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When used in this quarterly report, the words “estimated”, “anticipated”, “expect”, “believe”, “intend” and similar expressions are intended to identify forward-looking statements.
−Removed: Forward-looking statements include, without limitation, discussions of our business, portfolio, strategy, plans and intentions and statements regarding estimated or future results of operations, financial condition or prospects (including, without limitation, estimated and future funds from operations (“FFO”), adjusted funds from operations (“AFFO”) and normalized and adjusted FFO and net income, estimated initial weighted average contractual lease rates, estimated square footage of properties under development or expansion, the timing, prices and other terms of potential or planned acquisitions or dispositions, statements regarding initial cash lease yields on or percentages of investment grade clients that are lessees of properties that we have acquired or intend or agreed to acquire or that are under development or expansion, statements regarding the payment, dependability and amount of and potential increases in future common stock dividends, statements regarding future cash flow or cash generation, statements regarding our ability to meet our liquidity needs, and statements regarding the anticipated or projected impact of our merger with VEREIT on our business, results of operations, financial condition or prospects).
+Added: Forward-looking statements include, without limitation, discussions of our business, portfolio, strategy, plans and intentions and statements regarding estimated or future operations and results of operations, financial condition or prospects (including, without limitation, estimated and future funds from operations (“FFO”), adjusted funds from operations (“AFFO”) and normalized and adjusted FFO and net income, estimated initial weighted average contractual lease rates, estimated square footage of properties under development or expansion, the timing, prices and other terms of potential or planned acquisitions or dispositions, statements regarding initial cash lease yields on or percentages of investment grade clients that are lessees of properties that we have acquired or intend or agreed to acquire or that are under development or expansion, client bankruptcies, statements regarding the payment, dependability and amount of and potential increases in future common stock dividends, statements regarding future cash flow or cash generation, capital raising, settlement of shares of common stock sold pursuant to forward sale confirmations under our ATM program, statements regarding our ability to meet our liquidity needs, and statements regarding the anticipated or projected impact of our merger with VEREIT on our business, results of operations, financial condition or prospects).
Forward-looking statements are subject to risks, uncertainties, and assumptions about Realty Income Corporation, including, among other things:
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• Future expenditures for development projects;
−Removed: • The impact of the COVID-19 pandemic, or future pandemics, on us, our business, our clients, or the economy generally;
+Added: • The impact of the COVID-19 pandemic, or future pandemics, on us, our business, our clients (including those in the theater industry), or the economy generally;
• The uncertainties regarding whether the anticipated benefits or results of our merger with VEREIT will be achieved.
−Removed: Future events and actual results, financial and otherwise, may differ materially from the results discussed or implied by the forward-looking statements.
−Removed: In particular, forward-looking statements regarding estimated or future results of operations or financial condition, estimated or future acquisitions or dispositions of properties, or the estimated or potential impact of our merger with VEREIT are based upon numerous assumptions and estimates and are inherently subject to substantial uncertainties and actual results of operations, financial condition, property acquisitions or dispositions and the impacts of our merger with VEREIT may differ materially from those expressed or implied in the forward-looking statements, particularly if actual events differ from those reflected in the estimates and assumptions upon which such forward-looking statements are based.
+Added: Future events and actual results, financial and otherwise, may differ materially from the results discussed in or implied by the forward-looking statements.
+Added: In particular, forward-looking statements regarding estimated or future results of operations or financial condition, estimated or future acquisitions or dispositions of properties, or the estimated or potential impact of the merger are based upon numerous assumptions and estimates and are inherently subject to substantial uncertainties and actual results of operations, financial condition, property acquisitions or dispositions, and the impacts of the merger may differ materially from those expressed or implied in the forward-looking statements, particularly if actual events differ from those reflected in the estimates and assumptions upon which such forward-looking statements are based.
Some of the factors that could cause actual results to differ materially are:
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• Changes in income tax laws and rates;
−Removed: • The continued evolution of the COVID-19 pandemic and the measures taken to limit its spread, and its impacts on us, our business, our clients, or the economy generally;
+Added: • The continued evolution of the COVID-19 pandemic and the measures taken to limit its spread, and its impacts on us, our business, our clients (including those in the theater industry), or the economy generally;
• The timing and pace of reopening efforts at the local, state and national level in response to the COVID-19 pandemic and developments, such as the unexpected surges in COVID-19 cases, that cause a delay in or postponement of reopenings;
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Over the past 53 years, Realty Income has been acquiring and managing freestanding commercial properties that generate rental revenue under long-term net lease agreements with our commercial clients.
−Removed: At June 30, 2022, we owned a diversified portfolio:
+Added: At September 30, 2022, we owned a diversified portfolio:
• Consisting of 11,733 properties;
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approximately 13,100 square feet per retail property and approximately 235,790 square feet per industrial property.
−Removed: (1) Excludes four properties with ancillary leases only, such as cell towers and billboards, of which one was vacant.
−Removed: Of the 11,427 properties in the portfolio at June 30, 2022, 11,289, or 98.8%, are single-client properties, of which 11,158 were leased, and the remaining are multi–client properties.
−Removed: Unless otherwise specified, references to rental revenue in the Management's Discussion and Analysis of Financial Condition and Results of Operations are exclusive of reimbursements from clients for recoverable real estate taxes and operating expenses totaling $41.0 million and $23.5 million for the three months ended June 30, 2022 and 2021, respectively, and $85.0 million and $45.2 million for the six months ended June 30, 2022 and 2021, respectively.
+Added: (1) Excludes four properties with ancillary leases only, such as cell towers and billboards.
+Added: Of the 11,733 properties in the portfolio at September 30, 2022, 11,587, or 98.8%, are single-client properties, of which 11,457 were leased, and the remaining are multi–client properties.
+Added: Unless otherwise specified, references to rental revenue in the Management's Discussion and Analysis of Financial Condition and Results of Operations are exclusive of reimbursements from clients for recoverable real estate taxes and operating expenses totaling $44.1 million and $23.9 million for the three months ended September 30, 2022 and 2021, respectively, and $129.0 million and $69.1 million for the nine months ended September 30, 2022 and 2021, respectively.
+Added: Rental revenue during the three and nine months ended September 30, 2021 excludes the impact of the mergers, which occurred on November 1, 2021.
Investment Philosophy
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We believe that diversification of the portfolio by client, industry, geography, and property type leads to more consistent and predictable income for our stockholders by reducing vulnerability that can come with any single concentration.
−Removed: Our investment activities have led to a diversified property portfolio that, as of June 30, 2022, consisted of 11,427 properties located in all 50 U.S.
+Added: Our investment activities have led to a diversified property portfolio that, as of September 30, 2022, consisted of 11,733 properties located in all 50 U.S.
states, Puerto Rico, the U.K.
and Spain, and doing business in 79 industries.
−Removed: None of the 72 industries represented in our property portfolio accounted for more than 9.2% of our annualized contractual rent as of June 30, 2022.
−Removed: With expanded scale from our merger with VEREIT, we hope to serve our existing clients better and to partner with new clients that require the larger and more diversified balance sheet we now provide.
−Removed: Equally, as we look to continue to expand geographically across Europe, we hope to partner with new multinational clients that seek a real estate partner with an expanding geographic footprint.
+Added: None of the 79 industries represented in our property portfolio accounted for more than 9.0% of our annualized contractual rent as of September 30, 2022.
+Added: As we look to continue to expand geographically across Europe, we hope to partner with new multinational clients that seek a real estate partner with an expanding geographic footprint.
Investment Strategy
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From a retail perspective, our investment strategy is to target clients that have a service, non-discretionary, and/or low-price-point component to their business.
−Removed: Our investments are usually with clients who have demonstrated resiliency to e-commerce or have a strong omni channel retail strategy, uniting brick-and-mortar and mobile browsing, both of which reflect the continued importance of last mile retail, the movement of goods to their final
−Removed: destination, real estate as part of a customer experience and supply chain strategy.
−Removed: Our overall investments (including last mile retail) are driven by an optimal portfolio strategy that, among other considerations, targets allocation ranges by asset class and industry.
+Added: Our investments are usually with clients who have demonstrated resiliency to e-commerce or have a strong omni channel retail strategy, uniting brick-and-mortar and mobile browsing, both of which reflect the continued importance of last mile retail, the movement of goods to their final destination, real estate as part of a customer experience and supply chain strategy.
+Added: Our overall investments
+Added: (including last mile retail) are driven by an optimal portfolio strategy that, among other considerations, targets allocation ranges by asset class and industry.
We review our strategy periodically and stress test our portfolio in a variety of positive and negative economic scenarios to ensure we deliver consistent earnings growth and value creation across economic cycles.
−Removed: As a result of the execution of this strategy, approximately 93% of our annualized retail contractual rent on June 30, 2022, is derived from our clients with a service, non-discretionary, and/or low price point component to their business.
+Added: As a result of the execution of this strategy, approximately 93% of our annualized retail contractual rent on September 30, 2022, is derived from our clients with a service, non-discretionary, and/or low price point component to their business.
From a non-retail perspective, we target industrial properties leased to industry leaders, the majority of which are investment grade rated companies.
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We conduct additional due diligence, including additional financial reviews of the client, and continue to monitor our clients’ credit quality on an ongoing basis by reviewing the available information previously discussed, and providing summaries of these findings to management.
−Removed: At June 30, 2022, approximately 43% of our total portfolio annualized contractual rent comes from properties leased to our investment grade clients, their subsidiaries or affiliated companies.
−Removed: At June 30, 2022, our top 20 clients (based on percentage of total portfolio annualized contractual rent) represented approximately 42% of our annualized rent and 12 of these clients have investment grade credit ratings or are subsidiaries or affiliates of investment grade companies.
+Added: At September 30, 2022, approximately 42.7% of our total portfolio annualized contractual rent comes from properties leased to our investment grade clients, their subsidiaries or affiliated companies.
+Added: At September 30, 2022, our top 20 clients (based on percentage of total portfolio annualized contractual rent) represented approximately 41.3% of our annualized rent and 12 of these clients have investment grade credit ratings or are subsidiaries or affiliates of investment grade companies.
Asset Management Strategy
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We have continued our 53-year policy of paying monthly dividends.
−Removed: In addition, we increased the dividend three times during 2022.
−Removed: As of July 2022, we have paid 99 consecutive quarterly dividend increases and increased the dividend 116 times since our listing on the NYSE in 1994.
+Added: In addition, we increased the dividend four times during 2022.
+Added: As of October 2022, we have paid 100 consecutive quarterly dividend increases and increased the dividend 117 times since our listing on the NYSE in 1994.
The following table summarizes our dividend increases in 2022:
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3rd increase Jun 2022 Jul 2022 $0.2475 $0.0005
−Removed: The dividends paid per share during the six months ended June 30, 2022, totaled approximately $1.4805, as compared to approximately $1.4085 during the six months ended June 30, 2021, an increase of $0.072, or 5.1%.
−Removed: The monthly dividend of $0.2475 per share represents a current annualized dividend of $2.9700 per share, and an annualized dividend yield of approximately 4.4% based on the last reported sale price of our common stock on the NYSE of $68.26 on June 30, 2022.
+Added: 4th increase Sep 2022 Oct 2022 $0.2480 $0.0005
+Added: The dividends paid per share during the nine months ended September 30, 2022, totaled approximately $2.2230, as compared to approximately $2.1150 during the nine months ended September 30, 2021, an increase of $0.1080, or 5.1%.
+Added: The monthly dividend of $0.2480 per share represents a current annualized dividend of $2.9760 per share, and an annualized dividend yield of approximately 5.1% based on the last reported sale price of our common stock on the NYSE of $58.20 on September 30, 2022.
Although we expect to continue our policy of paying monthly dividends, we cannot guarantee that we will maintain our current level of dividends, that we will continue our pattern of increasing dividends per share, or what our actual dividend yield will be in any future period.
−Removed: Acquisitions During the Three and Six Months Ended June 30, 2022
+Added: Acquisitions During the Three and Nine Months Ended September 30, 2022
Below is a listing of our acquisitions in the U.S.
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(Years) Initial Weighted
−Removed: Three months ended June 30, 2022 (2)
+Added: Three months ended September 30, 2022 (2)
Acquisitions - U.S.
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375 9,115 $ 1,867.5 14.0 6.1 %
−Removed: Six months ended June 30, 2022 (2)
+Added: Nine months ended September 30, 2022 (2)
Acquisitions - U.S.
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Since it is possible that a client could default on the payment of contractual rent, we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above.
−Removed: Contractual net operating income used in the calculation of initial average cash yield includes approximately $2.5 million and $6.8 million, received as settlement credits as reimbursement of free rent periods for the three and six months ended June 30, 2022, respectively.
+Added: Contractual net operating income used in the calculation of initial weighted average cash yield includes approximately $1.2 million and $8.0 million, received as settlement credits as reimbursement of free rent periods for the three and nine months ended September 30, 2022, respectively.
In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return.
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estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs.
−Removed: (2) None of our investments during the three and six months ended June 30, 2022, caused any one client to be 10% or more of our total assets at June 30, 2022.
−Removed: (3) Includes two U.K.
−Removed: development properties that represent investments of £13.2 million and £14.9 million Sterling during the three and six months ended June 30, 2022, respectively, converted at the applicable exchange rate on the funding date.
−Removed: (4) Our clients occupying the new properties are 89.2% retail and 10.8% industrial, based on rental revenue.
−Removed: Approximately 39% of the rental revenue generated from acquisitions during the three months ended June 30, 2022, is from our investment grade rated clients, their subsidiaries or affiliated companies.
−Removed: (5) Our clients occupying the new properties are 87.4% retail and 12.6% industrial, based on rental revenue.
−Removed: Approximately 33% of the rental revenue generated from acquisitions during the six months ended June 30, 2022, is from our investment grade rated clients, their subsidiaries or affiliated companies.
+Added: (2) None of our investments during the three and nine months ended September 30, 2022, caused any one client to be 10% or more of our total assets at September 30, 2022.
+Added: (3) Includes five U.K.
+Added: development properties that represent investments of £21.7 million and £36.6 million Sterling during the three and nine months ended September 30, 2022, respectively, converted at the applicable exchange rate on the funding date.
+Added: (4) Our clients occupying the new properties are 95.7% retail, 4.1% industrial and 0.2% other property types, based on rental revenue.
+Added: Approximately 27% of the rental revenue generated from acquisitions during the three months ended September 30, 2022, is from our investment grade rated clients, their subsidiaries or affiliated companies.
+Added: (5) Our clients occupying the new properties are 90.6% retail, 9.3% industrial and 0.1% other property types, based on rental revenue.
+Added: Approximately 30% of the rental revenue generated from acquisitions during the nine months ended September 30, 2022, is from our investment grade rated clients, their subsidiaries or affiliated companies.
Announcement of Transaction with Wynn Resorts
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This transaction is subject to numerous uncertainties, including various closing conditions, and there can be no assurance that the transaction will be consummated on the terms or timetable currently contemplated, or at all.
+Added: Theater Industry Update
+Added: For the third quarter 2022, we collected approximately 85% of the contractual rent (1) across our theater portfolio as Cineworld Group plc (“Cineworld”), the parent entity of the entities that lease certain of our theater properties, including Regal Cinemas, commenced Chapter 11 reorganization proceedings during the month of September 2022 and, as is customary in this jurisdiction pursuant to the proceedings of the bankruptcy court, was not yet required to pay rent for the month of September.
+Added: However, for the month of October 2022, we have collected all of the contractual rent across our theater portfolio.
+Added: As of September 2022 , we had cumulative reserves of $23.5 million on properties leased to Cineworld and its affiliates.
+Added: These reserves, representing a reduction of rental revenue, primarily relate to contractual rent and expense recoveries recorded during the COVID-19 pandemic in 2020 and exclude straight-line rent reserves.
+Added: Total receivables from Cineworld and its affiliates were $31.0 million at September 30, 2022, net of reserves and excluding straight line rent receivables, and include both deferred contractual rent and deferred expense recoveries.
+Added: (1) We define contractual rent as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables.
+Added: Charged amounts have not been adjusted for any COVID-19 related rent relief granted and includes contractual rent from any clients in bankruptcy.
Portfolio Discussion
Leasing Results
−Removed: At June 30, 2022, we had 132 properties available for lease out of 11,427 properties in our portfolio, representing a 98.9% occupancy rate based on the number of properties in the portfolio.
−Removed: Our property-level occupancy rate at June 30, 2022 excludes four properties with ancillary leases only, such as cell towers and billboards, of which one was vacant .
+Added: At September 30, 2022, we had 131 properties available for lease out of 11,733 properties in our portfolio, representing a 98.9% occupancy rate based on the number of properties in the portfolio.
+Added: Our property-level occupancy rate at September 30, 2022 excludes four properties with ancillary leases only, such as cell towers and billboards .
Below is a summary of our portfolio activity for the periods indicated below:
−Removed: Three months ended June 30, 2022
−Removed: Properties available for lease at March 31, 2022 156
+Added: Three months ended September 30, 2022
+Added: Properties available for lease at June 30, 2022 132
Lease expirations (1)
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Vacant dispositions (27)
−Removed: Properties available for lease at June 30, 2022
−Removed: Six months ended June 30, 2022
+Added: Properties available for lease at September 30, 2022
+Added: Nine months ended September 30, 2022
Properties available for lease at December 31, 2021
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Vacant dispositions (122)
−Removed: Properties available for lease at June 30, 2022
+Added: Properties available for lease at September 30, 2022
(1) Includes scheduled and unscheduled expirations (including leases rejected in bankruptcy), as well as future expirations resolved in the periods indicated above.
−Removed: During the three months ended June 30, 2022, the annual new rent on re-leases was $35.51 million, as compared to the previous annual rent of $33.63 million on the same units, representing a rent recapture rate of 105.6% on the units re-leased.
−Removed: We re-leased four units to new clients without a period of vacancy, and seven units to new clients after a period of vacancy.
−Removed: During the six months ended June 30, 2022, the annual new rent on re-leases was $67.20 million, as compared to the previous annual rent of $63.47 million on the same units, representing a rent recapture rate of 105.9% on the units re-leased.
−Removed: We re-leased seven units to new clients without a period of vacancy, and 19 units to new clients after a period of vacancy.
+Added: During the three months ended September 30, 2022, the annual new rent on re-leases was $33.36 million, as compared to the previous annual rent of $30.75 million on the same units, representing a rent recapture rate of 108.5% on the units re-leased.
+Added: We re-leased five units to new clients without a period of vacancy, and six units to new clients after a period of vacancy.
+Added: During the nine months ended September 30, 2022, the annual new rent on re-leases was $100.57 million, as compared to the previous annual rent of $94.22 million on the same units, representing a rent recapture rate of 106.7% on the units re-leased.
+Added: We re-leased 12 units to new clients without a period of vacancy, and 25 units to new clients after a period of vacancy.
As part of our re-leasing costs, we pay leasing commissions to unrelated, third-party real estate brokers consistent with the commercial real estate industry standard, and sometimes provide rent concessions to our clients.
We do not consider the collective impact of the leasing commissions or rent concessions to our clients to be material to our financial position or results of operations.
−Removed: At June 30, 2022, our average annualized contractual rent was approximately $14.13 per square foot on the 11,295 leased properties in our portfolio.
−Removed: At June 30, 2022, we classified 36 properties, with a carrying amount of $66.3 million, as real estate and lease intangibles held for sale, net on our balance sheet.
−Removed: The expected sale of these properties does not represent a strategic shift that will have a major effect on our operations and financial results and is consistent with our existing disposition strategy to further enhance our real estate portfolio and maximize portfolio returns.
+Added: At September 30, 2022, our average annualized contractual rent was approximately $14.06 per square foot on the 11,602 leased properties in our portfolio.
+Added: At September 30, 2022, we classified 24 properties, with a carrying amount of $18.3 million, as real estate and lease intangibles held for sale, net on our balance sheet.
+Added: The expected sale of these properties does not represent a strategic shift that will have a major effect on our operations and financial
+Added: results and is consistent with our existing disposition strategy to further enhance our real estate portfolio and maximize portfolio returns.
Investments in Existing Properties
−Removed: During the three months ended June 30, 2022, we capitalized costs of $25.8 million on existing properties in our portfolio, consisting of $0.8 million for re-leasing costs, $2.8 million for recurring capital expenditures, and $22.2 million for non-recurring building improvements.
−Removed: During the six months ended June 30, 2022, we capitalized costs of $37.8 million on existing properties in our portfolio, consisting of $3.2 million re-leasing costs, $2.8 million for recurring capital expenditures, and $31.8 million for non-recurring building improvements.
+Added: During the three months ended September 30, 2022, we capitalized costs of $32.8 million on existing properties in our portfolio, consisting of $685,000 for re-leasing costs, $273,000 for recurring capital expenditures, and $31.8 million for non-recurring building improvements.
+Added: During the nine months ended September 30, 2022, we capitalized costs of $70.6 million on existing properties in our portfolio, consisting of $3.9 million re-leasing costs, $3.0 million for recurring capital expenditures, and $63.7 million for non-recurring building improvements.
The majority of our building improvements relate to roof repairs, HVAC improvements, and parking lot resurfacing and replacements.
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Sale of Unconsolidated Joint Ventures
−Removed: In July 2022, six of the seven properties owned by our industrial partnerships acquired in connection with the VEREIT merger were sold, with the seventh property expected to be sold later in the third quarter of 2022.
−Removed: The gross purchase price for the properties is $905.0 million and our proportionate share of net proceeds (after mortgage defeasance and closing costs) is estimated to be approximately $120 million .
+Added: During July 2022, all seven of the properties owned by our industrial partnerships acquired in connection with the VEREIT merger were sold.
+Added: The gross purchase price for the properties was $905.0 million and we collected $113.5 million of net proceeds (after mortgage defeasance and closing costs) during the three months ended September 30, 2022, representing our proportionate share of partnership distributions.
Equity Capital Raising
−Removed: During the three and six months ended June 30, 2022, we raised $1.1 billion and $1.7 billion of gross proceeds from the sale of common stock, respectively, at a weighted average price of $67.13 and $66.51 per share, respectively, primarily through proceeds from the sale of common stock through our prior ATM program.
In June 2022, we replaced our prior ATM program, which authorized us to offer and sell up to 69,088,433 shares of common stock, with a new equity distribution program, pursuant to which we may offer and sell up to 120,000,000 shares of common stock (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the NYSE at prevailing market prices or at negotiated prices.
+Added: During the three and nine months ended September 30, 2022, we raised $0.7 billion and $2.4 billion of gross proceeds from the sale of common stock, respectively, at a weighted average price of $73.05 and $68.27 per share, respectively, primarily through proceeds from the sale of common stock through our ATM programs.
+Added: The ATM program issuances during the three and nine months ended September 30, 2022 included 9,532,853 and 25,432,825 shares issued pursuant to forward sale confirmations, respectively.
+Added: As of September 30, 2022, 19,995,547 shares of common stock subject to forward sale confirmations have been executed but not settled.
Note Issuances
+Added: In October 2022, we issued $750.0 million of 5.625% senior unsecured notes due October 2032 (the "October 2032 Notes").
+Added: The public offering price for the October 2032 notes was 99.879% of the principal amount for an effective semi-annual yield to maturity of 5.641%.
In June 2022, we closed on the previously announced private placement of £600.0 million of senior unsecured notes, which included £140.0 million of notes due 2030, £345.0 million of notes due 2032, and £115.0 million of notes due 2037.
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Similar to our previous revolving credit facility, the new revolving credit facility also has a $1.0 billion expansion feature, which is subject to obtaining lender commitments.
−Removed: As of June 30, 2022, the balance of borrowings outstanding under our new revolving credit facility was $219.1 million, and we had a cash balance of $172.8 million.
−Removed: Expansion of Commercial Paper Program
+Added: As of September 30, 2022, the balance of borrowings outstanding under our new revolving credit facility was $1.2 billion, and we had a cash balance of $187.7 million.
+Added: Expansion of Commercial Paper Programs
During July 2022, our U.S.
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The notes offered under our European commercial paper program will rank pari passu with all of our other unsecured senior indebtedness, including borrowings under our revolving credit facility and our term loan, and our outstanding senior notes, including under our U.S.
−Removed: Dollar-denominated commercial paper program.
+Added: Dollar-denominated commercial paper programs.
We use our unsecured revolving credit facility as a liquidity backstop for the repayment of the notes issued under these programs.
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The following summarizes our select financial results (dollars in millions, except per share data).
−Removed: Our merger with VEREIT occurred on November 1, 2021;
−Removed: hence, our financial results do not include VEREIT financial results during the three and six months ended June 30, 2021.
−Removed: Three months ended June 30, Six months ended June 30, % Increase
−Removed: 2022 2021 2022 2021 Three months Six months
+Added: Three months ended September 30, Nine months ended September 30, % Increase
+Added: 2022 2021 2022 2021 Three months Nine Months
Total revenue $ 837.3 $ 489.9 $ 2,455.0 $ 1,395.4 70.9 % 75.9 %
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(2) All per share amounts are presented on a diluted per common share basis.
−Removed: Our financial results during the three and six months ended June 30, 2022 were impacted by merger and integration-related costs of $2.7 million and $9.2 million, respectively, related to our merger with VEREIT.
−Removed: Our financial results in the six months ended June 30, 2021 were impacted by a $46.5 million loss on extinguishment of debt due to the January 2021 early redemption of the 3.250% notes due October 2022, and $13.3 million of merger and integration-related costs related to our merger with VEREIT.
−Removed: See our discussion of FFO, Normalized FFO, and AFFO (which are not financial measures under generally accepted accounting principles, or GAAP), later in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this quarterly report, which includes a reconciliation of net income available to common stockholders to FFO and Normalized FFO, and AFFO.
+Added: Our financial results during the three and nine months ended September 30, 2022 were impacted by the following transactions:
+Added: (i) merger and integration-related costs related to our merger with VEREIT of $3.7 million and $13.0 million, respectively, and (ii) $1.7 million and $16.4 million of provisions for impairment, respectively.
+Added: Our financial results during the three and nine months ended September 30, 2021 were impacted by the following transactions:
+Added: (i) a $50.5 million loss on extinguishment of debt primarily due to the January 2021 early redemption of the 3.250% notes due October 2022 recorded in the three months ended March 31, 2021, (ii) merger and integration-related costs related to our merger with VEREIT of $16.8 million and $30.1 million, respectively, and (iii) $11.0 million and $31.0 million of provisions for impairment, respectively.
+Added: See our discussion of FFO, Normalized FFO, and AFFO (which are not financial measures under generally accepted accounting principles, or GAAP), later in the section entitled “Management’s Discussion and Analysis of
+Added: Financial Condition and Results of Operations,” in this quarterly report, which includes a reconciliation of net income available to common stockholders to FFO and Normalized FFO, and AFFO.
LIQUIDITY AND CAPITAL RESOURCES
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We may issue common stock when we believe that our share price is at a level that allows for the proceeds of any offering to be accretively invested into additional properties.
−Removed: In addition, we may issue common stock to permanently finance properties that were initially financed by our revolving credit facility, commercial paper program, or debt securities.
+Added: In addition, we may issue common stock to permanently finance properties that were initially financed by our revolving credit facility, commercial paper programs, or debt securities.
However, we cannot assure you that we will have access to the capital markets at all times and at terms that are acceptable to us.
Our primary cash obligations, for the current year and subsequent years, are included in the “Table of Obligations,” which is presented later in this section.
−Removed: We expect to fund our operating expenses and other short-term liquidity requirements, including property acquisitions and development costs, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs and cash distributions to common stockholders, primarily through cash provided by operating activities, borrowings on our credit facility and under our commercial paper program and through public securities offerings.
−Removed: As of June 30, 2022, there are approximately $1.9 billion of obligations becoming due through the remainder of 2022, which we expect to fund through a combination of cash
−Removed: flows from operations, issuances of common stock or debt, and additional borrowings under our revolving credit facility and rolling over borrowings under our commercial paper program.
+Added: We expect to fund our operating expenses and other short-term liquidity requirements, including property acquisitions and development costs, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs and cash distributions to common stockholders, primarily through cash provided by operating activities, borrowings on our credit facility and under our commercial paper programs and through public securities offerings.
+Added: As of September 30, 2022, there are approximately $1.3 billion of obligations becoming due through the remainder of 2022, which we expect to fund through a combination of cash flows from operations, issuances of common stock or debt, and additional borrowings under our revolving credit facility and rolling over borrowings under our commercial paper programs.
We may choose to mitigate our financial exposure to exchange rate risk for properties acquired outside the U.S.
4 unchanged sentences
Therefore, we seek to maintain a conservative debt level on our balance sheet and solid interest and fixed charge coverage ratios.
−Removed: At June 30, 2022, our total outstanding borrowings of senior unsecured notes and bonds, term loan, mortgages payable, revolving credit facility and commercial paper were $15.82 billion, or approximately 27.3% of our total market capitalization of $58.05 billion.
−Removed: We define our total market capitalization at June 30, 2022, as the sum of:
−Removed: • Shares of our common stock outstanding of 617,564,272, plus total common units outstanding of 1,060,709, multiplied by the last reported sales price of our common stock on the NYSE of $68.26 per share on June 30, 2022, or $42.23 billion;
−Removed: • Outstanding borrowings of $219.1 million on our revolving credit facility;
−Removed: • Outstanding borrowings of $950.0 million on our commercial paper program;
−Removed: • Outstanding mortgages payable of $928.9 million, excluding net mortgage premiums of $19.2 million and deferred financing costs of $1.0 million;
+Added: At September 30, 2022, our total outstanding borrowings of senior unsecured notes and bonds, term loan, mortgages payable, revolving credit facility and commercial paper were $16.14 billion, or approximately 30.6% of our total market capitalization of $52.75 billion.
+Added: We define our total market capitalization at September 30, 2022, as the sum of:
+Added: • Shares of our common stock outstanding of 627,145,827, plus total common units outstanding of 1,795,167, multiplied by the last reported sales price of our common stock on the NYSE of $58.20 per share on September 30, 2022, or $36.60 billion;
+Added: • Outstanding borrowings of $1.2 billion on our revolving credit facility, comprised entirely of Euro borrowings;
+Added: • Outstanding borrowings of $723.8 million on our commercial paper programs, including €511.0 million of Euro-denominated borrowings;
+Added: • Outstanding mortgages payable of $840.7 million, excluding net mortgage premiums of $15.6 million and deferred financing costs of $926,000;
• Outstanding borrowings of $250.0 million on our term loan, excluding deferred financing costs of $295,000;
• Outstanding senior unsecured notes and bonds of $13.1 billion, including Sterling-denominated notes of £2.57 billion, and excluding unamortized net premiums of $241.3 million and deferred financing costs of $56.6 million.
−Removed: • Our proportionate share of outstanding debt from unconsolidated entities of $86.0 million, excluding premiums and deferred financing costs.
Universal Shelf Registration
2 unchanged sentences
The securities covered by this registration statement include (1) common stock, (2) preferred stock, (3) debt securities, (4) depositary shares representing fractional interests in shares of preferred stock, (5) warrants to purchase debt securities, common stock, preferred stock, or depositary shares, and (6) any combination of these securities.
−Removed: We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered.
+Added: We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if
+Added: these securities are offered.
The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.
2 unchanged sentences
Our ATM program replaced our prior ATM program in June 2022, which previously authorized us to offer and sell up to 69,088,433 shares of common stock.
−Removed: During the three months ended June 30, 2022, we issued 15,899,972 shares, which were sold pursuant to forward sale confirmations, and raised approximately $1.07 billion of gross proceeds under the prior ATM program.
−Removed: During the six months ended June 30, 2022, we issued 25,973,181 shares and raised approximately $1.73 billion of gross proceeds under the prior ATM program.
−Removed: As of June 30, 2022, there were no open forward sale confirmations and we had 120,000,000 shares remaining for future issuance under our ATM program.
+Added: Upon settlement, subject to certain exceptions, we may elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which cases we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.
+Added: We currently expect to fully physically cash settle any forward sale agreement with the respective forward purchaser on one or more dates specified by us on or prior to the maturity date of such forward sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number of shares specified in such forward sale agreement multiplied by the relevant forward price per share.
+Added: During the three months ended September 30, 2022, we issued 9,532,853 shares, which were sold pursuant to forward sale confirmations, and raised approximately $696.6 million of gross proceeds under the ATM program.
+Added: During the nine months ended September 30, 2022, we issued 35,506,034 shares and raised approximately $2.42 billion of gross proceeds under the ATM programs.
+Added: With respect to forward sales pursuant to our ATM program, we do not initially receive any proceeds from any sale of shares of our common stock borrowed by a forward purchaser and sold through a forward seller .
+Added: As of September 30, 2022, there were 19,995,547 shares of common stock underlying the outstanding forward sale agreements under our ATM program with a weighted average initial price of $66.70 per share as of September 30, 2022, representing approximately $1.3 billion in gross proceeds assuming full physical settlement of all outstanding shares of common stock subject to such forward sale agreements and certain assumptions made with respect to settlement dates.
+Added: The weighted average forward price at September 30, 2022 was $66.43 per share, after price deduction and adjustments.
+Added: After deducting the 20.0 million shares sold pursuant forward sale confirmations that remained outstanding as of September 30, 2022, we had 90,471,600 shares remaining for future issuance under our ATM program.
We anticipate maintaining the availability of our ATM program in the future, including the replenishment of authorized shares issuable thereunder.
4 unchanged sentences
Our DRSPP includes a waiver approval process, allowing larger investors or institutions, per a formal approval process, to purchase shares at a small discount, if approved by us.
−Removed: We did not issue shares under the waiver approval process during the six months ended June 30, 2022.
−Removed: During the three months ended June 30, 2022, we issued 43,260 shares and raised approximately $2.9 million under our DRSPP.
−Removed: During the six months ended June 30, 2022, we issued 84,631 shares and raised approximately $5.7 million under our DRSPP.
−Removed: At June 30, 2022, we had 11,250,748 shares remaining for future issuance under our DRSPP program.
+Added: We did not issue shares under the waiver approval process during the nine months ended September 30, 2022.
+Added: During the three months ended September 30, 2022, we issued 43,430 shares and raised approximately $3.0 million under our DRSPP.
+Added: During the nine months ended September 30, 2022, we issued 128,061 shares and raised approximately $8.7 million under our DRSPP.
+Added: At September 30, 2022, we had 11,207,318 shares remaining for future issuance under our DRSPP program.
Revolving Credit Facility
7 unchanged sentences
Our new credit facility is unsecured and, accordingly, we have not pledged any assets as collateral for this obligation .
−Removed: At June 30, 2022, we had a borrowing capacity of $4.03 billion available on our new revolving credit facility and an $219.1 million outstanding balance.
−Removed: The weighted average interest rate on borrowings under our revolving credit facility during the six months ended June 30, 2022, was 1.5% per annum.
+Added: At September 30, 2022, we had a borrowing capacity of $3.05 billion available on our revolving credit facility and an $1.2 billion outstanding balance.
+Added: The weighted average interest rate on borrowings under our revolving credit facility during the nine months ended September 30, 2022, was 1.7% per annum.
We must comply with various financial and other covenants in our credit facility.
−Removed: At June 30, 2022, we were in compliance with these covenants.
+Added: At September 30, 2022, we were in compliance with these covenants.
We expect to use our credit facility to acquire additional properties and for other general corporate purposes.
Any additional borrowings will increase our exposure to interest rate risk.
−Removed: Commercial Paper Program
−Removed: We have a U.S.
−Removed: dollar-denominated unsecured commercial paper program.
−Removed: Under the terms of the program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $1.0 billion.
−Removed: Borrowings under this program generally mature in one year or less.
−Removed: At June 30, 2022, we had an outstanding balance of $950.0 million.
−Removed: The weighted average interest rate on borrowings under our commercial paper program was 0.8% for the six months ended June 30, 2022.
−Removed: We use our $4.25 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper program.
−Removed: The commercial paper borrowings outstanding at June 30, 2022 have matured and will mature between July 2022 and January 2023.
−Removed: We generally use our credit facility and commercial paper borrowings for the short-term financing of new property acquisitions.
−Removed: Thereafter, we generally seek to refinance those borrowings with the net proceeds of long-term or more permanent financing, including the issuance of equity or debt securities.
−Removed: We cannot assure you, however, that we will be able to obtain any such refinancing, or that market conditions prevailing at the time of the refinancing will enable us to issue equity or debt securities at acceptable terms.
−Removed: We regularly review our credit facility and commercial paper program and may seek to extend, renew or replace our credit facility and commercial paper program, to the extent we deem appropriate.
+Added: Commercial Paper Programs
During July 2022, our U.S.
1 unchanged sentence
We also established a new Euro-denominated unsecured commercial paper program, which permits us to issue additional unsecured commercial notes up to a maximum aggregate amount of $1.5 billion (or foreign currency equivalent), which may be issued in U.S.
−Removed: Dollars or various other foreign currencies, in each case, pursuant to customary terms in the European commercial paper note market.
+Added: Dollars or various other foreign currencies, including but not limited to, Euros, Sterling, Swiss Francs, Yen, Canadian Dollars, and Australian Dollars, in each case, pursuant to customary terms in the European commercial paper note market.
+Added: At September 30, 2022, we had an outstanding balance of $723.8 million, including €511.0 million of Euro-denominated borrowings.
+Added: The weighted average interest rate on borrowings under our commercial paper programs was 1.3% for the nine months ended September 30, 2022.
+Added: We use our $4.25 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper programs.
+Added: The commercial paper borrowings outstanding at September 30, 2022 have matured and will mature between October 2022 and January 2023.
+Added: We generally use our credit facility and commercial paper borrowings for the short-term financing of new property acquisitions.
+Added: Thereafter, we generally seek to refinance those borrowings with the net proceeds of long-term or more permanent financing, including the issuance of equity or debt securities.
+Added: We cannot assure you, however, that we will be able to obtain any such refinancing, or that market conditions prevailing at the time of the refinancing will enable us to issue equity or debt securities at acceptable terms.
+Added: We regularly review our credit facility and commercial paper programs and may seek to extend, renew or replace our credit facility and commercial paper programs, to the extent we deem appropriate.
In October 2018, in conjunction with entering into our current revolving credit facility, we entered into a $250.0 million senior unsecured term loan, which matures in March 2024.
1 unchanged sentence
In connection with entering into our new unsecured credit facility in April 2022, the previous LIBOR benchmark rate was replaced with daily SOFR, based on a five day lookback period, and, due to our current credit ratings, is not subject to a credit spread adjustment.
−Removed: In conjunction with this term loan, we also entered into an interest rate swap, which was based off the one-month LIBOR through June 30, 2022.
−Removed: As of June 30, 2022, the interest rate swap was also converted to SOFR.
−Removed: As of June 30, 2022, the effective interest rate on this term loan, after giving effect to the interest rate swap, is 3.73%.
+Added: In conjunction with this term loan, we also entered into an interest rate swap, which was based off the daily SOFR through June 30, 2022.
+Added: As of September 30, 2022, the effective interest rate on this term loan, after giving effect to the interest rate swap, was 3.83%.
Mortgage Debt
−Removed: As of June 30, 2022, we had $928.9 million of mortgages payable, of which £33.4 million related to a Sterling-denominated mortgage.
−Removed: The majority of our mortgages payable were assumed in connection with our property acquisitions, originally including ten mortgages from our merger with VEREIT in 2021 totaling $839.1 million, and eight mortgages on 17 properties totaling $45.1 million during the six months ended June 30, 2022.
−Removed: At June 30, 2022, we had net premiums totaling $19.2 million on these mortgages and deferred financing costs of $1.0 million.
+Added: As of September 30, 2022, we had $840.7 million of mortgages payable, of which £30.7 million related to a Sterling-denominated mortgage.
+Added: The majority of our mortgages payable were assumed in connection with our merger with VEREIT or with our property acquisitions, including the assumption of eight mortgages on 17 properties totaling $45.1 million during the nine months ended September 30, 2022.
+Added: At September 30, 2022, we had net premiums totaling $15.6 million on these mortgages and deferred financing costs of $926,000.
We expect to pay off the mortgages payable as soon as prepayment penalties have declined to a level that would make it economically feasible to do so.
−Removed: During the six months ended June 30, 2022, we made $226.0 million in principal payments, including the repayment of seven mortgages in full for $223.9 million (of which $168.2 million was paid off related to mortgages assumed from our merger with VEREIT).
+Added: During the nine months ended September 30, 2022, we made $311.1 million in principal payments, including the repayment of 12 mortgages in full for $308.0 million.
+Added: Our mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage without the prior consent of the lender.
+Added: At September 30, 2022, we were in compliance with these covenants.
Notes Outstanding
−Removed: Our senior unsecured note and bond obligations consist of the following as of June 30, 2022, sorted by maturity date (in millions):
−Removed: As of June 30, 2022
+Added: As of September 30, 2022, our senior unsecured note and bond obligations had a total principal amount of $13.13 billion, including Sterling- denominated notes of £2.57 billion, and excluding net unamortized premiums of $241.3 million and deferred financing costs of $56.6 million.
+Added: The carrying value of these note and bond obligations as of September 30, 2022, includes the portion of the VEREIT OP notes that remained outstanding, totaling $39.1 million in the aggregate, that were not exchanged in the exchange offers commenced by us with respect to the outstanding bonds of VEREIT Operating Partnership, L.P.
+Added: ("VEREIT OP") in connection with the consummation of the merger with VEREIT (the "Exchange Offers");
+Added: consequently, these notes were originally issued by VEREIT OP in December 2019 for the principal amount of $600 million, while the amount of debt issued by Realty Income Corporation through the Exchange Offers was $599 million, resulting from cancellations due to late tenders that forfeited the early participation premium of $30 per $1,000 principal amount and cash paid in lieu of fractional shares.
+Added: As of September 30, 2022
Principal Amount (Currency Denomination) Carrying Value (USD)
29 unchanged sentences
Unamortized net premiums and deferred financing costs 184
−Removed: (1) Carrying Value (USD) as of June 30, 2022, includes the portion of the VEREIT OP notes that remained outstanding, totaling $39.1 million in the aggregate, that were not exchanged in the exchange offers commenced by us with respect to the outstanding bonds of VEREIT Operating Partnership, L.P.
+Added: (1) Carrying Value (USD) as of September 30, 2022, includes the portion of the VEREIT OP notes that remained outstanding, totaling $39.1 million in the aggregate, that were not exchanged in the exchange offers commenced by us with respect to the outstanding bonds of VEREIT Operating Partnership, L.P.
("VEREIT OP") in connection with the consummation of the merger with VEREIT (the "Exchange Offers").
1 unchanged sentence
The amount of Realty Income debt issued through the Exchange Offers was $599 million, resulting from cancellations due to late tenders that forfeited the early participation premium of $30 per $1,000 principal amount and cash paid in lieu of fractional shares.
−Removed: All of our outstanding notes and bonds have fixed interest rates and contain various covenants, with which we remained in compliance as of June 30, 2022.
+Added: In October 2022, we issued $750.0 million of 5.625% senior unsecured notes due October 2032 (the "October 2032 Notes").
+Added: The public offering price for the October 2032 Notes was 99.879% of the principal amount, for an effective semi-annual yield to maturity of 5.641%.
+Added: All of our outstanding notes and bonds have fixed interest rates and contain various covenants, with which we remained in compliance as of September 30, 2022.
Interest on our £400 million of 1.625% senior unsecured notes issued in October 2020, our £400 million of 1.125% senior unsecured notes issued in July 2021, our £350 million of 1.750% senior unsecured notes also issued in July 2021, our £250 million of 1.875% senior unsecured notes issued in January 2022, and £250 million of 2.500% senior unsecured notes also issued in January 2022 is paid annually.
3 unchanged sentences
generally accepted accounting principles ("GAAP") measurements, are presented to investors to show our ability to incur additional debt under the terms of our senior notes and bonds as well as to disclose our current compliance with such covenants and are not measures of our liquidity or performance.
−Removed: The actual amounts as of June 30, 2022, are:
+Added: The actual amounts as of September 30, 2022, are:
Note Covenants
7 unchanged sentences
(1) Our debt service coverage ratio is calculated on a pro forma basis for the preceding four-quarter period on the assumptions that:
−Removed: (i) the incurrence of any debt (as defined in the covenants) incurred by us since the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other debt since the first day of such four-quarter period), (ii) the repayment or retirement of any of our debt since the first day of such four-quarter period, and (iii) any acquisition or disposition by us of any asset or group since the first day of such four quarters had in each case occurred on July 1, 2021 and subject to certain additional adjustments.
−Removed: Such pro forma ratio has been prepared on the basis required by that debt service covenant, reflects various estimates and assumptions and is subject to other uncertainties, and therefore does not purport to reflect what our actual debt service coverage ratio would have been had transactions referred to in clauses (i), (ii) and (iii) of the preceding sentence occurred as of July 1, 2021, nor does it purport to reflect our debt service coverage ratio for any future period.
−Removed: The following is our calculation of debt service and fixed charge coverage at June 30, 2022 (in thousands, for trailing twelve months):
+Added: (i) the incurrence of any debt (as defined in the covenants) incurred by us since the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other debt since the first day of such four-quarter period), (ii) the repayment or retirement of any of our debt since the first day of such four-quarter period, and (iii) any acquisition or disposition by us of any asset or group since the first day of such four quarters had in each case occurred on October 1, 2021 and subject to certain additional adjustments.
+Added: Such pro forma ratio has been prepared on the basis required by that debt service covenant, reflects various estimates and assumptions and is subject to other uncertainties, and therefore does not purport to reflect what our actual debt service coverage ratio would have been had transactions referred to in clauses (i), (ii) and (iii) of the preceding sentence occurred as of October 1, 2021, nor does it purport to reflect our debt service coverage ratio for any future period.
+Added: The following is our calculation of debt service and fixed charge coverage at September 30, 2022 (in thousands, for trailing twelve months):
Net income available to common stockholders
12 unchanged sentences
We intend to retain an appropriate amount of cash as working capital.
−Removed: At June 30, 2022, we had cash and cash equivalents totaling $172.8 million, inclusive of £107.5 million Sterling and €12.3 million Euro.
+Added: At September 30, 2022, we had cash and cash equivalents totaling $187.7 million, inclusive of £97.8 million Sterling and €9.6 million Euro.
We believe that our cash and cash equivalents on hand, cash provided from operating activities, and borrowing capacity is sufficient to meet our liquidity needs for the next twelve months.
−Removed: We intend, however, to use permanent or long-term capital to fund property acquisitions and to repay future borrowings under our credit facility and commercial paper program.
+Added: We intend, however, to use permanent or long-term capital to fund property acquisitions and to repay future borrowings under our credit facility and commercial paper programs.
Credit Agency Ratings
The borrowing interest rates under our revolving credit facility are based upon our ratings assigned by credit rating agencies.
−Removed: As of June 30, 2022, we were assigned the following investment grade corporate credit ratings on our senior unsecured notes and bonds:
+Added: As of September 30, 2022, we were assigned the following investment grade corporate credit ratings on our senior unsecured notes and bonds:
Moody’s Investors Service has assigned a rating of A3 with a “stable” outlook and Standard & Poor’s Ratings Group has assigned a rating of A- with a “stable” outlook.
−Removed: In addition, we were
−Removed: assigned the following ratings on our commercial paper at June 30, 2022:
+Added: In addition, we were assigned the following ratings on our commercial paper at September 30, 2022:
Moody's Investors Service has assigned a rating of P-2 and Standard & Poor's Ratings Group has assigned a rating of A-2.
−Removed: Based on our credit agency ratings as of June 30, 2022, interest rates under our new credit facility for U.S.
−Removed: borrowings would have been at the Secured Overnight Financing Rate (“SOFR”), plus 0.725% with a SOFR adjustment charge of 0.10% and a revolving credit facility fee of 0.125%, for all-in pricing of 0.95% over SOFR and, for British Pound Sterling borrowings, at the Sterling Overnight Indexed Average (“SONIA”), plus 0.725% with a SONIA adjustment charge of 0.0326% and a revolving credit facility fee of 0.125%, for all-in pricing of 0.8826% over SONIA.
+Added: Based on our credit agency ratings as of September 30, 2022, interest rates under our new credit facility for U.S.
+Added: borrowings would have been at the SOFR, plus 0.725% with a SOFR adjustment charge of 0.10% and a revolving credit facility fee of 0.125%, for all-in pricing of 0.95% over SOFR and, for British Pound Sterling borrowings, at the SONIA, plus 0.725% with a SONIA adjustment charge of 0.0326% and a revolving credit facility fee of 0.125%, for all-in pricing of 0.8826% over SONIA.
In addition, our new credit facility provides that the interest rates can range between:
8 unchanged sentences
Table of Obligations
−Removed: The following table summarizes the maturity of each of our obligations as of June 30, 2022 (dollars in millions):
−Removed: Maturity Credit Facility and Commercial Paper Program (1)
+Added: The following table summarizes the maturity of each of our obligations as of September 30, 2022 (dollars in millions):
+Added: Principal due Credit Facility and Commercial Paper Programs (1)
Senior Unsecured Notes and
11 unchanged sentences
(1) The initial term of the credit facility expires in June 2026 and includes, at our option, two six-month extensions.
−Removed: At June 30, 2022, there were $219.1 million borrowings under our revolving credit facility.
−Removed: Commercial paper program outstanding at June 30, 2022 were $950.0 million, which have matured and will mature between July 2022 and January 2023.
+Added: At September 30, 2022, there were $1.2 billion borrowings under our revolving credit facility.
+Added: Commercial paper programs outstanding at September 30, 2022 were $723.8 million, which have matured and will mature between October 2022 and January 2023.
(2) Excludes non-cash net premiums recorded on notes payable of $241.3 million and deferred financing costs of $56.6 million.
+Added: The table of obligations also excludes the October 2022 issuance of $750.0 million of senior unsecured notes due October 2032
(3) Excludes deferred financing costs of $295,000.
−Removed: (4) Excludes both non-cash net premiums recorded on the mortgages payable of $19.2 million and deferred financing costs of $1.0 million.
−Removed: (5) Interest on the term loan, notes, bonds, mortgages payable, credit facility and commercial paper program has been calculated based on outstanding balances at period end through their respective maturity dates.
+Added: (4) Excludes both non-cash net premiums recorded on the mortgages payable of $15.6 million and deferred financing costs of $926,000.
+Added: (5) Interest on the term loan, notes, bonds, mortgages payable, credit facility and commercial paper programs has been calculated based on outstanding balances at period end through their respective maturity dates.
(6) Realty Income currently pays the ground lessors directly for the rent under the ground leases.
2 unchanged sentences
(8) “Other” consists of $764.9 million of commitments under construction contracts, and $22.3 million for re-leasing costs, recurring capital expenditures, and non-recurring building improvements.
−Removed: Our credit facility, commercial paper program, term loan, and notes payable obligations are unsecured.
+Added: Our credit facility, commercial paper programs, term loan, and notes payable obligations are unsecured.
Accordingly, we have not pledged any assets as collateral for these obligations.
1 unchanged sentence
As a result of our merger with VEREIT, we assumed an equity method investment in three unconsolidated entities.
−Removed: We are responsible to fund our proportionate share of any operating cash deficits pursuant to the governance documents of the applicable entities.
−Removed: There are no further material commitments related to these investments at this time.
−Removed: The debt held by the unconsolidated entities is secured by its properties, though is non-recourse to us with limited customary exceptions which vary from loan to loan.
−Removed: In July 2022, six of the seven properties owned by our industrial partnerships acquired in connection with the VEREIT merger were sold, with the seventh property
−Removed: expected to be sold later in the third quarter of 2022.
−Removed: Our proportionate share of net proceeds (after mortgage defeasance and closing costs) is estimated to be approximately $120 million .
+Added: In July 2022, six of the seven properties owned by our industrial partnerships acquired in connection with the VEREIT merger were sold, and the seventh property was sold in September 2022.
+Added: The gross purchase price for the properties was $905.0 million and we collected $113.5 million of net proceeds (after mortgage defeasance and closing costs) during the three months ended September 30, 2022, representing our proportionate share of partnership distributions.
+Added: Up until the point of sale of these properties, we were responsible to fund our proportionate share of any operating cash deficits pursuant to the governance documents of the applicable entities.
+Added: There were no further material commitments related to those investments.
+Added: The debt held by the unconsolidated entities was secured by its properties, though was non-recourse to use with limited customary exceptions, which varied from loan to loan.
Dividend Policy
3 unchanged sentences
In order to maintain our status as a REIT for federal income tax purposes, we generally are required to distribute dividends to our stockholders aggregating annually at least 90% of our taxable income (excluding net capital gains), and we are subject to income tax to the extent we distribute less than 100% of our taxable income (including net capital gains).
−Removed: In 2021, our cash distributions to common stockholders totaled $1.17 billion, or approximately 149.4% of our estimated taxable income of $783.3 million.
−Removed: Our estimated taxable income reflects non-cash deductions for depreciation and amortization.
−Removed: Our estimated taxable income is presented to show our compliance with REIT dividend requirements and is not a measure of our liquidity or operating performance.
+Added: In 2021, our cash distributions to common stockholders totaled $1.17 billion, or approximately 125.3% of our taxable income of $933.3 million.
+Added: Our taxable income reflects non-cash deductions for depreciation and amortization.
+Added: Our taxable income is presented to show our compliance with REIT dividend requirements and is not a measure of our liquidity or operating performance.
We intend to continue to make distributions to our stockholders that are sufficient to meet this dividend requirement and that will reduce or eliminate our exposure to income taxes.
Furthermore, we believe our cash on hand and funds from operations are sufficient to support our current level of cash distributions to our stockholders.
−Removed: Our cash distributions to common stockholders in the six months ended June 30, 2022, totaled $884.1 million, representing 76.0% of our adjusted funds from operations available to common stockholders of approximately $1.16 billion.
−Removed: In comparison, our cash distributions to common stockholders in 2021 totaled $1.17 billion, representing 78.5% of our adjusted funds from operations available to common stockholders of $1.49 billion.
+Added: Our cash distributions to common stockholders in the nine months ended September 30, 2022, totaled $1.34 billion, representing 76.0% of our adjusted funds from operations available to common stockholders of approximately $1.77 billion.
+Added: In comparison, our cash distributions to common stockholders in 2021 totaled $1.17 billion, representing 78.5% our adjusted funds from operations available to common stockholders of $1.49 billion.
Future distributions will be at the discretion of our Board of Directors and will depend on, among other things, our results of operations, FFO, Normalized FFO, AFFO, cash flow from operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, our debt service requirements, and any other factors the Board of Directors may deem relevant.
34 unchanged sentences
If events should occur that require us to reduce the carrying value of our real estate by recording provisions for impairment, they could have a material impact on our results of operations.
−Removed: The following is a comparison of our results of operations for the three and six months ended June 30, 2022, to the three and six months ended June 30, 2021.
+Added: The following is a comparison of our results of operations for the three and nine months ended September 30, 2022, to the three and nine months ended September 30, 2021.
Total Revenue
The following summarizes our total revenue (dollars in thousands):
−Removed: Three months ended June 30, Six months ended June 30, $ Increase
−Removed: 2022 2021 2022 2021 Three Months Six Months
+Added: Three months ended September 30, Nine months ended September 30, $ Increase
+Added: 2022 2021 2022 2021 Three Months Nine Months
Rental (excluding reimbursable)
5 unchanged sentences
$ 837,269 $ 489,891 $ 2,455,031 $ 1,395,443 $ 347,378 $ 1,059,588
−Removed: The increase in total revenue primarily relates to the merger with VEREIT and acquisitions for the six months ended June 30, 2022 .
+Added: The increase in total revenue primarily relates to the merger with VEREIT and acquisitions for the nine months ended September 30, 2022 .
Rental Revenue (excluding reimbursable)
−Removed: The table below summarizes the increase in rental revenue (excluding reimbursable) in the three months ended June 30, 2022, compared to the three months ended June 30, 2021 (dollars in thousands):
−Removed: Three months ended June 30, Increase/(Decrease)
+Added: The table below summarizes the increase in rental revenue (excluding reimbursable) in the three months ended September 30, 2022, compared to the three months ended September 30, 2021 (dollars in thousands):
+Added: Three months ended September 30, Increase/(Decrease)
Number of Properties Square Footage (1)
6 unchanged sentences
N/A N/A 3,725 7,716 (3,991)
−Removed: Properties sold prior to 2022 357 8,679,230 931 19,312 (18,381)
+Added: Properties sold during and prior to 2022 393 9,587,827 9,037 9,428 (391)
Straight-line rent and other non-cash adjustments N/A N/A 2,788 4,895 (2,107)
2 unchanged sentences
Other excluded revenue (5)
−Removed: NA N/A 4,341 1,964 2,377
−Removed: VEREIT same store rental revenue (6)
N/A N/A 1,890 3,195 (1,305)
+Added: VEREIT rental revenue (6)
+Added: N/A N/A — (266,977) 266,977
Totals $ 781,883 $ 462,416 $ 319,467
(1) Excludes 5,913,131 square feet from properties ground leased to clients and 2,647,226 square feet from properties with no land or building ownership.
−Removed: (2) The same store rental revenue percentage increase for the three months ended June 30, 2022 as compared with the same period in prior year is 2.0%.
−Removed: (3) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of June 30, 2022, of 1.22 GBP/USD.
+Added: (2) The same store rental revenue percentage increase for the three months ended September 30, 2022 as compared with the same period in prior year is 1.0%.
+Added: (3) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of September 30, 2022, of 1.11 GBP/USD.
None of the properties in Spain met our same store pool definition for the periods presented.
−Removed: (4) Relates to the aggregate of (i) rental revenue from properties (285 properties comprising 5,721,191 square feet) that were available for lease during part of 2022 or 2021, (ii) rental revenue for properties (13 properties comprising 704,617 square feet) under development, and (iii) rental revenue that is not contractual base rent such as lease termination settlements.
−Removed: (5) Primarily consists of lease termination revenue and reimbursements for tenant improvements.
−Removed: (6) Amounts for the three months ended June 30, 2021 represent same store rental revenue from VEREIT properties, which were not included in our financial statements prior to the close of the merger on November 1, 2021.
−Removed: The table below summarizes the increase in rental revenue (excluding reimbursable) in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 (dollars in thousands):
−Removed: Six months ended June 30, Increase/(Decrease)
+Added: (4) Relates to the aggregate of (i) rental revenue from properties (292 properties comprising 5,869,312 square feet) that were available for lease during part of 2022 or 2021, and (ii) rental revenue for properties (15 properties comprising 704,665 square feet) under development.
+Added: (5) Primarily consists of lease termination revenue and reimbursements for tenant improvements and rental revenue that is not contractual base rent such as lease termination settlements.
+Added: (6) Amounts for the three months ended September 30, 2021 represent rental revenue from VEREIT properties, which were not included in our financial statements prior to the close of the merger on November 1, 2021.
+Added: The table below summarizes the increase in rental revenue (excluding reimbursable) in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 (dollars in thousands):
+Added: Nine months ended September 30, Increase/(Decrease)
Number of Properties Square Footage (1)
6 unchanged sentences
N/A N/A 21,605 25,754 (4,149)
−Removed: Properties sold prior to 2022 357 8,679,230 2,972 34,240 (31,268)
+Added: Properties sold during and prior to 2022 393 9,587,827 17,442 48,882 (31,440)
Straight-line rent and other non-cash adjustments N/A N/A 15,126 13,925 1,201
3 unchanged sentences
N/A N/A 7,696 7,164 532
−Removed: VEREIT same store rental revenue (6)
+Added: VEREIT rental revenue (6)
N/A N/A — (808,169) 808,169
1 unchanged sentence
(1) Excludes 5,913,131 square feet from properties ground leased to clients and 2,647,226 square feet from properties with no land or building ownership.
−Removed: (2) The same store rental revenue percentage increase for the six months ended June 30, 2022 as compared with the same period in prior year is 3.0%.
−Removed: (3) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of June 30, 2022, of 1.22 GBP/USD.
+Added: (2) The same store rental revenue percentage increase for the nine months ended September 30, 2022 as compared with the same period in prior year is 2.4%.
+Added: (3) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of September 30, 2022, of 1.11 GBP/USD.
None of the properties in Spain met our same store pool definition for the periods presented.
−Removed: (4) Relates to the aggregate of (i) rental revenue from properties (285 properties comprising 5,721,191 square feet) that were available for lease during part of 2022 or 2021, (ii) rental revenue for properties (13 properties comprising 704,617 square feet) under development, and (iii) rental revenue that is not contractual base rent such as lease termination settlements.
−Removed: (5) Primarily consists of lease termination revenue and reimbursements for tenant improvements.
−Removed: (6) Amounts for the six months ended June 30, 2021 represent same store rental revenue from VEREIT properties, which were not included in our financial statements prior to the close of the merger on November 1, 2021.
+Added: (4) Relates to the aggregate of (i) rental revenue from properties (292 properties comprising 5,869,312 square feet) that were available for lease during part of 2022 or 2021, and (ii) rental revenue for properties (15 properties comprising 704,665 square feet) under development.
+Added: (5) Primarily consists of lease termination revenue and reimbursements for tenant improvements and rental revenue that is not contractual base rent such as lease termination settlements.
+Added: (6) Amounts for the nine months ended September 30, 2021 represent rental revenue from VEREIT properties, which were not included in our financial statements prior to the close of the merger on November 1, 2021.
For purposes of determining the same store rent property pool, we include all properties that were owned for the entire year-to-date period, for both the current and prior year, except for properties during the current or prior year that;
7 unchanged sentences
Our calculation of same store rental revenue also includes uncollected rent for which we have not granted a lease concession.
−Removed: If these applicable amounts of rent deferrals and uncollected rent were excluded from our calculation of same store rental revenue, the increases for the three and six months ended June 30, 2022 relative to the comparable periods for 2021 would have been 2.6% and 3.5%, respectively.
−Removed: Of the 11,427 properties in the portfolio at June 30, 2022, 11,289, or 98.8%, are single-client properties and the remaining are multi-client properties.
−Removed: Of the 11,289 single-client properties, 11,158, or 98.8%, were net leased at June 30, 2022.
+Added: If these applicable amounts of rent deferrals and uncollected rent were excluded from our calculation of same store rental revenue, the increases for the three and nine months ended September 30, 2022 relative to the comparable periods for 2021 would have been 0.3% and 2.5%, respectively.
+Added: Of the 11,733 properties in the portfolio at September 30, 2022, 11,587, or 98.8%, are single-client properties and the remaining are multi-client properties.
+Added: Of the 11,587 single-client properties, 11,457, or 98.9%, were net leased at September 30, 2022.
Of the 12,146 in-place leases in the portfolio, which excludes 167 vacant units, 10,306, or 84.9%, were under leases that provide for increases in rents through:
3 unchanged sentences
• A combination of two or more of the above rent provisions.
−Removed: Rent based on a percentage of our client's gross sales, or percentage rent, was $2.2 million in the three months ended June 30, 2022, $596,000 in the three months ended June 30, 2021, $6.0 million in the six months ended June 30, 2022, and $1.6 million in the six months ended June 30, 2021.
+Added: Rent based on a percentage of our client's gross sales, or percentage rent, was $2.3 million in the three months ended September 30, 2022, $441,000 in the three months ended September 30, 2021, $8.3 million in the nine months ended September 30, 2022, and $2.0 million in the nine months ended September 30, 2021.
We anticipate percentage rent to be less than 1% of rental revenue for 2022.
−Removed: At June 30, 2022, our portfolio of 11,427 properties was 98.9% leased with 132 properties available for lease, as compared to 98.5% leased with 164 properties available for lease at December 31, 2021, and 98.5% leased with 103 properties available for lease at June 30, 2021.
+Added: At September 30, 2022, our portfolio of 11,733 properties was 98.9% leased with 131 properties available for lease, as compared to 98.5% leased with 164 properties available for lease at December 31, 2021, and 98.8% leased with 86 properties available for lease at September 30, 2021.
It has been our experience that approximately 1% to 4% of our property portfolio will be available for lease at any given time;
−Removed: however, it is possible that the number of properties available for lease or sale could increase in the future, given the nature of economic cycles and other unforeseen global events, such as the ongoing COVID-19 pandemic and the measures taken to limit its spread.
+Added: however, it is possible that the number of properties available for lease or sale could increase in the future, given the nature of economic cycles and other unforeseen global events, such as the COVID-19 pandemic.
Rental Revenue (reimbursable)
5 unchanged sentences
The following summarizes our total expenses (dollars in thousands):
−Removed: Three months ended June 30, Six months ended June 30, $ Increase/(Decrease)
−Removed: 2022 2021 2022 2021 Three Months Six Months
+Added: Three months ended September 30, Nine months ended September 30, $ Increase/(Decrease)
+Added: 2022 2021 2022 2021 Three Months Nine Months
Depreciation and amortization $ 419,016 $ 198,832 $ 1,232,215 $ 564,606 $ 220,184 $ 667,609
18 unchanged sentences
comprehensive income.
−Removed: Prior to this adjustment, general and administrative expenses as a percentage of total revenue was 4.9% for the six months end June 30, 2021.
−Removed: There was no change for the three months ended June 30, 2021.
+Added: There was no change to the general and administrative expense as a percentage of total revenue prior to this adjustment for the three and nine months ended September 30, 2021.
Depreciation and Amortization
−Removed: The increase in depreciation and amortization for the three and six months ended June 30, 2022, was primarily due to the acquisition of properties in 2021 and the merger with VEREIT.
+Added: The increase in depreciation and amortization for the three and nine months ended September 30, 2022, was primarily due to the acquisition of properties in 2021 and the merger with VEREIT.
As discussed in the sections entitled “Funds from Operations Available to Common Stockholders (FFO) and Normalized Funds from Operations Available to Common Stockholders (Normalized FFO)" and “Adjusted Funds from Operations Available to Common Stockholders (AFFO),” depreciation and amortization is a non-cash item that is added back to net income available to common stockholders for our calculation of FFO, Normalized FFO, and AFFO.
1 unchanged sentence
The following is a summary of the components of our interest expense (dollars in thousands):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
11 unchanged sentences
Average interest rates 3.21 % 3.02 % 3.16 % 3.10 %
−Removed: The increase in interest expense for the three and six months ended June 30, 2022 is primarily due the January 2022 issuance of £500 million in principal of Sterling denominated notes, the issuance of $4.65 billion in principal of notes associated with the exchange offer and assumption of $839.1 million in principal of mortgage debt, both associated with our merger with VEREIT in November 2021, the July 2021 issuance of £750 million in principal of Sterling denominated notes, and higher average balances and rates on the credit facility and commercial paper borrowings, partially offset by the December 2021 early redemption on all $750.0 million in principal of the 4.650% notes due August 2023, and the January 2021 early redemption on all $950.0 million in principal of the 3.250% notes due October 2022.
−Removed: During the six months ended June 30, 2022, the weighted average interest rate on our:
−Removed: • Revolving credit facility outstanding borrowings of $219.1 million was 1.5%;
+Added: The increase in interest expense for the three and nine months ended September 30, 2022 is primarily due to the June 2022 issuance of £600 million in principal of Sterling denominated notes, January 2022 issuance of £500 million in principal of Sterling denominated notes, the issuance of $4.65 billion in principal of notes associated with the exchange offer and assumption of $839.1 million in principal of mortgage debt, both associated with our merger with VEREIT in November 2021, the July 2021 issuance of £750 million in principal of Sterling denominated notes, and higher average balances and rates on the credit facility and commercial paper borrowings, partially offset by the December 2021 early redemption on all $750.0 million in principal of the 4.650% notes due August 2023, and the January 2021 early redemption on all $950.0 million in principal of the 3.250% notes due October 2022.
+Added: During the nine months ended September 30, 2022, the weighted average interest rate on our:
+Added: • Revolving credit facility outstanding borrowings of $1.2 billion was 1.7%;
• Commercial paper outstanding borrowings of $723.8 million was 1.3%;
• Term loan outstanding of $250.0 million (excluding deferred financing costs of $295,000) was swapped to fixed at 3.8%;
−Removed: • Mortgages payable of $928.9 million (excluding net premiums totaling $19.2 million and deferred financing costs of $1.0 million on these mortgages) was 4.8%;
+Added: • Mortgages payable of $840.7 million (excluding net premiums totaling $15.6 million and deferred financing costs of $926,000 on these mortgages) was 4.8%;
• Notes and bonds payable of $13.13 billion (excluding net unamortized original issue premiums of $241.3 million and deferred financing costs of $56.6 million) was 3.3%;
4 unchanged sentences
General portfolio costs include, but are not limited to, insurance, legal, property inspections, and title search fees.
−Removed: At June 30, 2022, 132 properties were available for lease or sale, as compared to 164 at December 31, 2021, and 103 at June 30, 2021.
−Removed: The increase in property expenses (excluding reimbursable) for the three and six months ended June 30, 2022, is primarily due to the increase in portfolio size, resulting in higher utilities, repairs and maintenance and property-related legal expenses.
+Added: At September 30, 2022, 131 properties were available for lease or sale, as compared to 164 at December 31, 2021, and 86 at September 30, 2021.
+Added: The increase in property expenses (excluding reimbursable) for the three and nine months ended September 30, 2022, is primarily due to the increase in portfolio size, resulting in higher utilities, repairs and maintenance and property-related legal expenses.
Property Expenses (reimbursable)
−Removed: The increase in property expenses (reimbursable) for the three and six months ended June 30, 2022, was primarily attributable to our increased portfolio size, which contributed to higher operating expenses as a result of our acquisitions in 2021 and the six months ended June 30, 2022, and an increase in ground lease rent, insurance, and property taxes paid on behalf of our clients.
+Added: The increase in property expenses (reimbursable) for the three and nine months ended September 30, 2022, was primarily attributable to our increased portfolio size, which contributed to higher operating expenses as a result of our acquisitions in 2021 and the nine months ended September 30, 2022, and an increase in ground lease rent, insurance, and property taxes paid on behalf of our clients .
General and Administrative Expenses
General and administrative expenses are expenditures related to the operations of our company, including employee-related costs, professional fees, and other general overhead costs associated with running our business.
−Removed: The increase in general and administrative expenses for the three and six months ended June 30, 2022, is primarily due to higher payroll-related costs and higher corporate-level professional fees, information technology, and corporate occupancy costs associated with the growth of the company, including the merger with VEREIT.
−Removed: At June 30, 2022, the headcount was 380 versus 239 at June 30, 2021.
+Added: The increase in general and administrative expenses for the three and nine months ended September 30, 2022, is primarily due to higher payroll-related costs and higher corporate-level professional fees, information technology, and corporate occupancy costs associated with the growth of the company, including the merger with VEREIT.
+Added: At September 30, 2022, the headcount was 388 versus 257 at September 30, 2021.
Provisions for Impairment
The following table summarizes provisions for impairment during the periods indicated below (dollars in millions):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
7 unchanged sentences
Merger and Integration-Related Costs
−Removed: In conjunction with our merger with VEREIT, we incurred approximately $2.7 million and $9.2 million of merger and integration-related transaction costs during the three and six months ended June 30, 2022, respectively, compared to approximately $13.3 million during the three and six months ended June 30, 2021.
+Added: In conjunction with our merger with VEREIT, we incurred approximately $3.7 million and $13.0 million of merger and integration-related transaction costs during the three and nine months ended September 30, 2022, respectively, compared to approximately $16.8 million and $30.1 million during three and nine months ended September 30, 2021.
Merger and integration-related costs consist of advisory fees, attorney fees, accountant fees, SEC filing fees and additional incremental and non-recurring costs necessary to convert data and systems, retain employees and otherwise enable us to operate the acquired business or assets efficiently.
Gain on Sales of Real Estate
−Removed: The following summarizes our property dispositions (dollars in millions):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: The following summarizes our property dispositions, excluding our proportionate share of net proceeds from the disposition of properties by our consolidated industrial partnerships (dollars in millions):
+Added: Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
2 unchanged sentences
Gain on sales of real estate $ 42.6 $ 12.1 $ 93.4 $ 35.4
−Removed: Foreign Currency and Derivative Gain, Net
+Added: Foreign Currency and Derivative Gains (Losses), Net
We borrow in the functional currencies of the countries in which we invest.
5 unchanged sentences
In June 2022, following the early prepayment of our Sterling-denominated intercompany loan receivable from our consolidated foreign subsidiaries, we terminated the four cross-currency swaps used to hedge the foreign currency exposure of the intercompany loan.
−Removed: As the hedge relationship has been terminated and the future principal and interest associated with the prepaid intercompany loan will not occur, $20.0 million was reclassified from accumulated other comprehensive income, or AOCI, to Foreign currency and derivative gain, net during the three months ended June 30, 2022.
+Added: As the hedge relationship was terminated and the future principal and interest associated with the prepaid intercompany loan will not occur, $20.0 million gain was reclassified from accumulated other comprehensive income, or AOCI, to 'Foreign currency and derivative loss, net' during the nine months ended September 30, 2022.
The reclassification from AOCI was offset by $7.9 million in losses from the intercompany loan remeasurement on the final exchange.
−Removed: Loss on Extinguishment of Debt
+Added: Gain (loss) on extinguishment of debt
+Added: In September 2021, we completed the early redemption on $12.5 million in principal of a mortgage due June 2032, plus accrued and unpaid interest.
+Added: As a result of the early redemption, we recognized a $4.0 million loss on extinguishment of debt for the nine months ended September 30, 2021.
In January 2021, we completed the early redemption on all $950.0 million in principal amount of outstanding 3.250% notes due October 2022, plus accrued and unpaid interest.
−Removed: As a result of the early redemption, we recognized a $46.5 million loss on extinguishment of debt for the six months ended June 30, 2021.
+Added: As a result of the early redemption, we recognized a $46.5 million loss on extinguishment of debt for the nine months ended September 30, 2021.
Equity in Income and Impairment of Investment in Unconsolidated Entities
−Removed: Equity in income of unconsolidated entities for the three and six months ended June 30, 2022, relates to three equity method investments that were acquired in our merger with VEREIT.
−Removed: The loss for the three and six months ended June 30, 2022 is primarily driven by an other than temporary impairment of $7.8 million.
−Removed: There were no comparative investments for the three and six months ended June 30, 2021.
+Added: Equity in income of unconsolidated entities for the three and nine months ended September 30, 2022, relates to three equity method investments that were acquired in our merger with VEREIT.
+Added: The loss for the three and nine months ended September 30, 2022 is primarily driven by an other than temporary impairments.
+Added: There were no comparative investments for the three and nine months ended September 30, 2021.
+Added: During the third quarter of 2022 all seven of the properties owned by our industrial partnerships acquired in connection with the VEREIT merger were sold.
Other Income, Net
Certain miscellaneous non-recurring revenue is included in other income, net.
−Removed: The increase in the three and six months ended June 30, 2022, is primarily related to insurance proceeds received from property losses and other non-recurring settlements.
+Added: The increase in the three and nine months ended September 30, 2022, is primarily related to insurance proceeds received from property losses and other non-recurring settlements.
Income taxes are for city and state income and franchise taxes, and for international income taxes accrued or paid by us and our subsidiaries.
−Removed: The increase in income taxes for the three and six months ended June 30, 2022, was primarily attributable to our increased volume of U.K.
+Added: The increase in income taxes for the three and nine months ended September 30, 2022, was primarily attributable to our increased volume of U.K.
investments, which contributed to higher U.K.
2 unchanged sentences
The following summarizes our net income available to common stockholders (dollars in millions, except per share data):
−Removed: Three months ended June 30, Six months ended June 30, % Increase
−Removed: 2022 2021 2022 2021 Three Months Six Months
+Added: Three months ended September 30, Nine months ended September 30, % Increase
+Added: 2022 2021 2022 2021 Three Months Nine Months
Net income available to common stockholders
4 unchanged sentences
The calculation to determine net income available to common stockholders includes provisions for impairment, gain from the sale of properties, and foreign currency gain and loss, which can vary from period to period based on timing and significantly impact net income available to the Company and available to common stockholders.
−Removed: The increase in net income available to common stockholders for the six months ended June 30, 2022, compared to the six months ended June 30, 2021 primarily related to the increase in the size of our portfolio due to the merger with VEREIT, which closed on November 1, 2021.
−Removed: In addition, net income available to common stockholders for the
−Removed: six months ended June 30, 2021, was impacted by a $46.5 million loss on extinguishment of debt due to the January 2021 early redemption of the 3.250% notes due October 2022.
+Added: The increase in net income available to common stockholders for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021 primarily related to the increase in the size of our portfolio due to the merger with VEREIT, which closed on November 1, 2021.
+Added: In addition, net income available to common stockholders for the nine months ended September 30, 2021, was impacted by the following transactions:
+Added: (i) a $50.5 million loss on extinguishment of debt, primarily due to the January 2021 early redemption of the 3.250% notes due October 2022 recorded in the three months ended March 31, 2021, (ii) $30.1 million of merger-related costs related to our merger with VEREIT, of which $16.8 million related to the three months ended September 30, 2021, and (iii) $31.0 million of provisions for impairment, of which $11.0 million related to the three months ended September 30, 2021.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (Adjusted EBITDA re )
1 unchanged sentence
Our definition of “Adjusted EBITDA re ” is generally consistent with the Nareit definition, other than our adjustments to remove foreign currency and derivative gain and loss, excluding gain and loss from the settlement of foreign currency forwards not designated as hedges, (which is consistent with our previous calculations of "Adjusted EBITDA").
−Removed: We define Adjusted EBITDA re , a non–GAAP financial measure, for the most recent quarter as earnings (net income) before (i) interest expense, including non-cash loss (gain) on swaps, (ii) income and franchise taxes, (iii) gain on extinguishment of debt, (iv) real estate depreciation and amortization, (v) provisions for impairment, (vi) merger and integration-related costs, (vii) gain on sales of real estate, (viii) foreign currency and derivative gain, net (as described in the Adjusted Funds from Operations section), and (ix) our proportionate share of interest expense and real estate depreciation and amortization from unconsolidated entities.
+Added: We define Adjusted EBITDA re , a non–GAAP financial measure, for the most recent quarter as earnings (net income) before (i) interest expense, including non-cash loss (gain) on swaps, (ii) income and franchise taxes, (iii) gain (loss) on extinguishment of debt, (iv) real estate depreciation and amortization, (v) provisions for impairment, (vi) merger and integration-related costs, (vii) gain on sales of real estate, (viii) foreign currency and derivative gain, net (as described in the Adjusted Funds from Operations section), and (ix) equity in income and impairment of investment in unconsolidated entities.
Our Adjusted EBITDA re may not be comparable to Adjusted EBITDA re reported by other companies or as defined by Nareit, and other companies may interpret or define Adjusted EBITDA re differently than we do.
11 unchanged sentences
The following is a reconciliation of net income available to common stockholders (which we believe is the most comparable GAAP measure) to Adjusted EBITDA re and Annualized Pro Forma EBITDA re calculations for the periods indicated below (dollars in thousands):
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Net income $ 220,287 $ 135,276
117,409 76,156
−Removed: Gain on extinguishment of debt (127) —
+Added: (Gain) loss on extinguishment of debt (240) 3,983
Depreciation and amortization
4 unchanged sentences
(42,883) (12,094)
−Removed: Foreign currency and derivative gain, net (7,480) (400)
+Added: Foreign currency and derivative losses, net 22,893 2,374
Gain on settlement of foreign currency forwards 2,784 —
−Removed: Proportionate share of adjustments for unconsolidated entities 9,049 —
+Added: Equity in income and impairment of investment in unconsolidated entities 662 —
Quarterly Adjusted EBITDA re
3 unchanged sentences
Annualized Pro Forma Adjustments $ 31,700 $ 43,910
−Removed: $ 55,756 $ 42,118
Annualized Pro Forma Adjusted EBITDA re
1 unchanged sentence
Total debt per the consolidated balance sheets, excluding deferred financing costs and net premiums and discounts $ 16,142,608 $ 9,293,592
−Removed: Proportionate share for unconsolidated entities debt, excluding deferred financing costs 86,006 —
Cash and cash equivalents (187,745) (516,983)
5 unchanged sentences
(3) During 2021, Net Debt was adjusted to exclude deferred financing costs and net premiums and discounts.
−Removed: The adjustment of Net Debt did not impact the calculation for the three months ended June 30, 2021.
+Added: The adjustment of Net Debt did not impact the calculation for the Net Debt/Annualized Adjusted EBITDA re for the three months ended September 30, 2021.
As described above, the Annualized Pro Forma Adjustments, which includes transaction accounting adjustments in accordance with U.S.
1 unchanged sentence
The following table summarizes our Annualized Pro Forma Adjusted EBITDA re calculation for the periods indicated below:
−Removed: Three months ended June 30,
+Added: Three months ended September 30,
Dollars in thousands 2022 2021
7 unchanged sentences
We define diluted FFO and diluted normalized FFO as FFO and normalized FFO adjusted for dilutive noncontrolling interests.
−Removed: Three months ended June 30, Six months ended June 30, % Increase
−Removed: 2022 2021 2022 2021 Three Months Six Months
+Added: Three months ended September 30, Nine months ended September 30, % Increase
+Added: 2022 2021 2022 2021 Three Months Nine Months
FFO available to common stockholders
7 unchanged sentences
(1) All per share amounts are presented on a diluted per common share basis.
−Removed: FFO and Normalized FFO for the three and six months ended June 30, 2022 and 2021 were impacted by the same transactions listed under "Net Income Available To Common Stockholders" on page 40.
+Added: FFO and Normalized FFO for the three and nine months ended September 30, 2022 and 2021 were impacted by the same transactions listed under "Net Income Available to Common Stockholders" on pages 55-56, with the exception of provisions for impairment, which do not impact FFO and Normalized FFO.
The following is a reconciliation of net income available to common stockholders (which we believe is the most comparable GAAP measure) to FFO and Normalized FFO.
Also presented is information regarding distributions paid to common stockholders and the weighted average number of common shares used for the basic and diluted computation per share (dollars in thousands, except per share amounts):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
1 unchanged sentence
Depreciation and amortization 419,016 198,832 1,232,215 564,606
−Removed: 409,437 187,789 813,199 365,774
Depreciation of furniture, fixtures and equipment (511) (230) (1,478) (674)
Provisions for impairment 1,650 11,011 16,379 30,977
−Removed: 7,691 17,246 14,729 19,966
Gain on sales of real estate (42,883) (12,094) (93,611) (35,396)
−Removed: (40,572) (14,901) (50,728) (23,302)
Proportionate share of adjustments for unconsolidated entities (1)
2 unchanged sentences
FFO available to common stockholders $ 597,154 $ 332,335 $ 1,807,385 $ 914,417
−Removed: $ 608,815 $ 314,375 $ 1,210,231 $ 582,082
FFO allocable to dilutive noncontrolling interests 985 356 2,569 1,062
1 unchanged sentence
FFO available to common stockholders $ 597,154 $ 332,335 $ 1,807,385 $ 914,417
−Removed: $ 608,815 $ 314,375 $ 1,210,231 $ 582,082
Merger and integration-related costs 3,746 16,783 12,994 30,081
5 unchanged sentences
Distributions paid to common stockholders $ 458,586 $ 273,791 $ 1,342,695 $ 797,847
−Removed: $ 445,829 $ 263,358 $ 884,109 $ 524,056
FFO available to common stockholders in excess of distributions paid to common stockholders $ 138,568 $ 58,544 $ 464,690 $ 116,570
3 unchanged sentences
Diluted 619,201,363 392,513,520 605,958,422 379,872,546
−Removed: (1) Includes an other than temporary impairment of $7.8 million on our investment in unconsolidated entities recognized in the three and six months ended June 30, 2022.
+Added: (1) Includes an other than temporary impairment of $0.7 million and $8.5 million recognized during the three and nine months ended September 30, 2022, respectively, on our investment in unconsolidated entities, all of which were sold as of September 30, 2022.
We consider FFO and Normalized FFO to be appropriate supplemental measures of a REIT’s operating performance as they are based on a net income analysis of property portfolio performance that adds back items such as depreciation and impairments for FFO, and adds back merger and integration-related costs, for Normalized FFO.
5 unchanged sentences
We define diluted AFFO as AFFO adjusted for dilutive noncontrolling interests.
−Removed: Three months ended June 30, Six months ended June 30, % Increase
−Removed: 2022 2021 2022 2021 Three months Six months
+Added: Three months ended September 30, Nine months ended September 30, % Increase
+Added: 2022 2021 2022 2021 Three months Nine months
AFFO available to common stockholders
8 unchanged sentences
Also presented is information regarding distributions paid to common stockholders and the weighted average number of common shares used for the basic and diluted computation per share (dollars in thousands, except per share amounts):
−Removed: Three months ended June 30, Six months ended June 30,
+Added: Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
12 unchanged sentences
Recurring capital expenditures (273) (365) (459) (415)
−Removed: Straight-line rent (27,554) (11,004) (55,376) (21,467)
+Added: Straight-line rent and expenses, net (29,628) (14,801) (85,004) (36,268)
Amortization of above and below-market leases, net 17,422 10,312 47,466 23,546
5 unchanged sentences
Diluted AFFO $ 604,572 $ 357,188 $ 1,770,005 $ 1,003,753
−Removed: AFFO per common share:
−Removed: Basic $ 0.97 $ 0.88 $ 1.95 $ 1.73
−Removed: Diluted $ 0.97 $ 0.88 $ 1.94 $ 1.73
+Added: AFFO per common share, basic and diluted $ 0.98 $ 0.91 $ 2.92 $ 2.64
Distributions paid to common stockholders $ 458,586 $ 273,791 $ 1,342,695 $ 797,847
9 unchanged sentences
In June 2022, we terminated the four cross-currency swaps subject to this adjustment.
−Removed: The three and six months ended June 30, 2022 include the adjustment through the termination date.
+Added: The nine months ended September 30, 2022 includes the adjustment through the termination date.
(4) Includes adjustments allocable to noncontrolling interests, obligations related to financing lease liabilities, mark-to-market adjustments on investments and derivatives that do not qualify for hedge accounting, and foreign currency gain and loss as a result of intercompany debt and remeasurement transactions.
7 unchanged sentences
PROPERTY PORTFOLIO INFORMATION
−Removed: At June 30, 2022, we owned a diversified portfolio:
+Added: At September 30, 2022, we owned a diversified portfolio:
• Consisting of 11,733 properties;
7 unchanged sentences
approximately 13,100 square feet per retail property and approximately 235,790 square feet per industrial property.
−Removed: (1) Excludes four properties with ancillary leases only, such as cell towers and billboards, of which one was vacant.
−Removed: At June 30, 2022, 11,295 properties were leased under net lease agreements.
+Added: (1) Excludes four properties with ancillary leases only, such as cell towers and billboards.
+Added: At September 30, 2022, 11,602 properties were leased under net lease agreements.
A net lease typically requires the client to be responsible for monthly rent and certain property operating expenses including property taxes, insurance, and maintenance.
17 unchanged sentences
Health and fitness 4.7 4.7 6.7 7.0 7.1
−Removed: General merchandise 3.8 3.7 3.4 2.5 2.1
Automotive service 3.9 3.2 2.7 2.6 2.2
+Added: General merchandise 3.9 3.7 3.4 2.5 2.1
(1) The presentation of Top 10 Industry Concentrations combines total portfolio contractual rent from the U.S.
1 unchanged sentence
Property Type Composition
−Removed: The following table sets forth certain property type information regarding our property portfolio as of June 30, 2022 (dollars in thousands):
+Added: The following table sets forth certain property type information regarding our property portfolio as of September 30, 2022 (dollars in thousands):
Property Type
6 unchanged sentences
(1) Includes leasable building square footage.
−Removed: Excludes 3,600 acres of leased land categorized as agriculture at June 30, 2022.
−Removed: (2) "Other" includes seven properties classified as office, consisting of approximately 2.0 million leasable square feet and $25.2 million in annualized contractual rent, and 16 properties classified as agriculture, consisting of approximately 191,200 leasable square feet and $28.6 million in annualized contractual rent.
+Added: Excludes 1,610 acres of leased land categorized as agriculture at September 30, 2022.
+Added: (2) "Other" includes eight properties classified as office, consisting of approximately 2.0 million leasable square feet and $25.6 million in annualized contractual rent, and 11 properties classified as agriculture, consisting of approximately 157,300 leasable square feet and $23.0 million in annualized contractual rent.
Client Diversification
−Removed: The following table sets forth the 20 largest clients in our property portfolio, expressed as a percentage of total portfolio annualized contractual rent, which does not give effect to deferred rent, at June 30, 2022:
+Added: The following table sets forth the 20 largest clients in our property portfolio, expressed as a percentage of total portfolio annualized contractual rent, which does not give effect to deferred rent, at September 30, 2022:
Client Number of
Percentage of Total Portfolio Annualized Contractual Rent (1)
−Removed: Walgreens 340 4.0 %
Dollar General 1,438 4.2 %
+Added: Walgreens 341 3.9
7-Eleven 632 3.8
1 unchanged sentence
LA Fitness 76 2.3
−Removed: Sainsbury's 27 2.1
BJ's Wholesale Clubs 33 1.9
+Added: Sainsbury's 27 1.8
B&Q (Kingfisher) 36 1.7
CVS Pharmacy 183 1.7
+Added: Lifetime Fitness 21 1.7
Wal-Mart / Sam's Club 66 1.7
−Removed: AMC Theatres 35 1.6
+Added: AMC Theaters 35 1.6
Red Lobster 200 1.5
1 unchanged sentence
Tractor Supply 165 1.4
−Removed: Lifetime Fitness 16 1.3
Home Depot 29 1.2
2 unchanged sentences
Total 4,768 41.3 %
+Added: (1) Amounts for each client are calculated independently;
+Added: therefore, the individual percentages may not sum to the total.
Lease Expirations
−Removed: The following table sets forth certain information regarding the timing of the lease term expirations in our portfolio (excluding rights to extend a lease at the option of the client) and their contribution to total portfolio annualized contractual rent as of June 30, 2022 (dollars in thousands):
+Added: The following table sets forth certain information regarding the timing of the lease term expirations in our portfolio (excluding rights to extend a lease at the option of the client) and their contribution to total portfolio annualized contractual rent as of September 30, 2022 (dollars in thousands):
Total Portfolio (1)
20 unchanged sentences
Geographic Diversification
−Removed: The following table sets forth certain state-by-state information regarding our property portfolio as of June 30, 2022 (dollars in thousands):
+Added: The following table sets forth certain state-by-state information regarding our property portfolio as of September 30, 2022 (dollars in thousands):
Percent Leased
51 unchanged sentences
Puerto Rico 6 100 59,400 0.1
−Removed: Spain 43 100 2,492,000 0.7
United Kingdom 203 100 17,868,700 9.0
+Added: Spain 52 100 % 3,960,100 1.0
Totals/average
21 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.