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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-23 · 357 added, 423 removed, 347 unchanged (69% of the section changed)

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We invest in people and places to deliver dependable monthly dividends that increase over time.

We are structured as a real estate investment trust ("REIT") requiring us annually to distribute at least 90% of our taxable income (excluding net capital gains) in the form of dividends to our stockholders.

We are structured as a REIT requiring us annually to distribute at least 90% of our taxable income (excluding net capital gains) in the form of dividends to our stockholders.

The monthly dividends are supported by the cash flow generated from real estate owned under long-term net lease agreements with our commercial clients.

Realty Income was founded in 1969, and listed on the New York Stock Exchange ("NYSE":

Realty Income was founded in 1969, and listed on the NYSE under the ticker symbol "O" in 1994.

Over the past 54 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.

At December 31, 2021, we owned a diversified portfolio:

• Consisting of 11,136 properties;

• With an occupancy rate of 98.5%, or 10,972 properties leased and 164 properties available for lease or sale;

• With clients doing business in 60 separate industries;

• Located in all 50 U.S.

states, Puerto Rico, the United Kingdom (U.K.) and Spain;

• With approximately 210.1 million square feet of leasable space;

• With a weighted average remaining lease term (excluding rights to extend a lease at the option of our client) of approximately 9.0 years;

• With an average leasable space per property of approximately 18,860 square feet, approximately 12,470 square feet per retail property and approximately 248,120 square feet per industrial property.

At December 31, 2022, our diversified portfolio consisted of:

• Owned or held interests in 12,237 properties;

• An occupancy rate of 99.0%, or 12,111 properties leased and 126 properties available for lease or sale;

• Clients doing business in 84 separate industries;

• Locations in all 50 U.S.

states, Puerto Rico, the U.K., Spain, and Italy;

• Approximately 236.8 million square feet of leasable space;

• A weighted average remaining lease term (excluding rights to extend a lease at the option of our client) of approximately 9.5 years;

• An average leasable space per property of approximately 19,350 square feet, approximately 13,000 square feet per retail property and approximately 234,100 square feet per industrial property.

Of the 12,237 properties in the portfolio at December 31, 2022, 12,018, or 98.2%, are single-client properties, of which 11,894 were leased, and the remaining are multi-client properties.

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 $104.9 million, $79.4 million and $69.1 million for 2021, 2020 and 2019, respectively.

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 $184.7 million, $104.9 million and $79.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

In addition, references to reserves recorded as a reduction of rental revenue include amounts reserved for in the current period, as well as unrecognized contractual revenue and unrecognized straight-line rental revenue for leases accounted for on a cash basis.

References to reserve reversals recorded as increases to rental revenue include amounts where the accounting for recognition of rental revenue and straight-line rental revenue has been moved from the cash to the accrual basis.

LIQUIDITY AND CAPITAL RESOURCES

Capital Philosophy

Historically, we have met our long-term capital needs by issuing common stock, long-term unsecured notes and bonds, term loans under our revolving credit facility, and preferred stock.

Our goal is to deliver dependable monthly dividends to our shareholders that increase over time.

Historically, we have met our principal short-term and long-term capital needs, including the funding of high-quality real estate

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acquisitions, property development, and capital expenditures, by issuing common stock, preferred stock, long-term unsecured notes and term loan borrowings.

Over the long term, we believe that common stock should be the majority of our capital structure.

however, we may also raise funds from debt or other equity securities.

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.

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.

We may issue common stock when we believe our share price is at a level that allows for the proceeds of an offering to be accretively invested into additional properties or to permanently finance properties that were initially financed by our revolving credit facility, commercial paper programs, or shorter-term 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.

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.

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 under our revolving credit facility, short-term term loans, and under our commercial paper programs, and through public securities offerings.

As of December 31, 2022, there are approximately $2.0 billion of obligations becoming due during 2023, which we expect to fund through a combination of the following:

• Cash and cash equivalents;

• Future cash flows from operations;

• Issuances of common stock or debt;

• Additional borrowings under our revolving credit facility (after deducting outstanding 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.

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Therefore, we seek to maintain a conservative debt level on our balance sheet and solid interest and fixed charge coverage ratios.

At December 31, 2021, our total outstanding borrowings of senior unsecured notes and bonds, term loan, mortgages payable, credit facility borrowings, commercial paper, and our proportionate share of outstanding borrowings by unconsolidated entities were $15.26 billion, or approximately 26.5% of our total market capitalization of $57.66 billion.

At December 31, 2022, our total outstanding borrowings of senior unsecured notes and bonds, $250.0 million term loan, mortgages payable, revolving credit facility and commercial paper were $17.9 billion, or approximately 29.9% of our total market capitalization of $59.9 billion.

We define our total market capitalization at December 31, 2022, as the sum of:

• Shares of our common stock outstanding of 660,300,195, plus total common units outstanding of 1,795,167, multiplied by the last reported sales price of our common stock on the NYSE of $63.43 per share on December 31, 2022, or $42.0 billion;

• Outstanding borrowings of $650.0 million on our revolving credit facility;

• Outstanding borrowings of $901.4 million on our commercial paper program;

• Outstanding mortgages payable of $1.11 billion, excluding net mortgage premiums of $28.7 million and deferred financing costs of $790,000;

• Outstanding borrowings of $250.0 million on our term loan, excluding deferred financing costs of $443,000;

• Outstanding borrowings of $2.0 billion on our revolving credit facility, comprised of €1.8 billion Euro and £70.0 million Sterling borrowings;

• Outstanding borrowings of $701.8 million on our commercial paper programs, including €361.0 million of Euro-denominated borrowings;

• Outstanding mortgages payable of $842.3 million, excluding net mortgage premiums of $12.4 million and deferred financing costs of $0.8 million;

• Outstanding borrowings on our $250.0 million term loan, excluding deferred financing costs of $0.2 million;

• Outstanding senior unsecured notes and bonds of $14.1 billion, including Sterling-denominated notes of £2.57 billion, and excluding unamortized net premiums of $224.6 million and deferred financing costs of $60.7 million.

• Our proportionate share of outstanding debt from unconsolidated entities of $86.0 million, excluding deferred financing costs of $1.8 million.

Universal Shelf Registration

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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.

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.

We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if

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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.

At-the-Market ("ATM") Program

Under our "at-the-market" equity distribution plan, or our ATM program, up to 69,088,433 shares of common stock may be offered and sold (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.

During 2021, we issued 46,290,540 shares and raised approximately $3.21 billion of gross proceeds under the ATM program.

At December 31, 2021, we had 29,387,491 shares remaining for future issuance under our ATM program.

Equity Capital Raising

Under our ATM program, up to 120,000,000 shares of common stock may be offered and sold (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, at prices related to prevailing market prices or at negotiated prices or by any other methods permitted by applicable law.

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.

During the year ended December 31, 2022, we issued 68,608,176 shares and raised approximately $4.6 billion of net proceeds under the ATM programs.

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.

As of December 31, 2022, there were 6,744,884 shares of common stock subject to forward sale agreements through our ATM program, with a weighted average initial price of $63.31 per share, representing approximately $0.4 billion in estimated net 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), which have been executed but not settled.

The weighted average forward price at December 31, 2022 was $62.59 per share, after price deduction and adjustments.

After deducting the 6,744,884 shares sold pursuant to forward sale confirmations that remained outstanding as of December 31, 2022, we had 70,620,121 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.

Issuance of Common Stock in Conjunction with our Merger with VEREIT

On November 1, 2021, we completed our acquisition of VEREIT.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of VEREIT common stock and each common unit of VEREIT OP (other than those held by VEREIT, us or our affiliates) was converted into 0.705 shares of Realty Income common stock.

As a result of the merger, former VEREIT common stockholders, VEREIT OP common unitholders and awardees of vested share awards separated from Realty Income received approximately 162 million shares of Realty Income common stock, based on the shares of VEREIT common stock and common units of VEREIT OP outstanding as of October 29, 2021.

Issuances of Common Stock in Underwritten Public Offerings

In July 2021, we issued 9,200,000 shares of common stock, inclusive of 1,200,000 shares purchased by the underwriters upon the exercise of their option to purchase additional shares.

After deducting underwriting discounts of $2.9 million, the net proceeds of $594.1 million were used to repay borrowings under our $1.0 billion commercial paper program, to fund investment opportunities and for other general corporate purposes.

In January 2021, we issued 12,075,000 shares of common stock, inclusive of 1,575,000 shares purchased by the underwriters upon the exercise of their option to purchase additional shares.

After deducting underwriting discounts of $19.3 million, the net proceeds of $669.6 million were used to fund property acquisitions and for general corporate purposes, and working capital.

Dividend Reinvestment and Stock Purchase Plan

Our Dividend Reinvestment and Stock Purchase Plan, or our DRSPP, provides our common stockholders, as well as new investors, with a convenient and economical method of purchasing our common stock and reinvesting their distributions.

Our Dividend Reinvestment and Stock Purchase Plan, (our "DRSPP"), provides our common stockholders, as well as new investors, with a convenient and economical method of purchasing our common stock and reinvesting their distributions.

Our DRSPP also allows our current stockholders to buy additional shares of common stock by reinvesting all or a portion of their distributions.

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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.

We did not issue shares under the waiver approval process during 2021.

During 2021, we issued 168,000 shares and raised approximately $11.2 million under our DRSPP.

We did not issue shares under the waiver approval process during the year ended December 31, 2022.

During the year ended December 31, 2022, we issued 175,554 shares and raised approximately $11.7 million under our DRSPP.

At December 31, 2022, we had 11,159,825 shares remaining for future issuance under our DRSPP program.

Revolving Credit Facility and Commercial Paper Program

We have a $3.0 billion unsecured revolving credit facility with an initial term that expires in March 2023 and includes, at our option, two six-month extensions.

The multicurrency revolving facility allows us to borrow in up to 14 currencies, including U.S.

Our revolving credit facility has a $1.0 billion expansion option, which is subject to obtaining lender commitments.

Under our revolving credit facility, our investment grade credit ratings as of December 31, 2021 provide for financing at the London Interbank Offered Rate ("LIBOR") plus 0.775% with a facility commitment fee of 0.125%, for all-in pricing of 0.90% over LIBOR.

Our revolving credit facility and term loan facility were amended in December 2021 to include provisions for establishing alternative reference rates when LIBOR is no longer available.

There were no issuances of common stock in underwritten public offerings during the year ended December 31, 2022.

Revolving Credit Facility

We have a $4.25 billion unsecured revolving multicurrency credit facility that matures in June 2026, includes two six-month extensions that can be exercised at our option and allows us to borrow in up to 14 currencies, including U.S.

Our revolving credit facility also has a $1.0 billion expansion feature, which is subject to obtaining lender commitments.

Under our revolving credit facility, our current investment grade credit ratings provide for financing on USD borrowings 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, British Pound Sterling 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, and Euro Borrowings at one-month Euro Interbank Offered Rate (“EURIBOR”), plus 0.725%, and a revolving credit facility fee of 0.125%, for all-in pricing of 0.85% over one-month EURIBOR.

The borrowing rate is subject to an interest rate floor and may change if our investment grade credit ratings change.

We also have other interest rate options available to us under our credit facility.

We also have other interest rate options available to us in different currencies.

Our credit facility is unsecured and accordingly, we have not pledged any assets as collateral for this obligation .

At December 31, 2021, we had a borrowing capacity of $2.35 billion available on our revolving credit facility and an outstanding balance of $650.0 million.

The weighted average interest rate on borrowings under our revolving credit facility during 2021 was 0.9% per annum.

We must comply with various financial and other covenants in our credit facility.

At December 31, 2021, we were in compliance with these covenants.

At December 31, 2022, we had a borrowing capacity of $2.2 billion available on our revolving credit facility (subject to customary conditions to borrowings) and an outstanding balance of $2.0 billion, comprised of €1.8 billion Euro and £70.0 million Sterling borrowings.

The weighted average interest rate on borrowings under our revolving credit facility during the year ended December 31, 2022, was 1.8% per annum.

Our revolving credit facility is subject to various leverage and interest coverage ration limitations, as at December 31, 2022, we were in compliance with

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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.

We have a U.S.

dollar-denominated unsecured commercial paper program.

Under the terms of the program, we may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding of $1.0 billion.

Borrowings under this program generally mature in one year or less.

At December 31, 2021, we had an outstanding balance of $901.4 million.

The weighted average interest rate on borrowings under our commercial paper program was 0.2% for 2021.

We use our $3.0 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper program.

The commercial paper borrowings generally carry a term of less than six months.

The commercial paper borrowings outstanding at December 31, 2021 mature between January 2022 and April 2022.

Commercial Paper Programs

During July 2022, our USD-denominated unsecured commercial paper program was amended to increase the maximum aggregate amount of outstanding notes from $1.0 billion to $1.5 billion.

We also established a 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.

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.

At December 31, 2022, we had an outstanding balance of $701.8 million, including €361.0 million of Euro-denominated borrowings.

The weighted average interest rate on borrowings under our commercial paper programs was 1.6% for the year ended December 31, 2022.

The commercial paper borrowings outstanding at December 31, 2022 have matured and will mature between January 2023 and February 2023.

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.

We generally use our credit facility and commercial paper borrowings for the short-term financing of new property acquisitions.

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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.

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.

In October 2018, in conjunction with entering into our revolving credit facility, we entered into a $250.0 million senior unsecured term loan, which matures in March 2024, and is governed by the credit agreement that governs our revolving credit facility.

Borrowing under this term loan bears interest at the current one-month LIBOR, plus 0.85%.

In conjunction with this term loan, we also entered into an interest rate swap which effectively fixes our per annum interest on this term loan at 3.89%.

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.

On January 6, 2023 we entered into the Term Loan Agreement governing our term loan, pursuant to which we borrowed an aggregate of approximately $1.0 billion in multicurrency borrowings, including $90.0 million, £705.0 million and €85.0 million in outstanding borrowings.

The Term Loan Agreement also permits us to incur additional term loans, up to an aggregate of $1.5 billion in total borrowings.

The Term Loans initially mature in January 2024 and include two 12-month maturity extensions that can be exercised at the company's option.

Our A3/A- credit ratings provide for a borrowing rate of 80 basis points over the applicable benchmark rate, which includes adjusted SOFR for USD-denominated loans, adjusted SONIA for Sterling-denominated loans, and EURIBOR for Euro-denominated loans.

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.

Prior to April 2022, borrowing under this term loan bore interest at the current one-month London Inter-Bank Offered Rate (“LIBOR”), plus 0.85%.

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.

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.

As of December 31, 2022, the effective interest rate on this term loan, after giving effect to the interest rate swap, was 3.83%.

Mortgage Debt

As of December 31, 2021, we had $1.11 billion of mortgages payable, the majority of which were assumed in connection with our property acquisitions, including ten mortgages from our merger with VEREIT in 2021 totaling $839.1 million and a Sterling-denominated mortgage payable of £31.0 million.

Additionally, at December 31, 2021, we had net premiums totaling $28.7 million on these mortgages and deferred financing costs of $790,000.

As of December 31, 2022, we had $842.3 million of mortgages payable, of which £30.7 million related to a Sterling-denominated mortgage.

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 year ended December 31, 2022.

At December 31, 2022, we had net premiums totaling $12.4 million on these mortgages and deferred financing costs of $0.8 million.

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.

During 2021, we made $66.6 million of principal payments, including the repayment of seven mortgages in full for $63.0 million.

During the year ended December 31, 2022, we made $312.2 million in principal payments, including the repayment of 12 mortgages in full for $308.0 million.

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.

At December 31, 2022, we were in compliance with these covenants.

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Notes Outstanding

Our senior unsecured note and bond obligations consist of the following as of December 31, 2021, sorted by maturity date (in millions):

Principal Amount (Currency Denomination) Carrying Value (USD) As of December 31, 2021

4.600% notes, $500 issued February 2014, of which $485 was exchanged in November 2021, both due in February 2024 (1)

3.875% notes, issued in June 2014 and due in July 2024 $ 350 350

3.875% notes, issued in April 2018 and due in April 2025 $ 500 500

4.625% notes, $550 issued October 2018, of which $544 was exchanged in November 2021, both due in November 2025 (1)

0.750% notes, issued December 2020 and due in March 2026 $ 325 325

4.875% notes, $600 issued June 2016, of which $596 was exchanged in November 2021, both due in June 2026 (1)

4.125% notes, $250 issued in September 2014 and $400 issued in March 2017, both due in October 2026 $ 650 650

3.000% notes, issued in October 2016 and due in January 2027 $ 600 600

1.125% notes, issued in July 2021 and due in July 2027 £ 400 541

3.950% notes, $600 issued August 2017, of which $594 was exchanged in November 2021, both due in August 2027 (1)

3.650% notes, issued in December 2017 and due in January 2028 $ 550 550

3.400% notes, $600 issued June 2020, of which $598 was exchanged in November 2021, both due in January 2028 (1)

2.200% notes, $500 issued November 2020, of which $497 was exchanged in November 2021, both due in June 2028 (1)

3.250% notes, issued in June 2019 and due in June 2029 $ 500 500

3.100% notes, $600 issued December 2019, of which $596 was exchanged in November 2021, both due in December 2029 (1)

1.625% notes, issued in October 2020 and due December 2030 £ 400 541

3.250% notes, $600 issued in May 2020 and $350 issued in July 2020, both due in January 2031 $ 950 950

2.850% notes, $700 issued November 2020, of which $699 was exchanged in November 2021, both due in December 2032 (1)

1.800% notes, issued in December 2020 and due in March 2033 $ 400 400

1.750% notes, issued in July 2021 and due in July 2033 £ 350 474

2.730% notes, issued in May 2019 and due in May 2034 £ 315 427

5.875% bonds, $100 issued in March 2005 and $150 issued in June 2011, both due in March 2035 $ 250 250

4.650% notes, $300 issued in March 2017 and $250 issued in December 2017, both due in March 2047 $ 550 550

Total principal amount $ 12,257

Unamortized net premiums and deferred financing costs 243

(1) In connection with our merger with VEREIT, we completed our debt exchange offer to exchange all outstanding notes issued by VEREIT OP on November 9, 2021 for new notes issued by Realty Income, pursuant to which approximately 99.2% of the outstanding notes issued by VEREIT OP were exchanged for a like aggregate principal amount of the notes issued by Realty Income.

Prior to the completion of our merger with VEREIT on November 1, 2021, these notes were not the obligation of Realty Income.

With respect to the notes originally issued by VEREIT OP that remained outstanding, we amended the indenture governing such notes to, among other things, eliminate substantially all of the restrictive covenants in such indenture.

In January 2022, we issued £250.0 million of 1.875% senior unsecured notes due January 2027 (the "January 2027 Notes") and £250.0 million of 2.500% senior unsecured notes due January 2042 (the "January 2042 Notes").

The public offering price for the January 2027 Notes was 99.487% of the principal amount, for an effective semi-annual yield to maturity of 1.974%, and the public offering price for the January 2042 Notes was 98.445% of the principal amount, for an effective semi-annual yield to maturity of 2.584%.

Combined, the new issues of the January 2027 Notes and the January 2042 Notes have a weighted average term of approximately 12.5 years and a weighted average effective semi-annual yield to maturity of approximately 2.28%.

In December 2021, we completed the early redemption on all $750.0 million in principal amount of our outstanding 4.650% notes due August 2023, plus accrued and unpaid interest.

As of December 31, 2022, our senior unsecured note and bond obligations had a total principal amount of $14.1 billion, including Sterling- denominated notes of £2.57 billion, and excluding net unamortized premiums of $224.6 million and deferred financing costs of $60.7 million.

Notes Payable to our consolidated financial statements for the full list of senior unsecured notes and bonds, by maturity date.

The following table summarizes the maturity of our notes and bonds payable as of December 31, 2022, excluding net unamortized premiums of $224.6 million and deferred financing costs of $60.7 million (dollars in millions):

Year of Maturity

Thereafter 8,656

During the year ended December 31, 2022, we issued the following notes and bonds (in millions):

2021 Issuances Date of Issuance Maturity Date Principal amount used Price of par value Effective yield to maturity

July 2021 July 2027 £ 400 99.31 % 1.24 %

July 2021 July 2033 £ 350 99.84 % 1.76 %

4.600% notes (1)

November 2021 February 2024 $ 485 100.00 % 4.60 %

4.625% notes (1)

November 2021 November 2025 $ 544 100.00 % 4.63 %

4.875% notes (1)

November 2021 June 2026 $ 596 100.00 % 4.88 %

3.950% notes (1)

November 2021 August 2027 $ 594 100.00 % 3.95 %

3.400% notes (1)

November 2021 January 2028 $ 598 100.00 % 3.40 %

2.200% notes (1)

November 2021 June 2028 $ 497 100.00 % 2.20 %

3.100% notes (1)

November 2021 December 2029 $ 596 100.00 % 3.10 %

2.850% notes (1)

November 2021 December 2032 $ 699 100.00 % 2.85 %

We issued $1,000 principal amount of Realty Notes for each validly tendered VEREIT Notes with $1,000 principal amount.

For this reason, we denote our “Price of par value” as 100%.

Prior to the completion of our merger with VEREIT on November 1, 2021, these notes were not the obligation of Realty Income.

We intend to allocate an equal amount of the net proceeds from the July 2021 Sterling-denominated offering of 1.125% notes due July 2027 of £400.0 million (the "July 2027 Notes"), which approximated $546.3 million, and the July 2021 Sterling-denominated offering of 1.750% notes due July 2033 of £350.0 million (the "July 2033 Notes"), which approximated $480.6 million, as converted at the applicable exchange rate on the closing of the offerings, to finance or refinance, in whole or in part, new or existing eligible green projects in the categories outlined in our Green Financing Framework, which is designed to align with the International Capital Markets Association ("ICMA") Green Bond Principles 2021.

Pending the allocation of an amount equal to the net proceeds from the offering of the notes to eligible green projects, we may temporarily use all or a portion of the net proceeds to repay any outstanding indebtedness or for liability management activities, or invest such net proceeds in accordance with our cash investment policy.

2022 Issuances

Date of Issuance Maturity Date Principal amount used Price of par value Effective yield to maturity

January 2022 January 2027 £ 250 99.487 % 1.974 %

January 2022 January 2042 £ 250 98.445 % 2.584 %

June 2022 June 2030 £ 140 100.000 % 3.160 %

June 2022 June 2032 £ 345 100.000 % 3.180 %

June 2022 June 2037 £ 115 100.000 % 3.390 %

October 2022 October 2032 $ 750 99.879 % 5.641 %

In January 2023, we issued $500 million of 5.05% senior unsecured notes due January 2026 and $600 million of 4.85% senior unsecured notes due March 2030.

See Note 19, Subsequent Events to our consolidated financial statements.

All of our outstanding notes and bonds have fixed interest rates and contain various covenants, with which we remained in compliance as of December 31, 2022.

Additionally, with the exception of our £400.0 million of 1.625% senior unsecured notes issued in October 2020, our January 2027 Notes, our July 2027 Notes, our July 2033 Notes, and our January 2042 Notes, in each case where interest is paid annually, interest on our remaining senior unsecured note and bond obligations is paid semiannually.

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.

Interest on our remaining senior unsecured note and bond obligations is paid semiannually.

The following is a summary of the key financial covenants for our senior unsecured notes, as defined and calculated per the terms of our senior notes and bonds.

These calculations, which are not based on U.S.

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.

GAAP, 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.

The actual amounts as of December 31, 2022, are:

Note Covenants Required Actual

Limitation on incurrence of total debt < 60% of adjusted assets

Limitation on incurrence of secured debt < 40% of adjusted assets

Note Covenants

Limitation on incurrence of total debt

< 60% of adjusted assets

Limitation on incurrence of secured debt

< 40% of adjusted assets

Debt service coverage (trailing 12 months) (1)

Maintenance of total unencumbered assets > 150% of unsecured debt

Maintenance of total unencumbered assets

> 150% of unsecured debt

(1) Our debt service coverage ratio is calculated on a pro forma basis for the preceding four-quarter period on the assumptions that:

(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 January 1, 2022 and subject to certain additional adjustments.

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 January 1, 2021, nor does it purport to reflect our debt service coverage ratio for any future period.

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 January 1, 2022, nor does it purport to reflect our debt service coverage ratio for any

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future period.

The following is our calculation of debt service and fixed charge coverage at December 31, 2022 (in thousands, for trailing twelve months):

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interest expense, excluding the amortization of deferred financing costs

loss on extinguishment of debt 97,178

gain on extinguishment of debt

provision for taxes

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We intend to retain an appropriate amount of cash as working capital.

At December 31, 2021, we had cash and cash equivalents totaling $258.6 million, inclusive of £105.1 million Sterling and €7.2 million Euro.

At December 31, 2022, we had cash and cash equivalents totaling $171.1 million, inclusive of £74.3 million denominated in Sterling and €17.8 million denominated in 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.

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.

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

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Moody's Investors Service has assigned a rating of P-2 and Standard & Poor's Ratings Group has assigned a rating of A-2.

Based on our ratings as of December 31, 2021, the facility interest rate was LIBOR, plus 0.775% with a facility commitment fee of 0.125%, for all-in drawn pricing of 0.90% over LIBOR.

Our credit facility provides that the interest rate can range between:

(i) LIBOR, plus 1.45% if our credit rating is lower than BBB-/Baa3 or our senior unsecured debt is unrated and (ii) LIBOR, plus 0.75% if our credit rating is A/A2 or higher.

Based on our credit agency ratings as of December 31, 2022, interest rates under our new credit facility for U.S.

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, 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, and for Euro Borrowings at one-month Euro Interbank Offered Rate (“EURIBOR”), plus 0.725%, and a revolving credit facility fee of 0.125%, for all-in pricing of 0.85% over one-month EURIBOR.

In addition, our new credit facility provides that the interest rates can range between:

(i) SOFR/SONIA/EURIBOR, plus 1.40% if our credit rating is lower than BBB-/Baa3 or our senior unsecured debt is unrated and (ii) SOFR/SONIA/EURIBOR, plus 0.70% if our credit rating is A/A2 or higher.

In addition, our credit facility provides for a facility commitment fee based on our credit ratings, which range from:

(i) 0.30% for a rating lower than BBB-/Baa3 or unrated, and (ii) 0.10% for a credit rating of A/A2 or higher .

Our revolving credit facility and term loan facility were amended in December 2021 to include provisions for establishing alternative reference rates when LIBOR is no longer available.

We also issue senior debt securities from time to time and our credit ratings can impact the interest rates charged in those transactions.

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Moreover, a rating is not a recommendation to buy, sell or hold our debt securities, preferred stock or common stock.

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Table of Obligations

The following table summarizes the maturity of each of our obligations as of December 31, 2021 (in millions):

Maturity Credit

Facility and Commercial Paper Program (1)

and Bonds (2)

Ground Leases

Paid by Realty

Ground Leases

The following table summarizes the maturity of each of our obligations as of December 31, 2022 (dollars in millions):

Year due Credit Facility and Commercial Paper Programs (1)

Senior Unsecured Notes and

$250.0 million Term

Leases Paid by

Realty Income (6)

Leases Paid by

Our Clients (7)

2023 $ 701.8 $ — $ — $ 22.0 $ 591.5 $ 10.6 $ 31.2 $ 607.4 $ 1,964.5

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Totals $ 2,729.0 $ 14,114.2 $ 250.0 $ 842.3 $ 3,933.1 $ 349.1 $ 411.9 $ 628.0 $ 23,257.6

(1) The initial term of the credit facility expires in March 2023 and includes, at our option, two six-month extensions.

At December 31, 2021 , there were $650.0 million in borrowings under our revolving credit facility.

The commercial paper borrowings outstanding at December 31, 2021 totaled $901.4 million and mature between January 2022 and April 2022.

(2) Excludes both non–cash net premiums recorded on notes payable of $295.5 million and deferred financing costs of $53.1 million.

The table of obligations also excludes the January 2022 issuances of £250.0 million of senior unsecured notes due January 2027 and £250.0 million of senior unsecured notes due January 2042.

(3) Excludes deferred financing costs of $443,000.

(4) Excludes both non–cash net premiums recorded on the mortgages payable of $28.7 million and deferred financing costs of $790,000.

(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.

Excludes interest from the January 2022 issuances of £250.0 million of 1.875% senior unsecured notes due January 2027 and £250.0 million of 2.500% senior unsecured notes due January 2042.

(6) Realty Income currently pays the ground lessors directly for the rent under the ground leases.

(1) The initial term of the credit facility expires in June 2026 and includes, at our option, two six-month extensions.

At December 31, 2022, there were $2.0 billion borrowings under our revolving credit facility.

Commercial paper programs outstanding at December 31, 2022 were $701.8 million, which have matured and will mature between January 2023 and February 2023.

(2) Excludes non-cash net premiums recorded on notes payable of $224.6 million and deferred financing costs of $60.7 million.

The table of obligations also excludes the January 2023 issuances of $500.0 million of senior unsecured notes due January 2026, which are callable at par on January 13, 2024, and $600.0 million of senior unsecured notes due March 2030, which are callable at par on January 15, 2030.

(3) Excludes deferred financing costs of $0.2 million as well as the approximately $1.0 billion multicurrency unsecured term loan entered into in January 2023.

(4) Excludes both non-cash net premiums recorded on the mortgages payable of $12.4 million and deferred financing costs of $0.8 million.

(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.

Excludes interest on the multicurrency term loan entered into January 2023 for approximately$1.0 billion, which matures January 2024, as well as on our January 2023 issuances of $500 million of senior unsecured notes, which are callable at par on January 13, 2024, and $600 million of senior unsecured notes due March 2030.

(6) We currently pay the ground lessors directly for the rent under the ground leases.

(7) Our clients, who are generally sub-clients under ground leases, are responsible for paying the rent under these ground leases.

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(8) “Other” consists of $606.3 million of commitments under construction contracts, and $21.7 million for re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

Our credit facility, commercial paper program, term loan, and notes payable obligations are unsecured.

Our credit facility, commercial paper programs, term loans, and notes payable obligations are unsecured.

Accordingly, we have not pledged any assets as collateral for these obligations.

Unconsolidated Investments

As a result of our merger with VEREIT, we assumed an equity method investment in three unconsolidated entities.

We are responsible to fund our proportionate share of any operating cash deficits.

There are no further material commitments related to these investments at this time.

The debt held by the unconsolidated entities is secured by its properties, though is non-recourse to us.

Impact of Real Estate and Credit Markets

In the commercial real estate market, property prices generally continue to fluctuate.

Likewise, during certain periods, including the current market, the global credit markets have experienced significant price volatility, dislocations, and liquidity disruptions, which may impact our access to and cost of capital.

We continually monitor the commercial real estate and global credit markets carefully and, if required, will make decisions to adjust our business strategy accordingly.

Acquisitions During 2021

Below is a listing of our acquisitions in the U.S.

and Europe for the year ended December 31, 2021 (excludes properties assumed on November 1, 2021 in conjunction with our merger with VEREIT):

Number of Properties Leasable Square Feet Investment

($ in thousands) Weighted Average Lease Term (Years) Initial Weighted Average Cash Lease Yield (1)

Year ended December 31, 2021 (2)

Acquisitions - U.S.

(in 43 states)

714 14,727,335 $ 3,608,573 14.1 5.5 %

Acquisitions - Europe (U.K.

129 9,196,345 2,558,909 11.6 5.5 %

Total Acquisitions 843 23,923,680 $ 6,167,482 13.1 5.5 %

Properties under Development (3)

68 2,681,676 243,278 15.7 6.0 %

911 26,605,356 $ 6,410,760 13.2 5.5 %

(1) The initial weighted average cash lease yield for a property is generally computed as estimated contractual first year cash net operating income, which, in the case of a net leased property, is equal to the aggregate cash base rent for the first full year of each lease, divided by the total cost of the property.

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.

Contractual net operating income used in the calculation of initial average cash yield includes approximately $8.5 million received as settlement credits for 41 properties as reimbursement of free rent periods for the year ended December 31, 2021.

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.

When the lease does not provide for a fixed rate of return on a property under development or expansion, the initial weighted average cash lease yield is computed as follows:

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.

(2) None of our investments during 2021 caused any one client to be 10% or more of our total assets at December 31, 2021.

(3) Includes £7.0 million of investments in U.K.

development properties, converted at the applicable exchange rates on the funding dates.

(4) Our clients occupying the new properties are 83.6% retail and 16.4% industrial, based on rental revenue.

Approximately 40% of the rental revenue generated from acquisitions during 2021 is from our investment grade rated clients, their subsidiaries or affiliated companies.

Portfolio Discussion

Leasing Results

At December 31, 2021, we had 164 properties available for lease out of 11,136 properties in our portfolio, which represents a 98.5% occupancy rate based on the number of properties in our portfolio.

Below is a summary of our portfolio activity for the periods indicated below:

Three months ended December 31, 2021

Properties available for lease at September 30, 2021

Lease expirations (1)(2)

Re-leases to same client (210)

Re-leases to new client (13)

Vacant dispositions (53)

Properties available for lease at December 31, 2021

Year ended December 31, 2021

Properties available for lease at December 31, 2020

Lease expirations (1)(2)

Re-leases to same client (336)

Re-leases to new client (36)

Vacant dispositions (133)

Properties available for lease at December 31, 2021

(1) Includes 103 net vacancies assumed from the combined effect of our merger with VEREIT and spin-off of office properties to Orion Office REIT Inc.

in November 2021.

(2) Includes scheduled and unscheduled expirations (including leases rejected in bankruptcy), as well as future expirations resolved in the periods indicated above.

During the three months ended December 31, 2021, the annual new rent on re-leases was $49.09 million, as compared to the previous annual rent of $48.22 million on the same units, representing a rent recapture rate of 101.8% on the units re-leased.

We re-leased six units to new clients without a period of vacancy, and nine units to new clients after a period of vacancy.

During the year ended December 31, 2021, the annual new rent on re-leases was $89.23 million, as compared to the previous annual rent of $86.29 million on the same units, representing a rent recapture rate of 103.4% on the units re-leased.

We re-leased 13 units to new clients without a period of vacancy, and 33 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.

At December 31, 2021, our average annualized contractual rent was approximately $14.03 per square foot on the 10,972 leased properties in our portfolio.

At December 31, 2021, we classified 33 properties, with a carrying amount of $30.5 million, as real estate and lease intangibles held for sale, net on our balance sheet.

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.

Investments in Existing Properties

During 2021, we capitalized costs of $21.9 million on existing properties in our portfolio, consisting of $6.3 million for re-leasing costs, $978,000 for recurring capital expenditures, and $14.6 million for non-recurring building improvements.

In comparison, during 2020, we capitalized costs of $7.0 million on existing properties in our portfolio, consisting of $1.8 million for re-leasing costs, $198,000 for recurring capital expenditures, and $5.0 million for non-recurring building improvements.

The majority of our building improvements relate to roof repairs, HVAC improvements, and parking lot resurfacing and replacements.

The amounts of our capital expenditures can vary significantly, depending on the rental market, credit worthiness of our clients, the lease term and the willingness of our clients to pay higher rental revenue over the terms of the leases.

We define recurring capital expenditures as mandatory and recurring landlord capital expenditure obligations that have a limited useful life.

We define non-recurring capital expenditures as property improvements in which we invest additional capital that extend the useful life of the properties.

Increases in Monthly Dividends to Common Stockholders

We have continued our 53-year policy of paying monthly dividends.

In addition, we increased the dividend five times during 2021 and once during 2022.

As of February 2022, we have paid 97 consecutive quarterly dividend increases and increased the dividend 114 times since our listing on the NYSE in 1994.

Month Month Monthly Dividend Increase

2021 Dividend increases

Declared Paid per share per share

1st increase Dec 2020 Jan 2021 $ 0.2345 $ 0.0005

2nd increase Mar 2021 Apr 2021 $ 0.2350 $ 0.0005

3rd increase Jun 2021 Jul 2021 $ 0.2355 $ 0.0005

4th increase Sept 2021 Oct 2021 $ 0.2360 $ 0.0005

5th increase Nov 2021 Dec 2021 $ 0.2460 $ 0.0100

2022 Dividend Increases

1st increase Dec 2021 Jan 2022 $ 0.2465 $ 0.0005

The dividends paid per share during 2021 totaled $2.833, as compared to $2.794 during 2020, an increase of $0.039, or 1.4%.

In November 2021, we also made a $2.060 tax distribution of Orion shares, that occurred in conjunction with the Orion Divestiture on November 12, 2021, after our merger with VEREIT on November 1, 2021.

The fair market value of these shares for tax distribution was determined to be $20.6272 per share, which was calculated using the five day volume weighted average share price after issuance.

The monthly dividend of $0.2465 per share represents a current annualized dividend of $2.958 per share, and an annualized dividend yield of approximately 4.1% based on the last reported sale price of our common stock on the NYSE of $71.59 on December 31, 2021.

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.

As a result of our VEREIT merger, we assumed an equity method investment in three unconsolidated entities.

In 2022, all seven assets owned by our industrial partnerships acquired in connection with the VEREIT merger were sold.

The gross purchase price for the properties was $905.0 million and we collected $114.0 million of net proceeds (after mortgage defeasance and closing costs) to date, representing our proportionate share of partnership distributions.

Up until the point of sale of these properties, we were responsible for funding our proportionate share of any operating cash deficits pursuant to the governance documents of the applicable entities.

There are no further material commitments related to those investments.

RESULTS OF OPERATIONS

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with GAAP, and are the basis for our discussion and analysis of financial condition and results of operations.

Our consolidated financial statements have been prepared in accordance with U.S.

GAAP and are the basis for our discussion and analysis of financial condition and results of operations.

Preparing our consolidated financial statements requires us to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements.

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However, actual results may differ from these estimates and assumptions.

This summary should be read in conjunction with the more complete discussion of our accounting policies and procedures included in note 2 to our consolidated financial statements.

In order to prepare our consolidated financial statements according to the rules and guidelines set forth by GAAP, many subjective judgments must be made with regard to critical accounting policies.

This summary should be read in conjunction with the more complete discussion of our accounting policies and procedures included in note 2, Summary of Significant Accounting Policies and Procedures and New Accounting Standards , to our consolidated financial statements in this Annual Report on Form 10-K for the year ended December 31, 2022.

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In order to prepare our consolidated financial statements according to the rules and guidelines set forth by U.S.

GAAP, many subjective judgments must be made with regard to critical accounting policies.

Management must make significant assumptions in determining the fair value of assets acquired and liabilities assumed.

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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.

When assessing the collectability of future lease payments, one of the key factors we have considered during 2020 and 2021 has been the COVID-19 pandemic.

We generally assess collectability based on an analysis of creditworthiness, economic trends, and other facts and circumstances related to our applicable clients.

If the collection of substantially all of the future lease payments is less than probable, we will write-off the receivable balances associated with the lease and cease to recognize lease income, including straight-line rent, unless cash is received when due.

Unless otherwise specified, references to reserves recorded as a reduction of rental revenue include amounts reserved for in the current period, as well as unrecognized contractual rental revenue and unrecognized straight-line rental revenue for leases accounted for on a cash basis.

During 2021, we have entered into rent deferral agreements with certain clients, allowing them to pay rent to us over an extended time period for COVID-related receivables.

Additionally, gradual improvements in certain client's financial positions have allowed us to re-assess, and potentially change, this cash basis accounting for outstanding receivables.

As of December 31, 2021, other than the information related to the reserves we have recorded to such date, we do not have any further client specific information that would change our assessment that collection of substantially all of the future lease payments under our existing leases is probable.

However, there may be impacts in future periods that could change this assessment as the situation continues to evolve and as more information becomes available.

The COVID-19 pandemic and the measures taken to limit its spread are negatively impacting the economy across many industries, including the industries in which some of our clients operate.

These impacts may continue and increase in severity as the duration or extent of the pandemic increases, which may, in turn, adversely impact the fair value estimates of our real estate and require the recording of impairments on our properties.

As a result, we evaluated certain key assumptions involving fair value estimates of our real estate, recording of impairments on our properties and collectability of our accounts receivable for our clients.

Due to more positive trends, we did not have to record any provisions for impairment on our theater properties during 2021.

However, we continue to evaluate the

potential impacts of the COVID-19 pandemic and the measures taken to limit its spread on our business and industry segments, as the situation continues to evolve and more information becomes available.

The following is a comparison of our results of operations for the years ended December 31, 2022, 2021 and 2020.

Total Revenue

The following summarizes our total revenue (in thousands):

The following summarizes our total revenue (dollars in thousands):

Years ended December 31, Increase

2022 2021 2020 2022

Rental (excluding reimbursable)

$ 3,114,975 $ 1,960,107 $ 1,560,171 $ 1,154,868 $ 399,936

Rental (reimbursable)

Other 15,505 7,554 3,345 7,951 4,209

184,682 104,851 79,362 $ 79,831 $ 25,489

44,024 15,505 7,554 $ 28,519 $ 7,951

Total revenue

$ 3,343,681 $ 2,080,463 $ 1,647,087 $ 1,263,218 $ 433,376

The increase in total revenue primarily relates to the merger with VEREIT and acquisitions for the years ended December 31, 2022 and 2021 .

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Rental Revenue (excluding reimbursable)

The table below summarizes the increase in rental revenue (excluding reimbursable) in 2021 compared to 2020 (dollars in thousands):

Year Ended December 31, Increase/(Decrease)

The table below summarizes our rental revenue (excluding reimbursable, dollars in thousands):

Years ended December 31, Increase/(Decrease)

Number of Properties Square Footage (1)

$ Change % Change

2022 2021 $ Change

Properties acquired during 2022 & 2021 2,314 53,632,497 $ 550,676 $ 134,652 $ 416,024

4,953 105,839,422 $ 413,546 $ 51,951 $ 361,595 696.0 %

Same store rental revenue (2)

9,615 167,391,055 2,453,030 2,410,302 42,728

Orion Divestiture (3)

92 10,093,123 430 154,444 (154,014)

Constant currency adjustment (4)

N/A N/A 4,483 18,020 (13,537)

Properties sold during 2021 & 2020

283 5,930,654 6,668 21,919 (15,251) (69.6) %

Properties sold during and prior to 2022 426 9,771,221 18,465 57,659 (39,194)

Straight-line rent and other non-cash adjustments N/A N/A 20,778 20,711 67

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308 7,257,983 55,903 52,341 3,562

Other excluded revenue (6)

N/A N/A 11,210 10,551 659

VEREIT rental revenue (7)

N/A N/A — (898,573) 898,573

Totals $ 3,114,975 $ 1,960,107 $ 1,154,868

(1) Excludes 5,909,738 square feet from properties ground leased to clients and 2,654,136 square feet from properties with no land or building ownership.

(2) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of December 31, 2021 of 1.35 GBP/USD.

None of the properties in Spain met our same store pool definition for the periods presented.

In addition, the same store pool excludes properties assumed on November 1, 2021 as a result of our merger with VEREIT.

(3) Relates to the aggregate of (i) rental revenue from properties (128 properties comprising 2,292,635 square feet) that were available for lease during part of 2021 or 2020, (ii) rental revenue for properties (nine properties comprising 357,605 square feet) under development, and (iii) rental revenue that is not contractual base rent such as lease termination settlements.

(2) The same store rental revenue percentage increase for the year ended December 31, 2022 as compared with the same period in the prior year is 1.8%.

(3) Following of the closing of our merger with VEREIT, we contributed 92 office real estate assets, a consolidated real estate venture holding one office asset, and an unconsolidated real estate venture holding five office assets to a wholly owned subsidiary named Orion Office REIT Inc.

On November 12, 2021, we distributed the outstanding shares of Orion common stock to our shareholders (including legacy VEREIT stockholders who received shares of our common stock in our merger with VEREIT) on a pro rata basis at a rate of one share of Orion common stock for every ten shares of Realty Income common stock held on November 12, 2021, the applicable record date, which we refer to as the Orion Divestiture.

(4) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of December 31, 2022, of 1.20 British Pound Sterling ("GBP")/USD.

None of the properties in Spain or Italy met our same store pool definition for the periods presented.

(5) Relates to the aggregate of (i) rental revenue from properties (292 properties comprising 6,552,442 square feet) that were available for lease during part of 2022 or 2021, and (ii) rental revenue for properties (16 properties comprising 705,541 square feet) under development or completed developments that do not meet our same store pool definition for the periods presented.

(6) Primarily consists of reimbursements for tenant improvements and rental revenue that is not contractual base rent such as lease termination settlements.

(7) Amounts for the year ended December 31, 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.

The table below summarizes the increase in rental revenue (excluding reimbursable) in 2021 compared to 2020 (dollars in thousands):

Year Ended December 31, Increase/(Decrease)

Number of Properties Square Footage 2020 2019 $ Change % Change

Years Ended December 31, Increase/(Decrease)

Number of Properties Square Footage (1)

2021 2020 $ Change

Properties acquired during 2021 & 2020

4,953 105,839,422 $ 413,546 $ 51,951 $ 361,595

Same store rental revenue (2)

Properties sold during 2020 & 2019 221 4,234,228 6,567 22,389 (15,822) (70.7) %

6,046 93,607,451 1,457,648 1,418,502 39,146

Orion Divestiture 92 10,074,923 45,047 50,401 (5,354)

Constant currency adjustment (3)

N/A N/A 2,025 (2,861) 4,886

Properties sold during and prior to 2021

283 5,930,654 6,668 21,919 (15,251)

Straight-line rent and other non-cash adjustments N/A N/A 11,646 (3,587) 15,233

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137 2,650,240 11,296 14,422 (3,126)

Other excluded revenue (5)

N/A N/A 12,231 9,424 2,807

Totals $ 1,960,107 $ 1,560,171 $ 399,936

(1) Relates to the aggregate of (i) rental revenue from properties (174 properties comprising 2,973,551 square feet) that were available for lease during part of 2020 or 2019, (ii) rental revenue for properties (six properties comprising 943,004 square feet) under development, and (iii) lease termination settlements.

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(1) Excludes 5,869,364 square feet from properties ground leased to clients and 2,100,990 square feet from properties with no land or building ownership.

(2) The same store rental revenue percentage increase for the year ended December 31, 2021 as compared with the same period in the

prior year is 2.8%.

(3) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of December 31, 2021 of 1.35 GBP/USD.

None of the properties in Spain met our same store pool definition for the periods presented.

In addition, the same store pool excludes properties assumed on November 1, 2021 as a result of our merger with VEREIT.

(4) Relates to the aggregate of (i) rental revenue from properties (128 properties comprising 2,292,635 square feet) that were available for lease during part of 2021 or 2020, (ii) rental revenue for properties (nine properties comprising 357,605 square feet) under development or completed developments that do not meet our same store pool definition for the periods presented.

(5) Primarily consists of reimbursements for tenant improvements and rental revenue that is not contractual base rent such as lease termination settlements.

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;

(i) were vacant at any time, (ii) were under development or redevelopment, or (iii) were involved in eminent domain and rent was reduced.

Beginning with the first quarter of 2022, properties acquired through the merger with VEREIT were considered under each element of our same store pool criterion, except for the requirement that the property be owned for the full comparative period.

If the property was owned by VEREIT for the full comparative period and each of the other criteria were met, the property was included in our same store property pool.

Each of the exclusions from the same store pool are separately addressed within the applicable sentences above, explaining the changes in rental revenue for the period.

Our calculation of same store rental revenue includes rent deferred for future payment as a result of lease concessions we granted in response to the COVID-19 pandemic and recognized under the practical expedient provided by the Financial Accounting Standards Board (FASB).

Same store rental revenue in 2021 was negatively impacted by net reserves recorded as reductions of rental revenue of $6.6 million, compared to $32.9 million in 2020.

Same store rental revenue in 2020 was negatively impacted by net reserves recorded as reductions of rental revenue of $39.9 million compared to $1.4 million in 2019.

Our calculation of same store rental revenue also includes uncollected rent for which we have not granted a lease concession.

If these applicable amounts of rent deferrals and uncollected rent were excluded from our calculation of same store rental revenue, the increase for 2021 relative to 2020 would have been 7.7%.

Rental revenue was negatively impacted by rent reserves during 2021 and 2020, primarily due to the COVID-19 pandemic, particularly with respect to the ongoing disruption to the theater industry.

As the COVID-19 pandemic did not affect our rent collections until April 2020, there was no related impact for the three months ended March 31, 2020.

The following table summarizes reserves recorded as a reduction of rental revenue (in millions):

Year ended December 31,

2021 2020 2019

Rental revenue reserves $ 10.2 $ 44.1 $ 1.4

Straight-line rent reserves 4.5 8.4 1.5

Total rental revenue reserves $ 14.7 $ 52.5 $ 2.9

If these applicable amounts of rent deferrals and uncollected rent were excluded from our calculation of same store rental revenue, the increases for 2022 relative to 2021 and 2021 relative to 2020 would have been 2.3% and 7.7%, respectively.

Of the 12,237 properties in the portfolio at December 31, 2022, 12,018, or 98.2%, are single-client properties and the remaining are multi-client properties.

Of the 12,018 single-client properties, 11,894, or 99.0%, were net leased at December 31, 2022.

Of the 11,236 in-place leases in the portfolio, which excludes 208 vacant units, 9,639 or 85.8% were under leases that provide for increases in rental revenue through:

Of the 12,797 in-place leases in the portfolio, which excludes 181 vacant units, 10,835, or 84.7%, were under leases that provide for increases in rents through:

• Base rent increases tied to inflation (typically subject to ceilings);

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• A combination of two or more of the above rent provisions.

Percentage rent, which is included in rental revenue, was $6.5 million in 2021, $5.1 million in 2020, and $8.0 million in 2019.

Percentage rent in 2021 was less than 1% of rental revenue and we anticipate percentage rent to be less than 1% of rental revenue in 2022.

Rent based on a percentage of our client's gross sales, or percentage rent, was $14.9 million, $6.5 million and $5.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Percentage rent represents less than 1% of rental revenue.

At December 31, 2022, our portfolio of 12,237 properties was 99.0% leased with 126 properties available for lease, as compared to 98.5% leased with 164 properties available for lease at December 31, 2021.

It has been our experience that approximately 1% to 4% of our property portfolio will be unleased at any given time;

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.

It has been our experience that approximately 1% to 4% of our property portfolio will be available for lease at any given time;

Rental Revenue (reimbursable)

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Other revenue primarily relates to interest income recognized on financing receivables for certain leases with above-market terms.

The increases in 2021 and 2020 are due to additional leases with above-market terms, which is proportional to overall portfolio growth.

The increases in the periods presented are due to additional leases with above-market terms, which is proportional to overall portfolio growth.

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Total Expenses

The following summarizes our total expenses (dollars in thousands):

Increase (Decrease)

Years ended December 31, Increase/(Decrease)

2022 2021 2020 2022

Depreciation and amortization $ 1,670,389 $ 897,835 $ 677,038 $ 772,554 $ 220,797

Interest 323,644 309,336 290,991 14,308 18,345

465,223 323,644 309,336 141,579 14,308

Property (excluding reimbursable) 41,648 28,754 25,241 12,894 3,513

Property (reimbursable)

184,682 104,851 79,362 79,831 25,489

General and administrative (2)

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Provisions for impairment

25,860 38,967 147,232 (13,107) (108,265)

Merger and integration-related costs 13,897 167,413 — (153,516) 167,413

Total expenses

$ 2,540,158 $ 1,658,444 $ 1,311,424 $ 881,714 $ 347,020

Total revenue (1)

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1.3 % 1.5 % 1.6 %

(1) In 2021, we began presenting 'Income taxes,' which was previously presented in 'Expenses,' below a newly captioned subtotal for 'Income before income taxes' within our consolidated statements of income and comprehensive income.

Prior year amounts have been reclassified to conform to the current year presentation.

(1) Excludes rental revenue (reimbursable).

(2) General and administrative expenses for 2020 included an executive severance charge related to the departure of our former Chief Financial Officer ("CFO") in March 2020.

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In order to present a normalized calculation of our general and administrative expenses as a percentage of total revenue for 2020, we have excluded this executive severance charge to arrive at a normalized general and administrative amount of $69.8 million which was used for our calculation.

(3) Excludes rental revenue (reimbursable).

Total revenue for 2020 and 2019 was updated to reflect the reclassification of certain miscellaneous non-recurring revenue from other revenue to other income, net in the consolidated statements of income and comprehensive income.

Depreciation and Amortization

The increase in depreciation and amortization in 2021 and 2020 was primarily due to the acquisition of properties in 2021 and 2020, which was partially offset by property sales in those same periods.

The increase in depreciation and amortization is primarily due to the acquisition of properties in 2022 and 2021, which was partially offset by property sales in those same periods.

The 2021 acquisition volume was primarily driven by 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.

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Interest Expense

The following is a summary of the components of our interest expense (dollars in thousands):

Years ended December 31,

2022 2021 2020

Interest on our credit facility, commercial paper, term loans, notes, mortgages and interest rate swaps $ 320,370 $ 293,879 $ 277,802

Interest on our credit facility, commercial paper, $250.0 million term loan, notes, mortgages and interest rate swaps

$ 523,384 $ 320,370 $ 293,879

Credit facility commitment fees 4,908 3,801 3,812

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Capital lease obligation 1,464 646 311

Interest on deferred financing leases 9 — —

Interest expense $ 465,223 $ 323,644 $ 309,336

Credit facility, commercial paper, term loans, mortgages and notes

Credit facility, commercial paper, $250.0 million term loan, mortgages and notes

Average outstanding balances (dollars in thousands) $ 16,460,928 $ 10,024,343 $ 8,240,829

Average interest rates 3.15 % 3.11 % 3.48 %

The increase in interest expense from 2020 to 2021 is primarily due to the issuance of $4.65 billion of notes associated with the exchange offer in conjunction with our merger with VEREIT in November 2021, the issuance of senior unsecured notes during 2020 and 2021 outside of our merger with VEREIT, which included aggregate totals of $1.68 billion in principal of USD denominated notes and £1.15 billion in principal of Sterling denominated notes, partially offset by the early redemptions during 2021 and 2020 of $1.2 billion of notes, increases in amortization of net note and mortgage premiums, and lower average balances on our credit facility and commercial paper borrowings.

The increase in interest expense from 2019 to 2020 is primarily due to the October 2020 issuance of our 1.625% notes due 2030, May and July 2020 issuances of our 2031 Notes, the May 2019 issuance of our 2.730% notes due 2034, the June 2019 issuance of our 3.250% notes due 2029, and higher interest related to mortgages assumed during December 2019, partially offset by the January 2020 repayment of our 5.750% notes due January 2021, the June 2020 repayment of one of our $250.0 million term loans, and lower average interest rates.

For the year ended December 31, 2021, the weighted average interest rate on our:

• Revolving credit facility outstanding borrowings of $650.0 million, was 0.9%

The increase in interest expense for the year ended December 31, 2022 is primarily due to the following:

(i) the October 2022 issuance of $750.0 million in principal of notes, (ii) the June 2022 issuance of £600 million in principal of Sterling-denominated notes, (iii) the January 2022 issuance of £500 million in principal of Sterling-denominated notes, (iv) 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, and (v) the July 2021 issuance of £750 million in principal of Sterling-denominated notes, as well as higher average balances and interest 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.

The increase in interest expense for the year ended December 31, 2021 is primarily due to the issuance of $4.65 billion in principal of notes associated with our merger with VEREIT as discussed above, the issuance of senior unsecured notes during 2020 and 2021 outside of our merger with VEREIT, which included aggregate totals of $1.68 billion in principal of USD-denominated notes and £1.15 billion in principal of Sterling-denominated notes, partially offset by the early redemptions during 2021 and 2020 of $1.2 billion of notes, increases in amortization of net note and mortgage premiums, and lower average balances on our credit facility and commercial paper borrowings.

During the year ended December 31, 2022, the weighted average interest rate on our:

• Revolving credit facility outstanding borrowings of $2.0 billion was 1.8%;

• Commercial paper outstanding borrowings of $701.8 million was 1.6%;

• Term loan outstanding of $250.0 million (excluding deferred financing costs of $443,000) was swapped to fixed at 3.9%;

• Mortgages payable of $1.11 billion (excluding net premiums totaling $28.7 million and deferred financing costs of $790,000 on these mortgages) was 4.7%;

• Notes and bonds payable of $12.26 billion (excluding unamortized net premiums of $295.5 million and deferred financing costs of $53.1 million) was 3.3%.

• Term loan outstanding of $250.0 million (excluding deferred financing costs of $0.2 million) was swapped to fixed at 3.8%;

• Mortgages payable of $842.3 million (excluding net premiums totaling $12.4 million and deferred financing costs of $0.8 million on these mortgages) was 4.8%;

• Notes and bonds payable of $14.1 billion (excluding net unamortized original issue premiums of $224.6 million and deferred financing costs of $60.7 million) was 3.3%;

• Notes, bonds, mortgages, $250.0 million term loan, and credit facility and commercial paper borrowings of $17.9 billion (excluding all net premiums and deferred financing costs) was 3.15%.

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Property Expenses (excluding reimbursable)

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At December 31, 2022, 126 properties were available for lease or sale, as compared to 164 at December 31, 2021, and 140 at December 31, 2020.

The increase in property expenses (excluding reimbursable) in 2021 is primarily due to the increase in portfolio size, resulting in higher utilities, repairs and maintenance, property-related legal expenses, property taxes, and reserves for contractually obligated reimbursements by our clients.

The increase in property expenses in 2020 relative to 2019 is primarily due to reserves for contractually obligated reimbursements by our clients, an increase in repairs and maintenance expense, and an increase in portfolio size and the number of vacant properties at year-end.

The increase in property expenses (excluding reimbursable) for the years ended December 31, 2022 and 2021 is primarily due to the increase in portfolio size, resulting in higher utilities, repairs and maintenance, property-related legal expenses, property taxes, insurance expenses and reserves for contractually obligated reimbursements by our clients.

Property Expenses (reimbursable)

The increase in property expenses (reimbursable) in both 2021 and 2020 was primarily attributable to our increased portfolio size, which contributed to higher operating expenses as a result of our acquisitions in 2021 and 2020, and an increase in property taxes paid on behalf of our clients.

The increase in property expenses (reimbursable) for the years ended December 31, 2022 and 2021, is primarily attributable to our increased portfolio size, which contributed to higher operating expenses as a result of our acquisitions during the years ended December 31, 2022 and 2021, 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.

The increase in general and administrative expenses for 2021 is primarily due to higher payroll-related costs and higher corporate-level professional fees.

The increase in general and administrative expenses for 2020 was primarily due to a severance charge of $3.5 million for our former CFO, who departed the company in March 2020, higher payroll-related costs, and higher corporate–level professional fees, partially offset by lower costs for terminated acquisitions and travel.

The increase in general and administrative expenses for the year ended December 31, 2022 is primarily due to higher payroll-related costs, corporate-level professional fees, corporate occupancy costs, and information technology costs associated with the growth of the company, including the merger with VEREIT.

The increase in general and administrative expenses for 2021 is primarily due to higher payroll-related costs and corporate-level professional fees.

Provisions for Impairment

The following table summarizes provisions for impairment during the periods indicated below (dollars in millions):

Year Ended December 31,

Years ended December 31,

2022 2021 2020

Carrying value prior to impairment $ 140.9 $ 169.2 $ 260.8

total provisions for impairment (25.9) (39.0) (147.2)

Number of properties:

Classified as held for sale 16 1 —

Classified as held for investment 11 34 3

Sold 76 64 48

During 2020, we identified the impact of the COVID-19 pandemic as an impairment triggering event for properties occupied by certain of our clients experiencing difficulties meeting their lease obligations to us.

Carrying value after impairment $ 115.0 $ 130.2 $ 113.6

The impairments for the years ended December 31, 2022 and 2021 primarily relate to properties sold, in the process of being sold, or vacant.

We identify the impact of the COVID-19 pandemic as an impairment triggering event for properties occupied by certain of our clients experiencing difficulties meeting their lease obligations to us.

After considering the impacts of the COVID-19 pandemic on the key assumptions, we determined that the carrying values of 38 properties classified as held for investment for the year ended December 31, 2020 were not recoverable.

As a result, we recorded provisions for impairment of $105.0 million for the year ended December 31, 2020 on the applicable properties impacted by the COVID-19 pandemic.

Of the provisions for impairment recorded during 2020 for properties impacted by the COVID-19 pandemic, a total of 13 assets occupied by certain of our clients in the theater industry were impaired for $83.8 million, which reduced the carrying value of the properties from $123.4 million to their estimated fair value of $39.6 million.

Impairments recorded on other properties during the year ended December 31, 2020 totaled $42.2 million.

Merger and Integration-Related Costs

In conjunction with our merger with VEREIT and Orion Divestiture, we incurred approximately $167.4 million of merger and integration-related transaction costs during 2021.

The merger and integration-related costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees, SEC filing fees and additional integration costs that include incremental and non-recurring costs necessary to convert data and systems, retain employees and otherwise enable us to operate the acquired VEREIT assets efficiently.

There were no merger and integration-related costs during 2020 or 2019.

In conjunction with our merger with VEREIT, we incurred approximately $13.9 million and $167.4 million of merger and integration-related transaction costs during the years ended December 31, 2022 and 2021, respectively.

There were no such costs incurred during the year ended December 31, 2020.

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

The following summarizes our property dispositions (dollars in millions).

These amounts exclude properties disposed from the spin-off of office properties to Orion Office REIT, Inc.

in November 2021.

Year Ended December 31,

The following summarizes our property dispositions, excluding our proportionate share of net proceeds from the disposition of properties by our consolidated industrial partnerships in 2022 (dollars in millions):

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Years ended December 31,

2022 2021 2020

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Gain on sales of real estate $ 102.7 $ 55.8 $ 76.2

Foreign Currency and Derivative Gains, Net

Foreign Currency and Derivative Gains (Losses), Net

We borrow in the functional currencies of the countries in which we invest.

Foreign currency and derivative gains, net are primarily a result of intercompany debt with certain remeasurement transactions and mark-to-market adjustments on derivatives that do not qualify for hedge accounting.

Loss on Extinguishment of Debt

In December 2021, we completed the early redemption on all $750.0 million in principal amount of outstanding 4.650% notes due August 2023, plus accrued and unpaid interest.

As a result of the early redemption, we recognized a $46.4 million loss on extinguishment of debt during 2021.

In October 2021, we completed the early redemption on $9.6 million in principal of a mortgage due June 2022, plus accrued and unpaid interest.

As a result of the early redemption, we recognized a loss of $315,000 on extinguishment of debt for 2021.

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.

As a result of the early redemption, we recognized a $4.0 million loss on extinguishment of debt during 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.

As a result of the early redemption, we recognized a $46.5 million loss on extinguishment of debt during 2021.

In January 2020, we completed the early redemption on all $250.0 million in principal amount of outstanding 5.750% notes due January 2021, plus accrued and unpaid interest.

As a result of the early redemption, we recognized a $9.8 million loss on extinguishment of debt during 2020.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities for 2021 relates to three equity method investments that were acquired in our merger with VEREIT.

There were no comparative investments during 2020 or 2019.

Net foreign currency gain and loss are primarily related to the remeasurement of intercompany debt from foreign subsidiaries.

Gain and loss on foreign currency are largely offset by derivative gain and loss.

Derivative gain and loss relates to mark-to-market adjustments on derivatives that do not qualify for hedge accounting.

Net derivative gain and loss are primarily related to realized and unrealized short term currency exchange swaps.

Gain and loss on derivatives are largely offset by foreign currency gain and loss.

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.

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 ("AOCI"), to 'Foreign currency and derivative (loss) gain, net' during the year ended December 31, 2022.

The reclassification from AOCI was offset by $7.9 million in losses from the intercompany loan remeasurement on the final exchange.

Gain (loss) on extinguishment of debt

We redeemed the following principal amounts (in millions) of certain outstanding notes and mortgages, prior to their maturity.

As a result of these early redemptions, we recognized the following losses on extinguishment of debt (in millions) in the consolidated statements of income and comprehensive income.

There were no comparable repayments for the year ended December 31, 2022.

Gain (Loss) on Extinguishment of Debt

2021 Repayments Principal Amount (1)

Amount of Loss Period Recognized

4.650% notes due August 2023 redeemed in December 2021

$ 750.0 $ 46.4 December 31, 2021

Mortgage due June 2022 redeemed in October 2021

$ 9.6 $ 0.3 December 31, 2021

Mortgage due June 2032 redeemed in September 2021

$ 12.5 $ 4.0 September 30, 2021

3.250% notes due October 2022 redeemed in January 2021

$ 950.0 $ 46.5 March 31, 2021

Total 2021 repayments $ 97.2

2020 Repayments

5.750% notes due January 2021 redeemed in January 2020

$ 250.0 $ 9.8 March 31, 2020

(1) The redeemed principal amounts presented exclude the amounts we paid in accrued and unpaid interest.

Equity in Income and Impairment of Investment in Unconsolidated Entities

Equity in income and impairment of investment in unconsolidated entities for the years ended December 31, 2022 and 2021 relate to three equity method investments that were acquired in our merger with VEREIT.

The loss for the year ended December 31, 2022 is primarily driven by an other than temporary impairment.

There were no comparative investments for the year ended December 31, 2020.

During 2022 all seven of the properties owned by our industrial partnerships acquired in connection with the VEREIT merger were sold.

Other Income, Net

Beginning in 2021, certain miscellaneous non-recurring revenue has been reclassified from total revenue to other income, net in the consolidated statements of income and comprehensive income .

Interest income from our money market accounts was higher for 2020 as compared to 2019, which is primarily due to higher average investment balances.

Certain miscellaneous non-recurring revenue is included in other income, net.

The increase for the year ended December 31, 2022 as compared to 2021, is primarily related to an increase in gain on insurance proceeds from recoveries on property losses exceeding our carrying value, an increase in gain from the involuntary conversions of real estate, gains on land sales and higher interest income due to higher average cash balances.

Tabl e of Contents

The increase for the year ended December 31, 2021 as compared to the year ended December 31, 2020, is primarily related to an increase in gain on insurance proceeds from recoveries on property losses exceeding our carrying value and an increase in gain from the involuntary conversions of real estate, which was partially offset by a decrease in interest income from lower average cash balances.

Income taxes are for city and state income and franchise taxes, and for international income taxes accrued or paid by us and our subsidiaries.

The increase in income taxes for 2021 and 2020 was primarily attributable to our increased volume of U.K.

The increase in income taxes for the years ended December 31, 2022 and 2021 is primarily attributable to our increased volume of U.K.

investments, which contributed to higher U.K.

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The following summarizes our net income available to common stockholders (dollars in millions, except per share data):

Year Ended December 31, % (Decrease)

Years ended December 31, % Increase/(Decrease)

2022 2021 2020 2022

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(1) All per share amounts are presented on a diluted per common share basis.

The calculation to determine net income available to common stockholders includes provisions for impairment, gains from the sale of properties, and foreign currency gains and losses, which can vary from period to period based on timing and significantly impact net income available to the Company and available to common stockholders.

Net income available to common stockholders in 2021 was primarily impacted by the following transactions:

(i) a $97.2 million loss on extinguishment of debt, which primarily includes $46.5 million related to the January 2021 early redemption of the 3.250% notes due October 2022 recorded in the three months ended March 31, 2021 and $46.4 million related to the December 2021 early redemption of the 4.650% notes due August 2023 recorded in the three months ended December 31, 2021, (ii) $167.4 million of merger and integration-related costs related to our merger with VEREIT and spin-off of office properties to Orion Office REIT Inc., (iii) $39.0 million of provisions for impairment, and (iv) $14.7 million in net reserves recorded as a reduction of rental revenue.

Net income available to common stockholders in 2020 was primarily impacted by the following transactions:

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 common stockholders.

The increase in net income available to common stockholders for the year ended December 31, 2022, compared to the year ended December 31, 2021 primarily related to the increase in the size of our portfolio due to the merger with VEREIT, which closed on November 1, 2021, gain on insurance proceeds from recoveries on property losses exceeding our carrying value, and $13.9 million of merger and integration-related costs related to our merger with VEREIT.

The increases were partially offset by reserves to rental revenue of $4.0 million (of which $1.7 million was related to straight-line rent receivables) for the year ended December 31, 2022.

Net income available to common stockholders for the year ended December 31, 2021, was impacted by the following transactions:

(i) a $97.2 million loss on extinguishment of debt, which primarily includes $46.5 million related to the January 2021 early redemption of the 3.250% notes due October 2022 recorded in the three months ended March 31, 2021 and $46.4 million related to the December 2021 early redemption of the 4.650% notes due August 2023 recorded in the three months ended December 31, 2021, (ii) $167.4 million of merger and integration-related costs related to our merger with VEREIT, and (iii) $14.7 million of reserves to rental revenue (of which $4.5 million was related to straight-line rent receivables).

Net income available to common stockholders for the year ended December 31, 2020 was primarily impacted by the following transactions:

(i) $147.2 million of provisions for impairment, (ii) $52.5 million in net reserves recorded as a reduction of rental revenue, (iii) a $9.8 million loss on extinguishment of debt due to the January 2020 early redemption of the 5.750% notes due January 2021, and (iv) a $3.5 million executive severance charge for our former CFO.

For 2019, the only comparable charges were $40.2 million in provisions for impairment and $2.9 million in reserves recorded as a reduction of rental revenue.

Tabl e of Contents

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate ("Adjusted EBITDA re" )

The National Association of Real Estate Investment Trusts ("Nareit") came to the conclusion that a Nareit-defined EBITDA metric for real estate companies (i.e., EBITDA for real estate, or EBITDA re ) would provide investors with a consistent measure to help make investment decisions among REITs.

Our definition of “Adjusted EBITDA re ” is generally consistent with the Nareit definition, other than our adjustments to remove foreign currency and derivative gains and losses and executive severance charges (which is consistent with our previous calculations of "Adjusted EBITDA").

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) 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 gains and losses, 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.

Nareit established an EBITDA metric for real estate companies (i.e., EBITDA for real estate, or EBITDA re ) it believed would provide investors with a consistent measure to help make investment decisions among REITs.

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").

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), (ix) gain on settlement of foreign currency forwards, and (x) equity in income 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.

Management believes Adjusted EBITDA re to be a meaningful measure of a REIT’s performance because it is widely followed by industry analysts, lenders and investors.

Management also believes the use of an annualized quarterly Adjusted EBITDA re metric, which we refer to as Annualized Adjusted EBITDA re , is meaningful because it represents the Company’s current earnings run rate for the period presented.

Management believes Adjusted EBITDA re to be a meaningful measure of a REIT’s performance because it provides a view of our operating performance, analyzes our ability to meet interest payment obligations before the effects of income tax, depreciation and amortization expense, provisions for impairment, gain on sales of real estate and other items, as defined above, that affect comparability, including the removal of non-recurring and non-cash items that industry observers believe are less relevant to evaluating the operating performance of a company.

In addition, EBITDA re is widely followed by industry analysts, lenders, investors, rating agencies, and others as a means of evaluating the operational cash generating capacity of a company prior to servicing debt obligations.

Management also believes the use of an annualized quarterly Adjusted EBITDA re metric, which we refer to as Annualized Adjusted EBITDA re , is meaningful because it represents our current earnings run rate for the period presented.

Annualized Adjusted EBITDA re and Annualized Pro Forma Adjusted EBITDA re , as defined below, are also used to determine the vesting of performance share awards granted to executive officers.

Annualized Adjusted EBITDA re should be considered along with, but not as an alternative to net income as a measure of our operating performance.

We define Annualized Pro Forma Adjusted EBITDA re as Annualized Adjusted EBITDA re , subject to certain adjustments to incorporate operating income from properties we acquired or stabilized during the applicable quarter and to remove operating income from properties we disposed of during the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the applicable period.

We define Annualized Pro Forma Adjusted EBITDA re as Annualized Adjusted EBITDA re , subject to certain adjustments to incorporate Adjusted EBITDA re from properties we acquired or stabilized during the applicable quarter and to remove Adjusted EBITDA re from properties we disposed of during the applicable quarter, and includes transaction accounting adjustments in accordance with U.S.

GAAP, giving pro forma effect to all transactions as if they occurred at the beginning of the applicable period.

Our calculation includes all adjustments consistent with the requirements to present Adjusted EBITDA re on a pro forma basis in accordance with Article 11 of Regulation S-X.

The Annualized Pro Forma Adjustments are consistent with the debt service coverage ratio calculated under financial covenants for our senior unsecured notes.

We believe Annualized Pro Forma Adjusted EBITDA re is a useful non-GAAP supplemental measure, as it excludes properties that were no longer owned at the balance sheet date and includes the annualized rent from properties acquired during the quarter.

Our ratios of net debt-to-Annualized Adjusted EBITDA re and net debt-to-Annualized Pro Forma Adjusted EBITDA re , which are used by management as a measure of leverage, are calculated as net debt (which we define as total debt per our consolidated balance sheet,

excluding deferred financing costs and net premiums and discounts, but including our proportionate share on debt from unconsolidated entities, less cash and cash equivalents), divided by annualized quarterly Adjusted EBITDA re and annualized Pro Forma Adjusted EBITDA re , respectively.

The following table summarizes our Annualized Adjusted EBITDA re and Annualized Pro Forma Adjusted EBITDA re calculations for the periods indicated below (dollars in thousands):

For the Three Months Ended December 31,

Dollars in thousands 2021 2020 2019

Management also uses our ratios of net debt-to-Annualized Adjusted EBITDA re and net debt-to Annualized Pro Forma Adjusted EBITDA re as measures of leverage in assessing our financial performance, which is calculated as net debt (which we define as total debt per the consolidated balance sheets, excluding deferred financing costs and net premiums and discounts, but including our proportionate share on debt from unconsolidated entities, less cash and cash equivalents), divided by annualized quarterly Adjusted EBITDA re and annualized Pro Forma Adjusted EBITDA re , respectively.

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The following is a reconciliation of net income (which we believe is the most comparable U.S.

GAAP measure) to Adjusted EBITDA re and Annualized Pro Forma EBITDA re calculations for the periods indicated below (dollars in thousands):

Three months ended December 31,

2022 2021 2020

Net income $ 228,336 $ 4,467 $ 118,150

131,290 100,739 78,764

Interest 100,739 78,764 75,073

Loss on extinguishment of debt — 46,722 —

Income taxes 10,128 4,500 1,736

9,381 10,128 4,500

Depreciation and amortization

438,174 333,229 175,041

Provisions for impairment

9,481 7,990 23,790

Merger and integration-related costs 903 137,332 —

Gain on sales of real estate

(9,346) (20,402) (22,667)

Foreign currency and derivative gains, net (2,692) (1,880) (3,311)

Gain on settlement of foreign currency forwards 2,139 — —

Proportionate share of adjustments for unconsolidated entities 113 1,581 —

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$ 3,350,992 $ 2,838,184 $ 1,522,978

Total debt per the consolidated balance sheet, excluding deferred financing costs and net premiums and discounts $ 15,172,849 $ 8,852,036 $ 7,930,350

Total debt per the consolidated balance sheets, excluding deferred financing costs and net premiums and discounts $ 17,935,539 $ 15,172,849 $ 8,852,036

Proportionate share for unconsolidated entities debt, excluding deferred financing costs — 86,006 —

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$ 17,764,437 $ 15,000,276 $ 8,027,560

Net Debt/Pro forma Adjusted EBITDA re (4)(5)

(1) Net income for the three months ended December 31, 2021 was negatively impacted by $827,000 of rent reserves recorded as reductions of rental revenue, of which $5.6 million was related to straight-line rent receivables, net of reserve reversals of $(4.8) million.

Net income for the three months ended December 31, 2020 was negatively impacted by $18.1 million of rent reserves recorded as reductions of rental revenue, of which $3.3 million relates to straight-line rent.

Net Debt/Annualized Adjusted EBITDAre 5.5 x 6.0 x 5.4 x

Net Debt/Annualized Pro Forma Adjusted EBITDA re

5.3 x 5.3 x 5.3 x

(1) We calculate Annualized Adjusted EBITDA re by multiplying the Quarterly Adjusted EBITDA re by four.

(3) Net Debt is total debt per our consolidated balance sheet, excluding deferred financing costs and net premiums and discounts, but including our proportionate share on debt from unconsolidated entities, less cash and cash equivalents.

(4) Net Debt/Annualized Adjusted EBITDA re was 6.0x for the three months ended December 31, 2021, 5.4x for the three months ended December 31, 2020, and 5.5x for the three months ended December 31, 2019.

(5) During 2021, Net Debt was adjusted to exclude deferred financing costs and net premiums and discounts.

Under the prior calculation of Net Debt, which included deferred financing costs and net premiums and discounts, Net Debt/Adjusted EBITDA re was 5.3x for the three months ended December 31, 2020, and Net Debt/Pro forma Adjusted EBITDA re was 5.2x for the three months ended December 31, 2020.

The adjustment of Net Debt did not impact the calculations for the three months ended December 31, 2019, which were 5.5x for Net Debt/Adjusted EBITDA re and 5.2x for Net Debt/Pro forma Adjusted EBITDA re .

The Annualized Pro Forma Adjustments consist of adjustments to incorporate operating income from properties we acquired or stabilized during the applicable quarter and to remove operating income from properties we disposed of during the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the applicable period.

For the three months ended December 31, 2021, the Annualized Pro Forma adjustments are inclusive of the effects of the merger.

The Annualized Pro Forma Adjustments are consistent with the debt service coverage ratio calculated under financial covenants for our senior unsecured notes and bonds.

(2) Net Debt is total debt per our consolidated balance sheets, excluding deferred financing costs and net premiums and discounts, but including our proportionate share on debt from unconsolidated entities, less cash and cash equivalents.

As described above, the Annualized Pro Forma Adjustments, which includes transaction accounting adjustments in accordance with GAAP, consists of adjustments to incorporate the Adjusted EBITDA re from properties we acquired or stabilized during the applicable quarter and removes Adjusted EBITDA re from properties we disposed of during the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the period, consistent with the requirements of Article 11 of Regulation S-X.

The following table summarizes our Annualized Pro Forma Adjusted EBITDA re calculation for the periods indicated below:

Three months ended December 31,

Dollars in thousands 2022 2021 2020

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Annualized Pro forma Adjustments $ 119,876 $ 358,560 $ 25,910

FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS (FFO) AND NORMALIZED FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS (Normalized FFO)

The following summarizes our FFO and Normalized FFO (dollars in millions, except per share data):

We define FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trusts' definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets, plus provisions for impairments of depreciable real estate assets, and reduced by gains on property sales.

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FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS AND NORMALIZED FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS

We define Normalized FFO, a non-GAAP financial measure, as FFO excluding merger and integration-related costs related to our merger with VEREIT.

% Increase/(Decrease)

We define diluted FFO and diluted normalized FFO as FFO and normalized FFO adjusted for dilutive noncontrolling interests.

The following summarizes our FFO and Normalized FFO (dollars in millions, except per share data):

Years ended December 31, % Increase/(Decrease)

2022 2021 2020 2022

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(1) All per share amounts are presented on a diluted per common share basis.

FFO and Normalized FFO for 2021, 2020, and 2019 were primarily impacted by the same transactions listed under "Net Income Available To Common Stockholders" on page 59.

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 (in thousands, except per share amounts):

FFO and Normalized FFO for the years ended December 31, 2022, 2021 and 2020 were impacted by the same transactions listed under "Net Income Available to Common Stockholders" on page 51, 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 U.S.

GAAP measure) to FFO and Normalized FFO.

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Years ended December 31,

2022 2021 2020

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Proportionate share of adjustments for unconsolidated entities (1)

12,812 1,931 —

FFO adjustments allocable to noncontrolling interests (1,605) (785) (817)

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Diluted 613,472,663 415,270,063 345,878,377

(1) Includes an other than temporary impairment of $8.5 million recognized during the year ended December 31, 2022 on our investment in unconsolidated entities, all of which were sold as of December 31, 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.

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Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative.

ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS (AFFO)

The following summarizes our AFFO (dollars in millions, except per share data):

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ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS

We define AFFO, a non-GAAP measure, as FFO adjusted for unique revenue and expense items, which we believe are not as pertinent to the measurement of our ongoing operating performance.

We define diluted AFFO as AFFO adjusted for dilutive noncontrolling interests.

The following summarizes our AFFO (dollars in millions, except per share data):

Years ended December 31, % Increase

2022 2021 2020 2022

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(1) All per share amounts are presented on a diluted per common share basis.

AFFO during 2021 and 2020 was primarily impacted by reserves recorded as a reduction of rental revenue related to the COVID-19 pandemic.

During the second half of 2021, reserves recorded as a reduction of rental revenue were partially offset by reserve reversals recorded as an increase to rental revenue where the accounting for recognition of rental revenue and straight-line rental revenue has been moved from the cash to the accrual basis.

The increases in AFFO for the years ended December 31, 2022 and 2021 were primarily attributable to the increase in the size of our portfolio, especially as it relates to the impact from our merger with VEREIT, which closed on November 1, 2021.

These increases were partially offset by reserves recorded as a reduction of rental revenue of $4.0 million, $14.7 million and $52.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

We consider AFFO to be an appropriate supplemental measure of our performance.

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Our AFFO calculations may not be comparable to AFFO, CAD or FAD reported by other companies, and other companies may interpret or define such terms differently than we do.

The following is a reconciliation of net income available to common stockholders (which we believe is the most comparable GAAP measure) to Normalized FFO and AFFO.

The following is a reconciliation of net income available to common stockholders (which we believe is the most comparable U.S.

GAAP measure) to Normalized FFO and AFFO.

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Years ended December 31,

2022 2021 2020

Net income available to common stockholders $ 869,408 $ 359,456 $ 395,486

$ 359,456 $ 395,486 $ 436,482

Cumulative adjustments to calculate Normalized FFO (1)

2 unchanged sentences

Executive severance charge (2)

Loss on extinguishment of debt 97,178 9,819 —

(Gain) loss on extinguishment of debt (367) 97,178 9,819

Amortization of share-based compensation 21,617 16,234 14,727

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(67,150) (6,182) 3,710

Loss on interest rate swaps 2,905 4,353 2,752

Straight-line payments from cross-currency swaps (5)

2,228 2,573 4,316

Non-cash loss on interest rate swaps 718 2,905 4,353

Straight-line impact of cash settlement on interest rate swaps (4)

Leasing costs and commissions (5,236) (6,201) (1,859)

Recurring capital expenditures (587) (1,202) (198)

Straight-line rent and expenses (61,350) (26,502) (28,674)

Amortization of above and below-market leases 37,970 22,940 19,336

Straight-line rent and expenses, net (120,252) (61,350) (26,502)

Amortization of above and below-market leases, net 63,243 37,970 22,940

Proportionate share of adjustments for unconsolidated entities (4,239) (1,948) —

1 unchanged sentence

26,264 3,356 54

Total AFFO available to common stockholders $ 1,488,753 $ 1,172,626 $ 1,050,015

AFFO available to common stockholders $ 2,401,359 $ 1,488,753 $ 1,172,626

AFFO allocable to dilutive noncontrolling interests 4,033 1,619 1,438

8 unchanged sentences

Diluted 613,472,663 415,270,063 345,878,377

(1) As of December 31, 2021, there was $58.7 million of uncollected rent deferred as a result of lease concessions we granted in response to the COVID-19 pandemic and recognized under the practical expedient provided by the FASB and $41.3 million of uncollected rent for which we have not granted a lease concession.

(1) See reconciling items for Normalized FFO presented under “Funds from Operations Available to Common Stockholders (FFO) and Normalized Funds from Operations Available to Common Stockholders (Normalized FFO)."

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No costs associated with our credit facility agreements or annual fees paid to credit rating agencies have been included.

(5) Straight-line payments from cross-currency swaps represent quarterly payments in U.S.

dollars received by us from counterparties in exchange for associated foreign currency payments.

These USD payments are fixed and determinable for the duration of the associated hedging transaction.

(6) 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 gains and losses as a result of intercompany debt and remeasurement transactions.

(4) Represents the straight-line amortization of $72.0 million gain realized upon the termination of $500.0 million in notional interest rate swaps, over the term of the $750.0 million of 5.625% senior unsecured notes due October 13, 2032.

(5) 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, foreign currency gain and loss as a result of intercompany debt and remeasurement transactions and straight-line payments from cross-currency swaps.

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We believe the non-GAAP financial measure AFFO provides useful information to investors because it is a widely accepted industry measure of the operating performance of real estate companies that is used by industry analysts and investors who look at and compare those companies.

In particular, AFFO provides an additional measure to compare the operating performance of different REITs without having to account for differing depreciation assumptions and other unique revenue and expense items which are not pertinent to measuring a particular company’s on-going operating performance.

Therefore, we believe that AFFO is an appropriate supplemental performance metric, and that the most appropriate GAAP performance metric to which AFFO should be reconciled is net income available to common stockholders.

Therefore, we believe that AFFO is an appropriate supplemental performance metric, and that the most appropriate U.S.

GAAP performance metric to which AFFO should be reconciled is net income available to common stockholders.

Presentation of the information regarding FFO, Normalized FFO, and AFFO is intended to assist the reader in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO, Normalized FFO, and AFFO in the same way, so comparisons with other REITs may not be meaningful.

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We expect that inflation will cause these lease provisions to result in rent increases over time.

During times when inflation is greater than increases in rent, as provided for in the leases, rent increases may not keep up with the rate of inflation.

During times when inflation is greater than increases in rent, as provided for in the leases, rent increases may not keep up with the rate of inflation and other costs (including increases in employment and other fees and expenses).

Moreover, our use of net lease agreements tends to reduce our exposure to rising property expenses due to inflation because the client is responsible for property expenses.

Inflation and increased costs may have an adverse impact on our clients if increases in their operating expenses exceed increases in revenue.

IMPACT OF RECENT ACCOUNTING STANDARDS

For information on the impact of new accounting standards on our business, see note 2 of the Notes to the Consolidated Financial Statements.

Even though net leases reduce our exposure to rising property expenses due to inflation, substantial inflationary pressures and increased costs may have an adverse impact on our clients if increases in their operating expenses exceed increases in revenue, which may adversely affect our clients' ability to pay rent.

Additionally, inflationary periods may cause us to experience increased costs of financing, make it difficult to refinance debt at attractive rates or at all, and may adversely affect the properties we can acquire if the cost of financing an acquisition is in excess of our anticipated earnings from such property, thereby limiting the properties that can be acquired.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

For information on the impact of new accounting standards on our business, see note 2, Summary of Significant Accounting Policies and Procedures and New Accounting Standards , to our Consolidated Financial Statements.

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.

What changed 10-K

Item 7. Management’s Discussion and Analysis