What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-08-03 · 223 added, 186 removed, 688 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts) (unaudited)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Real estate held for investment, at cost:

23 unchanged sentences

Stockholders’ equity:

Common stock and paid in capital, par value $ 0.01 per share, 1,300,000 shares authorized, 708,773 and 660,300 shares issued and outstanding as of June 30, 2023, and December 31, 2022, respectively

Common stock and paid in capital, par value $ 0.01 per share, 1,300,000 shares authorized, 723,894 and 660,300 shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively

38,031,829 34,159,509

9 unchanged sentences

(in thousands, except per share amounts) (unaudited)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

2023 2022 2023 2022

20 unchanged sentences

Amounts available to common stockholders per common share:

Net income available to common stockholders per common share, basic and diluted $ 0.29 $ 0.37 $ 0.63 $ 0.71

Net income, basic and diluted $ 0.33 $ 0.36 $ 0.96 $ 1.06

Weighted average common shares outstanding:

2 unchanged sentences

Net income available to common stockholders $ 233,473 $ 219,567 $ 653,904 $ 642,143

Total other comprehensive income (loss):

Total other comprehensive loss

Foreign currency translation adjustment ( 61,401 ) ( 89,231 ) ( 3,605 ) ( 148,929 )

Unrealized (loss) gain on derivatives, net ( 6,410 ) 33,454 ( 8,572 ) 77,144

Total other comprehensive income (loss) $ 22,636 $ ( 15,538 ) $ 49,224 $ 17,446

Unrealized gain (loss) on derivatives, net 7,193 41,914 ( 1,379 ) 119,058

Total other comprehensive loss $ ( 54,208 ) $ ( 47,317 ) $ ( 4,984 ) $ ( 29,871 )

Comprehensive income available to common stockholders $ 179,265 $ 172,250 $ 648,920 $ 612,272

3 unchanged sentences

(in thousands) (unaudited)

Three months ended June 30, 2023, and 2022

Three months ended September 30, 2023, and 2022

capital Distributions

net income Accumulated

comprehensive income Total

comprehensive income (loss) Total

stockholders’

1 unchanged sentence

interests Total

Balance, March 31, 2023

Balance, June 30, 2023

708,773 $ 37,149,380 $ ( 6,102,226 ) $ 96,057 $ 31,143,211 $ 167,932 $ 31,311,143

Net income — — 233,473 — 233,473 404 233,877

Other comprehensive income — — — 22,636 22,636 — 22,636

Other comprehensive loss — — — ( 54,208 ) ( 54,208 ) — ( 54,208 )

Distributions paid and payable — — ( 547,781 ) — ( 547,781 ) ( 2,497 ) ( 550,278 )

3 unchanged sentences

( 1 ) 6,196 — — 6,196 — 6,196

Balance, June 30, 2023

Balance, September 30, 2023

723,894 $ 38,031,829 $ ( 6,416,534 ) $ 41,849 $ 31,657,144 $ 166,274 $ 31,823,418

Balance, March 31, 2022

Balance, June 30, 2022

617,564 $ 31,303,383 $ ( 4,999,150 ) $ 22,379 $ 26,326,612 $ 76,267 $ 26,402,879

2 unchanged sentences

Distributions paid and payable — — ( 461,429 ) — ( 461,429 ) ( 1,070 ) ( 462,499 )

Issuance of common partnership units — — — — — 51,221 51,221

Share issuances, net of costs 9,582 694,708 — — 694,708 — 694,708

Share-based compensation, net — 4,978 — — 4,978 — 4,978

Balance, June 30, 2022

Balance, September 30, 2022

627,146 $ 32,003,069 $ ( 5,241,012 ) $ ( 24,938 ) $ 26,737,119 $ 127,138 $ 26,864,257

Six months ended June 30, 2023 and 2022

Nine months ended September 30, 2023 and 2022

capital Distributions

1 unchanged sentence

comprehensive

income (loss) Total

stockholders’

3 unchanged sentences

Net income — — 653,904 — 653,904 3,248 657,152

Other comprehensive income — — — 49,224 49,224 — 49,224

Other comprehensive loss — — — ( 4,984 ) ( 4,984 ) — ( 4,984 )

Distributions paid and payable — — ( 1,577,245 ) — ( 1,577,245 ) ( 7,108 ) ( 1,584,353 )

2 unchanged sentences

Share-based compensation, net 246 13,973 — — 13,973 — 13,973

Balance, June 30, 2023

Balance, September 30, 2023

723,894 $ 38,031,829 $ ( 6,416,534 ) $ 41,849 $ 31,657,144 $ 166,274 $ 31,823,418

1 unchanged sentence

Net income — — 642,143 — 642,143 1,937 644,080

Other comprehensive income — — — 17,446 17,446 — 17,446

Other comprehensive loss — — — ( 29,871 ) ( 29,871 ) — ( 29,871 )

Distributions paid and payable — — ( 1,352,584 ) — ( 1,352,584 ) ( 2,846 ) ( 1,355,430 )

Issuance of common partnership units — — — — — 51,221 51,221

Share issuances, net of costs 35,715 2,415,281 — — 2,415,281 — 2,415,281

Share-based compensation, net 169 9,576 — — 9,576 — 9,576

Balance, June 30, 2022

Balance, September 30, 2022

627,146 $ 32,003,069 $ ( 5,241,012 ) $ ( 24,938 ) $ 26,737,119 $ 127,138 $ 26,864,257

3 unchanged sentences

(in thousands) (unaudited)

Six months ended June 30,

Nine months ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

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(Loss) gain on interest rate swaps ( 5,390 ) 2,181

Foreign currency and unrealized derivative loss, net ( 6,289 ) ( 6,890 )

Foreign currency and unrealized derivative gain, net 10,188 16,003

Gain on sales of real estate ( 19,675 ) ( 93,611 )

11 unchanged sentences

Return of investment from unconsolidated entities 3,927 1,401

Net proceeds from sale of unconsolidated entities — 107,621

Proceeds from note receivable — 5,867

Insurance proceeds received 15,177 16,046

11 unchanged sentences

Distributions to noncontrolling interests ( 5,585 ) ( 2,658 )

Net (payments) receipts on derivative settlements ( 9,285 ) 7,474

Net receipts on derivative settlements 2,191 7,474

Debt issuance costs ( 35,014 ) ( 27,732 )

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 30, 2023

Basis of Presentation

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We are listed on the New York Stock Exchange ("NYSE") under the symbol “O”.

As of June 30, 2023, we owned or held interests in a diversified portfolio of 13,118 properties located in all 50 states of the United States ("U.S."), Puerto Rico, the United Kingdom ("U.K."), Spain, Italy, and Ireland, with approximately 255.5 million square feet of leasable space.

As of September 30, 2023, we owned or held interests in a diversified portfolio of 13,282 properties located in all 50 states of the United States ("U.S."), Puerto Rico, the United Kingdom ("U.K."), Spain, Italy, and Ireland, with approximately 262.6 million square feet of leasable space.

Our accompanying unaudited consolidated financial statements were prepared from our books and records in accordance with accounting principles generally accepted in the United States of America ("U.S.

In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented have been included.

Operating results for the three and six months ended June 30, 2023 are not necessarily an indication of the results that may be expected for the entire year.

Operating results for the three and nine months ended September 30, 2023 are not necessarily an indication of the results that may be expected for the entire year.

Readers of this quarterly report should refer to our audited consolidated financial statements for the year ended December 31, 2022, which are included in our 2022 Annual Report on Form 10-K , as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report.

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We reassess our determination of whether we are the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances.

At June 30, 2023, Realty Income, L.P.

At September 30, 2023, Realty Income, L.P.

and certain investments, including investments in joint ventures, are considered VIEs in which we were deemed the primary beneficiary based on our controlling financial interests.

Below is a summary of selected financial data of consolidated VIEs included in the consolidated balance sheets at June 30, 2023, and December 31, 2022 (in thousands):

June 30, 2023 December 31, 2022

Below is a summary of selected financial data of consolidated VIEs included in the consolidated balance sheets at September 30, 2023, and December 31, 2022 (in thousands):

September 30, 2023 December 31, 2022

Net real estate

8 unchanged sentences

Certain prior period amounts have been reclassified to conform to the current year presentation.

Value-added tax receivable is now included in 'Other assets, net', in the consolidated balance sheets.

Value-added tax receivable is included in 'Other assets, net', in the consolidated balance sheets.

Previously, this was categorized as 'Accounts receivable, net' in the consolidated balance sheets.

35 unchanged sentences

If we subsequently conclude that the collection of substantially all lease payments under a lease is probable, a reversal of lease receivables previously written off is recognized.

Goodwill is not amortized, but is subject to impairment reviews annually, or more frequently if necessary.

Goodwill is qualitatively assessed to determine whether a quantitative impairment assessment is necessary.

Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.

If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized, and the asset is written down to its estimated fair value.

We perform our annual goodwill impairment assessment as of June 30.

During the six months ended June 30, 2023 and 2022, there were no impairments of goodwill.

Concentration of Credit Risk.

There were no clients who accounted for more than more than 10% of our total revenue for each of the six months ended June 30, 2023, and 2022.

There were no clients who accounted for more than more than 10% of our total revenue for each of the nine months ended September 30, 2023, and 2022.

Recent Accounting Pronouncements.

2 unchanged sentences

Accounts receivable, net, consist of the following at:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Straight-line rent receivables, net $ 484,423 $ 363,993

2 unchanged sentences

Lease intangible assets, net, consist of the following at:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

In-place leases

8 unchanged sentences

Other assets, net, consist of the following at:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Financing receivables $ 1,638,967 $ 933,116

Right of use asset - operating leases, net 589,237 603,097

Right of use asset - financing leases 675,512 467,920

Right of use asset - operating leases, net 595,148 603,097

Value-added tax receivable 95,462 24,726

Prepaid expenses 39,595 28,128

Impounds related to mortgages payable 45,224 18,152

Derivative assets and receivables – at fair value 44,753 83,100

Prepaid expenses 42,220 28,128

Restricted escrow deposits 41,311 37,627

6 unchanged sentences

Accounts payable and accrued expenses consist of the following at:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Notes payable - interest payable $ 182,603 $ 129,202

Derivative liabilities and payables – at fair value 93,017 64,724

Accrued costs on properties under development 87,672 26,559

Property taxes payable 87,316 45,572

Derivative liabilities and payables – at fair value 78,344 64,724

Value-added tax payable 64,197 23,375

5 unchanged sentences

Lease intangible liabilities, net, consist of the following at:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Below-market leases

4 unchanged sentences

Other liabilities consist of the following at:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Lease liability - operating leases, net $ 426,575 $ 440,096

5 unchanged sentences

Acquisitions of Real Estate

Below is a summary of our acquisitions for the six months ended June 30, 2023:

Below is a summary of our acquisitions for the nine months ended September 30, 2023:

Properties Leasable

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Since it is possible that a client could default on the payment of contractual rent (defined as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables), 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 weighted average cash lease yield includes approximately $ 1.5 million received as settlement credits as reimbursement of free rent periods for the six months ended June 30, 2023.

Contractual net operating income used in the calculation of initial weighted average cash lease yield includes approximately $ 3.7 million received as settlement credits as reimbursement of free rent periods for the nine months ended September 30, 2023.

In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return.

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estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs.

(2) Includes £ 8.7 million of investments in three U.K.

development properties and € 10.2 million of investment in one Spain development property, converted at the applicable exchange rates on the funding dates.

(3) Our clients occupying the new properties are 89.9 % retail and 10.1 % industrial based on annualized contractual rent.

Approximately 26 % of the annualized contractual rent generated from acquisitions during the six months ended June 30, 2023 is from our investment grade rated clients, their subsidiaries or affiliated companies.

The aggregate purchase price of the assets acquired during the six months ended June 30, 2023 has been allocated as follows (in millions):

(2) Includes £ 32.6 million of investments in four U.K.

development properties and € 25.9 million of investment in two Spain development properties, converted at the applicable exchange rates on the funding dates.

(3) Our clients occupying the new properties are 89.7 % retail, 10.0 % industrial, and 0.3 % other property types based on annualized contractual rent.

Approximately 25 % of the annualized contractual rent generated from acquisitions during the nine months ended September 30, 2023 is from investment grade rated clients, their subsidiaries, or affiliated companies.

The aggregate purchase price of the assets acquired during the nine months ended September 30, 2023 has been allocated as follows (in millions):

Acquisitions - USD Acquisitions - Sterling Acquisitions - Euro

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Other assets (3)

560.3 326.1 1.6

Lease intangible liabilities (4)

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(5) USD-denominated other liabilities consist entirely of deferred rent on certain below-market leases.

The properties acquired during the six months ended June 30, 2023 generated total revenues of $ 70.8 million and net income of $ 32.9 million during the six months ended June 30, 2023.

The properties acquired during the nine months ended September 30, 2023 generated total revenues of $ 174.4 million and net income of $ 91.6 million during the nine months ended September 30, 2023.

Investments in Existing Properties

During the six months ended June 30, 2023, we capitalized costs of $ 31.9 million on existing properties in our portfolio, consisting of $ 26.3 million for non-recurring building improvements, $ 5.5 million for re-leasing costs, and $ 0.1 million for recurring capital expenditures.

In comparison, during the six months ended June 30, 2022, we capitalized costs of $ 37.8 million on existing properties in our portfolio, consisting of $ 31.8 million for non-recurring building improvements, $ 3.2 million for re-leasing costs, and $ 2.8 million for recurring capital expenditures.

During the nine months ended September 30, 2023, we capitalized costs of $ 43.6 million on existing properties in our portfolio, consisting of $ 36.5 million for non-recurring building improvements, $ 6.9 million for re-leasing costs, and $ 0.2 million for recurring capital expenditures.

In comparison, during the nine months ended September 30, 2022, we capitalized costs of $ 70.6 million on existing properties in our portfolio, consisting of $ 63.7 million for non-recurring building improvements, $ 3.9 million for re-leasing costs, and $ 3.0 million for recurring capital expenditures.

Properties with Existing Leases

1 unchanged sentence

The values of the in-place leases are amortized as depreciation and amortization expense.

The amounts amortized to expense for all of our in-place leases, for the six months ended June 30, 2023, and 2022 were $ 319.4 million and $ 318.3 million, respectively.

The amounts amortized to expense for all of our in-place leases, for the nine months ended September 30, 2023, and 2022 were $ 489.2 million and $ 476.8 million, respectively.

The values of the above-market and below-market leases are amortized over the term of the respective leases, including any bargain renewal options, as an adjustment to rental revenue in the consolidated statements of income and comprehensive income.

The amounts amortized as a net decrease to rental revenue for capitalized above-market and below-market leases for the six months ended June 30, 2023, and 2022 were $ 86.8 million and $ 48.6 million, respectively.

The amounts amortized as a net decrease to rental revenue for capitalized above-market and below-market leases for the nine months ended September 30, 2023 and 2022 were $ 48.6 million and $ 41.2 million, respectively.

If a lease was to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recorded to revenue or expense, as appropriate.

The following table presents the estimated impact during the next five years and thereafter related to the amortization of the above-market and below-market lease intangibles and the amortization of the in-place lease intangibles at June 30, 2023 (dollars in thousands):

(decrease) to

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

7 unchanged sentences

Under our revolving credit facility, our current investment grade credit ratings provide for 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.

As of June 30, 2023, we had a borrowing capacity of $ 3.4 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $ 867.5 million, comprised of £ 644.0 million Sterling and € 45.0 million Euro borrowings, as compared to an outstanding balance at December 31, 2022 of $ 2.0 billion, comprised of € 1.8 billion Euro and £ 70.0 million Sterling borrowings.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 4.6 % and 1.5 % during the six months ended June 30, 2023, and 2022, respectively.

At June 30, 2023, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 5.6 %.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at June 30, 2023, we were in compliance with the covenants under our revolving credit facility.

As of June 30, 2023, credit facility origination costs of $ 14.7 million are included in other assets, net, as compared to $ 17.2 million at December 31, 2022, on our consolidated balance sheets.

As of September 30, 2023, we had a borrowing capacity of $ 3.8 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $ 481.5 million, comprised of £ 372.0 million Sterling and € 26.0 million Euro borrowings, as compared to an outstanding balance at December 31, 2022 of $ 2.0 billion, comprised of € 1.8 billion Euro and £ 70.0 million Sterling borrowings.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 4.8 % and 1.7 % during the nine months ended September 30, 2023, and 2022, respectively.

At September 30, 2023, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 5.9 %.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at September 30, 2023, we were in compliance with the covenants under our revolving credit facility.

As of September 30, 2023, credit facility origination costs of $ 13.5 million are included in other assets, net, as compared to $ 17.2 million at December 31, 2022, on our consolidated balance sheets.

These costs are being amortized over the remaining term of our revolving credit facility.

Commercial Paper Programs

We have a USD-denominated unsecured commercial paper program, under which we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $ 1.5 billion, as well as 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).

Our Euro-denominated unsecured commercial paper program may be issued in USD or various 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 market.

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Proceeds from commercial paper borrowings are used for general corporate purposes.

As of June 30, 2023, the balance of borrowings outstanding under our commercial paper programs was $ 122.7 million, consisting entirely of USD borrowings, as compared to $ 701.8 million outstanding commercial paper borrowings, including € 361.0 million of Euro-denominated borrowings, at December 31, 2022.

The weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.5 % and 0.8 % for the six months ended June 30, 2023, and 2022, respectively.

As of June 30, 2023, our weighted average interest rate on outstanding borrowings under our commercial paper programs was 5.4 %.

As of September 30, 2023, the balance of borrowings outstanding under our commercial paper programs was $ 376.8 million, consisting entirely of Euro borrowings, as compared to $ 701.8 million outstanding commercial paper borrowings, including € 361.0 million of Euro-denominated borrowings, at December 31, 2022.

The weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.7 % and 1.3 % for the nine months ended September 30, 2023, and 2022, respectively.

As of September 30, 2023, our weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.0 %.

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.

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In January 2023, we entered into a term loan agreement, permitting us to incur multicurrency term loans, up to an aggregate of $ 1.5 billion in total borrowings.

As of June 30, 2023, we had $ 1.1 billion in multicurrency borrowings, including $ 90.0 million, £ 705.0 million, and € 85.0 million in outstanding borrowings.

The 2023 term loans initially mature in January 2024 and include two 12-month maturity extensions that can be exercised at our option.

As of September 30, 2023, we had $ 1.0 billion in multicurrency borrowings, including $ 90.0 million, £ 705.0 million, and € 85.0 million in outstanding borrowings.

The 2023 term loans initially mature in January 2024 and include two 12-month maturity extensions that can be exercised at our option, with an anticipated repayment date of January 2026.

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 conjunction with our 2023 term loans, we entered into interest rate swaps which fix our per annum interest rate.

As of June 30, 2023, the effective interest rate, after giving effect to the interest rate swaps, was 5.0 %.

As of September 30, 2023, the effective interest rate, after giving effect to the interest rate swaps, was 5.0 %.

We also have a $ 250.0 million senior unsecured term loan, which matures in March 2024.

In conjunction with this term loan, we also entered into an interest rate swap.

As of June 30, 2023, the effective interest rate on this term loan, after giving effect to the interest rate swap, was 3.8 %.

At June 30, 2023, deferred financing costs of $ 4.4 million are included net of the term loans principal balance, as compared to $ 0.2 million related to our $ 250.0 million term loan at December 31, 2022, on our consolidated balance sheets.

As of September 30, 2023, the effective interest rate on this term loan, after giving effect to the interest rate swap, was 3.8 %.

At September 30, 2023, deferred financing costs of $ 2.3 million are included net of the term loans principal balance, as compared to $ 0.2 million related to our $ 250.0 million term loan at December 31, 2022, on our consolidated balance sheets.

These costs are being amortized over the remaining term of the term loans.

As of June 30, 2023, we were in compliance with the covenants contained in the term loans.

As of September 30, 2023, we were in compliance with the covenants contained in the term loans.

Mortgages Payable

During the six months ended June 30, 2023, we made $ 8.1 million in principal payments, including the full repayment of one mortgage for $ 5.7 million.

No mortgages were assumed during the six months ended June 30, 2023.

During the nine months ended September 30, 2023, we made $ 20.8 million in principal payments, including the full repayment of two mortgages for $ 17.4 million.

No mortgages were assumed during the nine months ended September 30, 2023.

Assumed mortgages are secured by the properties on which the debt was placed and are considered non-recourse debt with limited customary exceptions which vary from loan to loan.

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 June 30, 2023, we were in compliance with these covenants.

The balance of our deferred financing costs, which are classified as part of 'Mortgages payable, net', on our consolidated balance sheets, was $ 0.7 million at June 30, 2023 and $ 0.8 million at December 31, 2022.

At September 30, 2023, we were in compliance with these covenants.

The balance of our deferred financing costs, which are classified as part of 'Mortgages payable, net', on our consolidated balance sheets, was $ 0.6 million at September 30, 2023 and $ 0.8 million at December 31, 2022.

These costs are being amortized over the remaining term of each mortgage.

The following table summarizes our mortgages payable as of June 30, 2023 and December 31, 2022 (dollars in millions):

The following table summarizes our mortgages payable as of September 30, 2023 and December 31, 2022 (dollars in millions):

Properties (1)

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Financing Costs

June 30, 2023 135 4.8 % 3.3 % 0.9 $ 836.3 $ 5.4 $ 841.7

September 30, 2023 131 4.8 % 3.3 % 0.7 $ 822.0 $ 2.3 $ 824.2

December 31, 2022 136 4.8 % 3.3 % 1.4 $ 842.3 $ 11.6 $ 853.9

(1) At June 30, 2023, there were 17 mortgages on 135 properties and at December 31, 2022, there were 18 mortgages on 136 properties.

(1) At September 30, 2023, there were 16 mortgages on 131 properties and at December 31, 2022, there were 18 mortgages on 136 properties.

With the exception of one Sterling-denominated mortgage which is paid quarterly, the mortgages require monthly payments with principal payments due at maturity.

At June 30, 2023 and December 31, 2022, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0 % to 6.9 % at June 30, 2023 and December 31, 2022, respectively.

(3) Effective interest rates ranged from 2.0 % to 6.6 % and 2.7 % to 6.6 % at June 30, 2023 and December 31, 2022, respectively.

The following table summarizes the maturity of mortgages payable as of June 30, 2023, excluding $ 5.4 million related to unamortized net premiums and deferred financing costs (dollars in millions):

At September 30, 2023 and December 31, 2022, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0 % to 6.9 % at September 30, 2023 and December 31, 2022, respectively.

(3) Effective interest rates ranged from 1.3 % to 6.6 % and 2.7 % to 6.6 % at September 30, 2023 and December 31, 2022, respectively.

The following table summarizes the maturity of mortgages payable as of September 30, 2023, excluding $ 2.3 million related to unamortized net premiums and deferred financing costs (dollars in millions):

Year of Maturity

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Notes Payable

At June 30, 2023, our senior unsecured notes and bonds are USD-denominated and Sterling-denominated.

At September 30, 2023, our senior unsecured notes and bonds are USD-denominated, Sterling-denominated, and Euro-denominated.

Foreign-denominated notes are converted at the applicable exchange rate on the balance sheet date.

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Carrying Value (USD) as of

Maturity Dates Principal (Currency Denomination) June 30, 2023 December 31, 2022

Maturity Dates Principal (Currency Denomination) September 30, 2023 December 31, 2022

4.600 % Notes due 2024

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4.875 % Notes due 2030 (1)

July 6, 2030 € 550,000 582,120 —

1.625 % Notes due 2030 (1)

December 15, 2030 £ 400,000 488,120 481,960

15 unchanged sentences

May 20, 2034 £ 315,000 384,395 379,544

5.125 % Notes due 2034 (1)

July 6, 2034 € 550,000 582,120 —

5.875 % Bonds due 2035

10 unchanged sentences

$ 17,482,652 $ 14,278,013

(1) Interest paid annually.

Interest on the remaining senior unsecured notes and bond obligations included in the table is paid semi-annually.

(2) In January 2023, in conjunction with the pricing of these senior unsecured notes due January 2026, we entered into three-year , fixed-to-variable interest rate swaps, which are accounted for as fair value hedges.

See Note 11, Derivative Instruments for further details.

The following table summarizes the maturity of our notes and bonds payable as of June 30, 2023, excluding $ 92.4 million related to unamortized net premiums, deferred financing costs, and basis adjustment on interest rate swaps designated as fair value hedges (dollars in millions):

The following table summarizes the maturity of our notes and bonds payable as of September 30, 2023, excluding $ 64.8 million related to unamortized net premiums, deferred financing costs, and basis adjustment on interest rate swaps designated as fair value hedges (dollars in millions):

Year of Maturity

Thereafter 11,449.8

As of June 30, 2023, the weighted average interest rate on our notes and bonds payable was 3.6 %, and the weighted average remaining years until maturity was 6.7 years.

Interest incurred on all of the notes and bonds was $ 144.1 million and $ 103.0 million for the three months ended June 30, 2023, and 2022, respectively, and $ 274.4 million and $ 206.1 million for the six months ended June 30, 2023, and 2022, respectively.

As of September 30, 2023, the weighted average interest rate on our notes and bonds payable was 3.7 %, and the weighted average remaining years until maturity was 6.6 years.

Interest incurred on all of the notes and bonds was $ 159.7 million and $ 107.9 million for the three months ended September 30, 2023, and 2022, respectively, and $ 434.1 million and $ 314.0 million for the nine months ended September 30, 2023, and 2022, respectively.

Our outstanding notes and bonds are unsecured;

accordingly, we have not pledged any assets as collateral for these or any other obligations.

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.

All of these notes and bonds contain various covenants, including:

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and (iv) the maintenance at all times of total unencumbered assets not less than 150 % of our outstanding unsecured debt.

At June 30, 2023, we were in compliance with these covenants.

At September 30, 2023, we were in compliance with these covenants.

Note Issuances

During the six months ended June 30, 2023, we issued the following notes and bonds (in millions):

Date of Issuance Maturity Date Principal amount Price of par value Effective semi-annual yield to maturity

During the nine months ended September 30, 2023, we issued the following notes and bonds (in millions):

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

5.050 % Notes

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April 2023 July 2033 $ 600.0 98.020 % 5.148 %

4.875 % Notes

July 2023 July 2030 € 550.0 99.421 % 4.975 %

5.125 % Notes

July 2023 July 2034 € 550.0 99.506 % 5.185 %

(1) In January 2023, we issued $ 500 million of 5.05 % senior unsecured notes due January 13, 2026, which are callable at par on January 13, 2024.

In July 2023, we issued € 550.0 million of 4.875 % senior unsecured notes due July 2030 and € 550.0 million of 5.125 % senior unsecured notes due July 2034.

See note 18, Subsequent Events, for further details.

Issuances of Common Stock

At-the-Market ("ATM") Program

Under our current ATM program, we may offer and sell up to 120.0 million shares of common stock (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the NYSE under the ticker symbol "O" at prevailing market prices or at negotiated prices.

In August 2023, we replaced our prior ATM program with a new ATM program, pursuant to which we may offer and sell up to 120.0 million shares of common stock (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the NYSE under the ticker symbol "O" at prevailing market prices or at negotiated prices.

Upon settlement, subject to certain exceptions, we may elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which cases we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.

As of June 30, 2023, we had 24.3 million additional shares remaining for future issuance under our ATM program.

Of the 120.0 million shares of our common stock available for sale under the prior ATM program at its inception, a total of 101.8 million of those shares were sold, the remainder of which were terminated.

As of September 30, 2023, we had 102.7 million shares remaining for future issuance under our new ATM program.

We anticipate maintaining the availability of our ATM program in the future, including the replenishment of authorized shares issuable thereunder.

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2023 2022 2023 2022

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Net proceeds $ 873.3 $ 691.4 $ 3,850.0 $ 2,404.1

(1) During the three and six months ended June 30, 2023, 20.7 million and 46.3 million shares were sold, respectively, and 35.5 million and 48.1 million shares were settled pursuant to forward sale confirmations, respectively.

In addition, as of June 30, 2023, 4.9 million shares of common stock subject to forward sale confirmations have been executed, but not settled, at a weighted average initial price of $ 59.33 per share.

We currently expect to fully settle forward sale agreements outstanding by September 30, 2023, representing $ 287.0 million in net proceeds, for which the weighted average forward price at June 30, 2023 was $ 58.72 per share.

(1) During the three and nine months ended September 30, 2023, 23.5 million and 69.7 million shares were sold, respectively, and 15.1 million and 63.2 million shares were settled pursuant to forward sale confirmations, respectively.

In addition, as of September 30, 2023, 13.3 million shares of common stock subject to forward sale confirmations have been executed, but not settled, at a weighted average initial gross price of $ 56.61 per share.

We currently expect to fully settle forward sale agreements outstanding by December 31, 2023, representing $ 749.3 million in net proceeds, for which the weighted average forward price at September 30, 2023 was $ 56.47 per share.

Dividend Reinvestment and Stock Purchase Plan ("DRSPP")

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Our DRSPP authorizes up to 26.0 million common shares to be issued.

At June 30, 2023, we had 11.1 million shares remaining for future issuance under our DRSPP program.

At September 30, 2023, we had 11.0 million shares remaining for future issuance under our DRSPP program.

The following table outlines common stock issuances pursuant to our DRSPP program (dollars in millions):

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Noncontrolling Interests

As of June 30, 2023, we have six entities with noncontrolling interests that we consolidate, consisting of our operating partnership, (Realty Income, L.P.), a joint venture formed in 2023 in connection with the acquisition of properties, a joint venture acquired in December 2019, and three development joint ventures ( one acquired in December 2020, one acquired in May 2021, and one acquired in April 2023).

The following table represents the change in the carrying value of all noncontrolling interests through June 30, 2023 (in thousands):

As of September 30, 2023, we have seven entities with noncontrolling interests that we consolidate, consisting of our operating partnership, (Realty Income, L.P.), a joint venture formed in July 2023 in connection with the acquisition of properties, a joint venture acquired in December 2019, and four development joint ventures ( one acquired in December 2020, one acquired in May 2021, one acquired in April 2023, and one acquired in September 2023).

The following table represents the change in the carrying value of all noncontrolling interests through September 30, 2023 (in thousands):

Realty Income, L.P.

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2,812 436 3,248

Carrying value at June 30, 2023

Carrying value at September 30, 2023

$ 114,370 $ 51,904 $ 166,274

(1) 1,795,167 units were outstanding as of both June 30, 2023 and December 31, 2022.

(2) Includes contributions of $ 39.2 million for the issuance of a 5.0 % joint venture interest as partial consideration paid on property acquisitions and contributions of $ 0.4 million related to a 5.0 % interest in a development joint venture.

(3) Includes a non-cash reduction of noncontrolling interest of $ 1.5 million from our partner's responsibility to absorb construction cost overages for a development joint venture during the six months ended June 30, 2023.

(1) 1,795,167 units were outstanding as of both September 30, 2023 and December 31, 2022.

(2) Includes contributions of $ 39.2 million for the issuance of a 5.0 % joint venture interest as partial consideration paid on property acquisitions, contributions of $ 0.4 million related to a 5.0 % interest in a development joint venture, and contributions of $ 0.4 million related to a 3.0 % interest in a development joint venture.

Fair Value Measurements

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Categorization within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

• Level 1 – Unadjusted quoted prices in active markets

Fair value measurements are classified as Level 1 if their value is observable in an active market.

Such instruments are valued by reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted price is readily available, and the price represents actual and regularly occurring market transactions.

An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis.

• Level 2 – Valuation Technique Using Observable Inputs

Fair value measurements classified as Level 2 are valued using quoted prices for identical instruments in markets that are not considered to be active, or quoted prices for similar assets or liabilities in active markets, or valuation techniques in which all significant inputs are observable or can be corroborated by observable market data for substantially the entire contractual term of the financial asset or liability.

• Level 3 – Valuation Technique Using Significant Unobservable Inputs

Fair value measurements are classified as Level 3 if their valuation incorporates significant inputs that are not based on observable market data (unobservable inputs).

Such inputs are generally determined based on observable inputs of a similar nature, historical observations on the level of the inputs, or other analytical techniques.

We evaluate our hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from period to period.

Changes in the type of inputs may result in a reclassification for certain assets.

We have not historically had changes in classifications and do not expect that changes in classifications between levels will be frequent.

Financial Instruments Not Measured at Fair Value on the Consolidated Balance Sheets

• Level 1 – Quoted market prices in active markets for identical assets and liabilities

• Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other market-corroborated inputs

• Level 3 – Inputs that are unobservable and significant to the overall fair value measurement

The following tables present the carrying values and estimated fair values of financial instruments as of September 30, 2023 and December 31, 2022 (in millions):

September 30, 2023

Hierarchy Level

Carrying Value Level 1 Level 2 Level 3

Derivative assets $ 44.8 $ — $ 44.8 $ —

Total assets $ 44.8 $ — $ 44.8 $ —

Mortgages payable $ 822.0 $ — $ — $ 806.1

Notes and bonds payable 17,417.9 — 15,478.2 —

Derivative liabilities 78.3 — 78.3 —

Total liabilities $ 18,318.2 $ — $ 15,556.5 $ 806.1

December 31, 2022

Hierarchy Level

Carrying Value Level 1 Level 2 Level 3

Derivative assets $ 83.1 $ — $ 83.1 $ —

Total assets $ 83.1 $ — $ 83.1 $ —

Mortgages payable $ 842.3 $ — $ — $ 810.4

Notes and bonds payable 14,114.2 — 12,522.8 —

Derivative liabilities 64.7 — 64.7 —

Total liabilities $ 15,021.2 $ — $ 12,587.5 $ 810.4

Financial Instruments Not Measured at Fair Value on our Consolidated Balance Sheets

The fair value of short-term financial instruments such as cash and cash equivalents, accounts receivable, escrow deposits, loans receivable, accounts payable, distributions payable, line of credit payable and commercial paper borrowings, and other liabilities approximate their carrying value in the accompanying consolidated balance sheets, due to their short-term nature.

The aggregate fair value of our term loans approximates carrying value due to the frequent repricing of the variable interest rate charged on the borrowing.

The following table reflects the carrying amounts and estimated fair values of our financial instruments (in millions):

June 30, 2023 December 31, 2022

The following table reflects the carrying amounts and estimated fair values of our financial instruments not measured at fair value on our consolidated balance sheets (in millions):

September 30, 2023 December 31, 2022

Carrying value

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(1) Excludes non-cash net premiums recorded on the mortgages payable.

The unamortized balance of these net premiums was $ 6.0 million at June 30, 2023, and $ 12.4 million at December 31, 2022.

Also excludes deferred financing costs of $ 0.7 million at June 30, 2023, and $ 0.8 million at December 31, 2022.

The unamortized balance of these net premiums was $ 2.8 million at September 30, 2023, and $ 12.4 million at December 31, 2022.

Also excludes deferred financing costs of $ 0.6 million at September 30, 2023, and $ 0.8 million at December 31, 2022.

(2) Excludes non-cash net premiums recorded on notes payable.

The unamortized balance of the net premiums was $ 168.8 million at June 30, 2023, and $ 224.6 million at December 31, 2022.

Also excludes deferred financing costs of $ 71.8 million and basis adjustment on interest rate swaps designated as fair value hedges of $ 4.6 million at June 30, 2023, and $ 60.7 million of deferred financing costs at December 31, 2022.

The unamortized balance of the net premiums was $ 147.5 million at September 30, 2023, and $ 224.6 million at December 31, 2022.

Also excludes deferred financing costs of $ 78.4 million and basis adjustment on interest rate swaps designated as fair value hedges of $ 4.4 million at September 30, 2023, and $ 60.7 million of deferred financing costs at December 31, 2022.

The estimated fair values of our mortgages payable and private senior notes payable have been calculated by discounting the future cash flows using an interest rate based upon the relevant forward interest rate curve, plus an applicable credit-adjusted spread.

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Although we have determined that the majority of the inputs used to value our derivatives fall within level two on the three-level valuation hierarchy, the credit valuation adjustments associated with our derivatives utilize level three inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by ourselves and our counterparties.

However, at June 30, 2023, and December 31, 2022, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

However, at September 30, 2023, and December 31, 2022, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

As a result, we determined that our derivative valuations in their entirety are classified as level two.

For more details on our derivatives, see note 11, Derivative Instruments.

Items Measured at Fair Value on a Non-Recurring Basis

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These interest rate swaps are designated as cash flow hedges.

The interest rate swaps are recorded on the consolidated balances sheets at fair value.

The interest rate swaps are recorded on the consolidated balance sheets at fair value.

Changes to fair value are recorded to accumulated other comprehensive income, or AOCI, and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings.

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For these hedges, we have elected to exclude the change in fair value of the cross-currency swaps related to both time value and cross-currency basis spread from the assessment of hedge effectiveness (the "excluded component").

Changes in the fair value of the cross-currency swaps attributable to changes in the spot rates on the final notional exchanges and changes in the value of the hedged assets due to changes in the spot rates are recorded in 'Foreign currency

and derivative (loss) gain, net'.

Changes in the fair value of the cross-currency swaps attributable to the excluded components are recorded to other comprehensive income and will be recognized in 'Foreign currency and derivative (loss) gain, net' on a systematic and rational basis, as net cash settlements and interest accruals on the respective cross currency swaps occur, over the remaining life of the hedging instruments.

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As the currency exchange swap is not accounted for as a hedging instrument, the change in fair value is recorded in earnings through the caption entitled 'Foreign currency and derivative (loss) gain, net' in the consolidated statements of income and comprehensive income.

The following table summarizes the terms and fair values of our derivative financial instruments at June 30, 2023 and December 31, 2022 (dollars in millions):

The following table summarizes the terms and fair values of our derivative financial instruments at September 30, 2023 and December 31, 2022 (dollars in millions):

Derivative Type

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Fair Value - asset (liability) as of

Derivatives Designated as Hedging Instruments June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

Derivatives Designated as Hedging Instruments September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Interest rate swaps

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3 320.0 320.0 (5) Oct 2032 ( 38.6 ) ( 33.3 )

Foreign currency forwards 24 144.0 185.5 (6) Jul 2023 - Dec 2024 6.9 16.1

Foreign currency forwards 26 160.7 185.5 (6) Oct 2023 - Dec 2024 10.1 16.1

$ 3,110.7 $ 755.5 $ ( 5.5 ) $ ( 11.6 )

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Currency exchange swaps

1 $ 214.9 $ 2,427.7 (7) July 2023 $ 3.5 $ 58.8

6 $ 1,650.6 $ 2,427.7 (7) Oct 2023 $ 6.6 $ 58.8

Cross-currency swaps 3 280.0 280.0 (5) Oct 2032 ( 34.7 ) ( 29.5 )

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Total of all Derivatives $ 5,041.3 $ 3,463.2 $ ( 33.6 ) $ 17.7

(1) This column represents the number of instruments outstanding as of June 30, 2023.

(2) Weighted average strike rate is calculated using the notional value as of June 30, 2023.

(3) This column represents maturity dates for instruments outstanding as of June 30, 2023.

(4) Represent purchased payer swaptions with a strike rate of 3.75 % and a sold payer swaptions with a strike rate of 4.25 %.

(1) This column represents the number of instruments outstanding as of September 30, 2023.

(2) Weighted average strike rate is calculated using the notional value as of September 30, 2023.

(3) This column represents maturity dates for instruments outstanding as of September 30, 2023.

(4) Represent purchased payer swaptions with a strike rate of 3.75 % and sold payer swaptions with a strike rate of 4.25 %.

(5) USD fixed rate of 5.625 % and EUR weighted average fixed rate of 4.697 %.

(6) Weighted average forward GBP-USD exchange rate of 1.31 .

(7) Weighted average EUR-USD exchange rate of 1.07 .

(7) Weighted average EUR-GBP exchange rates each of 0.86 .

We measure our derivatives at fair value and include the balances within other assets and accounts payable as well as accrued expenses on our consolidated balance sheets.

We have agreements with each of our derivative counterparties containing provisions under which we could be declared in default on our derivative obligations if repayment of our indebtedness is accelerated by the lender due to our default.

The following table summarizes the amount of unrecognized gain (loss) on derivatives in other comprehensive income (in thousands):

The following table summarizes the amount of unrealized gain (loss) on derivatives in other comprehensive income (in thousands):

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Derivatives in Cash Flow Hedging Relationships 2023 2022 2023 2022

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Total derivatives in fair value hedging relationships $ ( 3,917 ) $ — $ ( 8,691 ) $ —

Total unrealized (loss) gain on derivatives $ ( 6,410 ) $ 33,454 $ ( 8,572 ) $ 77,144

Total unrealized gain (loss) on derivatives $ 7,193 $ 41,914 $ ( 1,379 ) $ 119,058

The following table summarizes the amount of gain (loss) on derivatives reclassified from AOCI (in thousands):

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Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income 2023 2022 2023 2022

Cross-currency swaps Foreign currency and derivative gain (loss), net $ — $ 21,527 $ — $ 27,641

Interest rate swaps Interest income 3,259 ( 2,153 ) 4,739 ( 4,683 )

Foreign currency forwards Foreign currency and derivative gain (loss), net 892 — 2,323 —

Cross-currency swaps Foreign currency and derivative (loss) gain, net

$ — $ 2,784 $ — $ 30,425

Interest rate swaps Interest expense 5,316 ( 1,286 ) 10,055 ( 5,969 )

Foreign currency forwards Foreign currency and derivative (loss) gain, net

1,662 — 3,985 —

Interest rate swaptions Interest expense ( 2,250 ) — ( 4,609 ) —

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Derivatives in Fair Value Hedging Relationships

Cross-currency swaps Foreign currency and derivative gain (loss), net $ 190 $ — $ 484 $ —

Cross-currency swaps Foreign currency and derivative (loss) gain, net

$ 570 $ — $ 1,054 $ —

Total derivatives in fair value hedging relationships $ 570 $ — $ 1,054 $ —

Net increase to net income $ 5,298 $ 1,498 $ 10,485 $ 24,456

We expect to reclassify $ 18.2 million from AOCI as a decrease to interest expense relating to interest rate swaps and interest rate swaption and $ 6.6 million from AOCI to foreign currency gain relating to foreign currency forwards within the next twelve months.

We expect to reclassify $ 9.8 million from AOCI as a decrease to interest expense relating to interest rate swaps and interest rate swaptions and $ 11.4 million from AOCI to foreign currency gain relating to foreign currency forwards within the next twelve months.

The following table details our foreign currency and derivative gains (losses), net included in income (in thousands):

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Realized foreign currency and derivative gain (loss), net:

(Loss) gain on the settlement of undesignated derivatives $ ( 981 ) $ 79,308 $ ( 1,326 ) $ 76,628

Gain on the settlement of undesignated derivatives $ 11,432 $ 4,050 $ 10,106 $ 80,677

Gain on the settlement of designated derivatives reclassified from AOCI 2,233 2,784 5,039 30,425

(Loss) gain on the settlement of transactions with third parties ( 51 ) 1,004 1,275 952

Gain (loss) on the settlement of transactions with third parties 410 ( 111 ) 1,685 ( 41 )

Total realized foreign currency and derivative gain, net $ 14,075 $ 6,723 $ 16,830 $ 111,061

Unrealized foreign currency and derivative gain (loss), net:

(Loss) gain on the change in fair value of undesignated derivatives $ ( 7,394 ) $ 37,274 $ ( 8,176 ) $ 59,995

Gain (loss) on remeasurement of certain assets and liabilities 4,792 ( 131,633 ) 13,190 ( 158,326 )

Total unrealized foreign currency and derivative (loss) gain, net $ ( 2,602 ) $ ( 94,359 ) $ 5,014 $ ( 98,331 )

Total foreign currency and derivative (losses) gains, net $ ( 2,552 ) $ 7,480 $ 7,770 $ 6,890

Gain (loss) on the change in fair value of undesignated derivatives $ 12,910 $ ( 24,488 ) $ 4,734 $ 35,506

Loss on remeasurement of certain assets and liabilities ( 29,798 ) ( 5,128 ) ( 16,607 ) ( 162,570 )

Total unrealized foreign currency and derivative loss, net $ ( 16,888 ) $ ( 29,616 ) $ ( 11,873 ) $ ( 127,064 )

Total foreign currency and derivative (loss) gain, net $ ( 2,813 ) $ ( 22,893 ) $ 4,957 $ ( 16,003 )

Lessor Operating Leases

At June 30, 2023, we owned or held interests in 13,118 properties.

At September 30, 2023, we owned or held interests in 13,282 properties.

Of the 13,282 properties, 13,032 , or 98.1 %, are single-client properties, and the remaining are multi-client properties.

At June 30, 2023, 137 properties were available for lease or sale.

At September 30, 2023, 159 properties were available for lease or sale.

The majority of our leases are accounted for as operating leases.

Substantially all of our leases are net leases where our client pays or reimburses us for property taxes and assessments and carries insurance coverage for public liability, property damage, fire, and extended coverage.

Rent based on a percentage of our client's gross sales, or percentage rent, for the three months ended June 30, 2023, and 2022 was $ 1.7 million, and $ 2.2 million, respectively.

Percentage rent for the six months ended June 30, 2023, and 2022 was $ 5.8 million, and $ 6.0 million, respectively.

Rent based on a percentage of our client's gross sales, or percentage rent, for the three months ended September 30, 2023, and 2022 was $ 2.2 million, and $ 2.3 million, respectively.

Percentage rent for the nine months ended September 30, 2023, and 2022 was $ 8.0 million, and $ 8.3 million, respectively.

Distributions Paid and Payable

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June 0.2550 0.2470

July 0.2555 0.2475

August 0.2555 0.2475

September 0.2555 0.2475

$ 2.2830 $ 2.2230

At June 30, 2023, a distribution of $ 0.2555 per common share was payable and was paid in July 2023.

At September 30, 2023, a distribution of $ 0.2560 per common share was payable and was paid in October 2023.

Net Income per Common Share

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The following table summarizes our supplemental cash flow information during the periods indicated below (in thousands):

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Supplemental disclosures:

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Mortgages assumed at fair value $ — $ 45,079

Issuance of common partnership units of Realty Income, L.P.

The following table provides a reconciliation of cash and cash equivalents reported within the consolidated balance sheets to the total of the cash, cash equivalents, and restricted cash reported within the consolidated statements of cash flows (in thousands):

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

Cash and cash equivalents shown in the consolidated balance sheets $ 344,129 $ 187,745

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Impounds related to mortgages payable (1)

45,224 10,529

Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 430,664 $ 288,913

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This note should be read in conjunction with the more complete discussion of our 2021 Plan included in note 17 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022.

The amount of share-based compensation costs recognized in 'General and administrative' in the consolidated statements of income and comprehensive income was $ 7.6 million and $ 6.6 million during the three months ended

June 30, 2023, and 2022, respectively, and $ 13.9 million and $ 11.6 million during the six months ended June 30, 2023 and 2022, respectively.

The amount of share-based compensation costs recognized in 'General and administrative' in the consolidated statements of income and comprehensive income was $ 6.2 million and $ 5.1 million during the three months ended September 30, 2023, and 2022, respectively, and $ 20.2 million and $ 16.7 million during the nine months ended September 30, 2023, and 2022, respectively.

Restricted Stock and Restricted Stock Units

During the six months ended June 30, 2023, we granted 219,951 shares of common stock under the 2021 Plan.

During the nine months ended September 30, 2023, we granted 220,970 shares of common stock under the 2021 Plan.

This included 40,000 total shares of restricted stock granted to the independent members of our Board of Directors in connection with our annual awards in May 2023, 20,000 shares of which vested immediately and 20,000 shares of which vest in equal parts over a three-year service period.

Our restricted stock awards granted to employees vest over a service period not exceeding four-years .

During the six months ended June 30, 2023, we also granted 14,876 restricted stock units, all of which vest over a four-year service period.

As of June 30, 2023, the remaining unamortized share-based compensation expense related to restricted stock awards and units totaled $ 21.7 million, which is being amortized on a straight-line basis over the service period of each applicable award.

During the nine months ended September 30, 2023, we also granted 15,065 restricted stock units, all of which vest over a four-year service period.

As of September 30, 2023, the remaining unamortized share-based compensation expense related to restricted stock awards and units totaled $ 18.7 million, which is being amortized on a straight-line basis over the service period of each applicable award.

The amount of share-based compensation is based on the fair value of the stock at the grant date.

Performance Shares

During the six months ended June 30, 2023, we granted 193,868 performance shares, as well as dividend equivalent rights, to our executive officers.

During the nine months ended September 30, 2023, we granted 193,868 performance shares, as well as dividend equivalent rights, to our executive officers.

The performance shares are earned based on our Total Shareholder Return (TSR) performance relative to select industry indices and peer groups as well as achievement of certain operating metrics, and vest 50 % on the first and second January 1 after the end of the three-year performance period, subject to continued service.

As of June 30, 2023, the remaining share-based compensation expense related to the performance shares totaled $ 24.3 million.

As of September 30, 2023, the remaining share-based compensation expense related to the performance shares totaled $ 20.9 million.

The performance shares are being recognized on a tranche-by-tranche basis over the service period.

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We believe that the outcome of the proceedings will not have a material adverse effect upon our consolidated financial position or results of operations.

At June 30, 2023, we had commitments of $ 15.2 million, which primarily relate to re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of June 30, 2023, we had committed $ 764.9 million under construction contracts related to development projects, which have estimated rental revenue commencement dates between July 2023 and July 2024.

At September 30, 2023, we had commitments of $ 19.5 million, which primarily relate to re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of September 30, 2023, we had committed $ 903.6 million under construction contracts related to development projects, which have estimated rental revenue commencement dates between October 2023 and October 2024.

Subsequent Events

In July 2023, we declared a dividend of $ 0.2555 per share to our common stockholders, which will be paid in August 2023.

ATM Forward Offerings

As of August 3, 2023, ATM forward agreements for a total of 11.0 million shares remain unsettled with total expected net proceeds of approximately $ 651.4 million of which 6.1 million shares were executed in July 2023.

Notes Issuance

In July 2023, we issued € 550.0 million of 4.875 % senior unsecured notes due July 2030 (the “2030 Notes”), and € 550.0 million of 5.125 % senior unsecured notes due July 2034 (the “2034 Notes”).

The public offering price for the 2030 Notes was 99.421 % of the principal amount for an effective annual yield to maturity of 4.975 %, and the public offering price for the 2034 Notes was 99.506 % of the principal amount for an effective annual yield to maturity of 5.185 %.

Interest on the 2030 Notes and the 2034 Notes is paid annually.

In October 2023, we declared a dividend of $ 0.2560 per share to our common stockholders, which will be paid in November 2023.

Agreement and Plan of Merger

On October 29, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Saints MD Subsidiary, Inc., a Maryland corporation and our direct wholly owned subsidiary (“Merger Sub”), and Spirit Realty Capital, Inc., a Maryland corporation (“Spirit”).

Pursuant to the terms and conditions of the Merger Agreement, upon the closing, Spirit will be merged with and into Merger Sub, with Merger Sub continuing as the surviving corporation (the “Merger”).

Pursuant to the terms and subject to the conditions of the Merger Agreement, at the date and time the Merger becomes effective, (i) each outstanding share of Spirit common stock, par value $ 0.05 per share (other than the Excluded Common Shares (as defined in the Merger Agreement)) will automatically be converted into 0.762 of a newly issued share our common stock, subject to adjustment as set forth in the Merger Agreement, and cash in lieu of fractional shares, and (ii) each outstanding share of Spirit’s 6.000 % Series A Cumulative Redeemable Preferred

Stock, par value $ 0.01 per share, will be converted into the right to receive one share of newly issued Realty Income 6.000 % Series A Cumulative Redeemable Preferred Stock, having substantially the same terms as the Spirit Series A Preferred Stock.

The Merger Agreement contains customary covenants, representations, and warranties, as well as certain termination rights for us and Spirit, in each case, as more fully described in the Merger Agreement.

The consummation of the Merger is also subject to certain customary closing conditions, including receipt of the approval by the stockholders of Spirit, and certain customary termination rights.

Investment in Joint Venture

In October 2023, we completed our previously announced $ 950.0 million acquisition of common and preferred interests from Blackstone Real Estate Trust, Inc.

in a new joint venture that owns a 95 % interest in the real estate of The Bellagio Las Vegas.

The investment included approximately $ 300.0 million of common equity in the joint venture in exchange for an indirect interest of 21.9 % in the property and a $ 650.0 million preferred equity interest in the joint venture with an expected rate of return of 8.1 %.

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-Q

Item 1. Financial Statements