What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-02-22 · 602 added, 757 removed, 872 unchanged (61% of the section changed)

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All schedules, other than that indicated in the Table of Contents, have been omitted as the required information is either not material, inapplicable or the information is presented in the financial statements or related notes.

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Report of Independent Registered Public Accounting Firm

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Specifically, the measurement of the fair values of land is dependent upon significant assumptions of market land values for which relevant external market data is not always readily available.

There was a high degree of subjective and complex auditor judgment required in evaluating the fair value measurements given the sensitivity of the fair value measurements to changes in these assumptions.

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Subjective and complex auditor judgment was required in evaluating the fair value measurements given the sensitivity of the fair value measurements to changes in these assumptions.

The following are the primary procedures we performed to address this critical audit matter.

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For a selection of real estate acquisitions, we involved valuation professionals with specialized skills and knowledge who assisted in evaluating a selection of the Company’s acquired land values by comparing them to independently developed ranges using market data from industry transaction databases and published industry reports.

(signed) KPMG LLP

We have served as the Company’s auditor since 1993.

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February 21, 2024

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Report of Independent Registered Public Accounting Firm

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

(signed) KPMG LLP

San Diego, California

February 21, 2024

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share and share count data)

(in thousands, except per share amounts)

December 31, 2023 December 31, 2022

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Total liabilities 24,672,388 20,829,803

Commitments and contingencies

Commitments and contingencies (Note 20)

Stockholders’ equity:

Common stock and paid in capital, par value $ 0.01 per share, 1,300,000,000 and 740,200,000 shares authorized, 660,300,195 and 591,261,991 shares issued and outstanding as of December 31, 2022, and 2021, respectively

Common stock and paid in capital, par value $ 0.01 per share, 1,300,000 shares authorized, 752,460 and 660,300 shares issued and outstanding as of December 31, 2023, and December 31, 2022, respectively

39,629,709 34,159,509

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The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(dollars in thousands, except per share and share count data)

(in thousands, except per share amounts)

Years ended December 31,

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Amounts available to common stockholders per common share:

Basic $ 1.42 $ 0.87 $ 1.15

Diluted $ 1.42 $ 0.87 $ 1.14

Net income, basic and diluted $ 1.26 $ 1.42 $ 0.87

Weighted average common shares outstanding:

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Net income available to common stockholders $ 872,309 $ 869,408 $ 359,456

Total other comprehensive income (loss):

Total other comprehensive gain

Foreign currency translation adjustment 64,326 ( 55,154 ) 9,119

Unrealized gain (loss) on derivatives, net 97,054 50,448 ( 34,926 )

Total other comprehensive income (loss) $ 41,900 $ 59,567 $ ( 37,532 )

Unrealized (loss) gain on derivatives, net ( 37,265 ) 97,054 50,448

Total other comprehensive gain $ 27,061 $ 41,900 $ 59,567

Comprehensive income available to common stockholders $ 899,370 $ 911,308 $ 419,023

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(dollars in thousands)

(in thousands)

Years ended December 31, 2023, 2022 and 2021

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Net income — — 359,456 — 359,456 1,291 360,747

Other comprehensive loss — — — ( 37,532 ) ( 37,532 ) — ( 37,532 )

Other comprehensive income — — — 59,567 59,567 — 59,567

Shares issued in merger 162,044 11,556,715 — — 11,556,715 3,160 11,559,875

Orion Divestiture — ( 1,140,769 ) — — ( 1,140,769 ) ( 1,352 ) ( 1,142,121 )

Distributions paid and payable — — ( 1,230,094 ) — ( 1,230,094 ) ( 1,868 ) ( 1,231,962 )

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Other comprehensive income — — — 41,900 41,900 — 41,900

Shares issued in merger 162,043,548 11,556,715 — — 11,556,715 3,160 11,559,875

Orion Divestiture — ( 1,140,769 ) — — ( 1,140,769 ) ( 1,352 ) ( 1,142,121 )

Distributions paid and payable — — ( 1,832,030 ) — ( 1,832,030 ) ( 4,125 ) ( 1,836,155 )

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Share issuance, net of costs 91,902 5,450,982 — — 5,450,982 — 5,450,982

Reallocation of equity — ( 3,210 ) — — ( 3,210 ) 3,210 —

Share-based compensation, net 258 19,218 — — 19,218 — 19,218

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The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(in thousands)

Years ended December 31,

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Amortization of deferred financing costs 26,670 15,613 12,333

Loss on interest rate swaps 718 2,905 4,353

Foreign currency and unrealized derivative loss (gain), net 220,948 27,223 ( 14,510 )

(Gain) loss on interest rate swaps ( 7,189 ) 718 2,905

Foreign currency and unrealized derivative loss, net 37,776 220,948 27,223

Gain on sales of real estate ( 25,667 ) ( 102,957 ) ( 55,798 )

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Distributions from unconsolidated entities 5,807 1,605 365

Provisions for impairment on real estate 25,860 38,967 147,232

Provisions for impairment 87,082 25,860 38,967

Change in assets and liabilities

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Improvements to real estate, including leasing costs ( 68,692 ) ( 95,514 ) ( 19,080 )

Investment in unconsolidated entities ( 1,179,306 ) — —

Investment in loans ( 201,621 ) — —

Proceeds from sales of real estate 117,354 436,115 250,536

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Payments on line of credit and commercial paper programs ( 79,398,193 ) ( 27,434,617 ) ( 7,508,332 )

Principal payment on term loan — — ( 250,000 )

Proceeds from term loan 1,029,383 — —

Proceeds from notes payable issued 4,239,745 2,154,662 1,033,387

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Effect of exchange rate changes on cash and cash equivalents 24,023 ( 20,511 ) 20,076

Net (decrease) increase in cash, cash equivalents and restricted cash ( 105,488 ) ( 518,310 ) 779,674

Net increase (decrease) in cash, cash equivalents and restricted cash 65,294 ( 105,488 ) ( 518,310 )

Cash, cash equivalents and restricted cash, beginning of period 226,881 332,369 850,679

Cash, cash equivalents and restricted cash, end of period $ 292,175 $ 226,881 $ 332,369

For supplemental disclosures, see note 16, Supplemental Disclosures of Cash Flow Information .

For supplemental disclosures, see note 18 , S upplemental Disclosures of Cash Flow Information .

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

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December 31, 2023

Organization and Operation

Summary of Significant Accounting Policies

Realty Income Corporation (“Realty Income,” the “Company,” “we,” “our” or “us”) was founded in 1969 and is organized as a Maryland corporation.

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

Over the past 54 years, we have been acquiring and managing freestanding commercial properties that generate rental revenue under long-term net lease agreements with our commercial clients.

At December 31, 2022, we owned or held interests in 12,237 properties, with approximately 236.8 million leasable square feet.

Information with respect to number of properties, leasable square feet, average initial lease term and initial weighted average cash lease yield is unaudited.

Our financial results for the years ended December 31, 2022 and 2021 reflect our merger with VEREIT, Inc.

("VEREIT"), following the consummation of the merger on November 1, 2021.

Our financial results for the year ended December 31, 2020 do not reflect the merger.

For more details, please see note 3, Merger with VEREIT, Inc.

and Orion Office REIT Inc.

Summary of Significant Accounting Policies and Procedures and New Accounting Standards

As of December 31, 2023, we owned or held interests in a diversified portfolio of 13,458 properties located in all 50 states of the United States ("U.S."), Puerto Rico, the United Kingdom ("U.K."), France, Germany, Ireland, Italy, Portugal, and Spain, with approximately 272.1 million square feet of leasable space.

Information with respect to number of properties, leasable square feet, average initial lease term and initial weighted average cash yield is unaudited.

Basis of Presentation .

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Generally, assets and liabilities are translated at the exchange rate in effect at the balance sheet date.

The resulting translation adjustments are included in 'Accumulated other comprehensive income', ("AOCI"), in the consolidated balance sheets.

The resulting translation adjustments are included in 'Accumulated other comprehensive income', ("AOCI"), on our consolidated balance sheets.

Certain balance sheet items, primarily equity and capital-related accounts, are reflected at the historical exchange rate.

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When the debt is remeasured to the functional currency of the entity, a gain or loss can result.

The resulting adjustment is reflected in 'Foreign currency and derivative (loss) gain, net' in the consolidated statements of income and comprehensive income.

The resulting adjustment is reflected in 'Foreign currency and derivative (loss) gain, net' in our consolidated statements of income and comprehensive income.

In the statement of cash flows, cash flows denominated in foreign currencies are translated using the exchange rates in effect at the time of the respective cash flows or at average exchange rates for the period, depending on the nature of the cash flow items.

Principles of Consolidation.

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We evaluate whether we have a controlling financial interest in an entity in accordance with Accounting Standards Codification ("ASC") 810, Consolidation.

Voting interest entities are entities considered to have sufficient equity at risk and which the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities.

Voting interest entities ("VOEs") are entities considered to have sufficient equity at risk and which the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities.

We consolidate voting interest entities in which we have a controlling financial interest, which we typically have through holding of a majority of the entity’s voting equity interests.

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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.

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The portion of a consolidated entity not owned by us is recorded as a noncontrolling interest.

Noncontrolling interests are reflected on our consolidated balance sheets as a component of equity.

Noncontrolling interests that were created or assumed as part of a business combination or asset acquisition were recognized at fair value as of the date of the transaction (see note 11, Noncontrolling Interests ).

At December 31, 2022, Realty Income, L.P.

and certain of our 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 on our consolidated balance sheets at December 31, 2022 and 2021 (in thousands):

At December 31, 2023, we are considered the primary beneficiary of Realty Income, L.P.

and certain investments, including investments in joint ventures.

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

December 31, 2023 December 31, 2022

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$ 134,366 $ 60,127

The portion of a consolidated entity not owned by us is recorded as a noncontrolling interest.

Noncontrolling interests are reflected on our consolidated balance sheets as a component of equity.

Reclassification .

Certain reclassifications have been made to the prior years’ consolidated statements of cash flows to conform to current year presentation.

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

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

Previously, this was categorized as 'Accounts receivable, net' on our consolidated balance sheets.

Use of Estimates.

The consolidated financial statements were prepared in conformity with U.S.

GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ from those estimates.

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A TRS is a subsidiary of a REIT that is subject to federal, state and local income taxes, as applicable.

Our use of a TRS enables us to engage in certain business activities while complying with the REIT qualification requirements and to retain any income generated by these businesses for reinvestment without the requirement to distribute those earnings.

Our use of TRS entities enables us to engage in certain business activities while complying with the REIT qualification requirements and to retain any income generated by these businesses for reinvestment without the requirement to distribute those earnings.

For our international territories, we are liable for taxes in the United Kingdom and Spain.

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Earnings and profits that determine the taxability of distributions to stockholders differ from net income reported for financial reporting purposes primarily due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things.

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We regularly analyze our various international, federal and state filing positions and only recognize the income tax effect in our financial statements when certain criteria regarding uncertain income tax positions have been met.

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Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term.

Any rental revenue contingent upon our client’s sales is recognized only after our client exceeds their sales breakpoint.

Rental increases based upon changes in the consumer price indexes are recognized only after the changes in the indexes have occurred and are then applied according to the lease agreements.

Any rental revenue contingent upon our client’s sales, or percentage rent, is recognized only after our client exceeds their sales breakpoint.

Rental increases based upon changes in the consumer price indices are recognized only after the changes in the indexes have occurred and are then applied according to the lease agreements.

Contractually obligated rental revenue from our clients for recoverable real estate taxes and operating expenses are included in contractually obligated reimbursements by our clients, a component of rental revenue, in the period when such costs are incurred.

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Other revenue includes certain property-related revenue not included in rental revenue and interest income recognized on financing receivables for certain leases with above-market terms.

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

We continue to assess the probability of collecting substantially all of the lease payments to which we are entitled under the original lease contract as required under Topic 842, Leases .

We assess the collectability of our future lease payments based on an analysis of creditworthiness, economic trends (including trends arising from the COVID-19 pandemic) and other facts and circumstances related to the applicable clients.

If we conclude the collection of substantially all lease payments under a lease is less than probable, rental revenue recognized for that lease is limited to cash received going forward, existing operating lease receivables, including those related to straight-line rental revenue, must be written off as an adjustment to rental revenue, and no further operating lease receivables are recorded for that lease until such future determination is made that substantially all lease payments under that lease are now considered probable.

We assess the probability of collecting substantially all of the lease payments to which we are entitled under the original lease contract as required under ASC 842, Leases .

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

If we conclude the collection of substantially all of lease payments under a lease is less than probable, rental revenue recognized for that lease is limited to cash received going forward, existing operating lease receivables, including those related to straight-line rental revenue, must be written off as an adjustment to rental revenue, and no further operating lease receivables are recorded for that lease until such future determination is made that substantially all lease payments under that lease are now considered probable.

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.

As of December 31, 2022, the majority of concessions granted to our clients as a result of the COVID-19 pandemic have been rent deferrals with the original lease term unchanged.

In accordance with the guidance provided by the Financial Accounting Standards Board ("FASB") staff, we have elected to account for these leases as if the right of deferral existed in the lease contract and therefore continue to recognize lease revenue in accordance with the lease contract in effect.

In limited circumstances, the undiscounted cash flows resulting from deferrals granted increased significantly from original lease terms, which required us to account for these as lease modifications and resulted in an insignificant impact to consolidated rental revenue.

Similarly, rent abatements granted, which are also accounted for as lease modifications, have impacted our rental revenue by an insignificant amount.

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.

The following table summarizes net reserves to rental revenue (in millions):

Years ended December 31,

2022 2021 2020

Rental revenue reserves $ 2.3 $ 10.2 $ 44.1

Straight-line rent reserves 1.7 4.5 8.4

Total rental revenue reserves $ 4.0 $ 14.7 $ 52.5

As of December 31, 2022, other than the information related to the reserves recorded to 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, since the conversations regarding rent collections for our clients affected by the COVID-19 pandemic are ongoing and we do not currently know the types of future concessions, if any, that will ultimately be granted, there may be impacts in future periods that could change this assessment as the situation continues to evolve and as more information becomes available.

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Loans Receivable .

The loans we acquired during 2023 are classified as held for investment and are carried at their amortized cost basis.

We recognize interest income on loans receivable using the effective-interest method.

Direct costs associated with originating loans, along with any premium or discount, are deferred and amortized as an adjustment to interest income over the term of the loan using the effective interest method.

When management identifies the full recovery of the contractually specified payments of principal and interest of a loan is less than probable, we evaluate the expected loss amount and place it on non-accrual status.

We made the accounting policy election to record accrued interest on our loan portfolio separate from our loan receivable and other lending investments.

These loans and the related interest receivable are presented in 'Other assets, net' on our consolidated balance sheets.

Allowance for Credit Losses .

The allowance for credit losses, which is recorded as a reduction to loans receivable and financing receivable within 'Other assets, net' on our consolidated balance sheets, is measured using a probability of default method based on our client's respective credit ratings and the expected value of the underlying collateral upon its repossession.

Included in our model are factors that incorporate forward-looking information.

Allowance for credit losses is presented in 'Provisions for impairment' in our consolidated statements of income and comprehensive income.

During the year ended December 31, 2023, we recognized a provision for credit losses of $ 4.9 million, which includes $ 2.5 million of allowances on loans receivable and $ 2.4 million of allowances on financing receivables.

Gain on Sales of Real Estate .

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Allocation of the Purchase Price of Real Estate Acquisitions .

A majority of our acquisitions qualify as asset acquisitions and the transaction costs associated with those acquisitions are capitalized.

However, our merger with VEREIT was comprised of both inputs and substantive processes that together significantly contributed to the ability to create outputs and, therefore, was considered a business.

As a result, the merger with VEREIT qualified as a business combination and, accordingly, the transaction costs were expensed and categorized as merger and integration-related costs on our consolidated statements of income and comprehensive income.

In accordance with ASC Topic 805, Business Combinations , adjustments to the allocated purchase price were made within one year of the closing date of our merger with VEREIT as acquisition date uncertainties were resolved (for more details on our merger with VEREIT, please see note 3, Merger with VEREIT, Inc.

and Orion Office REIT Inc.

Divestiture ).

Apart from our merger with VEREIT, a majority of our acquisitions qualify as asset acquisitions.

Therefore when acquiring a property for investment purposes, we typically allocate the cost of real estate acquired, inclusive of transaction costs, to:

We evaluate whether or not substantially all of the value of acquired assets is concentrated in a single identifiable asset or group of identifiable assets to determine whether a transaction is accounted for as an asset acquisition or a business combination.

A majority of our

acquisitions qualify as asset acquisitions, and the transaction costs associated with those acquisitions are capitalized.

On the other hand, we expense the transaction costs and categorize them as merger and integration-related costs on our consolidated statements of income and comprehensive income for transactions that qualify as a business combination.

For business combinations, we recognize the amount of any purchase consideration that exceeds the fair value of all identified assets acquired and liabilities assumed as goodwill and may record measurement period adjustments within one year of the acquisition date as permitted under ASC 805, Business Combinations .

For asset acquisitions, we allocate the cost of real estate acquired, inclusive of transaction costs, to:

(1) land, (2) building and improvements, and (3) identified intangible assets and liabilities, based in each case on their relative estimated fair values.

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market land and building values, market rental rates, discount rates and capitalization rates.

Our methodology for measuring and allocating the fair value of real estate acquisitions includes both observable market data (categorized as level 2 on the three-level valuation hierarchy of ASC Topic 820, Fair Value Measurement), and unobservable inputs that reflect our own internal assumptions (categorized as level 3 under ASC Topic 820).

Given the significance of the unobservable inputs we believe the allocations of fair value of real estate acquisitions should be categorized as level 3 under ASC Topic 820.

Our methodology for measuring and allocating the fair value of real estate acquisitions includes both observable market data (categorized as level 2 on the three-level valuation hierarchy of ASC 820, Fair Value Measurement ), and unobservable inputs that reflect our own internal assumptions (categorized as level 3 under ASC 820).

Given the significance of the unobservable inputs we believe the allocations of fair value of real estate acquisitions should be categorized as level 3 under ASC 820.

From time to time, we have used, and may continue to use, the assistance of independent third parties specializing in real estate valuations to prepare our purchase price allocations.

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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 on our consolidated statements of income and comprehensive income.

The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to depreciation and amortization expense over the remaining periods of

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the respective leases.

The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to depreciation and amortization expense over the remaining periods of the respective leases.

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

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Assets held for sale are recorded at the lower of carrying value or estimated fair value, less the estimated cost to dispose of the assets.

Twenty-two properties were classified as held for sale at December 31, 2022.

Twenty-nine properties were classified as held for sale at December 31, 2023.

If circumstances arise that we previously considered unlikely and, as a result, we decide not to sell a property previously classified as held for sale, we will reclassify the property as held for investment.

We measure and record a property that is reclassified as held for investment at the lower of (i) its carrying value before the property was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the property been continuously classified as held for investment or (ii) the estimated fair value at the date of the subsequent decision not to sell.

We measure and record

a property that is reclassified as held for investment at the lower of (i) its carrying value before the property was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the property been continuously classified as held for investment or (ii) the estimated fair value at the date of the subsequent decision not to sell.

Investment in Unconsolidated Entities.

During the year ended December 31, 2022, all seven properties owned by our industrial partnerships and accounted for under the equity method were sold.

For further details, see note 5, Investments in Real Estate.

We accounted for our investment in unconsolidated entity arrangements using the equity method of accounting as we had the ability to exercise significant influence, but not control, over operating and financing policies of these investments.

We had determined that none of the unconsolidated entities would be considered VIEs under the applicable accounting guidance.

Our equity method investments were acquired in our merger with VEREIT.

As a result, the investments were recorded at fair value and subsequently would be adjusted for our share of equity in the entities' earnings and distributions received.

The step-up in fair value was allocated to the individual investment assets and liabilities and were amortized over the estimated useful life of the respective underlying tangible real estate assets, the lease term of the intangible real estate assets, and the remaining term of the assumed debt.

The carrying value of our investment was included in 'Investment in unconsolidated entities' in the accompanying consolidated balance sheet as of December 31, 2021.

We recorded our proportionate share of net income from the unconsolidated entities in 'Equity in income and impairment of investment in unconsolidated entities' in the consolidated statements of income and comprehensive income for the years ended December 31, 2022 and 2021.

Investments in unconsolidated entities of which we are not considered the primary beneficiary, include VIEs and are accounted for using the equity method as we have the ability to exercise significant influence over operating and financing policies of these investments.

We initially recognize the fair value of our contribution as an equity method investment.

We subsequently adjust these balances for our proportionate share of net earnings/losses of the entities, distributions received and contributions made.

Transaction costs related to the formation of equity method investments are also capitalized, resulting in a basis difference.

This basis difference is amortized over the estimated useful life of the respective underlying assets and/or liabilities.

The carrying value of our investment is included in 'Investment in unconsolidated entities' on our consolidated balance sheets.

We record our proportionate share of net income from the unconsolidated entities in 'Equity in income and impairment of investment in unconsolidated entities' in our consolidated statements of income and comprehensive income.

With regard to distributions from unconsolidated entities, we have elected the nature of distribution approach as the information is available to us to determine the nature of the underlying activity that generated the distributions.

In accordance with such approach, cash flows generated from the operations of an unconsolidated entity are classified as a return on investment (cash inflow from operating activities) and cash flows that are generated from other activities, such as property sales, debt refinancing or sale and redemptions of our investments of our investments are classified as a return of investment (cash inflow from investing activities).

Our contribution to the unconsolidated entities or any distributions from them as returns of investment are classified as investing activities.

Our investment in unconsolidated entities includes preferred interests.

Upon acquisition, we assess whether such investment should be considered debt or equity securities based on investment terms.

As of December 31, 2023, our investment balance includes preferred interests classified as equity securities without a readily determinable fair value, for which we elect to apply the measurement alternative and record the value of the investment at cost, less any applicable impairment.

Upon the closing of a business combination, after identifying all tangible and intangible assets and liabilities, the excess consideration paid over the fair value of the assets and liabilities acquired and assumed, respectively, represents goodwill.

In connection with our merger with VEREIT, we recorded goodwill as a result of consideration exceeding the net assets acquired.

For further details, see note 3, Merger with VEREIT, Inc.

and Orion Office REIT Inc.

Divestiture .

Deferred Financing Costs.

Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining or originating financing.

Deferred financing costs, other than those associated with the line of credit, are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability.

Deferred financing costs, other than those associated with the line of credit, are presented on our consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability.

Deferred financing costs related to the line of credit are included in 'other assets, net' in the accompanying consolidated balance sheets.

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The estimated useful lives are as follows:

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Buildings 25 years or 35 years

Buildings 25 to 35 years

Building improvements 4 to 35 years

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Key assumptions that we utilize in this analysis include projected rental rates, estimated holding periods, capital expenditures and property sales capitalization rates.

For further details, see note 12, Financial Instruments and Fair Value Measurements.

For further details, see note 13, Fair Value Measurements.

Provisions for Impairment - Goodwill.

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Provisions for Impairment - Investment in Unconsolidated Entities.

As part of our merger with VEREIT in November 2021, we acquired seven properties owned by industrial partnerships.

These properties, which were subsequently sold during the year ended December 31, 2022, were accounted for under the equity method and considered unconsolidated entities.

During our ownership of those properties and when circumstances indicated that a decrease in the value of an equity method investment had occurred that was other than temporary, we recognized an impairment loss, which required significant judgment.

To determine whether the impairment loss was other-than-temporary, we considered whether it had the ability and intent to hold the investment until the carrying value was fully recovered.

We evaluated the impairment of our investment in unconsolidated entities in accordance with accounting standards for equity investments by first reviewing each investment for indicators of impairment.

If indicators were present, we estimated the fair value of the investments.

If the carrying value of the investment was greater than the estimated fair value, we made an assessment of whether the impairment was temporary or other-than-temporary.

In making this assessment, we considered the length of time and the extent to which fair value had been less than cost, the financial condition and near-term prospects of the entity, and our intent and ability to retain the interest long enough for a recovery in market value.

The investment was reduced to its estimated fair value if conclusions indicated the impairment was other than temporary.

For further details, see note 5, Investments in Real Estate.

During our ownership of properties that are accounted for under the equity method and considered unconsolidated entities, and when circumstances indicate that a decrease in the value of an equity method investment has occurred that is other than temporary, we recognize an impairment loss, which requires significant judgment.

To determine whether the impairment loss is other-than-temporary, we consider whether it has the ability and intent to hold the investment until the carrying value is fully recovered.

We evaluate the impairment of our investment in unconsolidated entities in accordance with accounting standards for equity investments by first reviewing each investment for indicators of impairment.

If indicators are present, we estimate the fair value of the investments.

If the carrying value of the investment is greater than the estimated fair value, we make an assessment of whether the impairment is temporary or other-than-temporary.

In making this assessment, we consider the length of time and the extent to which fair value has been less than cost, the financial condition and near-term prospects of the entity, and our intent and ability to retain the interest long enough for a recovery in market value.

The investment is then reduced to its estimated fair value if conclusions indicate the impairment is other than temporary.

Equity Offering Costs.

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Derivative contracts may be entered into outright or embedded within a non-derivative host contract, and may be listed, traded on exchanges or privately negotiated directly between two parties.

We actively manage our risk exposures which arise from our liquidity and funding activities using derivative instruments which hedge for interest rate risk, foreign exchange risk, or both.

We actively manage interest rate and foreign currency exposures arising from our liquidity and funding activities using derivative instruments.

We record all derivatives on the balance sheet at fair value.

The recognition of changes in the fair value of derivatives is recorded in net income unless the derivative is designated in a cash flow or net investment hedge accounting relationship in which case the change in fair value is recorded in other comprehensive income until such time as the designated hedged item impacts net income.

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The majority of inputs used to value our derivatives fall within level 2 of the fair value hierarchy.

The recognition of changes in the fair value of derivatives is recorded in net income unless the derivative is designated as a cash flow or net investment hedge, in which case the change in fair value is recorded in other comprehensive income and subsequently reclassified to a designated account in our consolidated statements of income and comprehensive income in the periods during which the hedged transaction affects earnings.

Segment Reporting.

During the second quarter of 2022, a re-evaluation of our business and management structure led to a change in identification of operating and reportable segments.

As we have grown in size and scale over recent years, including through the acquisition of VEREIT in November 2021, management has shifted its focus to operating performance, seeking investments with attractive yields and risk adjusted returns regardless of client industry or geography.

Our chief operating decision maker relies primarily on cash flow analysis at the consolidated level to make decisions about allocating resources.

As a result, we reorganized our business activities into one operating and reportable segment.

ASC Topic 280, Segment Reporting , establishes standards for the manner in which enterprises report information about operating segments.

We are engaged in a single business activity, which is the leasing of property to clients, generally on a net basis (whereby clients are responsible for property taxes, insurance and maintenance costs).

That business activity spans various geographic boundaries and includes property types and clients engaged in various industries, but ultimately all business activity involves similar economic characteristics of owning and leasing commercial properties under long-term, net lease agreements.

Our business is characterized as owning and leasing commercial properties under long-term, mostly triple net lease agreements (whereby clients are responsible for property taxes, insurance and maintenance

costs), and these economic characteristics are similar across various property types, geographic locations, and industries in which our clients operate.

Information reviewed by our chief operating decision maker in evaluating performance and allocating resources are primarily operating results and cash flow analysis for the overall company.

Therefore, we operate and manage the business in one operating and reportable segment.

This segmental presentation is consistent with the information provided to our chief operating decision maker to make decisions about allocating resources and assessing our performance.

ASC 280 requires certain entity-wide annual disclosures for entities with a single reportable segment.

ASC 280, Segment Reporting, requires certain entity-wide annual disclosures for entities with a single reportable segment.

The following table disaggregates domestic and international revenue by major asset types and geographic regions (in millions):

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Total revenue $ 2,080.5

(1) Other includes properties in Spain, starting in September 2021 and in Italy, starting in October 2022.

(2) Other includes the office, agriculture and gaming asset types, with gaming starting in December 2022.

(1) Other includes properties in Spain, starting in September 2021, in Italy, starting in October 2022, in Ireland, starting in June 2023, and in France, Germany, and Portugal starting in December 2023.

(2) Other includes the following asset types:

office, agriculture and gaming.

Long-lived assets include items such as property, plant, equipment and right-of-use assets subject to operating and finance leases.

As of December 31, 2022, no individual country or asset-type representing more than 10% of total revenue, other than as presented in the tables above.

In addition, as of December 31, 2022, no individual country or asset-type representing more than 10% of the total assets, other than as presented in the tables below.

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following table disaggregates domestic and international total long-lived assets (in millions):

As of December 31, 2023, no individual country or asset-type represented more than 10% of total revenue, other than as presented in the tables above.

In addition, as of December 31, 2023, no individual country or asset-type represented more than 10% of the total assets, other than as presented in the tables below.

The following table disaggregates domestic and international total long-lived assets (in millions):

As of December 31,

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Total assets $ 57,779.4 $ 49,673.1

(1) Other includes properties in Spain, starting in September 2021 and in Italy, starting in October 2022.

Recently Adopted Accounting Standards In March 2020, the FASB issued ASU 2020-04 establishing Topic 848, Reference Rate Reform .

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance is optional and is effective between March 12, 2020, and December 31, 2022.

The guidance may be elected over time as reference rate reform activities occur.

During 2022, all of our debt and derivative instruments were converted from LIBOR to SOFR.

The interest rate swap on our term loan, which was converted to a Secured Overnight Financing Rate ("SOFR") benchmark from the London Inter-Bank Offered Rate (“LIBOR”) during June 2022, continues to be accounted for as a cash flow hedge.

The adoption of this guidance had no impact on our consolidated financial statements.

(1) Other includes properties in Spain, starting in September 2021, in Italy, starting in October 2022, in Ireland, starting in June 2023, and in France, Germany, and Portugal, starting in December 2023.

Recent Accounting Standards Not Yet Adopted.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes , to enhance income tax disclosures, provide more information about tax risks and opportunities present in worldwide operations, and to disaggregate existing income tax disclosures.

The guidance is effective for annual periods beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively.

Early adoption is permitted.

We are currently evaluating the impact on our financial statement disclosures.

In November 2023, FASB issued Accounting Standards Update ASU 2023-07, Segment Reporting , establishing improvements to reportable segments disclosures to enhance segment reporting under Topic 280.

This ASU aims to change how public entities identify and aggregate operating segments and apply quantitative thresholds to determine their reportable segments.

This ASU also requires public entities that operate as a single reportable segment to provide all segment disclosures in Topic 280, not just entity level disclosures.

The guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and the amendments should be applied retrospectively to all periods presented in the financial statements.

We are currently evaluating the impact on our financial statement disclosures.

Merger with VEREIT, Inc.

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Merger with VEREIT

On April 29, 2021, we entered into an Agreement and Plan of Merger, as amended, (the "Merger Agreement"), with VEREIT, its operating partnership, VEREIT Operating Partnership, L.P., ("VEREIT OP"), and two newly formed subsidiaries.

Pursuant to the terms of the Merger Agreement, (i) one of the newly formed subsidiaries of us agreed to merge with and into VEREIT OP, with VEREIT OP as the surviving entity, which we refer to as the Partnership Merger, and (ii) immediately thereafter, VEREIT agreed to merge with and into the other newly formed subsidiary of us, with our subsidiary as the surviving corporation, which we refer to collectively as the merger.

The primary reason for the Merger was to expand our size, scale and diversification, in order to further enhance our competitive advantages and accelerate our investment activities.

On November 1, 2021, we completed our acquisition of VEREIT, and the merger was consummated.

Pursuant to the terms of the Merger Agreement and subject to the terms thereof, upon the consummation of the merger, (i) each outstanding share of VEREIT common stock, and each outstanding common partnership unit of VEREIT OP owned by any of its partners other than VEREIT, Realty Income or their respective affiliates, was automatically converted into 0.705 of newly issued shares of our common stock, or in certain instances, Realty Income L.P.

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

("VEREIT"), and the merger was consummated.

Pursuant to the terms of the Merger Agreement and subject to the terms thereof, upon the consummation of the merger, (i) each outstanding share of VEREIT common stock, and each outstanding common partnership unit of VEREIT Operating Partnership, L.P., ("VEREIT OP") owned by any of its partners other than VEREIT, Realty Income or their respective affiliates, was automatically converted into 0.705 of newly issued shares of our common stock, or in certain instances, Realty Income L.P.

units, and (ii) each VEREIT OP outstanding common unit owned by VEREIT, Realty Income or their respective affiliates remained outstanding as partnership interests in the surviving entity.

Each outstanding VEREIT stock option and restricted stock unit that were unvested as of November 1, 2021 were converted into equivalent options and restricted stock units, in each case with respect to the share of the Company's common stock, using the equity award exchange ratio in accordance with the Merger Agreement.

For more details, see note 17, Common Stock Incentive Plan.

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Our merger with VEREIT has been accounted for using the acquisition method of accounting in accordance with ASC, 805, Business Combinations , with Realty Income as the accounting acquirer, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair value .

The fair value of the consideration transferred on the date of the acquisition is as follows (in thousands, except share and per share data):

Shares of VEREIT common stock and VEREIT OP common units exchanged (1)

Exchange Ratio 0.705

Fractional shares settled in cash ( 1,545 )

Shares of Realty Income common stock and Realty Income L.P.

units issued 161,657,800

Adjusted opening price of Realty common stock on November 1, 2021 (2)

Fair value of Realty common stock issued to former holders of VEREIT common stock and VEREIT OP common units $ 11,515,855

Fair value of VEREIT's equity-based compensation awards attributable to pre-combination services (3)

Total non-cash consideration $ 11,559,875

Cash paid for fractional shares 110

VEREIT indebtedness paid off in connection with the merger (4)

Consideration transferred $ 12,060,399

(1) Includes 229,152,001 shares of VEREIT common stock and 152,034 VEREIT OP common units outstanding as of November 1, 2021.

Under the Merger Agreement, these shares and units were converted to Realty Income common stock, or in certain instances, Realty Income L.P.

units, at an Exchange Ratio of 0.705 per share of VEREIT common stock or VEREIT OP common unit, as applicable.

(2) The fair value of Realty Income common stock issued to former holders of VEREIT common stock and VEREIT OP common units is based on the per share opening price of Realty Income common stock of $ 71.00 on November 1, 2021, adjusted for the monthly dividend of $ 0.236 per share that former holders of VEREIT common stock and VEREIT OP common units were eligible to receive when such dividend was paid on November 15, 2021.

(3) Represents the fair value of fully vested deferred stock unit awards of VEREIT common stock (“VEREIT DSU Awards”) which were converted into Realty Income common stock upon our merger with VEREIT, as well as the estimated fair value of the Realty Income replacement employee and executive stock options and restricted stock units that were granted at the closing date of our merger with VEREIT and which were attributable to pre-combination services.

(4) Represents the outstanding balance of the VEREIT revolving credit facility repaid by Realty Income in connection with the closing of the merger.

The amount shown in the table above was based upon the balance outstanding immediately prior to November 1, 2021.

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Purchase Price Allocation

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

As of November 1, 2021

Land $ 3,021,906

Buildings 8,677,467

Total real estate held for investment 11,699,373

Cash and cash equivalents 128,411

Accounts receivable 53,355

Lease intangible assets (1)

Goodwill 3,717,620

Investment in unconsolidated entities 175,379

Other assets 308,910

Total assets acquired $ 19,287,821

Accounts payable and accrued expenses $ 139,836

Lease intangible liabilities (2)

Other liabilities 320,893

Mortgages payable 869,027

Notes payable 4,946,965

Total liabilities assumed $ 7,226,070

Net assets acquired, at fair value $ 12,061,751

Noncontrolling interests $ 1,352

Total purchase price $ 12,060,399

(1) The weighted average amortization period for acquired lease intangible assets is 9.3 years.

(2) The weighted average amortization period for acquired lease intangible liabilities is 25.5 years.

The initial assessment of fair value provided in our Annual Report on Form 10-K for the year ended December 31, 2021 was preliminary and was based on information that was available to management at the time the consolidated financial statements were prepared.

Measurement period adjustments were recorded during the year ended December 31, 2022 in the period in which they were determined, as if they had been completed at the acquisition date.

Before the first anniversary of the merger date, final measurement period adjustments, as reflected in the table above, resulted in a net increase of $ 54.8 million to goodwill from the initial valuation, reflecting a decrease of $ 15.8 million in land, $ 7.6 million in building, $ 22.6 million in lease intangible assets, $ 19.5 million in investment in unconsolidated entities, $ 9.9 million in other assets, offset by decrease of $ 4.4 million in lease intangible liabilities, $ 16.1 million in other liabilities and $ 0.1 million in mortgages payable.

Approximately $ 3.72 billion was allocated to goodwill.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed.

The recognized goodwill was attributable to expected synergies and benefits arising from the merger transaction, including anticipated financing and overhead cost savings, potential economies of scale benefits in both customer and vendor relationships and the

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employee workforce onboarded from VEREIT following the closing of the merger.

None of the goodwill recognized is deductible for tax purposes.

Merger and Integration-Related Costs

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

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.

In conjunction with our merger with VEREIT, we incurred merger-related transaction costs of $ 4.8 million, $ 13.9 million, and $ 167.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Merger and integration-related costs consist of advisory fees, attorney fees, accountant fees, public 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.

Unaudited Pro Forma Financial Information

Our consolidated results of operations for the years ended December 31, 2022 and 2021, include $ 1.02 billion and $ 176.3 million of revenues, respectively, and $ 62.4 million and $ 36.7 million of net income associated with the results of operations of VEREIT OP, respectively.

The following unaudited pro forma information presents a summary of our combined results of operations for the years ended December 31, 2021 and 2020, as if our merger with VEREIT had occurred on January 1, 2020 (in millions, except per share data).

There are no pro forma adjustments for the year ended December 31, 2022, as the merger was completed November 1, 2021.

The following pro forma financial information is not necessarily indicative of the results of operations had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.

Our consolidated results of operations for year ended December 31, 2021 include $ 176.3 million of revenues and $ 36.7 million of net income associated with the results of operations of VEREIT OP.

The following unaudited pro forma information presents a summary of our combined results of operations for the year ended December 31, 2021 as if our merger with VEREIT had occurred on January 1, 2020 (in millions, except per share data).

In accordance with ASC 805, Business Combinations , the following information excludes the impact of the spin-off of office assets to Orion Office REIT Inc.

Years ended December 31,

Year ended December 31, 2021

Total revenues $ 3,084.3

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The unaudited pro forma financial information above includes the following nonrecurring significant adjustment made to account for certain costs incurred as if our merger with VEREIT had been completed on January 1, 2020:

merger and integration-related costs of $ 167.4 million were excluded within the pro forma financial information for 2021, but included for 2020.

merger and integration-related costs of $ 167.4 million were excluded within the pro forma financial information for 2021.

Orion Divestiture

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.

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.

On November 12, 2021, we distributed the outstanding shares of Orion common stock to our shareholders 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.

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.

For more detail, see note 16, Distributions Paid and Payable .

Following the Orion Divestiture, Orion began operating as a separate, independent public company.

In conjunction with the Orion Divestiture, we incurred approximately $ 6.0 million of transaction costs during the year ended December 31, 2021, which were included in the $ 167.4 million of merger and integration-related costs within our consolidated statements of income and comprehensive income.

We incurred $ 1.9 million of transaction costs relating to the Orion Divestiture during the year ended December 31, 2022.

In conjunction with the Orion Divestiture, we incurred approximately $ 1.9 million and $ 6.0 million of transaction costs during the year ended December 31, 2022 and 2021, which were included in 'Merger and integration-related costs' within our consolidated statements of income and comprehensive income.

As part of the Orion Divestiture, Orion paid us a dividend of $ 425.0 million and reimbursed $ 170.2 million to us for the early redemption of mortgage loans underlying the contributed assets prior to the effectuation of the Orion Divestiture.

The distribution of Orion resulted in the derecognition of net assets of $ 1.74 billion, which net of the aforementioned cash payments of $ 595.2 million, resulted in a reduction to additional paid in capital of $ 1.14 billion.

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In connection with the divestiture, we entered into certain agreements with Orion to effect our legal and structural separation, including a transition services agreement ("TSA") and reverse TSA to provide certain administrative and other services for a limited time, and tax matters.

Supplemental Detail for Certain Components of Consolidated Balance Sheets (dollars in thousands):

Supplemental Detail for Certain Components of Consolidated Balance Sheets (in thousands):

Accounts receivable, net, consist of the following at:

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( 549,319 ) ( 443,688 )

Other items 1,799 —

$ 5,017,907 $ 5,168,366

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December 31, 2023 December 31, 2022

Financing receivables $ 933,116 $ 323,921

Right of use asset - operating leases, net 603,097 631,515

Financing receivables, net $ 1,570,943 $ 933,116

Right of use asset - financing leases 706,837 467,920

Derivative assets and receivables – at fair value 83,100 29,593

Restricted escrow deposits 37,627 68,541

Right of use asset - operating leases, net 594,712 603,097

Loan receivable, net 205,339 —

Value-added tax receivable 100,672 24,726

Prepaid expenses 33,252 28,128

Impounds related to mortgages payable 53,005 18,152

Credit facility origination costs, net 17,196 4,352

Derivative assets and receivables – at fair value 21,170 83,100

Corporate assets, net 12,948 12,334

Credit facility origination costs, net 12,264 17,196

Restricted escrow deposits 6,247 37,627

Interest receivable 6,139 —

Investment in sales type lease 6,056 5,951

Non-refundable escrow deposits 200 5,667

Note receivable — 4,455

Other items 38,859 39,939

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Accrued costs on properties under development 65,967 26,559

Accrued property expenses 25,290 27,344

Value-added tax payable 64,885 23,375

Accrued income taxes 61,070 22,626

Accrued property expenses 54,208 25,290

Mortgages, term loans, and credit line - interest payable 8,580 5,868

Merger and integration-related costs 1,464 10,699

Other items 66,576 55,921

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$ 1,406,853 $ 1,379,436

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Other liabilities consist of the following at:

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Security deposits 28,250 15,577

Other acquisition liabilities 1,647 —

$ 811,650 $ 774,787

Investments in Real Estate

We acquire land, buildings and improvements necessary for the successful operations of commercial clients.

Acquisitions During the Years ended December 31, 2022, and 2021

Acquisitions of Real Estate

Below is a summary of our acquisitions for the year ended December 31, 2023 (unaudited):

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Lease Yield (1)

Year ended December 31, 2022 (2)

Acquisitions - U.S.

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(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 weighted average cash yield includes approximately $ 10.5 million received as settlement credits as reimbursement of free rent periods for the year ended December 31, 2022.

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 $ 4.4 million received as settlement credits as reimbursement of free rent periods for the year ended December 31, 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) None of our investments during the year ended December 31, 2022 caused any one client to be 10% or more of our total assets at December 31, 2022.

(3) Includes five U.K.

development properties that represent an investment of £ 40.9 million during the year ended December 31, 2022, converted at the applicable exchange rate on the funding date.

(4) Our clients occupying the new properties are 71.4 % retail, 19.1 % gaming, 6.5 % industrial and 3.0 % other property types (including 2.7 % agricultural and 0.3 % office) based on rental revenue.

Approximately 23 % of the rental revenue generated from acquisitions during the year ended December 31, 2022 is from our investment grade rated clients, their subsidiaries or affiliated companies.

The acquisitions during the year ended December 31, 2022, which had no associated contingent consideration, were allocated as follows (in millions):

Year ended December 31, 2022

Acquisitions - USD (1)

Acquisitions - Sterling Acquisitions - Euro

$ 1,568.6 £ 640.5 € 118.0

Buildings and improvements 3,853.6 663.0 156.8

Lease intangible assets (3)

458.6 247.8 51.1

Other assets (4)

634.1 203.0 5.4

Lease intangible liabilities (5)

( 94.9 ) ( 60.1 ) —

Other liabilities (6)

( 46.0 ) ( 4.9 ) —

$ 6,374.0 £ 1,689.3 € 331.3

(1) Included in USD-denominated acquisitions was an investment of $ 1.7 billion into a single property in the gaming industry.

The acquisition was allocated as (i) $ 419.5 million to land, (ii) $ 1.28 billion to buildings and improvements, (iii) $ 13.2 million of right-of-use assets accounted for as operating leases included in 'Other assets' and (iv) $ 9.3 million of lease liabilities under operating leases included in 'Other liabilities'.

(2) Sterling-denominated land includes £ 42.5 million of right of use assets under long-term ground leases.

(3) The weighted average amortization period for acquired lease intangible assets is 11.6 years.

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(4) USD-denominated other assets consists of $ 585.7 million of financing receivables with above-market terms and $ 32.8 million of right-of-use assets accounted for as finance leases, and $ 15.6 million of right of use assets under ground leases.

Sterling-denominated other assets consists of £ 12.2 million of financing receivables with above-market terms, £ 188.4 million of right-of-use assets accounted for as finance leases and £ 2.4 million of right-of-use assets accounted for as operating leases.

Euro-denominated other assets consists entirely of financing receivables with above-market terms.

(5) The weighted average amortization period for acquired lease intangible liabilities is 14.2 years.

(6) USD-denominated other liabilities consists of $ 28.0 million of deferred rent on certain below-market leases, $ 11.5 million of lease liabilities under ground leases, and $ 8.6 million of lease liabilities under financing leases.

Sterling-denominated other liabilities consists of £ 2.4 million of lease liabilities under operating leases and £ 2.5 million of deferred rent on certain below-market leases.

The properties acquired during the year ended December 31, 2022 generated total revenues of $ 211.3 million and net income of $ 79.0 million during the year ended December 31, 2022.

Below is a summary of our acquisitions for the year ended December 31, 2021 (information is unaudited and excludes properties assumed on November 1, 2021 in conjunction with our merger with VEREIT):

Properties Leasable

(in thousands, unaudited) Investment

($ in millions) Weighted

(Years) Initial Weighted Average Cash Lease Yield (1)

Year ended December 31, 2021 (2)

Acquisitions - U.S.

714 14,727 $ 3,608.6 14.1 5.5 %

Acquisitions - Europe

129 9,196 2,558.9 11.6 5.5 %

Total acquisitions 843 23,923 $ 6,167.5 13.1 5.5 %

Properties under development (3)

68 2,682 243.3 15.7 6.0 %

911 26,605 $ 6,410.8 13.2 5.5 %

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

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

(3) Includes one U.K.

development property that represents an investment of £ 7.0 million during the year ended December 31, 2021, converted at the applicable exchange rate on the funding date.

(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 the year ended December 31, 2021, was from investment grade rated clients, their subsidiaries or affiliated companies.

The acquisitions during the year ended December 31, 2021, which had no associated contingent consideration, were allocated as follows (in millions):

Year ended December 31, 2021

(2) Includes £ 34.3 million of investments in U.K.

development properties and € 29.3 million of investment in Spain development properties, converted at the applicable exchange rates on the funding dates.

(3) Our clients occupying the new properties are 88.7 % retail, 8.5 % industrial, and 2.8 % other property types based on net operating income.

Approximately 31.4 % of the net operating income generated from acquisitions during the year ended December 31, 2023 is from investment grade rated clients, their subsidiaries, or affiliated companies.

The aggregate purchase price of the assets acquired during the year ended December 31, 2023 has been allocated as follows (in millions):

Acquisitions - USD Acquisitions - Sterling Acquisitions - Euro

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(2) The weighted average amortization period for acquired lease intangible assets is 11.3 years.

(3) USD-denominated other assets consists of $ 179.7 million of financing receivables with above-market terms, $ 85.0 million of right-of-use assets accounted for as finance leases, $ 5.8 million in investments in sales-type leases, and $ 259.7 million of right of use assets under ground leases.

Sterling-denominated other assets consists of £ 7.2 million of financing receivables with above-market terms and £ 33.2 million of right-of-use assets accounted for as finance leases.

Euro-denominated other assets consists entirely of financing receivables with above-market terms.

(3) USD-denominated other assets consist entirely of financing receivables with above-market terms.

Sterling-denominated other assets primarily consist of £ 66.1 million of financing receivables with above-market terms and £ 191.1 million of right-of-use assets accounted for as finance leases.

Euro-denominated other assets consist of € 17.4 million of financing receivables with above-market terms, € 10.6 million of right-of-use assets accounted for as finance leases and € 7.2 million of right-of-use assets under ground leases.

(4) The weighted average amortization period for acquired lease intangible liabilities is 16.9 years.

(5) USD-denominated other liabilities consists of $ 26.9 million of deferred rent on certain below-market leases, $ 67.4 million of lease liabilities under ground leases and $ 33.3 million of lease liabilities under financing leases.

Sterling-denominated other liabilities consists entirely of a mortgage premium.

Euro-denominated other liabilities consists entirely of deferred rent on certain below-market leases.

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The properties acquired during the year ended December 31, 2021, which were all accounted for as asset acquisitions, generated total revenues of $ 136.6 million and net income of $ 25.8 million during the year ended December 31, 2021.

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

Sterling-denominated other liabilities primarily consist of £ 2.3 million of deferred rent on certain below-market leases and £ 0.2 million of lease liabilities under financing leases.

Euro-denominated other liabilities consists of € 1.6 million of deferred rent on certain below-market leases, € 4.4 million of lease liabilities under ground leases, € 2.1 million of lease liabilities under financing leases, and € 1.5 million of other liabilities.

The properties acquired during the year ended December 31, 2023 generated total revenue and net income of $ 302.3 million and $ 152.4 million, respectively.

Investments in Existing Properties

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Properties with Existing Leases

The value of the in-place and above-market leases is recorded to 'Lease intangible assets, net' on our consolidated balance sheets, and the value of the below-market leases is recorded to 'Lease intangible assets, net' on our consolidated balance sheets.

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 years ended December 31, 2023, 2022 and 2021 were $ 651.1 million, $ 634.9 million, and $ 247.6 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 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 our 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 years ended December 31, 2023, 2022 and 2021 were $ 61.5 million, $ 55.6 million, and $ 35.4 million, respectively.

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Gain on Sales of Real Estate

The following table summarizes our properties sold during the periods indicated below, excluding our proportionate share of net proceeds from the disposition of properties by our unconsolidated industrial partnerships for 2022 and 2021 and the properties disposed from the spin-off of office properties to Orion in November 2021 (dollars in millions):

The following table summarizes our properties sold during the periods indicated below (dollars in millions):

Years ended December 31,

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Gain on sales of real estate $ 25.7 $ 103.0 $ 55.8

These property sales do not represent a strategic shift that will have a major effect on our operations and financial results, and therefore do not require presentation as discontinued operations.

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Investment in Unconsolidated Entities

The following is a summary of our investments in unconsolidated entities as of December 31, 2022 (in thousands):

Ownership % (1)

Number of Properties Carrying Amount of Investment as of Equity in income and impairment of investment in unconsolidated entities for the year ended (2)

Investments in Unconsolidated Entities

The following is a summary of our investments in unconsolidated entities as of December 31, 2023 and 2022 (in thousands):

Ownership % Number of Properties Carrying Amount (1) of Investment as of

Investment As of December 31, 2023

12/31/2023 12/31/2022

Bellagio Las Vegas Joint Venture - Common Equity Interest 21.9 % 1 $ 296,097 $ —

Bellagio Las Vegas Joint Venture - Preferred Equity Interest n/a n/a 650,000 —

Data Center Development Joint Venture 80.0 % 2 226,021 —

Industrial Partnerships 20.0 % — — —

Total investment in unconsolidated entities $ 1,172,118 $ —

(1) The total carrying amount of the investments was greater than the underlying equity in net assets (i.e., basis difference) by $ 2.2 million as of December 31, 2023.

Equity in income and impairment of investment in unconsolidated entities consists of the following (in thousands):

Years ended December 31,

Investment 2023 2022 2021

As of December 31, 2022

December 31, 2022

December 31, 2021 December 31, 2022 December 31, 2021 December 31, 2020

Bellagio Las Vegas Joint Venture - Common Equity Interest $ 2,139 $ — $ —

Data Center Development Joint Venture — — —

Industrial Partnerships 407 ( 6,448 ) 1,106

(1) Our ownership interest reflects legal ownership interest.

Legal ownership may, at times, not equal our economic interest in the listed properties because of various provisions in certain entity agreements regarding capital contributions, distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns.

As a result, our actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with legal ownership interests.

Equity in income and impairment of investment in unconsolidated entities

$ 2,546 $ ( 6,448 ) $ 1,106

Bellagio Las Vegas Joint Venture Interests

In October 2023, we invested $ 951.4 million to acquire common and preferred interests from Blackstone Real Estate Trust, Inc.

("BREIT") in a joint venture that owns a 95.0 % interest in the real estate of The Bellagio Las Vegas.

The investment included $ 301.4 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.

The unconsolidated entity had total debt outstanding of $ 3.0 billion as of December 31, 2023, all of which was non-recourse to us with limited customary exceptions.

The Company's preferred equity investment entitles it to certain preferential cumulative distributions out of operating and capital proceeds pursuant to the terms and conditions of the preferred equity.

There is no maturity date on the preferred equity investment, which bears interest of 8.1 %, payable monthly in arrears in cash, with rate increases commencing in year 7.

BREIT may cause the joint venture to redeem all or a portion of the preferred equity investment, and Realty Income may cause the joint venture to redeem all or a portion of the preferred equity investment if BREIT or its affiliates cease to control the joint venture, in each case, for a cash payment equaling the sum of the amount to be redeemed plus, prior to the first anniversary of the transaction, a redemption fee of 3.0 %, or, after the first anniversary and prior to the fourth anniversary of the transaction, a redemption fee of 2.0 %.

Interest income is determined by applying the interest rate to the sum of the outstanding balance of preferred equity and any accrued but unpaid interests.

During the year ended December 31, 2023, we recognized interest income of $ 13.0 million included within 'Other revenue' in our consolidated statements of income and comprehensive income.

We have determined that this joint venture is a VIE, and we are not the primary beneficiary as we do not have power to direct activities that most significantly impact the joint venture's economic performance.

As a holder of preferred interests, we do not receive any additional voting rights, nor do we have conversion and redemption rights.

Our maximum exposure to loss associated with this VIE is limited to our common and preferred equity investments.

Data Center Development Joint Venture

In November 2023, we established a joint venture with Digital Realty Trust, Inc.

("Digital Realty") to support the development of two build-to-suit data centers in Northern Virginia.

We invested $ 201.2 million to acquire an 80.0 % equity interest in the venture, while Digital Realty maintains a 20.0 % interest.

We have determined that this joint venture is a VIE.

While we have an 80.0 % interest in the joint venture, we are not the primary beneficiary because we do not have power to direct activities that significantly impact the joint venture's economic performance as we were not engaged when the joint venture partner initially developed the construction plan and entered into the lease agreement.

Digital Realty is the managing member, and we do not have substantive kick-out rights.

We will continuously evaluate whether we are the primary beneficiary as the power to direct activities that most significantly affect economic performance can change over the life of the joint venture.

Our maximum exposure to loss associated with this VIE is limited to our equity investment and our pro rata share of the remaining $ 117.7 million of estimated development costs for the first phase of the project.

Industrial Partnerships

All seven assets held by our industrial partnerships were sold during the year ended December 31, 2022.

As the portion of the net proceeds applied to our investment basis that we expected to receive at closing was less than our $ 121.4 million carrying amount of investment in unconsolidated entities, we recognized an other than temporary impairment of $ 8.5 million during the year ended December 31, 2022.

The other than temporary impairments are included in 'Equity in income and impairment of investment in unconsolidated entities' in the consolidated statements of income and comprehensive income for the periods presented.

As a result of the merger with VEREIT, we assumed a preferred equity interest in the development of one distribution center for which we were entitled to receive a cumulative preferred return of 9 % per year on the initial contribution of $ 22.8 million along with a share in the profit earned in the event of the sale of the property to a third party.

Under the acquisition method of accounting, this preferred equity interest was adjusted to its fair value of $ 38.1 million at the time of the merger.

During December 2021, the distribution center was sold to a third party and we received proceeds of $ 38.3 million and recorded a $ 0.2 million gain on disposition.

The aggregate debt outstanding for unconsolidated entities was $ 431.8 million as of December 31, 2021, all of which was non-recourse to us with limited customary exceptions that varied from loan to loan.

There was no aggregate debt outstanding as of December 31, 2022, as all seven properties owned by our industrial partnerships were sold during the year ended December 31, 2022, and the debt underlying each of the seven properties was either defeased or prepaid in connection with the sales.

Each of us and our unconsolidated entity partners were subject to the provisions of the applicable entity agreements for our unconsolidated partnerships, which included provisions for when additional contributions might be required to fund certain cash shortfalls.

The other than temporary impairments are included in 'Equity in income and impairment of investment in unconsolidated entities' in our consolidated statements of income and comprehensive income for the periods presented.

Investments in Loans

The following table presents information about our loans as of December 31, 2023 (dollars in thousands):

Amortized Cost Allowance Carrying Amount (1)

Senior Secured Note Receivable $ 174,337 $ ( 2,498 ) $ 171,839

Mortgage Loan 33,500 — 33,500

Total $ 207,837 $ ( 2,498 ) $ 205,339

(1) The total carrying amount of the investment in loans excludes accrued interest of $ 3.4 million as of December 31, 2023, which is recorded to 'Other assets, net' on our consolidated balance sheets.

Senior Secured Note Receivable

In November 2023, the Company purchased a Sterling-denominated senior secured note with a principal amount of £ 142.0 million, equivalent to $ 180.9 million as of December 31, 2023.

The interest only note bears interest at Sterling Overnight Indexed Average (“SONIA”) plus 6.75 % and matures in October 2029.

The Company paid £ 136.7 million for the note and accounted for the discount at amortized cost.

The discount is being amortized over the term of the note.

Mortgage Loan

In October 2023, the Company issued a $ 33.5 million mortgage loan which is collateralized by nine automotive service properties located across seven different states.

The interest only loan bears interest at 8.25 % subject to annual increases and matures in October 2038.

Revolving Credit Facility and Commercial Paper Programs

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 dollars.

Our revolving credit facility also has a $ 1.0 billion expansion option, 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.

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 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 December 31, 2023, we had a borrowing capacity of $ 4.25 billion available on our revolving credit facility (subject to customary conditions to borrowing) and no outstanding balance 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 % during the year ended December 31, 2023, and 1.8 % during the year ended December 31, 2022.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at December 31, 2023, we were in compliance with the covenants under our revolving credit facility.

As of December 31, 2023, credit facility origination costs of $ 12.3 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.

As of December 31, 2022, we had a borrowing capacity of $ 2.2 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $ 2.0 billion, comprised of € 1.8 billion Euro and £ 70.0 million Sterling borrowings, as compared to an outstanding balance at December 31, 2021 of $ 650.0 million, consisting entirely of USD borrowings.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 1.8 % during the year ended December 31, 2022, and 0.9 % during the year ended December 31, 2021.

At December 31, 2022, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 2.6 %.

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revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at December 31, 2022, we were in compliance with the covenants under our revolving credit facility.

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.

Also during July 2022, we established a new Euro-denominated unsecured commercial paper program, which permits us to issue additional unsecured commercial notes up to a maximum aggregate amount of $ 1.5 billion (or foreign currency equivalent), which may be issued in 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.

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.

The commercial paper ranks on a parity in right of payment with all of our other unsecured senior indebtedness outstanding from time to time, including borrowings under our revolving credit facility, our term loans and our outstanding senior unsecured notes.

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

As of December 31, 2022, the balance of borrowings outstanding under our commercial paper programs was $ 701.8 million, including € 361.0 million of Euro-denominated borrowings, as compared to $ 901.4 million outstanding commercial paper borrowings, consisting entirely of USD-denominated borrowings at December 31, 2021.

As of December 31, 2023, the balance of borrowings outstanding under our commercial paper programs was $ 764.4 million, including € 583.0 million of Euro-denominated borrowings, as compared to $ 701.8 million outstanding commercial paper borrowings, including € 361.0 million of EUR borrowings, at December 31, 2022.

The weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.8 % for the year ended December 31, 2023, and 1.6 % for the year ended December 31, 2022.

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

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 %.

At December 31, 2022, deferred financing costs of $ 0.2 million are included net of the term loan principal balance, as compared to $ 0.4 million at December 31, 2021, on our consolidated balance sheets.

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

During January 2023, we borrowed an aggregate of approximately $ 1.0 billion in multicurrency borrowings under an unsecured term loan initially maturing January 2024.

See note 19, Subsequent Events for further details.

We regularly review our credit facility and commercial paper programs and may seek to extend, renew or replace our credit facility and commercial paper programs, to the extent we deem appropriate.

In 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 December 31, 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 mature in January 2025, with one remaining twelve-month maturity extension available at our 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 conjunction with our 2023 term loans, we entered into interest rate swaps which fix our per annum interest rate.

As of December 31, 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 entered into an interest rate swap and as of December 31, 2023, the effective interest rate on this term loan, after giving effect to the interest rate swap, was 3.8 %.

At December 31, 2023, deferred financing costs of $ 0.1 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 December 31, 2023, we were in compliance with the covenants contained in the term loans.

Mortgages Payable

During the year ended December 31, 2023, we made $ 22.0 million in principal payments, including the full repayment of two mortgages for $ 17.4 million.

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

During the year ended December 31, 2021, we made $ 66.6 million in principal payments, including the full repayment of seven mortgages for $ 63.0 million.

We assumed eight mortgages on 17 properties totaling $ 45.1 million during the year ended December 31, 2022, as compared to the assumption of 11 mortgages totaling $ 881.1 million in principal, including ten mortgages from our merger with VEREIT totaling $ 839.1 million and one Sterling-denominated mortgage on one property totaling £ 31.0 million for the year ended December 31, 2021.

No mortgages were assumed during the year ended December 31, 2023.

We assumed eight mortgages on 17 properties totaling $ 45.1 million during the year ended December 31, 2022.

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.

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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.

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 redemptions in September and October of 2021, we recognized total losses of $ 4.3 million on extinguishment of debt during the year ended December 31, 2021.

There were no comparable mortgage redemptions during the years ended December 31, 2022 or 2020.

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, 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 $ 0.8 million at December 31, 2022 and 2021, respectively.

The balance of our deferred financing costs, which are classified as part of 'Mortgages payable, net', on our consolidated balance sheets, was $ 0.4 million and $ 0.8 million at December 31, 2023 and 2022, respectively.

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

The following table summarizes our mortgages payable as of December 31, 2022 and 2021 (dollars in thousands):

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

Properties (1)

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Balance Unamortized

Premium (Discount)

Financing Costs

1 unchanged sentence

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

(1) At December 31, 2022, there were 18 mortgages on 136 properties.

At December 31, 2021, there were 22 mortgages on 267 properties.

(1) At December 31, 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 December 31, 2023 and December 31, 2022, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0 % to 6.9 % at December 31, 2022 and 2021, respectively.

(3) Effective interest rates ranged from 2.7 % to 6.6 % and 2.6 % to 6.0 % at December 31, 2022 and 2021, respectively.

The following table summarizes the maturity of mortgages payable, excluding net premiums of $ 12.4 million and deferred financing costs of $ 0.8 million as of December 31, 2022 (dollars in millions):

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

(3) Effective interest rates ranged from 0.5 % to 6.6 % and 2.7 % to 6.6 % at December 31, 2023 and December 31, 2022, respectively.

The following table summarizes the maturity of mortgages payable as of December 31, 2023, excluding $ 0.8 million related to unamortized net discounts and deferred financing costs (dollars in millions):

Year of Maturity

Thereafter 2.3

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Notes Payable

Our senior unsecured notes and bonds are USD-denominated and Sterling-denominated.

At December 31, 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.

The following are sorted by maturity date (in millions):

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

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

$ 500 $ 500 $ 500

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

$ 350 350 350

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

$ 500 500 500

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

$ 550 550 550

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

$ 325 325 325

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

$ 600 600 600

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

$ 650 650 650

1.875 % notes, issued in January 2022 and due in January 2027

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

$ 600 600 600

1.125 % notes, issued in July 2021 and due in July 2027

£ 400 482 541

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

$ 600 600 600

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

$ 550 550 550

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

$ 600 600 600

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

$ 500 500 500

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

$ 500 500 500

3.100 % notes, $ 600 issued December 2019, of which $ 596 was exchanged in November 2021, both due in December 2029 (1)(2)

$ 599 599 599

3.160 % notes, issued in June 2022 and due in June 2030

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

£ 400 482 541

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

$ 950 950 950

3.180 % notes, issued in June 2022 and due in June 2032

5.625 % notes, issued in October 2022 and due in October 2032

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

$ 700 700 700

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

$ 400 400 400

1.750 % notes, issued in July 2021 and due in July 2033

£ 350 422 474

2.730 % notes, issued in May 2019 and due in May 2034

£ 315 379 427

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

$ 250 250 250

3.390 % notes, issued in June 2022 and due in June 2037

2.500 % notes, issued in January 2022 and due in January 2042

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

$ 550 550 550

The following are sorted by maturity date (in thousands):

Carrying Value (USD) as of

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

4.600 % Notes due 2024

February 6, 2024 $ 499,999 $ 499,999 $ 499,999

3.875 % Notes due 2024

July 15, 2024 $ 350,000 350,000 350,000

3.875 % Notes due 2025

April 15, 2025 $ 500,000 500,000 500,000

4.625 % Notes due 2025

November 1, 2025 $ 549,997 549,997 549,997

5.050 % Notes due 2026

January 13, 2026 $ 500,000 500,000 —

0.750 % Notes due 2026

March 15, 2026 $ 325,000 325,000 325,000

4.875 % Notes due 2026

June 1, 2026 $ 599,997 599,997 599,997

4.125 % Notes due 2026

October 15, 2026 $ 650,000 650,000 650,000

1.875 % Notes due 2027 (1)

January 14, 2027 £ 250,000 318,450 301,225

3.000 % Notes due 2027

January 15, 2027 $ 600,000 600,000 600,000

1.125 % Notes due 2027 (1)

July 13, 2027 £ 400,000 509,520 481,960

3.950 % Notes due 2027

August 15, 2027 $ 599,873 599,873 599,873

3.650 % Notes due 2028

January 15, 2028 $ 550,000 550,000 550,000

3.400 % Notes due 2028

January 15, 2028 $ 599,816 599,816 599,816

2.200 % Notes due 2028

June 15, 2028 $ 499,959 499,959 499,959

4.700 % Notes due 2028

December 15, 2028 $ 400,000 400,000 —

3.250 % Notes due 2029

June 15, 2029 $ 500,000 500,000 500,000

3.100 % Notes due 2029

December 15, 2029 $ 599,291 599,291 599,291

4.850 % Notes due 2030

March 15, 2030 $ 600,000 600,000 —

3.160 % Notes due 2030

June 30, 2030 £ 140,000 178,332 168,686

4.875 % Notes due 2030 (1)

July 6, 2030 € 550,000 607,915 —

1.625 % Notes due 2030 (1)

December 15, 2030 £ 400,000 509,520 481,960

3.250 % Notes due 2031

January 15, 2031 $ 950,000 950,000 950,000

5.750 % Notes due 2031 (1)

December 5, 2031 £ 300,000 382,140 —

3.180 % Notes due 2032

June 30, 2032 £ 345,000 439,461 415,691

5.625 % Notes due 2032

October 13, 2032 $ 750,000 750,000 750,000

2.850 % Notes due 2032

December 15, 2032 $ 699,655 699,655 699,655

1.800 % Notes due 2033

March 15, 2033 $ 400,000 400,000 400,000

1.750 % Notes due 2033 (1)

July 13, 2033 £ 350,000 445,830 421,715

4.900 % Notes due 2033

July 15, 2033 $ 600,000 600,000 —

2.730 % Notes due 2034

May 20, 2034 £ 315,000 401,247 379,544

5.125 % Notes due 2034 (1)

July 6, 2034 € 550,000 607,915 —

5.875 % Bonds due 2035

March 15, 2035 $ 250,000 250,000 250,000

3.390 % Notes due 2037

June 30, 2037 £ 115,000 146,487 138,563

6.000 % Notes due 2039 (1)

December 5, 2039 £ 450,000 573,210 —

2.500 % Notes due 2042 (1)

January 14, 2042 £ 250,000 318,450 301,225

4.650 % Notes due 2047

March 15, 2047 $ 550,000 550,000 550,000

Total principal amount $ 18,562,064 $ 14,114,156

Unamortized net premiums and deferred financing costs 164 243

Unamortized net premiums, deferred financing costs, and cumulative basis adjustment on fair value hedge (2)

40,255 163,857

(1) Carrying Value (USD) includes the portion of the VEREIT OP notes that remained outstanding, totaling $ 39.1 million in the aggregate at December 31, 2022 and 2021, that were not exchanged in the exchange offers commenced by us with respect to the outstanding bonds of VEREIT OP in connection with the consummation of the merger with VEREIT (the "Exchange Offers").

(2) These notes were originally issued by VEREIT OP in December of 2019 for the principal amount of $ 600 million.

The amount of Realty Income debt issued through the Exchange Offers was $ 599 million, resulting from cancellations due to late tenders that forfeited the early participation premium of $ 30 per $1,000 principal amount and cash paid in lieu of fractional shares.

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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):

$ 18,602,319 $ 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 14, Derivative Instruments for further details.

The following table summarizes the maturity of our notes and bonds payable as of December 31, 2023, excluding $ 40.3 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

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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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At December 31, 2023, we were in compliance with these covenants.

Note Repayments

We redeemed the following principal amounts (in millions) of certain outstanding notes, 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.

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

3.250 % notes due October 2022 redeemed in January 2021

$ 950.0 $ 46.5 March 31, 2021

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.

Note Issuances

During the years ended December 31, 2023 and 2022 we issued the following notes and bonds (in millions):

2022 Issuances

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

1.875 % Notes

January 2022 January 2027 £ 250 99.487 % 1.974 %

2023 Issuances Date of Issuance Maturity Date Principal amount Price of par value Effective yield to maturity

5.050 % Notes

January 2023 January 2026 $ 500.0 (1)

3.160 % Notes

June 2022 June 2030 £ 140 100.000 % 3.160 %

99.618 % 5.189 %

4.850 % Notes

June 2022 June 2032 £ 345 100.000 % 3.180 %

January 2023 March 2030 $ 600.0 98.813 % 5.047 %

4.700 % Notes

June 2022 June 2037 £ 115 100.000 % 3.390 %

April 2023 December 2028 $ 400.0 98.949 % 4.912 %

4.900 % Notes

October 2022 October 2032 $ 750 99.879 % 5.641 %

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2021 Issuances

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

April 2023 July 2033 $ 600.0 98.020 % 5.148 %

4.875 % Notes

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5.750 % Notes

November 2021 February 2024 $ 485 100.000 % 4.600 %

4.625 % Notes (1)

November 2021 November 2025 $ 544 100.000 % 4.625 %

4.875 % Notes (1)

November 2021 June 2026 $ 596 100.000 % 4.875 %

3.950 % Notes (1)

November 2021 August 2027 $ 594 100.000 % 3.950 %

3.400 % Notes (1)

November 2021 January 2028 $ 598 100.000 % 3.400 %

2.200 % Notes (1)

November 2021 June 2028 $ 497 100.000 % 2.200 %

December 2023 December 2031 £ 300.0 99.298 % 5.862 %

6.000 % Notes

November 2021 December 2029 $ 596 100.000 % 3.100 %

December 2023 December 2039 £ 450.0 99.250 % 6.075 %

2022 Issuances Date of Issuance Maturity Date Principal amount Price of par value Effective yield to maturity

1.875 % Notes

November 2021 December 2032 $ 699 100.000 % 2.850 %

2020 Issuances Date of Issuance Maturity Date Principal amount used Price of par value Effective yield to maturity

January 2022 January 2027 £ 250.0 99.487 % 1.974 %

2.500 % Notes

May 2020 January 2031 $ 600 98.99 % 3.364 %

January 2022 January 2042 £ 250.0 98.445 % 2.584 %

3.160 % Notes

July 2020 January 2031 $ 350 108.24 % 2.341 %

June 2022 June 2030 £ 140.0 100.000 % 3.160 %

3.180 % Notes

October 2020 December 2030 £ 400 99.19 % 1.712 %

June 2022 June 2032 £ 345.0 100.000 % 3.180 %

3.390 % Notes

December 2020 March 2026 $ 325 99.19 % 0.908 %

June 2022 June 2037 £ 115.0 100.000 % 3.390 %

5.625 % Notes

December 2020 March 2033 $ 400 98.47 % 1.941 %

(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 notes of identical terms issued by Realty Income, pursuant to which approximately 99.2 % of the outstanding notes issued by VEREIT OP were exchanged.

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.

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.

To induce holders of the VEREIT OP notes to participate in the exchange, Realty Income offered noteholders electing to exchange their notes a cash payment equal to 10 basis points of the note principal amount held.

This resulted in a cash payment of $ 4.6 million to participating noteholders.

The exchange was accounted for as a modification of the existing VEREIT OP notes assumed in our merger with VEREIT.

(2) In July 2020, we issued $ 350.0 million of 3.250 % senior unsecured notes due January 2031 (the "2031 Notes"), which constituted a further issuance of, and formed a single series with, the $ 600.0 million of 2031 Notes issued in May 2020.

The proceeds from each of these offerings were used to repay borrowings outstanding under our credit facility, to fund investment opportunities, and for other general corporate purposes.

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.

October 2022 October 2032 $ 750.0 99.879 % 5.641 %

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

In January 2024, we issued $ 450.0 million of 4.750 % senior unsecured notes due February 2029 and $ 800.0 million of 5.125 % senior unsecured notes due February 2034.

See note 21, Subsequent Events, for further details.

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Note Repayments

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

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

There were no comparable repayments for the years ended December 31, 2023 or 2022.

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

3.25 % notes due October 2022 redeemed in January 2021

$ 950.0 $ 46.5 March 31, 2021

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

Issuances of Common Stock

Issuance of Common Stock in Connection with VEREIT Acquisition

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

As a result of the merger, former VEREIT common stockholders, VEREIT OP common unitholders and awardees of vested share awards separated from Realty Income and 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.

For further details, please refer to note 3, Merger with VEREIT, Inc.

and Orion Office REIT Inc.

Issuances of Common Stock in Underwritten Public Offerings

In July 2021, we issued 9,200,000 shares of common stock, including 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 primarily used to repay borrowings under our commercial paper programs, to fund potential investment opportunities and for other general corporate purposes.

In January 2021, we issued 12,075,000 shares of common stock, including 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, for general corporate purposes and working capital.

In March 2020, we issued 9,690,500 shares of common stock, including 690,500 shares purchased by the underwriters upon the exercise of their option to purchase additional shares.

The net proceeds of $ 728.9 million were used to repay borrowings under our credit facility, to fund investment opportunities, and for other general corporate purposes.

There were no comparative offerings during the year ended December 31, 2022.

At-the-Market ("ATM") Program

In June 2022, we replaced our prior ATM program, which authorized us to offer and sell up to 69,088,433 shares of common stock, with a new "at-the-market" equity distribution program, or our ATM program, pursuant to which we may offer and sell up to 120,000,000 shares of common stock (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the NYSE under the ticker symbol "O" at prevailing market prices or at negotiated prices.

After deducting 6,744,884 shares sold pursuant to forward sale confirmations that remained open at December 31, 2022, we had 70,620,121 additional shares remaining for future issuance under our ATM program.

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.

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 December 31, 2023, we had 81.3 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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The following table outlines common stock issuances pursuant to our ATM programs (dollars in millions):

The following table outlines common stock issuances pursuant to our ATM programs (dollars in millions, shares in thousands):

Years ended December 31,

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Gross proceeds $ 5,483.2 $ 4,599.4 $ 3,207.9

Sales agents' commissions ( 34.3 ) ( 27.3 ) ( 14.6 )

Other offering expenses ( 9.1 ) ( 1.1 ) ( 0.4 )

Sales agents' commissions and other offering expenses ( 43.7 ) ( 43.4 ) ( 28.4 )

Net proceeds $ 5,439.5 $ 4,556.0 $ 3,179.5

(1) During the year ended December 31, 2022, 65,279,851 shares were sold and 58,534,967 settled pursuant to forward sale confirmations.

In addition, as of December 31, 2022, 6,744,884 shares of common stock subject to forward sale confirmations have been executed at a weighted average initial price of $ 63.31 per share but not settled.

We currently expect to fully physically 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.

We currently expect to fully settle the outstanding forward sale agreements during the three months ended March 31, 2023, representing $ 0.4 billion in net proceeds, for which the weighted average forward price at December 31, 2022 was $ 62.59 per share.

Our forward sale confirmations are accounted for as equity instruments, as we have determined the agreements meet the derivatives and hedging guidance scope exception.

No shares were sold pursuant to forward sale confirmations during years ended December 31, 2021 and 2020.

(1) During the year ended December 31, 2023, 91.1 million shares were sold and 91.7 million shares were settled pursuant to forward sale confirmations.

In addition, as of December 31, 2023, 6.2 million shares of common stock subject to forward sale confirmations have been executed, but not settled, at a weighted average initial gross price of $ 55.03 per share.

We currently expect to fully settle forward sale agreements outstanding by June 30, 2024, representing $ 337.8 million in net proceeds, for which the weighted average forward price at December 31, 2023 was $ 54.70 per share.

Dividend Reinvestment and Stock Purchase Plan ("DRSPP")

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

Our DRSPP authorizes up to 26,000,000 common shares to be issued.

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

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

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

At December 31, 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, shares in thousands):

Years ended December 31,

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Gross proceeds $ 11.5 $ 11.7 $ 11.2

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 no t issue shares under the waiver approval process during the years ended December 31, 2022, 2021 or 2020.

Issuance of Common Stock in Connection with VEREIT Acquisition

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

Issuances of Common Stock in Underwritten Public Offerings

During 2021, we issued an aggregate of 21.3 million shares of common stock, including 2.8 million shares purchased by the underwriters upon the exercise of their option to purchase additional shares.

After deducting underwriting discounts, the aggregate net proceeds of $ 1.3 billion were used to fund investment opportunities, for general corporate purposes and working capital.

There were no comparative offerings during the years ended December 31, 2023 or 2022.

Noncontrolling Interests

There are four entities with noncontrolling interests that we consolidate, including an operating partnership, Realty Income, L.P., a joint venture acquired in December 2019, and two development joint ventures, one acquired in December 2020 and one acquired in May 2021.

In November 2021, we issued 300,604 common partnership units in Realty Income, L.P.

in connection with the acquisition of seven properties and recorded $ 20.4 million of noncontrolling interests.

In December 2021, we issued 240,586 common partnership units in Realty Income, L.P.

in connection with the acquisition of one property and recorded $ 16.6 million of noncontrolling interests.

In November 2021 we issued 56,400 of common partnership units in Realty Income, L.P.

in exchange for VEREIT OP units in connection with our merger with VEREIT and recorded noncontrolling interests of $ 1.8 million.

In addition, during September 2022, we issued 734,458 common partnership units in Realty Income, L.P.

in connection with the acquisition of nine properties and recorded $ 51.2 million of contributions to noncontrolling interests.

As of December 31, 2023, we have seven entities with noncontrolling interests that we consolidate, including an operating partnership, Realty Income, L.P., and interests in consolidated property partnerships not wholly-owned by us.

At December 31, 2023, outstanding common partnership units in Realty Income, L.P.

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We hold the remaining 93.1 % interest and consolidate the entity.

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None of our common partnership units have voting rights.

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We determined that the units meet the requirements to qualify for presentation as permanent equity.

In May 2021 and December 2020, we completed the respective acquisition of a development property by acquiring a controlling interest in a joint venture.

We are the managing member of these two joint ventures, and possess the ability to control the business and manage the affairs of these entities.

At December 31, 2022, we and our subsidiaries held an 89.6 % interest in the joint venture established in May 2021 and an 94.5 % interest in the joint venture established in December 2020.

In December 2019, we completed the acquisition of nine properties by acquiring a controlling interest in a joint venture.

We are the managing member of this joint venture and possess the ability to control the business and manage the affairs of this entity.

At December 31, 2022, we and our subsidiaries held an 89.9 % interest, and consolidated this entity in our consolidated financial statements.

The following table represents the change in the carrying value of all noncontrolling interests through December 31, 2022 (dollars in thousands):

The following table represents the change in the carrying value of all noncontrolling interests through December 31, 2023 (in thousands):

Realty Income, L.P.

Noncontrolling

Interests Total

Carrying value at December 31, 2021

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Contributions (2)

Issued in merger 3,160 — 3,160

Orion divestiture ( 1,352 ) — ( 1,352 )

51,221 — 51,221

Reallocation of equity 3,210 — 3,210

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Contributions (3)

— 40,097 40,097

Distributions (4)

2 unchanged sentences

3,934 671 4,605

Reallocation of equity 3,210 — 3,210

Carrying value at December 31, 2023

$ 114,072 $ 51,430 $ 165,502

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

1,060,709 units were outstanding as of December 31, 2021.

(2) In September 2022, we issued 734,458 common partnership units in Realty Income, L.P.

in connection with the acquisition of nine properties and recorded $ 51.2 million of contributions to noncontrolling interests.

1,795,167 and 1,060,709 units were outstanding as of December 31, 2022 and 2021, respectively.

At December 31, 2022, Realty Income, L.P.

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

For further information, see note 2 Summary of Significant Accounting Policies and Procedures and New Accounting Standards.

Financial Instruments and Fair Value Measurements

(3) Primarily related to contributions of $ 39.2 million for the issuance of a 5.0 % joint venture interest as partial consideration paid on property acquisitions.

The remaining amount represents contributions for two development joint ventures.

(4) 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 year ended December 31, 2023.

At December 31, 2023, we are considered the primary beneficiary of Realty Income, L.P.

and other VIEs.

For further information, see note 1, Summary of Significant Accounting Policies .

Fair Value Measurements

Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price).

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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

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Financial instruments 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

Financial instruments 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

Financial instruments 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.

• 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

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.

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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

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 fair value of our $ 250 million term loan approximates carrying value due to the frequent repricing of the variable interest rate charged on the borrowing, which is based on the daily SOFR.

The fair value of our financial instruments not carried at fair value are disclosed as follows (in millions):

December 31, 2022 Carrying value

Estimated fair value

Mortgages payable assumed in connection with acquisitions (1)

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

December 31, 2023

Hierarchy Level

Carrying Value Level 1 Level 2 Level 3

Loans receivable (1)

$ 205.3 $ — $ 171.8 $ 33.5

Derivative assets 21.2 — 21.2 —

Total assets $ 226.5 $ — $ 193.0 $ 33.5

Mortgages payable $ 822.4 $ — $ — $ 814.5

Notes and bonds payable 18,562.1 — 17,603.7 —

$ 14,114.2 $ 12,522.8

December 31, 2021 Carrying value

Estimated fair value

Mortgages payable assumed in connection with acquisitions (1)

Derivative liabilities 119.6 — 119.6 —

Total liabilities $ 19,504.1 $ — $ 17,723.3 $ 814.5

(1) Considering the proximity of time between the issuance and measurement of the two loans acquired during the fourth quarter of 2023, we have concluded that the carrying value reasonably approximates the estimated fair value at December 31, 2023.

We determined our investment in mortgage loan is categorized as level 3 of the fair value hierarchy given our experience with mortgage borrowings.

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, 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 not measured at fair value on our consolidated balance sheets (in millions):

December 31, 2023 December 31, 2022

Carrying value

Mortgages payable (1)

$ 822.4 $ 814.5 $ 842.3 $ 810.4

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$ 18,562.1 $ 17,603.7 $ 14,114.2 $ 12,522.8

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

The unamortized balance of these net premiums was $ 12.4 million at December 31, 2022, and $ 28.7 million at December 31, 2021.

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

The unamortized balance of these net discounts was $ 0.4 million at December 31, 2023, and $ 12.4 million of net premiums at December 31, 2022.

Also excludes deferred financing costs of $ 0.4 million at December 31, 2023, and $ 0.8 million at December 31, 2022.

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

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

The unamortized balance of the net premiums was $ 125.3 million at December 31, 2023, and $ 224.6 million at December 31, 2022.

Also excludes deferred financing costs of $ 60.7 million at December 31, 2022, and $ 53.1 million at December 31, 2021.

The estimated fair values of our mortgages payable assumed in connection with acquisitions 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.

Because this methodology includes unobservable inputs that reflect our own internal assumptions and calculations, the measurement of estimated fair values related to our mortgages payable is categorized as level three on the three-level valuation hierarchy.

Also excludes deferred financing costs of $ 83.8 million and a favorable basis adjustment on interest rate swaps designated as fair value hedges of $ 1.3 million at December 31, 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.

The estimated fair values of our publicly-traded senior notes and bonds payable are based upon indicative market prices and recent trading activity of our senior notes and bonds payable.

Because this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair values related to our notes and bonds payable is categorized as level two on the three-level valuation hierarchy.

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Financial Instruments Measured at Fair Value on a Recurring Basis

For derivative assets and liabilities, we may utilize interest rate swaps and forward-starting swaps to manage interest rate risk, and cross-currency swaps, currency exchange swaps, foreign currency forwards and foreign currency collars to manage foreign currency risk.

For derivative assets and liabilities, we may utilize interest rate swaps, interest rate swaptions, and forward-starting swaps to manage interest rate risk, and cross-currency swaps, currency exchange swaps, and foreign currency forwards to manage foreign currency risk.

The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative.

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In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

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.

Although we have determined that the majority of the inputs used to value our derivatives fall within level 2 on the fair value 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 December 31, 2023, and 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 14, Derivative Instruments .

Items Measured at Fair Value on a Non-Recurring Basis

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Certain financial and nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments only under certain circumstances, such as when an impairment write-down occurs.

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 clients experiencing difficulties meeting their lease obligations to us.

After considering the impacts of the COVID-19 pandemic on the key assumptions noted above, we determined that the carrying values of 38 properti es 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.

The following table summarizes our provisions for impairment on real estate investments during the periods indicated below (dollars in millions):

Depending on impairment triggering events during the applicable period, impairments are typically recorded for properties sold, in the process of being sold, vacant, in bankruptcy, or experiencing difficulties with collection of rent.

The following table summarizes our provisions for impairment on real estate investments during the periods indicated below (in millions):

Years ended December 31,

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total provisions for impairment (1)

( 82.2 ) ( 25.9 ) ( 39.0 )

Carrying value after impairment $ 112.3 $ 115.0 $ 130.2

Derivative Designated as Hedging Instruments

In order to hedge the foreign currency risk associated with interest payments on intercompany loans denominated in British Pound Sterling ("GBP") and Euros, we have a hedging strategy to enter into foreign currency forward contracts to sell GBP, USD, and Euro and buy Euro, USD, and GBP.

These foreign currency forwards are designated as cash flow hedges.

(1) Excludes provision for current expected credit loss of $ 4.9 million at December 31, 2023.

The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions and purchase offers received from third parties, which are Level 3 inputs.

We may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of such real estate.

Estimating future cash flows is highly subjective and estimates can differ materially from actual results.

Derivative Instruments

In the normal course of business, our operations are exposed to economic risks from interest rates and foreign currency exchange rates.

We may enter into derivative financial instruments to offset these underlying economic risks.

Derivative Designated as Hedging Instruments - Cash Flow Hedges

We entered into foreign currency forward contracts to sell GBP, USD, and EUR and buy EUR, USD, and GBP to hedge the foreign currency risk associated with interest payments on intercompany loans denominated in British Pound Sterling ("GBP") and Euro ("EUR").

Forward points on the forward contracts are included in the assessment of hedge effectiveness.

Amounts reported in other comprehensive income (loss) related to foreign currency derivative contracts will be reclassified to other gain and (loss) in the same period during which the hedged forecasted transactions affect earnings.

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In May 2019, we entered into four cross-currency swaps to exchange £ 130 million for $ 166 million maturing in May 2034, in order to hedge the foreign currency risk associated with our Sterling-denominated intercompany loan receivable from our consolidated foreign subsidiaries.

These cross-currency swaps were designated as cash flow hedges on their trade date.

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 did not occur, a $ 20.0 million gain was reclassified from AOCI to 'Foreign currency and derivative (loss) gain, net' during the three months ended June 30, 2022.

In October 2022, we entered into six cross-currency swaps to exchange € 612 million for $ 600 million maturing in October 2032, in order to hedge the foreign currency risk associated with our Euro-denominated intercompany loans receivable from our consolidated foreign subsidiaries.

We designated three of the six cross-currency swaps, exchanging € 326 million for $ 320 million, as fair value hedges of foreign denominated intercompany loans receivable (the "hedged assets").

The hedged assets are eliminated in consolidation, but remeasurement gains and losses pertaining to the hedged assets impact earnings as part of 'Foreign currency and derivative (loss) gain, net'.

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.

In February 2020, we entered into five forward starting treasury rate locks with notional amounts totaling $ 500.0 million.

The treasury rate locks were entered into to hedge our exposure to the changes in the 10-year US treasury rates in anticipation of potential future debt offerings during the first half of 2020.

The treasury rate locks were designated as cash flow hedges, with any changes in fair value recorded in AOCI.

Upon the initial issuance of the 2031 Notes in May 2020, we amortized the AOCI balance over the term of the 2031 Notes.

In June 2020, all five treasury rate locks were terminated and we entered into six forward starting interest rate swaps with notional amounts totaling $ 500.0 million in a cashless settlement of the terminated treasury rate locks.

The forward starting swaps were entered into to hedge our exposure to the changes in the 3-month USD-LIBOR swap rate in anticipation of potential future debt offerings through a current estimated range ending in 2023.

The forward starting swaps are designated as cash flow hedges, with any changes in fair value recorded in AOCI.

Upon issuance of the 2031 Notes during July 2020, the AOCI balance associated with four of the forward starting swaps with a notional amount of $ 350.0 million we amortized over the term of the notes.

However, we elected not to terminate the four forward starting interest rate swaps, and redesignated the swaps in a new hedging relationship for a future debt issuance to hedge our exposure to the changes in the 10-year US treasury rates in anticipation of potential future debt offerings between May 2020 and December 2023.

Upon the December 2020 issuance of $ 325.0 million of 0.750 % notes due March 2026 and $ 400.0 million of 1.800 % notes due March 2033, the AOCI balance associated with six of the forward starting swaps with a notional amount of $ 500.0 million began amortizing over the term.

The AOCI balance being amortized represents the change in fair value on four swaps with a notional amount of $ 350.0 million from the July issuance of the 2031 notes through the December note issuances and the change in fair value from the two remaining forward starting swaps with a notional amount of $ 150.0 million from their June 2020 inception through the December note issuances.

The notional amounts of the six swaps were first applied to the $ 400.0 million of 1.800 % notes due March 2033, with the remaining $ 100.0 million of notional applied to the $ 325.0 million of 0.750 % notes due March 2026.

In connection with our October 2022 offering of $ 750 million of 5.625 % unsecured notes, due October 13, 2032, we terminated the six forward starting interest rate swaps.

Upon the issuance of the October 2022 offering, the change in fair value on the six forward starting interest rate swaps with notional amounts totaling $ 500.0 million is being amortized through the AOCI balance through the term of the notes.

As of December 31, 2022, we had one interest rate swap in place on our $ 250.0 million unsecured term loan.

Our objective in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements.

We designated this interest rate swap as a cash flow hedge in accordance with Topic 815, Derivatives and Hedging .

This interest rate swap is recorded on the consolidated balances sheets at fair value.

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

This interest

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rate swap, which was converted to a SOFR benchmark from LIBOR during June 2022, continues to be accounted for as a cash flow hedge.

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

Years ended December 31,

Derivatives in Cash Flow Hedging Relationships 2022 2021 2020

Currency swaps $ ( 5,091 ) $ 8,232 $ ( 2,169 )

Interest rate swaps 98,310 34,659 ( 32,757 )

Foreign currency forwards 8,540 7,557 —

Total derivatives in cash flow hedging relationships $ 101,759 $ 50,448 $ ( 34,926 )

Derivatives in Fair Value Hedging Relationships

Currency swaps ( 4,705 ) — —

Total unrealized gain (loss) on derivatives $ 97,054 $ 50,448 $ ( 34,926 )

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

Years ended December 31,

Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income 2022 2021 2020

Currency swaps Foreign currency and derivative gain (loss), net $ 30,814 $ 3,541 $ ( 3,617 )

Interest rate swaps Interest expense ( 4,487 ) ( 10,343 ) ( 11,434 )

Foreign Currency Forwards Foreign currency and derivative gain, net 2,139 — —

Total derivatives in cash flow hedging relationships $ 28,466 $ ( 6,802 ) $ ( 15,051 )

Derivatives in Fair Value Hedging Relationships

Currency swaps Foreign currency and derivative loss, net ( 29,708 ) — —

Net decrease to net income $ ( 1,242 ) $ ( 6,802 ) $ ( 15,051 )

We expect to reclassify $ 11.9 million from AOCI as a decrease to interest expense relating to interest rate swaps and $ 9.8 million from AOCI to foreign currency gain relating to foreign currency forwards within the next twelve months.

We executed variable-to-fixed interest rate swaps to add stability to interest expense and to manage our exposure to interest rate movements associated with our term loans.

To mitigate the impact of fluctuating interest rates, we also entered into interest rate swaption agreements during March 2023, structuring them as swaption corridors, in anticipation of issuing USD denominated bonds.

Interest rate swaption corridors are a combination of two swaption positions.

Specifically, we purchased a payer swaption, an option that allows us to enter into a swap where we will pay the fixed rate and receive the floating rate of the swap, and we also sold a payer swaption, an option that provides the counterparty with the right to enter into a swap where we will receive the fixed rate and pay the floating rate of the swap.

The total premium paid for the March 2023 transaction was $ 7.6 million.

All three hedging instruments are designated as cash flow hedges.

Derivative Designated as Hedging Instruments - Fair Value Hedges

Periodically, we enter into and designate fixed-to-floating interest rate swaps to manage interest rate risk by managing our mix of fixed-rate and variable-rate debt.

These swaps involve the receipt of fixed-rate amounts for variable interest rate payments over the life of the swaps without exchange of the underlying principal amount.

We also designate some of our cross-currency swaps as fair value hedges as we use them to hedge foreign currency risk associated with changes in spot rates on foreign-denominated debt.

For these hedging instruments, 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 these excluded components are recorded to other comprehensive income and subsequently 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.

Derivative Designated as Hedging Instruments - Net Investment Hedges

During the fourth quarter of 2023, we designated the three existing cross-currency swaps that had not been designated as hedging instruments through the third quarter of 2023 as net investment hedges to mitigate the risks associated with our investment in EUR-denominated foreign operations.

These cross-currency swaps qualify as net investment hedges under the criteria prescribed in accordance with ASC Topic 815-20, Hedging - General .

We use the spot method of assessing hedge effectiveness and apply the consistent election to the excluded component by

recognizing changes in the fair value of the hedging instruments attributable to the excluded component in the same manner as described above.

Any difference between the change in the fair value of the excluded components and the amounts recognized in earnings is reported in other comprehensive income as part of the foreign cumulative translation adjustment.

The gain or loss on the portion of the derivative instruments included in the assessment of effectiveness is reported in other comprehensive income as part of the 'Foreign currency translation adjustment' line item, to the extent the relationship is highly effective.

If the company’s net investment changes during a reporting period, the hedge relationship will be assessed for whether a de-designation is warranted (only if the hedge notional amount is outside of prescribed tolerance).

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency exchange swap agreements to reduce the effects of currency exchange rate fluctuations between the U.S.

dollar, our reporting currency, and British Pound Sterling and Euro.

We enter into foreign currency exchange swap agreements to reduce the effects of currency exchange rate fluctuations between the USD, our reporting currency, and GBP and EUR.

These derivative contracts generally mature within one year and are not designated as hedge instruments for accounting purposes.

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.

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

Years ended December 31,

2022 2021 2020

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

Gain (loss) on the settlement of undesignated derivatives $ 204,392 $ 24,392 $ ( 6,344 )

Gain (loss) on the settlement of designated derivatives reclassified from AOCI 3,245 3,541 ( 3,617 )

Loss on the settlement of transactions with third parties ( 553 ) ( 134 ) ( 36 )

Total realized foreign currency and derivative gain (loss), net $ 207,084 $ 27,799 $ ( 9,997 )

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

Gain (loss) on the change in fair value of undesignated derivatives $ 29,316 $ ( 14,714 ) $ ( 8,205 )

Gain (loss) on remeasurement of certain assets and liabilities ( 249,711 ) ( 12,375 ) 22,787

Total unrealized foreign currency and derivative gain (loss), net $ ( 220,395 ) $ ( 27,089 ) $ 14,582

Total foreign currency and derivative gains (losses), net

$ ( 13,311 ) $ 710 $ 4,585

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 our consolidated statements of income and comprehensive income.

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

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Number of Instruments (1)

Accounting Classification Notional Amount as of

Notional Amount as of

Weighted Average Strike Rate (2)

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

Interest rate swap

1 Derivative $ 250.0 $ 250.0 2.88 % March 2024 $ 5.6 $ ( 11.9 )

Cross-currency swaps (4)

3 Derivative 320.0 166.3 (5) October 2032 ( 33.3 ) ( 13.8 )

Foreign currency forwards 30 Derivative 185.5 176.1 (6) Jan 2023 - Aug 2024 16.1 7.6

Forward-starting swaps (7)

– Derivative – 300.0 – % – ( 3.2 )

Forward-starting swaps (7)

– Hybrid Debt – 200.0 – % – ( 5.1 )

Interest rate swaps

9 $ 1,630.0 $ 250.0 4.26 % Jan 2024 - Jan 2026 $ 0.3 $ 5.6

Interest rate swaptions 6 1,000.0 — (4) Feb 2034 2.6 —

Cross-currency swaps - Fair Value (5)

3 320.0 320.0 (6) Oct 2032 ( 59.8 ) ( 33.3 )

Cross-currency swaps - Net Investment (5)

3 280.0 — (7) Oct 2032 ( 53.2 ) —

Foreign currency forwards 22 162.3 185.5 (8) Jan 2024 - Dec 2024 2.7 16.1

$ 3,392.3 $ 755.5 $ ( 107.4 ) $ ( 11.6 )

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Currency exchange swaps

4 Derivative $ 2,427.7 $ 1,639.5 (9) January 2023 $ 58.8 $ ( 14.7 )

4 $ 1,810.6 $ 2,427.7 (9) Jan 2024 - Feb 2024 $ 8.9 $ 58.8

Cross-currency swaps (5)

3 Derivative 280.0 – (5) October 2032 ( 29.5 ) —

0 — 280.0 —% Oct 2032 — ( 29.5 )

$ 1,810.6 $ 2,707.7 $ 8.9 $ 29.3

Total of all Derivatives $ 5,202.9 $ 3,463.2 $ ( 98.5 ) $ 17.7

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(3) This column represents maturity dates for instruments outstanding as of December 31, 2023.

(4) In June 2022, we terminated four British Pound Sterling, or GBP, cross-currency swaps with a notional amount of $ 166.3 million.

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

(5) In October 2022, we entered into six cross-currency swaps to exchange € 612 million for $ 600 million maturing in October 2032.

We redesignated $ 280 million of three cross-currency swaps as net investment hedges in December 2023.

(6) USD fixed rate of 5.625 % and EUR weighted average fixed rate of 4.681 %.

(7) USD fixed rate of 5.625 % and EUR weighted average fixed rate of 4.716 %.

(8) Weighted average forward GBP-USD exchange rate of 1.30 .

(7) There were five treasury rate locks entered into during February 2020 that were terminated in June 2020 and converted into six forward starting interest rate swaps through a cashless settlement.

These forward starting interest rate swaps were terminated in connection with a senior unsecured note issuance in October 2022.

(8) Represents one GBP currency exchange swap with a notional amount of $ 836.4 million and three Euro ("EUR"), currency exchange swaps with an associated notional amount of $ 1.6 billion.

(9) Weighted Average Forward EUR-GBP exchange rate of 0.86 and Weighted Average Forward EUR-USD exchange rate of 1.05 .

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.

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(9) Weighted average exchange rates of 1.27 for GBP-USD and 0.86 for EUR-GBP.

We measure our derivatives at fair value and include the balances within 'Other assets, net' and 'Accounts payable and 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.

Lessor Operating and Finance Leases

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

Years ended December 31,

Derivatives in Cash Flow Hedging Relationships 2023 2022 2021

Cross-currency swaps $ — $ ( 5,091 ) $ 8,232

Interest rate swaps ( 11,171 ) 98,310 34,659

Foreign currency forwards ( 13,349 ) 8,540 7,557

Interest rate swaptions 1,857 — —

Total derivatives in cash flow hedging relationships $ ( 22,663 ) $ 101,759 $ 50,448

Derivatives in Fair Value Hedging Relationships

Cross-currency swaps - Fair Value $ ( 14,602 ) $ ( 4,705 ) $ —

Total derivatives in fair value hedging relationships $ ( 14,602 ) $ ( 4,705 ) $ —

Total unrealized (loss) gain on derivatives, net

$ ( 37,265 ) $ 97,054 $ 50,448

Derivatives in Net Investment Hedging Relationships

Cross-currency swaps - Net Investment $ ( 4,272 ) $ — $ —

Total unrealized loss recorded in foreign currency translation adjustment $ ( 4,272 ) $ — $ —

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

Years ended December 31,

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

2023 2022 2021

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

$ — $ 30,814 $ 3,541

Interest rate swaps Interest expense 15,794 ( 4,487 ) ( 10,343 )

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

4,251 2,139 —

Interest rate swaptions Interest expense ( 6,859 ) — —

Total derivatives in cash flow hedging relationships $ 13,186 $ 28,466 $ ( 6,802 )

Derivatives in Fair Value Hedging Relationships

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

$ 1,415 $ ( 29,708 ) $ —

Total derivatives in fair value hedging relationships $ 1,415 $ ( 29,708 ) $ —

Derivatives in Net Investment Hedging Relationships

Cross-currency swaps - Net Investment Foreign currency and derivative (loss) gain, net $ 62 $ — $ —

Total derivatives in net investment hedging relationships $ 62 $ — $ —

Net increase (decrease) to net income

$ 14,663 $ ( 1,242 ) $ ( 6,802 )

We expect to reclassify $ 8.0 million from AOCI as a decrease to interest expense relating to interest rate swaps and interest rate swaptions and $ 3.6 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):

Years ended December 31,

2023 2022 2021

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

Gain on the settlement of undesignated derivatives $ 18,051 $ 204,392 $ 24,392

Gain on the settlement of designated derivatives reclassified from AOCI 5,728 3,245 3,541

Gain (loss) on the settlement of transactions with third parties 583 ( 553 ) ( 134 )

Total realized foreign currency and derivative gain, net $ 24,362 $ 207,084 $ 27,799

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

(Loss) gain on the change in fair value of undesignated derivatives $ ( 5,231 ) $ 29,316 $ ( 14,714 )

Loss on remeasurement of certain assets and liabilities ( 32,545 ) ( 249,711 ) ( 12,375 )

Total unrealized foreign currency and derivative loss, net $ ( 37,776 ) $ ( 220,395 ) $ ( 27,089 )

Total foreign currency and derivative (loss) gain, net $ ( 13,414 ) $ ( 13,311 ) $ 710

Lessor Operating Leases

At December 31, 2023, we owned or held interests in 13,458 properties.

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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, maintains the interior and exterior of the building and leased premises, and carries insurance coverage for public liability, property damage, fire and extended coverage.

The vast majority 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 years ended December 31, 2023, 2022, and 2021 was $ 14.8 million, $ 14.9 million, and $ 6.5 million, respectively.

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Totals $ 43,194,010 $ 29,263

(1) Related to 17 properties which are subject to direct financing leases and, therefore, revenue is recognized as rental income on the discounted cash flows of the lease payments.

(1) Related to six properties which are subject to direct financing leases and, therefore, revenue is recognized as rental income on the discounted cash flows of the lease payments.

Amounts reflected are the cash rent on these respective properties.

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We pay monthly distributions to our common stockholders.

The following is a summary of monthly distributions paid per common share for the years ended December 31, 2022, 2021, and 2020:

The following is a summary of monthly distributions paid per common share for the periods indicated below:

2023 2022 2021

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$ 3.0510 $ 2.9670 $ 2.8330

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At December 31, 2023, a distribution of $ 0.2565 per common share was payable and was paid in January 2024.

6 unchanged sentences

$ 3.0510000 $ 2.9670000 $ 4.8927123

$ 2.9670000 $ 4.8927123 $ 2.7940000

(1) Unrecaptured Section 1250 Gain of $ 0.0784152 , or 2.643 % of the total common dividends paid in the year ended December 31, 2022, and Section 897 Gain of $ 0.1802346 , or 6.075 % of the total common dividends paid in the year ended December 31, 2022, both represent additional characterization of, and are part of, total capital gain distribution.

(1) The amount distributed in 2021 includes the $ 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.

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Net Income per Common Share

The following is a reconciliation of the denominator of the basic net income per common share computation to the denominator of the diluted net income per common share computation:

Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each period.

Diluted net income per common share is computed by dividing net income available to common stockholders, plus income attributable to dilutive shares and convertible common units for the period, by the weighted average number of common shares that would have been outstanding assuming the issuance of common shares for all potentially dilutive common shares outstanding during the reporting period.

The following is a reconciliation of the denominator of the basic net income per common share computation to the denominator of the diluted net income per common share computation (shares in thousands):

Years ended December 31,

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Weighted average forward ATM offerings that were anti-dilutive 759 644 —

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Supplemental Disclosures of Cash Flow Information

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

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

Years ended December 31,

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Non-cash activities:

Net increase (decrease) in fair value of derivatives $ 58,753 $ 40,489 $ ( 55,205 )

Net (decrease) increase in fair value of derivatives $ ( 116,145 ) $ 58,753 $ 40,489

Increase in noncontrolling interests from property acquisitions $ 39,156 $ — $ —

Mortgages assumed at fair value (1)

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For the year ended December 31, 2021, includes $ 1.8 million for the issuance of 56,400 units on November 1, 2021 that were a result of our merger with VEREIT, $ 20.4 million for the issuance of 300,604 units on November 30, 2021 that were a partial consideration for an acquisition of properties, and $ 16.6 million for the issuance of 240,586 units on December 30, 2021 that were issued to a new partner in connection with an industrial property contribution.

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 (dollars in thousands):

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

December 31, 2023 December 31, 2022

Cash and cash equivalents shown in the consolidated balance sheets $ 232,923 $ 171,102

$ 171,102 $ 258,579

Restricted escrow deposits (1)

37,627 68,541

Impounds related to mortgages payable (1)

Total cash, cash equivalents, and restricted cash shown in the consolidated

statements of cash flows

53,005 18,152

(1) Included within other assets, net on the consolidated balance sheets (see note 4, Supplemental Detail for Certain Components of Consolidated Balance Sheets ).

Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 292,175 $ 226,881

(1) Included within 'other assets, net' on our consolidated balance sheets (see note 3, Supplemental Detail for Certain Components of Consolidated Balance Sheets ).

These amounts consist of cash that we are legally entitled to, but that is not immediately available to us.

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The 2021 Plan offers our directors, employees, and consultants an opportunity to own our stock and/or rights that will reflect our growth, development and financial success.

Except as noted below, the aggregate number of shares of our common stock subject to options, stock purchase rights ("SPR"), stock appreciation rights ("SAR"), and other awards, will be no more 8,924,231 shares.

The maximum number of shares that may be subject to options, SPR, SAR and other awards granted under the plan to any individual in any calendar year may not exceed 3,200,000 , and the maximum aggregate amount of cash that may be paid in cash during any calendar year with respect to one or more shares payable in cash shall be $ 10.0 million.

The maximum number of shares that may be subject to options, SPR, SAR and other awards granted under the plan to any individual in any calendar year may not exceed 3.2 million, and the maximum aggregate amount of cash that may be paid in cash during any calendar year with respect to one or more shares payable in cash shall be $ 10.0 million.

The 2021 Plan replaced the Realty Income Corporation 2012 Incentive Award Plan (the"2012 Plan"), which was set to expire in March 2022 and from which no further awards have been granted.

The disclosures below incorporate activity for both the 2012 Plan and the 2021 Plan.

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In connection with our merger with VEREIT, shares which remained available for issuance under the VEREIT, Inc.

2021 Equity Incentive Plan immediately prior to the closing of the merger (as adjusted by the Exchange Ratio) may be used for awards under the 2021 Plan and will not reduce the shares authorized for grant under the 2021 Plan, to the extent that awards using such shares (i) are permitted without stockholder approval under applicable stock exchange rules, (ii) are made only to VEREIT service providers or individuals who become Realty Income service providers following the date of the consummation of the merger, and (iii) are only granted under the 2021 Plan during the period commencing on the date of the consummation of the merger and ending on June 2, 2031.

As a result, 6,186,101 additional shares were available for issuance under the 2021 Plan.

The amount of share-based compensation costs recognized in 'General and administrative' in the consolidated statements of income and comprehensive income was $ 21.6 million, $ 16.2 million, and $ 16.5 million (including $ 1.8 million of accelerated share-based compensation costs for our former Chief Financial Officer) during the years ended December 31, 2022, 2021, and 2020, respectively.

As a result, 6.2 million additional shares were available for issuance under the 2021 Plan.

The amount of share-based compensation costs recognized in 'General and administrative' in our consolidated statements of income and comprehensive income was $ 26.2 million, $ 21.6 million, and $ 16.2 million during the years ended December 31, 2023, 2022, and 2021, respectively.

Also, in connection with the merger, each outstanding VEREIT, Inc.

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The converted awards issued by Realty Income have identical terms to the original VEREIT, Inc.

On November 1, 2021, we issued 442,418 shares of Realty Income common stock in settlement of equity awards that vested upon the separation of certain former-VEREIT employees and directors in connection with the merger.

On November 1, 2021, we issued 0.4 million shares of Realty Income common stock in settlement of equity awards that vested upon the separation of certain former-VEREIT employees and directors in connection with the merger.

This issuance is excluded from the Restricted Stock Units and Stock Options sections below, as the awards were not granted under the 2021 Plan.

and Orion Office REIT Inc.

Divestiture ), ii.) $ 25.6 million of expense was recognized during November in merger and integration-related costs related to the acceleration of vesting upon the separation of certain employees in connection with the merger, and iii.) $ 2.0 million will be amortized through general and administrative expenses over the remaining vesting term for former VEREIT, Inc.

The aggregate fair value of the converted awards was $ 71.6 million, of which i.) $ 44.0 million related to pre-combination services and is included in the consideration transferred in the merger ii.) $ 25.6 million of expense was recognized during November in merger and integration-related costs related to the acceleration of vesting upon the separation of certain employees in connection with the merger, and iii.) $ 2.0 million will be amortized through general and administrative expenses over the remaining vesting term for former VEREIT, Inc.

employees who were retained by Realty Income.

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The following disclosures are inclusive of these adjustments, which has been labeled 'Equitable adjustment - Orion Divestiture' throughout.

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Restricted Stock

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(2) Our restricted stock awards granted to employees vest over a service periods not exceeding four-years .

Effective November 1, 2022, and applied retroactively for all outstanding awards, restricted stock awards granted to employees with 10 years of continued service and 60 years of age will vest over the shorter of the original vesting term or the period through the date in which the awardee reaches age 60.

Additionally effective November 1, 2022, and applied retroactively for all outstanding awards, we have a retirement provision whereby the vesting date for eligible participants is accelerated based on certain criteria.

The vesting schedule for shares granted to non-employee directors is as follows:

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In addition, in November 2021, we granted 8,000 shares of restricted stock to the new members of our Board of Directors, which vest in equal parts over a three-year service period.

In connection with our annual awards, 20,000 , 24,000 , and 24,000 shares vested immediately and 20,000 , 12,000 , and 12,000 shares vest in equal parts over a three-year service period for the years ending December 31, 2022, 2021 and 2020, respectively.

In connection with our annual awards, 20,000 , 20,000 , and 24,000 shares vested immediately and 20,000 , 20,000 , and 12,000 shares vest in equal parts over a three-year service period for the years ended December 31, 2023, 2022, and 2021, respectively.

As of December 31, 2023, the remaining unamortized share-based compensation expense related to restricted stock totaled $ 14.9 million, which is being amortized on a straight-line basis over the service period of each applicable award.

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We define the grant date as the date the recipient and Realty Income have a mutual understanding of the key terms and conditions of the award, and the recipient of the grant begins to benefit from, or be adversely affected by, subsequent changes in the price of the shares.

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Restricted Stock Units

During 2023, 2022 and 2021, and in connection with our merger with VEREIT Inc., we also granted restricted stock units that primarily vest over service periods of three or four-years and have the same economic rights as shares of restricted stock:

2023 2022 2021

Number of restricted stock units Weighted average price (1)

Outstanding nonvested shares, beginning of year

58,513 $ 67.91 67,367 $ 69.69 18,670 $ 70.38

Equitable adjustment - Orion Divestiture (2)

Shares granted 15,065 $ 66.41 24,820 $ 66.82 71,956 $ 68.96

Shares vested ( 29,492 ) $ 70.30 ( 26,917 ) $ 70.55 ( 23,368 ) $ 66.96

Shares forfeited ( 1,474 ) $ 71.02 ( 6,757 ) $ 71.14 —

Outstanding nonvested shares, end of each period

42,612 $ 65.62 58,513 $ 67.91 67,367 $ 69.69

(1) Grant date fair value.

(2) Effective with the Orion Divestiture on November 12, 2021, outstanding equity awards were adjusted by a conversion ratio of 1.002342 per one Realty Income share then held.

As of December 31, 2023, the remaining share-based compensation expense related to the restricted stock units totaled $ 1.1 million and is being recognized on a straight-line basis over the service period.

The amount of share-based compensation for the restricted stock units is based on the fair value of our common stock at the grant date.

The expense amortization period for restricted stock units is the lesser of the four-year service period or the period over which the awardee reaches the qualifying retirement age.

For employees who have already met the qualifying retirement age, restricted stock units are fully expensed at the grant date.

Performance Shares

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Net Debt-to-Pro Forma Adjusted EBITDA re Ratio

Net Debt-to-Adjusted EBITDA re Ratio

25 % 25 % N/A

Net Debt-to-Adjusted EBITDA re Ratio

The annual performance shares are earned based on our performance related to our metrics above, and vest 50 % on the first and second January 1 after the end of the three-year performance period, subject to continued service.

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The awards were made to reward the executives for the successful consummation of the VEREIT Transaction and were intended to retain and motivate the executives to achieve optimal synergies and incentivize further growth from the merger.

The performance shares are earned based on our performance related to Adjusted Funds from Operations Available to Common Stockholders ("AFFO") accretion ( 50 % weighting) and general and administrative expense synergies ( 50 % weighting), and vest 50 % upon the completion of the performance period.

The remaining 50 % will vest on the one-year anniversary of the completion of the applicable performance period.

The performance shares were earned based on our performance related to Adjusted Funds from Operations Available to Common Stockholders ("AFFO") accretion ( 50 % weighting) and general and administrative expense synergies ( 50 % weighting), and vested 50 % upon the completion of the performance period.

The remaining 50 % vested on the one-year anniversary of the completion of the applicable performance period.

All vesting is subject to continued service.

The performance period was one year for the AFFO accretion targets from January 1, 2022 to December 31, 2022, and is two years for the general and administrative expense synergies from January 1, 2022 to December 31, 2023.

The fair value of the annual performance shares was estimated on the date of grant using a Monte Carlo Simulation model.

The performance period was one year for the AFFO accretion targets from January 1, 2022 to December 31, 2022, and was two years for the general and administrative expense synergies from January 1, 2022 to December 31, 2023.

The fair value of the performance shares was estimated on the date of grant using a Monte Carlo Simulation model.

The fair value of the one-time performance shares was based on the fair value of our common stock at the grant date and is dependent on the probability of satisfying the performance conditions stipulated in the award grant.

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As of December 31, 2023, the remaining share-based compensation expense related to the performance shares totaled $ 17.4 million and is being recognized on a tranche-by-tranche basis over the service period.

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Restricted Stock Units

During 2022, 2021 and 2020, and in connection with our merger with VEREIT Inc., we also granted restricted stock units that primarily vest over service periods of three or four-years and have the same economic rights as shares of restricted stock:

2022 2021 2020

Number of restricted stock units Weighted average price (1)

Outstanding nonvested shares, beginning of year

67,367 $ 69.69 18,670 $ 70.38 15,511 $ 59.82

Equitable adjustment - Orion Divestiture (2)

Shares granted 24,820 $ 66.82 71,956 $ 68.96 9,966 $ 78.79

Shares vested ( 26,917 ) $ 70.55 ( 23,368 ) $ 66.96 ( 6,807 ) $ 58.63

Shares forfeited ( 6,757 ) $ 71.14 — —

Outstanding nonvested shares, end of each period

58,513 $ 67.91 67,367 $ 69.69 18,670 $ 70.38

(1) Grant date fair value.

(2) Effective with the Orion Divestiture on November 12, 2021, outstanding equity awards were adjusted by a conversion ratio of 1.002342 per one Realty Income share then held.

As of December 31, 2022, the remaining share-based compensation expense related to the restricted stock units totaled $ 1.4 million and is being recognized on a straight-line basis over the service period.

The amount of share-based compensation for the restricted stock units is based on the fair value of our common stock at the grant date.

The expense amortization period for restricted stock units is the lesser of the four-year service period or the period over which the awardee reaches the qualifying retirement age.

For employees who have already met the qualifying retirement age, restricted stock units are fully expensed at the grant date.

Stock Options

The following stock options were converted in connection with our merger with VEREIT, Inc.

in 2021 and there are no additional granted or outstanding stock options.

In connection with our merger with VEREIT in 2021, 709,426 stock options were converted with a weighted average exercise price of $ 53.80 per option.

There were no outstanding stock options prior to the VEREIT merger, and no additional stock options have since been granted.

The fair value of the stock options as of their grant date is determined using the Black-Scholes option pricing model, which requires the input of assumptions including expected terms, expected volatility, dividend yield and risk-free rate.

The following table summarizes our stock option activity during the year ended December 31, 2022:

Number of stock options Weighted average exercise price (1)

Weighted average remaining contractual term (Years) Aggregate intrinsic value

Outstanding nonvested options, beginning of year 315,070 $ 52.89

Options exercised ( 262,267 ) $ 52.41

Options forfeited ( 7,424 ) $ 58.46

Outstanding nonvested options, end of each period 45,379 $ 54.75 5.8 $ 393,710

(1) Grant date fair value.

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The following table summarizes our stock option activity during the year ended December 31, 2021:

Number of stock options Weighted average exercise price (1)

Weighted average remaining contractual term (Years) Aggregate intrinsic value

Outstanding nonvested options, beginning of year —

Options granted (2)

709,426 $ 53.80

Equitable adjustment - Orion Divestiture (3)

Options exercised ( 395,903 ) $ 54.54

Options forfeited —

Outstanding nonvested options, end of each period 315,070 $ 52.89 2.4 $ 5,891,639

(1) Grant date fair value.

(2) During the year ended December 31, 2021, stock options were granted in connection with the VEREIT merger.

(3) Effective with the Orion Divestiture on November 12, 2021, outstanding equity awards were adjusted by a conversion ratio of 1.002342 per one Realty Income share then held.

As of December 31, 2023, we had 28,343 outstanding nonvested stock options with a weighted average exercise price of $ 54.50 per option.

Their weighted average remaining contractual term is 4.8 years.

Compensation expense for stock options is recognized on a straight-line basis over the service period described above.

During the years ended December 31, 2022 and 2021, we recorded $ 47,000 and $ 68,000 of expense related to stock options, respectively.

During the years ended December 31, 2023, we recorded no expense related to stock options.

During each of the years ended December 31, 2022 and 2021, we recorded less than $ 0.1 million of expense related to stock options.

As of December 31, 2023, there was no unamortized expense relating to our outstanding stock options.

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At December 31, 2023, we had commitments of $ 32.7 million, which primarily relate to re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of December 31, 2022, we had committed $ 606.3 million under construction contracts related to development projects, which have estimated rental revenue commencement dates between January 2023 and August 2024.

In addition, as of December 31, 2023, we had committed $ 740.0 million under construction contracts related to development projects, which have estimated rental revenue commencement dates between January 2024 and January 2025.

We have certain properties that are subject to ground leases, which are accounted for as operating leases.

At December 31, 2023, minimum future rental payments for the next five years and thereafter are as follows (in millions):

Operating Leases Finance Leases Total

Operating Leases Finance

2024 $ 39.4 $ 5.3 $ 44.7

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At December 31, 2023, the weighted average discount rate for finance leases is 3.47 % and the weighted average remaining lease term is 22.6 years.

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Subsequent Events

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In addition, in February 2024, we declared a dividend of $ 0.2565 , which will be paid in March 2024.

Note Issuances

In January 2023, we issued $ 500 million of 5.05 % senior unsecured notes due January 2026, which are callable at par on January 13, 2024, and $ 600 million of 4.85 % senior unsecured notes due March 2030, which are callable at par on January 15, 2030.

The public offering price for the January 2026 Notes was 99.618 % of the principal amount for an effective semi-annual yield to maturity of 5.189 % and the public offering price for the March 2030 Notes was 98.813 % of the principal amount for an effective semi-annual yield to maturity of 5.047 % .

On January 6, 2023 we entered into a term loan agreement (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 (collectively, the “Term Loans”).

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.

Agreement and Plan of Merger

On January 23, 2024, we completed our acquisition of Spirit in an all-stock transaction.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, the transaction was subject to the approval of Spirit’s stockholders and satisfaction of other customary closing conditions.

Pursuant to the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger, (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)) automatically converted into 0.762 of a newly issued share of 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,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.

In connection with our merger with Spirit, we completed the $ 2.7 billion exchange in principal of outstanding notes issued by Spirit Realty, L.P.

(“Spirit OP”), a wholly owned subsidiary of the Company following the Merger, for new notes issued by Realty Income and entered into $ 800.0 million and $ 500.0 million term loan agreements, which provide for the assumption of Spirit OP's existing term loan agreements.

Due to the close proximity of the acquisition date and the Company's filing of its annual report on Form 10-K for the year ended December 31, 2023, the initial accounting for the business combination is incomplete, and therefore we are unable to disclose the information required by ASC 805, Business Combinations .

Such information will be included in the Company's subsequent Form 10-Q.

Notes Issuance

In January 2024, we issued $ 450.0 million of 4.750 % senior unsecured notes due February 2029 (the “2029 Notes”), and $ 800.0 million of 5.125 % senior unsecured notes due February 2034 (the “2034 Notes”).

The public offering price for the 2029 Notes was 99.225 % of the principal amount for an effective annual yield to maturity of 4.923 %, and the public offering price for the 2034 Notes was 98.910 % of the principal amount for an effective annual yield to maturity of 5.265 %.

Interest on the 2029 Notes and the 2034 Notes is paid semi-annually.

ATM Forward Offerings

ATM forward agreements for a total of 13.4 million shares remain unsettled with total expected net proceeds of approximately $ 850 million, of which 6.7 million shares were executed in 2023.

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Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

We have had no disagreements with our independent registered public accounting firm on accounting matters or financial disclosure, nor have we changed accountants in the two most recent fiscal years.

As of February 20, 2024, ATM forward agreements for a total of 10.8 million shares remain unsettled with total expected net proceeds of approximately $ 605 million of which 4.6 million shares were executed in January 2024.

A Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data