REALTY INCOME CORP 10-K

Item 8: Financial Statements and Supplementary Data Table of Contents A. Reports of Independent Registered Public Accounting Firm B. Consolidated Balance Sheets, December 31, 202 3 and 202 2 C. Consolidated Statements of Income and Comprehensive Income, Years ended December 31, 202 3 , 202 2 , and 202 1 D. Consolidated Statements of Equity, Years ended December 31, 202 3 , 202 2 , and 20 21 E. Consolidated Statements of Cash Flows, Years ended December 31, 202 3 , 202 2 , and 20 21 F. Notes to Consolidated Financial Statements G. Schedule III Real Estate and Accumulated Depreciation Schedules not filed: 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. 46 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Realty Income Corporation: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Realty Income Corporation and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income and comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Evaluation of the Fair Value of Land in Real Estate Acquisitions As discussed in Note 4 to the consolidated financial statements, during 2023 the Company acquired $8.2 billion of real estate properties. As discussed in Note 1, the purchase price of a real estate acquisition is typically allocated among the individual components of both tangible and intangible assets and liabilities acquired based on their estimated relative fair values. We identified the evaluation of the fair value of land in real estate acquisitions as a critical audit matter. 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. 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. 47 Table of Contents The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to allocate the purchase price of real estate acquisitions. This included controls over the measurement of the fair value of land. 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. /s/ KPMG LLP We have served as the Company’s auditor since 1993. San Diego, California February 21, 2024 48 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Realty Income Corporation: Opinion on Internal Control Over Financial Reporting We have audited Realty Income Corporation and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income and comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 21, 2024 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. /s/ KPMG LLP San Diego, California February 21, 2024 49 Table of Contents REALTY INCOME CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, 2023 December 31, 2022 ASSETS Real estate held for investment, at cost: Land $ 14,929,310 $ 12,948,835 Buildings and improvements 34,657,094 29,707,751 Total real estate held for investment, at cost 49,586,404 42,656,586 Less accumulated depreciation and amortization ( 6,072,118 ) ( 4,904,165 ) Real estate held for investment, net 43,514,286 37,752,421 Real estate and lease intangibles held for sale, net 31,466 29,535 Cash and cash equivalents 232,923 171,102 Accounts receivable, net 710,536 543,237 Lease intangible assets, net 5,017,907 5,168,366 Goodwill 3,731,478 3,731,478 Investment in unconsolidated entities 1,172,118 — Other assets, net 3,368,643 2,276,953 Total assets $ 57,779,357 $ 49,673,092 LIABILITIES AND EQUITY Distributions payable $ 195,222 $ 165,710 Accounts payable and accrued expenses 738,526 399,137 Lease intangible liabilities, net 1,406,853 1,379,436 Other liabilities 811,650 774,787 Line of credit payable and commercial paper 764,390 2,729,040 Term loan, net 1,331,841 249,755 Mortgages payable, net 821,587 853,925 Notes payable, net 18,602,319 14,278,013 Total liabilities 24,672,388 20,829,803 Commitments and contingencies (Note 20) Stockholders’ equity: 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 Distributions in excess of net income ( 6,762,136 ) ( 5,493,193 ) Accumulated other comprehensive income 73,894 46,833 Total stockholders’ equity 32,941,467 28,713,149 Noncontrolling interests 165,502 130,140 Total equity 33,106,969 28,843,289 Total liabilities and equity $ 57,779,357 $ 49,673,092 The accompanying notes to consolidated financial statements are an integral part of these statements. 50 Table of Contents REALTY INCOME CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in thousands, except per share amounts) Years ended December 31, 2023 2022 2021 REVENUE Rental (including reimbursable) $ 3,958,150 $ 3,299,657 $ 2,064,958 Other 120,843 44,024 15,505 Total revenue 4,078,993 3,343,681 2,080,463 EXPENSES Depreciation and amortization 1,895,177 1,670,389 897,835 Interest 730,423 465,223 323,644 Property (including reimbursable) 316,964 226,330 133,605 General and administrative 144,536 138,459 96,980 Provisions for impairment 87,082 25,860 38,967 Merger and integration-related costs 14,464 13,897 167,413 Total expenses 3,188,646 2,540,158 1,658,444 Gain on sales of real estate 25,667 102,957 55,798 Foreign currency and derivative (loss) gain, net ( 13,414 ) ( 13,311 ) 710 Gain (loss) on extinguishment of debt — 367 ( 97,178 ) Equity in income and impairment of investment in unconsolidated entities 2,546 ( 6,448 ) 1,106 Other income, net 23,789 30,511 9,949 Income before income taxes 928,935 917,599 392,404 Income taxes ( 52,021 ) ( 45,183 ) ( 31,657 ) Net income 876,914 872,416 360,747 Net income attributable to noncontrolling interests ( 4,605 ) ( 3,008 ) ( 1,291 ) Net income available to common stockholders $ 872,309 $ 869,408 $ 359,456 Amounts available to common stockholders per common share: Net income, basic and diluted $ 1.26 $ 1.42 $ 0.87 Weighted average common shares outstanding: Basic 692,298 611,766 414,535 Diluted 693,024 612,181 414,770 Net income available to common stockholders $ 872,309 $ 869,408 $ 359,456 Total other comprehensive gain Foreign currency translation adjustment 64,326 ( 55,154 ) 9,119 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. 51 Table of Contents REALTY INCOME CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (in thousands) Years ended December 31, 2023, 2022 and 2021 Shares of common stock Common stock and paid in capital Distributions in excess of net income Accumulated other comprehensive income (loss) Total stockholders’ equity Noncontrolling interests Total equity Balance, December 31, 2020 361,303 $ 14,700,050 $ ( 3,659,933 ) $ ( 54,634 ) $ 10,985,483 $ 32,247 $ 11,017,730 Net income — — 359,456 — 359,456 1,291 360,747 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 ) Share issuances, net of costs 67,777 4,453,953 — — 4,453,953 — 4,453,953 Contributions by noncontrolling interests — — — — — 43,390 43,390 Reallocation of equity — 42 — — 42 ( 42 ) — Share-based compensation, net 138 8,221 — — 8,221 — 8,221 Balance, December 31, 2021 591,262 $ 29,578,212 $ ( 4,530,571 ) $ 4,933 $ 25,052,574 $ 76,826 $ 25,129,400 Net income — — 869,408 — 869,408 3,008 872,416 Other comprehensive income — — — 41,900 41,900 — 41,900 Distributions paid and payable — — ( 1,832,030 ) — ( 1,832,030 ) ( 4,125 ) ( 1,836,155 ) Share issuances, net of costs 68,876 4,570,766 — — 4,570,766 — 4,570,766 Contributions by noncontrolling interests — — — — — 51,221 51,221 Reallocation of equity — ( 3,210 ) — — ( 3,210 ) 3,210 — Share-based compensation, net 162 13,741 — — 13,741 — 13,741 Balance, December 31, 2022 660,300 $ 34,159,509 $ ( 5,493,193 ) $ 46,833 $ 28,713,149 $ 130,140 $ 28,843,289 Net income — — 872,309 — 872,309 4,605 876,914 Other comprehensive income — — — 27,061 27,061 — 27,061 Distributions paid and payable — — ( 2,141,252 ) — ( 2,141,252 ) ( 9,340 ) ( 2,150,592 ) Contributions by noncontrolling interests — — — — — 40,097 40,097 Share issuance, net of costs 91,902 5,450,982 — — 5,450,982 — 5,450,982 Share-based compensation, net 258 19,218 — — 19,218 — 19,218 Balance, December 31, 2023 752,460 $ 39,629,709 $ ( 6,762,136 ) $ 73,894 $ 32,941,467 $ 165,502 $ 33,106,969 The accompanying notes to consolidated financial statements are an integral part of these statements. 52 Table of Contents REALTY INCOME CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years ended December 31, 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 876,914 $ 872,416 $ 360,747 Adjustments to net income: Depreciation and amortization 1,895,177 1,670,389 897,835 Amortization of share-based compensation 26,227 21,617 41,773 Non-cash revenue adjustments ( 62,029 ) ( 57,009 ) ( 23,380 ) (Gain) loss on extinguishment of debt — ( 367 ) 97,178 Amortization of net premiums on mortgages payable ( 12,803 ) ( 13,622 ) ( 3,498 ) Amortization of net premiums on notes payable ( 60,657 ) ( 62,989 ) ( 10,349 ) Amortization of deferred financing costs 26,670 15,613 12,333 (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 ) Equity in income and impairment of investment in unconsolidated entities ( 2,546 ) 6,448 ( 1,106 ) Distributions from unconsolidated entities 5,807 1,605 365 Provisions for impairment 87,082 25,860 38,967 Change in assets and liabilities Accounts receivable and other assets ( 111,286 ) ( 29,524 ) ( 38,292 ) Accounts payable, accrued expenses and other liabilities 285,293 ( 5,290 ) ( 24,714 ) Net cash provided by operating activities 2,958,769 2,563,856 1,322,189 CASH FLOWS FROM INVESTING ACTIVITIES Investment in real estate ( 8,053,595 ) ( 8,886,436 ) ( 6,313,076 ) 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 Return of investment from unconsolidated entities 3,927 1,401 38,345 Net proceeds from sale of unconsolidated entities — 108,088 — Proceeds from note receivable — 5,867 — Insurance proceeds received 27,279 49,070 — Non-refundable escrow deposits ( 200 ) ( 5,667 ) ( 28,390 ) Net cash paid in merger — — ( 366,030 ) Net cash used in investing activities ( 9,354,854 ) ( 8,387,076 ) ( 6,437,695 ) CASH FLOWS FROM FINANCING ACTIVITIES Cash distributions to common stockholders ( 2,111,793 ) ( 1,813,431 ) ( 1,169,026 ) Borrowings on line of credit and commercial paper programs 77,338,040 28,539,299 9,082,206 Payments on line of credit and commercial paper programs ( 79,398,193 ) ( 27,434,617 ) ( 7,508,332 ) Proceeds from term loan 1,029,383 — — Proceeds from notes payable issued 4,239,745 2,154,662 1,033,387 Principal payment on notes payable — — ( 1,700,000 ) Principal payments on mortgages payable ( 22,015 ) ( 312,234 ) ( 66,575 ) Payments upon extinguishment of debt — — ( 96,583 ) Proceeds from common stock offerings, net 5,439,462 4,556,028 4,442,725 Proceeds from dividend reinvestment and stock purchase plan 11,519 11,654 11,232 Distributions to noncontrolling interests ( 7,725 ) ( 3,935 ) ( 1,707 ) Net receipts on derivative settlements 7,853 79,763 3,266 Debt issuance costs ( 81,898 ) ( 34,156 ) ( 13,405 ) Net cash received from Orion Divestiture — — 593,484 Other items, including shares withheld upon vesting ( 7,022 ) ( 4,790 ) ( 33,552 ) Net cash provided by financing activities 6,437,356 5,738,243 4,577,120 Effect of exchange rate changes on cash and cash equivalents 24,023 ( 20,511 ) 20,076 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 18 , S upplemental Disclosures of Cash Flow Information . The accompanying notes to consolidated financial statements are an integral part of these statements. 53 Table of Contents REALTY INCOME CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 1. 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. We invest in commercial real estate and have elected to be taxed as a real estate investment trust ("REIT"). We are listed on the New York Stock Exchange ("NYSE") under the symbol “O”. 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 . These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Intercompany accounts and transactions are eliminated in consolidation. The U.S. Dollar ("USD") is our reporting currency. Unless otherwise indicated, all dollar amounts are expressed in USD. For our consolidated subsidiaries whose functional currency is not the USD, we translate their financial statements into USD at the time we consolidate those subsidiaries’ financial statements. 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"), on our consolidated balance sheets. Certain balance sheet items, primarily equity and capital-related accounts, are reflected at the historical exchange rate. Income statement accounts are translated using the average exchange rate for the period. We and certain of our consolidated subsidiaries have intercompany and third-party debt that is not denominated in our functional currency. 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 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. These consolidated financial statements include the accounts of Realty Income and all other entities in which we have a controlling financial interest. We evaluate whether we have a controlling financial interest in an entity in accordance with Accounting Standards Codification ("ASC") 810, Consolidation. 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. Variable interest entities ("VIEs") are entities that lack sufficient equity at risk or where the equity holders either do not have the obligation to absorb losses, do not have the right to receive residual returns, do not have the right to make decisions about the entity’s activities, or some combination of the above. A controlling financial interest in a VIE is present when an entity has a variable interest, or a combination of variable interests, that provides the entity with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. An entity that meets both conditions above is deemed the primary beneficiary and consolidates the VIE. We reassess our initial evaluation of whether an entity is a VIE when certain reconsideration events occur. We reassess our determination of whether we are the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances. At 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): 54 Table of Contents December 31, 2023 December 31, 2022 Net real estate $ 2,866,272 $ 920,032 Total assets $ 3,588,720 $ 1,082,346 Total liabilities $ 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. 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 12, Noncontrolling Interests ). Reclassification . 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Net Income per Common Share. 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. For more detail, see note 17, Net Income per Common Share. Cash Equivalents and Restricted Cash . We consider all short-term, highly liquid investments that are readily convertible to cash and have an original maturity of three months or less at the time of purchase to be cash equivalents. Restricted cash includes cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the U.S. Internal Revenue Code, impounds related to mortgages payable and cash that is not immediately available to Realty Income (i.e. escrow deposits for future acquisitions). Cash accounts maintained on behalf of Realty Income in demand deposits at commercial banks and money market funds may exceed federally insured levels or may be held in accounts without any federal insurance or any other insurance or guarantee. However, Realty Income has not experienced any losses in such accounts. Income Taxes. We have elected to be taxed as a REIT, under the Internal Revenue Code of 1986, as amended. We believe we have qualified and continue to qualify as a REIT. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income in the U.S., we generally will not be required to pay U.S. income taxes on such income. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements, except for federal income taxes of our taxable REIT subsidiaries ("TRS"). A TRS is a subsidiary of a REIT that is subject to federal, state and local income taxes, as applicable. 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. Accordingly, provisions have been made for U.K. and Spain income taxes. Therefore, the income taxes recorded on our consolidated statements of income and comprehensive income represent amounts accrued or paid by Realty Income and its subsidiaries for U.S. income taxes on our TRS entities, city and state income and franchise taxes, and income taxes for the U.K. and Spain. 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. 55 Table of Contents 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. We believe that our income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain tax positions have been recorded on our consolidated financial statements. Lease Revenue Recognition and Accounts Receivable. The majority of our leases are accounted for as operating leases. 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, 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. Taxes and operating expenses paid directly by our clients are recorded on a net basis. 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. 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. 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 . When real estate is sold, the carrying amount of the applicable assets is derecognized with a corresponding gain from the sale recognized in our consolidated statements of income and comprehensive income. We record a gain on sale of real estate pursuant to provisions under ASC 610-20 , Gains and Losses from the Derecognition of Nonfinancial Assets . We determine whether we would have a controlling financial interest in the property after the sale. We record a gain from the sale of real estate provided that various criteria, relating to the terms of the sale and any subsequent involvement by us with the real estate, have been met. Allocation of the Purchase Price of Real Estate Acquisitions . 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 56 Table of Contents 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. Intangible assets and liabilities consist of above-market or below-market lease value of in-place leases and the value of in-place leases, as applicable. Additionally, above-market rents on certain leases under which we are a lessor are accounted for as financing receivables amortizing over the lease term, while below-market rents on certain leases under which we are a lessor are accounted for as prepaid rent. In an acquisition of multiple properties, we must also allocate the purchase price among the properties. The allocation of the purchase price is based on our assessment of estimated fair values of the land, building and improvements, and identified intangible assets and liabilities, utilizing market-based evidence and commonly applied valuation approaches. In addition, any assumed notes payable or mortgages are recorded at their estimated fair values. The estimated fair values of our mortgages payable have been calculated by discounting the future cash flows using applicable interest rates that have been adjusted for factors, such as industry type, client investment grade, maturity date, and comparable borrowings for similar assets. The use of different assumptions in the allocation of the purchase price of the acquired properties and liabilities assumed could affect the timing of recognition of the related revenue and expenses. Our estimated fair value determinations are based on management’s judgment, utilizing various factors, including: 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 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. The allocation of tangible assets (which includes land and buildings/improvements) of an acquired property with an in-place lease is based upon relative fair value. Land is typically valued utilizing the sales comparison (or market) approach. Buildings and improvements are typically valued under the replacement cost approach. In allocating the fair value to identified intangibles for above-market or below-market leases, an amount is recorded based on the present value of the difference between (i) the contractual amount to be paid pursuant to the in-place lease and (ii) our estimate of fair market lease rate for the corresponding in-place lease, measured over the remaining assumed contract term of the lease. The value of in-place leases is determined by our estimated costs related to acquiring a client and the carrying costs that would be incurred over the vacancy period to locate a client if the property were vacant, considering market conditions and costs to execute similar leases at the time of acquisition. 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 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. Real Estate and Lease Intangibles Held for Sale. We generally reclassify assets to held for sale when the disposition has been approved, there are no known contingencies relating to the sale and the consummation of the disposition is considered probable within one year. Upon classifying a real estate investment as held for sale, we will no longer recognize depreciation expense related to the depreciable assets of the property. 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-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 57 Table of Contents 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. 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. Goodwill. 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. 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 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. These costs are amortized to interest expense over the terms of the respective financing agreements that approximates the effective interest method. Depreciation and Amortization . Land, buildings and improvements are recorded and stated at cost. Major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives, while ordinary repairs and maintenance are expensed as incurred. Buildings and improvements that are under redevelopment, or are being developed, are carried at cost and no depreciation is recorded on these assets. Additionally, amounts essential to the development of the property, such as pre-construction, development, construction, interest and other costs incurred during the period of development are capitalized. We cease capitalization when the property is available for occupancy upon substantial completion of property improvements to accommodate the client's use, but in any event no later than one year from the completion of major construction activity. Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: 58 Table of Contents Buildings 25 to 35 years Building improvements 4 to 35 years Equipment 5 to 25 years Lease commissions and property improvements to accommodate the client's use The shorter of the term of the related lease or useful life Acquired in-place leases Remaining terms of the respective leases Provisions for Impairment - Real Estate Assets. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property, a fair value analysis is performed and, to the extent the estimated fair value is less than the current book value, a provision for impairment is recorded to reduce the book value to estimated fair value. 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 13, Fair Value Measurements. Provisions for Impairment - Goodwill. Goodwill is not amortized, but is subject to impairment reviews annually, or more frequently if necessary. Goodwill is qualitatively assessed to determine whether a quantitative impairment assessment is necessary. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized, and the asset is written down to its estimated fair value. We perform our annual goodwill impairment assessment as of June 30. During the years ended December 31, 2023, 2022 and 2021, there were no impairments of goodwill. Provisions for Impairment - Investment in Unconsolidated Entities. 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. Underwriting commissions and offering costs have been reflected as a reduction of additional paid-in-capital on our consolidated balance sheets. Derivative and Hedging Activities . Derivatives are financial arrangements among two or more parties with returns linked to or “derived” from an underlying equity, debt, commodity, other asset, liability, interest rate, foreign exchange rate or another index, or the occurrence or nonoccurrence of a specified event. The settlement of a derivative is determined by its underlying notional amount specified in the contract. 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 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 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. 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 59 Table of Contents 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. 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): Years ended December 31, 2023 U.S. U.K. Other (1) Total Retail $ 2,754.2 $ 374.0 $ 65.4 $ 3,193.6 Industrial 515.4 43.7 — 559.1 Other (2) 205.5 — — 205.5 Rental (including reimbursable) $ 3,475.1 $ 417.7 $ 65.4 $ 3,958.2 Other revenue 120.8 Total revenue $ 4,079.0 2022 U.S. U.K. Other (1) Total Retail $ 2,455.9 $ 243.3 $ 30.9 $ 2,730.1 Industrial 465.2 30.2 — 495.4 Other (2) 74.2 — — 74.2 Rental (including reimbursable) $ 2,995.3 $ 273.5 $ 30.9 $ 3,299.7 Other revenue 44.0 Total revenue $ 3,343.7 2021 U.S. U.K. Other (1) Total Retail $ 1,566.7 $ 138.9 $ 4.2 $ 1,709.8 Industrial 261.5 9.6 — 271.1 Other (2) 84.1 — — 84.1 Rental (including reimbursable) $ 1,912.3 $ 148.5 $ — $ 2,065.0 Other revenue 15.5 Total revenue $ 2,080.5 (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, 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, 2023 2022 U.S. U.K. Other (1) Total U.S. U.K. Other (1) Total Long-lived assets $ 36,577.1 $ 6,787.1 $ 1,496.1 $ 44,860.3 $ 33,685.6 $ 4,596.1 $ 582.7 $ 38,864.4 Remaining assets 12,919.1 10,808.7 Total assets $ 57,779.4 $ 49,673.1 (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. 60 Table of Contents 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. 2. Merger with VEREIT, Inc. and Orion Office REIT Inc. Divestiture Merger with VEREIT 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. A. Merger and Integration-Related Costs 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. B. Unaudited Pro Forma Financial Information 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). 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. 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. ("Orion"). Year ended December 31, 2021 Total revenues $ 3,084.3 Net income $ 734.6 Basic and diluted earnings per share $ 1.27 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. 61 Table of Contents 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 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 . 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. 3. Supplemental Detail for Certain Components of Consolidated Balance Sheets (in thousands): A. Accounts receivable, net, consist of the following at: December 31, 2023 December 31, 2022 Straight-line rent receivables, net $ 516,692 $ 363,993 Client receivables, net 193,844 179,244 $ 710,536 $ 543,237 B. Lease intangible assets, net, consist of the following at: December 31, 2023 December 31, 2022 In-place leases $ 5,500,404 $ 5,324,565 Accumulated amortization of in-place leases ( 1,746,377 ) ( 1,409,878 ) Above-market leases 1,811,400 1,697,367 Accumulated amortization of above-market leases ( 549,319 ) ( 443,688 ) Other items 1,799 — $ 5,017,907 $ 5,168,366 C. Other assets, net, consist of the following at: December 31, 2023 December 31, 2022 Financing receivables, net $ 1,570,943 $ 933,116 Right of use asset - financing leases 706,837 467,920 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 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 Other items 38,859 39,939 $ 3,368,643 $ 2,276,953 62 Table of Contents D. Accounts payable and accrued expenses consist of the following at: December 31, 2023 December 31, 2022 Notes payable - interest payable $ 218,811 $ 129,202 Derivative liabilities and payables – at fair value 119,620 64,724 Property taxes payable 78,809 45,572 Accrued costs on properties under development 65,967 26,559 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 Other items 66,576 55,921 $ 738,526 $ 399,137 E. Lease intangible liabilities, net, consist of the following at: December 31, 2023 December 31, 2022 Below-market leases $ 1,728,027 $ 1,617,870 Accumulated amortization of below-market leases ( 321,174 ) ( 238,434 ) $ 1,406,853 $ 1,379,436 F. Other liabilities consist of the following at: December 31, 2023 December 31, 2022 Lease liability - operating leases, net $ 425,213 $ 440,096 Rent received in advance and other deferred revenue 312,195 269,645 Lease liability - financing leases 44,345 49,469 Security deposits 28,250 15,577 Other acquisition liabilities 1,647 — $ 811,650 $ 774,787 4. Investments in Real Estate A. Acquisitions of Real Estate Below is a summary of our acquisitions for the year ended December 31, 2023 (unaudited): Number of Properties Leasable Square Feet (in thousands, unaudited) Investment ($ in millions) Weighted Average Lease Term (Years) Initial Weighted Average Cash Lease Yield (1) Acquisitions - U.S. 838 15,030 $ 3,802.3 15.9 6.9 % Acquisitions - Europe 177 14,737 3,080.4 13.7 7.1 % Total acquisitions 1,015 29,767 $ 6,882.7 14.9 7.0 % Properties under development (2) 390 8,094 1,270.3 16.4 6.8 % Total (3) 1,405 37,861 $ 8,153.0 15.1 7.0 % (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 (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. When the lease does not provide for a fixed rate of return on a property under development or expansion, the initial weighted average cash lease yield is computed as follows: estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs. (2) 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. 63 Table of Contents 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 Land (1) $ 779.5 £ 477.2 € 288.6 Buildings and improvements 2,842.5 909.0 462.3 Lease intangible assets (2) 430.0 130.1 36.8 Other assets (3) 559.9 257.3 35.2 Lease intangible liabilities (4) ( 115.1 ) ( 12.4 ) ( 0.9 ) Other liabilities (5) ( 9.1 ) ( 2.6 ) ( 9.6 ) $ 4,487.7 £ 1,758.6 € 812.4 (1) Sterling-denominated land includes £ 7.1 million of right of use assets under long-term ground leases. (2) The weighted average amortization period for acquired lease intangible assets is 11.3 years. (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 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. B. Investments in Existing Properties During the year ended December 31, 2023, we capitalized costs of $ 59.8 million on existing properties in our portfolio, consisting of $ 49.6 million for non-recurring building improvements, $ 9.9 million for re-leasing costs, and $ 0.3 million for recurring capital expenditures. In comparison, during the year ended December 31, 2022, we capitalized costs of $ 96.7 million on existing properties in our portfolio, consisting of $ 88.3 million for non-recurring building improvements, $ 5.2 million for re-leasing costs, and $ 3.2 million for recurring capital expenditures. C. 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 liabilities, 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 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. If a lease was to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recorded to revenue or expense, as appropriate. The following table presents the estimated impact during the next five years and thereafter related to the amortization of the above-market and below-market lease intangibles and the amortization of the in-place lease intangibles at December 31, 2023 (dollars in thousands): Net increase (decrease) to rental revenue Increase to amortization expense 2024 $ ( 57,431 ) $ 593,845 2025 ( 51,025 ) 512,189 2026 ( 43,447 ) 456,383 2027 ( 34,900 ) 395,966 2028 ( 24,525 ) 336,868 Thereafter 356,100 1,458,777 Totals $ 144,772 $ 3,754,028 64 Table of Contents D. Gain on Sales of Real Estate The following table summarizes our properties sold during the periods indicated below (dollars in millions): Years ended December 31, 2023 2022 2021 Number of properties 121 170 154 Net sales proceeds $ 117.4 $ 436.1 $ 250.3 Gain on sales of real estate $ 25.7 $ 103.0 $ 55.8 5. 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 Bellagio Las Vegas Joint Venture - Common Equity Interest $ 2,139 $ — $ — Data Center Development Joint Venture — — — Industrial Partnerships 407 ( 6,448 ) 1,106 Equity in income and impairment of investment in unconsolidated entities $ 2,546 $ ( 6,448 ) $ 1,106 A. 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. 65 Table of Contents 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. B. 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. C. 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 our consolidated statements of income and comprehensive income for the periods presented. 6. 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. A. 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. B. 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. 7. Revolving Credit Facility and Commercial Paper Programs A. 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 USD. 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 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 66 Table of Contents 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. B. Commercial Paper Programs We have a USD-denominated unsecured commercial paper program, under which we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $ 1.5 billion, as well as a Euro-denominated unsecured commercial paper program, which permits us to issue additional unsecured commercial notes up to a maximum aggregate amount of $ 1.5 billion (or foreign currency equivalent). Our Euro-denominated unsecured commercial paper program may be issued in USD or various foreign currencies, including but not limited to, Euros, Sterling, Swiss Francs, Yen, Canadian Dollars, and Australian Dollars, in each case, pursuant to customary terms in the European commercial paper market. 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, 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. As of December 31, 2023, our weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.4 %. We use our $ 4.25 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper programs. The commercial paper borrowings generally carry a term of less than a year . 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. 8. Term Loans 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 %. 67 Table of Contents 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. 9. 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. 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. 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 $ 0.4 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, 2023 and 2022 (dollars in millions): As Of Number of Properties (1) Weighted Average Stated Interest Rate (2) Weighted Average Effective Interest Rate (3) Weighted Average Remaining Years Until Maturity Remaining Principal Balance Unamortized Premium (Discount) and Deferred Financing Costs Balance, net Mortgage Payable Balance December 31, 2023 131 4.8 % 3.3 % 0.4 $ 822.4 $ ( 0.8 ) $ 821.6 December 31, 2022 136 4.8 % 3.3 % 1.4 $ 842.3 $ 11.6 $ 853.9 (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, 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 Principal 2024 $ 740.5 2025 44.0 2026 12.0 2027 22.3 2028 1.3 Thereafter 2.3 Totals $ 822.4 68 Table of Contents 10. Notes Payable A. General 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 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, deferred financing costs, and cumulative basis adjustment on fair value hedge (2) 40,255 163,857 $ 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. 69 Table of Contents 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 Principal 2024 $ 850.0 2025 1,050.0 2026 2,075.0 2027 2,027.8 2028 2,049.8 Thereafter 10,509.5 Totals $ 18,562.1 As of December 31, 2023, the weighted average interest rate on our notes and bonds payable was 3.8 %, and the weighted average remaining years until maturity was 6.7 years. Interest incurred on all of the notes and bonds was $ 598.6 million, $ 431.3 million, and $ 286.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. Our outstanding notes and bonds are unsecured; accordingly, we have not pledged any assets as collateral for these or any other obligations. All of these notes and bonds contain various covenants, including: (i) a limitation on incurrence of any debt which would cause our debt to total adjusted assets ratio to exceed 60 %; (ii) a limitation on incurrence of any secured debt which would cause our secured debt to total adjusted assets ratio to exceed 40 %; (iii) a limitation on incurrence of any debt which would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of total unencumbered assets not less than 150 % of our outstanding unsecured debt. At December 31, 2023, we were in compliance with these covenants. B. Note Issuances During the years ended December 31, 2023 and 2022 we issued the following notes and bonds (in millions): 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) 99.618 % 5.189 % 4.850 % Notes January 2023 March 2030 $ 600.0 98.813 % 5.047 % 4.700 % Notes April 2023 December 2028 $ 400.0 98.949 % 4.912 % 4.900 % Notes April 2023 July 2033 $ 600.0 98.020 % 5.148 % 4.875 % Notes July 2023 July 2030 € 550.0 99.421 % 4.975 % 5.125 % Notes July 2023 July 2034 € 550.0 99.506 % 5.185 % 5.750 % Notes December 2023 December 2031 £ 300.0 99.298 % 5.862 % 6.000 % Notes 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 January 2022 January 2027 £ 250.0 99.487 % 1.974 % 2.500 % Notes January 2022 January 2042 £ 250.0 98.445 % 2.584 % 3.160 % Notes June 2022 June 2030 £ 140.0 100.000 % 3.160 % 3.180 % Notes June 2022 June 2032 £ 345.0 100.000 % 3.180 % 3.390 % Notes June 2022 June 2037 £ 115.0 100.000 % 3.390 % 5.625 % Notes 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. 70 Table of Contents C. 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. 11. Issuances of Common Stock A. At-the-Market ("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. The following table outlines common stock issuances pursuant to our ATM programs (dollars in millions, shares in thousands): Years ended December 31, 2023 2022 2021 Shares of common stock issued under the ATM program (1) 91,699 68,608 46,291 Gross proceeds $ 5,483.2 $ 4,599.4 $ 3,207.9 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, 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. B. Dividend Reinvestment and Stock Purchase Plan ("DRSPP") Our DRSPP, provides our common stockholders, as well as new investors, with a convenient and economical method of purchasing our common stock and reinvesting their distributions. Our DRSPP also allows our current stockholders to buy additional shares of common stock by reinvesting all or a portion of their distributions. 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, 2023 2022 2021 Shares of common stock issued under the DRSPP program 198 176 168 Gross proceeds $ 11.5 $ 11.7 $ 11.2 71 Table of Contents C. 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. D. 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. 12. 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. represented 6.9 % ownership interest in Realty Income L.P. We hold the remaining 93.1 % interest and consolidate the entity. None of our common partnership units have voting rights. Common partnership units are entitled to monthly distributions equal to the amount paid to common stockholders of Realty Income, and are redeemable in cash or Realty Income common stock, at our option, and at a conversion ratio of 1.02934 due to the Orion Divestiture, subject to certain exceptions. Prior to the Orion Divestiture, the conversion ratio was one to one. These issuances with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the issuer, were evaluated to determine whether temporary or permanent equity classification on the balance sheet was appropriate. We determined that the units meet the requirements to qualify for presentation as permanent equity. The following table represents the change in the carrying value of all noncontrolling interests through December 31, 2023 (in thousands): Realty Income, L.P. units (1) Other Noncontrolling Interests Total Carrying value at December 31, 2021 $ 62,416 $ 14,410 $ 76,826 Contributions (2) 51,221 — 51,221 Reallocation of equity 3,210 — 3,210 Distributions ( 3,818 ) ( 307 ) ( 4,125 ) Allocation of net income 2,772 236 3,008 Carrying value at December 31, 2022 $ 115,801 $ 14,339 $ 130,140 Contributions (3) — 40,097 40,097 Distributions (4) ( 5,663 ) ( 3,677 ) ( 9,340 ) Allocation of net income 3,934 671 4,605 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. (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 . 72 Table of Contents 13. 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). ASC 820, Fair Value Measurements and Disclosures , sets forth a fair value hierarchy that categorizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. Categorization within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. • 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. Changes in the type of inputs may result in a reclassification for certain assets. We have not historically had changes in classifications and do not expect that changes in classifications between levels will be frequent. 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 Assets: Loans receivable (1) $ 205.3 $ — $ 171.8 $ 33.5 Derivative assets 21.2 — 21.2 — Total assets $ 226.5 $ — $ 193.0 $ 33.5 Liabilities: Mortgages payable $ 822.4 $ — $ — $ 814.5 Notes and bonds payable 18,562.1 — 17,603.7 — 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 Assets: Derivative assets $ 83.1 $ — $ 83.1 $ — Total assets $ 83.1 $ — $ 83.1 $ — Liabilities: 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 73 Table of Contents A. 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 Fair value Carrying value Fair value Mortgages payable (1) $ 822.4 $ 814.5 $ 842.3 $ 810.4 Notes and bonds payable (2) $ 18,562.1 $ 17,603.7 $ 14,114.2 $ 12,522.8 (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 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 $ 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. 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 3 of the fair value hierarchy. 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 2 of the fair value hierarchy. B. Financial Instruments Measured at Fair Value on a Recurring Basis 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. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, spot and forward rates, as well as option volatility . Derivative fair values also include credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. 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 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 . C. Items Measured at Fair Value on a Non-Recurring Basis Impairment of Real Estate Investments 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. 74 Table of Contents 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, 2023 2022 2021 Carrying value prior to impairment $ 194.5 $ 140.9 $ 169.2 Less: total provisions for impairment (1) ( 82.2 ) ( 25.9 ) ( 39.0 ) Carrying value after impairment $ 112.3 $ 115.0 $ 130.2 (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. 14. 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. 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 75 Table of Contents 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 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 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): Derivative Type Number of Instruments (1) Notional Amount as of Weighted Average Strike Rate (2) Maturity Date (3) Fair Value - asset (liability) as of Derivatives Designated as Hedging Instruments December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 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 ) Derivatives not Designated as Hedging Instruments Currency exchange swaps 4 $ 1,810.6 $ 2,427.7 (9) Jan 2024 - Feb 2024 $ 8.9 $ 58.8 Cross-currency swaps (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 (1) This column represents the number of instruments outstanding as of December 31, 2023. (2) Weighted average strike rate is calculated using the notional value as of December 31, 2023. (3) This column represents maturity dates for instruments outstanding as of December 31, 2023. (4) Represent purchased payer swaptions with a strike rate of 3.75 % and sold payer swaptions with a strike rate of 4.25 %. (5) 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 . (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. 76 Table of Contents 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. 77 Table of Contents 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 15. Lessor Operating Leases At December 31, 2023, we owned or held interests in 13,458 properties. Of the 13,458 properties, 13,197 , or 98.1 %, are single-client properties, and the remaining are multi-client properties. At December 31, 2023, 193 properties were available for lease or sale. The majority of our leases are accounted for as operating leases. 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. At December 31, 2023, minimum future annual rental revenue to be received on the operating leases for the next five years and thereafter are as follows (in thousands): Future Minimum Operating Lease Payments Future Minimum Direct Financing and Sale-Type Lease Payments (1) 2024 $ 4,006,574 $ 1,037 2025 3,918,126 812 2026 3,747,064 814 2027 3,531,235 751 2028 3,222,392 710 Thereafter 24,768,619 25,139 Totals $ 43,194,010 $ 29,263 (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. Two properties are subject to sales-type leases and, therefore, revenue is recognized as sales-type lease income on the discounted cash flows of the lease payments. Amounts reflected are the cash rent on these respective properties. No individual client’s rental revenue, including percentage rents, represented more than 10% of our total revenue for each of the years ended December 31, 2023, 2022, and 2021. 78 Table of Contents 16. Distributions Paid and Payable We pay monthly distributions to our common stockholders. The following is a summary of monthly distributions paid per common share for the periods indicated below: 2023 2022 2021 January $ 0.2485 $ 0.2465 $ 0.2345 February 0.2485 0.2465 0.2345 March 0.2545 0.2465 0.2345 April 0.2550 0.2470 0.2350 May 0.2550 0.2470 0.2350 June 0.2550 0.2470 0.2350 July 0.2555 0.2475 0.2355 August 0.2555 0.2475 0.2355 September 0.2555 0.2475 0.2355 October 0.2560 0.2480 0.2360 November 0.2560 0.2480 0.2360 December 0.2560 0.2480 0.2460 Total $ 3.0510 $ 2.9670 $ 2.8330 At December 31, 2023, a distribution of $ 0.2565 per common share was payable and was paid in January 2024. At December 31, 2022, a distribution of $ 0.2485 per common share was payable and was paid in January 2023. The following presents the federal income tax characterization of distributions paid or deemed to be paid per common share for the years: 2023 2022 2021 Ordinary income $ 2.8434500 $ 2.7867654 $ 1.5146899 Nontaxable distributions 0.2075500 — 3.2925615 Total capital gain distribution — 0.1802346 0.0854609 Totals (1) $ 3.0510000 $ 2.9670000 $ 4.8927123 (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. 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. 17. Net Income per Common Share 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, 2023 2022 2021 Weighted average shares used for the basic net income per share computation 692,298 611,766 414,535 Incremental shares from share-based compensation 349 395 235 Dilutive effect of forward ATM offerings 377 20 — Weighted average shares used for diluted net income per share computation 693,024 612,181 414,770 Unvested shares from share-based compensation that were anti-dilutive 117 32 45 Weighted average partnership common units convertible to common shares that were anti-dilutive 1,795 1,292 500 Weighted average forward ATM offerings that were anti-dilutive 759 644 — 79 Table of Contents 18. Supplemental Disclosures of Cash Flow Information The following table summarizes our supplemental cash flow information during the periods indicated below (in thousands): Years ended December 31, 2023 2022 2021 Supplemental disclosures: Cash paid for interest $ 692,004 $ 501,716 $ 355,483 Cash paid for income taxes $ 12,283 $ 45,031 $ 19,676 Cash paid for merger and integration-related costs $ 11,329 $ 22,783 $ 157,115 Non-cash activities: 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) $ — $ 45,079 $ 911,525 Notes payable assumed at fair value $ — $ — $ 4,946,965 Issuance of common partnership units of Realty Income, L.P. (2) $ — $ 51,221 $ 38,783 Non-cash assets and liabilities assumed in merger $ — $ — $ 11,559,875 Non-cash assets and liabilities distributed in Orion Divestiture $ — $ — $ 1,142,121 (1) For the year ended December 31, 2021, includes £ 31.0 million Sterling, converted at the applicable exchange rate on the date of transaction, for one mortgage and $ 869.1 million, estimated at fair value, for ten mortgages from our merger with VEREIT. (2) For the year ended December 31, 2022, includes 734,458 common partnership units of Realty Income L.P. that were issued in connection with the acquisition of nine properties. 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 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 Restricted escrow deposits (1) 6,247 37,627 Impounds related to mortgages payable (1) 53,005 18,152 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. As a result, these amounts were considered restricted as of the dates presented. 19. Common Stock Incentive Plan In March 2021, our Board of Directors adopted, and in May 2021, stockholders approved, the Realty Income 2021 Incentive Award Plan (the "2021 Plan"). 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 than 8.9 million 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 3.2 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. 80 Table of Contents 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, 6.2 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. 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 shares of the Company's common stock, using the equity award exchange ratio in accordance with the merger agreement. The converted awards issued by Realty Income have identical terms to the original VEREIT, Inc. award grant. 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. 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. The following disclosures are inclusive of converted awards for former VEREIT employees continuing as employees of Realty Income, which are reflected as grants, as the replacement awards represent newly issued awards settled in Realty Income common shares. In connection with the Orion Divestiture, each stock option, restricted stock unit and performance award outstanding at November 12, 2021 was entitled to an equitable adjustment equal to the ratio of the five-day volume weighted average per-share price of Realty Income common stock prior to the Orion Divestiture divided by the five-day volume weighted average per-share of Realty Income common stock following the Orion Divestiture, resulting in an adjustment factor of approximately 1.002342 . The equitable adjustment was considered a modification in accordance with the provisions of ASC 718, Compensation-Stock Compensation . As a result, we compared the fair value of each award immediately prior to the equitable adjustment to the fair value immediately after the equitable adjustment to measure incremental compensation cost, if any. The equitable adjustment did not result in any incremental fair value. Therefore, no stock-based compensation expense was recorded as of result of the modification. The following disclosures are inclusive of these adjustments, which has been labeled 'Equitable adjustment - Orion Divestiture' throughout. A. Restricted Stock The following table summarizes our common stock grant activity: 2023 2022 2021 Number of shares Weighted average price (1) Number of shares Weighted average price (1) Number of shares Weighted average price (1) Outstanding nonvested shares, beginning of year 242,660 $ 67.12 212,630 $ 65.20 219,482 $ 63.69 Shares granted (2) 222,511 $ 65.40 156,274 $ 67.37 133,052 $ 64.27 Shares vested ( 110,634 ) $ 61.28 ( 118,160 ) $ 63.95 ( 124,505 ) $ 61.57 Shares forfeited ( 7,486 ) $ 66.91 ( 8,084 ) $ 67.78 ( 15,399 ) $ 65.09 Outstanding nonvested shares, end of each period 347,051 $ 67.89 242,660 $ 67.12 212,630 $ 65.20 (1) Grant date fair value. (2) Our restricted stock awards granted to employees vest over a service periods not exceeding four-years . 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. 81 Table of Contents The vesting schedule for shares granted to non-employee directors is as follows: • For directors with less than six years of service at the date of grant, shares vest in 33.33 % annual increments upon re-election to the Board at each of the three Annual Meetings of Stockholders following the grant date; • For directors with six years of service at the date of grant, shares vest in 50 % annual increments upon re-election to the Board at each of the two Annual Meetings of Stockholders following the grant date; • For directors with seven years of service at the date of grant, shares are 100 % vested upon re-election to the Board in the following year; and • For directors with eight or more years of service at the date of grant, there is immediate vesting as of the date the shares of stock are granted. For the years ended December 31, 2023, 2022, and 2021, respectively, we granted 40,000 , 40,000 , and 36,000 total shares of restricted stock granted to the independent members of our Board of Directors in connection with our annual awards in May 2023, 2022 and 2021, respectively. 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 , 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. The amount of share-based compensation is based on the fair value of the stock at the grant date. 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. B. 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) Number of restricted stock units Weighted average price (1) 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) — — 109 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. 82 Table of Contents C. Performance Shares During 2023, 2022 and 2021, we granted annual performance share awards, as well as dividend equivalent rights, to our executive officers. The number of performance shares that vest for each of the three years is based on the achievement of the following performance goals: Weighting for year granted Annual Performance Awards Metrics 2023 2022 2021 Total shareholder return (“TSR”) ranking relative to MSCI US REIT Index 55 % 55 % 70 % Dividend per share growth rate 20 % 20 % 15 % Net Debt-to-Pro Forma Adjusted EBITDA re Ratio 25 % 25 % N/A Net Debt-to-Adjusted EBITDA re Ratio N/A N/A 15 % 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. The performance period for the 2021 performance awards began on January 1, 2021 and ended on December 31, 2023. The performance period for the 2022 performance awards began on January 1, 2022 and will end on December 31, 2024. The performance period for the 2023 performance awards began on January 1, 2023 and will end on December 31, 2025. On November 15, 2021, the Compensation Committee approved a one-time grant of performance share awards and a one-time cash bonus to certain of our named executives in connection with the completion of our merger with VEREIT and the transactions contemplated thereby, including the Orion Divestiture (the "VEREIT Transaction"). 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 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 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. The following table summarizes our performance share grant activity, inclusive of annual performance shares and the one-time performance shares related to the merger with VEREIT: 2023 2022 2021 Number of performance shares Weighted average price (1) Number of performance shares Weighted average price (1) Number of performance shares Weighted average price (1) Outstanding nonvested shares, beginning of year 470,880 $ 73.37 388,139 $ 68.09 291,759 $ 69.73 Equitable adjustment - Orion Divestiture (2) — — 752 Shares granted 215,040 $ 73.32 174,940 $ 77.73 257,149 $ 64.18 Shares vested ( 124,151 ) $ 76.59 ( 74,247 ) $ 59.62 ( 109,113 ) $ 62.52 Shares forfeited — $ — ( 17,952 ) $ 58.59 ( 52,408 ) $ 65.83 Outstanding nonvested shares, end of each period 561,769 $ 72.64 470,880 $ 73.37 388,139 $ 68.09 (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 performance shares totaled $ 17.4 million and is being recognized on a tranche-by-tranche basis over the service period. 83 Table of Contents D. 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. 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, 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. 20. Commitments and Contingencies In the ordinary course of business, we are party to various legal actions which we believe are routine in nature and incidental to the operation of our business. We believe that the outcome of the proceedings will not have a material adverse effect upon our consolidated financial position or results of operations. At 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, 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 2024 $ 39.4 $ 5.3 $ 44.7 2025 38.8 3.6 42.4 2026 38.0 9.2 47.2 2027 35.5 1.5 37.0 2028 31.9 1.5 33.4 Thereafter 497.5 48.9 546.4 Total $ 681.1 $ 70.0 $ 751.1 Present value adjustment for remaining lease payments (1) ( 255.9 ) ( 25.7 ) Total lease liability $ 425.2 $ 44.3 (1 ) The discount rates are specific for individual leases primarily based on the lease term. The range of discount rates used to calculate the present value of the operating lease payments is 0.94 % to 6.42 % and for finance lease payments is 1.14 % to 6.21 %. The weighted average discount rate was derived from estimated incremental borrowing rates based on our credit quality, as we did not have any borrowings at the balance sheet date with comparable terms to our lease agreements. At December 31, 2023, the weighted average discount rate for operating leases is 3.66 % and the weighted average remaining lease term is 23.1 years. 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. 21. Subsequent Events A. Dividends In January 2024, we declared a dividend of $ 0.2565 per share to our common stockholders, which was paid in February 2024. In addition, in February 2024, we declared a dividend of $ 0.2565 , which will be paid in March 2024. 84 Table of Contents B. 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. C. 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. D. ATM Forward Offerings 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. 85 Item 9: A Changes In and Disagreements With Accountants on Accounting and Financial Disclosure None.