What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 283 added, 219 removed, 836 unchanged (38% of the section changed)

3 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Real estate held for investment, at cost:

18 unchanged sentences

Line of credit payable and commercial paper 1,148,787 764,390

Term loan, net 2,370,455 1,331,841

Term loans, net 2,370,057 1,331,841

Mortgages payable, net 199,031 821,587

2 unchanged sentences

Commitments and contingencies (note 20)

6.000 % Series A cumulative redeemable preferred stock and paid in capital, par value $ 0.01 per share, 69,900 shares authorized, 6,900 shares and no shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively, liquidation preference $ 25.00 per share

6.000 % Series A cumulative redeemable preferred stock and paid in capital, par value $ 0.01 per share, 69,900 shares authorized, 6,900 shares and no shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively, liquidation preference $ 25.00 per share

$ 167,394 $ —

Stockholders’ equity:

Common stock and paid in capital, par value $ 0.01 per share, 1,300,000 shares authorized, 870,756 and 752,460 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Common stock and paid in capital, par value $ 0.01 per share, 1,300,000 shares authorized, 870,848 and 752,460 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

$ 46,230,789 $ 39,629,709

9 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

2024 2023 2024 2023

Rental (including reimbursable) $ 1,284,728 $ 995,289 $ 2,492,897 $ 1,920,578

9 unchanged sentences

Gain on sales of real estate 25,153 7,824 41,727 12,103

Foreign currency and derivative gain, net 4,046 10,322

Equity in (losses) earnings of unconsolidated entities ( 1,676 ) —

Foreign currency and derivative gain (loss), net 511 ( 2,552 ) 4,557 7,770

Equity in earnings of unconsolidated entities 2,029 411 353 411

Other income, net 6,108 3,020 11,554 5,750

7 unchanged sentences

Amounts available to common stockholders per common share:

Net income, basic and diluted $ 0.16 $ 0.34

Basic $ 0.30 $ 0.29 $ 0.45 $ 0.63

Diluted $ 0.29 $ 0.29 $ 0.45 $ 0.63

Weighted average common shares outstanding:

2 unchanged sentences

Net income available to common stockholders $ 256,804 $ 195,415 $ 386,500 $ 420,431

Total other comprehensive (loss) income

Total other comprehensive income

Foreign currency translation adjustment 3,218 29,046 ( 14,818 ) 57,796

Unrealized gain (loss) on derivatives, net 7,324 ( 6,410 ) 16,246 ( 8,572 )

Total other comprehensive (loss) income

$ ( 9,114 ) $ 26,588

Total other comprehensive income $ 10,542 $ 22,636 $ 1,428 $ 49,224

Comprehensive income available to common stockholders $ 267,346 $ 218,051 $ 387,928 $ 469,655

3 unchanged sentences

(in thousands) (unaudited)

Three months ended March 31, 2024, and 2023

Three months ended June 30, 2024, and 2023

stock Preferred

6 unchanged sentences

interests Total

Balance, December 31, 2023

Balance, March 31, 2024

6,900 $ 167,394 870,756 $ 46,220,761 $ ( 7,299,514 ) $ 64,780 $ 38,986,027 $ 165,063 $ 39,151,090

Net income — — — — 259,391 — 259,391 1,577 260,968

Other comprehensive loss — — — — — ( 9,114 ) ( 9,114 ) — ( 9,114 )

Other comprehensive income — — — — — 10,542 10,542 — 10,542

Distributions paid and payable — — — — ( 684,195 ) — ( 684,195 ) ( 2,430 ) ( 686,625 )

Share issuances, net of costs — — 57 2,796 — — 2,796 — 2,796

Shares issued with merger 6,900 167,394 108,308 6,043,641 — — 6,043,641 — 6,043,641

Contributions by noncontrolling interests — — — — — — — 1,067 1,067

1 unchanged sentence

— — 35 7,232 — — 7,232 — 7,232

Balance, June 30, 2024

6,900 $ 167,394 870,848 $ 46,230,789 $ ( 7,724,318 ) $ 75,322 $ 38,581,793 $ 165,277 $ 38,747,070

Balance, March 31, 2023

— $ — 673,207 $ 34,958,608 $ ( 5,772,923 ) $ 73,421 $ 29,259,106 $ 128,232 $ 29,387,338

Net income — — — — 195,415 — 195,415 1,738 197,153

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

Distributions paid and payable — — — — ( 524,718 ) — ( 524,718 ) ( 1,597 ) ( 526,315 )

Share issuances, net of costs — — 35,519 2,183,194 — — 2,183,194 — 2,183,194

Contributions by noncontrolling interests — — — — — — — 39,559 39,559

Share-based compensation, net — — 47 7,578 — — 7,578 — 7,578

Balance, June 30, 2023

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

Six months ended June 30, 2024 and 2023

stock Preferred

capital Shares of

capital Distributions

net income Accumulated

comprehensive income Total

stockholders’

equity Non-controlling

interests Total

Balance, December 31, 2023 — $ — 752,460 $ 39,629,709 $ ( 6,762,136 ) $ 73,894 $ 32,941,467 $ 165,502 $ 33,106,969

Net income — — — — 391,675 — 391,675 3,192 394,867

Other comprehensive income — — — — — 1,428 1,428 — 1,428

Distributions paid and payable — — — — ( 1,353,857 ) — ( 1,353,857 ) ( 4,698 ) ( 1,358,555 )

Share issuances, net of costs — — 9,720 549,452 — — 549,452 — 549,452

Shares issued with merger 6,900 167,394 108,308 6,043,641 — — 6,043,641 — 6,043,641

Contributions by noncontrolling interests — — — — — — — 1,281 1,281

Share-based compensation, net — — 360 7,987 — — 7,987 — 7,987

Balance, June 30, 2024

6,900 $ 167,394 870,848 $ 46,230,789 $ ( 7,724,318 ) $ 75,322 $ 38,581,793 $ 165,277 $ 38,747,070

Balance December 31, 2022 — $ — 660,300 $ 34,159,509 $ ( 5,493,193 ) $ 46,833 $ 28,713,149 $ 130,140 $ 28,843,289

Net income — — — — 420,431 — 420,431 2,844 423,275

2 unchanged sentences

Share issuances, net of costs — — 48,226 2,982,094 — — 2,982,094 — 2,982,094

Contributions by noncontrolling interests — — — — — — — 39,559 39,559

Share-based compensation, net — — 247 7,777 — — 7,777 — 7,777

Balance, March 31, 2023

Balance, June 30, 2023

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

3 unchanged sentences

(in thousands) (unaudited)

Three months ended March 31,

Six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

7 unchanged sentences

Amortization of deferred financing costs 11,693 12,568

Gain on interest rate swaps ( 1,800 ) ( 1,801 )

Foreign currency and unrealized derivative gain, net ( 5,104 ) ( 6,289 )

Non-cash interest expense (income) 7,409 ( 3,600 )

Gain on sales of real estate ( 41,727 ) ( 12,103 )

Equity in losses of unconsolidated entities 1,676 —

Equity in earnings of unconsolidated entities ( 353 ) ( 411 )

Distributions on common equity from unconsolidated entities 10,551 —

8 unchanged sentences

Investment in unconsolidated entities ( 51,856 ) —

Investment in loans ( 377,490 ) —

Proceeds from sales of real estate 201,904 60,460

Return of investment from unconsolidated entities — 3,927

Proceeds from note receivable 42,574 —

19 unchanged sentences

Other items, including shares withheld upon vesting ( 8,529 ) ( 6,146 )

Net cash provided by financing activities 17,027 949,824

Net cash (used in) provided by financing activities ( 543,560 ) 3,247,401

Effect of exchange rate changes on cash and cash equivalents ( 1,429 ) 21,075

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

Summary of Significant Accounting Policies

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The Company was founded in 1969 and our shares of common stock trade on the New York Stock Exchange ("NYSE") under the symbol “O”.

As of March 31, 2024, we owned or held interests in a diversified portfolio of 15,485 properties located in all 50 states of the United States ("U.S."), the United Kingdom ("U.K."), and six other countries in Europe, with approximately 334.2 million square feet of leasable space.

As of June 30, 2024, we owned or held interests in a diversified portfolio of 15,450 properties located in all 50 states of the United States ("U.S."), the United Kingdom ("U.K."), and six other countries in Europe, with approximately 335.3 million square feet of leasable space.

In January 2024, we completed our merger with Spirit Realty Capital, Inc.

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

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

The resulting adjustment is reflected in 'Foreign currency and derivative gain (loss), 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.

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

Operating results for the three months ended March 31, 2024 are not necessarily an indication of the results that may be expected for the entire year.

Operating results for the three and six months ended June 30, 2024 are not necessarily an indication of the results that may be expected for the entire year.

Readers of this quarterly report should refer to our audited consolidated financial statements for the year ended December 31, 2023, which are included in our 2023 Annual Report on Form 10-K , as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report.

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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.

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 March 31, 2024, we are considered the primary beneficiary of Realty Income, L.P.

At June 30, 2024, 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 March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

Below is a summary of selected financial data of such consolidated VIEs, included on our consolidated balance sheets at June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

Net real estate

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Income Taxes.

We have elected to be taxed as a REIT, under the Internal Revenue Code of 1986, as amended.

We have elected to be taxed as a real estate investment trust ("REIT"), under the Internal Revenue Code of 1986, as amended.

We believe we have qualified and continue to qualify as a REIT.

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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.

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.

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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.

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 clients' 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 three and six months ended June 30, 2024, we recognized a provision for credit losses of $ 9.3 million and $ 10.5 million, respectively.

The amount recognized during the six months ended June 30, 2024 is comprised of increases of $ 4.6 million in allowances on loans receivable and $ 5.9 million in allowances on financing receivables.

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

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

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

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

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

During the six months ended June 30, 2024 and 2023, there were no impairments of goodwill.

Recent Accounting Standards Not Yet Adopted.

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

At Acquisition Date As Reported

March 31, 2024 Measurement Period Adjustments At Acquisition Date As Reported

June 30, 2024

Land $ 1,853,895 $ ( 1,673 ) $ 1,852,222

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Lease intangible assets (1)

2,214,615 ( 32,665 ) 2,181,950

Goodwill 1,259,864 ( 60,183 ) 1,199,681

Other assets (2)

174,672 ( 1,881 ) 172,791

Total assets acquired $ 10,504,500 $ ( 2,207 ) $ 10,502,293

1 unchanged sentence

Lease intangible liabilities (3)

378,369 ( 416 ) 377,953

Other liabilities 101,954 142 102,096

Term loan 1,300,000

Term loans 1,300,000 — 1,300,000

Notes payable 2,481,486 — 2,481,486

3 unchanged sentences

(1) The weighted average amortization period for acquired lease intangible assets is 10.8 years.

(2) Includes $ 53.9 million of gross contractual loans receivable, the fair value of which was $ 47.1 million, and we expect to collect substantially all of the loans receivable as of the acquisition date.

(3) The weighted average amortization period for acquired lease intangible liabilities is 8.2 years.

The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated financial statements were prepared.

Measurement period adjustments will be recorded in the

period in which they are determined, as if they had been completed at the acquisition date.

As of March 31, 2024, we had not finalized the determination of fair values allocated to certain assets and liabilities.

Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date.

As of June 30, 2024, we had not finalized the determination of fair values allocated to certain assets and liabilities.

Accordingly, certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, loss contingencies, and goodwill are subject to change.

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None of the goodwill recognized is expected to be deductible for tax purposes.

The measurement period adjustments recorded in the three months ended June 30, 2024 resulted from updated valuations related to real estate assets and liabilities, in addition to loans receivable.

The adjustments were determined based on additional information that existed at the acquisition date but was not contemplated in our initial fair value assessment and resulted in a decrease to goodwill of $ 60.2 million .

Merger and Integration-Related Costs

In conjunction with our merger with Spirit, we incurred merger-related transaction costs of $ 94.1 million during the three months ended March 31, 2024, primarily consisting of employee severance, post-combination share-based compensation, transfer taxes, and various professional fees directly attributable to the Merger.

In conjunction with our merger with Spirit, we incurred $ 2.8 million and $ 96.9 million of merger-related transaction costs during the three and six months ended June 30, 2024, respectively, primarily consisting of employee severance, post-combination share-based compensation, transfer taxes, and various professional fees directly attributable to the Merger.

Unaudited Pro Forma Financial Information

The following unaudited pro forma information presents a summary of our combined results of operations for the three months ended March 31, 2024 and 2023, respectively, as if our merger with Spirit had occurred on January 1, 2023 (in millions, except per share data).

The following unaudited pro forma information presents a summary of our combined results of operations for the three and six months ended June 30, 2024 and 2023, respectively, as if our merger with Spirit had occurred on January 1, 2023 (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 for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Total revenues $ 1,339.4 $ 1,211.8 $ 2,646.8 $ 2,346.7

Net income $ 256.8 $ 222.2 $ 490.8 $ 418.9

Basic and diluted earnings per share $ 0.27 $ 0.25

Our consolidated results of operations for the three months ended March 31, 2024 include $ 155.0 million of revenues and $ 6.9 million of net income associated with the results of operations of Spirit from the merger closing date of January 23, 2024 to March 31, 2024.

Basic earnings per share $ 0.30 $ 0.28 $ 0.58 $ 0.54

Diluted earnings per share $ 0.29 $ 0.28 $ 0.58 $ 0.54

Our consolidated results of operations for the three and six months ended June 30, 2024 include $ 206.8 million and $ 361.8 million of revenues, respectively, and $ 56.1 million and $ 63.0 million of net income, respectively, associated with the results of operations of Spirit from the merger closing date of January 23, 2024 to June 30, 2024.

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

Accounts receivable, net, consist of the following at:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Straight-line rent receivables, net $ 612,934 $ 516,692

2 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

In-place leases

9 unchanged sentences

Other assets, net, consist of the following at:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Financing receivables, net $ 1,553,737 $ 1,570,943

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Derivative assets and receivables - at fair value 52,195 21,170

Restricted escrow deposits 18,806 6,247

Corporate assets, net 14,226 12,948

Interest receivable 11,572 6,139

Credit facility origination costs, net 11,030 12,264

Impounds related to mortgages payable 11,485 53,005

Restricted escrow deposits 6,401 6,247

Credit facility origination costs, net 9,797 12,264

Investment in sales type lease 6,098 6,056

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Accounts payable and accrued expenses consist of the following at:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Notes payable - interest payable $ 325,788 $ 218,811

Derivative liabilities and payables - at fair value 105,809 119,620

Value-added tax payable 91,844 64,885

Accrued costs on properties under development 103,715 65,967

Value-added tax payable 89,955 64,885

Derivative liabilities and payables - at fair value 88,597 119,620

Property taxes payable 81,411 78,809

Accrued property expenses 52,464 54,208

Accrued income taxes 60,655 61,070

Accrued property expenses 43,482 54,208

Accrued merger-related costs 19,077 4,551

3 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Below-market leases

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Other liabilities consist of the following at:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Lease liability - operating leases, net $ 473,173 $ 425,213

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Acquisitions of Real Estate

Below is a summary of our acquisitions for the three months ended March 31, 2024:

Below is a summary of our acquisitions for the six months ended June 30, 2024:

Properties Leasable

(in thousands, unaudited) Investment

(in thousands) Investment

($ in millions) Weighted

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Since it is possible that a client could default on the payment of contractual rent (defined as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables), we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above.

Contractual net operating income used in the calculation of initial weighted average cash lease yield includes approximately $ 0.5 million received as settlement credits as reimbursement of free rent periods for the three months ended March 31, 2024.

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

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

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

development properties and € 8.4 million of investments in Spain development properties, converted at the applicable exchange rates on the funding dates.

(2) Includes £ 35.2 million of investments relating to U.K.

development properties, € 17.7 million of investments relating to Spain development properties, and € 6.9 million of investments relating to Portugal development properties, converted at the applicable exchange rates on the funding dates.

(3) Our clients occupying the new properties are 86.2 % retail and 13.8 % industrial based on net operating income.

Approximately 41.0 % of the net operating income generated from acquisitions during the three months ended March 31, 2024 is from investment grade rated clients, their subsidiaries, or affiliated companies.

The aggregate purchase price of the assets acquired during the three months ended March 31, 2024 has been allocated as follows (in millions):

Approximately 31 % of the net operating income generated from acquisitions during the six months ended June 30, 2024 is from investment grade rated clients, their subsidiaries, or affiliated companies.

The aggregate purchase price of the assets acquired during the six months ended June 30, 2024 has been allocated as follows (in millions):

Acquisitions - USD Acquisitions - Sterling Acquisitions - Euro

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( 14.9 ) ( 2.4 ) ( 0.8 )

Other liabilities — — —

$ 300.2 £ 289.2 € 49.0

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(3) The weighted average amortization period for acquired lease intangible liabilities is 10.0 years.

The properties acquired during the three months ended March 31, 2024 generated total revenue and net income of $ 2.6 million and $ 0.9 million, respectively.

The properties acquired during the six months ended June 30, 2024 generated total revenue and net income of $ 13.1 million and $ 3.6 million, respectively.

Investments in Existing Properties

During the three months ended March 31, 2024, we capitalized costs of $ 7.4 million on existing properties in our portfolio, consisting of $ 6.4 million for non-recurring building improvements, $ 0.9 million for re-leasing costs, and less than $ 0.1 million for recurring capital expenditures.

In comparison, during the three months ended March 31, 2023, we capitalized costs of $ 13.8 million on existing properties in our portfolio, consisting of $ 13.3 million for non-recurring building improvements, $ 0.4 million for re-leasing costs, and $ 0.1 million for recurring capital expenditures.

During the six months ended June 30, 2024, we capitalized costs of $ 49.3 million on existing properties in our portfolio, consisting of $ 46.2 million for non-recurring building improvements, $ 3.1 million for re-leasing costs, and less than $ 0.1 million for recurring capital expenditures.

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

Properties with Existing Leases

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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 three months ended March 31, 2024, and 2023 were $ 211.5 million and $ 157.4 million, respectively.

The amounts amortized to expense for all of our in-place leases, for the six months ended June 30, 2024, and 2023 were $ 434.2 million and $ 319.4 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 three months ended March 31, 2024, and 2023 were $ 9.1 million and $ 14.6 million, respectively.

The amounts amortized as a net decrease to rental revenue for capitalized above-market and below-market leases for the six months ended June 30, 2024, and 2023 were $ 19.1 million and $ 28.9 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 March 31, 2024 (dollars in thousands):

(decrease) to

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

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Number of properties 76 29 122 55

2 unchanged sentences

Investments in Unconsolidated Entities

The following is a summary of our investments in unconsolidated entities as of March 31, 2024 and December 31, 2023 (dollars in thousands):

The following is a summary of our investments in unconsolidated entities as of June 30, 2024 and December 31, 2023 (dollars in thousands):

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

Investment As of March 31, 2024

March 31, 2024 December 31, 2023

Investment As of June 30, 2024

June 30, 2024

December 31, 2023

Bellagio Las Vegas Joint Venture - Common Equity Interest 21.9 % 1 $ 283,608 $ 296,097

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

Data Center Development Joint Venture 80.0 % 2 265,291 226,021

Data Center Joint Venture 80.0 % 2 286,151 226,021

Total investment in unconsolidated entities $ 1,219,759 $ 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 March 31, 2024.

(1) The total carrying amount of the investments was greater than the underlying equity in net assets (i.e., basis difference) by $ 7.8 million as of June 30, 2024.

The basis difference is primarily attributable to capitalized interest for the data center joint venture development funding.

Bellagio Las Vegas Joint Venture Interests

Our investment in the joint venture that owns a 95.0 % interest in the real estate of The Bellagio Las Vegas includes $ 301.4 million of common equity for an indirect interest of 21.9 % in the property and a $ 650.0 million preferred equity interest.

During the three months ended March 31, 2024, we recognized interest income of $ 13.0 million for 8.1 % preferential cumulative distributions within 'Other revenue' in our consolidated statements of income and comprehensive income.

The unconsolidated entity had total debt outstanding of $ 3.0 billion as of March 31, 2024, all of which was non-recourse to us with limited customary exceptions.

Data Center Development Joint Venture

We own an 80.0 % equity interest in a data center development joint venture;

however, we are not the primary beneficiary because we do not have power to direct activities that significantly impact the joint venture's economic performance.

Our maximum exposure to loss associated with this VIE is limited to our equity investment and our pro rata share of the remaining $ 70.1 million of estimated development costs for the first phase of the project.

This joint venture owns a 95.0 % interest in the real estate of The Bellagio Las Vegas.

We made an initial investment in October 2023, including $ 301.4 million of common equity for an indirect interest of 21.9 % in the property and a $ 650.0 million preferred equity interest.

During the six months ended June 30, 2024, we recognized interest income of $ 26.3 million for 8.1 % preferential cumulative distributions within 'Other' revenue in our consolidated statements of income and comprehensive income.

The unconsolidated entity had total debt outstanding of $ 3.0 billion as of June 30, 2024, all of which was non-recourse to us with limited customary exceptions.

Data Center Joint Venture

We own an 80.0 % equity interest in a joint venture that owns and operates two data centers that were substantially completed during the second quarter of 2024.

Based on our reevaluation conducted during the second quarter of 2024, we determined that this joint venture is a VOE.

As we do not control this joint venture, we account for it under the equity method.

Our maximum exposure to loss associated with this VOE is limited to our equity investment and our pro rata share of the remaining $ 52.4 million of estimated development costs for the first phase of the project.

Investments in Loans

The following table presents information about our loans as of March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024

The following table presents information about our loans as of June 30, 2024 and December 31, 2023 (dollars in thousands):

June 30, 2024

Amortized Cost Allowance (1)

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

(1) During the three months ended March 31, 2024, our allowance for credit losses increased by $ 2.2 million, almost entirely attributable to the loans we acquired in conjunction with our merger with Spirit.

(2) The total carrying amount of the investment in loans excludes accrued interest of $ 8.7 million and $ 3.4 million as of March 31, 2024 and December 31, 2023, respectively, which is recorded to 'Other assets, net' on our consolidated balance sheets.

(1) During the six months ended June 30, 2024, our allowance for credit losses increased by $ 6.5 million, attributable to the loans we acquired in conjunction with our merger with Spirit and another senior secured note we acquired in May 2024.

(2) The total carrying amount of the investment in loans excludes accrued interest of $ 9.4 million and $ 3.4 million as of June 30, 2024 and December 31, 2023, respectively, which is recorded to 'Other assets, net' on our consolidated balance sheets.

(3) Includes a loan acquired in conjunction with our merger with Spirit with an estimated acquisition date fair value of $ 4.6 million.

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Senior Secured Notes Receivable

We own a Sterling-denominated senior secured note with a principal amount of £ 142.0 million, equivalent to $ 179.5 million as of March 31, 2024.

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

We 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.

In conjunction with our merger with Spirit, we acquired a senior secured note receivable with a principal amount of $ 9.9 million.

This interest only note bears interest at Secured Overnight Financing Rate ("SOFR") plus 4.00 % and matures in July 2028 .

Mortgage Loans

We have 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.

In conjunction with our merger with Spirit, we acquired a mortgage loan with a principal amount of $ 33.0 million and estimated its fair value to be $ 32.8 million at the acquisition date.

This 10 % fixed-rate, interest only loan is collateralized by four single-tenant properties and matures in March 2025.

In April 2024, this $ 33.0 million loan was repaid in full.

Unsecured Loan

In conjunction with our merger with Spirit, we acquired an 11.0 % fixed-rate, unsecured loan with a principal amount of $ 11.0 million.

It was recorded at its acquisition-date fair value of $ 9.8 million and is included in 'Other assets' on our consolidated balance sheets.

This interest only loan matures in December 2026 .

In May 2024, we acquired a GBP-denominated senior secured note, maturing in May 2030, with a principal amount of £ 300.0 million, equivalent to $ 379.1 million as of June 30, 2024.

The interest only note bears interest at a fixed rate of 8.125 % and is callable at par beginning in May 2026.

Revolving Credit Facility and Commercial Paper Programs

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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 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 March 31, 2024, we had a borrowing capacity of $ 3.44 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $ 0.8 billion, comprised entirely of Sterling borrowings.

Under our revolving credit facility, our current investment grade credit ratings provide for USD borrowings at 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 ("GBP") at the SONIA, plus 0.725 % with a SONIA adjustment charge of 0.0326 % and a revolving credit facility fee of 0.125 %, for all-in pricing of 0.8826 % over SONIA, and Euro ("EUR") borrowings at one-month Euro Interbank Offered Rate (“EURIBOR”), plus 0.725 %, and a revolving credit facility fee of 0.125 %, for all-in pricing of 0.85 % over one-month EURIBOR.

As of June 30, 2024, we had a borrowing capacity of $ 3.40 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $ 0.8 billion, including £ 0.6 billion GBP and € 40.0 million EUR borrowings.

There was no outstanding balance at December 31, 2023.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 6.2 % and 3.7 % during the three months ended March 31, 2024, and 2023, respectively.

At March 31, 2024, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 5.9 %.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at March 31, 2024, we were in compliance with the covenants under our revolving credit facility.

As of March 31, 2024, credit facility origination costs of $ 11.0 million are included in 'Other assets, net', as compared to $ 12.3 million at December 31, 2023, on our consolidated balance sheets.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 5.7 % and 4.6 % during the six months ended June 30, 2024, and 2023, respectively.

At June 30, 2024, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 5.8 %.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at June 30, 2024, we were in compliance with the covenants under our revolving credit facility.

As of June 30, 2024, credit facility origination costs of $ 9.8 million are included in 'Other assets, net', as compared to $ 12.3 million at December 31, 2023, on our consolidated balance sheets.

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

Commercial Paper Programs

We have a USD-denominated unsecured commercial paper program, under which we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $ 1.5 billion, as well as a Euro-denominated unsecured commercial paper program, which permits us to issue additional unsecured commercial notes up to a maximum aggregate amount of $ 1.5 billion (or foreign currency equivalent).

Our Euro-denominated unsecured commercial paper program may be issued in USD or various foreign currencies, including but not limited to, Euros, Sterling, Swiss Francs, Yen, Canadian Dollars, and Australian Dollars, in each case, pursuant to customary terms in the European commercial paper market.

The commercial paper ranks pari passu in right of payment with all of our other unsecured senior indebtedness outstanding, exclusive of unexchanged VEREIT and Spirit bonds, from time to time, including borrowings under our revolving credit facility, our term loans and our outstanding senior unsecured notes (and is structurally subordinated to all our subsidiary debt).

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 EUR-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 EUR-denominated unsecured commercial paper program may be issued in USD or various foreign currencies, including but not limited to, EUR, GBP, 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 pari passu in right of payment with all of our other unsecured senior indebtedness outstanding, exclusive of unexchanged VEREIT, Inc.

("VEREIT") and Spirit bonds, from time to time, including borrowings under our revolving credit facility, our term loans and our outstanding senior unsecured notes (and is structurally subordinated to all our subsidiary debt).

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

As of March 31, 2024, the balance of borrowings outstanding under our commercial paper programs was $ 216.0 million, comprised entirely of Euro-denominated borrowings ("EUR borrowings"), as compared to $ 764.4 million outstanding commercial paper borrowings, including € 583.0 million of EUR borrowings, at December 31, 2023.

The weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.5 % and 3.5 % for the three months ended March 31, 2024, and 2023, respectively.

As of March 31, 2024, our weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.2 %.

As of June 30, 2024, the balance of borrowings outstanding under our commercial paper programs was $ 302.2 million, including € 100.0 million of EUR borrowings, as compared to $ 764.4 million outstanding commercial paper borrowings, including € 583.0 million of EUR borrowings, at December 31, 2023.

The weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.5 % for both the six months ended June 30, 2024, and 2023.

As of June 30, 2024, our weighted average interest rate on outstanding borrowings under our commercial paper programs was 5.0 %.

We use our $ 4.25 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper programs.

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The amended and restated term loan agreements are fixed through interest rate swaps at a weighted average interest rate of 3.9 %.

Pursuant to the amended and restated term loan agreement, we borrowed $ 800.0 million in aggregate total borrowings, $ 300.0 million of which matures in August 2025 and $ 500.0 million of which matures in August 2027 (the “$ 800 million term loan agreement”).

Pursuant to the amended and restated term loan agreement, we borrowed $ 800.0 million in aggregate total borrowings,

$ 300.0 million of which matures in August 2025 and $ 500.0 million of which matures in August 2027 (the “$ 800 million term loan agreement”).

We also entered into an amended and restated term loan agreement pursuant to which we borrowed $ 500.0 million in aggregate total borrowings which matures in June 2025 (the “$ 500 million term loan agreement”).

Our 2023 term loan agreement allows us to incur up to an aggregate of $ 1.5 billion in multi-currency borrowings.

As of March 31, 2024, we had $ 1.1 billion in multi-currency borrowings, including $ 90.0 million, £ 705.0 million, and € 85.0 million in outstanding borrowings.

In January 2023, we entered into our 2023 term loan agreement, which allows us to incur up to an aggregate of $ 1.5 billion in multi-currency borrowings.

As of June 30, 2024, we had $ 1.1 billion in multi-currency 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 January 2024, we entered into interest rate swaps which fix our per annum interest rate at 4.9 % until term loan maturity in January 2026.

Deferred financing costs were $ 2.5 million at March 31, 2024 and are included net of the term loans principal balance, as compared to $ 0.1 million related to our 2023 term loans at December 31, 2023, on our consolidated balance sheets.

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 GBP-denominated loans, and EURIBOR for Euro-denominated loans.

In January 2024, we entered into interest rate swaps which fix our per annum interest rate at 4.9 % until January 2026, which is the term loan maturity date if our remaining extension option is exercised.

Deferred financing costs were $ 2.0 million at June 30, 2024 and are included net of the term loans principal balance, as compared to $ 0.1 million related to our 2023 term loans at December 31, 2023, on our consolidated balance sheets.

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

As of March 31, 2024, we were in compliance with the covenants contained in the term loans.

As of June 30, 2024, we were in compliance with the covenants contained in the term loans.

Mortgages Payable

During the three months ended March 31, 2024, we made $ 621.2 million in principal payments, including the full repayment of two mortgages for $ 620.0 million.

No mortgages were assumed during the three months ended March 31, 2024.

During the six months ended June 30, 2024, we made $ 622.4 million in principal payments, including the full repayment of two mortgages for $ 620.0 million.

No mortgages were assumed during the six months ended June 30, 2024.

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 March 31, 2024, 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 at March 31, 2024 and December 31, 2023, respectively.

At June 30, 2024, 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 $ 0.3 million at June 30, 2024 and $ 0.4 million at December 31, 2023.

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

The following table summarizes our mortgages payable as of March 31, 2024 and December 31, 2023 (dollars in millions):

The following table summarizes our mortgages payable as of June 30, 2024 and December 31, 2023 (dollars in millions):

Properties (1)

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Financing Costs

March 31, 2024 49 4.3 % 4.6 % 1.3 $ 201.0 $ ( 0.9 ) $ 200.1

June 30, 2024 49 4.3 % 4.6 % 1.1 $ 199.8 $ ( 0.7 ) $ 199.0

December 31, 2023 131 4.8 % 3.3 % 0.4 $ 822.4 $ ( 0.8 ) $ 821.6

(1) At March 31, 2024, there were 14 mortgages on 49 properties and at December 31, 2023, there were 16 mortgages on 131 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 March 31, 2024 and December 31, 2023, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0 % to 6.9 % at March 31, 2024 and December 31, 2023, respectively.

(3) Effective interest rates ranged from 0.8 % to 6.6 % and 0.5 % to 6.6 % at March 31, 2024 and December 31, 2023, respectively.

The following table summarizes the maturity of mortgages payable as of March 31, 2024, excluding $ 0.9 million related to unamortized net discounts and deferred financing costs (dollars in millions):

(1) At June 30, 2024, there were 14 mortgages on 49 properties and at December 31, 2023, there were 16 mortgages on 131 properties.

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

At June 30, 2024 and December 31, 2023, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0 % to 6.9 % at June 30, 2024 and December 31, 2023, respectively.

(3) Effective interest rates ranged from 2.8 % to 6.6 % and 0.5 % to 6.6 % at June 30, 2024 and December 31, 2023, respectively.

The following table summarizes the maturity of mortgages payable as of June 30, 2024, excluding $ 0.7 million related to unamortized net discounts and deferred financing costs (dollars in millions):

Year of Maturity

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Notes Payable

At March 31, 2024, our senior unsecured notes and bonds are USD-denominated, Sterling-denominated, and Euro-denominated.

At June 30, 2024, our senior unsecured notes and bonds are USD-denominated, GBP-denominated, and EUR-denominated.

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

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Maturity Dates Principal (Currency Denomination) Carrying Value (USD) as of

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

4.600 % Notes due 2024

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March 15, 2028 $ 449,994 449,994 —

Maturity Dates Principal (Currency Denomination) Carrying Value (USD) as of

March 31, 2024 December 31, 2023

2.200 % Notes due 2028

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

Maturity Dates Principal (Currency Denomination) Carrying Value (USD) as of

June 30, 2024 December 31, 2023

3.390 % Notes due 2037

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Total principal amount $ 21,991,675 $ 18,562,064

Unamortized net (discounts) premiums, deferred financing costs, and cumulative basis adjustment on fair value hedge (3)

Unamortized net (discounts) premiums, deferred financing costs, and cumulative basis adjustment on fair value hedges (3)

( 250,069 ) 40,255

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See note 13, Derivative Instruments for further details.

The following table summarizes the maturity of our notes and bonds payable as of March 31, 2024, excluding $ 254.1 million related to unamortized net discounts, deferred financing costs, and basis adjustments on interest rate swaps designated as fair value hedges (dollars in millions):

The following table summarizes the maturity of our notes and bonds payable as of June 30, 2024, excluding unamortized net discounts, deferred financing costs, and basis adjustments on interest rate swaps designated as fair value hedges (dollars in millions):

Year of Maturity

Thereafter 13,395.6

As of March 31, 2024, the weighted average interest rate on our notes and bonds payable was 3.8 %, and the weighted average remaining years until maturity was 6.5 years.

Interest incurred on all of the notes and bonds was $ 200.5 million and $ 130.3 million for the three months ended March 31, 2024, and 2023, respectively.

In July 2024, we repaid $ 350.0 million of outstanding 3.875 % senior unsecured notes, plus accrued and unpaid interest, upon maturity.

As of June 30, 2024, the weighted average interest rate on our notes and bonds payable was 3.8 %, and the weighted average remaining years until maturity was 6.3 years.

Interest incurred on all of the notes and bonds was $ 206.1 million and $ 144.1 million for the three months ended June 30, 2024, and 2023, respectively, and $ 406.6 million and $ 274.4 million for the six months ended June 30, 2024, and 2023, respectively.

Our outstanding notes and bonds are unsecured;

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

At March 31, 2024, we were in compliance with these covenants.

At June 30, 2024, we were in compliance with these covenants.

Note Issuances

During the three months ended March 31, 2024, we issued the following notes and bonds (in millions):

During the six months ended June 30, 2024, we issued the following notes and bonds (in millions):

2024 Issuances Date of Issuance Maturity Date Principal amount Price of par value Effective yield to maturity

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Noncontrolling Interests

As of March 31, 2024, we have eight 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.

The following table represents the change in the carrying value of all noncontrolling interests through March 31, 2024 (in thousands):

As of June 30, 2024, we have ten 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.

The following table represents the change in the carrying value of all noncontrolling interests through June 30, 2024 (in thousands):

Realty Income, L.P.

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Contributions

— 1,281 1,281

Distributions ( 2,842 ) ( 1,856 ) ( 4,698 )

1 unchanged sentence

2,782 410 3,192

Carrying value at March 31, 2024

Carrying value at June 30, 2024

$ 114,012 $ 51,265 $ 165,277

(1) 1,795,167 units were outstanding as of both March 31, 2024 and December 31, 2023.

At March 31, 2024, we are considered the primary beneficiary of Realty Income, L.P.

(1) 1,795,167 units were outstanding as of both June 30, 2024 and December 31, 2023.

At June 30, 2024, we are considered the primary beneficiary of Realty Income, L.P.

and other VIEs.

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

The following tables present the carrying values and estimated fair values of financial instruments as of March 31, 2024 and December 31, 2023 (in millions):

March 31, 2024

The following tables present the carrying values and estimated fair values of financial instruments as of June 30, 2024 and December 31, 2023 (in millions):

June 30, 2024

Hierarchy Level

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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):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Carrying value

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$ 21,991.7 $ 20,429.9 $ 18,562.1 $ 17,603.7

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

The unamortized balance of these net discounts was $ 0.5 million at March 31, 2024, and $ 0.4 million of net discounts at December 31, 2023.

Also excludes deferred financing costs of $ 0.4 million at March 31, 2024 and December 31, 2023, respectively.

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

The unamortized balance of the net discounts was $ 159.4 million at March 31, 2024, and $ 125.3 million of net premiums at December 31, 2023.

Also excludes deferred financing costs of $ 93.1 million and a favorable basis adjustment on interest rate swaps designated as fair value hedges of $ 1.6 million at March 31, 2024, and 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.

(1) Excludes non-cash net premiums and discounts as well as deferred financing costs recorded on mortgages payable.

Excludes non-cash net premiums and discounts, deferred financing costs, and the cumulative basis adjustment on fair value hedges recorded on notes payable.

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

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Although we have determined that the majority of the inputs used to value our derivatives fall within level 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 March 31, 2024, and December 31, 2023, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

However, at June 30, 2024, and December 31, 2023, 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.

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

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Carrying value prior to impairment $ 281.9 $ 97.0 $ 443.9 $ 125.5

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Carrying value after impairment $ 194.7 $ 67.2 $ 268.5 $ 82.5

(1) Excludes provision for current expected credit loss of $ 1.3 million at March 31, 2024.

(2) Real estate assets that were deemed to be impaired for the three months ended March 31, 2024 primarily relate to two office properties which were acquired and retained in our merger with VEREIT, Inc.

("VEREIT") in 2021.

Number of properties:

Classified as held for sale 24 — 26 1

Classified as held for investment 41 7 50 8

Sold 33 27 53 47

(1) Excludes provision for current expected credit loss of $ 9.3 million and $ 10.5 million for the three and six months ended June 30, 2024.

(2) Real estate assets that were deemed to be impaired for the six months ended June 30, 2024 primarily relate to two office properties which were acquired and retained in our merger with VEREIT in 2021, 17 properties leased to clients in bankruptcies, as well as certain properties that are more likely than not to be sold in the next twelve months.

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.

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Derivatives Designated as Hedging Instruments - Cash Flow Hedges

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

We enter into foreign currency forward contracts to sell GBP and EUR and buy USD to hedge the foreign currency risk associated with interest payments on intercompany loans denominated in GBP and EUR.

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

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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 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.

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 gain (loss), 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.

Derivatives Designated as Hedging Instruments - Net Investment Hedges

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We use the spot method of assessing hedge effectiveness and apply the consistent election to the excluded component by recognizing changes in the fair value of the hedging instruments attributable to the excluded component in the same manner as described above.

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

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 our 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).

Further, certain EUR-denominated bonds and borrowings under our Revolving Credit Facility and Term Loans (all as defined in Notes 7 and 8 , respectively) may be also designated as, and are

effective as, net investment hedge.

Further, certain EUR-denominated bonds and borrowings under our Revolving Credit Facility and Term Loans (all as defined in notes 7 and 8 , respectively) may be also designated as, and are effective as, net investment hedge.

Changes in the value of such borrowings, related to changes in the spot rates, will be recorded in the same manner as foreign currency translation adjustments.

2 unchanged sentences

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 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 March 31, 2024 and December 31, 2023 (dollars in millions):

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 gain (loss), 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 June 30, 2024 and December 31, 2023 (dollars in millions):

Derivative Type

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Fair Value - asset (liability) as of

Derivatives Designated as Hedging Instruments March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Derivatives Designated as Hedging Instruments June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

Interest rate swaps (4)

6 unchanged sentences

3 280.0 280.0 (7) Oct 2032 ( 40.6 ) ( 53.2 )

Foreign currency forwards 24 217.8 162.3 (8) Apr 2024 - Jun 2025 2.2 2.7

Foreign currency forwards 22 262.3 162.3 (8) Jul 2024 - Dec 2025 2.2 2.7

$ 3,542.3 $ 3,392.3 $ ( 39.8 ) $ ( 107.4 )

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Currency exchange swaps

4 $ 1,476.3 $ 1,810.6 (9) Apr 2024 - May 2024 $ 2.1 $ 8.9

4 $ 1,454.0 $ 1,810.6 (9) Jul 2024 $ 3.4 $ 8.9

$ 1,454.0 $ 1,810.6 $ 3.4 $ 8.9

Total of all Derivatives $ 4,996.3 $ 5,202.9 $ ( 36.4 ) $ ( 98.5 )

(1) This column represents the number of instruments outstanding as of March 31, 2024.

(2) Weighted average strike rate is calculated using the notional value as of March 31, 2024.

(3) This column represents maturity dates for instruments outstanding as of March 31, 2024.

(4) During the three months ended March 31, 2024, we entered into five variable-to-fixed interest rate swaps when we extended maturity of the 2023 term loans and designated them as cash flow hedges.

(1) This column represents the number of instruments outstanding as of June 30, 2024.

(2) Weighted average strike rate is calculated using the notional value as of June 30, 2024.

(3) This column represents maturity dates for instruments outstanding as of June 30, 2024.

(4) During the six months ended June 30, 2024, we entered into five variable-to-fixed interest rate swaps when we extended maturity of the 2023 term loans and designated them as cash flow hedges.

We also designated five variable-to-fixed interest rate swaps we acquired from Spirit as cash flow hedges to mitigate the interest rate risk associated with the term loans we assumed in conjunction with our merger with Spirit.

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

Three months ended March 31,

Three months ended

June 30, Six months ended

Derivatives in Cash Flow Hedging Relationships 2024 2023 2024 2023

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

Three months ended March 31,

Three months ended

June 30, Six months ended

Derivatives in Cash Flow Hedging Relationships Location of Gain Recognized in Income

Interest rate swaps Interest expense $ 8,932 $ 1,480

2024 2023 2024 2023

Interest rate swaps Interest $ 8,588 $ 3,259 $ 17,520 $ 4,739

Foreign currency forwards Foreign currency and derivative gain, net 1,569 892 3,680 2,323

Interest rate swaptions Interest expense ( 982 ) —

Interest rate swaptions Interest 73 ( 2,358 ) ( 909 ) ( 2,358 )

Total derivatives in cash flow hedging relationships $ 10,230 $ 1,793 $ 20,291 $ 4,704

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

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

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

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Gain on the settlement of designated derivatives reclassified from AOCI 3,045 1,082 6,486 2,807

(Loss) gain on the settlement of transactions with third parties ( 6 ) 1,326

Gain (loss) on the settlement of transactions with third parties ( 9 ) ( 51 ) ( 15 ) 1,275

Total realized foreign currency and derivative (loss) gain, net $ ( 2,083 ) $ 50 $ ( 13,913 ) $ 2,756

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Gain (loss) on the change in fair value of undesignated derivatives $ 3,408 $ ( 7,394 ) $ 5,546 $ ( 8,176 )

Gain on remeasurement of certain assets and liabilities 13,738 8,398

Total unrealized foreign currency and derivative gain, net $ 15,876 $ 7,616

Total foreign currency and derivative gain, net $ 4,046 $ 10,322

(Loss) gain on remeasurement of certain assets and liabilities ( 814 ) 4,792 12,924 13,190

Total unrealized foreign currency and derivative gain (loss), net $ 2,594 $ ( 2,602 ) $ 18,470 $ 5,014

Total foreign currency and derivative gain (loss), net $ 511 $ ( 2,552 ) $ 4,557 $ 7,770

Lessor Operating Leases

At March 31, 2024, we owned or held interests in 15,485 properties.

At June 30, 2024, we owned or held interests in 15,450 properties.

Of the 15,450 properties, 15,154 , or 98.1 %, are single-client properties, and the remaining are multi-client properties.

At March 31, 2024, 217 properties were available for lease or sale.

At June 30, 2024, 185 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 three months ended March 31, 2024, and 2023 was $ 5.3 million, and $ 4.1 million, respectively.

No individual client’s rental revenue, including percentage rents, represented more than 10% of our total revenue for each of the three months ended March 31, 2024, and 2023.

Rent based on a percentage of our clients' gross sales, or percentage rent, for the three months ended June 30, 2024, and 2023 was $ 2.4 million, and $ 1.7 million, respectively.

Percentage rent for the six months ended June 30, 2024, and 2023 was $ 7.7 million, and $ 5.8 million, respectively.

No individual client’s rental revenue, including percentage rents, represented more than 10% of our total revenue for each of the six months ended June 30, 2024, and 2023.

Stockholders' Equity

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The following is a summary of monthly distributions paid per common share for the periods indicated below:

Three months ended March 31,

Six months ended

January $ 0.2565 $ 0.2485

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March 0.2565 0.2545

April 0.2570 0.2550

May 0.2570 0.2550

June 0.2625 0.2550

$ 1.5460 $ 1.5165

At March 31, 2024, a distribution of $ 0.2570 per common share was payable and was paid in April 2024.

At June 30, 2024, a distribution of $ 0.2630 per common share was payable and was paid in July 2024.

At-the-Market ("ATM") Program

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

As of March 31, 2024, we had 76.7 million shares remaining for future issuance under our ATM program.

As of June 30, 2024, we had 73.2 million shares remaining for future issuance under our ATM program.

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

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

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Shares of common stock issued under the ATM program (1)

— 35,475 9,604 48,140

Gross proceeds $ — $ 2,195.7 $ 547.0 $ 2,997.4

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Net proceeds $ ( 0.2 ) $ 2,180.5 $ 543.3 $ 2,976.7

(1) During the three months ended March 31, 2024, 4.6 million shares were sold, and 9.6 million shares were settled pursuant to forward sale confirmations.

In addition, as of March 31, 2024, 1.2 million shares of common stock subject to forward sale confirmations have been executed, but not settled, at a weighted average initial gross price of $ 54.00 per share.

We currently expect to fully settle forward sale agreements outstanding by June 30, 2024, representing $ 62.9 million in net proceeds, for which the weighted average forward price at March 31, 2024 was $ 53.70 per share.

(1) During the three and six months ended June 30, 2024, 3.5 million and 8.1 million shares were sold, respectively, and 9.6 million shares were settled pursuant to forward sale confirmations.

In addition, as of June 30, 2024, 4.7 million shares of common stock subject to forward sale confirmations have been executed, but not settled, at a weighted average initial gross price of $ 53.32 per share.

We currently expect to fully settle forward sale agreements outstanding by September 30, 2024, representing $ 247.8 million in net proceeds, for which the weighted average forward price at June 30, 2024 was $ 52.87 per share.

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 provides our common stockholders with a convenient and economical method of purchasing our common stock and reinvesting their distributions.

It 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 March 31, 2024, we had 10.9 million shares remaining for future issuance under our DRSPP program.

At June 30, 2024, we had 10.8 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):

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Shares of common stock issued under the DRSPP program 57 44 115 86

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We are authorized to issue up to 69.9 million shares of our preferred stock.

As of March 31, 2024, we had 6.9 million shares of our preferred stock outstanding.

As of June 30, 2024, we had 6.9 million shares of our preferred stock outstanding.

The 6.000 % Series A Cumulative Redeemable Preferred Stock trades on the NYSE under the ticker symbol "O PR".

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Dividends are payable quarterly in arrears on or about the last day of March, June, September and December of each year.

During the three months ended March 31, 2024, we paid one quarterly dividend to holders of our preferred stock totaling $ 0.375 per share, or $ 2.6 million.

During the six months ended June 30, 2024, we paid two quarterly dividends to holders of our preferred stock totaling $ 0.750 per share, or $ 5.2 million.

Common Stock Incentive Plan

This note should be read in conjunction with the more complete discussion of the Realty Income 2021 Incentive Award Plan (the "2021 Plan"), included in note 19 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023.

The amount of share-based compensation costs recognized in 'General and administrative' in our consolidated statements of income and comprehensive income was $ 9.3 million and $ 6.3 million during the three months ended March 31, 2024, and 2023, respectively.

The amount of share-based compensation costs recognized in 'General and administrative' in our consolidated statements of income and comprehensive income was $ 7.3 million and $ 7.6 million during the three months ended June 30, 2024, and 2023, respectively, and $ 16.5 million and $ 13.9 million during the six months ended June 30, 2024, and 2023, respectively.

In connection with the Merger, each outstanding Spirit restricted stock award and performance share award was cancelled and converted into Realty Income common stock, using the Exchange Ratio in accordance with the Merger Agreement.

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Restricted Stock and Restricted Stock Units

During the three months ended March 31, 2024, we granted 296,871 shares of common stock under the 2021 Plan.

This included 4,000 total shares of restricted stock granted to the new independent member of our Board of Directors, which vest in equal parts over a three-year service period.

During the six months ended June 30, 2024, we granted 341,522 shares of common stock under the 2021 Plan.

This included 44,000 total shares of restricted stock granted to the independent members of our Board of Directors, 4,000 of which were granted to a new member in the first quarter of 2024, and the remaining 40,000 shares of which were granted in connection with our annual awards in May 2024.

The vesting schedule for these shares is up to three-years , based on each director's years of service, and is subject to the director’s continued service through each applicable vesting date.

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

During the three months ended March 31, 2024, we also granted 30,322 restricted stock units, all of which vest over a four-year service period.

As of March 31, 2024, the remaining unamortized share-based compensation expense related to restricted stock awards and units totaled $ 29.5 million, which is being amortized on a straight-line basis over the service period of each applicable award.

During the six months ended June 30, 2024, we also granted 30,322 restricted stock units, all of which vest over a four-year service period.

As of June 30, 2024, the remaining unamortized share-based compensation expense related to restricted stock awards and units totaled $ 27.5 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.

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Performance Shares

During the three months ended March 31, 2024, we granted 274,358 performance shares, as well as dividend equivalent rights, to our executive officers.

During the six months ended June 30, 2024, we granted 274,358 performance shares, as well as dividend equivalent rights, to our executive officers.

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

As of March 31, 2024, the remaining share-based compensation expense related to the performance shares totaled $ 29.7 million.

As of June 30, 2024, the remaining share-based compensation expense related to the performance shares totaled $ 26.1 million.

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

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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):

Three months ended March 31,

Weighted average shares used for the basic net income per share computation

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Weighted average shares used for the basic net income per share computation 870,319 674,109 852,621 667,357

Incremental shares from share-based compensation 398 409 384 392

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Weighted average shares used for diluted net income per share computation 870,725 674,593 853,011 668,108

835,242 661,239

Unvested shares from share-based compensation that were anti-dilutive 232 182 219 147

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

Three months ended March 31,

Six months ended

Supplemental disclosures:

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Notes payable assumed at fair value $ 2,481,486 $ —

Increase in noncontrolling interests from property acquisitions $ — $ 39,156

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):

March 31, 2024 March 31, 2023

June 30, 2024 June 30, 2023

Cash and cash equivalents shown in the consolidated balance sheets $ 442,820 $ 253,693

Restricted escrow deposits (1)

18,806 23,995

Impounds related to mortgages payable (1)

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

At March 31, 2024, we had commitments of $ 101.4 million, which primarily relate to tenant improvements, re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of March 31, 2024, we had committed $ 536.1 million under construction contracts related to development projects, which have estimated rental revenue commencement dates between April 2024 and March 2026.

At June 30, 2024, we had commitments of $ 91.5 million, which primarily relate to tenant improvements, re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of June 30, 2024, we had committed $ 393.9 million under construction contracts related to development projects, which have estimated rental revenue commencement dates between July 2024 and April 2025.

Subsequent Events

In April 2024, we declared a dividend of $ 0.2570 per share to our common stockholders, which will be paid in May 2024.

Loan Repayment

In April 2024, a $ 33.0 million secured loan to an operator of Emagine Theaters, assumed in the Spirit merger, was repaid in full.

In July 2024, we declared a dividend of $ 0.2630 per share to our common stockholders, which will be paid in August 2024.

ATM Forward Offerings

As of August 5, 2024, ATM forward agreements for a total of 8.3 million shares remain unsettled with total expected net proceeds of approximately $ 447.8 million, of which 3.7 million shares were executed in July 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements