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Item 2. Management’s Discussion and Analysis

2024-08-06 compared with 2024-05-07 · 188 added, 151 removed, 578 unchanged (37% of the section changed)

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Forward-looking statements include discussions of our business and portfolio;

growth strategies and intentions to acquire or dispose of properties (including timing, partners, clients and terms);

growth strategies and intentions to acquire or dispose of properties (including geographies, timing, partners, clients and terms);

re-leases, re-development and speculative development of properties and expenditures related thereto;

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the announcement of operating results, strategy, plans, and the intentions of management;

settlement of shares of common stock sold pursuant to forward sale confirmations under our ATM program;

settlement of shares of common stock sold pursuant to forward sale confirmations under our At-the-Market ("ATM") Program;

dividends, including the amount, timing and payment of dividends related thereto;

and trends in our business, including trends in the market for long-term leases of freestanding, single-client properties.

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O), an S&P 500 company, is real estate partner to the world's leading companies.

Founded in 1969, we invest in diversified commercial real estate and have a portfolio of over 15,450 properties in all 50 U.S.

Founded in 1969, we invest in diversified commercial real estate and have a portfolio of 15,450 properties in all 50 U.S.

states, the U.K., and six other countries in Europe.

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Since our founding, we have declared 649 consecutive monthly dividends and are a member of the S&P 500 Dividend Aristocrats ® index for having increased our dividend for the last 29 consecutive years.

As of March 31, 2024, we owned or held interests in 15,485 properties, with approximately 334.2 million square feet of leasable space leased to 1,552 clients doing business in 89 separate industries.

Of the 15,485 properties in our portfolio as of March 31, 2024, 15,189, or 98.1%, were single-client properties, of which 14,978 were leased, and the remaining were multi–client properties.

Our total portfolio of 15,485 properties as of March 31, 2024 had a weighted average remaining lease term (excluding rights to extend a lease at the option of the client) of approximately 9.8 years.

Total portfolio annualized contractual rent (defined as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables) on our leases as of March 31, 2024 was $4.79 billion.

As of March 31, 2024, approximately 36.2% of our total portfolio annualized contractual rent comes from properties leased to our investment grade clients, their subsidiaries or affiliated companies.

As of March 31, 2024, our top 20 clients (based on percentage of total portfolio annualized contractual rent) represented approximately 36.3% of our annualized rent and 10 of these clients have investment grade credit ratings or are subsidiaries or affiliates of investment grade companies.

Approximately 91% of our annualized retail contractual rent as of March 31, 2024, is derived from our clients with a service, non-discretionary, and/or low price point component to their business.

Unless otherwise specified, references to rental revenue in the Management's Discussion and Analysis of Financial Condition and Results of Operations are exclusive of reimbursements from clients for recoverable real estate taxes and operating expenses totaling $72.7 million and $59.6 million for the three months ended March 31, 2024, and 2023, respectively.

As of June 30, 2024, we owned or held interests in 15,450 properties, with approximately 335.3 million square feet of leasable space leased to 1,551 clients doing business in 90 separate industries.

Of the 15,450 properties in our portfolio as of June 30, 2024, 15,154, or 98.1%, were single-client properties, and the remaining were multi–client properties.

Our total portfolio of 15,450 properties as of June 30, 2024 had a weighted average remaining lease term (excluding rights to extend a lease at the option of the client) of approximately 9.6 years.

Total portfolio annualized contractual rent (defined as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables) on our leases as of June 30, 2024 was $4.85 billion.

As of June 30, 2024, approximately 36.0% of our total portfolio annualized contractual rent comes from properties leased to our investment grade clients, their subsidiaries or affiliated companies.

As of June 30, 2024, our top 20 clients (based on percentage of total portfolio annualized contractual rent) represented approximately 36.2% of our annualized rent and 10 of these clients have investment grade credit ratings or are subsidiaries or affiliates of investment grade companies.

Approximately 91% of our annualized retail contractual rent as of June 30, 2024, is derived from our clients with a service, non-discretionary, and/or low price point component to their business.

Unless otherwise specified, references to rental revenue in the Management's Discussion and Analysis of Financial Condition and Results of Operations are exclusive of reimbursements from clients for recoverable real estate taxes and operating expenses totaling $80.6 million and $87.7 million for the three months ended June 30, 2024, and 2023, respectively, and $153.3 million and $147.3 million for the six months ended June 30, 2024 and 2023, respectively.

RECENT DEVELOPMENTS

Closing of Spirit Merger

On January 23, 2024, we closed on our previously announced stock-for-stock merger with Spirit (formerly NYSE:

The Merger is further described in note 2, Merger with Spirit Realty Capital, Inc.

, to the consolidated financial statements.

We assumed the Spirit portfolio, which consisted of 2,018 U.S.

retail, industrial and other properties across 49 states.

Increases in Monthly Dividends to Common Stockholders

We have continued our 55-year history of paying monthly dividends.

In addition, we increased the dividend twice during 2024.

As of April 2024, we have paid 106 consecutive quarterly dividend increases and increased the dividend 124 times since our listing on the NYSE in 1994.

In addition, we have increased the dividend four times during 2024.

As of July 2024, we have paid 107 consecutive quarterly dividend increases and increased the dividend 126 times since our listing on the New York Stock Exchange (“NYSE”) in 1994.

2024 Dividend increases

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2nd increase Mar 2024 Apr 2024 $ 0.2570 $ 0.0005

The dividends paid per share during 2024 totaled $0.7695, as compared to $0.7515 during 2023, an increase of $0.018, or 2.4%.

The monthly dividend of $0.257 per share represents a current annualized dividend of $3.084 per share, and an annualized dividend yield of 5.7% based on the last reported sale price of our common stock on the NYSE of $54.10 on March 31, 2024.

3rd increase May 2024 Jun 2024 $ 0.2625 $ 0.0055

4th increase Jun 2024 Jul 2024 $ 0.2630 $ 0.0005

The dividends paid per share during the six months ended June 30, 2024 totaled $1.5460, as compared to $1.5165 during the six months ended June 30, 2023, an increase of $0.030, or 1.9%.

The monthly dividend of $0.2630 per share represents a current annualized dividend of $3.156 per share, and an annualized dividend yield of 6.0% based on the last reported sale price of our common stock on the NYSE of $52.82 on June 30, 2024.

Although we expect to continue our policy of paying monthly dividends, we cannot guarantee that we will maintain our current level of dividends, that we will continue our pattern of increasing dividends per share, or what our actual dividend yield will be in any future period.

Investments During the Three Months Ended March 31, 2024

During the three months ended March 31, 2024, we invested $0.6 billion at an initial weighted average cash yield of 7.8%, in 153 properties and properties under development or expansion.

See note 4 , Investments in Real Estate, to the consolidated financial statements for further details.

Equity Capital Raising

During the three months ended March 31, 2024, we raised $550.1 million of proceeds from the sale of common stock, at a weighted average price of $56.93 per share, primarily through proceeds from the sale of common stock through our ATM program.

The ATM program issuances during the three months ended March 31, 2024 included 9.6 million shares issued pursuant to forward sale confirmations.

As of March 31, 2024, 1.2 million shares of common stock subject to forward sale confirmations have been executed but not settled.

See note 15 , Stockholders' Equity , to the consolidated financial statements for further details.

Note Issuances

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.

In connection with the Merger, we also completed the $2.7 billion exchange in principal of outstanding notes issued by Spirit Realty, L.P.

(“Spirit OP”).

See note 10, Notes Payable , to the consolidated financial statements for further details.

Investments During the Three and Six Months Ended June 30, 2024

During the three months ended June 30, 2024, we invested $0.8 billion at an initial weighted average cash yield of 7.9%, including an investment in 120 properties, properties under development or expansion, and an investment in a loan.

During the six months ended June 30, 2024, we invested $1.4 billion at an initial weighted average cash yield of 7.8%, including an investment in 198 properties, properties under development or expansion, and an investment in a loan.

See notes 4 , Investments in Real Estate, 5 , Investments in Unconsolidated Entities, and 6, Investments in Loans, to the consolidated financial statements for further details.

Closing of Spirit Merger

On January 23, 2024, we closed on our previously announced stock-for-stock merger with Spirit (formerly NYSE:

The Merger is further described in note 2, Merger with Spirit Realty Capital, Inc.

, to the consolidated financial statements.

Portfolio Discussion

Leasing Results

At March 31, 2024, we had 217 properties available for lease or sale out of 15,485 properties in our portfolio, which represents a 98.6% occupancy rate based on the number of properties in our portfolio.

Our property-level occupancy rates exclude properties with ancillary leases only, such as cell towers and billboards, properties with possession pending, and include properties owned by unconsolidated joint ventures.

At June 30, 2024, we had 185 properties available for lease or sale out of 15,450 properties in our portfolio, which represents a 98.8% occupancy rate based on the number of properties in our portfolio.

Our property-level occupancy rates exclude properties with ancillary leases only, such as cell towers and billboards, and properties with possession pending, and include properties owned by unconsolidated joint ventures.

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

Three months ended March 31, 2024

Three months ended June 30, 2024

Properties available for lease at March 31, 2024

Lease expirations (1)

Re-leases to same client (144)

Re-leases to new client (9)

Vacant dispositions (64)

Properties available for lease at June 30, 2024

Six months ended June 30, 2024

Properties available for lease at December 31, 2023

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Vacant dispositions (107)

Properties available for lease at March 31, 2024

Properties available for lease at June 30, 2024

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

(2) Includes 26 properties acquired through the merger with Spirit in January 2024.

During the three months ended March 31, 2024, the new annualized contractual rent on re-leases was $59.37 million, as compared to the previous annual rent of $56.91 million on the same units, representing a rent recapture rate of 104.3% on the units re-leased.

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

During the three months ended June 30, 2024, the new annualized contractual rent on re-leases was $33.73 million, as compared to the previous annual rent of $31.91 million on the same units, representing a rent recapture rate of 105.7% on the units re-leased.

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

During the six months ended June 30, 2024, the new annualized contractual rent on re-leases was $93.09 million, as compared to the previous annual rent of $88.82 million on the same units, representing a rent recapture rate of 104.8% on the units re-leased.

We re-leased 14 units to new clients without a period of vacancy, and 15 units to new clients after a period of vacancy.

As part of our re-leasing costs, we pay leasing commissions to unrelated, third-party real estate brokers consistent with the commercial real estate industry standard, and sometimes provide rent concessions to our clients.

We do not consider the collective impact of the leasing commissions or rent concessions to our clients to be material to our financial position or results of operations.

Disposition Strategy

During the six months ended June 30, 2024, we sold 122 properties with total net proceeds received of $201.9 million.

Our disposition strategy aims at further enhancing our portfolio and maximizing portfolio returns through the sale of select assets.

It remains a function of our proactive investment management approach, supported by several data-driven tools including our predictive analytics platform.

Appointment of New Chief Accounting Officer ("CAO")

Effective June 27, 2024, Neale Redington assumed his role as our Senior Vice President and CAO.

Impact of Inflation

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LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2024, we had $4.0 billion of liquidity, which consists of cash and cash equivalents of $680.2 million, unsettled ATM forward equity of $62.9 million, and $3.2 billion of availability under our $4.25 billion unsecured revolving credit facility, net of $806.5 million of borrowing on the revolving credit facility and after deducting $216.0 million in borrowings under our commercial paper programs.

As of June 30, 2024, we had $3.8 billion of liquidity, which consists of cash and cash equivalents of $442.8 million, unsettled ATM forward equity of $247.8 million, and $3.1 billion of availability under our $4.25 billion unsecured revolving credit facility, net of $846.6 million of borrowing on the revolving credit facility and after deducting $302.2 million in borrowings under our commercial paper programs.

We use our unsecured revolving credit facility as a liquidity backstop for the repayment of the notes issued under these programs.

Our primary cash obligations, for the current year and subsequent years, are included in the “Material Cash Requirements” table, which is presented later in this section.

We expect to fund our operating expenses and other short-term liquidity requirements, including property acquisitions and development costs, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs, and cash distributions to common stockholders, primarily through cash provided by operating activities, borrowings under our revolving credit facility, short-term term loans, and under our commercial paper programs, and through public securities offerings.

We expect to fund the next twelve months of obligations through a combination of the following:

• Cash and cash equivalents;

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• Additional borrowings under our revolving credit facility (after deducting outstanding borrowings under our commercial paper programs);

• Investment dispositions and/or credit investment repayments.

• Short-term loans;

• Investment dispositions;

• Credit investment repayments;

• Public securities offerings.

We believe that our cash and cash equivalents on hand, cash provided from operating activities, and borrowing capacity is sufficient to meet our liquidity needs for the next twelve months.

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Capitalization

As of March 31, 2024, our total market capitalization was $73.6 billion.

Total market capitalization consisted of $47.2 billion of common equity (based on the March 31, 2024 closing price on the NYSE of $54.10 and assuming the conversion of 1.8 million common units of Realty Income, L.P.), aggregate liquidation value (based on a redemption price of $25.00 per share) of 6.000% Series A Cumulative Redeemable Preferred Stock of $0.2 billion, and total outstanding borrowings of $26.3 billion on our revolving credit facility, commercial paper, term loans, mortgages payable, senior unsecured notes and bonds, and our proportionate share of unconsolidated entities' debt (excluding unamortized deferred financing costs, discounts, and premiums).

Our total debt and preferred stock to total market capitalization was 35.9% at March 31, 2024.

As of June 30, 2024, our total market capitalization was $72.6 billion.

Total market capitalization consisted of $46.1 billion of common equity (based on the June 30, 2024 closing price on the NYSE of $52.82 and assuming the conversion of 1.8 million common units of Realty Income, L.P.), aggregate liquidation value (based on a redemption price of $25.00 per share) of 6.000% Series A Cumulative Redeemable Preferred Stock of $0.2 billion, and total

outstanding borrowings of $26.4 billion on our revolving credit facility, commercial paper, term loans, mortgages payable, senior unsecured notes and bonds, and our proportionate share of unconsolidated entities' debt (excluding unamortized deferred financing costs, discounts, and premiums).

Our total debt and preferred stock to total market capitalization was 36.5% at June 30, 2024.

Universal Shelf Registration

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The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

As of March 31, 2024, there were approximately 1.2 million shares of unsettled common stock subject to forward sale confirmations through our ATM program, representing approximately $62.9 million in expected net proceeds, which have been executed at a weighted average price of $53.70 per share (assuming full physical settlement of all outstanding shares of common stock, subject to such forward sale agreements and certain assumptions made with respect to settlement dates).

During the three months ended March 31, 2024, we settled approximately 9.6 million shares of common stock previously sold pursuant to forward sale agreements through our ATM program for approximately $543.5 million of net proceeds.

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

As of June 30, 2024, there were approximately 4.7 million shares of unsettled common stock subject to forward sale confirmations through our ATM program, representing approximately $247.8 million in expected net proceeds, which have been executed at a weighted average price of $52.87 per share (assuming full physical settlement of all outstanding shares of common stock, subject to such forward sale agreements and certain assumptions made with respect to settlement dates).

During the six months ended June 30, 2024, we settled approximately 9.6 million shares of common stock previously sold pursuant to forward sale agreements through our ATM program for approximately $543.3 million of net proceeds.

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.

Debt Financing Activities

At March 31, 2024, our total outstanding borrowings of revolving credit facility, commercial paper, term loans, mortgages payable, and senior unsecured notes and bonds were $25.6 billion, with a weighted average maturity of 5.9 years and a weighted average interest rate of 3.9%.

As of March 31, 2024, approximately 94% of our total debt was fixed rate debt.

See notes 7 through 10 to the consolidated financial statements for additional information about our outstanding debt, along with our debt financing activities during the three months ended March 31, 2024 below.

At June 30, 2024, our total outstanding borrowings of revolving credit facility, commercial paper, term loans, mortgages payable, and senior unsecured notes and bonds were $25.7 billion, with a weighted average maturity of 5.6 years and a weighted average interest rate of 3.9%.

As of June 30, 2024, approximately 94% of our total debt was fixed rate debt.

See notes 7 through 10 to the consolidated financial statements for additional information about our outstanding debt, along with our debt financing activities during the six months ended June 30, 2024 below.

Note Issuances

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

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

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

January 2024 February 2029 $ 450.0 99.23 % 4.923 %

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Note Repayment

During the three months ended March 31, 2024, we repaid the following notes, plus accrued and unpaid interest upon maturity (in millions):

Note Repayment Date of Issuance Maturity Date Principal amount

During the six months ended June 30, 2024, we repaid the following notes, plus accrued and unpaid interest upon maturity (in millions):

Note Repayment Date of Repayment Maturity Date Principal amount

February 2014 February 2024 $ 500.0

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

Term Loan Issuances

In January 2024, in connection with our merger with Spirit, we entered into an amended and restated term loan agreement (which replaced Spirit's then-existing term loans with various lenders).

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”).

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.

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.

Term Loan Redemption

During the three months ended March 31, 2024, we repaid our $250.0 million senior unsecured term loan in full upon maturity.

Mortgages Repaid

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.

During the six months ended June 30, 2024, we repaid our $250.0 million senior unsecured term loan in full upon maturity.

Mortgage Repayments

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.

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

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

These calculations, which are not based on accounting principles generally accepted in the United States of America ("U.S.

GAAP"), are presented to investors to show our ability to incur additional debt under the terms of our senior notes and bonds as well as to disclose our current compliance with such covenants and are not measures of our liquidity or performance.

The actual amounts as of March 31, 2024, are:

The actual amounts as of June 30, 2024, are:

Note Covenants

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

(i) the incurrence of any debt (as defined in the covenants) incurred by us since the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other debt since the first day of such four-quarter period), (ii) the repayment or retirement of any of our debt since the first day of such four-quarter period, and (iii) any acquisition or disposition by us of any asset or group since the first day of such four quarters had in each case occurred on April 1, 2023 and subject to certain additional adjustments.

Such pro forma ratio has been prepared on the basis required by that debt service covenant, reflects various estimates and assumptions and is subject to other uncertainties, and therefore does not purport to reflect what our actual debt service coverage ratio would have been had transactions referred to in clauses (i), (ii) and (iii) of the preceding sentence occurred as of April 1, 2023, nor does it purport to reflect our debt service coverage ratio for any future period.

The following is our calculation of debt service and fixed charge coverage at March 31, 2024 (in thousands, for trailing twelve months):

(i) the incurrence of any debt (as defined in the covenants) incurred by us since the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other debt since the first day of such four-quarter period), (ii) the repayment or retirement of any of our debt since the first day of such four-quarter period, and (iii) any acquisition or disposition by us of any asset or group since the first day of such four quarters had in each case occurred on July 1, 2023 and subject to certain additional adjustments.

Such pro forma ratio has been prepared on the basis required by that debt service covenant, reflects various estimates and assumptions and is subject to other uncertainties, and therefore does not purport to reflect what our actual debt service coverage ratio would have been had transactions referred to in clauses (i), (ii) and (iii) of the preceding sentence occurred as of July 1, 2023, nor does it purport to reflect our debt service coverage ratio for any future period.

The following is our calculation of debt service and fixed charge coverage at June 30, 2024 (in thousands, for trailing twelve months):

Net income attributable to the Company

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GAAP operating performance measures.

Below is our calculation of fixed charges at March 31, 2024 (in thousands, for the trailing twelve months):

Below is our calculation of fixed charges at June 30, 2024 (in thousands, for the trailing twelve months):

Income available for debt service, as defined

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The borrowing interest rates under our revolving credit facility are based upon our ratings assigned by credit rating agencies.

As of March 31, 2024, we were assigned the following investment grade corporate credit ratings on our senior unsecured notes and bonds:

As of June 30, 2024, we were assigned the following investment grade corporate credit ratings on our senior unsecured notes and bonds:

Moody’s Investors Service has assigned a rating of A3 with a “stable” outlook and Standard & Poor’s Ratings Group has assigned a rating of A- with a “stable” outlook.

In addition, we were assigned the following ratings on our commercial paper at March 31, 2024:

In addition, we were assigned the following ratings on our commercial paper at June 30, 2024:

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

Based on our credit agency ratings as of March 31, 2024, interest rates under our credit facility for U.S.

borrowings would have been 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 drawn pricing of 0.95% over SOFR, for British Pound Sterling borrowings, at the Sterling Overnight Indexed Average (“SONIA”), plus 0.725% with a SONIA adjustment charge of 0.0326% and a revolving credit facility fee of 0.125%, for all-in drawn pricing of 0.8826% over SONIA, and for Euro Borrowings at one-month Euro Interbank Offered Rate (“EURIBOR”), plus 0.725%, and a revolving credit facility fee of 0.125%, for all-in drawn pricing of 0.85% over one-month EURIBOR.

Based on our credit agency ratings as of June 30, 2024, interest rates under our credit facility for U.S.

borrowings would have been 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 drawn pricing of 0.95% over SOFR, for GBP borrowings, at SONIA, plus 0.725% with a SONIA adjustment charge of 0.0326% and a revolving credit facility fee of 0.125%, for all-in drawn pricing of 0.8826% over SONIA, and for EUR Borrowings at one-month EURIBOR, plus 0.725%, and a revolving credit facility fee of 0.125%, for all-in drawn pricing of 0.85% over one-month EURIBOR.

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

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Material Cash Requirements

The following table summarizes the maturity of each of our obligations as of March 31, 2024 (dollars in millions):

The following table summarizes the maturity of each of our obligations as of June 30, 2024 (dollars in millions):

Credit Facility and Commercial Paper (1)

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2027 — 500.0 22.3 2,321.3 668.2 12.9 30.5 4.4 3,559.6

2028 — — 1.3 2,499.8 564.3 10.6 27.4 — 3,103.4

Thereafter — — 2.4 13,395.6 2,506.8 311.8 362.9 3.4 16,582.9

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

At March 31, 2024, there were $806.5 million of outstanding borrowings under our revolving credit facility.

Commercial paper programs outstanding were $216.0 million at March 31, 2024, which mature between April 2024 and May 2024.

At June 30, 2024, there were $846.6 million of outstanding borrowings under our revolving credit facility.

Commercial paper programs outstanding were $302.2 million at June 30, 2024, which matured in July 2024.

(2) The maturity date for our 2023 term loans assumes a twelve-month extension available at the company's option is exercised.

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(6) “Other” consists of $393.9 million of commitments under construction contracts, and $91.5 million for tenant improvements, re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

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

Investments in Unconsolidated Entities

As of March 31, 2024, our pro-rata share of secured debt of unconsolidated entities was approximately $659.2 million.

As of June 30, 2024, our pro-rata share of secured debt of unconsolidated entities was approximately $659.2 million.

DIVIDEND POLICY

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Distributions are paid monthly to the limited partners holding common units of Realty Income, L.P., each on a per unit basis that is equal to the amount paid per share to our common stockholders.

In order to maintain our status as a REIT for federal income tax purposes, we generally are required to distribute dividends to our stockholders aggregating annually at least 90% of our taxable income (excluding net capital gains), and we are subject to income tax to the extent we distribute less than 100% of our taxable income (including net capital gains).

In order to maintain our status as a real estate investment trust ("REIT") for federal income tax purposes, we generally are required to distribute dividends to our stockholders aggregating annually at least 90% of our taxable income (excluding net capital gains), and we are subject to income tax to the extent we distribute less than 100% of our taxable income (including net capital gains).

In 2023, our cash distributions to common stockholders totaled $2.11 billion, or approximately 115.9% of estimated taxable income of $1.82 billion.

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Furthermore, we believe our cash on hand and funds from operations are sufficient to support our current level of cash distributions to our stockholders.

We distributed $0.7695 per share to stockholders during the three months ended March 31, 2024, representing 74.8% of our diluted Adjusted Funds from Operations Available to Common Stockholders ("AFFO") per share of $1.03.

We distributed $1.5460 per share to stockholders during the six months ended June 30, 2024, representing 74.0% of our diluted Adjusted Funds from Operations Available to Common Stockholders ("AFFO") per share of $2.09.

The preferred stockholders receive cumulative distributions at a rate of 6.000% per annum on the $25.00 per share liquidation preference (equivalent to $1.50 per annum per share).

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RESULTS OF OPERATIONS

The following is a comparison of our results of operations for the three months ended March 31, 2024 and 2023.

The following is a comparison of our results of operations for the three and six months ended June 30, 2024 and 2023.

Total Revenue

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

Three months ended March 31,

2024 2023 Change

Three months ended

June 30, Six months ended

2024 2023 Change 2024 2023 Change

Rental (excluding reimbursable)

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Rental Revenue (excluding reimbursable)

The table below summarizes our rental revenue (excluding reimbursable) for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Number of Properties Three months ended March 31,

2024 2023 Change

The table below summarizes the increase in rental revenue (excluding reimbursable) in the three and six months ended June 30, 2024 compared to the same periods in 2023 (dollars in thousands):

Three months ended

June 30, Six months ended

Number of Properties 2024 2023 Change Number of Properties 2024 2023 Change

Properties acquired during 2024 & 2023

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Constant currency adjustment (2)

N/A 504 (3,352) 3,856

N/A (39) (632) 593 N/A 708 (3,883) 4,591

Properties sold during and prior to 2024

417 1,850 10,123 (8,273) 250 3,670 11,991 (8,321)

Straight-line rent and other non-cash adjustments N/A 695 1,851 (1,156)

Straight-line rent and other non-cash adjustments N/A 4,919 444 4,475 N/A 5,633 (6,013) 11,646

Vacant rents, development and other (3)

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Other excluded revenue (4)

N/A 189 2,195 (2,006)

N/A 15,868 (278) 16,146 N/A 16,057 1,917 14,140

Spirit rental revenue (5)

N/A — (181,203) 181,203 N/A — — —

Totals $ 1,204,160 $ 907,551 $ 296,609 $ 2,339,615 $ 1,773,259 $ 566,356

(1) The same store rental revenue percentage increase for the three months ended March 31, 2024 as compared to the same period in 2023 is 0.8%.

(2) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of March 31, 2024.

(1) The same store rental revenue percentage increased by 0.2% and 0.4% for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively.

(2) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of June 30, 2024.

None of the properties in France, Germany, Ireland or Portugal met our same store pool definition for the periods presented.

In addition, the same store pool excludes properties assumed on January 23, 2024 as a result of our merger with Spirit.

(3) Relates to the aggregate of (i) rental revenue from 318 properties that were available for lease during part of 2024 or 2023, and (ii) rental revenue for 42 properties under development or completed developments that do not meet our same store pool definition for the periods presented.

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

(3) Relates to the aggregate of (i) rental revenue from 302 and 288 properties that were available for lease during part of 2024 or 2023 for the three and six months ended June 30, 2024, and (ii) rental revenue for 56 and 47 properties under development or completed developments that do not meet our same store pool definition for the periods presented three and six months ended June 30, 2024.

(4) Primarily consists of lease termination fees of $16.3 million and $16.8 million for the three and six months ended June 30, 2024, respectively, recognized as reimbursements for tenant improvements and rental revenue.

(5) Amounts for the three months ended June 30, 2023 represent rental revenue from Spirit properties, which were not included in our financial statements prior to the close of the merger on January 23, 2024.

For purposes of determining the same store rent property pool, we include all properties that were owned for the entire year-to-date period, for both the current and prior year, except for properties during the current or prior year that;

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

Beginning with the second quarter of 2024, properties acquired through the merger with Spirit were considered under each element of our Same Store Pool criteria, except for the requirement that the property be owned for the full comparative period.

If the property was owned by Spirit for the full comparative period and each of the other criteria were met, the property was included in our Same Store Pool.

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

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base rent increases tied to inflation (typically subject to ceilings), percentage rent based on a percentage of the clients’ gross sales, fixed increases, or a combination of two or more of the aforementioned rent provisions.

Rent based on a percentage of our client's gross sales, or percentage rent, was $5.3 million and $4.1 million for the three months ended March 31, 2024 and 2023, respectively, which represents less than 1% of rental revenue.

At March 31, 2024, our portfolio of 15,485 properties was 98.6% leased with 217 properties available for lease or sale, as compared to 98.6% leased with 193 properties available for lease at December 31, 2023, and 99.0% leased with 131 properties available for lease at March 31, 2023.

Rent based on a percentage of our clients' gross sales, or percentage rent, was $2.4 million and $1.7 million for the three months ended June 30, 2024 and 2023, respectively, and $7.7 million and $5.8 million for the six months ended June 30, 2024 and 2023, respectively.

Percentage rent represents less than 1.0% of rental revenue.

At June 30, 2024, our portfolio of 15,450 properties was 98.8% leased with 185 properties available for lease or sale, as compared to 98.6% leased with 193 properties available for lease at December 31, 2023, and 99.0% leased with 137 properties available for lease at June 30, 2023.

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

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A number of our leases provide for contractually obligated reimbursements from clients for recoverable real estate taxes and operating expenses.

The increase in contractually obligated reimbursements by our clients for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily due to higher recoverable real estate taxes and higher recoverable common area maintenance expenses from overall portfolio growth.

Contractually obligated reimbursements by our clients for the three months ended June 30, 2024 decreased by $7.2 million as compared with the same period in 2023, primarily due to lower real estate taxes from a modification of tax remittance terms with one of our clients in the prior year period.

For the six months ended June 30, 2024, contractually obligated reimbursements increased $6.0 million as compared with the same period in 2023, primarily due to the growth of our portfolio due to acquisitions.

Other Revenue

Other revenue primarily relates to interest income recognized on financing receivables for certain leases with above-market terms and interest income recognized on client loans and preferred equity investments.

The increase in other revenue for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily due to higher interest income on financing receivables of $12.6 million driven by an increase in recent sale-leaseback transactions with above-market lease terms, in addition to an increase of $20.4 million from interest income earned on loans and preferred equity investments.

Other revenue increased by $30.8 million and $64.0 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively, primarily due to an increase of $24.0 million and $44.1 million from interest income earned on loans and preferred equity investments for the three and six months ended June 30, 2024, respectively, in addition to higher interest income on financing receivables of $6.3 million and $18.9 million for three and six months ended June 30, 2024, respectively, driven by an increase in recent sale-leaseback transactions with above-market lease terms.

Total Expenses

The following summarizes our total expenses (in thousands):

Three months ended March 31,

2024 2023 Change

Three months ended

June 30, Six months ended

2024 2023 Change 2024 2023 Change

Depreciation and amortization $ 605,570 $ 472,278 $ 133,292 $ 1,186,634 $ 923,755 $ 262,879

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General and administrative expenses as a percentage of total revenue (1)

3.6 % 4.0 % 3.5 % 3.9 %

Property expenses (excluding reimbursable) as a percentage of total revenue (1)

1.5 % 0.7 % 1.5 % 0.9 %

(1) Excludes rental revenue (reimbursable).

Depreciation and Amortization

The increase in depreciation and amortization for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily due to overall portfolio growth from acquisitions.

Depreciation and amortization increased by $133.3 million and $262.9 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively, primarily due to the Merger with Spirit and the acquisition of properties in 2024 and 2023.

Interest Expense

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

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Interest on our credit facility, commercial paper, term loans, mortgages, senior unsecured notes and bonds, and interest rate swaps

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Weighted average interest rates 4.02 % 3.84 % 4.03 % 3.71 %

The increase in interest expense for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily due to higher average debt and weighted average interest.

Interest expense increased by $63.1 million and $149.6 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively, primarily due to the following:

(i) issuance of EUR-denominated notes in July 2023, (ii) issuance of GBP-denominated notes in December 2023, (iii) issuance of USD notes in January 2024, (iv) non-cash interest expense related to the discount of Spirit notes assumed in the merger, and (v) higher average balances and interest rates on the credit facility and commercial paper borrowings, all of which were partially offset by an increase in capitalized interest.

See notes to the accompanying consolidated financial statements for additional information regarding our indebtedness.

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Property expenses (excluding reimbursable) consist of costs associated with properties available for lease, non-net-leased properties and general portfolio expenses and include, but are not limited to, property taxes, maintenance, insurance, utilities, property inspections and legal fees.

The increase in property expenses (excluding reimbursable) for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily impacted by higher property taxes, repairs and maintenance, and property insurance.

Property expenses (excluding reimbursable) increased by $12.3 million and $19.1 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively, and was primarily impacted by higher property taxes, repairs and maintenance, and property insurance.

Property Expenses (reimbursable)

Property expenses (reimbursable) consist of reimbursable property taxes and operating costs paid on behalf of our clients.

The increase in property expenses (reimbursable) for the three months ended March 31, 2024 is proportional to overall portfolio growth.

Property expenses (reimbursable) decreased by $7.2 million and increased by $6.0 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively, consistent with changes in our contractually obligated reimbursements billed.

General and Administrative Expenses

General and administrative expenses are expenditures related to the operations of our company, including employee-related costs, professional fees, and other general overhead costs associated with running our business.

The increase in general and administrative expenses for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily due to higher payroll-related compensation costs associated with the growth of the company.

General and administrative expenses increased by $8.2 million and $14.9 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively, primarily due to higher employee costs compared to the prior year.

Provisions for Impairment

Provisions for impairment consist of impairment on long-lived assets and allowances for credit losses on financing receivables and loans.

The increase in impairment for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily due to two office properties which were acquired and retained in our merger with VEREIT, Inc.

("VEREIT") in 2021, summarized in the following table (dollars in millions):

Three months ended March 31,

Provisions for impairment for the three and six months ended June 30, 2024 relate primarily to two office properties which were acquired and retained in our merger with VEREIT, Inc.

("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, summarized in the following table (dollars in millions):

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.

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, respectively.

Merger and Integration-Related Costs

Merger and integration-related costs consist of advisory fees, attorney fees, accountant fees, and incremental and non-recurring costs necessary to convert data and systems, retain employees, and otherwise enable us to operate the acquired business or assets efficiently.

In conjunction with our merger with 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.

For the three months ended March 31, 2023, we incurred $1.3 million of merger and integration-related transaction costs in conjunction with our VEREIT merger in November 2021.

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

For the three and six months ended June 30, 2023, we incurred $0.3 million and $1.6 million of merger and integration-related transaction costs, respectively, in conjunction with our merger with VEREIT in November 2021.

Gain on Sales of Real Estate

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

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Number of properties sold 76 29 122 55

1 unchanged sentence

Gain on sales of real estate $ 25.2 $ 7.8 $ 41.7 $ 12.1

Foreign Currency and Derivative Gain, Net

Foreign Currency and Derivative Gain (Loss), Net

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

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Derivative gain and loss are primarily related to mark-to-market adjustments on derivatives that do not qualify for hedge accounting and settlement of designated derivatives reclassified from Accumulated Other Comprehensive Income ("AOCI").

Foreign currency and derivative gain, net was $4.0 million and $10.3 million, for the three months ended March 31, 2024 and 2023, respectively, primarily due to foreign currency fluctuations related to the remeasurement of intercompany debt.

Equity in (Losses) Earnings of Unconsolidated Entities

Equity in (losses) earnings for the three months ended March 31, 2024 primarily relates to investments made in two unconsolidated joint ventures during the fourth quarter of 2023.

See note 5, Investments in Unconsolidated Entities , to the consolidated financial statements for further details.

Foreign currency and derivative gain (loss), net for the three and six months ended June 30, 2024 was a gain of $0.5 million and $4.6 million, respectively, primarily due to derivative gains reclassified from AOCI and undesignated foreign currency swaps offsetting losses on remeasurement of net foreign denominated liabilities.

Foreign currency and derivative gain (loss), net was a loss of $2.6 million for the three months ended June 30, 2023 and a gain of $7.8 million for the six months ended June 30, 2023, respectively, primarily due to foreign currency fluctuations related to the remeasurement of intercompany debt as well as on undesignated foreign currency exchange swap agreements.

Equity in Earnings of Unconsolidated Entities

Equity in earnings for the three and six months ended June 30, 2024 primarily relates to our share of earnings in joint ventures that we made investments in during the fourth quarter of 2023.

Equity in earnings for the three and six months ended June 30, 2023 is attributable to distributions in excess of our basis related to three equity method investments acquired in our merger with VEREIT in November of 2021, all of which were sold in 2022.

Following the sale of the properties, distributions primarily resulted from the release of holdbacks from property sales, refunds from taxing authorities and distributions of operating cash.

Other Income, Net

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

The increase of $2.7 million for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily due to an increase in miscellaneous revenue.

The increase of $3.1 million and $5.8 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively, is primarily due to an increase in interest earned on cash and cash equivalents attributable to higher rates and average balances.

Income taxes primarily consist of international income taxes accrued or paid by us and our subsidiaries, as well as state and local taxes.

The increase in income taxes for the three months ended March 31, 2024 as compared with the same period in 2023 is primarily attributable to higher taxable income in the U.K.

The increase of $2.7 million and $6.3 million in income taxes for the three and six months ended June 30, 2024 as compared with the same periods in 2023, respectively, is primarily attributable to higher taxable income in the U.K.

NON-GAAP FINANCIAL MEASURES

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

Our definition of “Adjusted EBITDA re ” is generally consistent with the Nareit definition, other than our adjustments to remove foreign currency and derivative gain and loss, excluding gain and loss from the settlement of foreign currency forwards not designated as hedges (which is consistent with our previous calculations of "Adjusted EBITDA").

We define Adjusted EBITDAre, a non-GAAP financial measure, for the most recent quarter as earnings (net income) before (i) interest expense, including non-cash loss (gain) on swaps, (ii) income and franchise taxes, (iii) gain on extinguishment of debt, (iv) real estate depreciation and amortization, (v) provisions for impairment, (vi) merger and integration-related costs, (vii) gain on sales of real estate, (viii) foreign currency and derivative gain and loss, net, (ix) gain on settlement of foreign currency forwards, and (x) our proportionate share of adjustments from unconsolidated entities.

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

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

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

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

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

Three months ended March 31,

Three months ended

Net income $ 260,968 $ 197,153

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Gain on sales of real estate (25,153) (7,824)

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

Foreign currency and derivative (gain) loss, net (511) 2,552

Proportionate share of adjustments from unconsolidated entities 16,911 (411)

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As described above, the Annualized Pro Forma Adjustments, which include transaction accounting adjustments in accordance with U.S.

GAAP, consist of adjustments to incorporate the Adjusted EBITDA re from properties we acquired or stabilized during the applicable quarter and remove Adjusted EBITDA re from properties we disposed of during the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the period, consistent with the requirements of Article 11 of Regulation S-X.

GAAP, consist of adjustments to incorporate the Adjusted EBITDA re from investments we acquired or stabilized during the applicable quarter and remove Adjusted EBITDA re from properties we disposed of during the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the period, consistent with the requirements of Article 11 of Regulation S-X.

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

Three months ended March 31,

Annualized pro forma adjustments from properties acquired or stabilized $ 83,152 $ 85,835

Annualized pro forma adjustments from properties disposed (953) (2,820)

Three months ended

Annualized pro forma adjustments from investments acquired or stabilized $ 39,329 $ 87,510

Annualized pro forma adjustments from investments disposed (5,516) 202

Annualized Pro Forma Adjustments $ 33,813 $ 87,712

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

Three months ended March 31,

2024 2023 % Change

Three months ended

June 30, Six months ended

2024 2023 % Change 2024 2023 % Change

FFO available to common stockholders

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Also presented is information regarding distributions paid to common stockholders and the weighted average number of common shares used for the basic and diluted computation per share (dollars in thousands, except per share amounts):

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

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

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

Three months ended March 31,

2024 2023 % Change

Three months ended

June 30, Six months ended

2024 2023 % Change 2024 2023 % Change

AFFO available to common stockholders

9 unchanged sentences

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

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

8 unchanged sentences

Straight-line impact of cash settlement on interest rate swaps (3)

1,797 1,797 3,595 3,595

Leasing costs and commissions (2,129) (5,032) (3,056) (5,476)

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Diluted AFFO $ 922,661 $ 673,119 $ 1,786,891 $ 1,325,279

AFFO per common share:

Basic $ 1.03 $ 0.99

Diluted $ 1.03 $ 0.98

AFFO per common share, basic and diluted $ 1.06 $ 1.00 $ 2.09 $ 1.98

Distributions paid to common stockholders $ 676,215 $ 515,091 $ 1,312,714 $ 1,012,336

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PROPERTY PORTFOLIO INFORMATION

At March 31, 2024, out of the 15,485 properties that we owned or held interests in, 15,268 properties were primarily leased under net lease agreements.

At June 30, 2024, out of the 15,450 properties that we owned or held interests in, 15,265 properties were primarily leased under net lease agreements.

A net lease typically requires the client to be responsible for monthly rent and certain property operating expenses including property taxes, insurance, and maintenance.

21 unchanged sentences

Property Type Composition

The following table sets forth certain property type information regarding our property portfolio as of March 31, 2024 (dollars in thousands):

The following table sets forth certain property type information regarding our property portfolio as of June 30, 2024 (dollars in thousands):

Property Type

4 unchanged sentences

Industrial 560 114,395,100 705,061 14.5

2 5,053,400 159,695 3.3

Gaming 2 5,053,400 159,695 3.3

69 5,095,200 136,647 2.8

Totals 15,450 335,298,700 $ 4,846,032 100.0 %

(1) Excludes 2,962 acres of leased land categorized as agriculture at March 31, 2024.

(2) Includes our pro rata share of leasable square feet of properties owned by unconsolidated joint ventures.

(3) "Other" primarily includes 27 properties classified as agriculture with $38.1 million in annualized contractual rent, 14 properties classified as office with $43.3 million in annualized contractual rent, and 21 properties classified as country club with $22.1 million in annualized contractual rent.

(1) Represents leasable building square footage and includes our portfolio of unconsolidated joint ventures based on ownership percentage.

Excludes 2,962 acres of leased land categorized as agriculture at June 30, 2024.

(2) "Other" primarily includes 15 properties classified as office with $45.7 million in annualized contractual rent, 27 properties classified as agriculture with $38.1 million in annualized contractual rent, three properties classified as data centers with $25.8 million in annualized contractual rent, and 21 properties classified as country clubs with $23.2 million in annualized contractual rent, as well as one land parcel under development.

Client Diversification

The following table sets forth the 20 largest clients in our property portfolio, expressed as a percentage of total portfolio annualized contractual rent, which does not give effect to deferred rent, at March 31, 2024:

Client Number of

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therefore, the individual percentages may not sum to the total.

Excludes non-rental contractual income on loans and preferred equity investments.

Lease Expirations

The following table sets forth certain information regarding the timing of the lease term expirations in our portfolio (excluding rights to extend a lease at the option of the client) and their contribution to total portfolio annualized contractual rent as of March 31, 2024 (dollars in thousands):

Total Portfolio (1)

22 unchanged sentences

Geographic Diversification

The following table sets forth certain geographic information regarding our property portfolio as of March 31, 2024 (dollars in thousands):

The following table sets forth certain geographic information regarding our property portfolio as of June 30, 2024 (dollars in thousands):

Percent Leased

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There have been no material changes to the Critical Accounting Policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

This summary should be read in conjunction with the more complete discussion of our accounting policies and procedures included in note 1, Summary of Significant Accounting Policies and Procedures and New Accounting Standards, to our consolidated financial statements in our Annual Report.

This summary should be read in conjunction with the more complete discussion of our accounting policies and procedures included in note 1, Summary of Significant Accounting Policies, to our consolidated financial statements in our Annual Report.

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 2. Management’s Discussion and Analysis