What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-02-25 compared with 2024-02-21 · 70 added, 81 removed, 275 unchanged (35% of the section changed)

In this Annual Report on Form 10-K, unless the context otherwise requires, references to “Realty Income,” the “Company,” “we,” “our” or “us” refer to Realty Income Corporation and our subsidiaries.

Realty Income, The Monthly Dividend Company ® , is an S&P 500 company and member of the S&P 500 Dividend Aristocrats ® index for having increased its dividend every year for over 25 consecutive years.

We invest in people and places to deliver dependable monthly dividends that increase over time.

We are structured as a real estate investment trust ("REIT"), requiring us to annually distribute at least 90% of our taxable income (excluding net capital gains) in the form of dividends to our stockholders.

The monthly dividends are supported by the cash flow generated from real estate in which we own or hold interests in under long-term net lease agreements with our commercial clients.

Realty Income was founded in 1969, and listed on the New York Stock Exchange ("NYSE":

Realty Income (NYSE:

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 as of December 31, 2024, have a portfolio of over 15,600 properties in all 50 states of the United States ("U.S."), the United Kingdom ("U.K."), and six other countries in Europe.

We are known as “The Monthly Dividend Company ® ” and have a mission to invest in people and places to deliver dependable monthly dividends that increase over time.

Since our founding, we have declared 656 consecutive monthly dividends and are a member of the S&P 500 Dividend Aristocrats ® index for having increased our dividend for the last 30 consecutive years.

Over the past 56 years, Realty Income has been acquiring and managing freestanding commercial properties that generate rental revenue under long-term net lease agreements with our commercial clients.

As of December 31, 2023, we owned or held interests in 13,458 properties located in the United States ("U.S.") and Europe.

On January 23, 2024, we closed on our previously announced merger with Spirit Realty Capital, Inc.

We are structured as a real estate investment trust ("REIT") requiring us annually to distribute at least 90% of our taxable income (excluding net capital gains) in the form of dividends to our stockholders.

On January 23, 2024, we closed on our merger with Spirit Realty Capital, Inc.

("Spirit", formerly NYSE:

SRC), which is further described in note 21, Subsequent Events, to the consolidated financial statements.

SRC), which is further described in note 2 , Merger with Spirit Realty Capital, Inc.

, to the consolidated financial statements.

The Spirit portfolio consisted of 2,018 U.S.

retail, industrial, and other properties across 49 states.

With assets that are highly complementary to our existing portfolio, this transaction enhances the diversification and depth our real estate portfolio and will allow us to strengthen our longstanding relationships with existing clients and curate new ones.

This transaction enhanced the diversification and depth our real estate portfolio and allowed us to strengthen our longstanding relationships with existing clients and curate new ones.

BUSINESS PHILOSOPHY AND STRATEGY

4 unchanged sentences

We believe that a portfolio of properties under long-term net lease agreements with our commercial clients generally produces a more predictable income stream than many other types of real estate portfolios, while continuing to offer the potential for growth in rental income.

Diversification is also a key component of our investment philosophy.

Diversification is a key component of our investment philosophy.

We believe that diversification of the portfolio by client, industry, geography, and property type leads to more consistent and predictable income for our stockholders by reducing vulnerability that can come with any single concentration.

Our investment activities have led to a diversified property portfolio and as of December 31, 2024, we owned or held interests in 15,621 properties located in all 50 U.S.

states, Puerto Rico, the United Kingdom ("U.K."), France, Germany, Ireland, Italy, Portugal, and Spain and doing business in 86 industries.

As we look to continue to expand geographically across Europe, we focus upon building relationships with new multinational clients that seek a real estate partner with an expanding geographic footprint.

states, the U.K., France, Germany, Ireland, Italy, Portugal, and Spain with clients doing business in 89 industries.

As we look to continue to expand our platform globally, we focus upon building relationships with new multinational clients that seek a real estate partner with an expanding geographic footprint.

Investment Strategy

37 unchanged sentences

If a property is rejected by our client during reorganization, we own the property and can either lease it to a new client or sell the property.

In addition, we believe that the risk of default on real estate leases

can be further mitigated by monitoring the performance of our clients’ individual locations and considering whether to proactively sell locations that meet our criteria for disposition.

In addition, we believe that the risk of default on real estate leases can be further mitigated by monitoring the performance of our clients’ individual locations and considering whether to proactively sell locations that meet our criteria for disposition.

We conduct comprehensive reviews of the business segments and industries in which our clients operate.

In addition, prior to entering any transaction, our credit research team conducts a review of a client’s credit quality.

In addition, prior to entering into any transaction, our credit research team conducts a review of a client’s credit quality.

The information reviewed may include reports and filings, including any public credit ratings, financial statements, debt and equity analyst reports, and reviews of corporate credit spreads, stock prices, market capitalization, and other financial metrics.

11 unchanged sentences

We also regularly analyze our portfolio with a view towards optimizing its returns and enhancing its overall credit quality.

Our active asset management strategy pursues asset sales when we believe the reinvestment of the sale proceeds will:

Our disposition strategy remains a function of our active investment management approach, supported by several data-driven tools, and aims at further enhancing our portfolio and maximizing portfolio returns through the sale of select assets when we believe the reinvestment of the sale proceeds will:

• Generate higher returns;

4 unchanged sentences

Capital Philosophy

Our goal is to deliver dependable monthly dividends to our stockholders that increase over time.

Historically, we have met our principal short-term and long-term capital needs, including the funding of high-quality real estate acquisitions, property development, and capital expenditures, by issuing common stock, preferred stock, long-term unsecured notes and term loan borrowings.

Over the long term, we believe that common stock should be the majority of our capital structure.

We may issue common stock when we believe our share price is at a level that allows for the proceeds of an offering to be accretively invested into additional properties or to permanently finance properties that were initially financed by our revolving credit facility, commercial paper programs, or shorter-term debt securities.

However, we cannot assure you that we will have access to the capital markets at all times and at terms that are acceptable to us.

A primary objective of Realty Income is to deliver dependable monthly dividends to our stockholders that increase over time.

To achieve this goal, we make a variety of capital allocation decisions, including with respect to our investments, leasing and releasing terms, and property development among other capital expenditures.

We fund these expenditures by utilizing internally generated cash flow, dispositions, debt and equity issuances and term loan borrowings.

Over the long term, we believe that common stock should represent the majority of our capital structure.

We may issue common stock when we believe our share price supports accretive deployment of proceeds into additional properties, to permanently finance properties that were initially financed by our revolving credit facility, commercial paper programs, or shorter-term debt securities, and to repay or refinance debt.

In addition, we continue to explore capital diversification initiatives, including the establishment of a fund business which we believe has the potential to expand our alternatives for sources of future capital.

However, we cannot assure you that we will have access to these sources of capital at all times and at terms that are acceptable to us.

Human Capital

12 unchanged sentences

To extend the scope of our talent acquisition efforts, we have implemented various initiatives, including college and high school internship programs.

Our comprehensive approach encompasses a wide range of strategies, such as engaging with affinity associations, utilizing targeted job advertisements, employing sourcing software that emphasizes diversity criteria, and fostering employee referrals.

Our comprehensive approach encompasses a wide range of strategies, such as engaging with affinity associations, and fostering employee referrals.

These measures ensure that we continually attract and embrace a diverse pool of candidates.

1 unchanged sentence

By encouraging our current employees to expand their skills and take on new challenges, we tap into a rich reservoir of potential that enhances our workforce's capabilities and reinforces our corporate culture.

We offer leadership development programs and train on critical topics such as ethics, insider trading, anti-discrimination and harassment, cybersecurity, diversity, equality and inclusion, safety, and other Company policies.

We offer leadership development programs and train on critical topics such as ethics, insider trading, anti-discrimination and harassment, anti-bribery, consumer privacy, cybersecurity, workplace violence prevention, safety, and other Company policies.

We provide professional development opportunities for One Team members and provide assistance and support to employees who are pursuing job-related licenses, certifications, and continuing education.

7 unchanged sentences

Information on our website, including our Sustainability Report, is not incorporated by reference into this annual report.

Diversity, Equality and Inclusion (DE&I)

We believe that the diversity of our One Team and our dedication to inclusion are foundational to our success.

We continue DE&I training and learning sessions to build employee awareness and action while also encouraging open discussion amongst colleagues.

Our DE&I initiatives are designed to enhance knowledge, deepen understanding, facilitate conversations on critical DE&I topics, encourage inclusive interactions, and cultivate a sense of belonging.

In addition, we conduct pay equity analyses to help ensure equitable pay for employees who perform similar work under similar circumstances, regardless of gender, race, or ethnicity.

Employee Health, Safety and Wellbeing

We prioritize the health, safety, and wellbeing of our team members.

Our wellbeing program is designed to empower employees through a range of activities and educational initiatives that contribute to both their personal and professional development.

Our wellbeing program is thoughtfully designed to empower employees by fostering personal and professional growth through engaging activities and educational initiatives.

Centered around five key pillars—purpose, social connection, financial health, community engagement, and physical wellness—our program provides a holistic approach to enhancing overall wellbeing.

In fostering a healthy work environment, we promote work-life balance by offering flexible schedules and providing discounted fitness programs, paid family leave, parental leave, onsite lactation rooms, an infant-at-work program, employee health fairs, and an employee assistance program, among other programs and services.

Government Regulation

Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.

We incur costs to monitor and take actions to comply with governmental regulations that are applicable to our business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property and the Americans with Disabilities Act of 1990, or ADA.

We believe that our properties generally have the necessary permits and approvals needed and are in compliance with applicable laws and regulations.

Compliance with various governmental regulations in the countries in which we operate has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.

We incur costs to monitor and take actions to comply with applicable federal, international, state and local governmental regulations that are applicable to our business, which include, among others, U.S.

federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, anti-money laundering and anti-bribery and corruption laws and regulations, data privacy laws and regulations, sanctions restrictions, foreign laws and regulations, gaming laws and regulations and the Americans with Disabilities Act of 1990, ("ADA").

We believe that our properties generally have the necessary permits and approvals needed and are in compliance with applicable laws and regulations in the countries in which we operate.

Environmental Matters

1 unchanged sentence

Federal, state and local environmental laws and regulations regulate releases of hazardous or toxic substances into the environment.

While our tenants are generally primarily responsible for compliance with environmental laws and regulations, we as owner of property can face liability for environmental contamination created by the presence or discharge of hazardous substances on the property.

While our tenants are generally primarily responsible for compliance with environmental laws and regulations, we as the property owner have faced and can face liability for environmental contamination created by the presence or discharge of hazardous substances on the property.

We can face such liability regardless of our knowledge of the contamination;

2 unchanged sentences

or the party responsible for the contamination of the property.

We have no knowledge of any hazardous substances existing on our properties in violation of any applicable laws;

however, no assurance can be given that such substances are not currently located on any of our properties.

Some of our properties contain, have contained, or are adjacent to or near properties that contain or have contained storage tanks for petroleum products or that involve or involved the use of hazardous or toxic substances.

10 unchanged sentences

These laws may impose liability for improper handling or a release into the environment of ACM and may provide for fines to, and for third parties to seek recovery from, owners or operators of real properties for personal injury or improper work exposure associated with ACM.

In addition, our properties may contain or develop harmful mold or other airborne contaminants.

The presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation.

In addition, our properties have contained and may contain in the future or develop harmful mold or other airborne contaminants.

The presence of significant mold or other airborne contaminants at any of our properties has required us to and could require us to undertake in the future costly remediation to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation.

Further, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants or others if property damage or personal injury occurs.

Americans with Disabilities Act of 1990

Our properties are generally required to comply with ADA.

The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities.

Compliance with the ADA, as well as a number of additional federal, state and local laws and regulations, may require modifications to properties we currently own and any properties we purchase, or may restrict renovations of those properties.

Noncompliance with these laws or regulations could result in fines or an award of damages to private litigants, as well as the incurrence of costs to make modifications to attain compliance.

Although our tenants are generally responsible for compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the property for a failure of one of our tenants to comply with such laws or regulations.

As of December 31, 2023, we have not received notice from any governmental authority, nor are we otherwise aware, of any non-compliance with the ADA that we believe would have a material adverse effect on our business, financial position or results of operations.

Available Information

We maintain a corporate website at www.realtyincome.com.

On our website we make available, free of charge, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, Form 3s, Form 4s, Form 5s, current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file these reports with the Securities and Exchange Commission (the "SEC").

On our website we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, and other reports required to be filed with the Securities and Exchange Commission (the "SEC"), as soon as reasonably practicable after we electronically file these reports with, or furnish them to, the SEC.

None of the information on our website is deemed to be part of this report.

PROPERTY PORTFOLIO INFORMATION

At December 31, 2023, out of the 13,458 properties that we owned or held interests in, 13,265 properties were vastly leased under net lease agreements.

At December 31, 2024, most of the properties in our portfolio were 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.

2 unchanged sentences

We define total portfolio annualized contractual rent as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables, as of the balance sheet date, multiplied by 12, excluding percentage rent, interest income on loans and preferred equity investments, and including our pro rata share of such revenues from properties owned by unconsolidated joint ventures.

We believe total portfolio annualized contractual rent is a useful supplemental operating measure, as it excludes properties that were no longer owned at the balance sheet date and includes the annualized rent from properties acquired during the quarter.

Total portfolio annualized contractual rent has not been reduced to reflect reserves recorded as adjustments to generally accepted accounting principles in the United States, ("U.S.

GAAP") rental revenue in the periods presented.

We believe total portfolio annualized contractual rent is a

useful supplemental operating measure, as it excludes properties that were no longer owned at the balance sheet date and includes the annualized rent from properties acquired during the quarter.

Total portfolio annualized contractual rent has not been reduced to reflect reserves recorded as adjustments to rental revenue under generally accepted accounting principles in the United States, ("U.S.

GAAP") in the periods presented.

Top 10 Industry Concentrations

3 unchanged sentences

Percentage of Total Portfolio Annualized Contractual Rent by Industry

Grocery 11.4% 10.0% 10.2% 9.8% 7.9%

Convenience Stores 10.2% 10.2% 8.6% 9.1% 11.9%

Grocery 10.1 11.4 10.0 10.2 9.8

Dollar Stores 6.4 7.1 7.4 7.5 7.6

Home Improvement 6.0 5.9 5.6 5.1 4.3

Drug Stores 5.5 5.7 6.6 8.2 8.8

Restaurants-Quick Service 4.9 5.2 6.0 6.6 5.3

Restaurants-Casual 4.4 5.1 5.9 2.8 3.2

Drug Stores 4.7 5.5 5.7 6.6 8.2

Automotive Service 4.5 4.3 4.0 3.2 2.7

Health and Fitness 4.3 3.9 4.4 4.7 6.7

Restaurants-Casual Dining 4.0 4.4 5.1 5.9 2.8

Gaming 3.2 3.9 2.9 — —

(1) The presentation of Top 10 Industry Concentrations combines total portfolio contractual rent from the U.S.

Europe consists of properties in the U.K., starting in May 2019, in Spain, starting in September 2021, in Italy, starting in October 2022, in Ireland, starting in June 2023, and in France, Germany, and Portugal, starting in December 2023.

Property Type Composition

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

Property Type

Property Type Number of

Properties Approximate

3 unchanged sentences

Industrial 566 116,138,200 722,251 14.5

2 5,053,400 157,945 3.9

Gaming 2 5,053,400 160,854 3.2

70 5,154,100 143,185 2.9

Totals 13,458 272,083,100 $ 4,041,871 100.0 %

Total 15,621 339,371,900 $ 4,970,824 100.0 %

(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 December 31, 2024.

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

(3) "Other" includes 27 properties classified as agriculture, consisting of approximately 0.3 million leasable square feet and $38.0 million in annualized contractual rent and 10 properties classified as office, consisting of approximately 2.1 million leasable square feet and $27.4 million in annualized contractual rent, as well as one land parcel under development.

(2) "Other" primarily includes 16 properties classified as office with $51.2 million in annualized contractual rent, 27 properties classified as agriculture with $38.7 million in annualized contractual rent, 21 properties classified as country clubs with $24.8 million in annualized contractual rent, and three properties classified as data centers with $24.5 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 December 31, 2023:

Client Number of

Leases Percentage of Total Portfolio Annualized Contractual Rent

7-Eleven 825 3.5 %

Dollar General 1,756 3.3

1 unchanged sentence

Dollar Tree / Family Dollar 1,372 3.0

7-Eleven 634 3.0

EG Group Limited 414 2.1

Wynn Resorts 1 2.0

Lifetime Fitness 38 1.9

(B&Q) Kingfisher 53 1.6

BJ's Wholesale Club 44 1.6

Sainsbury's 38 1.5

LA Fitness 68 1.6

BJ's Wholesale Clubs 33 1.5

Lifetime Fitness 23 1.5

MGM (Bellagio) 1 1.4

CVS Pharmacy 212 1.2

Walmart / Sam's Club 67 1.4

Tractor Supply 211 1.2

AMC Theaters 35 1.2

Red Lobster 200 1.2

MGM (Bellagio) (1)

LA Fitness 65 1.2

Home Depot 40 1.1

AMC Theatres 39 1.1

Walmart / Sam's Club 62 1.0

Total 5,716 36.4 %

(1) Amounts for each client are calculated independently;

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

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

(1) Represents our proportionate share of the common equity ownership in the unconsolidated joint venture.

Lease Expirations

3 unchanged sentences

Total Portfolio Annualized Contractual Rent Percentage of Total Portfolio Annualized Contractual Rent

Retail Non-Retail

Year Retail Non-Retail

2025 714 29 9,724,000 $ 158,934 3.2 %

14 unchanged sentences

2040-2143 1,957 124 40,318,400 980,786 19.7

Totals 13,835 427 269,031,000 $ 4,041,871 100.0 %

Total 16,022 672 335,788,300 $ 4,970,824 100.0 %

(1) Leases on our multi-client properties are counted separately in the table above.

This table excludes 270 vacant units.

Geographic Diversification

54 unchanged sentences

Puerto Rico 6 100 59,400 *

Virgin Islands 1 100 38,000 *

France 28 100 1,406,800 0.3

5 unchanged sentences

United Kingdom 339 100 30,563,100 11.7

Totals/average

13,458 100 % 272,083,100 100.0 %

Total/average 15,621 99 % 339,371,900 100.0 %

• *Less than 0.1%

3 unchanged sentences

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;

1 unchanged sentence

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

statements made regarding our share repurchase 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 payments of dividends;

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

Forward-looking statements are subject to risks, uncertainties, and assumptions about Realty Income Corporation which may cause our actual future results to differ materially from expected results.

Forward-looking statements are subject to risks, uncertainties, and assumptions about us which may cause our actual future results to differ materially from expected results.

Some of the factors that could cause actual results to differ materially are, among others, our continued qualification as a real estate investment trust;

7 unchanged sentences

changes in domestic and foreign income tax laws and rates;

property ownership through joint ventures, partnerships and other arrangements which may limit control of the underlying investments;

property ownership through co-investment ventures, funds, joint ventures, partnerships and other arrangements which may transfer or limit control of the underlying investments;

epidemics or pandemics including measures taken to limit their spread, the impacts on us, our business, our clients, and the economy generally;

2 unchanged sentences

acts of terrorism and war;

and the anticipated benefits from mergers and acquisitions including from the merger with Spirit (the "Merger").

and the anticipated benefits from mergers and acquisitions.

Additional factors that may cause risks and uncertainties include those discussed in the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report on Form 10-K , for the year ended December 31, 2024.

2 unchanged sentences

Actual plans and operating results may differ materially from what is expressed or forecasted in this annual report and forecasts made in the forward-looking statements discussed in this annual report might not materialize.

We do not undertake any obligation to update forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

We do not undertake any obligation to update forward-looking statements or publicly release the results of any forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

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

What changed 10-K

Item 1. Business