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Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 5:00 p.m. ET Vice President, Investor Relations - Alexander John Waters President and Chief Executive Officer - Sumit Roy Chief Financial Officer and Treasurer - Jonathan Pong Chief Strategy Officer and President, Realty Income International - Neil Abraham Chief Investment Officer - Mark E. Hagan Operator: Good day, and welcome to the Realty Income second quarter 20 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star, then 2. Please note today's event is being recorded. I would now like to turn the conference over to Alexander John Waters, Vice President, Investor Relations. Please go ahead. Alexander John Waters: Thank you for joining Realty Income's second quarter 2026 results conference call. Joining us on the conference call today are Sumit Roy, President and Chief Executive Officer Jonathan Pong, Chief Financial Officer and Treasurer Neil Abraham, Chief Strategy Officer and President, Realty Income International and Mark E. Hagan, Chief Investment Officer. During this conference call, we will make certain statements that may be considered forward looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in any forward looking statements. We will disclose in greater detail the factors that may cause such differences in our Form 10 Q filed with the SEC. We will observe a 1 question and 1 follow-up limit during the Q and A portion of the call. To ensure that everyone has an opportunity to participate. And with that, I would now like to turn the call over to our CEO, Sumit Roy. Sumit Roy: Thank you, Alexander, and welcome everyone. Realty Income delivered another strong quarter in Q2. Reflecting the benefits of our diversified investment strategy and our position as a trusted capital partner to many of the world's leading companies. Our investment activity highlighted the breadth of our opportunity set demonstrating our ability to invest across the capital stack geographies and property types to support accretive growth. Against that backdrop, AFFO per share grew 3.8% to $1.09 during the quarter. Year to date, AFFO per share was $2.22 representing 5.2% growth and a meaningful acceleration from the same period in 2025. This momentum supports $0.02 increase in our full year AFFO per share guidance midpoint to a new range of $4.44 to $4.45 representing growth of approximately 4% at the midpoint. We are also increasing 2026 investment volume guidance from $9.5 billion to $10 billion as our pipeline remains robust. I will cover key investment highlights during the quarter before detailing market dynamics in each of Realty Income's strategic areas. Global investments totaled approximately $2.6 billion or $2.1 billion at our pro rata share. At an initial weighted average cash yield, of 7.3%. Second quarter activity was weighted more heavily toward The United States with approximately $1.7 billion in pro rata investments at a weighted average cash yield of 7.4%. Including roughly $800 million in industrial assets, representing approximately 75% of U.S. real estate investments. Also embedded within this U. S. Activity was continued deployment through our U. S. Core Plus fund, which acquired approximately $73 million of assets on a global basis with industrial representing more than half of that volume and retail accounting for the balance. In Europe, we closed on approximately $400 million at a weighted average yield of 7%. Finally, on June 30, we announced a $6 billion programmatic hyperscale data center joint venture with Cloud Capital in which Realty Income expects to invest up to $1.4 billion over time for its 45% equity interest. Turning to additional investment details, let's start with Industrial, which represented approximately 65% of our global real estate investments. We continue to find attractive risk adjusted opportunities supported by improving fundamentals and contractual rent escalators that generally range from 2%-3.5% annually. Just under half of Industrial acquisitions NOI this quarter, came from investment grade clients with investments concentrated in high quality primary and infill markets. Notably, U.S. Industrial fundamentals strengthened during the quarter as net absorption accelerated sharply. Vacancy declined and development activity began to improve alongside market conditions. That positive industrial momentum also carried through to our U. S. Core Plus fund, which continues to demonstrate the value of pairing our scale and sourcing with long term private capital. During the quarter, we fully deployed the Fund's remaining cornerstone commitments increased total gross asset value to approximately $3 billion. Assets acquired into the fund in Q2 generated a 6% weighted average cash yield. While these investments carry lower initial yields, they consist of high quality assets in attractive markets leased to strong credit customers and supported by contractual rent escalators well above average. A dynamic reflected in the Fund's 2.9% year to date same store revenue growth. Importantly, the management fee stream from the fund enables us to pursue these lower initial yield investments with day 1 accretion to Realty Income's shareholders. Thus expanding our overall buy box. In Europe, while several international clients were more cautious earlier in the year amid geopolitical uncertainty, activity has improved and a number of those clients are actively pursuing transactions today. Europe continues to offer attractive risk adjusted investment spreads, supported by lower borrowing costs. Our established presence in the region and a landscape that remains less competitive than in The US. We remain constructive on Europe and continue to view it as an important contributor to our growth over time. Turning to data centers, our joint venture with Cloud Capital establishes another large scale programmatic investment vehicle. The venture includes 3 Northern Virginia data center assets representing under 400 megawatts of capacity. We closed on the first stabilized asset last week, and expect to acquire our share of 2 development assets upon stabilization. Our partnership with Cloud Capital originated from a prior credit investment and has evolved into a long term relationship focused on developing and owning hyperscale data centers across leading U. S. And European markets. Since announcing the venture, data center dialogue has continued to increase expanding our access to opportunities across the sector. We believe the industry is still in the early stages of a multiyear digital infrastructure build out driven by AI adoption cloud computing and broader digitization trends. As a result, demand for data center capacity continues to exceed available supply in many of the industry's most attractive markets. We remain focused on top tier supply constrained markets and partnering with experienced operators that value our long term programmatic financing capabilities. Across our investment activity, our scale and sourcing platform continue to be significant advantages that are difficult to replicate through individual asset acquisitions. As an example, earlier this year, the fund acquired a combined 19 property portfolio leased to a top performing quick service restaurant operator for more than $100 million. A subsequent third party valuation completed in connection with our core Plus fund verified a prevailing market cap rate for the portfolio that is more than 30 basis points below our acquisition basis. Providing tangible evidence of the immediate value creation that can be achieved through portfolio transactions. While acquisitions and capital deployment are important drivers of long term growth, we are seeing increasing opportunities to create value through active portfolio management and capital recycling. During the quarter, we completed $161 million of dispositions reallocating capital towards areas of the portfolio where we see the strongest combination of organic growth pricing power and value creation. Importantly, this approach is not limited to non core or vacant assets, but extends across the portfolio whenever we believe capital can be redeployed more strategically. This disciplined approach enhances portfolio quality, improves capital efficiency and supports sustainable earnings growth. Looking ahead, we continue to see attractive opportunities to recycle capital into assets that are better aligned with our long term strategic priorities. We also continued to improve portfolio quality during the quarter with investment grade client exposure increasing to 34% of annualized rent from 32% in the first quarter. Portfolio fundamentals remain strong, occupancy of 98.8% and 482 re leased units generating a blended rent recapture rate of 102.7%, with renewals at 104.6%. This included a large batch renewal with a single client covering nearly 150 assets, demonstrating the scale and efficiency of our platform. Industrial comprised approximately 1 third of leasing activity during the quarter and generated a rent recapture rate of 105.8%, while international recapture rates reached 112.9%,. Reflecting the continued success of our UK value add retail park strategy. Our international retail park strategy continues to benefit from limited new supply strong retailer demand and record low vacancy rates helping drive attractive leasing spreads and incremental value creation. Importantly, the growth and diversification of our investment capabilities have been matched by similar progress on the capital side of the business. Our expanding capital platform is reducing our reliance on public equity while enhancing our ability to fund growth efficiently. With that, I will turn the call over to Jonathan. Jonathan Pong: Thanks, Sumit, and good afternoon, everyone. The second quarter demonstrated our commitment to diversifying our sources of capital on a global scale while maintaining a healthy balance sheet. We continue to operate from a position of significant liquidity conservative leverage and broad access to multiple capital channels. We ended the quarter with approximately $3.5 billion of available liquidity, on a pro rata basis. Net debt to annualized pro forma adjusted EBITDA at the end of the second quarter stood at 5.4x or 5.2x inclusive of unsettled ATM forwards. Which is well within our target range. Subsequent to quarter end, we further enhanced our liquidity profile through an expansion of both our global revolving credit facility and commercial paper program. An unsecured bond offering in Europe and continued forward equity issuance under the ATM. Our updated credit facility now provides for borrowings of up to $5.5 billion, an increase of $1.5 billion from the prior facility with a 5 basis point reduction to our borrowing rate. Similarly, we expanded our global commercial paper program to $5.5 billion, an increase of $2.5 billion. Secondly, we completed a €600 million-denominated bond offering at a yield of 3.7%. And finally, we raised an additional $90 million of forward equity, bringing our current ATM unsettled balance to approximately $1.3 billion. Pro forma for these transactions, available liquidity increased to more than $5.7 billion. With our enterprise value approaching $90 billion and a robust pipeline of external growth opportunities, the access to additional capital enhances our ability to immediately finance our investment pipeline while remain patient and opportunistic in accessing longer term and permanent capital. As a reminder, outstanding borrowings on our credit facilities and commercial paper programs represent our only exposure to variable rate debt. And we intend to maintain the variable rate exposure at 10% or less of our total outstanding debt. Our commitment to maintaining a strong balance sheet supported by access to multiple sources of capital, was recently recognized in Fitch's initiation of coverage for Realty Income with a solid A long term issuer default rating. This rating places us among just 4 US REITs with a solid A or equivalent rating from 1 of the 3 major rating agencies, and we are grateful that our size diversification, and track record of performance have elevated us to this rating. We remain active on the capital raising front inclusive of the aforementioned euro bond offering, we have issued $3 billion of new debt year to date at a blended effective coupon of 3.9% compared to $1.4 billion of debt that has matured to date at a blended coupon of 4%. We continue to diversify our sources of debt capital across different currencies, and investor capital pools with the focus on avoiding saturation or reliance on any 1 market while lowering our all in cost of borrowing and managing appropriate maturity ladder going forward. On a year to date basis, we have issued 4 discrete debt instruments, including a convertible bond a U. S. Dollar unsecured bond swapped to euros, a municipal prepaid term loan swap to euros, and a euro unsecured bond. Each of these debt instruments was selected with an intentional bias towards tapping into a unique investor base as well minimizing our global and blended cost of debt. On the equity side, private capital has reduced our reliance on public equity markets to fund our growth. As a result, we have meaningfully lowered our public equity consumption as a percentage of investment volume comprising only 18% of investment volume year to date compared to an average of 47% over the past 3 years. Year to date, we have settled only $825 million of forward equity to close on $4.7 billion of pro rata investment activity all while maintaining leverage within our 5.5x target level. This reflects the benefit of our recent capital initiatives, which have diversified our sources of equity capital. Turning to our 2026 outlook, as Sumit mentioned, we are increasing our full year AFFO per share guidance range to $4.44 to $4.45, also increasing our full year acquisitions guidance to $10 billion, up from $9.5 billion previously. This reflects the strength of our investment pipeline and the confidence in our ability to source and execute attractive opportunities. At our share, we expect to invest approximately $9 billion during 2026. We are also holding our 2026 credit loss outlook flat at around 40 basis points of rental revenue reflecting stable operating performance across our client base. Notably, we are not raising our lease termination income guidance We recorded approximately $1 million in the second quarter and continue to expect $45 million to $50 million for the full year. As a result, the increase in AFFO guidance reflects the underlying strength of the business in terms of investment volumes yields modest credit losses, the successful execution of several capital markets transactions, and our expectations for continued momentum throughout the balance of 2026. With that, I will turn the call back over to Sumit. Sumit Roy: Thank you, Jonathan. In summary, the second quarter represented disciplined execution across the platform. Highlighted by continued performance of our high quality portfolio disciplined capital allocation at attractive yields, and the curation of unique capital vehicles that provide Realty Income with durable financing engine to accelerate AFFO per share growth in the years ahead. With that, I would now like to open it up for questions. Rocco? Operator: Thank you. We will now begin the question and answer session. Ask a question, you may press star then 1 on your telephone keypad. If your question has already been addressed and you would like to remove yourself from queue. Once again, that is star then 1 if you have a question. And today's first question comes from Michael Goldsmith at UBS. Please go ahead. Michael Goldsmith: Good afternoon. Thanks a lot for taking my question. The acquisition cap rates during the quarter were 7.4%, which is a bit lower than you saw last quarter. Is that a reflection of mix competition or something else that had to play into, also the industrial assets with the elevated lease escalators? And just how should we think about the accretion on cap rates of 7.4%? Sumit Roy: Yes, that is a great question. The idea here is to always try to blend to a number that is getting us back to our historical spreads Michael. And the blended cap rate or the investment yield is 7.4%. And When you think about the portion north of $100 million was in the fund, that was where the lower yielding cap rates went and that was by design because that is why the fund was created. Stuff that we could not accretively buy on balance sheet was going to be allocated to the fund. Where the long term return hurdles were going to be met, but that initial accretion was not. And so what is remaining is has a profile that gets us to our historical spreads of circa 150 basis points. that is how you should think about our investments. Michael Goldsmith: Thanks for that clarification. And then just as a follow-up, can you provide an update of where we are in terms of generating fee income as the amount in the quarter? Is that kind of the right run rate? Or do you expect that to accelerate from here? And then also, how much is included in the underlying guide? Jonathan Pong: Hey, Michael. So if you look at the supplement, I believe at Page 22, we do show management fee income to realty income. It was about $3.2 million for the quarter. The majority of that obviously is for The U. S. Core plus fund. We had raised $1.7 billion during our cornerstone round And, you know, as of early July, we had drawn down all of the capital that is now fee generating. There is also, you know, a separate component of that is attributed to the insurance JV that we announced back in March. And so in totality, that is where you get the 3.2. In terms of guidance, we have talked about this before, but we expect around $10 million or so for the fund in terms of management fees. And then, then, you know, perhaps there will be $2 million to $3 million, attributable to insurance JV. Sumit Roy: Thank you. Operator: Our next question today comes from Brad Heffern at RBC Capital Markets. Please go ahead. Brad Heffern: Hey, afternoon, everybody. Thanks for the questions. Obviously, rates have been bouncing around a lot, but generally going up. But we have also been hearing some of your peers talk about some slight cap rate compression I guess, first, are you seeing that as well? And then do you think higher rates will eventually flow through or, are competitive dynamics preventing that from happening? Sumit Roy: that is a great question, Brad. it is a very strange environment really because this inverse correlation that exists between how net lease generally trades versus the 10 year. Largely holds true. But what has happened over the last 2 months is that inverse correlation has not held true. It really is a question of what is going to happen to the tenure? What is the forward outlook? Not so much where it is trading at today, that is going to dictate what is going to happen to cap rates? We have oftentimes talked about cap rates being a trailing variable when it comes to interest rate the 10 year treasury. And If the view is that the 10 year is going to be in this 4.6% to potentially 5% ZIP code, then what we have historically seen is cap rates do follow. But you mentioned it in your question, the way you framed it, there is a lot more competition here in The US. There are a lot more new entrants on the private side along with a few on the public side. And so there is that competitive dynamic that is going to keep cap rates lower. But ultimately, in a highly elevated cost of capital environment, cap rates will need to adjust. Okay. Got it. Thank you for that. Brad Heffern: And then you talked a bit about the positive European outlook in the prepared comments. I wanted to specifically zoom in on The UK Cost of debt seems pretty unattractive over there, especially compared to euro debt. So are you seeing upward pressure on cap rates in The UK to reflect that? Or is it just a less appealing market right now? Sumit Roy: Neil? Neil Abraham: Thanks, Sumit. Brad, in response to that question, I think we have countervailing effects. 1, of course, is the sort of macro malaise change in the PM the move in rates. Against that, what you have is institutional capital coming in and you see this more broadly across Europe as well. And it started really with malls or shopping centers as they are called over there. And there is quite an aggressive bid for those kinds of assets. So in The UK, almost perversely, we are actually seeing institutional capital coming in good size, driving down cap rates. And then while we have not bought retail parks or multi tenant retail across the continent, There is also now 1 or 2 larger private equity players driving consolidation. I think the industrial logic is that they sort of missed that play in The UK, but there is still an opportunity across Europe. And the low level of base rates makes it actually quite accretive on a levered basis. And so I do not think we are seeing upward pressure on cap rates in The UK or frankly much of Europe with the exception of Germany. And I think, if anything, the pressure on cap rates downward on retail parks in The UK will continue? Sumit Roy: Thank you. Operator: Our next question today comes from Rob Stevenson at Huntington's. Please go ahead. Analyst: Good afternoon, guys. Sumit, how should we be thinking about how much of the $5 billion or so of second half investments in the guidance is likely to be put on realty income's balance sheet and financed by the REIT versus going into various JVs, funds, partnerships, and anything new that you would create over, you know, the remainder of the year? Sumit Roy: Yeah. So that 500. So we have said we are going to do about $10 billion. that is the guidance. And what we have shared with the market is $9 billion of that $10 billion is going to be on balance sheet. And if you see what we have invested year to date, on the fund, we have largely used up the equity, the cornerstone equity, actually. We have completely used up all of the equity that we have raised. And so the only assets that are going to go on the fund will be the leverage capacity that the fund has that is still available to it. And that is going to be obviously you know, it is the same ratio, 1/3, 2/3. So we have got about $1.7 billion that we have raised in equity. We have got about 1/3 of that amount in leverage capacity deployed. But the rest of it will be on balance sheet. Okay. that is helpful. And then with these various funds, JVs, partnerships, etcetera, that you now have in place, Do you have all of the sources of capital that you guys think that you need to execute the business plan? Over the next couple of years? Or should we expect to see more of these types of partnerships and JVs being announced over the next 6 to 12 months given what your pipeline looks like? So Rob, I think in terms of the product that we are going to pursue from an investment perspective, that is largely defined. We have been talking about our desire to go into data centers We have now formed joint ventures. Is it possible that there could continue to be other JVs that we have form with developers who have a very healthy pipeline that fits our box? The answer is yes. And especially on the heels of the conversation, on the heels of the announcement that we have made. There are some very interesting conversations that are taking place. And that is much more in line with what we have already shared. The other asset types are ones that we are just continuing to invest in. And, obviously, the fact that we have created these multiple channels of geography and asset types, we are going where the best risk adjusted returns are. On the financing side is where we are sort of still new in the game, and the rationale behind why we did what we did was to try to sort of leverage the platform that we have with a lot lower cost of capital, a lot lower cost of equity capital, let me be more precise. That we could then generate earnings contribution through the fee stream. I would say that we have-- that is the journey that we are on. And it is-- I have heard Jonathan mention it as an ecosystem that we are trying to create where we are maximizing the utilization of a platform with you know, trying to attract the lowest cost of equity capital that wants to leverage and wants to pay fees and basically be exposed to net lease investing. So, you know, I will not go so far as to say what we have shared with you is the end all and be all of all equity capital sources. I would characterize it as it is the beginning. And there will be other channels. What we are going to be acutely focused on is to make sure that the overlap on these various different sources of equity capital, private sources of equity capital, is very minimum. We wanna make sure that we are using our platform very judiciously to serve these various different sources of capital, make each 1 of them very successful, that this fee stream that we are able to generate continues to be 1 that is a very high level of permanence and 1 that we can count on and our shareholders can benefit from in years to come. Operator: And our next question today comes from Smedes Rose at Citi. Please go ahead. Smedes Rose: Hi, thank you. I just wanted to follow-up on kind of your acquisitions outlook. It looks like for your portion, the back half of the year is estimated around $4.3 billion. So that suggests it decelerates a little bit from what you saw in the first half. Could you maybe just speak to kind of what you are seeing there? Is it slowdown by design? Are you being conservative? Competition heating up? And just interested in any kind of color around that outlook. Sumit Roy: Mark. Mark E. Hagan: Yes. Thanks for the question. Well, I think that with the guidance at $10 billion and the first half total investments of $5.3 billion. I do not think there is a lot of deceleration in there, but Well, I am just looking at your portion. You said for your portion, it would be $9 billion for the year. Yes. The overall global investment amount. But look, it is not driven by anything in terms of that we are seeing in the conditions in terms of deceleration. In fact, it is really the opposite. We increased our overall volume guidance because of the strength and robustness of the pipeline. So, you know, as we are sitting here today, we really we feel great about the pipeline and about at least another strong second half of the year. Sumit Roy: Yes. Okay and then you yeah. Go ahead. Sorry. To you know, forecasting out and trying to back into, you know, what is the delta between what we have forecasted versus what we have not. Smedes Rose: What I can tell you from a pipeline perspective, from the health of the pipeline, from what we are seeing, we feel great. Okay. And I just on that, you know, you obviously leaned into industrial in the quarter. just wondering, is that the primary focus going forward from here? Or are you happy with the kind of exposure that you have in that asset class at this point? Sumit Roy: Industrial has always been a focus of ours. We obviously cannot go into the 3-cap deals that we just saw recently announced. Industrial single tenant industrial more specifically across various geographies has always been something that we have leaned into. And the way we are playing that is through the development channel. Is partnering with the best in class developers and being able to generate yields with more of a built to suit characteristic rather than a spec characteristic where we are able to meet the hurdles that we need to meet in order to generate the spread investing that you and our shareholders are used to seeing. So What you are seeing today is and I am sure you have heard it from other industrial companies, is this what we expect to be a new trend where absorption rates are trending very positive, vacancies are all at all time lows, And what is driving this demand is much more widespread than e commerce, which was the driver of industrial demand 4, 5 years ago. it is much more broad based. it is industrial, it is manufacturing, it is data center equipment that needs to be stored in warehouses, etcetera, that is that is also driving some of the demand. We feel very good about the pipeline that we have created. We are being able to do it at cap rates and investment yields that make sense to us through a combination of investing on the credit side as well as on the equity side. Thank you. Operator: And our next question today comes from Haendel St. Juste with Mizuho. Please go ahead. Analyst: Hey guys, thanks for taking the question. Sumit, maybe starting with you, I guess I was intrigued by some of the comments you are making about capitalizing on the market to do some portfolio recycling, improving the quality of your on balance sheet assets. So I am curious how much of the portfolio ballpark might be subject to being upgraded or recycled? Sounds like you are doing a bit more IG here. Is that something we should expect near term and maybe some color or perspective on the difference in cap rates or bumps and what you are buying versus selling? Thanks. Sumit Roy: that is a great question, Haendel. I think in the prepared remarks you picked up on our desire to continue to recycle capital Obviously, have talked about there are certain metrics that we are very focused on internal growth being 1 of them, duration of the lease term being another, being exposed to credit that we have a long term view on and we feel comfortable with is another metric that we are going to be very focused on. This capital recycling that we would like to continue to lean into is largely on a pro forma basis going to help make each 1 of these variables that I just mentioned accretive. that is the desire. It could be obviously leaning into the data center side, leaning into the industrial side, and repositioning our overall portfolio to make sure that our net lease metrics that we focus on, KPIs that we are very focused on, continues to move in the right direction through this capital recycling. Analyst: that is great color. Thank you for that. Jonathan Pong: Jonathan, a question for you. Maybe if you will allow me a 2-parter. Just want to get some clarification on what is in the other adjustments per share It looks like we excluded that. the FFO, the AFFO per share guidance would be down. Maybe I am misinterpreting it, so maybe some color on that And then just some color or thoughts on the duration of the loan book. Seems like there is a decent amount high yielding paper maturing the next couple of years. Curious if you guys are expecting to be able to originate more or you plan on managing that dilution. Thanks. Hey, Haendel. So the other category is really nothing new. it is primarily FX related. Gains or losses that are noncash in nature. You also have other CECL related type of impacts as well. But you know, that is nothing that would you know, raise, to the level of a cash adjustment that would impact the FFO and should not impact the AFFO given that it is noncash and it is nonrecurring. I would say on the loan tenor, assuming you are talking about the investments that we make Look, we have talked about this before. But when you think about the right hand side, of our balance sheet, when you think about you know, a legacy balance sheet with a fair amount of debt that is rolling every single year, You know, this provides a nice hedge, if you will, a natural hedge where, you know, if rates go down, yes, theoretically, there is reinvestment risk, but also, you know, the other side of our ledger is also much more attractive in refinancing at much lower rates and vice versa. So we manage it. We look at it just as closely as we look at you know, the liability side of the balance sheet. And that is how we risk mitigate and forecast what our exposure is. Should there be various scenarios that play out in the rate environment. Thank you. Operator: Our next question today comes from Omotayo Akyusanya with Deutsche Bank. Please go ahead. Omotayo Okusanya: Yes. Good afternoon, everyone. Just along Haendel's line of questioning in terms of capital recycling. Could we see that also manifest itself as kind of new JVs or doing more with your current JV partners? Or how do we kind of think? Or is it are you going to take a much more just kind of outright asset sales? Sumit Roy: Yeah. The idea being recycling. So, yes, we are continuously looking at our portfolio Omotayo, and we are trying to figure out where are the assets that are mispriced in the market where we do not have a long term hold strategic outlook on certain portions of our portfolio. And we would much rather sell those assets, raise that capital, and redeploy it in either asset types or geographies or risk adjusted opportunities where we feel we have a much higher conviction on holding long term. What we are talking about. it is not supposed to represent additional JVs, etcetera. That is not the idea behind the capital recycling that you should sort of think about when we are talking about capital recycling? Omotayo Okusanya: Thanks for the clarification. Sumit Roy: Sure. Thank you. Operator: And our next question today comes from Alexander Fagan with Baird. Please go ahead. Analyst: Hey, thanks for taking my question. On the data center hyperscale deals, can you speak if after these 3 assets, are you diversifying your tenant base or the end tenant base? For your data center portfolio? Mark E. Hagan: Sure. Thanks for the question. Yes, we are. Obviously, we announced a transaction 3 years ago with 2 data centers in Northern Virginia. That had a specific tenant in it. The transaction that we just announced last month, that 3 data centers has varied tenants in it that are different than the original 2. So we currently have the 5 assets with different tenants in them. And going forward, as we continue to build out our data center portfolio, that is 1 thing that we are going to keep our mind on as part of our strategy in terms of obviously, we want to focus on the investment grade rated hyperscalers and enterprise users. Those work well for us. But we are going to be very mindful of making sure that we balance our concentration to any particular assets. Analyst: And kind of on the tenant question broadly, should we expect any new top 20 tenants entering the portfolio this year? Sumit Roy: Well, Alec, when that happens, it will be announced and I think it will be viewed very positively. Obviously, these data center clients tend to be very large And you know, when those close, could it potentially reshuffle our top 20? The answer is yes. But it will be viewed very positively, in my opinion. Thank you. Operator: Our next question today comes from Ronald Kamdem with Morgan Stanley. Please go ahead. Analyst: Just staying on the data center portfolio theme, maybe can you talk a little bit more about sort of the economics whether it is sort of stabilized yields or price per megawatt just your views on that going forward. And also on the competition. Right? Because I think there is a lot of big private equity players out there. there is other public capital. Just what that environment is like to get these deals through? Thanks. Mark E. Hagan: Sure. Thanks, Ron. Let me hit the second part of the question first, if that is okay. Yes, there are a lot of people in the sector right now both on the development side and people wanting to invest capital into this sector. So there is you know, a lot of competition for, both developing these assets and owning them. I think that 1 of the important things though is that there are a lot that are still in the development phase. If we are talking about the large hyperscale data centers. And there is probably a lack of a natural home for the ultimate long term ownership of those assets. Some of the developers may want to keep ownership of them for the long term, but others do not. And so that does create a despite the competition, out there and the players in the sector going after some of these assets. For somebody like us, whose model focuses on, you know, holding long leased assets, that have clients with strong IG credit ratings and with good annual bumps, there is a natural sweet spot for us, to be long term holders of that. And so I think that makes us perhaps a little bit different than, you know, some of the other people who are playing in the space right now. In terms of your question on cap rates, I think there is still a bit of just overall discovery going on in the market. There are, a lot of these large assets are still rolling from the development phase into the potentially changing hands for the stabilized phase. And I think there is been some transactions that have been in the market recently that have been announced where there is some cap rate data out there on them. I think that is a good indication of where cap rates are right now. these types of assets. Analyst: And then my second 1, if I may, I think just going back, I think the comments were 40 basis points in terms of chosen bad debt for this year. Just can you remind us, the watch list, sort of any changes over the last 3 months, any sort of larger tenants, or does it remain pretty granular? Jonathan Pong: Ron, the watch list remains in the high 5% area. And, you know, so it is a very granular watch list. I think there is 137 individual tenants that comprise that with a median about 2 basis points. So at the very top, it is the usual suspects. I would say it is, home furnishings. it is casual dining, and then drops off pretty significantly thereafter. So when you were thinking about any changes to credit quality in the portfolio, very stable, Some things have come out. Some things have gone in. But broadly speaking, from a guidance perspective or from a forecast perspective, 40 basis points does still feel fairly conservative. And I will remind folks that our historical credit loss, you know, across our entire history has been in the low 20-basis-point area. So, we are trending back towards that area, but, you know, we still create a little bit of buffering cushion there. guidance wise. Operator: And our next question today comes from James Kammert at Evercore. Please go ahead. Jim Kammert: Again, if I get back to the data centers, there is no doubt there is abundant opportunity out there for realty income. I am just curious if I play devil's advocate If you are underwriting these to zero residual value given your bumps and you are going in representative cap rates, what would this zero residual value IRRs look like today? Sumit Roy: James, we are not going to go into the details, but that is definitely 1 of the, you know, scenarios that 1 should look at. there is been a lot of debate about residual values, fungibility of these assets. Which is why the box that we have created takes into account you know, where these data centers are located, what is the throughput required, Do we see Northern Virginia suddenly in 20 years' time when the leases come due, will it no longer be the epicenter of data center world? Or do we see data centers demands completely dry up? And so based on that, you run various different scenarios. And that is 1 of the reasons why we sort of lean into these very long duration leases. 15 to 20 years and preferably 20. And we are trying to partner with developers who have the ability such as cloud, to get these types of long duration contracts with very minimal you know, responsibilities on the landlord side. And so what we feel is we run these various different scenarios, we are very comfortable with the downside. You know, we are very comfortable assuming you know, the outcome if the world were to completely fall apart and it is in fact going to be sold for land at the end. That is certainly a scenario we run. But way we try to mitigate it is by looking at all of these other factors. You know. What is the what kind of an asset is it? what is the duration of the lease? what is the growth you are getting in it? what is your going in yield? Those are the things that you sort of protect, you know, will allow you protection when you are running these downside and Herculean scenarios. So that is that is how I would leave it. Jim Kammert: that is fair. And then quickly, what was your what were your tolerance in terms of absolute exposure to data centers as a percent of ABR or of your gross investment? Sumit Roy: Yes. Jim, we are not targeting a percentage of our portfolio, needs to be data centers. What we are seeing is a once in a generation demand for a particular asset type that has clients that we are very attracted to in locations that we find very interesting. And, you know, we are having multiple conversations. How many of those conversations actually translate to the transactions time will tell. But this is a fascinating environment for us and we are very excited about the deals that we do get over the finish line, the deals that we pursue and are able to sort of enter into. We are going to talk about it, and we will be able to defend those every day. But we are as focused on some of the obsolescence risk and the residual risk that people talk about. And there are obviously mitigants we have built into the process to make sure that we only engage in transactions that have a return profile that meets our overall long term return expectations. Thank you for the color, Sumit. Jim Kammert: Thank you. Sumit Roy: Sure. Jim Kammert: Thank you. Operator: And our next question comes from Jason Wayne of Barclays. Please go ahead. Jason Wayne: Thanks for the question. To step away from the data centers, so on the rest of the investment pipeline, you said you were still interested in Europe. Just wondering if you could give kind of a mix of what is in the pipeline today? Neil Abraham: Sure. Neil will take that. Sure. So look, I would say the mix today is largely reflective of the kinds of things we have done in the past and continue to like. So we are looking at deals in grocery, in DIY, on the industrial logistics space, And generally, many of these are with marquee names in their country or globally. Some of the industrial deals that Sumit alluded to are development driven. The majority of what we are looking at today, I would say, is in markets where there is also a theme that we are looking to play, whether it is onshoring or advanced manufacturing. And I think the pipeline looks quite good across Europe as we look at the back half of the year. Jason Wayne: Got it. And then you mentioned that public equity funding is was down to 18% of your investment volume this year. Is there any kind of long term target there since the private capital is obviously more 1 time in nature? Jonathan Pong: Look, Jason, I think it is going to depend on circumstances. And know, we are we are not saying we are never gonna touch the public equity markets. it is been very good to us over the years, and it is a very deep market. But we do not want to be beholden to just 1 source. So whether it is 18%, whether it is 50, a lot of it is gonna be dependent on what other partnerships and how we grow our existing partnerships and source the private capital And then, obviously, the bigger question is, you know, the volume of opportunities that we see is very robust. So it is it is hard to put a number there. What we do want to make clear is that all of these sources of private capital are meant to, as Sumit mentioned, not overlap with 1 another. Also increase the buy box. For us. And so there are deals that are very high quality, and I think you see that with the core plus fund. In terms of what we are putting into the fund that you know, we have not been buying on balance sheet because of the lower initial yield. So I think from that standpoint, reason we went into this a matter of a few years ago was really to solve that 1 underlying question as to whether or not we could expand you know, our sources of equity beyond the public markets, and maintain a level of scarcity value in our securities, and, you know, not have as much exposure to a very volatile source of funding. Sumit Roy: Yes. And Jason, just to be very clear, you mentioned that it is onetime in nature. it is the exact opposite of what we have created. I mean, the open ended fund by its by definition, will be a vehicle that will continue to raise capital out into the future. that is the reason why we constructed it as an open ended vehicle rather than a closed end fund. The JV that we have with the GIC is meant to be a programmatic JV. Once we have utilized the initial capital commitment, the hope is that they will continue to deploy more and more capital with us. it is a similar situation with Apollo. So it is we are shying away from partnerships that etcetera, which is 1 time in nature or closed ended in nature. Primarily because we want this, you know, fee stream to be permanent and growing into the future. So I just wanted to make that 1 correction, Jason. Thank you. Operator: And our next question today comes from Jana Galan with Bank of America. Please go ahead. Jana Galan: Thank you. Good afternoon and congrats on the quarter. Jonathan, I just wanted to follow-up on the guidance increase to better understand the driver of the $0.02 increase at the midpoint. Guess there is no change to bad debt, no change to fees. Is it just primarily the higher investment volumes? Jonathan Pong: A lot of what drives AFFO in a very finite span of time is timing. And then, obviously, you know, what we have not discussed is capital markets because for obvious reasons, we do not give capital markets guidance. And so I think, you know, between those 2, dynamics, especially since we are sitting here in August right now and a lot of the capital market execution risk has been taken off the table. And given the fact that we have much better visibility today on a deal pipeline and, importantly, the timing of when those deals will close. Gave us a lot more comfort to take this guidance range up. So think it is really a combination of just derisking with certain question marks, that you inherently have at the beginning of the year and then, obviously, a very attractive know, pipeline of deals with more certain closing dates. Jana Galan: Thank you very much. Thank you. Operator: And our next question today comes from Anthony Paolone at JPMorgan. Please go ahead. Anthony Paolone: Yes, thanks. Good evening. Have a question about just the allocation of capital in your investments across these various buckets? I was wondering what a wholly owned acquisition yield needs to look like for it to be interesting? And the reason I ask is when I look at what you are doing, it seems like 8s and 9s on some of the loan investments in the 7s on the development and the fee enhancements from your various private capital sources will get you into the sevens as well. So when you get to a wholly owned deal, you know, what does that have to look like to kind of be interesting and competitive Yes. Sumit Roy: The answer is it is different by geography. Anthony. that is the reality, and that is something that we are tracking on a weekly basis We have hurdle rates that need to be met. Because we need to permanently finance it. And you know, what we try to generate is a 150 basis points of spread. that is what we have historically achieved And given dynamics that might be unique to certain geographies, you know, the cap rates need to get to those levels. Is going to differ. Obviously, you know, the cost of capital also comes into play, especially in places like Europe where they just tend to be a lot lower. Given the cost of debt. But the corollary is also true. You know? In places like The UK, I think there was a previous question that was asked, the cost of debt is slightly higher, and therefore, expectation is that deals need to have a higher yield to satisfy that 150 basis points of spread. So there is not 1 cap rate and it is definitely something that we track very, very closely and the team tracks very closely. Anthony Paolone: Okay. And I just have 1 just item to I am curious about. Your fee earning AUM, I think, went up $1.3 billion from Q1 to 2Q. But when I look at like what your investment activity was, it was a $500 million difference between everything you did versus your share. Am I confusing a concept, or I would have thought that AUM would go up with that difference? Sumit Roy: Anthony, I think you should think about the Apollo JV. Right? That was a contribution of assets off of a balance sheet. And we are getting fees off of, you know, the portion that we are managing on behalf of our partner there. Thank you. Operator: Our next question today comes from Greg McGinniss at Scotiabank. Please go ahead. Greg McGinniss: Hey. Good afternoon. Not to the belabor the point here, but back to data centers for a moment. Are you open to data center investment in Europe? Curious how returns there compared to The US. And then are you avoiding investment in the development phase? Or is that just the nature of the agreement with cloud? That you would wait until stabilization? Mark E. Hagan: Sure. Thanks, Greg. Thanks for the question. Without going into specifics of the cloud transaction, I think your first part of your question, was whether we would be interested in investing in Europe or outside The U. The answer is yes to that. You know, we are certainly in a lot of different countries now in Europe. there is some very good data center markets there as well, the FLAP cities plus some other emerging very attractive markets. That is absolutely something that we would be open to. I think and as part of the cloud JV that we announced, as you saw that could present us with opportunities not only in The U. S. But also in Europe. Your question about, I think, cap rates and yields, and ties back into Sumit's earlier answer, it really is dependent on a country by country basis. I mean, cap rates can be different, asking cap rates can be different, but our cost of capital also varies by region, by country. And so, hard to give you a definitive answer on that other than like everything else, know, depending on where, what country those data center assets might be in, we are going to you know, them and seek to get the same historical spreads and returns that we would normally get. And then in terms of investing in development phase versus post stabilization, Yes. Thanks. Sorry, forgot about that part of the question. There are ways that we can, for example, we have and I think we have mentioned this, what led to our cloud JV and the 3 seed assets was actually by, lending, during the development phase of projects. And so, know, that is something that we can do. We can play in different parts of, these phases of these assets. Not just, you know, with Cloud, but with other potential transactions as well. Greg McGinniss: Okay. Thanks. And then, on the loan investments, initial yields are up to 9.2% this quarter. Is there anything in particular that was driving up that yield? And assuming a similar kind of rate environment going forward, are your expectations what are your expectations on turning those into real estate versus recycling that capital back into more loans? Sumit Roy: It could have multiple reasons as to why we do the credit investments, Greg. You know, part of it is precisely what Mark was mentioning that it is a way for us to then have access to the real estate which is acting as the collateral in the development phase. And we are able to, depending on where we invest, able to get outsized returns depending on the risk. That is associated with that investment. But the idea has always been that we will use credit investments to either have a channel to owning that real estate because that is 1 way to play it. Or to build relationships with operators that have a pipeline of assets that we are interested in. More often than not, the investments that we are making is secured by real estate. Neale estate that we would love to own You know? And so that is the thinking and the thesis behind the deals. If it is obviously a stabilized asset, the yields tend to be lower. If it is during the development phase, the yields are going to be higher. So that is definitely going to be a function of the inherent risk in those investments. That will dictate what the yield is. Thank you. Operator: Our next question today comes from Eric Borden at BMO Capital Markets. Please go ahead. Eric Borden: Greg, thanks. Just going back to the guidance raise, on the $02 at the midpoint. When you mentioned capital markets execution risk being been taken off the table, does that primarily relate to debt issuance or equity funding? And cross currency financing? Or is just the overall funding visibility for the pipeline greater or increased? Jonathan Pong: The combination of all of that. Eric. I would say, obviously, debt financing, we have taken a lot of that risk off the table. The European market, and the shape of the FX curve has been very beneficial to us. And importantly, you know, a lot of what we have done on the acquisitions and investment side is euro denominated. So we have had a net investment hedge capacity that can match fund the financing the same currency as where we are getting rent and where we are deploying our capital. On the equity side, you know, you can see we have got $1.3 billion of unsettled forward equity. And, you know, that is at a reasonable price, but certainly that is a risk where you have initial guidance that you come out with in February you take for granted that you are gonna be able to have, you know, that type of equity cost. And then, you know, I would also say, just looking forward, part of it is also thinking about yields. And if we have more visibility to the pipeline, in terms of volume, you can assume that we would have pretty good visibility in terms of yields, which translates directly into investment spreads. And so you know, I would say it is really a combination of all the factors that you mentioned there. Eric Borden: Thanks. And then just on the same store revenue growth of 1.2% in the quarter. With strength from the industrial and gaming sectors, but there was an offset of a 5.1% decline from the other bucket Just hopefully, if you could provide some more color on what is driving the underperformance in that category, whether it is specific asset type or tenant cohort? Jonathan Pong: Yeah. So, you know, when you look at the footnote in terms of other, you do see that we have added hotel to that category. And so, you know, the quantum itself is not meaningful, but I would say, it is an asset that you know, we assumed from a prior merger. And, you know, we feel like we are coming to a good resolution on this, but, you know, there was a little bit of nonpayment of rent that we absorbed in the second quarter. Thank you. Operator: Our next question today comes from Upal Rana at KeyBanc Capital Markets. Please go ahead. Analyst: Thank you. Sumit, on your updated investment guidance of $10 billion is that a reasonable annual deployment run rate we should be expecting for the company to achieve going forward? Not looking for any future guidance numbers, but just there were some larger investments this year. So just curious if that is the level that we should expect going forward? Sumit Roy: Well, Upal, in 2022, we did $9 billion. In 2023 or 2021, 1 of those years, we $9.5 billion. So, you know, this is the third year that we are forecasting to do north of $9 billion. And all we have done is expanded our, you know, investable channels and we have expanded our geographies. So look, we are very comfortable guiding to 2026 at $10 billion and obviously, we have been very open about the areas that we would like to invest in. We have talked about once in a generational opportunity on the data center side. Those are the things that I would ask you to consider. In terms of sourcing, we are sourcing, year to date, we source north of $62 billion. And this is very much in line with, you know, the all time high that we had in 2025. And every year as we have expanded these investable channels and geographies, our sourcing numbers have gone up. So I mean, 1 could even make the argument if we had a better cost of capital things would be even simpler. But I am not going to go into, you know, whether $10 billion is the is the right run rate or not. I can speak to this year being something that we are very, very confident about and very much believe in meeting. Okay. That was helpful. And then just a quick 1 on the new client rent recapture rate. I know it only represents about 10% of the total re-leasing, but it was materially below the portfolio average. So just wanted to get your comments on what was driving that? The 102.7% was materially lower than our guidance. I do not believe we gave guidance on recapture rates And so my team is showing me some numbers Oh, you are talking about with new clients. Correct. I understand. So there were very few assets that went through to a new client. And Upal, what I would ask you to focus on is what is the blended rate that we are able to achieve. For the right client, we are absolutely willing to give rent haircuts and enter into a you know, a longer term contract with more growth. Those are things that we will continue to play. And what we have said is we are a very mature highly effective you know, asset management business and those are going to be areas that you will see fluctuate quarter over quarter. But what we focus on is when you take that into consideration along with re-leasing to the same client, what are we blending out to? You know? Is that a positive number? And I would say that know, this 100 and almost 103% has largely been the case quarter in, quarter out since we have been tracking this number over the last 8, 9 years now. So that is something we talked about 10 years ago when asset management was not as big a part of our business. But today, what is it, Janine? Close to $400 million of leases that are rolling on an annual basis. And it will be closer to $500 million you know, in the years to come. So it is very much a big part of our business, and it will continue to be a driver of growth. And it is a team that I am very proud of. And, they continue to post amazing results for us. Thank you. Operator: Our next question today comes from Jay Kornreich at Cantor Fitzgerald. Please go ahead. Jay Kornreich: Hey, thanks. Just 1 question for me on the private capital fund. You mentioned deploying the initial $1.7 billion of equity. From the private core plus fund. So wondering just where do you go from here? Were there any limits or barriers that led to the initial raise being that $1.7 billion And then how should we think about the private capital fund growing in size from here? Jonathan Pong: Hey, Jay. So I think 1 way to think about it is you know, for a cornerstone raise, you know, that is when the when the big initiative is to build the AUM. And know, once you get that cap on the door and then you have proven that you can deploy it, accretively, You know, there is a performance track record that we are trying to build here. And you generally need a 3-year track record until you can come back to the market and really open up the floodgates for more capital. I will remind everyone that, you know, Sue had mentioned earlier. Open end perpetual fund, which, you know, in the environment we have been in, you know, is not exactly the most, you know, active market fundraising standpoint. We were able to buck that trend, but now the focus is on performance. And so I think where we go from here is there is a lot of focus internally on making sure that, you know, we are making all the right decisions should there be capital recycling. Obviously, deployment of the capital has been a big focus. On the right deals, with the right underwriting, the right structuring. And so you know, we are constantly gonna be open for business in terms of trying to raise capital, but, you know, the expectation was always you get the cornerstone capital in the door. You deploy it. You manage it. You show results. And then you know, 3 years in, that is when your next round starts to really take off. Jay Kornreich: Okay. that is helpful context. that is all for me. Operator: And our next question today comes from Spenser Allaway with Green Street Advisors. Please go ahead. Analyst: Yes, thank you. As Realty Income continues to find accretive ways to grow, I am just curious how big you envision the credit platform could be as a percent of overall investment volume in any 1 given year. And then can you remind us, do you have a dedicated team looking for these credit opportunities? Sumit Roy: I will answer your second question first, Spenser. Yes, we do. We had dedicated folks here in, in The US as well as in Europe looking for transactions on the credit side of the equation. In terms of how big we would like for this to be, we do not again, just like there was a question on type composition and what we want data centers to be or industrial to be. Know, we view credit as a way to ultimately get to owning assets fee simple. That is how we are using credit to enhance relationships with developers, to cultivate relationships with developers, and gain access to the real estate that we have a long term view on. And so today, it is a very small portion of our balance sheet. Circa $3 billion. it is our credit investments. And, you know, and we feel like it has allowed us access to channels that would not have been available to us had we not gone down this path. And while we are investing, higher up on the on the balance sheet with better collateral you know, while generating yields that are quite compelling. And so if that leads to then owning real estate, I think it is a channel that we want to continue to lean into. But obviously, this is not something that is going to dominate our balance sheet. We are not a lending We are not a lender. We are not a bank. But it is a way to sort of cultivate relationships that allows us to execute our core business, which is owning net lease assets, long term net lease assets. Okay, great. And then maybe just circling back to the capital recycling. I know you provided a lot of great color around the direction there. But it looks like you have sold more occupied assets this quarter as a percent of your total disposition. So just speaking to your more proactive asset management. I am just curious, is there any 1 credit or industry that drove elevated asset management in Q2? Or was this just a slightly busier quarter? Yes. it is-- look, I hope that this trend continues. What you are gonna see, Spenser, is that it is could be a credit driven decision. It could be a mispricing decision. That we see that the private markets are valuing assets at a much lower cap rate than what we would have on our balance sheet. We are not tied to any 1 asset. If there is a massive mispricing that we are gonna see, we are gonna try to lean into that. We know where we want to put capital to work. If this could become a source of capital, that allows us to sort of reposition our portfolio in a way that is incredibly accretive we want to lean into that. And so you should not just look at occupied sale as a way to reduce credit. That could certainly be you know, a reason to do that, but it is not the only reason why we would be selling assets, occupied assets into the market. Thank you. Operator: That does conclude our question and answer session. I would like to turn the conference back over to Sumit Roy for any closing remarks. Sumit Roy: Thank you so much, everyone, for joining this call, and we look forward to seeing you in upcoming conferences. Rocco, thank you for hosting us. Operator: Yes, sir. Thank you very much. And we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful evening. Before you buy stock in Realty Income, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy. Realty Income (O) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Realty Income Corporation O entered the second half of 2026 with better earnings visibility after a solid second quarter. AFFO per share increased 3.8% year over year to $1.09, while first-half AFFO per share rose 5.2% to $2.22. Management also raised its full-year AFFO guidance and investment target, pointing to continued opportunities across its expanding property and capital platforms. The stock reaction, however, was muted. Realty Income shares fell 0.54% to $62.36 on Aug. 6, the first trading session after the Aug. 5 results, and closed at $61.89 on Aug. 10 after another 0.99% decline. So far this year, Realty Income stock has gained 9.8% but underperformed the Zacks REIT and Equity Trust - Retail industry. However, O stock has outpaced its close peers, like Agree Realty Corporation ADC and Essential Properties Realty Trust, Inc. EPRT. Image Source: Zacks Investment Research The question now is whether stronger investment activity, steady property fundamentals and an expanding funding platform can support further per-share growth. At the same time, interest rates, acquisition pricing and the valuation investors assign to dependable REIT income remain important considerations. Realty Income's underlying business remained healthy in the second quarter. Revenues increased to $1.55 billion from $1.41 billion a year ago, while AFFO available to common shareholders rose to $1.02 billion from $947.5 million. Portfolio occupancy was 98.8% compared with 98.9% at the end of the first quarter and 98.6% a year earlier.The company also generated a 102.7% rent recapture rate on re-leased properties. Same-store rental revenues increased 1.2%, showing that organic growth remains modest but positive. Realty Income's portfolio included 15,588 properties across 92 industries at quarter-end, giving it a level of diversification that is difficult for smaller net-lease operators to match. Agree Realty and Essential Properties offer similar exposure to long-duration net leases, but both operate with smaller portfolios and somewhat different tenant mixes. Realty Income’s larger scale gives it broader sourcing access across retail, industrial and international markets, while ADC remains more concentrated in high-quality retail properties and EPRT has built a strong position in service-oriented and middle-market tenants. That scale can help Realty Income find more investment opportunities, although it also means the company needs a much larger volume of acquisitions to generate meaningful per-share growth. Investment activity remains central to Realty Income's outlook. The company invested roughly $2.6 billion during the second quarter, or $2.1 billion at its pro-rata share, at a weighted average initial cash yield of 7.3%. First-half investments totaled about $5.34 billion. Management consequently raised 2026 investment guidance from $9.5 billion to $10 billion. Industrial properties represented about 65% of second-quarter real estate investment activity. Realty Income is also expanding in Europe, private capital and data centers. Its $6 billion programmatic hyperscale data-center venture with Cloud Capital could involve up to $1.4 billion of equity from Realty Income over time. Management said its wider investment channels allow it to pursue opportunities across asset types, geographies and different parts of the capital structure.The broader investment approach gives Realty Income more growth channels than either Agree Realty or Essential Properties. ADC remains focused largely on retail net lease, while EPRT continues to expand through a smaller and more targeted acquisition platform. Realty Income, by comparison, is deploying capital across industrial properties, Europe, private-capital vehicles and data centers. This diversification can support longer-term growth, but it also introduces more execution risk as management moves into areas that sit outside the traditional retail net-lease model. Realty Income ended the second quarter with about $3.5 billion of available liquidity and net debt to annualized pro forma adjusted EBITDAre of 5.4 times. After quarter-end, the company expanded its revolving credit facilities to $5.5 billion, increased its commercial-paper capacity and issued €600 million of unsecured notes. Private capital is also reducing Realty Income’s dependence on common-equity issuance. Management noted that public equity represented only 18% of year-to-date investment volume compared with an average of 47% during the prior three years. This broader funding base could strengthen Realty Income’s ability to compete with Agree Realty, Essential Properties and private-market buyers for attractive assets. Still, higher Treasury yields remain a challenge for REIT valuations. The real-estate sector came under pressure again on Monday as long-term bond yields rose. Higher financing costs can narrow acquisition spreads and make income-oriented REIT shares less attractive relative to bonds. Over the past 30 days, FFO per share estimates for both 2026 and 2027 have remained unchanged, though the figures suggest 3.97% and 3.47% growth year over year, indicating a balanced view of growth and cost pressures. Image Source: Zacks Investment Research Valuation-wise, Realty Income stock is trading at a forward 12-month price-to-FFO of 13.62X, below the retail REIT industry average of 16.75X but ahead of its three-year median of 13.24X. O stock is also currently trading at a reasonable discount compared with its industry peers, Agree Realty Corporation and Essential Properties Realty Trust. This valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 15.80X, while Essential Properties Realty Trust is trading at 14.22X.The Value Score of C suggests that Realty Income may not be a bargain at current levels. Still, the company’s strategic investments, consistent dividend growth, underpinned by predictable rental income, keep it appealing for long-term income-oriented investors. Management's higher AFFO guidance is encouraging, yet the increase is modest. Realty Income now expects about 4% AFFO-per-share growth at the midpoint. This suggests investors should weigh the reliable income profile against a growth rate that remains measured. Image Source: Zacks Investment Research Realty Income's second-quarter results support the case for patience rather than a major change in positioning. The company is producing AFFO growth, maintaining high occupancy and finding enough investment opportunities to raise its 2026 deployment target. Its stronger liquidity position and broader access to private capital are additional upsides. However, the post-earnings share-price weakness, interest-rate sensitivity and modest internal growth argue against chasing the stock after its earlier gains. For investors who already own Realty Income, maintaining the existing position appears appropriate while collecting the monthly dividend and monitoring whether the larger investment pipeline produces sustained per-share growth over the coming quarters. Check Realty Income’s dividend history here.At present, Realty Income carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Realty Income Corporation (O) : Free Stock Analysis Report Agree Realty Corporation (ADC) : Free Stock Analysis Report Essential Properties Realty Trust, Inc. (EPRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Realty Income (O) just reported its second quarter 2026 results, giving investors fresh numbers on rental income, earnings and dividend capacity as the REIT also moves ahead with a new equity offering. See our latest analysis for Realty Income. The stock has had a soft patch in recent weeks, with a 7 day share price return of 2.13% and a 30 day share price return of 1.26%. This compares with a year to date share price return of 9.07% and a 1 year total shareholder return of 14.79%. This suggests momentum has cooled a little after a stronger period supported by steady results and the recent follow on equity offering. If Realty Income's update has you reassessing income ideas, it can also be useful to broaden your search with other opportunities using our 8 dividend fortresses Realty Income now trades at a discount to both analyst targets and one intrinsic value estimate after its recent equity raise and earnings. Is that a genuine mispricing, or a fair warning sign from the market about future risk? Realty Income's most followed narrative pegs fair value at $70.93, which sits above the latest close at $62.51 and frames the recent pullback in a different light. Read the complete narrative. Curious how a steady dividend profile, a specific revenue growth path and a defined discount rate combine to reach that fair value? The key assumptions behind this narrative rest on disciplined payout growth, a particular view on long run cash generation and a required return that sits above those cash flows. The full story shows exactly how those moving parts line up to support the $70.93 figure. Result: Fair Value of $70.93 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, there are clear pressure points, including a cost of capital above recent ROIC and higher volatility in key western markets, which could challenge this Realty Income narrative. Find out about the key risks to this Realty Income narrative. While the user narrative points to Realty Income trading below an estimated fair value of $70.93, the current P/E ratio of 46.7x tells a different story. It sits well above the US Retail REITs industry on 27.3x, the peer average on 28.3x and even a fair ratio of 37x. That gap suggests investors are already paying up for quality, so the key question is whether the underlying earnings profile justifies staying at this richer level. See what the numbers say about this price — find out in our valuation breakdown. With sentiment on Realty Income split between opportunity and caution, it makes sense to look through the data yourself and move quickly to your own assessment of the 4 key rewards and 1 important warning sign. If Realty Income has your attention, do not stop here. Broaden your watchlist with other potential opportunities that could fit different roles in your portfolio. Target resilient compounding potential by focusing on businesses that consistently generate cash using our 51 high quality undervalued stocks Prioritise sleep-at-night stability by filtering for companies that pass tough robustness checks with the 79 resilient stocks with low risk scores Hunt for future standouts hiding in plain sight by reviewing our screener containing 19 high quality undiscovered gems This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include O. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Realty Income Corporation? Here are five stocks we like better. Realty Income raised its 2026 outlook after second-quarter AFFO per share increased 3.8% to $1.09. Full-year AFFO guidance is now $4.44–$4.45 per share, while the investment-volume target rose to $10 billion. Investment activity reached approximately $2.6 billion globally in the quarter, led by industrial properties, which represented about 65% of global real estate investments. The company also expanded its European, private-capital and data-center platforms. The balance sheet remained within target leverage levels, with pro forma liquidity exceeding $5.7 billion after financing actions. Portfolio occupancy was 98.8%, and rent recapture remained strong at 102.7% overall and 105.8% for industrial leasing. 3 Healthcare Stocks With Fresh Dividend Hikes and Different Income Profiles Realty Income (NYSE:O) raised its full-year 2026 outlook after reporting second-quarter adjusted funds from operations, or AFFO, per share growth of 3.8% to $1.09, supported by investment activity across industrial properties, Europe, private-capital vehicles and data centers. Year-to-date AFFO per share reached $2.22, up 5.2% from the same period of 2025. Chief Executive Officer Sumit Roy said the company increased the midpoint of its full-year AFFO guidance by $0.02, setting a new range of $4.44 to $4.45 per share. The midpoint implies approximately 4% annual growth. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Why Bloom Energy May Be the Most Important AI Infrastructure Stock The company also lifted its 2026 investment-volume target to $10 billion from $9.5 billion, citing a robust investment pipeline. Realty Income expects approximately $9 billion of that amount to be invested at its share. Realty Income reported approximately $2.6 billion of global investments during the second quarter, or $2.1 billion at its pro-rata share, at an initial weighted average cash yield of 7.3%. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Nano Nuclear’s Air Force Contract Puts Its Short-Squeeze Setup in Focus U.S. investments accounted for roughly $1.7 billion at Realty Income's share and carried a 7.4% weighted average cash yield. Industrial assets represented about $800 million of U.S. activity and approximately 65% of global real estate investments for the quarter. Roy said industrial acquisitions were supported by improving market fundamentals and contractual rent escalators generally ranging from 2% to 3.5% annually. Nearly half of industrial acquisition net operating income came from investment-grade clients, he said. → No Hangover: Revisiting Microsoft One Week After Earnings The company invested about $400 million in Europe at a weighted average yield of 7%. Neil Abraham, chief strategy officer and president of Realty Income International, said the European pipeline includes grocery, do-it-yourself retail, industrial logistics, onshoring and advanced-manufacturing opportunities. Abraham said the company remains constructive on Europe, despite geopolitical uncertainty earlier in the year. He also said cap-rate pressure in the United Kingdom and much of Europe has generally been downward due to institutional capital inflows, with Germany an exception. Realty Income's U.S. Core Plus Fund acquired approximately $673 million of assets globally during the quarter, with industrial accounting for more than half of the volume and retail comprising the remainder. The fund's remaining cornerstone commitments were fully deployed, bringing total gross asset value to approximately $3 billion. Assets acquired by the fund in the second quarter generated a 6% weighted average cash yield. Roy said the fund enables Realty Income to pursue lower-initial-yield assets that may not be accretive on the company's balance sheet while generating management-fee income and day-one accretion for shareholders. Chief Financial Officer Jonathan Pong said management-fee income totaled approximately $3.2 million in the quarter, largely from the Core Plus Fund and a separate insurance joint venture. He said Realty Income expects roughly $10 million of management fees from the fund and another $2 million to $3 million from the insurance venture during 2026. On June 30, Realty Income announced a $6 billion programmatic hyperscale data center joint venture with Cloud Capital. Realty Income expects to invest up to $1.4 billion over time for a 45% equity interest in the venture, which includes three Northern Virginia data center properties representing less than 400 megawatts of capacity. Roy said Realty Income had closed on the first stabilized property and expects to acquire interests in two development assets when they stabilize. The company sees demand for data center capacity continuing to exceed available supply in major markets, driven by artificial intelligence, cloud computing and broader digitization. Chief Investment Officer Mark Hagan said Realty Income intends to diversify its data center tenant exposure and focus on investment-grade hyperscale and enterprise users. He said the company could invest in European data center markets and may participate at different stages of development, including through credit investments. Realty Income ended the quarter with approximately $3.5 billion of available liquidity on a pro-rata basis. Net debt to annualized pro forma adjusted EBITDA was 5.4 times, or 5.2 times including unsettled at-the-market equity forwards, within the company's target range. After quarter-end financing actions, Pong said pro forma liquidity rose above $5.7 billion. Those actions included expanding global revolving credit facilities to $5.5 billion, increasing the commercial paper program to $5.5 billion, issuing a €600 million bond at a 3.7% yield, and raising another $90 million of forward equity. Year to date, the company issued $3 billion of debt at a blended effective coupon of 3.9%, compared with $1.4 billion of maturities at a 4% blended coupon. Fitch also initiated coverage of Realty Income with an A long-term issuer default rating, Pong said. Portfolio occupancy was 98.8% at quarter-end. Realty Income re-leased 482 units at a blended rent recapture rate of 102.7%, including renewals at 104.6%. Industrial leasing generated a 105.8% recapture rate, while international recapture reached 112.9%. The company completed $161 million in dispositions during the quarter. Roy said the capital-recycling strategy is intended to reallocate capital toward property types, geographies and opportunities with stronger organic-growth prospects, pricing power and long-term value potential. Investment-grade client exposure rose to 34% of annualized rent from 32% in the prior quarter. Realty Income maintained its full-year credit-loss outlook at about 40 basis points of rental revenue and did not change its forecast for lease-termination income of $45 million to $50 million. Pong said the higher AFFO outlook reflected stronger investment volumes and yields, modest credit losses, capital-markets execution and improved visibility into deal timing. Realty Income Corporation (NYSE: O) is a real estate investment trust (REIT) that acquires, owns and manages commercial properties subject primarily to long-term net lease agreements. The company's business model focuses on generating predictable, contractual rental income by leasing properties to tenants under agreements that typically place responsibility for taxes, insurance and maintenance on the tenant. Realty Income is publicly traded on the New York Stock Exchange and markets itself as a reliable income-oriented REIT. Realty Income's portfolio is concentrated in single-tenant, retail and service-oriented properties such as drugstores, convenience stores, dollar and discount retailers, restaurants, and other essential-service businesses. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Realty Income Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Realty Income Corporation O raised full-year AFFO and investment targets on its second-quarter 2026 earnings call, citing a broader pipeline and improved funding visibility. President and CEO Sumit Roy and CFO and Treasurer Jonathan Pong emphasized growth without loosening underwriting. Private capital, industrial properties, data centers and recycling are expanding the opportunity set. Sumit Roy said AFFO per share rose 3.8% year over year to $1.09. The result matched the Zacks Consensus Estimate, while revenues of $1.54 billion topped the consensus estimate of $1.53 billion. Realty Income Corporation price-consensus-eps-surprise-chart | Realty Income Corporation Quote Realty Income raised 2026 AFFO per share guidance to $4.44-$4.45 from $4.41-$4.44. Investment volume guidance increased to $10 billion from $9.5 billion, with about $9 billion expected at the company’s share. CFO Pong tied the higher outlook to investment volume, favorable yields, capital markets execution and better closing visibility. Credit-loss guidance remained at around 40 basis points of rental revenues. CFO Pong said public equity funded 18% of year-to-date investment volume versus a 47% average over the prior three years. Realty Income settled $825 million of forward equity to fund $4.7 billion of pro rata investments. Quarter-end available liquidity was about $3.5 billion. Subsequent actions, including expanded $5.5 billion facilities, a €600 million bond and additional forward equity, raised pro forma liquidity above $5.7 billion. In response to a question from a UBS about fee income, Sumit Roy said quarterly management fees were about $3.2 million. He stressed that the Core Plus Fund and programmatic joint ventures were designed as recurring capital channels. Sumit Roy highlighted the $6 billion hyperscale data center venture with Cloud Capital. Realty Income expects to invest up to $1.4 billion for a 45% stake in three Northern Virginia assets totaling 400 megawatts. Roy said data centers represent a multiyear channel tied to AI adoption, cloud computing and digitization. The first stabilized asset closed after quarter-end, while the two development assets are expected to join after stabilization. An Evercore analyst pressed management on residual-value risk. President and CEO Roy said underwriting includes severe downside cases and prioritizes top markets, 15- to 20-year leases, contractual growth and limited landlord obligations. He declined to set a target portfolio allocation. President and CEO Roy said global investments totaled about $2.6 billion, or $2.1 billion at Realty Income’s share, at a 7.3% initial weighted average cash yield. Industrial properties accounted for roughly 65% of global real estate investment activity. A UBS analyst questioned the 6.4% acquisition yield. Roy said lower-yielding assets were directed to the Core Plus Fund, while balance-sheet investments were structured to preserve the historical spread target of about 150 basis points. President and CEO Roy said Europe benefited from lower borrowing costs and less competition than the United States. Chief strategy officer and Realty Income International President Neil Abraham added that institutional demand was pushing U.K. retail park cap rates lower. President and CEO Roy said the company completed $161 million of dispositions and was increasingly willing to sell occupied assets. Such decisions can reflect credit concerns, private-market mispricing or stronger redeployment opportunities. Roy clarified to a Deutsche Bank analyst that portfolio recycling remains focused on outright asset sales rather than joint ventures. He gave a similar response to a Green Street analyst, saying occupied-asset sales are not limited to reducing tenant risk. Occupancy was 98.8%, blended rent recapture reached 102.7% and investment-grade client exposure increased to 34% of annualized rent from 32% in the first quarter. CFO Pong reported leverage of 5.4 times net debt to annualized pro forma adjusted EBITDAre or 5.2 times including unsettled ATM forwards. Fitch assigned an A long-term issuer default rating with a stable outlook. Sumit Roy expressed confidence in the 2026 pipeline while emphasizing selectivity. Credit investments, private capital and new property types are intended to support the company’s core strategy of owning long-duration net lease assets. Realty Income carries a Zacks Rank #2 (Buy), reflecting a favorable near-term earnings-estimate revision profile. Its Value, Growth, Momentum and VGM Score are all D, below the A or B grades identified as more favorable style signals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The combination presents a positive rank without supportive Style Scores across the main investing approaches. The Zacks Rank can change as analysts revise estimates after the just-reported results, so the current rating is not fixed. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Realty Income Corporation (O) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. AFFO Per Share (Q2): $1.09, representing 3.8% growth. AFFO Per Share (Year-to-Date): $2.22, representing 5.2% growth. Full-Year 2026 AFFO Guidance: Increased to a range of $4.44 to $4.45 per share, representing approximately 4% growth at the midpoint. Global Investments (Q2): Totaled approximately $2.6 billion, or $2.1 billion at pro rata share, at an initial weighted average cash yield of 7.3%. U.S. Investments (Q2): Approximately $1.7 billion in pro rata investments at a weighted average cash yield of 7.4%. European Investments (Q2): Approximately $400 million at a weighted average yield of 7%. 2026 Investment Volume Guidance: Increased from $9.5 billion to $10 billion. Occupancy: 98.8%. Rent Recapture Rate: Blended rate of 102.7%, with renewals at 104.6%. Dispositions (Q2): Completed $161 million in dispositions. Investment-Grade Client Exposure: Increased to 34% of annualized rent, up from 32% in the first quarter. Net Debt to Annualized Pro Forma Adjusted EBITDA: 5.4 times, or 5.2 times inclusive of unsettled ATM forwards. Available Liquidity: Approximately $3.5 billion on a pro rata basis at quarter end, increasing to more than $5.7 billion pro forma for subsequent transactions. New Debt Issued (Year-to-Date): $3 billion at a blended effective coupon of 3.9%. Debt Matured (Year-to-Date): $1.4 billion at a blended coupon of 4%. Public Equity Consumption: Comprised only 18% of investment volume year-to-date, compared to an average of 47% over the past three years. Credit Loss Outlook (2026): Held flat at around 40 basis points of rental revenue. Lease Termination Income (Q2): Recorded approximately $1 million, with full-year guidance maintained at $45 million to $50 million. Warning! GuruFocus has detected 8 Warning Signs with O. Is O fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. AFFO per share grew 3.8% to $1.09 in Q2, with year-to-date growth of 5.2%, and the full-year guidance midpoint was raised to $4.44-$4.45. Investment volume guidance was increased to $10 billion for 2026, reflecting a robust pipeline and strong sourcing capabilities. Portfolio quality improved with investment-grade client exposure rising to 34% of annualized rent, and occupancy remained high at 98.8%. Rent recapture rates were strong, with a blended rate of 102.7% and renewals at 104.6%, including a large batch renewal covering nearly 150 assets. The company expanded its capital platform, reducing reliance on public equity (only 18% of investment volume year-to-date) and enhancing liquidity to over $5.7 billion. Fitch initiated coverage with a solid A rating, placing Realty Income among just four U.S. REITs with such a rating. The new $6 billion hyperscale data center JV with Cloud Capital provides access to a high-growth sector with strong demand and long-term leases. Industrial fundamentals are improving, with accelerated absorption, declining vacancy, and attractive rent escalators of 2%-3.5% annually. International recapture rates reached 112.9%, driven by the successful UK value-add retail park strategy. The U.S. Core Plus Fund is fully deployed, generating management fees that contribute to day-one accretion for shareholders. The blended acquisition cap rate of 6.4% was lower than the previous quarter, partly due to lower-yielding fund investments, which may raise concerns about yield compression. Rising interest rates (10-year Treasury in the 4.6%-5% range) could pressure cap rates higher, potentially impacting investment spreads. Competition in the U.S. net lease market is increasing, with new entrants keeping cap rates lower and making it harder to achieve historical spreads. Credit loss guidance remains at 40 basis points of rental revenue, which is higher than the historical average of low 20 basis points, indicating ongoing credit risk. The watch list remains elevated at high 5% of annualized rent, with concentration in home furnishings and casual dining sectors. Lease termination income guidance was not raised, with only $1 million recorded in Q2, suggesting limited upside from this source. The 'other' same-store revenue category declined 5.1%, driven by a hotel asset from a prior merger with non-payment of rent, though the impact is not material. Public equity funding, while reduced, still relies on unsettled ATM forwards of $1.3 billion, which could be subject to market volatility. Data center investments carry obsolescence and residual value risks, though the company runs downside scenarios to mitigate them. The U.K. market faces higher cost of debt, which could limit investment opportunities despite institutional capital inflows. Q: The acquisition cap rates during the quarter were 6.4%, which is a bit lower than last quarter. Is that a reflection of mix, competition, or something else? How should we think about the accretion on cap rates of 6.4%?A: Sumit Roy (CEO) explained that the lower blended cap rate is by design, driven by the allocation of over $600 million of lower-yielding assets to the U.S. Core Plus Fund. He clarified that the remaining on-balance-sheet investments maintain a profile that achieves the company's historical investment spreads of approximately 150 basis points. Q: Can you provide an update on the management fee income run rate and how much is included in the underlying guidance?A: Jonathan Pong (CFO) stated that management fee income was approximately $3.2 million for the quarter, primarily from the U.S. Core Plus Fund, which is now fully deployed. He guided that the full-year expectation is around $10 million for the fund and an additional $2 million to $3 million attributable to the insurance JV. Q: With rates bouncing around, are you seeing cap rate compression, and do you think higher rates will eventually flow through given competitive dynamics?A: Sumit Roy (CEO) noted that the typical inverse correlation between net lease cap rates and the 10-year Treasury has not held over the last two months. He stated that if the 10-year remains in the 4.6% to 5% range, cap rates will likely follow, but increased competition from new private and public entrants is keeping cap rates lower in the U.S. Q: How should we think about the split of the $5 billion second-half investment pipeline between on-balance-sheet investments versus JVs and funds?A: Sumit Roy (CEO) confirmed that of the $10 billion total guidance, $9 billion is expected to be on the balance sheet. He noted that the fund's cornerstone equity has been fully deployed, and only the fund's remaining leverage capacity will be used for future fund investments, with the rest going on the balance sheet. Q: Do you have all the sources of capital needed to execute the business plan, or should we expect more partnerships and JVs over the next 6 to 12 months?A: Sumit Roy (CEO) indicated that the investment product is largely defined, but the financing side is still evolving. He described the creation of an "ecosystem" to attract low-cost equity capital and generate fee streams, stating that while the current channels are the beginning, they will focus on ensuring minimal overlap between different private capital sources to ensure permanence and shareholder benefit. Q: The back-half investment outlook suggests a slight deceleration. Is that by design, conservatism, or competition?A: Sumit Roy (CEO) and Mark Hagan (CIO) pushed back on the notion of deceleration, emphasizing that the guidance was increased to $10 billion due to the strength and robustness of the pipeline. They expressed great confidence in the health of the pipeline and expect another strong second half of the year. Q: How much of the portfolio might be subject to being upgraded or recycled, and what is the difference in cap rates between what you are buying and selling?A: Sumit Roy (CEO) stated that capital recycling is focused on improving key metrics like internal growth, lease duration, and credit exposure. He indicated that the strategy involves selling assets where the company has lower long-term conviction and redeploying capital into areas like data centers and industrial, aiming to make the portfolio's KPIs more accretive on a pro forma basis. Q: On the data center hyperscale deals, are you diversifying the tenant base, and should we expect new TOP20 tenants this year?A: Mark Hagan (CIO) confirmed that the new three-asset portfolio has different tenants than the original two assets, and diversification will be a key part of the strategy going forward. Sumit Roy (CEO) added that when large data center clients close, they could potentially reshuffle the TOP20 list, which would be viewed very positively. Q: Can you talk about the economics of data center investments, including stabilized yields and competition from private equity and other public capital?A: Mark Hagan (CIO) acknowledged significant competition but highlighted a lack of a natural long-term home for stabilized hyperscale assets, which creates a sweet spot for Realty Income. He noted that cap rates are still in a discovery phase as assets transition from development to stabilized ownership, but recent transactions provide good indications of current market levels. Q: If you underwrite data centers to zero residual value, what would those IRRs look like today?A: Sumit Roy (CEO) declined to provide specific details but confirmed that zero residual value is one of the scenarios they run. He explained that the underwriting box considers location, lease duration (15-20 years), and growth, and that they are comfortable with the downside protection provided by long-duration leases with minimal landlord responsibilities. Q: What is your tolerance for absolute exposure to data centers as a percentage of ABR or gross investment?A: Sumit Roy (CEO) stated that they are not targeting a specific percentage for data centers. He described the current environment as a "once-in-a-generation" demand for the asset type, and while they are having multiple conversations, they remain focused on transactions that meet their long-term return expectations and mitigate obsolescence and residual risks. Q: What does a wholly-owned acquisition yield need to look like for it to be interesting, given the higher yields on loans and development deals?A: Sumit Roy (CEO) explained that hurdle rates vary by geography and are tracked weekly. The goal is to generate a 150 basis point spread over the cost of capital, which means required cap rates differ by region. For example, lower debt costs in Europe allow for lower cap rates, while higher costs in the UK require higher yields to maintain the same spread. Q: Are you open to data center investment in Europe, and are you avoiding the development phase?A: Mark Hagan (CIO) confirmed that they are open to European data center investments, citing markets like Frankfurt and other attractive locations. He clarified that they can participate in various phases, including lending during the For the complete transcript of the earnings call, please refer to the full earnings call transcript.

SAN DIEGO, Aug. 5, 2026 /PRNewswire/ -- Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company®, today announced operating results for the three and six months ended June 30, 2026. All per share amounts presented in this press release are on a diluted per common share basis unless stated otherwise. COMPANY HIGHLIGHTS: For the three months ended June 30, 2026: Net income available to common stockholders was $344.0 million, or $0.37 per share Adjusted Funds from Operations ("AFFO") per share increased 3.8% to $1.09 per share, compared to the three months ended June 30, 2025 Invested $2.6 billion; our Pro-Rata Share was $2.1 billion at an Initial Weighted Average Cash Yield of 7.3% Net Debt to Annualized Pro Forma Adjusted EBITDAre was 5.4x Achieved a rent recapture rate of 102.7% on properties re-leased Events subsequent to June 30, 2026: In July 2026, issued €600.0 million of 3.625% senior unsecured notes due July 2032 In July 2026, amended and restated our unsecured revolving credit facility to $5.5 billion and commercial paper programs to $5.5 billion In August 2026, assigned a Long-Term Issuer Default Rating of 'A' with a Stable Outlook from Fitch Ratings CEO Comments "Our results reflect the strength of Realty Income's diversified platform and our disciplined approach to capital allocation," said Sumit Roy, Realty Income's Chief Executive Officer. "As demonstrated by our recently announced $6 billion hyperscale data center joint venture and the continued expansion of our Realty Income Investment Management platform, we are leveraging our scale, relationships, and track record to access new sources of growth while maintaining the same disciplined underwriting standards that have defined Realty Income for decades." "Supported by the resilience of our core portfolio and contributions from these complementary growth channels, we delivered another quarter of solid AFFO per share growth and invested approximately $2.6 billion, or $2.1 billion at our share, during the quarter. As a result, we are pleased to raise our 2026 AFFO per share guidance to $4.44 - $4.45, reflecting approximately 4% growth rate at the midpoint." Select Financial Results The following summarizes our select financial results (dollars in millions, except per share data): Dividend Increases In June 2026, we announced the 115th consecutive quarterly dividend increase, which is the 135th increase since our listing on the New York Stock Exchange ("NYSE") in 1994. The annualized dividend amount as of June 30, 2026 was $3.252 per share. The amount of monthly dividends paid per share increased 0.7% to $0.812 in the three months ended June 30, 2026, as compared to $0.806 during the three months ended June 30, 2025, representing 74.5% of our diluted AFFO per share of $1.09 during the three months ended June 30, 2026. Real Estate Portfolio Update As of June 30, 2026, we owned or held interests in 15,588 properties, which were leased to 1,798 clients doing business in 92 industries. Our diversified portfolio of commercial properties under long-term, net lease agreements is actively managed with a weighted average remaining lease term of approximately 8.6 years. Our portfolio of commercial real estate has historically provided dependable rental revenue supporting the payment of monthly dividends. As of June 30, 2026, portfolio occupancy was 98.8% with 188 properties available for lease or sale, as compared to 98.9% as of March 31, 2026 and 98.6% as of June 30, 2025. 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: Changes in Occupancy During the three months ended June 30, 2026, the new Annualized Base Rent on re-leased units was $110.3 million, as compared to the previous annual rent of $107.4 million on the same units, representing a rent recapture rate of 102.7% on the re-leased units. Please see the Glossary for our definition of Annualized Base Rent. During the six months ended June 30, 2026, the new Annualized Base Rent on re-leased units was $183.5 million, as compared to the previous annual rent of $178.2 million on the same units, representing a rent recapture rate of 103.0% on the re-leased units. Investment SummaryThe following table summarizes our investments for the periods indicated below (dollars in millions): Same Store Rental Revenue The following summarizes our Same Store Rental Revenue for 14,619 properties under lease for the three and six months ended June 30, 2026 and 2025 (dollars in millions): For purposes of comparability, Same Store Rental Revenue is presented on a constant currency basis using the applicable exchange rate as of June 30, 2026. Same Store Rental Revenue also includes our Pro-Rata Share of rental revenue from properties owned by unconsolidated joint ventures and amounts attributable to noncontrolling interests based on their respective ownership percentages. Please see the Glossary to see definitions of our Same Store Pool and Same Store Rental Revenue. Property DispositionsThe following summarizes our property dispositions (dollars in millions): Liquidity and Capital Markets LiquidityAs of June 30, 2026, we had $3.5 billion total available liquidity at our Pro-Rata Share(1), comprised of the components summarized below (dollars in millions): Capital RaisingDuring the three months ended June 30, 2026, we raised $843.0 million of proceeds from the sale of common stock at a weighted average price of $61.52 per share, primarily through the sale of 13.7 million shares of common stock pursuant to forward sale agreements under our ATM program. As of August 5, 2026, approximately 22.5 million shares of common stock subject to ATM forward sale agreements remain unsettled, of which 1.4 million shares were sold in July 2026, representing approximately $1.3 billion in expected net proceeds and a weighted average initial gross price of $60.34 per share. ATM net sale proceeds assume 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. On July 1, 2026, our U.S. Core Plus Fund called $265.7 million of capital from third-party investors, resulting in an indirect ownership of 23.6% in the Fund. In July 2026, we issued €600.0 million of 3.625% senior unsecured notes due July 2032 (the "2032 Notes"). The public offering price for the 2032 Notes was 99.518% of the principal amount for an effective annual yield to maturity of 3.716%. In April 2026, we issued $800.0 million of 4.750% senior unsecured notes due April 2033 (the "April 2033 Notes"). The public offering price for the April 2033 Notes was 98.261% of the principal amount for an effective yield to maturity of 5.047%. Interest is paid semi-annually. In connection with the issuance, we executed a $500 million U.S. Dollar-to-Euro 7-year cross currency swap, resulting in approximately €436 million of proceeds and an effective fixed-rate, Euro-denominated yield to maturity of approximately 4.07% and coupon rate of 3.81%. On a combined basis, the Notes and related swap resulted in an effective blended yield to maturity of approximately 4.44% and blended coupon rate of 4.16%. Expanded Revolving Credit Facilities and Commercial Paper ProgramsIn July 2026, we closed on the recast and expansion of our $5.5 billion multicurrency unsecured revolving credit facilities, upsized from the prior $4.0 billion capacity. In addition, we also announced an expanded combined capacity of $5.5 billion for our global commercial paper programs, upsized from the prior $3.0 billion combined capacity. 'A' Credit Rating from Fitch RatingsOn August 3, 2026, Fitch Ratings assigned Realty Income a Long-Term Issuer Default Rating of 'A' with a Stable Outlook. In its press release, Fitch Ratings cited Realty Income's long operating history and cycle-tested performance, durable cash flow, portfolio diversification, and strong access to multiple sources of capital as key drivers supporting its 'A' rating. Guidance Summarized below are approximate estimates of the key components of our 2026 earnings guidance (with 2026 actual results for comparison): Conference Call Information In conjunction with the release of our operating results, we will host a conference call on August 5, 2026 at 2:00 p.m. PDT to discuss the operating results. To access the conference call, dial (833) 816-1264 (United States) or (412) 317-5632 (International). When prompted, please ask for the Realty Income conference call. A telephone replay of the conference call can also be accessed by calling (855) 669-9658 (United States) or (412) 317-0088 (International) and entering the conference ID 5929348. The telephone replay will be available through August 12, 2026. A live webcast will be available in listen-only mode by clicking on the webcast link on the company's home page at www.realtyincome.com. A replay of the conference call webcast will be available approximately one hour after the conclusion of the live broadcast. No access code is required for this replay. Supplemental Materials Supplemental Operating and Financial Data for the three and six months ended June 30, 2026 is available on our corporate website at www.realtyincome.com/investors/quarterly-and-annual-results. About Realty Income Realty Income (NYSE: O), an S&P 500 company, is real estate partner to the world's leading companies®. Founded in 1969, we serve our clients as a full-service real estate capital provider. As of June 30, 2026, we have a portfolio of over 15,500 properties in all 50 U.S. states, the United Kingdom ("U.K."), and eight 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 673 consecutive monthly dividends and are a member of the S&P 500 Dividend Aristocrats® index for having increased our dividend for over 31 consecutive years. Additional information about the company can be found at www.realtyincome.com. Investors and others should note that we announce material financial and operational information to our investors using our investor relations website (www.realtyincome.com/investors), press releases, SEC filings and public conference calls and webcasts. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this press release, the words "estimate," "anticipate," "assume," "expect," "believe," "intend," "continue," "should," "may," "likely," "plan," "seek," and similar expressions are intended to identify forward-looking statements. Forward-looking statements include discussions of our business, strategy, plans, and the intentions of management; joint ventures, partnerships, and portfolio including management thereof; our platform; growth and capital strategies including our private capital business, investment pipeline 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; operations and results; guidance; our share repurchase program; settlement of shares of common stock sold pursuant to forward sale confirmations under our ATM program; dividends, including the amount, timing and payments of dividends; and macroeconomic and other business trends, including interest rates and trends in the market for long-term leases of freestanding, single-client properties. 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; general domestic and foreign business, economic, or financial conditions; competition; fluctuating interest and currency rates; inflation and its impact on our clients and us; access to debt and equity capital markets and other sources of funding (including the terms, structure and partners of such funding); volatility and uncertainty in the credit and financial markets; other risks inherent in real estate, private capital, credit and mezzanine investments, and joint ventures or co-investment ventures, including solvency, defaults under leases, bankruptcies, potential liability relating to environmental matters, illiquidity of real estate investments (including rights of first refusal or rights of first offer), and potential damages from natural disasters; impairments in the value of our real estate assets; volatility and changes in domestic and foreign laws and the application, enforcement or interpretation thereof (including with respect to tax laws and rates); property ownership through co-investment ventures, funds, joint ventures, partnerships and other arrangements which, among other things, may transfer or limit our control of the underlying investments; epidemics or pandemics; the loss of key personnel; the threat and outcome of any legal proceedings to which we are a party or which may occur in the future; acts of terrorism and war; and the anticipated benefits from mergers, acquisitions, co-investment ventures, funds, joint ventures, partnerships and other arrangements; and those additional risks and factors discussed in our reports filed with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are not guarantees of future plans and performance and speak only as of the date of this press release. Past operating results and performance are provided for informational purposes and are not a guarantee of future results. There can be no assurance that historical trends will continue. Actual plans and results may differ materially from what is expressed or forecasted in this press release and forecasts made in the forward-looking statements discussed in this press release may not materialize. 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 or to reflect the occurrence of unanticipated events. The Annualized Pro Forma Adjustments, which include transaction accounting adjustments in accordance with U.S. GAAP, consist of adjustments to incorporate Adjusted EBITDAre from investments we acquired or stabilized during the applicable quarter and Adjusted EBITDAre from investments we disposed of during the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the applicable quarter. Our calculation includes all adjustments consistent with the requirements to present Adjusted EBITDAre on a pro forma basis in accordance with Article 11 of Regulation S-X. The following table summarizes our Annualized Pro Forma Adjustments related to our Annualized Pro Forma Adjusted EBITDAre calculation for the period indicated below (in thousands): GLOSSARY Adjusted EBITDAre. The National Association of Real Estate Investment Trusts ("Nareit") established an EBITDA metric for real estate companies (i.e., EBITDA for real estate, or EBITDAre) it believed would provide investors with a consistent measure to help make investment decisions among certain REITs. Our definition of "Adjusted EBITDAre" is generally consistent with the Nareit definition, other than our adjustment to remove foreign currency and derivative gain and loss and merger, transaction, and other costs, net. We define Adjusted EBITDAre, a non-GAAP financial measure, for the most recent quarter as earnings (net income) before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) executive severance charge, (v) provisions for impairment of real estate, (vi) provisions for credit losses on loans and financing receivables, (vii) merger, transaction, and other costs, net, (viii) gain on sales of real estate, (ix) foreign currency and derivative gain and loss, net, and (x) equity in earnings of unconsolidated entities. Our Adjusted EBITDAre may not be comparable to Adjusted EBITDAre reported by other companies or as defined by Nareit, and other companies may interpret or define Adjusted EBITDAre differently than we do. Management believes Adjusted EBITDAre to be a meaningful measure of a REIT's performance because it provides a view of our operating performance, analyzes our ability to meet interest payment obligations before the effects of income tax, depreciation and amortization expense, provisions for impairment, provisions for credit losses on loans and financing receivables, gain on sales of real estate and other items, as defined above, that affect comparability, including the removal of non-recurring and non-cash items that industry observers believe are less relevant to evaluating the operating performance of a company. In addition, EBITDAre is widely followed by industry analysts, lenders, investors, rating agencies, and others as a means of evaluating the operating performance of business activities prior to servicing debt obligations. Adjusted EBITDAre should be considered along with, but not as an alternative to, net income as a measure of our operating performance. Adjusted Free Cash Flow, a non-GAAP financial measure, is defined as net cash provided by operating activities, less certain capital expenditures, distributions paid to common stockholders and noncontrolling interests, merger, transaction, and other costs, net, and changes in net working capital. We believe adjusted free cash flow to be a useful liquidity measure for us and our investors by helping to evaluate our ability to generate cash beyond what is needed to fund capital expenditures, debt service and other obligations. Notwithstanding cash on hand and incremental borrowing capacity, adjusted free cash flow reflects our ability to grow our business through investments and acquisitions, as well as our ability to return cash to shareholders through dividends. Adjusted free cash flow is not considered under generally accepted accounting principles to be a primary measure of an entity's residual cash flow available for discretionary spending, and accordingly should not be considered an alternative to operating income, net income, or amounts shown in our consolidated statements of cash flows. Adjusted Funds From Operations (AFFO), a non-GAAP financial measure, is defined as FFO adjusted for unique revenue and expense items, which we believe are not as pertinent to the measurement of our ongoing operating performance. Most companies in our industry use a similar measurement to AFFO, but they may use the term "CAD" (for Cash Available for Distribution) or "FAD" (for Funds Available for Distribution). We believe AFFO provides useful information to investors because it is a widely accepted industry measure of the operating performance of real estate companies used by the investment community. In particular, AFFO provides an additional measure to compare the operating performance of different REITs without having to account for differing depreciation assumptions and other unique revenue and expense items which are not pertinent to measuring a particular company's ongoing operating performance. Therefore, we believe that AFFO is an appropriate supplemental performance metric, and that the most appropriate GAAP performance metric to which AFFO should be reconciled is net income available to common stockholders. Annualized Adjusted EBITDAre, a non-GAAP financial measure, is calculated by multiplying Adjusted EBITDAre for the applicable quarter by four. Management believes the use of an Annualized Adjusted EBITDAre metric is meaningful because it represents our run rate operating performance for the period presented. Annualized Adjusted Free Cash Flow, a non-GAAP financial measure, is calculated by annualizing Adjusted Free Cash Flow. Annualized Base Rent represents our Pro-Rata Share of contractual monthly base rent for all leases in place and exchange rates as of the balance sheet date, multiplied by 12, and excludes percentage rent and income on loans and preferred equity investments. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period. Total annualized base rent has not been reduced to reflect reserves recorded as reductions to GAAP rental revenue in the periods presented. We believe total annualized base 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. Annualized Pro Forma Adjusted EBITDAre, a non-GAAP financial measure, is defined as Annualized Adjusted EBITDAre, which includes transaction accounting adjustments in accordance with U.S. GAAP, adjusted to incorporate Adjusted EBITDAre from investments we acquired or stabilized during the applicable quarter and Adjusted EBITDAre from investments we disposed of during the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the applicable quarter. Our calculation includes all adjustments consistent with the requirements to present Annualized Adjusted EBITDAre on a pro forma basis in accordance with Article 11 of Regulation S-X. The ratio of our net debt to our Annualized Pro Forma Adjusted EBITDAre is also used to determine the vesting of performance share awards granted to our executive officers. Cash Income represents expected rent for real estate acquisitions as well as rent to be received upon completion of the properties under development. For unconsolidated entities and consolidated entities with noncontrolling interests, this represents our Pro-Rata Share of the cash income. For loans receivable and preferred equity investments, this represents earned interest income and preferred dividend income, respectively. Funds From Operations (FFO), a non-GAAP financial measure, consistent with the Nareit definition, is net income available to common stockholders, plus depreciation and amortization of real estate assets, plus provisions for impairments of depreciable real estate assets, and reduced by gain on property sales. Presentation of the information regarding FFO and AFFO is intended to assist the reader in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and AFFO in the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered alternatives to reviewing our cash flows from operating, investing, and financing activities. In addition, FFO and AFFO should not be considered measures of liquidity, of our ability to make cash distributions, or of our ability to pay interest payments. We consider FFO to be an appropriate supplemental measure of a REIT's operating performance as it is based on a net income analysis of property portfolio performance that adds back items such as depreciation and impairments for FFO. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT using historical accounting for depreciation could be less informative. The use of FFO is recommended by the REIT industry as a supplemental performance measure. In addition, FFO is used as a measure of our compliance with the financial covenants of our credit facility. Gross Asset Value is total assets before accumulated depreciation and amortization. Initial Weighted Average Cash Yield for acquisitions and properties under development is computed as Cash Income for the first twelve months following the acquisition date, divided by the total cost of the property (including all expenses borne by us), and includes our Pro-Rata Share of Cash Income from unconsolidated joint ventures and consolidated entities with noncontrolling interests. Initial weighted average cash yield for loans receivable and preferred equity investments is computed using the Cash Income for the first twelve months following the acquisition date, divided by the total cost of the investment. Investment Grade Clients are our clients, our clients that are subsidiaries or affiliates of companies, and credit investments secured with a real estate property leased to a tenant, that as of the balance sheet date, have a credit rating of Baa3/BBB- or higher from one of the three major rating agencies (Moody's/S&P/Fitch). Net Debt/Annualized Pro Forma Adjusted EBITDAre, a ratio used by management as a measure of leverage, is calculated as net debt (which we define as total debt, excluding deferred financing costs and net discounts, less cash and cash equivalents), divided by Annualized Pro Forma Adjusted EBITDAre. Net Debt/Annualized Pro Forma Adjusted EBITDAre - Inclusive of Unsettled ATM Forward Equity, a ratio used by management as a measure of leverage, is calculated as net debt inclusive of unsettled ATM forward equity (which we define as total debt, excluding deferred financing costs and net discounts, less cash and cash equivalents, less expected proceeds from unsettled ATM forward equity as of the balance sheet date), divided by Annualized Pro Forma Adjusted EBITDAre. Normalized Funds from Operations Available to Common Stockholders (Normalized FFO), a non-GAAP financial measure, is FFO excluding merger, transaction, and other costs, net. Pro-Rata Share represents our proportionate economic ownership of our joint ventures, which is derived by applying our economic ownership percentage of each such joint venture to calculate our proportionate share of the relevant line item information being presented, and aggregating that information for all such joint ventures. For balance sheet information and other capital-based metrics, we apply our economic ownership percentage as of the end of the applicable period being presented, and for activity- and earnings-based metrics, we apply our weighted average economic ownership percentage for the applicable period being presented, unless otherwise specified. We believe this form of presentation offers insights into the financial performance and condition of our company as a whole, given the significance of our joint ventures that are accounted for either under the equity method or consolidated with the third parties' share included in noncontrolling interest, although the presentation of such information may not accurately depict the legal and economic implications of holding a noncontrolling interest in the joint venture. We do not control the unconsolidated joint ventures in which we are invested for purposes of GAAP and do not represent legal claim to such items. The operating agreements of the joint ventures may contain provisions that would cause us to receive a different economic percentage of distributions from the joint venture under certain circumstances, such as the amount of capital contributed by each investor and whether any contributions are entitled to priority distributions. Similarly, upon a liquidation of any such joint venture, subject to the applicable terms of the operating agreement of such joint venture, we generally would be entitled to the applicable percentage of residual cash or other assets that remain only after repayment of all liabilities, priority distributions, and initial equity contributions. In addition, the economic interests in any joint venture may be different than our other legal interests or rights in such joint venture. We provide pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our joint ventures when read in conjunction with our reported results under GAAP. Other companies may calculate their proportionate interest differently than we do, limiting the usefulness as a comparative measure. Due to these limitations, the non-GAAP pro-rata financial information should not be considered in isolation or as a substitute for our consolidated financial statements as reported under GAAP. Same Store Pool, for purposes of determining the properties used to calculate our same store rental revenue, includes all properties that we 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 were: (i) vacant at any time, (ii) under development or redevelopment, or (iii) involved in eminent domain and rent was reduced. Same Store Rental Revenue excludes straight-line rent, the amortization of above and below-market leases, and reimbursements from clients for recoverable real estate taxes and operating expenses. For purposes of comparability, same store rental revenue is presented on a constant currency basis by applying the exchange rate as of the balance sheet date to base currency rental revenue. We present same store rental revenue on a pro-rata basis to account for our share of same store rental revenue related to unconsolidated and consolidated joint ventures. For purposes of comparability, we calculate our Pro-Rata Share using our ownership percentage as of June 30, 2026 to same store rental revenue for the three and six months ended June 30, 2026 and 2025. View original content to download multimedia:https://www.prnewswire.com/news-releases/realty-income-announces-operating-results-for-the-three-and-six-months-ended-june-30-2026-302844124.html

Realty Income Corporation O, a leader in the net lease sector, is slated to release second-quarter 2026 results on Aug. 5, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s adjusted funds from operations (AFFO) and revenues is pegged at $1.09 per share and $1.54 billion, respectively.While the Zacks Consensus Estimate for second-quarter 2026 AFFO per share has remained unchanged over the past two months, it suggests 3.81% growth year over year. The Zacks Consensus Estimate for quarterly revenues implies a notable year-over-year increase of 8.98%. Image Source: Zacks Investment Research For the current year, the Zacks Consensus Estimate for Realty Income’s revenues is pegged at $6.27 billion, indicating a rise of 9.03% year over year. The consensus mark for 2026 AFFO per share is pinned at $4.45, calling for an expansion of around 3.97% on a year-over-year basis. Over the trailing four quarters, the company’s AFFO per share surpassed the Zacks Consensus Estimate on two occasions, met it once and missed it in the other. This is depicted in the graph below: Realty Income Corporation price-eps-surprise | Realty Income Corporation Quote Our proven model doesn’t predict a surprise in terms of AFFO per share for Realty Income this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an AFFO beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Realty Income currently carries a Zacks Rank #2 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Realty Income’s second-quarter 2026 earnings report is expected to show that the company continued to benefit from the momentum built in the first quarter, supported by strong occupancy, steady investment activity and growing contributions from its private capital platform. Investors are likely to have focused on whether acquisition-driven growth and resilient property fundamentals were enough to offset the impact of higher financing costs during the quarter under review.Management’s updated 2026 guidance provides the benchmark for second-quarter expectations. Realty Income is expected to have experienced continued AFFO growth, supported by occupancy around its 98.5% target, same-store rent growth of 1-1.3% and a full-quarter contribution from investments completed earlier in the year. The company’s diversified portfolio and long-term lease structure are expected to have supported stable rental income, while recent acquisitions are likely to have contributed to revenue growth.The company is also expected to have experienced another active investment quarter. After deploying $2.8 billion during the first quarter and raising its full-year investment target to $9.5 billion, Realty Income’s acquisition pipeline is expected to have remained healthy across the United States and Europe. Continued capital deployment at attractive yields may have benefited rental revenue growth and strengthened earnings visibility.Realty Income is further expected to have seen broader support from its expanding private capital strategy. The Apollo retail joint venture, additional capital raised through the U.S. Core Plus Fund and other institutional partnerships are expected to have improved revenue visibility while providing greater funding flexibility. These initiatives are likely to have contributed to investment capacity without relying solely on the public equity markets.On the other hand, higher borrowing costs are expected to have pressured results in the quarter under review, although the company’s use of cross-currency swaps may have partially offset financing costs. Overall, Realty Income is expected to have delivered another stable quarter, with resilient operating fundamentals outweighing the impact of a higher-rate funding environment. Shares of Realty Income have rallied 11.4% so far in the year, aligning with the S&P 500 composite’s increase but underperforming the Zacks REIT and Equity Trust - Retail industry’s rise of 21.4%. While Realty Income has underperformed its industry, it has rallied more than its peers like Agree Realty Corporation ADC and Essential Properties Realty Trust, Inc. EPRT. Image Source: Zacks Investment Research Valuation-wise, Realty Income trades at a forward price-to-FFO of 13.98X, below the retail REIT industry average of 17.19X but above its one-year median of 13.71X. O stock is also currently trading at a reasonable discount compared with its industry peers, Agree Realty Corporation and Essential Properties Realty Trust. However, this valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 16.40X, while Essential Properties Realty Trust is trading at 14.69X.However, the Value Score of D suggests that Realty Income may not be a bargain at current levels. Image Source: Zacks Investment Research Realty Income’s second-quarter setup supports a favorable investment view. High occupancy, steady rent growth and contributions from recent acquisitions are expected to have supported AFFO, while the Apollo venture and U.S. Core Plus Fund may have improved funding flexibility and fee income. The company’s diversified portfolio, disciplined capital deployment, strong liquidity and raised 2026 guidance suggest that operating momentum remains intact.For investors seeking dependable income with moderate growth potential, the outlook supports adding the shares at present levels.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Realty Income Corporation (O) : Free Stock Analysis Report Agree Realty Corporation (ADC) : Free Stock Analysis Report Essential Properties Realty Trust, Inc. (EPRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

With the second-quarter earnings season underway, the early results are drawing investor interest as companies report strong profits. Instead of buying stocks that have already rallied on solid results, it may make more sense to focus on companies that still have room to surprise positively. Earnings beat often serve as catalysts, boosting sentiment and pushing shares higher. This is likely to be reflected in the earnings releases of Host Hotels & Resorts HST, Realty Income O and Simon Property Group SPG. REITs play a vital role in both the physical and digital sides of the economy and often show resilience even in challenging markets. Taking a closer look at the sector’s fundamentals can help investors identify areas of steady performance and long-term growth potential. Here’s a look at where the industry’s strengths lie and how it could still present value amid broader market uncertainty. The hotel industry, in particular, demonstrated resilient growth in the second quarter of 2026. According to CBRE data, overall hotel occupancy increased 0.8% year over year as demand growth of 1.7% surpassed the 0.4% rise in supply during the quarter. Revenue per available room (RevPAR) climbed 5.7% year over year, bolstered by a 4.4% increase in the average daily rate (ADR), with real (inflation-adjusted) RevPAR growth settling at 1.8% after accounting for a 3.8% inflation rate. For the retail industry, Cushman & Wakefield’s report shows that net absorption reached 708,000 square feet in the second quarter of 2026. National vacancy remained broadly stable at 6%, up only three basis points sequentially, while remaining below the historical average of 7.4%. Limited construction continued to support market fundamentals, with just 2.3 million square feet delivered during the quarter. Asking rents increased 2.2% year over year to $25.65 per square foot, supported by tight availability and muted new supply. Picking the right stock could be difficult unless one knows the proper method. To make the task simple, we rely on the Zacks methodology, combining a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Research shows that stocks with a favorable Zacks Rank and a positive Earnings ESP have as high as a 70% chance of delivering a positive earnings surprise. Here are three REITs that have the right combination of elements to deliver positive surprises this earnings season. Host Hotels & Resorts currently has an Earnings ESP of +1.48% and carries a Zacks Rank #2. Over the trailing four quarters, the company’s adjusted funds from operations (AFFO) per share outpaced the Zacks Consensus Estimate on all occasions, with the average beat being 8.66%. You can see the complete list of today’s Zacks #1 Rank stocks here. Host Hotels & Resorts, Inc. price-eps-surprise | Host Hotels & Resorts, Inc. Quote Host Hotels is likely to have benefited from its portfolio of luxury and upper-scale hotels across the top U.S. markets and the Sunbelt region. The improvement in group and transient demand, including leisure and resort demand, is expected to have supported its hotel RevPAR growth in the to-be-reported quarter. The company’s strategic capital allocations are likely to have improved portfolio quality and strengthened its position in key U.S. markets, where it has a greater scale and competitive advantage. This is likely to have given it an edge and driven margin expansion. However, high interest expenses are likely to have been a spoilsport for HST during the to-be-reported quarter. Host Hotels is scheduled to release its second-quarter earnings on Aug. 5, after market close. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.62 billion, which suggests a 2.2% increase from the year-ago quarter’s reported figure. The consensus mark for second-quarter 2026 AFFO per share is pegged at 62 cents, implying a 6.9% increase year over year. Realty Income currently has an Earnings ESP of +0.92% and carries a Zacks Rank of 2. Over the trailing four quarters, the company’s AFFO per share surpassed the Zacks Consensus Estimate on two occasions, met once and missed another, the average beat being 0.68%. Realty Income Corporation price-eps-surprise | Realty Income Corporation Quote Realty Income is likely to have delivered stable operating performance in the second quarter, supported by its diversified net lease portfolio. The company’s sustained occupancy and resilient tenant demand are likely to have supported earnings stability. Its disciplined acquisition strategy and emphasis on high-performing assets are likely to have underpinned portfolio strength and operational consistency during the to-be-reported period. On the balance sheet side, the company is expected to have experienced a continued focus on liquidity, funding costs and leverage control. Realty Income is slated to report second-quarter 2026 results on Aug. 5, after market close. The Zacks Consensus Estimate for quarterly revenues is presently pegged at $1.54 billion, which indicates an increase of 8.98% year over year. The consensus mark for the quarterly AFFO per share is pegged at $1.09, which calls for 3.81% year-over-year growth. Simon Property Group has an Earnings ESP of +0.39% and carries a Zacks Rank #3 at present. Over the trailing four quarters, SPG’s FFO per share surpassed the Zacks Consensus Estimate in each quarter, with the average beat being 2.88%. Simon Property Group, Inc. price-eps-surprise | Simon Property Group, Inc. Quote Simon Property Group’s second-quarter 2026 results are expected to show steady operating momentum, supported by healthy demand across its high-quality retail portfolio. The company is likely to have benefited from strong leasing activity. Occupancy is also expected to have remained firm, backed by demand from new tenants. However, its second-quarter performance may have been pressured by higher interest expenses and tariff-related stress on tenants. Simon Property is scheduled to report its quarterly figures on Aug. 10, after market close. The Zacks Consensus Estimate for second-quarter total revenues is pegged at $1.71 billion, indicating a 14.37% increase year over year. The consensus mark for the quarterly FFO per share stands at $3.18, suggesting a 4.26% increase year over year. Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report Simon Property Group, Inc. (SPG) : Free Stock Analysis Report Realty Income Corporation (O) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research