Realty Income · 10-Q · Item 2 MD&A

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the documents incorporated by reference, 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

quarterly report, 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; our share repurchase program;

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

program; dividends, including the amount, timing and payments of dividends; and 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.

Additional factors that may cause risks and uncertainties include those discussed in the sections entitled “Business,”

“Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our

annual report on Form 10-K, for the year ended December 31, 2025.

Readers are cautioned not to place undue reliance on forward-looking statements. These forward-looking

statements are not guarantees of future plans and performance and speak only as of the date this quarterly report

was filed with the Securities and Exchange Commission (the "SEC"). 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 quarterly report and forecasts made in the forward-looking statements discussed in this quarterly report might

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.

OVERVIEW

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 states of the United States ("U.S."), 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.

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As of June 30, 2026, we owned or held interests in 15,588 properties, with approximately 353.2 million square feet

of leasable space leased to 1,798 clients doing business in 92 separate industries. Of the 15,588 properties in our

portfolio as of June 30, 2026, 15,218, or 97.6%, were single-tenant properties, and the remaining were multi–client

properties. Our total portfolio of properties as of June 30, 2026 had a weighted average remaining lease term

(excluding rights to extend a lease at the option of the client) of approximately 8.6 years. Total portfolio annualized

base rent (defined as 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) on our leases as of June 30, 2026 was $5.28 billion.

As of June 30, 2026, approximately 34.3% of our total portfolio annualized base rent comes from properties leased

to our investment grade clients, their subsidiaries or affiliated companies. As of June 30, 2026, our top 20 clients

(based on percentage of total portfolio annualized base rent) represented approximately 34.8% of our annualized

base rent and 13 of these clients have investment grade credit ratings or are subsidiaries or affiliates of investment

grade companies. Approximately 91% of our annualized retail base rent as of June 30, 2026, is derived from our

clients with a service, non-discretionary, and/or low price point component to their business.

Unless otherwise specified, references to rental revenue in the Management's Discussion and Analysis of Financial

Condition and Results of Operations are exclusive of reimbursements from clients for recoverable real estate taxes

and operating expenses totaling $91.1 million and $87.4 million for the three months ended June 30, 2026 and

2025, respectively, and $188.6 million and $174.8 million for the six months ended June 30, 2026 and 2025,

respectively.

RECENT DEVELOPMENTS

Increases in Monthly Dividends to Common Stockholders

We have continued our 57-year history of paying monthly dividends by T1increasing the dividend three times during

2026. As of August 2026, we have paid 115 consecutive quarterly dividend increases and increased the dividend

135 times since our listing on the New York Stock Exchange (“NYSE”) in 1994.

Month Declared

Month Paid

Monthly Dividend

per share

Increase per

share

1st increase

2nd increase

3rd increase

The dividends paid per share during the six months ended June 30, 2026 totaled $1.6215, as compared to $1.6015

The monthly dividend of $0.2710 per share represents a current annualized dividend of $3.252 per share, and an

annualized dividend yield of 5.2% based on the last reported sale price of our common stock on the NYSE of

$61.96 on June 30, 2026. Although we expect to continue our policy of paying monthly dividends, we cannot

guarantee that we will maintain our current level of dividends, that we will continue our pattern of increasing

dividends per share, or what our actual dividend yield will be in any future period.

Investments

During the three months ended June 30, 2026, we invested $2.6 billion; our pro-rata share was $2.1 billion at an

initial weighted average cash yield of 7.3%, including investments in 144 properties, properties under development

or expansion, unconsolidated entities, and loans.

During the six months ended June 30, 2026, we invested $5.3 billion; our pro-rata share was $4.7 billion at an initial

weighted average cash yield of 7.2%, including investments in 338 properties, properties under development or

expansion, unconsolidated entities, and loans.

See notes 3, Investments in Real Estate, 4, Investments in Unconsolidated Entities, and 5, Investments in Loans

and Financing Receivables to the consolidated financial statements for further details.

Establishment of Joint Venture with Cloud Capital

In June 2026, T2we announced a strategic joint venture with Cloud Capital and its affiliates (“Cloud Capital”) to invest

in hyperscale data centers, which we expect to invest up to $1.4 billion for a 45% stake in a three-asset Northern

Virginia portfolio valued at more than $6.0 billion, with leases running 15 to 20 years. Subsequent to June 30, 2026,

we closed on the first stabilized data center asset and expect to acquire the following two development assets upon

stabilization.

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Establishment of Joint Venture with Apollo

In March 2026, we established our Managed Insurance and Retirement Annuity investment platform as a vehicle to

pursue various co-investment opportunities with institutional investors. In connection with this initiative, on March

31, 2026 we T3closed a $1.0 billion strategic investment from Apollo in exchange for a 49% interest in a newly formed

joint venture which owns an existing portfolio of 492 retail properties contributed by the Company.

Dispositions

During the three months ended June 30, 2026, we sold 80 properties with total net proceeds received of $160.7

million. During the six months ended June 30, 2026, we sold 177 properties with total net proceeds received of

Equity Capital Raising

During the three months ended June 30, 2026, we raised $843.0 million of proceeds from the sale of common

stock, at a weighted average of $61.52, primarily through the settlement of 13.7 million shares of common stock

under our ATM program. As of August 5, 2026, we had outstanding forward sale agreements under our ATM

program for a total of 22.5 million shares of common stock, representing expected net proceeds of approximately

$1.3 billion, of which 1.4 million shares were sold in July 2026 (assuming full physical settlement of such

agreements).

Note Issuance

In July 2026, we issued €600.0 million of 3.625% senior unsecured notes due July 2032. See note 19, Subsequent

Events, to the consolidated financial statements for further details.

In April 2026, we issued $800.0 million of 4.750% senior unsecured notes due April 2033. In connection with the

offering, we executed a $500 million U.S. Dollar-to-Euro 7-year cross currency swap, resulting in approximately

€436 million of proceeds and a blended coupon rate of 4.16%.

Term Loan Issuance

In March 2026, we closed a $693.9 million unsecured term loan due January 2036 at a fixed rate of 4.91% and

executed a cross-currency swap on $500.0 million of proceeds for approximately €431.0 million, achieving an

effective blended borrowing rate of 4.34%.

Convertible Bond Issuance

In January 2026, we issued $862.5 million principal amount of 3.500% convertible senior notes due January 2029 in

a private offering, resulting in net proceeds of approximately $845.1 million. We used approximately $101.9 million

of the net proceeds to repurchase approximately 1.8 million shares of our common stock concurrently with the

pricing of the offering.

Expanded Revolving Credit Facilities and Commercial Paper Programs

In July 2026, we T4closed 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.

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Portfolio Discussion

Leasing Results

As of June 30, 2026, we had 188 properties available for lease or sale out of 15,588 properties in our portfolio,

which represents a 98.8% occupancy rate based on the number of properties in our portfolio. Our property-level

occupancy rates exclude properties with ancillary leases only, such as cell towers and billboards, and properties

with possession pending, and include properties owned by unconsolidated joint ventures. Below is a summary of

our portfolio activity for the periods indicated below:

Properties available for lease as of March 31, 2026

Lease expirations (1)

Re-leases to same client

Re-leases to new client

Vacant dispositions

Properties available for lease as of June 30, 2026

Properties available for lease as of December 31, 2025

Lease expirations (1)

Re-leases to same client

Re-leases to new client

Vacant dispositions

Properties available for lease as of June 30, 2026

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

indicated above.

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.

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.

As part of our re-leasing costs, we pay leasing commissions to unrelated, third-party real estate brokers consistent

with the commercial real estate industry standard, and sometimes provide rent concessions to our clients. We do

not consider the collective impact of the leasing commissions or rent concessions to our clients to be material to our

financial position or results of operations.

Impact of Inflation

Leases generally provide for limited increases in rent as a result of fixed increases, increases in the consumer price

index, retail price index in the case of certain leases in the U.K. (typically subject to ceilings), or increases in clients’

sales volumes. We expect that inflation will cause these lease provisions to result in rent increases over time.

During times when inflation is greater than increases in rent, as provided for in the leases, rent increases may not

keep up with the rate of inflation and other costs.

Moreover, our strategic focus on the use of net lease agreements reduces our exposure to rising property expenses

due to inflation because the client is responsible for property expenses. Even though the utilization of net leases

reduces our exposure to rising property expenses due to inflation, T5substantial inflationary pressures and increased

costs may have an adverse impact on our clients if increases in their operating expenses exceed increases in

revenue, which may adversely affect our clients' ability to pay rent. Additionally, inflationary periods may cause us to

experience increased costs of financing, make it difficult to refinance debt at attractive rates or at all, and may

adversely affect the properties we can acquire if the cost of financing an acquisition is in excess of our anticipated

earnings from such property, thereby limiting the properties that can be acquired.

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Impact of Real Estate and Capital Markets

In the commercial real estate market, property prices generally continue to fluctuate. Likewise, during certain

periods, the global capital markets have experienced significant price volatility, dislocations, and liquidity disruptions,

which may impact our access to and cost of capital. We continually monitor the commercial real estate and global

capital markets carefully and, if required, will make decisions to adjust our business strategy accordingly.

Impact of Current Macroeconomic Conditions

We monitor developments related to macroeconomic factors that could have an adverse impact on our business

and our clients. Our clients face challenges that may differ from or be additional to challenges we face, including

potential changes in consumer confidence levels, behavior and spending and increased operational expenses,

including potential impacts from changes in global trade policies. The extent of the future effects on our business,

results of operations, cash flows, and growth strategies is highly uncertain and will ultimately depend on future

developments, none of which can be predicted.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash obligations are included in the “Material Cash Requirements” table, which is presented later in this

section. We expect to fund our operating expenses and other short-term liquidity requirements, including property

acquisitions and development costs, payment of principal and interest on our outstanding indebtedness, property

improvements, re-leasing costs, and cash distributions to common stockholders, primarily through a combination of

the following:

•Cash and cash equivalents;

•Future cash flows from operations;

•Issuances of common stock or debt, or other securities offerings;

•Additional borrowings under our credit facilities or commercial paper programs, which are backstopped by our

credit facilities;

•Short-term loans;

•Asset dispositions; and

•Credit investment repayments.

In addition to these sources of liquidity, we manage and own an interest in our perpetual life U.S. Core Plus Fund

(the "Fund"). During the six months ended June 30, 2026, within our Fund, we called an aggregate $948.0 million of

capital from third-party investors and redeemed an aggregate $591.9 million of the Company's units, resulting in our

indirect ownership interest of 26.8% in the Fund. On July 1, 2026, within our Fund, we called an additional

$265.7 million of capital from third-party investors, resulting in our indirect ownership interest of 23.6% in the Fund.

We seek to hold additional closings during the life of the Fund. In January 2026, we established a strategic

relationship with GIC, a leading global institutional investor, including the formation of a build-to-suit development

joint venture. In March 2026, we established a strategic relationship with Apollo, a high-growth, global alternative

asset manager, and closed on $1.0 billion of gross proceeds in exchange for Apollo’s acquisition of a 49% interest in

a joint venture that indirectly owns a diversified net lease portfolio comprised entirely of single-tenant retail

properties.

We intend to evaluate other opportunities to raise private capital in the future, including potentially through additional

funds and/or joint venture opportunities.

We believe that our cash and cash equivalents on hand, cash provided from operating activities, and borrowing

capacity are sufficient to meet our liquidity needs for the next twelve months. We intend, however, to use permanent

or long-term capital to fund property acquisitions and to repay future borrowings under our credit facilities and

commercial paper programs.

Long-Term Liquidity Requirements

Our primary goal is to deliver dependable monthly dividends to stockholders that increase over time. Historically, we

have met our principal short-term and long-term capital needs, including the funding of high-quality real estate

acquisitions, investments in loans to clients, property development, and capital expenditures by issuing common

stock, long-term unsecured notes, and term loan borrowings. While the issuance of common stock has historically

been an important component of our capital structure, we continue to broaden and diversify our sources of capital to

reduce reliance on the public capital markets. This approach enhances capital availability across market cycles,

improves cost‑of‑capital certainty, and increases financial flexibility. However, there can be no assurance that our

efforts will be successful.

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Capitalization

As of June 30, 2026, our total capitalization was $90.0 billion. Total capitalization consisted of $58.8 billion of

common equity (based on the June 30, 2026 closing price on the NYSE of $61.96 and assuming the conversion of

2.7 million common units of Realty Income, L.P.), and total outstanding borrowings of $31.2 billion of our pro-rata

share of total debt principal.

Share Repurchase Program

We are authorized to repurchase up to $2.0 billion in shares of our common stock under our share repurchase

program, which will expire in January 2028. Repurchases under the repurchase program may be made at

management’s discretion from time to time using a variety of methods, which may include open market purchases,

privately negotiated transactions, Rule 10b5-1 plans or otherwise, all in accordance with the rules of the SEC and

other applicable legal requirements. The repurchase program does not obligate us to acquire any particular amount

of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. In

January 2026, we repurchased 1.8 million shares of our common stock for $101.9 million under the repurchase

program.

ATM Program

During the three and six months ended June 30, 2026, we settled approximately 13.7 million shares of common

stock previously sold pursuant to forward sale agreements through our ATM program for approximately $824.3

million of net proceeds. As of June 30, 2026, we had outstanding forward-sale agreements under our ATM program

for a total of 21.1 million shares of common stock, representing approximately $1.2 billion in expected net proceeds,

which have been executed at a weighted average price of $58.34 per share (assuming full physical settlement of all

outstanding shares of common stock, subject to such forward sale agreements and certain assumptions made with

respect to settlement dates). In May 2026, we entered into a new ATM equity program that provides for the offer and

sale of up to 150.0 million shares of common stock pursuant to forward sale agreements. As of June 30, 2026, we

had 138.9 million shares remaining for future issuance under our ATM program. We anticipate maintaining the

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

Debt Financing Activities

As of June 30, 2026, our total outstanding borrowings of credit facilities, commercial paper, term loans, mortgages

payable, and senior unsecured notes and bonds were $31.0 billion, with a weighted average maturity of 5.1 years

and a weighted average interest rate of 3.9%. As of June 30, 2026, approximately 91% of our total debt was fixed

rate debt. See notes 6 through 8 to the consolidated financial statements for additional information about our

outstanding debt, along with our debt financing activities during the six months ended June 30, 2026 below.

Term Loan Issuance

In March 2026, we closed a $693.9 million unsecured term loan due January 2036 with an affiliate of The Goldman

Sachs Group, Inc. at a fixed rate of 4.91% and executed a cross-currency swap on $500.0 million of proceeds for

approximately €431.0 million, achieving an effective blended borrowing rate of 4.34%.

Convertible Bond Issuance

In January 2026, we issued $862.5 million principal amount of 3.500% convertible senior notes due January 2029 in

a private offering, resulting in net proceeds of approximately $845.1 million. We used approximately $101.9 million

of the net proceeds to repurchase approximately 1.8 million shares of our common stock concurrently with the

pricing of the offering. The notes are senior, unsecured obligations of Realty Income and accrue interest at a rate of

3.500% per annum, payable semi-annually in arrears. The notes will mature on January 15, 2029, unless earlier

repurchased, redeemed or converted.

Note Issuance

In July 2026, we issued €600.0 million of 3.625% senior unsecured notes due July 2032. See note 19, Subsequent

Events, to the consolidated financial statements for further details.

In April 2026, we issued $800.0 million of 4.750% senior unsecured notes due April 2033. In connection with the

offering, we executed a $500 million U.S. Dollar-to-Euro 7-year cross currency swap, resulting in approximately

€436 million of proceeds and a blended coupon rate of 4.16%.

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Note Repayments

During the six months ended June 30, 2026, we repaid the following notes, plus accrued and unpaid interest, upon

maturity:

Date of Issuance

Maturity Date

Principal amount (in millions)

Credit Facilities and Commercial Paper Programs

On July 10, 2026, we amended and restated our unsecured revolving credit facility to increase the borrowing

capacity to $5.5 billion, among other things. The revolving credit facility is bifurcated into two $2.75 billion tranches,

which initially mature on April 29, 2029 and July 10, 2030, respectively, before giving effect to two six-month

extension options. Pursuant to the terms of the revolving credit facility, the credit ratings at the time of the

amendment provided for a borrowing rate of 67.5 basis points over the SOFR for USD borrowings, with a facility

commitment fee of 12.5 basis points, for all-in drawn pricing of 80 basis points over SOFR, a reduction of 5.0 basis

points from the prior revolving credit facilities.

In conjunction with the closing of the updated revolving credit facility, we also expanded our global unsecured

commercial paper programs to a total combined capacity of $5.5 billion, including an upsized $2.75 billion U.S.

commercial paper program and a $2.75 billion European commercial paper program. The notes will be sold under

customary terms in the United States and European commercial paper note markets, respectively, and will rank pari

passu with all of our other unsecured senior indebtedness, including our outstanding senior notes and borrowings

under our multicurrency revolving credit facilities. We expect to use our $5.5 billion multicurrency revolving credit

facilities as a liquidity backstop for the repayment of notes issued under the programs.

Note Covenants

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

per the terms of our senior notes and bonds. These calculations, which are not based on accounting principles

generally accepted in the United States of America ("U.S. GAAP"), are presented to investors to show our ability to

incur additional debt under the terms of our senior notes and bonds as well as to disclose our current compliance

with such covenants and are not measures of our liquidity or performance. The actual amounts as of June 30, 2026,

are:

Note Covenants

Required

Actual

Limitation on incurrence of total debt

< 60% of adjusted assets

Limitation on incurrence of secured debt

< 40% of adjusted assets

Debt service and fixed charge coverage (trailing 12 months) (1)

Maintenance of total unencumbered assets

> 150% of unsecured debt

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

incurrence of any Debt (as defined in the covenants) by us since the first day of such four-quarter period and the application of the proceeds

therefrom (including to refinance other Debt since the first day of such four-quarter period), (ii) the repayment or retirement of any of our Debt

since the first day of such four-quarter period, and (iii) any acquisition or disposition by us of any asset or group since the first day of such four

quarters and subject to certain additional adjustments. Such pro forma ratio has been prepared on the basis required by that debt service

covenant, reflects various estimates and assumptions and is subject to other uncertainties, and therefore does not purport to reflect what our

actual debt service coverage ratio would have been had transactions referred to in clauses (i), (ii) and (iii) of the preceding sentence occurred

as of the first day of the four-quarter period, nor does it purport to reflect our debt service coverage ratio for any future period. Fixed charge

coverage is calculated in the same manner as the debt service coverage. The following is our calculation of debt service and fixed charge

coverage as of June 30, 2026 (in thousands, for trailing twelve months):

Net income attributable to the Company

Plus: interest expense, excluding the amortization of deferred financing costs

Plus: provision for taxes

Plus: depreciation and amortization

Plus: provisions for impairment

Plus: pro forma adjustments

Less: provisions for gains from sales or joint ventures

Income available for debt service, as defined

Total pro forma debt service charge

Debt service and fixed charge coverage ratio

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Credit Agency Ratings

The borrowing interest rates under our revolving credit facilities are based upon our ratings assigned by credit rating

agencies. We are currently assigned the following investment grade corporate credit ratings on our senior

unsecured notes and bonds: Moody’s Investors Service has assigned a rating of A3 with a “stable” outlook,

Standard & Poor’s Ratings Group has assigned a rating of A- with a “stable” outlook, and on August 3, 2026, we

received a credit rating of A with a "stable" outlook from Fitch Ratings. In addition, we are assigned the following

ratings on our commercial paper: Moody's Investors Service has assigned a rating of P-2, Standard & Poor's

Ratings Group has assigned a rating of A-2, and Fitch Ratings has assigned a rating of F1.

Effective September 1, 2026, our current investment grade ratings provide for a borrowing rate of 0.650% over the

SOFR for USD borrowings, with a facility commitment fee of 0.100%, for all-in drawn pricing of 75 basis points over

SOFR. Prior to the credit rating by Fitch Ratings, financing under the credit facility was 5 basis points higher.

In addition, if our credit rating is lower than BBB-/Baa3 or our senior unsecured debt is unrated, credit ratings

provide for a borrowing rate 1.350% over the SOFR for USD borrowings, with a facility fee of 0.300%. If our credit

rating is A/A2 or higher, credit ratings provide for a borrowing rate of 0.6250% over the SOFR for USD borrowings,

with a facility fee of 0.100%.

We also issue senior debt securities from time to time and our credit ratings can impact the interest rates charged in

those transactions. If our credit ratings or ratings outlook change, our cost to obtain debt financing could increase or

decrease. The credit ratings assigned to us could change based upon, among other things, our results of operations

and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies, and we cannot

assure you that our ratings will not be changed or withdrawn by a rating agency in the future if, in its judgment,

circumstances warrant. Moreover, a rating is not a recommendation to buy, sell or hold our debt securities or

common stock.

Material Cash Requirements

The following table summarizes the maturity of each of our obligations as of June 30, 2026 (in millions):

Thereafter

Total

Credit Facilities (1)

$—

$—

$—

$—

Commercial Paper (2)

—

—

—

—

—

Unsecured Term Loans

—

—

Mortgages Payable

—

Senior Unsecured Notes and Bonds

Interest (3)

Ground Leases Paid by the Company (4)

Ground Leases Paid by Our Clients (5)

Other (6)

—

Total

(1) The initial terms of the RI Credit Facilities expire in April 2027 and April 2029 and include, at our option, two six-month extensions. The initial

term of the Fund Credit Facilities expires in April 2029 and includes, at our option, two six-month extensions.

(2) Commercial paper programs outstanding were $1.4 billion, maturing between July 2026 and August 2026.

(3) Interest on the commercial paper programs, term loans, mortgages payable, and senior unsecured notes and bonds has been calculated

based on outstanding balances at period end through their respective maturity dates.

(4) We currently pay the ground lessors directly for the rent under certain ground lease arrangements.

(5) Our clients, who are generally sub-tenant clients under ground leases, are responsible for paying the rent under these ground leases.

(6) “Other” consists of $729.4 million of commitments under construction contracts, $243.0 million for our equity interest in a joint venture, among

other costs, $81.1 million for tenant improvements, recurring capital expenditures, and building improvements, and $11.5 million in contingent

purchase consideration obligations related to leasing activities at four U.K. retail park properties acquired in 2026.

As of June 30, 2026, we had approximately $375.4 million of unfunded loan commitments related to certain loan

investments. These commitments are not reflected in the table above, as the timing of the funding is dependent on

borrower request and the satisfaction of customary conditions, and therefore cannot be reasonably estimated by

period. See Note 18, Commitments and Contingencies to the consolidated financial statements for further details.

Investments in Unconsolidated Entities

As of June 30, 2026, our pro-rata share of secured debt of unconsolidated entities was approximately $659.2

million.

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DIVIDEND POLICY

Distributions are paid monthly to holders of shares of our common stock.

Distributions are paid monthly to the limited partners holding common units of Realty Income, L.P., each on a per

unit basis that is equal to the amount paid per share to our common stockholders (subject to the adjustment factor

applicable to those units at the time of such distribution).

In order to maintain our status as a real estate investment trust ("REIT") for federal income tax purposes, we

generally are required to distribute dividends to our stockholders aggregating annually at least 90% of our taxable

income (excluding net capital gains), and we are subject to income tax to the extent we distribute less than 100% of

our taxable income (including net capital gains). In 2025, our cash distributions to common stockholders totaled

$2.92 billion, or approximately 159.0% of our estimated taxable income of $1.84 billion. Certain measures are

available to us to reduce or eliminate our tax exposure as a REIT, and accordingly, no provision for U.S. federal

income taxes, other than our taxable REIT subsidiaries (each, a "TRS"), has been made. Our estimated taxable

income reflects non-cash deductions for depreciation and amortization. Our estimated taxable income is presented

to show our compliance with REIT dividend requirements and is not a measure of our liquidity or operating

performance. We intend to continue to make distributions to our stockholders that are sufficient to meet this dividend

requirement and that will reduce or eliminate our exposure to income taxes. Furthermore, we believe our cash on

hand and funds from operations are sufficient to support our current level of cash distributions to our stockholders.

We distributed $1.62 per share to stockholders during the six months ended June 30, 2026, representing 73.0% of

our diluted Adjusted Funds from Operations Available to Common Stockholders ("AFFO") per share of $2.22.

Future distributions will be at the discretion of our Board of Directors and will depend on, among other things, our

results of operations, Funds from Operations Available to Common Stockholders ("FFO"), Normalized Funds from

Operations Available to Common Stockholders ("Normalized FFO"), AFFO, cash flow from operations, financial

condition, capital requirements, the annual distribution requirements under the REIT provisions of the U.S. Internal

Revenue Code of 1986, as amended (the “Code”), our debt service requirements, and any other factors the Board

of Directors may deem relevant. In addition, our RI Credit Facilities contain financial covenants that could limit the

amount of distributions payable by us in the event of a default, and which prohibit the payment of distributions on

our common stock in the event that we fail to pay when due (subject to any applicable grace period) any principal or

interest on borrowings under our RI Credit Facilities.

Distributions of our current and accumulated earnings and profits for federal income tax purposes generally will be

taxable to stockholders as ordinary income, except to the extent that we recognize capital gains and declare a

capital gains dividend, or that such amounts constitute “qualified dividend income” subject to a reduced rate of tax.

The maximum tax rate of non-corporate taxpayers for “qualified dividend income” is generally 20%. In general,

dividends payable by REITs are not eligible for the reduced tax rate on qualified dividend income, except to the

extent that certain holding requirements have been met with respect to the REIT’s stock and the REIT’s dividends

are attributable to dividends received from certain taxable corporations (such as our TRSs) or to income that was

subject to tax at the corporate or REIT level (for example, if we distribute taxable income that we retained and paid

tax on in the prior taxable year). However, non-corporate stockholders, including individuals, generally may deduct

up to 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend

income.

Distributions in excess of earnings and profits generally will first be treated as a non-taxable reduction in the

stockholders’ basis in their stock, but not below zero. Distributions in excess of that basis generally will be taxable

as a capital gain to stockholders. Approximately 33.6% of the distributions to our common stockholders, made or

deemed to have been made in 2025, were classified as a return of capital for federal income tax purposes.

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RESULTS OF OPERATIONS

The following is a comparison of our results of operations for the three and six months ended June 30, 2026

Total Revenue

The following summarizes our total revenue (in thousands):

Three months ended

Six months ended

Change

Change

Rental (excluding reimbursements)

Rental (reimbursements)

Interest income on financing receivables

Interest and dividend income on loans

and preferred equity investments

Other

Total revenue

Rental Revenue (excluding reimbursements)

The table below summarizes the increase in rental revenue (excluding reimbursements) in the three and six months

Three months ended

Number of

Properties

Change

Same store rental revenue

Constant currency adjustment (1)

N/A

Properties sold during and prior to 2026

Straight-line rent and other non-cash adjustments

N/A

Vacant rents, development and other (2)

Other excluded revenue (3)

N/A

Total

Six months ended

Number of

Properties

Change

Same store rental revenue

Constant currency adjustment (1)

N/A

Properties sold during and prior to 2026

Straight-line rent and other non-cash adjustments

N/A

Vacant rents, development and other (2)

Other excluded revenue (3)

N/A

Total

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

(2)Relates to the aggregate of (i) rental revenue from 301 properties that were available for lease during part of 2026 or 2025 for the three and six

months ended June 30, 2026, respectively and (ii) rental revenue for 103 properties under development or completed developments that do

not meet our same store pool definition for the three and six months ended June 30, 2026, respectively.

(3)"Other excluded revenue" primarily consists of reimbursements related to lease termination fees and other settlement income.

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For purposes of determining the same store rent property pool, we include all properties that were owned for the

entire year-to-date period, for both the current and prior year, except for properties during the current or prior year

that: (i) were vacant at any time, (ii) were under development or redevelopment, or (iii) were involved in eminent

domain and rent was reduced. Each of the exclusions from the same store pool are separately addressed within the

applicable sentences above, explaining the changes in rental revenue for the period.

Of the 17,440 in-place leases in the portfolio, 13,918, or 79.8%, were under leases that provide for increases in

rents through: base rent increases tied to inflation (typically subject to ceilings), percentage rent based on a

percentage of the clients’ gross sales, fixed increases, or a combination of two or more of the aforementioned rent

provisions.

Rent based on a percentage of our clients' gross sales, or percentage rent, was $4.0 million and $2.8 million for the

three months ended June 30, 2026 and 2025, respectively. Rent based on a percentage of our clients' gross sales,

or percentage rent, was $8.2 million and $8.6 million for the six months ended June 30, 2026 and 2025,

respectively. Percentage rent represents less than 1% of rental revenue.

As of June 30, 2026, our portfolio of 15,588 properties was 98.8% leased with 188 properties available for lease or

sale, as compared to 98.6% leased with 212 properties available for lease as of June 30, 2025. It has been our

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

however, it is possible that the number of properties available for lease or sale could increase in the future, given

the nature of economic cycles and other unforeseen global events.

Rental Revenue (reimbursements)

A number of our leases provide for contractually obligated reimbursements from clients for recoverable real estate

taxes and operating expenses. Contractually obligated reimbursements by our clients increased by $3.7 million and

$13.8 million for the three and six months ended June 30, 2026 as compared to the same periods in 2025,

respectively, primarily due to higher reimbursable property taxes and maintenance due to growth in our portfolio.

Interest Income on Financing Receivables

Interest income on financing receivables decreased by $0.4 million and $0.9 million for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to lower average

financing receivable balances outstanding.

Interest and Dividend Income on Loans and Preferred Equity Investments

Interest and dividend income on loans and preferred equity investments increased by $49.0 million and $84.4

million for the three and six months ended June 30, 2026 as compared to the same periods in 2025, respectively,

due to the growth in our loan and preferred equity portfolio. Our loans receivable and preferred equity investments

increased by approximately $2.8 billion compared to the same period in 2025 due to acquisitions.

Other Revenue

Other revenue increased by $0.4 million and $6.0 million for the three and six months ended June 30, 2026 as

compared to the same periods in 2025, respectively, primarily due to higher solar electricity tax credits received in

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Expenses

The following summarizes our total expenses (in thousands):

Three months ended

Six months ended

Change

Change

Depreciation and amortization

Interest

Property (excluding reimbursements)

Property (reimbursements)

General and administrative

Provisions for impairment of real estate

Provisions for credit losses on loans and

financing receivables

Merger, transaction, and other costs, net

Total expenses

Total revenue (1)

General and administrative expenses as a

percentage of total revenue (1)

Property expenses (excluding reimbursements)

as a percentage of total revenue (1)

(1) Excludes client reimbursements.

Depreciation and Amortization

Depreciation and amortization decreased by $3.2 million for the three months ended June 30, 2026 and increased

by $18.2 million for the six months ended June 30, 2026 as compared to the same periods in 2025, as a result of

accelerated amortization of in-place leases in the prior year period relating to certain properties leased to clients in

bankruptcy, partially offset by higher depreciation expense due to growth in our portfolio for the three and six months

Interest Expense

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

Three months ended

Six months ended

Change

Change

Interest on our revolving credit facilities,

commercial paper, term loans,

mortgages, senior unsecured notes

and bonds, and interest rate swaps

Credit facility commitment fees

Amortization of debt origination and

deferred financing costs

Gain on interest rate swaps

Amortization of net note and mortgage

and note discounts

Capital lease obligation

Interest capitalized

Interest expense

Revolving credit facilities, commercial

paper, term loans, mortgages and

senior unsecured notes and bonds

Average outstanding balances

Weighted average interest rates

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Interest expense increased by $28.3 million or 10.0%, and $51.8 million, or 9.4%, for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to higher average

borrowings in 2026, as well as higher amortization of mortgage and note premiums and discounts and deferred

financing costs. See notes to the accompanying consolidated financial statements for additional information

regarding our indebtedness.

Property Expenses (excluding reimbursements)

Property expenses (excluding reimbursements) consist of costs associated with properties available for lease, non-

net-leased properties and general portfolio expenses and include, but are not limited to, property taxes,

maintenance, insurance, utilities, property inspections and legal fees.

Property expenses (excluding reimbursements) increased by $1.3 million and $1.4 million for the three and six

months ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to higher

property taxes of $5.9 million and $7.4 million, partially offset by lower repairs and maintenance costs of $3.3 million

and $4.4 million.

Property Expenses (reimbursements)

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

Property expenses (reimbursements) increased by $3.7 million and $13.8 million for the three and six months ended

June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to higher reimbursable property

taxes and maintenance due to growth in our portfolio.

General and Administrative Expenses

General and administrative expenses are expenditures related to the operations of our company, including

employee-related costs, professional fees, and other general overhead costs associated with running our business.

General and administrative expenses increased by $8.3 million and $23.1 million for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to higher employee

costs as we continue to invest in our people and our platform.

Provisions for Impairment of Real Estate

Provisions for impairment of real estate decreased by $88.1 million and $95.3 million during the three and six

months ended June 30, 2026 as compared to the same periods in 2025, respectively. The decrease is primarily due

to larger impairments recorded in 2025 related to properties leased to clients in bankruptcy.

Provisions for Credit Losses on Loans and Financing Receivables

Provisions for credit losses increased by $6.2 million and $26.1 million for the three and six months ended June 30,

2026 as compared to the same periods in 2025, respectively. For the six months ended June 30, 2026, the increase

is primarily due to initial expected credit losses on loans acquired during the period. For the three months ended

June 30, 2026, the increase was due to initial expected credit losses on loans acquired during the period, partially

offset by favorable changes in estimated credit losses for existing loans.

Merger, Transaction, and Other Costs, Net

Merger, transaction, and other costs, net increased by $1.7 million and $12.2 million for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to placement fees

incurred in fundraising for the Fund and certain strategic venture formation costs incurred in the current year.

Gain on Sales of Real Estate

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

Three months ended

Six months ended

Change

Change

Number of properties sold

7

Net sales proceeds

Gain on sales of real estate

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Foreign Currency and Derivative Loss, Net

We borrow in the functional currencies of the countries in which we invest. Net foreign currency gain and loss are

primarily related to the remeasurement of intercompany debt from foreign subsidiaries and outstanding borrowings

denominated in the local currencies we invest in. Derivative gain and loss are primarily related to mark-to-market

adjustments on derivatives that do not qualify for hedge accounting and settlement of designated derivatives

reclassified from Accumulated Other Comprehensive Income ("AOCI").

Foreign currency and derivative loss, net increased by $4.4 million and $18.9 million, for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to the impact of foreign

currency fluctuations on our foreign-denominated assets and liabilities, as well as derivative instruments we

executed to reduce the effect of these fluctuations.

Equity in Earnings of Unconsolidated Entities

Equity in earnings of unconsolidated entities decreased by $1.1 million and $2.8 million for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily attributable to lower income

within our data center joint venture due to a gain on sale from an easement recorded in 2025 with no comparable

gain recorded in 2026, in addition to an adjustment to straight-line rent recognized in the prior year.

Other Income, Net

Other income, net decreased by $0.1 million for the three months ended June 30, 2026 and increased by $7.8

million for the six months ended June 30, 2026 as compared to the same periods in 2025, primarily due to a non-

recurring insurance commutation gain realized during the first quarter of 2026.

Income Taxes

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

state and local taxes. The increase of $1.7 million and $12.3 million in income taxes for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, is primarily attributable to higher

taxable income in the U.K. and Europe, offset with lower state franchise and income taxes in the U.S.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests increased by $24.5 million and $32.0 million for the three and six

months ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily attributable to the

launches of our U.S. Core Plus Fund and Apollo joint venture, which contributed to increases of $24.6 million and

$32.5 million for the three and six months ended June 30, 2026.

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NON-GAAP FINANCIAL MEASURES

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate ("Adjusted

EBITDAre")

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.

Management also believes the use of an Annualized Adjusted EBITDAre metric, which is calculated by multiplying

Adjusted EBITDAre for the applicable quarter by four, is meaningful because it represents our current earnings run

rate for the period presented. Adjusted EBITDAre should be considered along with, but not as an alternative to net

income as a measure of our operating performance. We define Annualized Pro Forma Adjusted EBITDAre as

Annualized Adjusted EBITDAre, subject to certain 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, and include transaction accounting adjustments in accordance with U.S. GAAP, giving

pro forma effect to all transactions as if they occurred at the beginning of the applicable 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. We believe Annualized Pro Forma Adjusted EBITDAre is a

useful non-GAAP supplemental measure, as it excludes investments that were no longer owned at the balance

sheet date and includes the annualized base rent from investments acquired during the quarter. Management also

uses our ratio of Net Debt/Annualized Pro Forma Adjusted EBITDAre as a measure of leverage in assessing our

financial performance, which is calculated as net debt (which we define as total debt, excluding deferred financing

costs and net discounts, less consolidated cash and cash equivalents), divided by Annualized Pro Forma Adjusted

EBITDAre. The ratio of our net debt to our Annualized Pro Forma Adjusted EBITDAre is also used to determine

vesting of performance share awards granted to our executive officers.

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The following is a reconciliation of net income (which we believe is the most comparable U.S. GAAP measure) to

Adjusted EBITDAre and Annualized Pro Forma Adjusted EBITDAre calculations for the period indicated below

(dollars in thousands):

Three months ended

Net income

Interest

Income taxes

Depreciation and amortization

Executive severance charge

Provisions for impairment of real estate

Provisions for credit losses on loans and financing receivables

Merger, transaction, and other costs, net

Gain on sales of real estate

Foreign currency and derivative loss, net

Equity in earnings of unconsolidated entities

Adjusted EBITDAre

Annualized Adjusted EBITDAre

Annualized Pro Forma Adjustments

Annualized Pro Forma Adjusted EBITDAre

Total debt per the consolidated balance sheets, excluding deferred financing costs and net

discounts

Less: Cash and cash equivalents

Net Debt

Net Debt/Annualized Pro Forma Adjusted EBITDAre

As described above, the Annualized Pro Forma Adjustments, which include transaction accounting adjustments in

accordance with U.S. GAAP, consist of adjustments to incorporate the Adjusted 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, consistent with the requirements of 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):

Three months ended

Annualized pro forma adjustments from investments acquired or stabilized

Annualized pro forma adjustments from investments disposed

Annualized Pro Forma Adjustments

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FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS AND NORMALIZED FUNDS FROM

OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS

We define FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trusts'

definition, as 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.

We define Normalized FFO, a non-GAAP financial measure, as FFO excluding merger, transaction, and other costs,

net. We define diluted FFO and diluted normalized FFO as FFO and normalized FFO adjusted for dilutive

noncontrolling interests.

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

Three months ended

Six months ended

% Change

% Change

FFO available to common stockholders

FFO per common share (1)

Normalized FFO available to common

stockholders

Normalized FFO per common share (1)

(1) All per share amounts are presented on a diluted per common share basis.

We consider FFO and Normalized FFO to be appropriate supplemental measures of a REIT’s operating

performance as they are based on a net income analysis of property portfolio performance that adds back items

such as depreciation and impairments for FFO, and adds back merger, transaction, and other costs, net, for

Normalized 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.

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The following is a reconciliation of net income available to common stockholders (which we believe is the most

comparable U.S. GAAP measure) to FFO and Normalized FFO. Also presented is information regarding

distributions paid to common stockholders and the weighted average number of common shares used for the basic

and diluted computation per share (in thousands, except per share amounts):

Three months ended

Six months ended

Net income available to common stockholders

Depreciation and amortization

Depreciation of furniture, fixtures and equipment

Provisions for impairment of real estate

Gain on sales of real estate

Proportionate share of adjustments for unconsolidated

entities

FFO adjustments allocable to noncontrolling interests

FFO available to common stockholders

FFO allocable to dilutive noncontrolling interests

Diluted FFO

FFO available to common stockholders

Merger, transaction, and other costs, net

Normalized FFO available to common stockholders

Normalized FFO allocable to dilutive noncontrolling

interests

Diluted Normalized FFO

FFO per common share：

Basic

Diluted

Normalized FFO per common share:

Basic

Diluted

Distributions paid to common stockholders

FFO after distributions

Normalized FFO after distributions

Weighted average number of common shares used for FFO

and Normalized FFO:

Basic

Diluted

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ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS

We define AFFO, a non-GAAP measure, as FFO adjusted for unique revenue and expense items, which we believe

are not as pertinent to the measurement of our ongoing operating performance. We define diluted AFFO as AFFO

adjusted for dilutive noncontrolling interests.

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

Three months ended

Six months ended

% Change

% Change

AFFO available to common stockholders

AFFO per common share (1)

(1) All per share amounts are presented on a diluted per common share basis.

We consider AFFO to be an appropriate supplemental measure of our performance. Most companies in our industry

use a similar measurement, but they may use the term “CAD” (for Cash Available for Distribution), “FAD” (for Funds

Available for Distribution) or other terms. Our AFFO calculations may not be comparable to AFFO, CAD or FAD

reported by other companies, and other companies may interpret or define such terms differently than we do.

We believe the non-GAAP financial measure AFFO provides useful information to investors because it is a widely

accepted industry measure of the operating performance of real estate companies that is used by industry analysts

and investors who look at and compare those companies. 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 on-going operating performance. Therefore, we believe that AFFO is an appropriate supplemental

performance metric, and that the most appropriate U.S. GAAP performance metric to which AFFO should be

reconciled is net income available to common stockholders. Presentation of the information regarding FFO,

Normalized 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, Normalized FFO, and AFFO in the same way,

so comparisons with other REITs may not be meaningful. Furthermore, FFO, Normalized FFO, and AFFO are not

necessarily indicative of cash flow available to fund cash needs and should not be considered as alternatives to net

income as an indication of our performance. FFO, Normalized FFO, and AFFO should not be considered as

alternatives to reviewing our cash flows from operating, investing, and financing activities. In addition, FFO,

Normalized FFO, and AFFO should not be considered as measures of liquidity, our ability to make cash

distributions, or our ability to pay interest payments.

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The following is a reconciliation of net income available to common stockholders (which we believe is the most

comparable U.S. GAAP measure) to Normalized FFO and AFFO. Also presented is information regarding

distributions paid to common stockholders and the weighted average number of common shares used for the basic

and diluted computation per share (in thousands, except per share amounts).

Three months ended

Six months ended

Net income available to common stockholders

Cumulative adjustments to calculate Normalized FFO (1)

Normalized FFO available to common stockholders

Debt-related non-cash items:

Amortization of net debt discounts and deferred financing

costs

Amortization of acquired interest rate swap value (2)

Capital expenditures from operating properties:

Leasing costs and commissions

Recurring capital expenditures

—

Other non-cash items:

Provisions for credit losses on loans and financing

receivables

Amortization of share-based compensation

Straight-line rent and expenses, net

Amortization of above and below-market leases, net

Deferred tax expense

Proportionate share of adjustments for unconsolidated

entities

Executive severance charge (3)

—

—

Other adjustments (4)

AFFO available to common stockholders

AFFO allocable to dilutive noncontrolling interests

Diluted AFFO

AFFO per common share:

Basic

Diluted

Distributions paid to common stockholders

AFFO after distributions

Weighted average number of common shares used for

AFFO:

Basic

Diluted

(1)See reconciling items for Normalized FFO presented under “Funds from Operations Available to Common Stockholders and Normalized Funds

from Operations Available to Common Stockholders".

(2)Includes the amortization of the purchase price allocated to interest rate swaps acquired in the merger with Spirit.

(3)The executive severance charge reflects certain benefits related to our Chief Legal Officer's expected departure in September 2026.

(4)Includes primarily non-cash foreign currency losses (gains) from remeasurement to USD, mark-to-market adjustments on investments and

derivatives that are non-cash in nature, obligations related to financing lease liabilities, and adjustments allocable to noncontrolling interests.

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PROPERTY PORTFOLIO INFORMATION

As of June 30, 2026, most of the properties in our portfolio were leased under net lease agreements. A net lease

typically requires the client to be responsible for monthly rent and certain property operating expenses including

property taxes, insurance, and maintenance. In addition, clients of our properties typically pay rent increases based

on: (1) fixed increases, (2) increases tied to inflation (typically subject to ceilings), or (3) additional rent calculated as

a percentage of the clients' gross sales above a specified level.

We define total portfolio annualized base rent as 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 excluding 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.

Top 20 Industry Concentrations

We are engaged in a single business activity, which is the leasing of property to clients, generally on a net lease

basis. That business activity spans various geographic boundaries and includes property types and clients engaged

in various industries. Even though we have a single segment, we believe our investors continue to view

diversification as a key component of our investment philosophy and so we believe it remains important to present

certain information regarding our property portfolio classified according to the business of the respective clients,

expressed as a percentage of our total portfolio annualized base rent:

Percentage of Total Portfolio Annualized

Base Rent by Industry

As of

Grocery

Convenience Stores

Home Improvement

Dollar Stores

Restaurants-Quick Service

Automotive Service

Health and Fitness

Drug Stores

General Merchandise

Restaurants-Casual Dining

Gaming

Home Furnishings

Transportation Services

Health Care

Apparel Stores

Sporting Goods

Wholesale Clubs

Motor Vehicle Dealerships

Entertainment

Theaters

(1) Annualized Base Rent percentages have been recast to conform to the current period presentation.

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Property Type Composition

The following table sets forth certain property type information regarding our property portfolio as of June 30, 2026

(dollars and square footage in thousands):

Property Type

Number of

Properties

Leasable

Square Feet (1)

Annualized Base

Rent

Percentage of

Annualized Base

Rent

Retail

Industrial

Gaming

2

Other (2)

Total

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

and deducts noncontrolling interests. Excludes 2,962 acres of leased land categorized as agriculture as of June 30, 2026.

(2)"Other" primarily includes 27 properties classified as agriculture with $35.8 million in annualized base rent, 15 properties classified as office

with $33.4 million in annualized base rent, 21 properties classified as country clubs with $28.0 million in annualized base rent, and three

properties classified as data centers with $25.0 million in annualized base rent, as well as one land parcel under development.

Client Diversification

The following table sets forth the 20 largest clients in our property portfolio, expressed as a percentage of total

portfolio annualized base rent, which does not give effect to deferred rent or interest earned on loans and preferred

equity investments, as of June 30, 2026:

Client

Number of

Leases

Percentage of Total

Portfolio Annualized

Base Rent (1)

Dollar General

7-Eleven

Walgreens

Family Dollar

Life Time Group

(B&Q) Kingfisher

Wynn Resorts

1

EG Group

Asda

Sainsbury's

Tesco

BJ's Wholesale Club

Tractor Supply

FedEx

MGM (Bellagio)

1

CVS Pharmacy

Carrefour

Home Depot

Walmart / Sam's Club

Decathlon

Total

(1)Amounts for each client are calculated independently; therefore, the individual percentages may not sum to the total.

Table of Contents

Lease Expirations

The following table sets forth certain information regarding the timing of the lease term expirations in our portfolio

(excluding rights to extend a lease at the option of the client) and their contribution to total portfolio annualized base

rent as of June 30, 2026 (dollars in thousands):

Total Portfolio (1)

Expiring

Leases

Annualized Base Rent

Percentage of

Annualized Base Rent

Year

Retail

Non-Retail

9

8

Total

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

Geographic Diversification

The following table sets forth certain geographic information regarding our property portfolio as of June 30, 2026

(square footage in thousands):

Location

Number of

Properties

Percent Leased

Approximate

Leasable Square

Feet

Percentage of

Annualized Base

Rent

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky