REALTY INCOME CORP (O)

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 increasing 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.

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

during the six months ended June 30, 2025, an increase of $0.020, or 1.2%.

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, we 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 closed 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

$348.6 million.

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, resultin

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Item 7:          Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis reflect our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7. "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, 2024.

GENERAL

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 December 31, 2025, we have a portfolio of over 15,500 properties in all 50 U.S. states, the 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 listing on the NYSE in 1994, we have had 133 dividend increases and are a member of the S&P 500 Dividend Aristocrats® index for having increased our dividend for over 31 consecutive years.

As of December 31, 2025, we owned or held interests in 15,511 properties, with approximately 355.0 million square feet of leasable space leased to 1,761 clients doing business in 92 separate industries. Of the 15,511 properties in our portfolio as of December 31, 2025, 15,167, or 97.8%, were single-tenant properties, and the remaining were multi–tenant properties. Our total portfolio had a weighted average remaining lease term (excluding rights to extend a lease at the option of the client) of approximately 8.8 years. Total portfolio annualized base rent (defined as the monthly cash base rent for all leases in place as of the end of the period, multiplied by 12, excluding percentage rent) on our leases as of December 31, 2025 was $5.31 billion.

As of December 31, 2025, approximately 32.2% of our total portfolio annualized base rent came from properties leased to our investment grade clients, their subsidiaries or affiliated companies. As of December 31, 2025, our top 20 clients (based on percentage of total portfolio annualized base rent) represented approximately 35.8% of our annualized base rent and 11 of these clients had investment grade credit ratings or were subsidiaries or affiliates of investment grade companies. Approximately 91% of our annualized retail base rent as of December 31, 2025, was 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 $340.4 million, $303.1 million, and $274.2 million for the years ended December 31, 2025, 2024, and 2023, respectively.

RECENT DEVELOPMENTS

Increases in Monthly Dividends to Common Stockholders

We have continued our 57-year history of paying monthly dividends by increasing the dividend five times during 2025 and once during 2026. As of February 2026, we have paid 113 consecutive quarterly dividend increases and increased the dividend 133 times since our listing on the NYSE in 1994.

The dividends paid per share during the year ended December 31, 2025 totaled $3.2170, as compared to $3.1255 during the year ended December 31, 2024, an increase of $0.0915, or 2.9%.

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The monthly dividend of $0.2700 per share represents a current annualized dividend of $3.240 per share, and an annualized dividend yield of 5.7% based on the last reported sale price of our common stock on the NYSE of $56.37 on December 31, 2025. 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.

U.S. Private Fund Business

In December 2025, we secured an additional $816.3 million in commitments for the Fund, bringing total commitments to approximately $1.5 billion. As a result of this and previously announced closings, the Company anticipates to close its cornerstone equity capital raise round on or before March 31, 2026 and is capping its commitments during this round at $1.7 billion.

Investments

During the year ended December 31, 2025, we invested $6.3 billion at an initial weighted average cash yield of 7.3%, including investments in 380 properties, properties under development or expansion, unconsolidated entities, a preferred equity investment, and loans. See notes 4 through 7 to the consolidated financial statements for further details.

Preferred Equity Investment in CityCenter Las Vegas Real Estate Assets

In December 2025, we acquired an $800.0 million preferred equity interest in the real estate assets of CityCenter Las Vegas, comprised of the ARIA Resort & Casino and Vdara Hotel & Spa, which is owned by funds affiliated with Blackstone Real Estate. Blackstone Real Estate will retain 100% of the common equity ownership of the property, which will continue to be operated by MGM Resorts International.

Establishment of Joint Venture with GIC

In January 2026, we announced the establishment of a strategic relationship with GIC, a leading global institutional investor, including the formation of a build-to-suit development joint venture with total combined commitments of over $1.5 billion.

Dispositions

During the year ended December 31, 2025, we sold 425 properties with total net proceeds received of $744.0 million.

Equity Capital Raising

In November 2025, we replaced our prior ATM program with a new ATM program, pursuant to which we may offer and sell up to 150.0 million shares of common stock.

During the year ended December 31, 2025, we raised $2.4 billion of proceeds from the sale of common stock at a weighted average price of $57.14 per share, primarily through the settlement of 42.0 million shares of common stock under our ATM program. As of December 31, 2025, we had outstanding forward sale agreements under our ATM program for a total of 12.6 million shares of common stock, representing expected net proceeds of approximately $708.5 million (assuming full physical settlement of such agreements). See note 16, Stockholders' Equity, to the consolidated financial statements contained in this annual report for further details.

Credit Facilities

In April 2025, we closed on the recast and expansion of our multi-currency unsecured credit facilities totaling $5.38 billion, including a $1.38 billion unsecured facility for the Fund. See note 8, Credit Facilities and Commercial Paper Programs, to the consolidated financial statements for further details.

Term Loan Amendment

In November 2025, we entered into a term loan agreement that amends and restates the previous agreement governing our $1.5 billion multi-currency term loan, dated January 6, 2023. The agreement provides for a £900.0 million Sterling-denominated term loan facility that will initially mature in January 2028, before giving effect to one twelve-month extension option. See note 9, Term Loans, to the consolidated financial statements for further details.

Note Issuances

In October 2025, we issued $400.0 million of 3.950% senior unsecured notes due February 2029 and $400.0 million of 4.500% senior unsecured notes due February 2033.

In June 2025, we issued €650.0 million of 3.375% senior unsecured notes due June 2031 and €650.0 million of 3.875% senior unsecured notes due June 2035.

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In April 2025, we issued $600.0 million of 5.125% senior unsecured notes due April 2035.

See note 11, Notes Payable, to the consolidated financial statements for further details.

Convertible Bond Issuance

In January 2026, we issued $862.5 million aggregate principal amount of 3.500% convertible senior notes due January 2029 in a private offering, for estimated net proceeds of $845.5 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.

Portfolio Discussion

Leasing Results

As of December 31, 2025, we had 173 properties available for lease or sale out of 15,511 properties in our portfolio, which represents a 98.9% occupancy rate based on the number of properties in our portfolio. Our property-level occupancy rate excludes properties with ancillary leases only, such as cell towers and billboards, and properties with possession pending, and includes properties owned by unconsolidated joint ventures. Below is a summary of our portfolio activity for the periods indicated below:

(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 December 31, 2025, the new annualized base rent on re-leased units was $88.30 million, as compared to the previous annual rent of $84.21 million on the same units, representing a rent recapture rate of 104.9% on the re-leased units.

During the year ended December 31, 2025, the new annualized base rent on re-leased units was $301.99 million, as compared to the previous annual rent of $290.61 million on the same units, representing a rent recapture rate of 103.9% 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.

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Moreover, our strategic focus on the use of net lease agreements reduces

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