Item 1. Financial Statements

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Item 1. Financial Statements

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts) (unaudited)


	September 30, 2024		December 31, 2023
ASSETS
Real estate held for investment, at cost:
Land	$	17,140,719	$	14,929,310
Buildings and improvements	40,608,341		34,657,094
Total real estate held for investment, at cost	57,749,060		49,586,404
Less accumulated depreciation and amortization	(7,066,449)		(6,072,118)
Real estate held for investment, net	50,682,611		43,514,286
Real estate and lease intangibles held for sale, net	60,467		31,466
Cash and cash equivalents	396,956		232,923
Accounts receivable, net	835,328		710,536
Lease intangible assets, net	6,600,058		5,017,907
Goodwill	4,932,199		3,731,478
Investment in unconsolidated entities	1,224,974		1,172,118
Other assets, net	3,736,173		3,368,643
Total assets	$	68,468,766	$	57,779,357
LIABILITIES AND EQUITY
Distributions payable	$	233,139	$	195,222
Accounts payable and accrued expenses	880,122		738,526
Lease intangible liabilities, net	1,676,549		1,406,853
Other liabilities	863,683		811,650
Line of credit payable and commercial paper	427,546		764,390
Term loans, net	2,428,279		1,331,841
Mortgages payable, net	197,522		821,587
Notes payable, net	23,092,216		18,602,319
Total liabilities	$	29,799,056	$	24,672,388
Commitments and contingencies (note 20)

Stockholders’ equity:
Common stock and paid in capital, par value $0.01 per share, 1,300,000 shares authorized, 875,197 and 752,460 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	$	46,505,688	$	39,629,709
Distributions in excess of net income	(8,151,359)		(6,762,136)
Accumulated other comprehensive income	103,463		73,894
Total stockholders’ equity	$	38,457,792	$	32,941,467
Noncontrolling interests	211,918		165,502
Total equity	$	38,669,710	$	33,106,969
Total liabilities and equity	$	68,468,766	$	57,779,357

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share amounts) (unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
REVENUE
Rental (including reimbursable)	$	1,271,153	$	1,008,862	$	3,764,050	$	2,929,440
Other	59,762		30,242		166,793		73,268
Total revenue	1,330,915		1,039,104		3,930,843		3,002,708
EXPENSES
Depreciation and amortization	602,339		495,566		1,788,973		1,419,321
Interest	261,261		184,121		748,806		522,110
Property (including reimbursable)	92,154		70,981		281,366		235,081
General and administrative	41,869		35,525		127,781		106,521
Provisions for impairment	96,920		16,808		282,867		59,801
Merger, transaction, and other costs	8,610		2,884		105,468		4,532
Total expenses	1,103,153		805,885		3,335,261		2,347,366
Gain on sales of real estate	50,563		7,572		92,290		19,675
Foreign currency and derivative (loss) gain, net	(1,672)		(2,813)		2,885		4,957

Equity in earnings of unconsolidated entities	5,087		—		5,440		411
Other income, net	4,739		7,235		16,293		12,985
Income before income taxes	286,479		245,213		712,490		693,370
Income taxes	(15,355)		(11,336)		(46,499)		(36,218)
Net income	271,124		233,877		665,991		657,152
Net income attributable to noncontrolling interests	(1,639)		(404)		(4,831)		(3,248)
Net income attributable to the Company	269,485		233,473		661,160		653,904
Preferred stock dividends	(2,588)		—		(7,763)		—
Excess of redemption value over carrying value of preferred shares redeemed	(5,116)		—		(5,116)		—
Net income available to common stockholders	$	261,781	$	233,473	$	648,281	$	653,904
Amounts available to common stockholders per common share:

Net income, basic and diluted	$	0.30	$	0.33	$	0.75	$	0.96


Weighted average common shares outstanding:
Basic	870,665		709,165		858,679		681,419
Diluted	872,052		709,543		859,462		682,129
Net income available to common stockholders	$	261,781	$	233,473	$	648,281	$	653,904
Total other comprehensive income (loss)
Foreign currency translation adjustment	74,615		(61,401)		59,797		(3,605)
Unrealized (loss) gain on derivatives, net	(46,474)		7,193		(30,228)		(1,379)
Total other comprehensive income (loss)	$	28,141	$	(54,208)	$	29,569	$	(4,984)
Comprehensive income available to common stockholders	$	289,922	$	179,265	$	677,850	$	648,920

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands) (unaudited)

Three months ended September 30, 2024, and 2023



	Shares of preferred stock	Preferred stock and paid in capital		Shares of common stock	Common stock and paid in capital		Distributions in excess of net income		Accumulated other comprehensive income		Total stockholders’ equity		Non-controlling interests		Total equity
Balance, June 30, 2024	6,900	$	167,394	870,848	$	46,230,789	$	(7,724,318)	$	75,322	$	38,581,793	$	165,277	$	38,747,070
Net income	—	—		—	—		269,485		—		269,485		1,639		271,124
Other comprehensive income	—	—		—	—		—		28,141		28,141		—		28,141
Distributions paid and payable	—	—		—	—		(691,410)				(691,410)		(2,740)		(694,150)

Share issuances, net of costs	—	—		4,354	269,272		—		—		269,272		—		269,272
Contributions by noncontrolling interests	—	—		—	—		—		—		—		489		489
Issuance of common partnership units	—	—		—	(768)		—		—		(768)		47,253		46,485
Preferred shares redeemed	(6,900)	(167,394)		—	—		(5,116)		—		(5,116)		—		(5,116)
Share-based compensation, net	—	—		(5)	6,395		—		—		6,395		—		6,395
Balance, September 30, 2024	—	$	—	875,197	$	46,505,688	$	(8,151,359)	$	103,463	$	38,457,792	$	211,918	$	38,669,710

Balance, June 30, 2023	—	$	—	708,773	$	37,149,380	$	(6,102,226)	$	96,057	$	31,143,211	$	167,932	$	31,311,143
Net income	—	—		—	—		233,473		—		233,473		404		233,877
Other comprehensive loss	—	—		—	—		—		(54,208)		(54,208)		—		(54,208)
Distributions paid and payable	—	—		—	—		(547,781)		—		(547,781)		(2,497)		(550,278)
Share issuances, net of costs	—	—		15,122	876,253		—		—		876,253		—		876,253
Contributions by noncontrolling interests	—	—		—	—		—		—		—		435		435
Share-based compensation, net	—	—		(1)	6,196		—		—		6,196		—		6,196
Balance, September 30, 2023	—	$	—	723,894	$	38,031,829	$	(6,416,534)	$	41,849	$	31,657,144	$	166,274	$	31,823,418


Nine months ended September 30, 2024 and 2023

	Shares of preferred stock	Preferred stock and paid in capital		Shares of common stock	Common stock and paid in capital		Distributions in excess of net income		Accumulated other comprehensive income		Total stockholders’ equity		Non-controlling interests		Total equity
Balance, December 31, 2023	—	$	—	752,460	$	39,629,709	$	(6,762,136)	$	73,894	$	32,941,467	$	165,502	$	33,106,969
Net income	—	—		—	—		661,160		—		661,160		4,831		665,991
Other comprehensive income	—	—		—	—		—		29,569		29,569		—		29,569
Distributions paid and payable	—	—		—	—		(2,045,267)		—		(2,045,267)		(7,438)		(2,052,705)

Share issuances, net of costs	—	—		14,073	818,724		—		—		818,724		—		818,724
Shares issued with merger	6,900	167,394		108,308	6,043,641		—		—		6,043,641		—		6,043,641
Contributions by noncontrolling interests	—	—		—	—		—		—		—		1,770		1,770
Issuance of common partnership units	—	—		—	(768)		—		—		(768)		47,253		46,485
Preferred shares redeemed	(6,900)	(167,394)		—	—		(5,116)		—		(5,116)		—		(5,116)
Share-based compensation, net	—	—		356	14,382		—		—		14,382		—		14,382
Balance, September 30, 2024	—	$	—	875,197	$	46,505,688	$	(8,151,359)	$	103,463	$	38,457,792	$	211,918	$	38,669,710

Balance December 31, 2022	—	$	—	660,300	$	34,159,509	$	(5,493,193)	$	46,833	$	28,713,149	$	130,140	$	28,843,289
Net income	—	—		—	—		653,904		—		653,904		3,248		657,152
Other comprehensive loss	—	—		—	—		—		(4,984)		(4,984)		—		(4,984)
Distributions paid and payable	—	—		—	—		(1,577,245)		—		(1,577,245)		(7,108)		(1,584,353)
Share issuances, net of costs	—	—		63,348	3,858,347		—		—		3,858,347		—		3,858,347
Contributions by noncontrolling interests	—	—		—	—		—		—		—		39,994		39,994
Share-based compensation, net	—	—		246	13,973		—		—		13,973		—		13,973
Balance, September 30, 2023	—	$	—	723,894	$	38,031,829	$	(6,416,534)	$	41,849	$	31,657,144	$	166,274	$	31,823,418

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)


	Nine months ended September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	665,991	$	657,152
Adjustments to net income:
Depreciation and amortization	1,788,973		1,419,321
Amortization of share-based compensation	47,671		20,154
Non-cash revenue adjustments	(95,324)		(51,272)
Amortization of net premiums on mortgages payable	(18)		(9,597)
Amortization of net premiums on notes payable	(3,883)		(45,647)
Amortization of deferred financing costs	17,694		19,498
Foreign currency and unrealized derivative (gain) loss, net	(33,582)		10,188
Non-cash interest expense (income)	9,179		(5,390)
Gain on sales of real estate	(92,290)		(19,675)
Equity in earnings of unconsolidated entities	(5,440)		(411)
Distributions on common equity from unconsolidated entities	15,608		—
Provisions for impairment	282,867		59,801
Change in assets and liabilities
Accounts receivable and other assets	40,338		(17,538)
Accounts payable, accrued expenses and other liabilities	(36,471)		161,527
Net cash provided by operating activities	2,601,313		2,198,111
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in real estate	(1,611,794)		(6,702,140)
Improvements to real estate, including leasing costs	(85,204)		(47,107)
Investment in unconsolidated entities	(57,014)		—
Investment in loans	(377,490)		—
Proceeds from sales of real estate	451,365		92,772
Return of investment from unconsolidated entities	—		3,927

Proceeds from note receivable	51,562		—
Insurance proceeds received	2,418		15,177
Non-refundable escrow deposits	(38,750)		(1,188)
Net cash acquired in merger	93,683		—
Net cash used in investing activities	(1,571,224)		(6,638,559)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash distributions to common stockholders	(1,999,858)		(1,555,679)
Cash distributions to preferred stockholders	(7,763)		—
Borrowings on line of credit and commercial paper programs	24,698,502		33,021,401
Payments on line of credit and commercial paper programs	(25,079,449)		(34,909,165)
Proceeds from term loan	—		1,029,383
Principal payment on term loan	(250,000)		—
Proceeds from notes payable issued	2,657,925		3,263,294
Principal payment on notes payable	(849,999)		—
Principal payments on mortgages payable	(626,321)		(20,842)

Proceeds from common stock offerings, net	809,910		3,849,963
Proceeds from dividend reinvestment and stock purchase plan	8,814		8,382
Redemption of preferred stock	(172,510)		—
Distributions to noncontrolling interests	(7,185)		(5,585)
Net receipts on derivative settlements	—		2,191
Debt issuance costs	(59,285)		(35,014)

Other items, including shares withheld upon vesting	(8,591)		(6,181)
Net cash (used in) provided by financing activities	(885,810)		4,642,148
Effect of exchange rate changes on cash and cash equivalents	11,423		2,083
Net increase in cash, cash equivalents and restricted cash	155,702		203,783
Cash, cash equivalents and restricted cash, beginning of period	292,175		226,881
Cash, cash equivalents and restricted cash, end of period	$	447,877	$	430,664

For supplemental disclosures, see note 19, S**upplemental Disclosures of Cash Flow Information.

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(unaudited)

1. Summary of Significant Accounting Policies

Realty Income Corporation (“Realty Income,” the “Company,” “we,” “our” or “us”), a Maryland corporation, is an S&P 500 company and real estate partner to the world's leading companies. The Company was founded in 1969 and our shares of common stock trade on the New York Stock Exchange ("NYSE") under the symbol “O”.

As of September 30, 2024, we owned or held interests in a diversified portfolio of 15,457 properties located in all 50 states of the United States ("U.S."), the United Kingdom ("U.K."), and six other countries in Europe, with approximately 336.6 million square feet of leasable space.

In January 2024, we completed our merger with Spirit Realty Capital, Inc. (“Spirit”). For more details, please see note 2**,** Merger with Spirit Realty Capital, Inc.

Basis of Presentation. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Intercompany accounts and transactions are eliminated in consolidation. The U.S. dollar ("USD") is our reporting currency. Unless otherwise indicated, all dollar amounts are expressed in USD.

For our consolidated subsidiaries whose functional currency is not the USD, we translate their financial statements into USD at the time we consolidate those subsidiaries’ financial statements. Generally, assets and liabilities are translated at the exchange rate in effect at the balance sheet date. The resulting translation adjustments are included in 'Accumulated other comprehensive income' ("AOCI") on our consolidated balance sheets. Certain balance sheet items, primarily equity and capital-related accounts, are reflected at the historical exchange rate. Income statement accounts are translated using the average exchange rate for the period.

We and certain of our consolidated subsidiaries have intercompany and third-party debt that is not denominated in our functional currency. When the debt is remeasured to the functional currency of the entity, a gain or loss can result. The resulting adjustment is reflected in 'Foreign currency and derivative (loss) gain, net' in our consolidated statements of income and comprehensive income. In the statement of cash flows, cash flows denominated in foreign currencies are translated using the exchange rates in effect at the time of the respective cash flows or at average exchange rates for the period, depending on the nature of the cash flow items.

In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented have been included. Operating results for the three and nine months ended September 30, 2024 are not necessarily an indication of the results that may be expected for the entire year. Readers of this quarterly report should refer to our audited consolidated financial statements for the year ended December 31, 2023, which are included in our 2023 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report.

Principles of Consolidation. These consolidated financial statements include the accounts of Realty Income and all other entities in which we have a controlling financial interest. We evaluate whether we have a controlling financial interest in an entity in accordance with Accounting Standards Codification ("ASC") 810, Consolidation.

Voting interest entities ("VOEs") are entities considered to have sufficient equity at risk and which the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. We consolidate voting interest entities in which we have a controlling financial interest, which we typically have through holding of a majority of the entity’s voting equity interests.

Variable interest entities ("VIEs") are entities that lack sufficient equity at risk or where the equity holders either do not have the obligation to absorb losses, do not have the right to receive residual returns, do not have the right to make decisions about the entity’s activities, or some combination of the above. A controlling financial interest in a VIE is present when an entity has a variable interest, or a combination of variable interests, that provides the entity with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially

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be significant to the VIE. An entity that meets both conditions above is deemed the primary beneficiary and consolidates the VIE. We reassess our initial evaluation of whether an entity is a VIE when certain reconsideration events occur. We reassess our determination of whether we are the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances.

At September 30, 2024, we are considered the primary beneficiary of Realty Income, L.P. and certain investments, including investments in joint ventures. Below is a summary of selected financial data of such consolidated VIEs, included on our consolidated balance sheets at September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024		December 31, 2023
Net real estate	$	2,907,604	$	2,866,272
Total assets	$	3,549,127	$	3,588,720
Total liabilities	$	154,092	$	134,366

The portion of a consolidated entity not owned by us is recorded as a noncontrolling interest. Noncontrolling interests are reflected on our consolidated balance sheets as a component of equity. Noncontrolling interests that were created or assumed as part of a business combination or asset acquisition were recognized at fair value as of the date of the transaction (see note 11, Noncontrolling Interests).

Use of Estimates. The consolidated financial statements were prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segment Reporting. We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and assesses our performance.

Income Taxes. We have elected to be taxed as a real estate investment trust ("REIT"), under the Internal Revenue Code of 1986, as amended. We believe we have qualified and continue to qualify as a REIT. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income in the U.S., we generally will not be required to pay U.S. income taxes on such income. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements, except for federal income taxes of our taxable REIT subsidiaries ("TRS"). A TRS is a subsidiary of a REIT that is subject to federal, state and local income taxes, as applicable. Our use of TRS entities enables us to engage in certain business activities while complying with the REIT qualification requirements and to retain any income generated by these businesses for reinvestment without the requirement to distribute those earnings. For our international territories, we are liable for taxes in the U.K. and Spain. Accordingly, provisions have been made for U.K. and Spain income taxes. Therefore, the income taxes recorded on our consolidated statements of income and comprehensive income represent amounts accrued or paid by Realty Income and its subsidiaries for U.S. income taxes on our TRS entities, city and state income and franchise taxes, and income taxes for the U.K. and Spain.

Earnings and profits that determine the taxability of distributions to stockholders differ from net income reported for financial reporting purposes primarily due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things.

We regularly analyze our various international, federal and state filing positions and only recognize the income tax effect in our financial statements when certain criteria regarding uncertain income tax positions have been met. We believe that our income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain tax positions have been recorded on our consolidated financial statements.

Lease Revenue Recognition and Accounts Receivable. The majority of our leases are accounted for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Any rental revenue contingent upon a client’s sales, or percentage rent, is recognized only after such client exceeds its sales breakpoint. Rental increases based upon changes in the consumer price indices are recognized only after the changes in the indexes have occurred and are then applied according to the lease agreements. Contractually obligated rental revenue from our clients for recoverable real estate taxes and operating expenses are included in contractually obligated reimbursements by our clients, a component of rental revenue, in the period when such costs are incurred. Taxes and operating expenses paid directly by our clients are recorded on a net basis.

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Other revenue includes certain property-related revenue not included in rental revenue and interest income recognized on financing receivables for above-market leases acquired through sale-leaseback transactions.

We assess the probability of collecting substantially all of the lease payments to which we are entitled under the original lease contract as required under ASC 842, Leases. We assess the collectability of our future lease payments based on an analysis of creditworthiness, economic trends and other facts and circumstances related to the applicable clients. If we conclude the collection of substantially all of the lease payments under a lease is less than probable, rental revenue recognized for that lease is limited to cash received going forward, existing operating lease receivables, including those related to straight-line rental revenue, must be written off as an adjustment to rental revenue, and no further operating lease receivables are recorded for that lease until such future determination is made that substantially all lease payments under that lease are now considered probable. If we subsequently conclude that the collection of substantially all lease payments under a lease is probable, a reversal of lease receivables previously written off is recognized.

Loans Receivable. We hold our loans receivable for long-term investment. We recognize interest income on loans receivable using the effective-interest method. Direct costs associated with originating loans, along with any premium or discount, are deferred and amortized as an adjustment to interest income over the term of the loan using the effective interest method. When management identifies the full recovery of the contractually specified payments of principal and interest of a loan is less than probable, we evaluate the expected loss amount and place it on non-accrual status. We made the accounting policy election to record accrued interest on our loan portfolio separate from our loan receivable and other lending investments. These loans and the related interest receivable are presented in 'Other assets, net' on our consolidated balance sheets.

Financing Receivables. For properties we acquire that qualify as sale-leaseback transactions and the purchase price is in excess of the fair value of the real estate acquired, the difference is accounted for as financing receivables, presented within 'Other assets, net' on our consolidated balance sheets. Rent payments are allocated between rental income and the financing receivable. Interest income on the financing receivable is recognized using the interest rate implicit in the leaseback and presented within 'Other' revenue in our consolidated statement of income and comprehensive income.

Allowance for Credit Losses. The allowance for credit losses, which is recorded as a reduction to loans receivable and financing receivable within 'Other assets, net' on our consolidated balance sheets, is measured using a probability of default method based on our clients' respective credit ratings, our historical experience, and the expected value of the underlying collateral upon its repossession. If we determine a financing receivable no longer shares risk characteristics with other financing receivables in the pool, we evaluate the financing receivable for expected credit losses on an individual basis. Included in our model are factors that incorporate forward-looking information. Changes in our allowance for credit losses are presented in 'Provisions for impairment' in our consolidated statements of income and comprehensive income.

The following summarizes the activity within the allowance for credit losses related to loans and financing receivable for the nine months ended September 30, 2024 (in millions):


	Loans Receivable		Financing Receivable		Total
Allowance for credit losses at December 31, 2023	$	2.5	$	2.4	$	4.9
Provision for credit losses (1)	4.5		69.8		74.3
Initial allowance for PCD assets (2)	1.8		—		1.8
Write-offs (3)	(1.8)		—		(1.8)
Foreign currency remeasurement	0.4		—		0.4
Allowance for credit losses at September 30, 2024	$	7.4	$	72.2	$	79.6

(1) During the nine months ended September 30, 2024, provisions for credit losses on loans receivable were primarily attributable to loans acquired during 2024. The increase in provision for credit losses on financing receivables is primarily due to a client in the convenience store industry that has defaulted on their lease payments and was fully reserved for as of September 30, 2024.

(2) Includes the recognition of an initial expected credit loss of $1.8 million for a purchased credit deteriorated ("PCD") loan we acquired in conjunction with our merger with Spirit.

(3) Includes a reduction due to the sale of a PCD loan in September 2024.

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Merger, Transaction, and Other Costs.

Merger, transaction, and other costs include (i) merger-related transaction costs, primarily consisting of employee severance, post-combination share-based compensation, transfer taxes, and various professional fees directly attributable to a merger, (ii) organization costs for potential strategic ventures and business lines, (iii) corporate facilities lease termination costs, and (iv) other costs that do not align with the ongoing operations of our business. During the three and nine months ended September 30, 2024, we incurred $8.6 million and $105.5 million, respectively, of merger, transaction, and other costs consisting primarily of $2.9 million and $99.8 million, respectively, of transaction and integration-related costs related to Spirit and $5.1 million for each of the respective periods related to the lease termination of a legacy corporate facility.

Recent Accounting Standards Not Yet Adopted.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes, to enhance income tax disclosures, provide more information about tax risks and opportunities present in worldwide operations, and to disaggregate existing income tax disclosures. The guidance is effective for annual periods beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. We are currently evaluating the impact on our financial statement disclosures.

In November 2023, FASB issued Accounting Standards Update ASU 2023-07, Segment Reporting, establishing improvements to reportable segments disclosures to enhance segment reporting under Topic 280. This ASU aims to change how public entities identify and aggregate operating segments and apply quantitative thresholds to determine their reportable segments. This ASU also requires public entities that operate as a single reportable segment to provide all segment disclosures in Topic 280, not just entity level disclosures. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and the amendments should be applied retrospectively to all periods presented in the financial statements. We are currently evaluating the impact on our financial statement disclosures.

2. Merger with Spirit Realty Capital, Inc.

On October 29, 2023, we entered into an Agreement and Plan of Merger (as amended, or the “Merger Agreement”) with Saints MD Subsidiary, Inc., (“Merger Sub”) a Maryland corporation and direct wholly owned subsidiary of Realty Income and Spirit, a Maryland corporation.

On January 23, 2024, we completed our merger with Spirit. Pursuant to the terms and subject to the conditions of the Merger Agreement, Spirit merged with and into Merger Sub, with Merger Sub continuing as the surviving corporation (the “Merger”). At the effective time of the Merger (the “Effective Time”), (i) each outstanding share of Spirit common stock, par value $0.05 per share, automatically converted into 0.762 (the “Exchange Ratio”) of a newly issued share of our common stock, subject to adjustments as set forth in the Merger Agreement, and cash in lieu of fractional shares, and (ii) each outstanding share of Spirit’s 6.000% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share, converted into the right to receive one share of newly issued Realty Income 6.000% Series A Cumulative Redeemable Preferred Stock (“Realty Income Series A preferred stock”), having substantially the same terms as the Spirit Series A Preferred Stock. Immediately prior to the Effective Time, each award of outstanding restricted Spirit common stock and Spirit performance share award was cancelled and converted into Realty Income common stock, using the Exchange Ratio. For more details, see note 16, Series A Preferred Stock.

The primary reason for the merger was to expand our size, scale and diversification, in order to further position us as the real estate partner of choice for large net lease transactions.

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Our merger with Spirit has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, with Realty Income as the accounting acquirer, which requires, among other things, that the assets acquired, and liabilities assumed be recognized at their acquisition date fair value. The fair value of the consideration transferred on the date of the acquisition is as follows (in thousands, except share and per share data):


Shares of Spirit common stock exchanged (1)	142,136,567
Exchange Ratio	0.762
Shares of Realty Income common stock issued	108,308,064
Opening price of Realty Income common stock on January 23, 2024	$	55.80
Fair value of Realty Income common stock issued to the former holders of Spirit common stock	$	6,043,590
Shares of Realty Income Series A preferred stock issued in exchange for Spirit Series A preferred stock	6,900,000
Opening price of Realty Income Series A preferred stock on January 23, 2024	$	24.26
Fair value of Realty Income Series A preferred stock issued to the former holders of Spirit Series A preferred stock	$	167,394
Cash paid for fractional shares	$	51
Less: Fair value of Spirit restricted stock and performance awards attributable to post-combination costs (2)	$	(24,751)
Consideration transferred	$	6,186,284

(1) Includes 142,136,567 shares of Spirit common stock outstanding as of January 23, 2024, which were converted into Realty Income common stock at the Effective Time at an Exchange Ratio of 0.762 per share of Spirit common stock. The portion of the converted unvested Spirit Restricted Stock Awards related to post-combination expense is removed in footnote (2) below.

(2) Represents the fair value of fully vested Spirit restricted stock and performance share awards that were accelerated and converted into Realty Income common stock at the Effective Time, reflecting the value attributable to post-combination services. Spirit restricted stock and performance share awards are included in Spirit's outstanding common stock as of the merger date. The fair value attributable to pre-combination services was $41.7 million and is included in the consideration transferred above.

A. Preliminary Purchase Price Allocation

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):


	At Acquisition Date As Reported March 31, 2024		Measurement Period Adjustments		At Acquisition Date As Reported September 30, 2024
ASSETS
Land	$	1,853,895	$	3,247	$	1,857,142
Buildings and improvements	4,859,162		90,314		4,949,476
Total real estate held for investment	6,713,057		93,561		6,806,618
Real estate and lease intangibles held for sale	35,650		(1,583)		34,067
Cash and cash equivalents	93,683		—		93,683
Accounts receivable	12,959		(145)		12,814
Lease intangible assets (1)	2,214,615		(32,804)		2,181,811
Goodwill	1,259,864		(59,143)		1,200,721
Other assets (2)	174,672		(1,881)		172,791
Total assets acquired	$	10,504,500	$	(1,995)	$	10,502,505
LIABILITIES
Accounts payable and accrued expenses	$	56,407	$	(1,934)	$	54,473
Lease intangible liabilities (3)	378,369		(203)		378,166
Other liabilities	101,954		142		102,096
Term loans	1,300,000		—		1,300,000
Notes payable	2,481,486		—		2,481,486
Total liabilities assumed	$	4,318,216	$	(1,995)	$	4,316,221
Net assets acquired, at fair value	$	6,186,284	$	—	$	6,186,284
Total purchase price	$	6,186,284	$	—	$	6,186,284

(1) The weighted average amortization period for acquired lease intangible assets is 10.8 years.

(2) Includes $53.9 million of gross contractual loans receivable, the fair value of which was $47.1 million, and we expect to collect substantially all of the loans receivable as of the acquisition date.

(3) The weighted average amortization period for acquired lease intangible liabilities is 8.2 years.

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The assessment of fair value is considered preliminary and is based on a valuation prepared by the Company with assistance of a third-party valuation specialist. We are in the process of finalizing our review of the inputs used in the valuation to ensure accuracy and procedures are performed within our policy. Accordingly, certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, loss contingencies, and goodwill are subject to change. We expect to complete our purchase accounting assessment in the fourth quarter of 2024.

Measurement period adjustments are recorded in the period in which they are determined, as if they had been completed at the acquisition date. The measurement period adjustments recorded in the nine months ended September 30, 2024 resulted from updated valuations related to real estate assets and liabilities, in addition to loans receivable. The adjustments were determined based on additional information that existed at the acquisition date but was not contemplated in our initial fair value assessment and resulted in a decrease to goodwill of $59.1 million.

A preliminary estimate of approximately $1.20 billion has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. The recognized goodwill is attributable to expected synergies and benefits arising from the merger transaction, including anticipated financing and corporate overhead cost savings. None of the goodwill recognized is expected to be deductible for tax purposes.

B. Merger, transaction, and other costs In conjunction with our merger with Spirit, we incurred $2.9 million and $99.8 million of merger-related transaction costs during the three and nine months ended September 30, 2024, respectively, primarily consisting of employee severance, post-combination share-based compensation, transfer taxes, and various professional fees directly attributable to the Merger.

C. Unaudited Pro Forma Financial Information

The following unaudited pro forma information presents a summary of our combined results of operations for the nine months ended September 30, 2024 and three and nine months ended September 30, 2023, respectively, as if our merger with Spirit had occurred on January 1, 2023 (in millions, except per share data). The following pro forma financial information is not necessarily indicative of the results of operations had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.


	Three months ended September 30,		Nine months ended September 30,
	2023		2024		2023
Total revenues	$	1,239.3	$	3,978.8	$	3,595.3
Net income	$	250.5	$	759.4	$	673.3
Basic and diluted earnings per share	$	0.31	$	0.88	$	0.85

Our consolidated results of operations for the three and nine months ended September 30, 2024 include $202.8 million and $563.8 million of revenues, respectively, and $40.2 million and $96.0 million of net income, respectively, associated with the results of operations of Spirit from the merger closing date of January 23, 2024 to September 30, 2024.

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3. Supplemental Detail for Certain Components of Consolidated Balance Sheets (in thousands):


A.	Accounts receivable, net, consist of the following at:	September 30, 2024		December 31, 2023
	Straight-line rent receivables, net	$	662,569	$	516,692
	Client receivables, net	172,759		193,844
		$	835,328	$	710,536


B.	Lease intangible assets, net, consist of the following at:	September 30, 2024		December 31, 2023
	In-place leases	$	7,393,345	$	5,500,404
	Above-market leases	2,225,473		1,811,400
	Accumulated amortization of in-place leases	(2,318,087)		(1,746,377)
	Accumulated amortization of above-market leases	(702,732)		(549,319)
	Other items	2,059		1,799
		$	6,600,058	$	5,017,907


C.	Other assets, net, consist of the following at:	September 30, 2024		December 31, 2023
	Financing receivables, net	$	1,500,862	$	1,570,943
	Right of use asset - financing leases, net	671,831		706,837
	Right of use asset - operating leases, net	624,939		594,712
	Loan receivable, net	622,593		205,339
	Prepaid expenses	58,520		33,252
	Value-added tax receivable	49,412		100,672
	Non-refundable escrow deposits	38,750		200
	Restricted escrow deposits	37,317		6,247
	Interest receivable	25,712		6,139
	Derivative assets and receivables - at fair value	15,524		21,170
	Impounds related to mortgages payable	13,604		53,005
	Corporate assets, net	12,576		12,948
	Credit facility origination costs, net	8,564		12,264
	Investment in sales type lease	6,120		6,056
	Other items	49,849		38,859
		$	3,736,173	$	3,368,643


D.	Accounts payable and accrued expenses consist of the following at:	September 30, 2024		December 31, 2023
	Notes payable - interest payable	$	245,089	$	218,811
	Derivative liabilities and payables - at fair value	158,024		119,620
	Property taxes payable	104,752		78,809
	Accrued costs on properties under development	78,833		65,967
	Accrued income taxes	77,287		61,070
	Accrued property expenses	63,912		54,208
	Value-added tax payable	55,676		64,885
	Accrued merger-related costs	18,786		4,551
	Mortgages, term loans, and credit line - interest payable	4,239		8,580
	Other items	73,524		62,025
		$	880,122	$	738,526


E.	Lease intangible liabilities, net, consist of the following at:	September 30, 2024		December 31, 2023
	Below-market leases	$	2,120,722	$	1,728,027
	Accumulated amortization of below-market leases	(444,173)		(321,174)
		$	1,676,549	$	1,406,853


F.	Other liabilities consist of the following at:	September 30, 2024		December 31, 2023
	Lease liability - operating leases	$	458,545	$	425,213
	Rent received in advance and other deferred revenue	317,206		312,195
	Lease liability - financing leases	55,262		44,345
	Security deposits	31,008		28,250
	Other acquisition liabilities	1,662		1,647
		$	863,683	$	811,650

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4. Investments in Real Estate

A. Acquisitions of Real Estate

Below is a summary of our acquisitions for the nine months ended September 30, 2024:


	Number of Properties	Leasable Square Feet (in thousands)	Investment ($ in millions)		Weighted Average Lease Term (Years)	Initial Weighted Average Cash Lease Yield (1)

Acquisitions - U.S.	87	2,370	$	414.3	13.4	7.5	%
Acquisitions - Europe	29	2,457	744.4		6.8	7.8	%
Total acquisitions	116	4,827	$	1,158.7	9.1	7.7	%
Properties under development (2)	182	6,306	548.9		15.6	7.4	%
Total (3)	298	11,133	$	1,707.6	11.1	7.6	%

(1)The initial weighted average cash lease yield for a property is generally computed as estimated contractual first year cash net operating income, which, in the case of a net leased property, is equal to the aggregate cash base rent for the first full year of each lease, divided by the total cost of the property. Since it is possible that a client could default on the payment of contractual rent (defined as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables), we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above. Contractual net operating income used in the calculation of initial weighted average cash lease yield includes approximately $1.2 million received as settlement credits as reimbursement of free rent periods for the nine months ended September 30, 2024.

In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return. When the lease does not provide for a fixed rate of return on a property under development or expansion, the initial weighted average cash lease yield is computed as follows: estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs.

(2)Includes £50.6 million of Sterling-denominated investments, and €38.9 million of Euro-denominated investments, converted at the applicable exchange rates on the funding dates.

(3)Our clients occupying the new properties are 84.9% retail and 15.1% industrial based on net operating income. Approximately 28% of the net operating income generated from acquisitions during the nine months ended September 30, 2024 was from investment grade rated clients, their subsidiaries, or affiliated companies at the date of acquisition.

The aggregate purchase price of the assets acquired during the nine months ended September 30, 2024 has been allocated as follows (in millions):


	Acquisitions - USD		Acquisitions - Sterling		Acquisitions - Euro
Land	$	117.1	£	134.2	€	15.5
Buildings and improvements	413.1		302.2		41.6
Lease intangible assets (1)	87.5		97.0		12.3
Other assets (2)	13.8		—		—
Lease intangible liabilities (3)	(32.5)		(5.5)		(2.5)

	$	599.0	£	527.9	€	66.9

(1)The weighted average amortization period for acquired lease intangible assets is 8.8 years.

(2)USD-denominated other assets consist entirely of financing receivables with above-market terms.

(3)The weighted average amortization period for acquired lease intangible liabilities is 10.6 years.

The aggregate purchase price of the assets acquired during the nine months ended September 30, 2024 included contingent consideration obligations related to leasing activities for a multi-tenant property acquired. At September 30, 2024, we had accrued $15.7 million for remaining amounts deemed probable and estimable.

The properties acquired during the nine months ended September 30, 2024 generated total revenue and net income of $34.2 million and $10.8 million, respectively.

B. Investments in Existing Properties

During the nine months ended September 30, 2024, we capitalized costs of $84.7 million on existing properties in our portfolio, consisting of $78.6 million for non-recurring building improvements, $5.9 million for re-leasing costs, and $0.2 million for recurring capital expenditures. In comparison, during the nine months ended September 30, 2023, we capitalized costs of $43.6 million on existing properties in our portfolio, consisting of $36.5 million for non-recurring building improvements, $6.9 million for re-leasing costs, and $0.2 million for recurring capital expenditures.

C. Properties with Existing Leases

The value of the in-place and above-market leases is recorded to 'Lease intangible assets, net' on our consolidated balance sheets, and the value of the below-market leases is recorded to 'Lease intangible liabilities, net' on our consolidated balance sheets.

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The values of the in-place leases are amortized as depreciation and amortization expense. The amounts amortized to expense for all of our in-place leases, for the nine months ended September 30, 2024, and 2023 were $652.8 million and $489.2 million, respectively.

The values of the above-market and below-market leases are amortized over the term of the respective leases, including any bargain renewal options, as an adjustment to rental revenue in our consolidated statements of income and comprehensive income. The amounts amortized as a net decrease to rental revenue for capitalized above-market and below-market leases for the nine months ended September 30, 2024, and 2023 were $26.1 million and $48.6 million, respectively. If a lease was to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recorded to revenue or expense, as appropriate.

The following table presents the estimated impact during the next five years and thereafter related to the amortization of the above-market and below-market lease intangibles and the amortization of the in-place lease intangibles at September 30, 2024 (dollars in thousands):


	Net increase (decrease) to rental revenue		Increase to amortization expense
2024	$	(9,108)	$	211,751
2025	(34,482)		781,553
2026	(37,215)		685,034
2027	(38,012)		586,735
2028	(30,989)		497,501
Thereafter	303,614		2,312,684
Totals	$	153,808	$	5,075,258

D. Gain on Sales of Real Estate

The following table summarizes our properties sold during the periods indicated below (dollars in millions):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Number of properties	92		24		214		79
Net sales proceeds	$	249.5	$	32.3	$	451.4	$	92.8
Gain on sales of real estate	$	50.6	$	7.6	$	92.3	$	19.7

5. Investments in Unconsolidated Entities

The following is a summary of our investments in unconsolidated entities as of September 30, 2024 and December 31, 2023 (dollars in thousands):


	Ownership %	Number of Properties	Carrying Amount (1) of Investment as of
Investment	As of September 30, 2024		September 30, 2024		December 31, 2023
Bellagio Las Vegas Joint Venture - Common Equity Interest	21.9%	1	$	278,944	$	296,097
Bellagio Las Vegas Joint Venture - Preferred Equity Interest	n/a	n/a	650,000		650,000
Data Center Joint Venture	80.0%	2	296,030		226,021

Total investment in unconsolidated entities			$	1,224,974	$	1,172,118

(1) The total carrying amount of the investments was greater than the underlying equity in net assets (i.e., basis difference) by $7.7 million as of September 30, 2024. The basis difference is primarily attributable to capitalized interest for the data center joint venture development funding.

A. Bellagio Las Vegas Joint Venture Interests

The joint venture we formed with Blackstone Real Estate Income Trust owns a 95.0% interest in the real estate of The Bellagio Las Vegas. We made an initial investment in October 2023, including $301.4 million of common equity for an indirect interest of 21.9% in the property and a $650.0 million preferred equity interest. During the nine months ended September 30, 2024, we recognized interest income of $39.5 million for 8.1% preferential cumulative distributions within 'Other' revenue in our consolidated statements of income and comprehensive income. The unconsolidated entity had total debt outstanding of $3.0 billion as of September 30, 2024, all of which was non-recourse to us with limited customary exceptions.

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B. Data Center Joint Venture

We own an 80.0% equity interest in the joint venture that we formed with Digital Realty Trust. As we do not control this VOE, we account for it under the equity method. This joint venture owns and operates two data centers. Our maximum exposure to loss associated with this joint venture is limited to our equity investment and our pro rata share of the remaining $35.4 million of estimated development costs for the first phase of the project.

6. Investments in Loans

The following table presents information about our loans as of September 30, 2024 and December 31, 2023 (dollars in thousands):


		September 30, 2024
	Maturity Date	Amortized Cost		Allowance		Carrying Amount (1)
Senior Secured Notes Receivable	October 2029 - May 2030	$	586,414	$	(6,476)	$	579,938
Mortgage Loans	September 2038	33,500		—		33,500
Unsecured Loan	December 2026	10,053		(898)		9,155
Total		$	629,967	$	(7,374)	$	622,593

		December 31, 2023
	Maturity Date	Amortized Cost		Allowance		Carrying Amount (1)
Senior Secured Note Receivable	October 2029	$	174,337	$	(2,498)	$	171,839
Mortgage Loan	September 2038	33,500		—		33,500
Total		$	207,837	$	(2,498)	$	205,339

(1) The total carrying amount of the investment in loans excludes accrued interest of $23.5 million and $3.4 million as of September 30, 2024 and December 31, 2023, respectively, which is recorded to 'Other assets, net' on our consolidated balance sheets.

A*. Senior Secured Notes Receivable*

In May 2024, we acquired a GBP-denominated senior secured note, maturing in May 2030, with a principal amount of £300.0 million, equivalent to $402.1 million as of September 30, 2024. The interest only note bears interest at a fixed rate of 8.125% and is callable at par beginning in May 2026.

In September 2024, our interest in a loan with a carrying amount of $5.3 million, which was acquired in conjunction with our merger with Spirit, was transferred to a third-party buyer. As a result of this transfer, we recorded a loss of $1.5 million, presented in 'Other income, net' in our consolidated statements of income and comprehensive income.

7. Revolving Credit Facility and Commercial Paper Programs

A. Credit Facility

We have a $4.25 billion unsecured revolving multi-currency credit facility that matures in June 2026, includes two six-month extensions that can be exercised at our option, and allows us to borrow in up to 14 currencies, including USD. Our revolving credit facility also has a $1.0 billion expansion option, which is subject to obtaining lender commitments. Under our revolving credit facility, our investment grade credit ratings at September 30, 2024 provide for USD borrowings at Secured Overnight Financing Rate ("SOFR"), plus 0.725% with a SOFR adjustment charge of 0.10% and a revolving credit facility fee of 0.125%, for all-in pricing of 0.95% over SOFR, GBP at the Sterling Overnight Indexed Average (“SONIA”), plus 0.725% with a SONIA adjustment charge of 0.0326% and a revolving credit facility fee of 0.125%, for all-in pricing of 0.8826% over SONIA, and Euro ("EUR") borrowings at one-month Euro Interbank Offered Rate (“EURIBOR”), plus 0.725%, and a revolving credit facility fee of 0.125%, for all-in pricing of 0.85% over one-month EURIBOR.

As of September 30, 2024, we had a borrowing capacity of $3.82 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $0.4 billion, including £0.3 billion GBP and €6.0 million EUR borrowings. There was no outstanding balance at December 31, 2023.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 5.4% and 4.8% during the nine months ended September 30, 2024, and 2023, respectively. At September 30, 2024, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 5.7%. Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at September 30, 2024, we were in compliance with the covenants under our revolving credit facility.

As of September 30, 2024, credit facility origination costs of $8.6 million are included in 'Other assets, net', as compared to $12.3 million at December 31, 2023, on our consolidated balance sheets. These costs are being amortized over the remaining term of our revolving credit facility.

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B. Commercial Paper Programs

We have a USD-denominated unsecured commercial paper program, under which we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $1.5 billion, as well as a EUR-denominated unsecured commercial paper program, which permits us to issue additional unsecured commercial notes up to a maximum aggregate amount of $1.5 billion (or foreign currency equivalent). Our EUR-denominated unsecured commercial paper program may be issued in USD or various foreign currencies, including but not limited to, EUR, GBP, Swiss Francs, Yen, Canadian Dollars, and Australian Dollars, in each case, pursuant to customary terms in the European commercial paper market.

The commercial paper ranks pari passu in right of payment with all of our other unsecured senior indebtedness outstanding, exclusive of unexchanged VEREIT, Inc. (“VEREIT”) and Spirit bonds, including borrowings under our revolving credit facility, our term loans and our outstanding senior unsecured notes (and is structurally subordinated to all our subsidiary debt). Proceeds from commercial paper borrowings are used for general corporate purposes.

As of September 30, 2024, we have no outstanding borrowings under our commercial paper programs, as compared to $764.4 million outstanding commercial paper borrowings, including €583.0 million of EUR borrowings, at December 31, 2023. The weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.6% and 4.7% for the nine months ended September 30, 2024, and 2023, respectively. We use our $4.25 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper programs. The commercial paper borrowings generally carry a term of less than a year.

We review our credit facility and commercial paper programs and may seek to extend, renew, or replace our credit facility and commercial paper programs, to the extent we deem appropriate.

8. Term Loans

In January 2024, in connection with our merger with Spirit, we entered into an amended and restated term loan agreement (which replaced Spirit's then-existing term loans with various lenders). The amended and restated term loan agreements are fixed through interest rate swaps at a weighted average interest rate of 3.9%. Pursuant to the amended and restated term loan agreement, we borrowed $800.0 million in aggregate total borrowings, $300.0 million of which matures in August 2025 and $500.0 million of which matures in August 2027 (the “$800 million term loan agreement”). We also entered into an amended and restated term loan agreement pursuant to which we borrowed $500.0 million in aggregate total borrowings which matures in June 2025 (the “$500 million term loan agreement”).

In January 2023, we entered into our 2023 term loan agreement, which allows us to incur up to an aggregate of $1.5 billion in multi-currency borrowings. As of September 30, 2024, we had $1.1 billion in multi-currency borrowings, including $90.0 million, £705.0 million, and €85.0 million in outstanding borrowings. The 2023 term loans mature in January 2025, with one remaining twelve-month maturity extension available at our option. Our A3/A- credit ratings provide for a borrowing rate of 80 basis points over the applicable benchmark rate, which includes adjusted SOFR for USD-denominated loans, adjusted SONIA for GBP-denominated loans, and EURIBOR for EUR-denominated loans. In January 2024, we entered into interest rate swaps which fix our per annum interest rate at 4.9% until January 2026, which is the term loan maturity date if our remaining extension option is exercised.

Deferred financing costs were $1.4 million at September 30, 2024 and are included net of the term loans principal balance, as compared to $0.1 million related to our 2023 term loans at December 31, 2023, on our consolidated balance sheets. These costs are being amortized over the remaining term of the term loans. As of September 30, 2024, we were in compliance with the covenants contained in the term loans.

9. Mortgages Payable

During the nine months ended September 30, 2024, we made $626.3 million in principal payments, including the full repayment of three mortgages for $622.7 million. No mortgages were assumed during the nine months ended September 30, 2024. Assumed mortgages are secured by the properties on which the debt was placed and are considered non-recourse debt with limited customary exceptions which vary from loan to loan.

Our mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage without the prior consent of the lender. At September 30, 2024, we were in compliance with these covenants.

-16-

The following table summarizes our mortgages payable as of September 30, 2024 and December 31, 2023 (dollars in millions):


As Of	Number of Properties (1)	Weighted Average Stated Interest Rate (2)		Weighted Average Effective Interest Rate (3)		Weighted Average Remaining Years Until Maturity	Remaining Principal Balance		Unamortized Premium (Discount) and Deferred Financing Costs Balance, net		Mortgage Payable Balance
September 30, 2024	48	4.3	%	4.6	%	0.8	$	198.1	$	(0.6)	$	197.5
December 31, 2023	131	4.8	%	3.3	%	0.4	$	822.4	$	(0.8)	$	821.6

(1)At September 30, 2024, there were 13 mortgages on 48 properties and at December 31, 2023, there were 16 mortgages on 131 properties. With the exception of one GBP-denominated mortgage which is paid quarterly, the mortgages require monthly payments with principal payments due at maturity. At September 30, 2024 and December 31, 2023, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0% to 6.9% at September 30, 2024 and December 31, 2023, respectively.

(3) Effective interest rates ranged from 2.8% to 6.8% and 0.5% to 6.6% at September 30, 2024 and December 31, 2023, respectively.

The following table summarizes the maturity of mortgages payable as of September 30, 2024, excluding $0.6 million related to unamortized net discounts and deferred financing costs (dollars in millions):


Year of Maturity	Principal
2024	$	114.2
2025	46.0
2026	12.0
2027	22.3
2028	1.3
Thereafter	2.3
Totals	$	198.1

10. Notes Payable

A. General

At September 30, 2024, our senior unsecured notes and bonds are USD-denominated, GBP-denominated, and EUR-denominated. Foreign-denominated notes are converted at the applicable exchange rate on the balance sheet date. The carrying value within the table below includes a portion of certain outstanding notes that have been assumed in both current and historical mergers that were not exchanged for new notes issued by Realty Income. We expect to fund the next twelve months of obligations through a combination of the following: (i) cash and cash equivalents, (ii) future cash flows from operations, (iii) issuances of common stock, debt, or other securities offerings, (iv) additional borrowings under our revolving credit facility, (v) short term loans, and (vi) asset dispositions and/or credit investment repayments. The following are sorted by maturity date (in thousands):


	Maturity Dates	Principal (Currency Denomination)		Carrying Value (USD) as of
		September 30, 2024		December 31, 2023
4.600% Notes due 2024	February 6, 2024	$	499,999	$	—	$	499,999
3.875% Notes due 2024	July 15, 2024	$	350,000	—		350,000
3.875% Notes due 2025	April 15, 2025	$	500,000	500,000		500,000
4.625% Notes due 2025	November 1, 2025	$	549,997	549,997		549,997
5.050% Notes due 2026	January 13, 2026	$	500,000	500,000		500,000
0.750% Notes due 2026	March 15, 2026	$	325,000	325,000		325,000
4.875% Notes due 2026	June 1, 2026	$	599,997	599,997		599,997
4.450% Notes due 2026 (1)	September 15, 2026	$	299,968	299,968		—
4.125% Notes due 2026	October 15, 2026	$	650,000	650,000		650,000
1.875% Notes due 2027 (2)	January 14, 2027	£	250,000	335,075		318,450
3.000% Notes due 2027	January 15, 2027	$	600,000	600,000		600,000
3.200% Notes due 2027 (1)	January 15, 2027	$	299,984	299,984		—
1.125% Notes due 2027 (2)	July 13, 2027	£	400,000	536,120		509,520
3.950% Notes due 2027	August 15, 2027	$	599,873	599,873		599,873
3.650% Notes due 2028	January 15, 2028	$	550,000	550,000		550,000

-17-


	Maturity Dates	Principal (Currency Denomination)		Carrying Value (USD) as of
		September 30, 2024		December 31, 2023
3.400% Notes due 2028	January 15, 2028	$	599,816	599,816		599,816
2.100% Notes due 2028 (1)	March 15, 2028	$	449,994	449,994		—
2.200% Notes due 2028	June 15, 2028	$	499,959	499,959		499,959
4.700% Notes due 2028	December 15, 2028	$	400,000	400,000		400,000
4.750% Notes due 2029	February 15, 2029	$	450,000	450,000		—
3.250% Notes due 2029	June 15, 2029	$	500,000	500,000		500,000
4.000% Notes due 2029 (1)	July 15, 2029	$	399,999	399,999		—
5.000% Notes due 2029 (2)	October 15, 2029	£	350,000	469,105		—
3.100% Notes due 2029	December 15, 2029	$	599,291	599,291		599,291
3.400% Notes due 2030 (1)	January 15, 2030	$	500,000	500,000		—
4.850% Notes due 2030	March 15, 2030	$	600,000	600,000		600,000
3.160% Notes due 2030	June 30, 2030	£	140,000	187,642		178,332
4.875% Notes due 2030 (2)	July 6, 2030	€	550,000	613,415		607,915
1.625% Notes due 2030 (2)	December 15, 2030	£	400,000	536,120		509,520
3.250% Notes due 2031	January 15, 2031	$	950,000	950,000		950,000
3.200% Notes due 2031 (1)	February 15, 2031	$	449,995	449,995		—
5.750% Notes due 2031 (2)	December 5, 2031	£	300,000	402,090		382,140
2.700% Notes due 2032 (1)	February 15, 2032	$	350,000	350,000		—
3.180% Notes due 2032	June 30, 2032	£	345,000	462,404		439,461
5.625% Notes due 2032	October 13, 2032	$	750,000	750,000		750,000
2.850% Notes due 2032	December 15, 2032	$	699,655	699,655		699,655
1.800% Notes due 2033	March 15, 2033	$	400,000	400,000		400,000
1.750% Notes due 2033 (2)	July 13, 2033	£	350,000	469,105		445,830
4.900% Notes due 2033	July 15, 2033	$	600,000	600,000		600,000
5.125% Notes due 2034	February 15, 2034	$	800,000	800,000		—
2.730% Notes due 2034	May 20, 2034	£	315,000	422,194		401,247
5.125% Notes due 2034 (2)	July 6, 2034	€	550,000	613,415		607,915
5.875% Bonds due 2035	March 15, 2035	$	250,000	250,000		250,000
3.390% Notes due 2037	June 30, 2037	£	115,000	154,135		146,487
6.000% Notes due 2039 (2)	December 5, 2039	£	450,000	603,135		573,210
5.250% Notes due 2041 (2)	September 4, 2041	£	350,000	469,105		—
2.500% Notes due 2042 (2)	January 14, 2042	£	250,000	335,075		318,450
4.650% Notes due 2047	March 15, 2047	$	550,000	550,000		550,000
5.375% Notes due 2054	September 1, 2054	$	500,000	500,000		—
Total principal amount				$	23,381,663	$	18,562,064
Unamortized net (discounts) premiums, deferred financing costs, and cumulative basis adjustment on fair value hedges (3)				(289,447)		40,255

				$	23,092,216	$	18,602,319

(1) In connection with our merger with Spirit, we completed our debt exchange offer to exchange all outstanding notes issued by Spirit Realty, L.P. ("Spirit OP") on January 23, 2024 for new notes issued by Realty Income. Prior to the completion of our merger with Spirit on January 23, 2024, these notes were not the obligation of Realty Income. Additional details regarding the exchange offers are provided in the Note Exchange Offers Associated with our Merger with Spirit section below.

(2) Interest paid annually. Interest on the remaining senior unsecured notes and bond obligations included in the table is paid semi-annually.

(3) As a result of our merger with Spirit, the carrying values of the senior notes exchanged were adjusted to fair value. In conjunction with the pricing of our senior unsecured notes due January 2026, we entered into three-year, fixed-to-variable interest rate swaps, which are accounted for as fair value hedges. See note 13, Derivative Instruments for further details.

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The following table summarizes the maturity of our notes and bonds payable as of September 30, 2024, excluding unamortized net discounts, deferred financing costs, and basis adjustments on interest rate swaps designated as fair value hedges (dollars in millions):


Year of Maturity	Principal
2024	$	—
2025	1,050.0
2026	2,375.0
2027	2,371.1
2028	2,499.8
Thereafter	15,085.8
Totals	$	23,381.7

As of September 30, 2024, the weighted average interest rate on our notes and bonds payable was 3.8%, and the weighted average remaining years until maturity was 6.9 years.

Interest incurred on all of the notes and bonds was $211.4 million and $159.7 million for the three months ended September 30, 2024, and 2023, respectively, and $618.0 million and $434.1 million for the nine months ended September 30, 2024, and 2023, respectively.

Our outstanding notes and bonds are unsecured; accordingly, we have not pledged any assets as collateral for these or any other obligations.

All of these notes and bonds contain various covenants, including: (i) a limitation on incurrence of any debt which would cause our debt to total adjusted assets ratio to exceed 60%; (ii) a limitation on incurrence of any secured debt which would cause our secured debt to total adjusted assets ratio to exceed 40%; (iii) a limitation on incurrence of any debt which would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of total unencumbered assets not less than 150% of our outstanding unsecured debt. At September 30, 2024, we were in compliance with these covenants.

B. Note Issuances

During the nine months ended September 30, 2024, we issued the following notes and bonds (in millions):


2024 Issuances	Date of Issuance	Maturity Date	Principal amount		Price of par value		Effective yield to maturity
4.750% Notes	January 2024	February 2029	$	450.0	99.23	%	4.923	%
5.125% Notes	January 2024	February 2034	$	800.0	98.91	%	5.265	%
5.375% Notes	August 2024	September 2054	$	500.0	98.37	%	5.486	%
5.000% Notes	September 2024	October 2029	£	350.0	99.14	%	5.199	%
5.250% Notes	September 2024	September 2041	£	350.0	96.21	%	5.601	%

C. Note Exchange Offers Associated with our Merger with Spirit

As part of our merger with Spirit, Realty Income exchanged the following notes issued by Spirit OP, a wholly owned subsidiary of the Company with notes of identical terms issued by Realty Income (in millions):


Series of Spirit Notes	Tenders and Consents Received as of the Expiration Date	Percentage of Total Outstanding Principal Amount of Such Series of Spirit Notes
4.450% Notes due September 2026	$291.7	97.24%
3.200% Notes due January 2027	$292.7	97.56%
2.100% Notes due March 2028	$443.8	98.62%
4.000% Notes due July 2029	$391.7	97.93%
3.400% Notes due January 2030	$484.5	96.91%
3.200% Notes due February 2031	$445.0	98.90%
2.700% Notes due February 2032	$347.6	99.31%

-19-

To induce holders of the Spirit OP notes to participate in the exchange, Realty Income offered noteholders electing to exchange their notes a cash payment equal to 10 basis points of the note principal amount held. Across the various note classes, Realty Income had a success rate of approximately 98.1% on the exchange, resulting in a cash payment of $2.7 million to participating noteholders. The exchange was accounted for as a modification of the existing Spirit OP notes assumed in our merger with Spirit. The interest rate, interest payment dates, redemption terms and maturity of each series of Realty Income notes issued by Realty Income in the exchange offers were the same as those of the corresponding series of Spirit notes exchanged. With respect to the notes originally issued by Spirit OP that remained outstanding, we amended the indenture governing such notes to, among other things, eliminate substantially all of the restrictive covenants in such indenture.

11. Noncontrolling Interests

As of September 30, 2024, we have eight entities with noncontrolling interests that we consolidate, including an operating partnership, Realty Income, L.P., and interests in consolidated property partnerships not wholly-owned by us.

The following table represents the change in the carrying value of all noncontrolling interests through September 30, 2024 (in thousands):


	Realty Income, L.P. units (1)		Other Noncontrolling Interests		Total
Carrying value at December 31, 2023	$	114,072	$	51,430	$	165,502
Contributions	—		1,770		1,770
Distributions	(4,627)		(2,811)		(7,438)
Allocation of net income	4,287		544		4,831

Issuance of common partnership units (2)	54,643		(7,390)		47,253
Carrying value at September 30, 2024	$	168,375	$	43,543	$	211,918

(1) 2,681,808 and 1,795,167 units were outstanding as of September 30, 2024 and December 31, 2023, respectively.

(2) In July 2024, a joint venture partner converted their interests in two consolidated property partnerships into 156,621 common partnership units in Realty Income, LP and recorded the excess over carrying value of $0.8 million as a reduction to common stock and paid in capital.

In September 2024, we completed the acquisition of 42 properties by paying cash and by issuing 730,020 common partnership units in Realty Income, LP.

At September 30, 2024, we are considered the primary beneficiary of Realty Income, L.P. and other VIEs. For further information, see note 1, Summary of Significant Accounting Policies.

12. Fair Value Measurements

Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price).

ASC 820, Fair Value Measurements and Disclosures, sets forth a fair value hierarchy that categorizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. Categorization within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Level 1 – Quoted market prices in active markets for identical assets and liabilities
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other market-corroborated inputs
Level 3 – Inputs that are unobservable and significant to the overall fair value measurement

We evaluate our hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from period to period. Changes in the type of inputs may result in a reclassification for certain assets. We have not historically had changes in classifications and do not expect that changes in classifications between levels will be frequent.

-20-

The following tables present the carrying values and estimated fair values of financial instruments as of September 30, 2024 and December 31, 2023 (in millions):


	September 30, 2024
			Hierarchy Level
	Carrying Value		Level 1		Level 2		Level 3
Assets:
Loans receivable	$	622.6	$	—	$	628.8	$	35.3
Derivative assets	15.5		—		15.5		—
Total assets	$	638.1	$	—	$	644.3	$	35.3
Liabilities:
Mortgages payable	$	198.1	$	—	$	—	$	196.3
Notes and bonds payable	23,381.7		—		21,480.6		1,023.1
Derivative liabilities	158.0		—		158.0		—
Total liabilities	$	23,737.8	$	—	$	21,638.6	$	1,219.4


	December 31, 2023
			Hierarchy Level
	Carrying Value		Level 1		Level 2		Level 3
Assets:
Loans receivable	$	205.3	$	—	$	171.8	$	33.5
Derivative assets	21.2		—		21.2		—
Total assets	$	226.5	$	—	$	193.0	$	33.5
Liabilities:
Mortgages payable	$	822.4	$	—	$	—	$	814.5
Notes and bonds payable	18,562.1		—		16,620.8		982.9
Derivative liabilities	119.6		—		119.6		—
Total liabilities	$	19,504.1	$	—	$	16,740.4	$	1,797.4

A. Financial Instruments Not Measured at Fair Value on our Consolidated Balance Sheets

The fair value of short-term financial instruments such as cash and cash equivalents, accounts receivable, escrow deposits, accounts payable, distributions payable, line of credit payable and commercial paper borrowings, and other liabilities approximate their carrying value in the accompanying consolidated balance sheets, due to their short-term nature. The aggregate fair value of our term loans approximates carrying value due to the frequent repricing of the variable interest rate charged on the borrowing.

The following table reflects the carrying amounts and estimated fair values of our financial instruments not measured at fair value on our consolidated balance sheets (in millions):


	September 30, 2024				December 31, 2023
	Carrying value		Fair value		Carrying value		Fair value
Mortgages payable (1)	$	198.1	$	196.3	$	822.4	$	814.5
Notes and bonds payable (1)	$	23,381.7	$	22,503.7	$	18,562.1	$	17,603.7

(1) Excludes non-cash net premiums and discounts as well as deferred financing costs recorded on mortgages payable. Excludes non-cash net premiums and discounts, deferred financing costs, and the cumulative basis adjustment on fair value hedges recorded on notes payable.

The estimated fair values of our mortgages payable and private senior notes payable have been calculated by discounting the future cash flows using an interest rate based upon the relevant forward interest rate curve, plus an applicable credit-adjusted spread. Because this methodology includes unobservable inputs that reflect our own internal assumptions and calculations, the measurement of estimated fair values related to our mortgages payable and private senior notes payable are categorized as level 3 of the fair value hierarchy.

The estimated fair values of our publicly-traded senior notes and bonds payable are based upon indicative market prices and recent trading activity of our senior notes and bonds payable. Because this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair values related to our notes and bonds payable is categorized as level 2 of the fair value hierarchy.

-21-

B. Financial Instruments Measured at Fair Value on a Recurring Basis

For derivative assets and liabilities, we may utilize interest rate swaps, interest rate swaptions, and forward-starting swaps to manage interest rate risk, and cross-currency swaps, currency exchange swaps, and foreign currency forwards to manage foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, spot and forward rates, as well as option volatility.

Derivative fair values also include credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within level 2 on the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize level three inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by ourselves and our counterparties. However, at September 30, 2024, and December 31, 2023, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we determined that our derivative valuations in their entirety are classified as level 2. For more details on our derivatives, see note 13, Derivative Instruments*.*

C. Items Measured at Fair Value on a Non-Recurring Basis

Impairment of Real Estate Investments

Certain financial and nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments only under certain circumstances, such as when an impairment write-down occurs.

Depending on impairment triggering events during the applicable period, impairments are typically recorded for properties sold, in the process of being sold, vacant, in bankruptcy, or experiencing difficulties with collection of rent.

The following table summarizes our provisions for impairment on real estate investments during the periods indicated below (in millions):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Carrying value prior to impairment	$	133.8	$	37.5	$	488.7	$	161.4
Less: total provisions for impairment of real estate (1)	(33.1)		(16.8)		(208.6)		(59.8)
Carrying value after impairment	$	100.7	$	20.7	$	280.1	$	101.6

Number of properties:
Classified as held for sale	11		—		13		—
Classified as held for investment	26		9		93		18
Sold	24		23		59		66

(1) Real estate assets that were deemed to be impaired for the nine months ended September 30, 2024 primarily relate to two office properties which were acquired and retained in our merger with VEREIT in 2021, 23 properties leased to clients in bankruptcies, as well as certain properties that are more likely than not to be sold in the next twelve months.

The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions and purchase offers received from third parties, which are level 3 inputs. We may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of such real estate. Estimating future cash flows is highly subjective and estimates can differ materially from actual results.

-22-

13. Derivative Instruments

In the normal course of business, our operations are exposed to economic risks from interest rates and foreign currency exchange rates. We may enter into derivative financial instruments to offset these underlying economic risks.

Derivatives Designated as Hedging Instruments - Cash Flow Hedges

We enter into foreign currency forward contracts to sell GBP and EUR and buy USD to hedge the foreign currency risk associated with interest payments on intercompany loans denominated in GBP and EUR. Forward points on the forward contracts are included in the assessment of hedge effectiveness. We also execute variable-to-fixed interest rate swaps to add stability to interest expense and to manage our exposure to interest rate movements associated with our term loans and may also enter into interest rate swaption agreements.

Derivatives Designated as Hedging Instruments - Fair Value Hedges

Periodically, we enter into and designate fixed-to-floating interest rate swaps to manage interest rate risk by managing our mix of fixed-rate and variable-rate debt. These swaps involve the receipt of fixed-rate amounts for variable interest rate payments over the life of the swaps without exchange of the underlying principal amount. We also designate some of our cross-currency swaps as fair value hedges as we use them to hedge foreign currency risk associated with changes in spot rates on foreign-denominated debt. For these hedging instruments, we have elected to exclude the change in fair value of the cross-currency swaps related to both time value and cross-currency basis spread from the assessment of hedge effectiveness (the "excluded component"). Changes in the fair value of the cross-currency swaps attributable to these excluded components are recorded to other comprehensive income and subsequently recognized in 'Foreign currency and derivative (loss) gain, net' on a systematic and rational basis, as net cash settlements and interest accruals on the respective cross currency swaps occur, over the remaining life of the hedging instruments.

Derivatives Designated as Hedging Instruments - Net Investment Hedges

To mitigate the foreign currency exchange rate variations associated with our investment in EUR-denominated foreign operations, we may enter into derivative instruments, such as cross-currency swaps that qualify as net investment hedges under the criteria prescribed in accordance with ASC Topic 815-20, Hedging - General. We use the spot method of assessing hedge effectiveness and apply the consistent election to the excluded component by recognizing changes in the fair value of the hedging instruments attributable to the excluded component in the same manner as described above. Any difference between the change in the fair value of the excluded components and the amounts recognized in earnings is reported in other comprehensive income as part of the foreign cumulative translation adjustment. The gain or loss on the portion of the derivative instruments included in the assessment of effectiveness is reported in other comprehensive income as part of the 'Foreign currency translation adjustment' line item, to the extent the relationship is highly effective. If our net investment changes during a reporting period, the hedge relationship will be assessed for whether a de-designation is warranted (only if the hedge notional amount is outside of prescribed tolerance). Further, certain EUR-denominated bonds and borrowings under our Revolving Credit Facility and Term Loans (all as defined in notes 7 and 8, respectively) may be also designated as, and are effective as, net investment hedges. Changes in the value of such borrowings, related to changes in the spot rates, will be recorded in the same manner as foreign currency translation adjustments. As of September 30, 2024, the total principal amount of foreign currency debt obligations designated as net investment hedges was $60.1 million.

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency exchange swap agreements to reduce the effects of currency exchange rate fluctuations between the USD, our reporting currency, and GBP and EUR. These derivative contracts generally mature within one year and are not designated as hedge instruments for accounting purposes. As the currency exchange swap is not accounted for as a hedging instrument, the change in fair value is recorded in earnings through the caption entitled 'Foreign currency and derivative (loss) gain, net' in our consolidated statements of income and comprehensive income.

-23-

The following table summarizes the terms and fair values of our derivative financial instruments at September 30, 2024 and December 31, 2023 (dollars in millions):


Derivative Type	Number of Instruments (1)			Notional Amount as of						Weighted Average Strike Rate (2)	Maturity Date (3)		Fair Value - asset (liability) as of
Derivatives Designated as Hedging Instruments		September 30, 2024				December 31, 2023					September 30, 2024				December 31, 2023

Interest rate swaps (4)	12			$	2,680.0			$	1,630.0	3.71%	Jun 2025 - Aug 2027		$	13.9			$	0.3
Interest rate swaptions (5)	—			—				1,000.0		—			—				2.6
Cross-currency swaps - Fair Value	3			320.0				320.0		(6)	Oct 2032		(59.5)				(59.8)
Cross-currency swaps - Net Investment	3			280.0				280.0		(7)	Oct 2032		(52.8)				(53.2)
Foreign currency forwards	31			357.6				162.3		(8)	Oct 2024 - Jun 2026		(15.2)				2.7


				$	3,637.6			$	3,392.3				$	(113.6)			$	(107.4)
Derivatives not Designated as Hedging Instruments
Currency exchange swaps	3			$	1,251.0			$	1,810.6	(9)	Oct 2024		$	(28.9)			$	8.9


				$	1,251.0			$	1,810.6				$	(28.9)			$	8.9
Total of all Derivatives		$	4,888.6			$	5,202.9				$	(142.5)			$	(98.5)

(1)This column represents the number of instruments outstanding as of September 30, 2024.

(2)Weighted average strike rate is calculated using the notional value as of September 30, 2024.

(3)This column represents maturity dates for instruments outstanding as of September 30, 2024.

(4)During the nine months ended September 30, 2024, we entered into five variable-to-fixed interest rate swaps when we extended maturity of the 2023 term loans and designated them as cash flow hedges. We also designated five variable-to-fixed interest rate swaps we acquired from Spirit as cash flow hedges to mitigate the interest rate risk associated with the term loans we assumed in conjunction with our merger with Spirit. The acquisition date fair value of these derivatives was $35.1 million in total and will be reclassified from AOCI to interest expense over the remaining life of the term loans.

(5)There were six interest swaptions equal to $1 billion in notional entered into in March 2023, of which $800 million was terminated in January 2024 in connection with a senior unsecured note issuance. A total termination premium of $3.4 million we received was deferred in other comprehensive income and will be recognized in interest expense over the 10-year tenor of the notes due 2034. The remaining swaption of the $200 million notional expired in January 2024.

(6)USD fixed rate of 5.625% and EUR weighted average fixed rate of 4.681%.

(7)USD fixed rate of 5.625% and EUR weighted average fixed rate of 4.716%.

(8)Weighted average forward GBP-USD exchange rate of 1.28.

(9)Weighted average exchange rates of 0.84 for EUR-GBP and 1.31 for GBP-USD.

We measure our derivatives at fair value and include the balances within 'Other assets, net' and 'Accounts payable and accrued expenses' on our consolidated balance sheets.

We have agreements with each of our derivative counterparties containing provisions under which we could be declared in default on our derivative obligations if repayment of our indebtedness is accelerated by the lender due to our default.

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The following table summarizes the amount of unrealized gain (loss) on derivatives and foreign currency translation adjustments in other comprehensive income (in thousands):


	Three months ended September 30,				Nine months ended September 30,
Derivatives in Cash Flow Hedging Relationships	2024		2023		2024		2023

Interest rate swaps	$	(30,051)	$	(7,172)	$	(18,206)	$	(5,328)
Foreign currency forwards	(17,414)		3,156		(17,947)		(6,039)
Interest rate swaptions	640		15,126		2,284		18,679
Total derivatives in cash flow hedging relationships	$	(46,825)	$	11,110	$	(33,869)	$	7,312
Derivatives in Fair Value Hedging Relationships
Cross-currency swaps - Fair Value	$	351	$	(3,917)	$	3,641	$	(8,691)

Total derivatives in fair value hedging relationships	$	351	$	(3,917)	$	3,641	$	(8,691)
Total unrealized (loss) gain on derivatives, net	$	(46,474)	$	7,193	$	(30,228)	$	(1,379)
Derivatives and Non-derivatives in Net Investment Hedging Relationships
Cross-currency swaps - Net Investment	$	(12,715)	$	—	$	(1,094)	$	—
Foreign currency debt	(2,232)		—		(2,232)		—
Total unrealized loss recorded in foreign currency translation adjustment	$	(14,947)	$	—	$	(3,326)	$	—

The following table summarizes the amount of gain (loss) on derivatives reclassified from AOCI (in thousands):


		Three months ended September 30,				Nine months ended September 30,
Derivatives in Cash Flow Hedging Relationships	Location of Gain Recognized in Income	2024		2023		2024		2023

Interest rate swaps	Interest	$	8,316	$	5,316	$	25,836	$	10,055
Foreign currency forwards	Foreign currency and derivative (loss) gain, net	739		1,662		4,419		3,985
Interest rate swaptions	Interest	82		(2,250)		(827)		(4,609)
Total derivatives in cash flow hedging relationships		$	9,137	$	4,728	$	29,428	$	9,431
Derivatives in Fair Value Hedging Relationships
Cross-currency swaps - Fair Value	Foreign currency and derivative (loss) gain, net	$	98	$	570	$	1,097	$	1,054
Total derivatives in fair value hedging relationships		$	98	$	570	$	1,097	$	1,054
Derivatives in Net Investment Hedging Relationships
Cross-currency swaps - Net Investment (excluded component)	Foreign currency and derivative (loss) gain, net	$	549	$	—	$	2,356	$	—
Total derivatives in net investment hedging relationships		$	549	$	—	$	2,356	$	—
Net increase to net income		$	9,784	$	5,298	$	32,881	$	10,485

We expect to reclassify $5.5 million from AOCI as a decrease to interest expense relating to interest rate swaps and $11.4 million from AOCI to foreign currency gain relating to foreign currency forwards within the next twelve months.

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The following table details our foreign currency and derivative gains (losses), net included in income (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Realized foreign currency and derivative (loss) gain, net:
(Loss) gain on the settlement of undesignated derivatives	$	(34,164)	$	11,432	$	(54,548)	$	10,106
Gain on the settlement of designated derivatives reclassified from AOCI	1,386		2,233		7,872		5,039
(Loss) gain on the settlement of transactions with third parties	(18)		410		(33)		1,685
Total realized foreign currency and derivative (loss) gain, net	$	(32,796)	$	14,075	$	(46,709)	$	16,830
Unrealized foreign currency and derivative (loss) gain, net:
(Loss) gain on the change in fair value of undesignated derivatives	$	(28,915)	$	12,910	$	(23,369)	$	4,734
Gain (loss) on remeasurement of certain assets and liabilities	60,039		(29,798)		72,963		(16,607)
Total unrealized foreign currency and derivative gain (loss), net	$	31,124	$	(16,888)	$	49,594	$	(11,873)
Total foreign currency and derivative (loss) gain, net	$	(1,672)	$	(2,813)	$	2,885	$	4,957

14. Lessor Operating Leases

At September 30, 2024, we owned or held interests in 15,457 properties. Of the 15,457 properties, 15,156, or 98.1%, are single-client properties, and the remaining are multi-client properties. At September 30, 2024, 196 properties were available for lease or sale. The majority of our leases are accounted for as operating leases.

At September 30, 2024, most of the properties in our portfolio were leased under net lease agreements where our client pays or reimburses us for property taxes and assessments and carries insurance coverage for public liability, property damage, fire, and extended coverage.

Rent based on a percentage of our clients' gross sales, or percentage rent, for the three months ended September 30, 2024, and 2023 was $3.1 million, and $2.2 million, respectively. Percentage rent for the nine months ended September 30, 2024, and 2023 was $10.8 million, and $8.0 million, respectively.

No individual client’s rental revenue, including percentage rents, represented more than 10% of our total revenue for each of the nine months ended September 30, 2024, and 2023.

15. Stockholders' Equity

*A.*Common Stock

We pay monthly distributions to our common stockholders. The following is a summary of monthly distributions paid per common share for the periods indicated below:


	Nine months ended September 30,
Month	2024		2023
January	$	0.2565	$	0.2485
February	0.2565		0.2485
March	0.2565		0.2545
April	0.2570		0.2550
May	0.2570		0.2550
June	0.2625		0.2550
July	0.2630		0.2555
August	0.2630		0.2555
September	0.2630		0.2555



Total	$	2.3350	$	2.2830

At September 30, 2024, a distribution of $0.2635 per common share was payable and was paid in October 2024.

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B. At-the-Market ("ATM") Program

Under our current ATM program, which we entered into in August 2023, we may offer and sell up to 120.0 million shares of common stock (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the NYSE under the ticker symbol "O" at prevailing market prices or at negotiated prices. Upon settlement, subject to certain exceptions, we may elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which cases we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser. As of September 30, 2024, we had 56.7 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.

The following table outlines common stock issuances pursuant to our ATM programs (dollars in millions, shares in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Shares of common stock issued under the ATM program (1)	4,309		15,070		13,913		63,210
Gross proceeds	$	268.4	$	883.0	$	815.3	$	3,880.4
Sales agents' commissions and other offering expenses	(1.8)		(9.7)		(5.4)		(30.4)
Net proceeds	$	266.6	$	873.3	$	809.9	$	3,850.0

(1) During the three and nine months ended September 30, 2024, 16.5 million and 24.6 million shares were sold, respectively, and 4.3 million and 13.9 million and shares were settled pursuant to forward sale confirmations. In addition, as of September 30, 2024, 16.8 million shares of common stock subject to forward sale confirmations have been executed, but not settled, at a weighted average initial gross price of $57.58 per share. We currently expect to fully settle forward sale agreements outstanding by December 31, 2024, representing $958.1 million in net proceeds, for which the weighted average forward price at September 30, 2024 was $56.88 per share.

C. Dividend Reinvestment and Stock Purchase Plan ("DRSPP")

Our DRSPP provides our common stockholders with a convenient and economical method of purchasing our common stock and reinvesting their distributions. It also allows our current stockholders to buy additional shares of common stock by reinvesting all or a portion of their distributions. Our DRSPP authorizes up to 26.0 million common shares to be issued. At September 30, 2024, we had 10.8 million shares remaining for future issuance under our DRSPP program.

The following table outlines common stock issuances pursuant to our DRSPP program (dollars in millions, shares in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Shares of common stock issued under the DRSPP program	44		52		159		138
Gross proceeds	$	2.6	$	3.0	$	8.8	$	8.4

16. Series A Preferred Stock

As part of the Merger Agreement with Spirit, each outstanding share of Spirit’s 6.000% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share, converted into the right to receive one share of newly issued Realty Income 6.000% Series A Cumulative Redeemable Preferred Stock, having substantially the same terms as the Spirit Series A Preferred Stock, resulting in 6.9 million shares of Realty Income Series A Preferred Stock issued.

In September 2024, we redeemed all 6.9 million shares of Realty Income Series A preferred stock outstanding. The shares were redeemed at redemption value of $25.00 per share, plus accrued and unpaid dividends to September 30, 2024. The excess of the $25.00 liquidation price per share over the carrying value of Realty Income Series A preferred stock redeemed resulted in a loss on redemption of $5.1 million for the three months ended September 30, 2024.

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17. Common Stock Incentive Plan

This note should be read in conjunction with the more complete discussion of the Realty Income 2021 Incentive Award Plan (the “2021 Plan”), included in note 19 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023.

The amount of share-based compensation costs recognized in 'General and administrative' in our consolidated statements of income and comprehensive income was $6.4 million and $6.2 million during the three months ended September 30, 2024, and 2023, respectively, and $22.9 million and $20.2 million during the nine months ended September 30, 2024, and 2023, respectively.

In connection with the Merger, each outstanding Spirit restricted stock award and performance share award was cancelled and converted into Realty Income common stock, using the Exchange Ratio in accordance with the Merger Agreement. The issuance is excluded from the sections below, as the awards were not granted under the 2021 Plan. The aggregate fair value of fully vested Spirit awards converted into Realty Income common stock was $66.5 million, of which i.) $41.7 million related to pre-combination services and is included in the consideration transferred in the merger and ii.) $24.8 million of expense was recognized in January in merger, transaction, and other costs related to the value attributable to post-combination services. For more details, please see note 2, Merger with Spirit Realty Capital, Inc.

A. Restricted Stock and Restricted Stock Units

During the nine months ended September 30, 2024, we granted 343,890 shares of common stock under the 2021 Plan. This included 44,000 total shares of restricted stock granted to the independent members of our Board of Directors, 4,000 of which were granted to a new member in the first quarter of 2024, and the remaining 40,000 shares of which were granted in connection with our annual awards in May 2024. The vesting schedule for these shares is up to three-years, based on each director's years of service, and is subject to the director’s continued service through each applicable vesting date. Our restricted stock awards granted to employees vest over a service period not exceeding four-years.

During the nine months ended September 30, 2024, we also granted 30,538 restricted stock units, all of which vest over a four-year service period.

As of September 30, 2024, the remaining unamortized share-based compensation expense related to restricted stock awards and units totaled $23.8 million, which is being amortized on a straight-line basis over the service period of each applicable award. The amount of share-based compensation is based on the fair value of the stock at the grant date. We define the grant date as the date the recipient and Realty Income have a mutual understanding of the key terms and conditions of the award, and the recipient of the grant begins to benefit from, or be adversely affected by, subsequent changes in the price of the shares.

B. Performance Shares

During the nine months ended September 30, 2024, we granted 274,358 performance shares, as well as dividend equivalent rights, to our executive officers. The performance shares are earned based on our Total Shareholder Return (“TSR”) performance relative to select industry indices and peer groups as well as achievement of certain operating metrics, and vest 50% after the end of the three-year performance period and the remaining 50% on January 1 of the following year, subject to continued service.

As of September 30, 2024, the remaining share-based compensation expense related to the performance shares totaled $22.5 million. The performance shares are being recognized on a tranche-by-tranche basis over the service period. The fair value of the performance shares was estimated on the date of grant using a Monte Carlo Simulation model.

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18. Net Income per Common Share

The following is a reconciliation of the denominator of the basic net income per common share computation to the denominator of the diluted net income per common share computation (shares in thousands):


	Three months ended September 30,		Nine months ended September 30,
	2024	2023	2024	2023
Weighted average shares used for the basic net income per share computation	870,665	709,165	858,679	681,419
Incremental shares from share-based compensation	525	378	442	360
Dilutive effect of forward ATM offerings	862	—	341	350
Weighted average shares used for diluted net income per share computation	872,052	709,543	859,462	682,129
Unvested shares from share-based compensation that were anti-dilutive	72	309	151	243
Weighted average partnership common units convertible to common shares that were anti-dilutive	1,922	1,795	1,838	1,795
Weighted average forward ATM offerings that were anti-dilutive	488	535	477	460

19. Supplemental Disclosures of Cash Flow Information

The following table summarizes our supplemental cash flow information during the periods indicated below (in thousands):


	Nine months ended September 30,
	2024		2023
Supplemental disclosures:
Cash paid for interest	$	732,123	$	501,162
Cash paid for income taxes	$	29,818	$	11,462

Non-cash activities:
Net decrease in fair value of derivatives	$	(44,050)	$	(51,386)
Term loans assumed at fair value	$	1,300,000	$	—
Notes payable assumed at fair value	$	2,481,486	$	—
Increase in noncontrolling interests from property acquisitions	$	—	$	39,156
Issuance/conversion of common partnership units of Realty Income, L.P. (1)	$	47,253	$	—

(1) See note 11, Noncontrolling Interests for further details.

The following table provides a reconciliation of cash and cash equivalents reported on our consolidated balance sheets to the total of the cash, cash equivalents, and restricted cash reported within our consolidated statements of cash flows (in thousands):


	September 30, 2024		September 30, 2023








Cash and cash equivalents shown in the consolidated balance sheets	$	396,956	$	344,129
Restricted escrow deposits (1)	37,317		41,311
Impounds related to mortgages payable (1)	13,604		45,224
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	447,877	$	430,664

(1) Included within 'other assets, net' on our consolidated balance sheets (see note 3, Supplemental Detail for Certain Components of Consolidated Balance Sheets). These amounts consist of cash that we are legally entitled to, but that is not immediately available to us. As a result, these amounts were considered restricted as of the dates presented.

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20. Commitments and Contingencies

In the ordinary course of business, we are party to various legal actions which we believe are routine in nature and incidental to the operation of our business. We believe that the outcome of the proceedings will not have a material adverse effect upon our consolidated financial position or results of operations.

At September 30, 2024, we had commitments of $77.8 million, which primarily relate to tenant improvements, re-leasing costs, recurring capital expenditures, and non-recurring building improvements. In addition, as of September 30, 2024, we had committed $394.9 million under construction contracts related to development projects, which have estimated rental revenue commencement dates between November 2024 and July 2025.

21. Subsequent Events

A. Dividends

In October 2024, we declared a dividend of $0.2635 per share to our common stockholders, which will be paid in November 2024.

B. ATM Forward Offerings

As of November 4, 2024, ATM forward agreements for a total of 17.0 million shares remain unsettled with total expected net proceeds of approximately $968.7 million, of which 0.2 million shares were executed in October 2024.

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