filings.toolsItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including the documents incorporated by reference, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. When used in this quarterly report, the words “estimated,” “anticipated,” “expect,” “believe,” “intend,” “continue,” “should,” “may,” “likely,” “plans,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements include discussions of our business and portfolio; growth strategies and intentions to acquire or dispose of properties (including geographies, timing, partners, clients and terms); re-leases, re-development and speculative development of properties and expenditures related thereto; future operations and results; the announcement of operating results, strategy, plans, and the intentions of management; statements made regarding our share repurchase program; settlement of shares of common stock sold pursuant to forward sale confirmations under our At-the-Market (“ATM”) Program; dividends, including the amount, timing and payments of dividends; and trends in our business, including trends in the market for long-term leases of freestanding, single-client properties. Forward-looking statements are subject to risks, uncertainties, and assumptions about us, which may cause our actual future results to differ materially from expected results. Some of the factors that could cause actual results to differ materially are, among others, our continued qualification as a real estate investment trust; general domestic and foreign business, economic, or financial conditions; competition; fluctuating interest and currency rates; inflation and its impact on our clients and us; access to debt and equity capital markets and other sources of funding (including the terms and partners of such funding); continued volatility and uncertainty in the credit markets and broader financial markets; other risks inherent in the real estate business including our clients' solvency, client defaults under leases, increased client bankruptcies, potential liability relating to environmental matters, illiquidity of real estate investments, and potential damages from natural disasters; impairments in the value of our real estate assets; volatility and changes in domestic and foreign laws and the application, enforcement or interpretation thereof (including with respect to income tax laws and rates); property ownership through co-investment ventures, funds, joint ventures, partnerships and other arrangements which may transfer or limit our control of the underlying investments; epidemics or pandemics including measures taken to limit their spread, the impacts on us, our business, our clients, and the economy generally; the loss of key personnel; the outcome of any legal proceedings to which we are a party or which may occur in the future; acts of terrorism and war; and the anticipated benefits from mergers and acquisitions.
Additional factors that may cause risks and uncertainties include those discussed in the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2024.
Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are not guarantees of future plans and performance and speak only as of the date this quarterly report was filed with the Securities and Exchange Commission (the "SEC"). Actual plans and operating results may differ materially from what is expressed or forecasted in this quarterly report and forecasts made in the forward-looking statements discussed in this quarterly report might not materialize. We do not undertake any obligation to update forward-looking statements or publicly release the results of any forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.
OVERVIEW
Realty Income (NYSE: O), an S&P 500 company, is real estate partner to the world's leading companies*®*. Founded in 1969, we invest in diversified commercial real estate and, as of March 31, 2025, have a portfolio of over 15,600 properties in all 50 states of the United States ("U.S."), the United Kingdom ("U.K."), and six other countries in Europe. We are known as “The Monthly Dividend Company®” and have a mission to invest in people and places to deliver dependable monthly dividends that increase over time. Since our founding, we have declared 658 consecutive monthly dividends and are a member of the S&P 500 Dividend Aristocrats® index for having increased our dividend for over 30 consecutive years.
As of March 31, 2025, we owned or held interests in 15,627 properties, with approximately 341.8 million square feet of leasable space leased to 1,598 clients doing business in 91 separate industries. Of the 15,627 properties in our portfolio as of March 31, 2025, 15,313, or 98.0%, were single-client properties, and the remaining were multi–client properties. Our total portfolio of 15,627 properties as of March 31, 2025 had a weighted average remaining lease term (excluding rights to extend a lease at the option of the client) of approximately 9.1 years. Total portfolio annualized base rent (defined as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables) on our leases as of March 31, 2025 was $5.05 billion.
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As of March 31, 2025, approximately 34.3% of our total portfolio annualized base rent comes from properties leased to our investment grade clients, their subsidiaries or affiliated companies. As of March 31, 2025, our top 20 clients (based on percentage of total portfolio annualized base rent) represented approximately 36.4% of our annualized base rent and 11 of these clients have investment grade credit ratings or are subsidiaries or affiliates of investment grade companies. Approximately 91% of our annualized retail base rent as of March 31, 2025, is derived from our clients with a service, non-discretionary, and/or low price point component to their business.
Unless otherwise specified, references to rental revenue in the Management's Discussion and Analysis of Financial Condition and Results of Operations are exclusive of reimbursements from clients for recoverable real estate taxes and operating expenses totaling $87.4 million and $72.7 million for the three months ended March 31, 2025 and 2024, respectively.
RECENT DEVELOPMENTS
Increases in Monthly Dividends to Common Stockholders
We have continued our 56-year history of paying monthly dividends by increasing the dividend three times during 2025. As of April 2025, we have paid 110 consecutive quarterly dividend increases and increased the dividend 130 times since our listing on the New York Stock Exchange (“NYSE”) in 1994.
| 2025 Dividend increases | Month Declared | Month Paid | Monthly Dividend per share | Increase per share | |||||||||||||||||||
| 1st increase | Dec 2024 | Jan 2025 | $ | 0.2640 | $ | 0.0005 | |||||||||||||||||
| 2nd increase | Feb 2025 | Mar 2025 | $ | 0.2680 | $ | 0.0040 | |||||||||||||||||
| 3rd increase | Mar 2025 | Apr 2025 | $ | 0.2685 | $ | 0.0005 |
The dividends paid per share during the three months ended March 31, 2025 totaled $0.7960, as compared to $0.7695 during the three months ended March 31, 2024, an increase of $0.027, or 3.4%.
The monthly dividend of $0.2685 per share represents a current annualized dividend of $3.222 per share, and an annualized dividend yield of 5.6% based on the last reported sale price of our common stock on the NYSE of $58.01 on March 31, 2025. Although we expect to continue our policy of paying monthly dividends, we cannot guarantee that we will maintain our current level of dividends, that we will continue our pattern of increasing dividends per share, or what our actual dividend yield will be in any future period.
Investments
During the three months ended March 31, 2025, we invested $1.4 billion at an initial weighted average cash yield of 7.5%, including investments in 121 properties, properties under development or expansion, and loans. See notes 4, Investments in Real Estate, 5, Investments in Unconsolidated Entities, and 6, Investments in Loans and Financing Receivables, to the consolidated financial statements for further details.
Dispositions
During the three months ended March 31, 2025, we sold 55 properties with total net proceeds received of $92.6 million.
Equity Capital Raising
During the three months ended March 31, 2025, we raised $635.1 million of proceeds from the sale of common stock, at a weighted average price of $56.26 per share, primarily through proceeds from the sale of common stock through our ATM program. The ATM program issuances during the three months ended March 31, 2025 included 11.2 million shares issued pursuant to forward sale confirmations. As of March 31, 2025, 1.2 million shares of common stock subject to forward sale confirmations have been executed but not settled. See note 15, Stockholders' Equity, to the consolidated financial statements for further details.
Credit Facilities
In April 2025, we closed on the recast and expansion of our multi-currency unsecured credit facility totaling $5.38 billion, including a $1.38 billion unsecured facility for our private fund. See note 21, Subsequent Events, to the consolidated financial statements for further details.
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Note Issuance
In April 2025, we issued $600.0 million of 5.125% senior unsecured notes due April 2035. See note 21, Subsequent Events, to the consolidated financial statements for further details.
Portfolio Discussion
Leasing Results
At March 31, 2025, we had 231 properties available for lease or sale out of 15,627 properties in our portfolio, which represents a 98.5% occupancy rate based on the number of properties in our portfolio. Our property-level occupancy rates exclude properties with ancillary leases only, such as cell towers and billboards, and properties with possession pending, and include properties owned by unconsolidated joint ventures. Below is a summary of our portfolio activity for the period indicated below:
| Three months ended March 31, 2025 | |||||
| Properties available for lease at December 31, 2024 | 205 | ||||
| Lease expirations (1) | 244 | ||||
| Re-leases to same client | (160) | ||||
| Re-leases to new client | (9) | ||||
| Vacant dispositions | (49) | ||||
| Properties available for lease at March 31, 2025 | 231 | ||||
(1)Includes scheduled and unscheduled expirations (including leases rejected in bankruptcy), as well as future expirations resolved in the period indicated above.
During the three months ended March 31, 2025, the new annualized base rent on re-leases was $46.22 million, as compared to the previous annual rent of $44.48 million on the same units, representing a rent recapture rate of 103.9% on the units re-leased.
As part of our re-leasing costs, we pay leasing commissions to unrelated, third-party real estate brokers consistent with the commercial real estate industry standard, and sometimes provide rent concessions to our clients. We do not consider the collective impact of the leasing commissions or rent concessions to our clients to be material to our financial position or results of operations.
Impact of Inflation
Leases generally provide for limited increases in rent as a result of fixed increases, increases in the consumer price index, retail price index in the case of certain leases in the U.K. (typically subject to ceilings), or increases in clients’ sales volumes. We expect that inflation will cause these lease provisions to result in rent increases over time. During times when inflation is greater than increases in rent, as provided for in the leases, rent increases may not keep up with the rate of inflation and other costs.
Moreover, our strategic focus on the use of net lease agreements reduces our exposure to rising property expenses due to inflation because the client is responsible for property expenses. Even though the utilization of net leases reduces our exposure to rising property expenses due to inflation, substantial inflationary pressures and increased costs may have an adverse impact on our clients if increases in their operating expenses exceed increases in revenue, which may adversely affect our clients' ability to pay rent. Additionally, inflationary periods may cause us to experience increased costs of financing, make it difficult to refinance debt at attractive rates or at all, and may adversely affect the properties we can acquire if the cost of financing an acquisition is in excess of our anticipated earnings from such property, thereby limiting the properties that can be acquired.
Impact of Real Estate and Capital Markets
In the commercial real estate market, property prices generally continue to fluctuate. Likewise, during certain periods, the global capital markets have experienced significant price volatility, dislocations, and liquidity disruptions, which may impact our access to and cost of capital. We continually monitor the commercial real estate and global capital markets carefully and, if required, will make decisions to adjust our business strategy accordingly.
Impact of Current Macroeconomic Conditions
We monitor developments related to macroeconomic factors that could have an adverse impact on our business and our clients. Our clients face challenges that may differ from or be additional to challenges we face, including potential changes in consumer confidence levels, behavior and spending and increased operational expenses, including potential impacts from changes in global trade policies. The extent of the future effects on our business, results of operations, cash flows, and growth strategies is highly uncertain and will ultimately depend on future developments, none of which can be predicted.
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LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2025, we had $2.9 billion of liquidity, which consists of cash and cash equivalents of $319.0 million, unsettled ATM forward equity of $69.1 million, and $2.5 billion of availability under our $4.25 billion unsecured revolving credit facility, net of $1.3 billion of borrowing on the revolving credit facility and after deducting $413.4 million in borrowings under our commercial paper programs. We use our unsecured revolving credit facility as a liquidity backstop for the repayment of the notes issued under our commercial paper programs.
Our primary cash obligations, for the current year and subsequent years, are included in the “Material Cash Requirements” table, which is presented later in this section. We expect to fund our operating expenses and other short-term liquidity requirements, including property acquisitions and development costs, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs, and cash distributions to common stockholders, primarily through a combination of the following:
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Cash and cash equivalents;
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Future cash flows from operations;
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Issuances of common stock or debt, or other securities offerings;
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Additional borrowings under our revolving credit facility or commercial paper programs, which are backstopped by our credit facility;
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Short-term loans;
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Asset dispositions; and
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Credit investment repayments.
In addition to these sources of liquidity, we are exploring various capital diversification initiatives, including the establishment of a third-party private capital open-end fund.
We believe that our cash and cash equivalents on hand, cash provided from operating activities, and borrowing capacity are sufficient to meet our liquidity needs for the next twelve months. We intend, however, to use permanent or long-term capital to fund property acquisitions and to repay future borrowings under our revolving credit facility and commercial paper programs.
Long-Term Liquidity Requirements
Our goal is to deliver dependable monthly dividends to our stockholders that increase over time. Historically, we have met our principal short-term and long-term capital needs, including the funding of high-quality real estate acquisitions, investments in loans to clients, property development, and capital expenditures by issuing common stock, long-term unsecured notes, and term loan borrowings. Over the long term, we believe that common stock should be the majority of our capital structure. We may issue common stock when we believe our share price is at a level that allows for the proceeds of an offering to be accretively invested into additional properties or to permanently finance properties that were initially financed by our revolving credit facility, commercial paper programs, or shorter-term debt securities. However, we cannot assure you that we will have access to the capital markets at all times and at terms that are acceptable to us.
Capitalization
As of March 31, 2025, our total capitalization was $80.5 billion. Total capitalization consisted of $52.5 billion of common equity (based on the March 31, 2025 closing price on the NYSE of $58.01 and assuming the conversion of 2.7 million common units of Realty Income, L.P.), and total outstanding borrowings of $28.0 billion on our revolving credit facility, commercial paper, term loans, mortgages payable, and senior unsecured notes and bonds and our proportionate share of unconsolidated entities' debt (excluding unamortized deferred financing costs, discounts, and premiums).
Share Repurchase Program
In February 2025, our Board of Directors authorized a share repurchase program for up to $2.0 billion in shares of our common stock, which will expire in January 2028. Repurchases under the repurchase program may be made at management’s discretion from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions, Rule 10b5-1 plans or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The repurchase program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. No share repurchases have been made to date under the repurchase program.
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ATM Program
During the three months ended March 31, 2025, we settled approximately 11.2 million shares of common stock previously sold pursuant to forward sale agreements through our ATM program for approximately $624.8 million of net proceeds. As of March 31, 2025, there were approximately 1.2 million shares of unsettled common stock subject to forward sale confirmations through our ATM program, representing approximately $69.1 million in expected net proceeds, which have been executed at a weighted average price of $55.38 per share (assuming full physical settlement of all outstanding shares of common stock, subject to such forward sale agreements and certain assumptions made with respect to settlement dates). Additionally, as of March 31, 2025, we had 44.8 million shares remaining for future issuance under our ATM program. We anticipate maintaining the availability of our ATM program in the future, including the replenishment of authorized shares issuable thereunder.
Debt Financing Activities
At March 31, 2025, our total outstanding borrowings of revolving credit facility, commercial paper, term loans, mortgages payable, and senior unsecured notes and bonds were $27.3 billion, with a weighted average maturity of 5.5 years and a weighted average interest rate of 3.9%. As of March 31, 2025, approximately 94% of our total debt was fixed rate debt. See notes 7 through 10 to the consolidated financial statements for additional information about our outstanding debt, along with our debt financing activities during the three months ended March 31, 2025 below.
Mortgage Repayments
During the three months ended March 31, 2025, we made $39.5 million in principal payments, including the full repayment of one mortgage for $39.0 million.
Note Issuance
In April 2025, we issued $600.0 million of 5.125% senior unsecured notes due April 2035.
Note Repayment
In April 2025, we repaid $500.0 million of outstanding 3.875% senior unsecured notes, plus accrued and unpaid interest, upon maturity.
Credit Facilities
In April 2025, we closed on the recast and expansion of an aggregate $5.38 billion multi-currency unsecured credit facility. Included in the total capacity is a newly-established $1.38 billion unsecured credit facility for our U.S. Core Plus Fund (the "Fund"), a newly formed open-end, perpetual life private fund.
The capacity of the Realty Income revolving credit facility is updated to $4.0 billion with an accordion expansion feature up to $5.0 billion, which is subject to obtaining lender commitments. The revolving credit facility is bifurcated into two $2.0 billion tranches, which initially mature on April 29, 2027 and April 29, 2029, respectively, before giving effect to two six-month extension options. Pursuant to the terms of the revolving credit facility, the current A3/A- credit ratings provide for a borrowing rate of 72.5 basis points over the SOFR for USD borrowings, with a facility commitment fee of 12.5 basis points, for all-in drawn pricing of 85 basis points over the SOFR for USD borrowings.
The $1.38 billion capacity of the Fund credit facility consists of a $1.0 billion revolving credit facility and a $380.0 million delayed draw, unsecured term loan. The aggregate facilities under the Fund Credit Agreement can be increased to up to $2.0 billion pursuant to an accordion expansion feature, which is subject to obtaining lender commitments. The Fund revolving credit facility initially matures on April 29, 2029, before giving effect to two six-month extension options, and the $380.0 million delayed draw term loan initially matures on April 29, 2028 and includes two six-month extension options.
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Covenants
The following is a summary of the key financial covenants for our senior unsecured notes, as defined and calculated per the terms of our senior notes and bonds. These calculations, which are not based on accounting principles generally accepted in the United States of America ("U.S. GAAP"), are presented to investors to show our ability to incur additional debt under the terms of our senior notes and bonds as well as to disclose our current compliance with such covenants and are not measures of our liquidity or performance. The actual amounts as of March 31, 2025, are:
| Note Covenants | Required | Actual | ||||||
| Limitation on incurrence of total debt | < 60% of adjusted assets | 41.4 | % | |||||
| Limitation on incurrence of secured debt | < 40% of adjusted assets | 0.2 | % | |||||
| Debt service and fixed charge coverage (trailing 12 months) (1) | > 1.5x | 4.7x | ||||||
| Maintenance of total unencumbered assets | > 150% of unsecured debt | 242.2 | % |
(1) Our debt service coverage ratio is calculated on a pro forma basis for the preceding four-quarter period on the assumptions that: (i) the incurrence of any Debt (as defined in the covenants) incurred by us since the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other Debt since the first day of such four-quarter period), (ii) the repayment or retirement of any of our Debt since the first day of such four-quarter period, and (iii) any acquisition or disposition by us of any asset or group since the first day of such four quarters and subject to certain additional adjustments. Such pro forma ratio has been prepared on the basis required by that debt service covenant, reflects various estimates and assumptions and is subject to other uncertainties, and therefore does not purport to reflect what our actual debt service coverage ratio would have been had transactions referred to in clauses (i), (ii) and (iii) of the preceding sentence occurred as of the first day of four-quarter period, nor does it purport to reflect our debt service coverage ratio for any future period. Fixed charge coverage is calculated in the same manner as the debt service coverage. The following is our calculation of debt service and fixed charge coverage at March 31, 2025 (in thousands, for trailing twelve months):
| Net income attributable to the Company | $ | 978,304 | |||
| Plus: interest expense, excluding the amortization of deferred financing costs | 1,021,513 | ||||
| Plus: provision for taxes | 66,756 | ||||
| Plus: depreciation and amortization | 2,423,515 | ||||
| Plus: provisions for impairment | 452,934 | ||||
| Plus: pro forma adjustments | 174,551 | ||||
| Less: gain on sales of real estate | (123,238) | ||||
| Income available for debt service, as defined | $ | 4,994,335 | |||
| Total pro forma debt service charge | $ | 1,056,506 | |||
| Debt service and fixed charge coverage ratio | 4.7x |
Credit Agency Ratings
The borrowing interest rates under our revolving credit facility are based upon our ratings assigned by credit rating agencies. As of March 31, 2025, we were assigned the following investment grade corporate credit ratings on our senior unsecured notes and bonds: Moody’s Investors Service has assigned a rating of A3 with a “stable” outlook and Standard & Poor’s Ratings Group has assigned a rating of A- with a “stable” outlook. In addition, we were assigned the following ratings on our commercial paper at March 31, 2025: Moody's Investors Service has assigned a rating of P-2 and Standard & Poor's Ratings Group has assigned a rating of A-2.
Based on our credit agency ratings as of March 31, 2025, interest rates under our credit facility for U.S. borrowings would have been at the 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 drawn pricing of 0.95% over SOFR, for British Pound Sterling ("GBP") borrowings, 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 drawn pricing of 0.8826% over SONIA, and for 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 drawn pricing of 0.85% over one-month EURIBOR. In addition, our credit facility provides that the interest rates can range between: (i) SOFR/SONIA/EURIBOR, plus 1.40% if our credit rating is lower than BBB-/Baa3 or our senior unsecured debt is unrated and (ii) SOFR/SONIA/EURIBOR, plus 0.70% if our credit rating is A/A2 or higher. In addition, our credit facility provides for a facility commitment fee based on our credit ratings, which ranges from: (i) 0.30% for a rating lower than BBB-/Baa3 or unrated, and (ii) 0.10% for a credit rating of A/A2 or higher.
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We also issue senior debt securities from time to time and our credit ratings can impact the interest rates charged in those transactions. If our credit ratings or ratings outlook change, our cost to obtain debt financing could increase or decrease. The credit ratings assigned to us could change based upon, among other things, our results of operations and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that our ratings will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. Moreover, a rating is not a recommendation to buy, sell or hold our debt securities or common stock.
Material Cash Requirements
The following table summarizes the maturity of each of our obligations as of March 31, 2025 (dollars in millions):
| Revolving Credit Facility and Commercial Paper (1) | Unsecured Term Loans | Mortgages Payable | Senior Unsecured Notes and Bonds | Interest (2) | Ground Leases Paid by the Company (3) | Ground Leases Paid by Our Clients (4) | Other (5) | Total | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | 413.4 | $ | 800.0 | $ | 5.1 | $ | 1,050.0 | $ | 756.4 | $ | 9.7 | $ | 24.0 | $ | 455.5 | $ | 3,514.1 | |||||||||||||||||||||||||||||||||||
| 2026 | 1,288.5 | 1,093.9 | 12.0 | 2,375.0 | 858.7 | 17.7 | 32.5 | 167.5 | 5,845.8 | ||||||||||||||||||||||||||||||||||||||||||||
| 2027 | — | 500.0 | 22.3 | 2,340.7 | 745.1 | 11.1 | 30.6 | 57.8 | 3,707.6 | ||||||||||||||||||||||||||||||||||||||||||||
| 2028 | — | — | 1.3 | 2,499.8 | 640.6 | 9.0 | 27.6 | 3.1 | 3,181.4 | ||||||||||||||||||||||||||||||||||||||||||||
| 2029 | — | — | 1.3 | 2,402.0 | 597.2 | 10.1 | 25.2 | 2.2 | 3,038.0 | ||||||||||||||||||||||||||||||||||||||||||||
| Thereafter | — | — | 1.0 | 12,490.0 | 2,960.7 | 407.8 | 336.5 | 12.0 | 16,208.0 | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,701.9 | $ | 2,393.9 | $ | 43.0 | $ | 23,157.5 | $ | 6,558.7 | $ | 465.4 | $ | 476.4 | $ | 698.1 | $ | 35,494.9 |
(1) The initial term of our revolving credit facility was set to expire in June 2026 and included, at our option, two six-month extensions. In April 2025, we completed the recast and expansion of our multi-currency unsecured credit facility, as described in Note 21, Subsequent Events. At March 31, 2025, there were $1.3 billion of outstanding borrowings under our revolving credit facility, and commercial paper programs outstanding were $413.4 million, which mature between May 2025 and June 2025.
(2) Interest on the commercial paper programs, term loans, mortgages payable, and senior unsecured notes and bonds has been calculated based on outstanding balances at period end through their respective maturity dates.
(3) We currently pay the ground lessors directly for the rent under certain ground lease arrangements.
(4) Our clients, who are generally sub-tenant clients under ground leases, are responsible for paying the rent under these ground leases.
(5) “Other” consists of $601.3 million of commitments under construction contracts, $88.6 million for tenant improvements, recurring capital expenditures, and non-recurring building improvements, and $8.2 million for contingent purchase consideration obligations related to leasing activities for a multi-tenant property acquired.
Investments in Unconsolidated Entities
As of March 31, 2025, our pro-rata share of secured debt of unconsolidated entities was approximately $659.2 million.
DIVIDEND POLICY
Distributions are paid monthly to holders of shares of our common stock.
Distributions are paid monthly to the limited partners holding common units of Realty Income, L.P., each on a per unit basis that is equal to the amount paid per share to our common stockholders (subject to the adjustment factor applicable to those units at the time of such distribution).
In order to maintain our status as a real estate investment trust ("REIT") for federal income tax purposes, we generally are required to distribute dividends to our stockholders aggregating annually at least 90% of our taxable income (excluding net capital gains), and we are subject to income tax to the extent we distribute less than 100% of our taxable income (including net capital gains). In 2024, our cash distributions to common stockholders totaled $2.69 billion, or approximately 126.1% of our estimated taxable income of $2.13 billion. Certain measures are available to us to reduce or eliminate our tax exposure as a REIT, and accordingly, no provision for U.S. federal income taxes, other than our taxable REIT subsidiaries (each, a "TRS"), has been made. Our estimated taxable income reflects non-cash deductions for depreciation and amortization. Our estimated taxable income is presented to show our compliance with REIT dividend requirements and is not a measure of our liquidity or operating performance. We intend to continue to make distributions to our stockholders that are sufficient to meet this dividend requirement and that will reduce or eliminate our exposure to income taxes. Furthermore, we believe our cash on hand and funds from operations are sufficient to support our current level of cash distributions to our stockholders. We distributed $0.796 per share to stockholders during the three months ended March 31, 2025, representing 75.1% of our diluted Adjusted Funds from Operations Available to Common Stockholders ("AFFO") per share of $1.06.
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Future distributions will be at the discretion of our Board of Directors and will depend on, among other things, our results of operations, Funds from Operations Available to Common Stockholders ("FFO"), Normalized Funds from Operations Available to Common Stockholders ("Normalized FFO"), AFFO, cash flow from operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, our debt service requirements, and any other factors the Board of Directors may deem relevant. In addition, our revolving credit facility contains financial covenants that could limit the amount of distributions payable by us in the event of a default, and which prohibit the payment of distributions on our common stock in the event that we fail to pay when due (subject to any applicable grace period) any principal or interest on borrowings under our revolving credit facility.
Distributions of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to stockholders as ordinary income, except to the extent that we recognize capital gains and declare a capital gains dividend, or that such amounts constitute “qualified dividend income” subject to a reduced rate of tax. The maximum tax rate of non-corporate taxpayers for “qualified dividend income” is generally 20%. In general, dividends payable by REITs are not eligible for the reduced tax rate on qualified dividend income, except to the extent that certain holding requirements have been met with respect to the REIT’s stock and the REIT’s dividends are attributable to dividends received from certain taxable corporations (such as our TRSs) or to income that was subject to tax at the corporate or REIT level (for example, if we distribute taxable income that we retained and paid tax on in the prior taxable year). However, non-corporate stockholders, including individuals, generally may deduct up to 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income, for taxable years beginning after December 31, 2017, and before January 1, 2026.
Distributions in excess of earnings and profits generally will first be treated as a non-taxable reduction in the stockholders’ basis in their stock, but not below zero. Distributions in excess of that basis generally will be taxable as a capital gain to stockholders. Approximately 30.4% of the distributions to our common stockholders, made or deemed to have been made in 2024, were classified as a return of capital for federal income tax purposes.
RESULTS OF OPERATIONS
The following is a comparison of our results of operations for the three months ended March 31, 2025 and 2024.
Total Revenue
The following summarizes our total revenue (in millions):
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||||||||||||||
| Rental (excluding reimbursements) | $ | 1,225.7 | $ | 1,135.5 | $ | 90.2 | |||||||||||||||||||||||||||||||||||||||||
| Rental (reimbursements) | 87.4 | 72.7 | 14.7 | ||||||||||||||||||||||||||||||||||||||||||||
| Other | 67.4 | 52.3 | 15.1 | ||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 1,380.5 | $ | 1,260.5 | $ | 120.0 |
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Rental Revenue (excluding reimbursements)
The table below summarizes the increase in rental revenue (excluding reimbursements) in the three months ended March 31, 2025 and 2024 (dollars in millions):
| Number of Properties | Three months ended March 31, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||||||
| Properties acquired during 2025 & 2024 | 497 | $ | 55.0 | $ | 2.6 | $ | 52.4 | |||||||||||||||||||||||||||||||
| Same store rental revenue (1) | 14,702 | 1,149.4 | 1,135.1 | 14.3 | ||||||||||||||||||||||||||||||||||
| Constant currency adjustment (2) | N/A | (5.0) | (2.4) | (2.6) | ||||||||||||||||||||||||||||||||||
| Properties sold during and prior to 2025 | 361 | 0.6 | 13.0 | (12.4) | ||||||||||||||||||||||||||||||||||
| Straight-line rent and other non-cash adjustments | N/A | (3.1) | 6.2 | (9.3) | ||||||||||||||||||||||||||||||||||
| Vacant rents, development and other (3) | 428 | 27.8 | 27.9 | (0.1) | ||||||||||||||||||||||||||||||||||
| Other excluded revenue (4) | N/A | 1.0 | 0.2 | 0.8 | ||||||||||||||||||||||||||||||||||
| Less: Spirit rental revenue (5) | N/A | — | (47.1) | 47.1 | ||||||||||||||||||||||||||||||||||
| Total | $ | 1,225.7 | $ | 1,135.5 | $ | 90.2 | ||||||||||||||||||||||||||||||||
(1)The same store rental revenue percentage increased by 1.3% for the three months ended March 31, 2025 as compared with the same period in 2024.
(2)For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of March 31, 2025.
(3)Relates to the aggregate of (i) rental revenue from 312 properties that were available for lease during part of 2025 or 2024 for the three months ended March 31, 2025, and (ii) rental revenue for 116 properties under development or completed developments that do not meet our same store pool definition for the three months ended March 31, 2025.
(4)"Other excluded revenue" primarily consists of reimbursements for tenant improvements and rental revenue that is not contractual base rent such as lease termination settlements.
(5)Amounts for the three months ended March 31, 2024 represent rental revenue from Spirit properties, which were not included in our financial statements prior to the close of the merger with Spirit on January 23, 2024.
For purposes of determining the same store rent property pool, we include all properties that were owned for the entire year-to-date period, for both the current and prior year, except for properties during the current or prior year that; (i) were vacant at any time, (ii) were under development or redevelopment, or (iii) were involved in eminent domain and rent was reduced. Each of the exclusions from the same store pool are separately addressed within the applicable sentences above, explaining the changes in rental revenue for the period.
Of the 16,856 in-place leases in the portfolio, 13,825, or 82.0%, were under leases that provide for increases in rents through: base rent increases tied to inflation (typically subject to ceilings), percentage rent based on a percentage of the clients’ gross sales, fixed increases, or a combination of two or more of the aforementioned rent provisions.
Rent based on a percentage of our clients' gross sales, or percentage rent, was $5.8 million and $5.3 million for the three months ended March 31, 2025 and 2024, respectively. Percentage rent represents less than 1% of rental revenue.
At March 31, 2025, our portfolio of 15,627 properties was 98.5% leased with 231 properties available for lease or sale, as compared to 98.6% leased with 217 properties available for lease at March 31, 2024. It has been our experience that approximately 1% to 4% of our property portfolio will be available for lease at any given time; however, it is possible that the number of properties available for lease or sale could increase in the future, given the nature of economic cycles and other unforeseen global events.
Rental Revenue (reimbursements)
A number of our leases provide for contractually obligated reimbursements from clients for recoverable real estate taxes and operating expenses. Contractually obligated reimbursements by our clients increased by $14.7 million for the three months ended March 31, 2025 as compared with the same period in 2024, primarily due to the growth of our portfolio due to acquisitions.
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Other Revenue
The following summarizes our total other revenue (in millions):
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Interest income on financing receivables | $ | 32.3 | $ | 31.5 | $ | 0.8 | |||||||||||||||||||||||||||||
| Interest income on loans and preferred equity investments | 34.4 | 20.1 | 14.3 | ||||||||||||||||||||||||||||||||
| Other | 0.7 | 0.7 | — | ||||||||||||||||||||||||||||||||
| $ | 67.4 | $ | 52.3 | $ | 15.1 |
Total other revenue increased by $15.1 million for the three months ended March 31, 2025 as compared with the same period in 2024, primarily due to higher interest income on loans due to growth in our loan portfolio.
Expenses
The following summarizes our total expenses (in millions):
| Three months ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 608.9 | $ | 581.1 | $ | 27.8 | ||||||||||||||||||||||||||||||||||||||||||||
| Interest | 268.4 | 240.6 | 27.8 | |||||||||||||||||||||||||||||||||||||||||||||||
| Property (excluding reimbursements) | 19.3 | 16.6 | 2.7 | |||||||||||||||||||||||||||||||||||||||||||||||
| Property (reimbursements) | 87.4 | 72.7 | 14.7 | |||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 44.0 | 40.8 | 3.2 | |||||||||||||||||||||||||||||||||||||||||||||||
| Provisions for impairment | 116.6 | 89.5 | 27.1 | |||||||||||||||||||||||||||||||||||||||||||||||
| Merger, transaction, and other costs, net | 0.3 | 94.1 | (93.8) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total expenses | $ | 1,144.9 | $ | 1,135.4 | $ | 9.5 | ||||||||||||||||||||||||||||||||||||||||||||
| Total revenue (1) | $ | 1,293.1 | $ | 1,187.8 | ||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses as a percentage of total revenue (1) | 3.4 | % | 3.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Property expenses (excluding reimbursements) as a percentage of total revenue (1) | 1.5 | % | 1.4 | % |
(1) Excludes client reimbursements.
Depreciation and Amortization
Depreciation and amortization increased by $27.8 million for the three months ended March 31, 2025 as compared with the same period in 2024, primarily due to the Merger and the acquisitions of properties in 2024 and 2025, which were partially offset by property dispositions.
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Interest Expense
The following is a summary of the components of our interest expense (in thousands):
| Three months ended March 31, | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||||||||
| Interest on our revolving credit facility, commercial paper, term loans, mortgages, senior unsecured notes and bonds, and interest rate swaps | $ | 266,611 | $ | 243,102 | $ | 23,509 | ||||||||||||||||||||||||||
| Revolving credit facility commitment fees | 1,328 | 1,343 | (15) | |||||||||||||||||||||||||||||
| Amortization of debt origination and deferred financing costs | 5,920 | 5,819 | 101 | |||||||||||||||||||||||||||||
| Gain on interest rate swaps | (1,905) | (1,800) | (105) | |||||||||||||||||||||||||||||
| Amortization of net mortgage premiums and discounts | 65 | (122) | 187 | |||||||||||||||||||||||||||||
| Amortization of net note premiums and discounts | 652 | (4,150) | 4,802 | |||||||||||||||||||||||||||||
| Capital lease obligation | 524 | 431 | 93 | |||||||||||||||||||||||||||||
| Interest capitalized | (4,821) | (4,009) | (812) | |||||||||||||||||||||||||||||
| Interest expense | $ | 268,374 | $ | 240,614 | $ | 27,760 | ||||||||||||||||||||||||||
| Revolving credit facility, commercial paper, term loans, mortgages and senior unsecured notes and bonds | ||||||||||||||||||||||||||||||||
| Average outstanding balances | $ | 27,183,230 | $ | 24,663,786 | $ | 2,519,444 | ||||||||||||||||||||||||||
| Weighted average interest rates | 3.94 | % | 4.03 | % |
Interest expense increased by $27.8 million, or 11.5%, for the three months ended March 31, 2025 as compared with the same period in 2024, primarily due to higher average borrowings and increased amortization of note premiums and discounts, partially offset by lower weighted average interest rates. See notes to the accompanying consolidated financial statements for additional information regarding our indebtedness.
Property Expenses (excluding reimbursements)
Property expenses (excluding reimbursements) consist of costs associated with properties available for lease, non-net-leased properties and general portfolio expenses and include, but are not limited to, property taxes, maintenance, insurance, utilities, property inspections and legal fees.
Property expenses (excluding reimbursements) increased by $2.7 million for the three months ended March 31, 2025 as compared with the same period in 2024, primarily due to an increase in repairs and maintenance, and utilities on properties available for lease compared with the same period in 2024.
Property Expenses (reimbursements)
Property expenses (reimbursements) consist of property taxes and operating costs paid on behalf of our clients. Property expenses (reimbursements) increased by $14.7 million for the three months ended March 31, 2025 as compared with the same period in 2024, primarily due to an increase in portfolio size, resulting in higher repairs and maintenance, property taxes, and insurance expenses paid on behalf of our clients.
General and Administrative Expenses
General and administrative expenses increased by $3.2 million for the three months ended March 31, 2025 as compared with the same period in 2024, primarily due to higher employee costs and professional fees as we continue to invest in our people and our platform.
Provisions for Impairment
The following table summarizes our provisions for impairment during the periods indicated below (in millions):
| Three months ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions for impairment of real estate | $ | 97.4 | $ | 88.2 | $ | 9.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions for credit losses | 19.2 | 1.3 | 17.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions for impairment | $ | 116.6 | $ | 89.5 | $ | 27.1 |
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Provisions for impairment increased by $27.1 million for the three months ended March 31, 2025, as compared with the same period in 2024, as a result of a $9.2 million increase in impairment of real estate and a $17.9 million increase in credit losses recognized on financing receivables under sale-leaseback transactions, both primarily attributable to deterioration in the creditworthiness of certain clients.
Merger, Transaction, and Other Costs, Net
Merger, transaction, and other costs, net decreased by $93.8 million for the three months ended March 31, 2025, as compared with the same period in 2024, primarily as a result of employee severance, post-combination share-based compensation, transfer taxes, and various professional fees directly attributable to the Merger that was completed in January 2024.
Gain on Sales of Real Estate
The following summarizes our property dispositions (dollars in millions):
| Three months ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||||||
| Number of properties sold | 55 | 46 | 9 | |||||||||||||||||||||||||||||||||||
| Net sales proceeds | $ | 92.6 | $ | 95.6 | $ | (3.0) | ||||||||||||||||||||||||||||||||
| Gain on sales of real estate | $ | 22.5 | $ | 16.6 | $ | 5.9 |
Foreign Currency And Derivative (Loss) Gain, Net
We borrow in the functional currencies of the countries in which we invest. Net foreign currency gain and loss are primarily related to the remeasurement of intercompany debt from foreign subsidiaries and outstanding borrowings denominated in the local currencies we invest in. Derivative gain and loss are primarily related to mark-to-market adjustments on derivatives that do not qualify for hedge accounting and settlement of designated derivatives reclassified from Accumulated Other Comprehensive Income ("AOCI").
Foreign currency and derivative (loss) gain, net was a $2.5 million loss for the three months ended March 31, 2025, compared to a $4.0 million gain for the same period in 2024, primarily due to the impact of foreign currency fluctuations, largely offset by derivative hedges.
Equity in Earnings (Losses) of Unconsolidated Entities
Equity in earnings of unconsolidated entities was $4.4 million for the three months ended March 31, 2025 as compared with $1.7 million in losses for the three months ended March 31, 2024, primarily attributable to higher earnings from our data center development joint venture, which commenced leasing in 2024.
Other Income, Net
Other income, net increased by $1.7 million for the three months ended March 31, 2025 as compared with the same period in 2024, primarily due to higher gains on insurance proceeds and other miscellaneous revenue.
Income TaxesIncome taxes primarily consist of international income taxes accrued or paid by us and our subsidiaries, as well as state and local taxes. The increase of $0.2 million in income taxes for the three months ended March 31, 2025 as compared with the same period in 2024 is primarily attributable to higher taxable income in Europe.
Preferred Stock Dividends
The decrease in preferred stock dividends of $2.6 million for the three months ended March 31, 2025 as compared with the same period in 2024 is due to the issuance of Realty Income Series A Preferred Stock during the three months ended March 31, 2024 in connection with the Merger. In September 2024, we redeemed all 6.9 million shares of Realty Income Series A Preferred Stock outstanding.
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NON-GAAP FINANCIAL MEASURES
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate ("Adjusted EBITDAre")
Nareit established an EBITDA metric for real estate companies (i.e., EBITDA for real estate, or EBITDAre) it believed would provide investors with a consistent measure to help make investment decisions among REITs. Our definition of “Adjusted EBITDAre” is generally consistent with the Nareit definition, other than our adjustment to remove foreign currency and derivative gain and loss and merger, transaction, and other costs, net. We define Adjusted EBITDAre, a non-GAAP financial measure, for the most recent quarter as earnings (net income) before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) provisions for impairment, (v) merger, transaction, and other costs, net, (vi) gain on sales of real estate, (vii) foreign currency and derivative gain and loss, net, and (viii) our proportionate share of adjustments from unconsolidated entities. Our Adjusted EBITDAre may not be comparable to Adjusted EBITDAre reported by other companies or as defined by Nareit, and other companies may interpret or define Adjusted EBITDAre differently than we do. Management believes Adjusted EBITDAre to be a meaningful measure of a REIT’s performance because it provides a view of our operating performance, analyzes our ability to meet interest payment obligations before the effects of income tax, depreciation and amortization expense, provisions for impairment, gain on sales of real estate and other items, as defined above, that affect comparability, including the removal of non-recurring and non-cash items that industry observers believe are less relevant to evaluating the operating performance of a company. In addition, EBITDAre is widely followed by industry analysts, lenders, investors, rating agencies, and others as a means of evaluating the operational cash generating capacity of a company prior to servicing debt obligations. Management also believes the use of an annualized quarterly Adjusted EBITDAre metric, which we refer to as Annualized Adjusted EBITDAre, is meaningful because it represents our current earnings run rate for the period presented. Annualized Adjusted EBITDAre and Annualized Pro Forma Adjusted EBITDAre, as defined below, are also used to determine the vesting of performance share awards granted to executive officers. Annualized Adjusted EBITDAre should be considered along with, but not as an alternative to net income as a measure of our operating performance. We define Annualized Pro Forma Adjusted EBITDAre as Annualized Adjusted EBITDAre, subject to certain adjustments to incorporate Adjusted EBITDAre from investments we acquired or stabilized during the applicable quarter and Adjusted EBITDAre from investments we disposed of during the applicable quarter, and include transaction accounting adjustments in accordance with U.S. GAAP, giving pro forma effect to all transactions as if they occurred at the beginning of the applicable period. Our calculation includes all adjustments consistent with the requirements to present Adjusted EBITDAre on a pro forma basis in accordance with Article 11 of Regulation S-X. The Annualized Pro Forma Adjustments are consistent with the debt service coverage ratio calculated under financial covenants for our senior unsecured notes. We believe Annualized Pro Forma Adjusted EBITDAre is a useful non-GAAP supplemental measure, as it excludes investments that were no longer owned at the balance sheet date and includes the annualized rent from investments acquired during the quarter. Management also uses our ratios of Net Debt/Annualized Adjusted EBITDAre, Net Debt/Annualized Pro Forma Adjusted EBITDAre, Net Debt and Preferred Stock/Annualized Adjusted EBITDAre, and Net Debt and Preferred Stock/Annualized Pro Forma Adjusted EBITDAre as measures of leverage in assessing our financial performance, which is calculated as net debt (which we define as total debt per the consolidated balance sheets, excluding deferred financing costs and net premiums and discounts, but including our proportionate share of debt from unconsolidated entities, less cash and cash equivalents), divided by annualized quarterly Adjusted EBITDAre and annualized Pro Forma Adjusted EBITDAre, respectively.
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The following is a reconciliation of net income (which we believe is the most comparable U.S. GAAP measure) to Adjusted EBITDAre and Annualized Pro Forma EBITDAre calculations for the periods indicated below (dollars in thousands):
| Three months ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net income | $ | 251,462 | $ | 133,899 | |||||||
| Interest | 268,374 | 240,614 | |||||||||
| Income taxes | 15,657 | 15,502 | |||||||||
| Depreciation and amortization | 608,935 | 581,064 | |||||||||
| Provisions for impairment | 116,589 | 89,489 | |||||||||
| Merger, transaction, and other costs, net | 279 | 94,104 | |||||||||
| Gain on sales of real estate | (22,537) | (16,574) | |||||||||
| Foreign currency and derivative loss (gain), net | 2,545 | (4,046) | |||||||||
| Proportionate share of adjustments from unconsolidated entities | 19,488 | 15,236 | |||||||||
| Quarterly Adjusted EBITDAre | $ | 1,260,792 | $ | 1,149,288 | |||||||
| Annualized Adjusted EBITDAre (1) | $ | 5,043,168 | $ | 4,597,152 | |||||||
| Annualized Pro Forma Adjustments | $ | 78,683 | $ | 82,199 | |||||||
| Annualized Pro Forma Adjusted EBITDAre | $ | 5,121,851 | $ | 4,679,351 | |||||||
| Total debt per the consolidated balance sheets, excluding deferred financing costs and net premiums and discounts | $ | 27,296,346 | $ | 25,598,604 | |||||||
| Proportionate share of unconsolidated entities debt, excluding deferred financing costs | 659,190 | 659,190 | |||||||||
| Less: Cash and cash equivalents | (319,007) | (680,159) | |||||||||
| Net Debt (2) | $ | 27,636,529 | $ | 25,577,635 | |||||||
| Preferred Stock | — | 167,394 | |||||||||
| Net Debt and Preferred Stock | $ | 27,636,529 | $ | 25,745,029 | |||||||
| Net Debt/Annualized Adjusted EBITDAre | 5.5 | x | 5.6 | x | |||||||
| Net Debt/Annualized Pro Forma Adjusted EBITDAre | 5.4 | x | 5.5 | x | |||||||
| Net Debt and Preferred Stock/ Annualized Adjusted EBITDAre | 5.5 | x | 5.6 | x | |||||||
| Net Debt and Preferred Stock/ Annualized Pro Forma Adjusted EBITDAre | 5.4 | x | 5.5 | x |
(1) We calculate Annualized Adjusted EBITDAre by multiplying the Quarterly Adjusted EBITDAre by four.
(2) Net Debt is total debt per our consolidated balance sheets, excluding deferred financing costs and net premiums and discounts, but including our proportionate share of debt from unconsolidated entities, less cash and cash equivalents.
As described above, the Annualized Pro Forma Adjustments, which include transaction accounting adjustments in accordance with U.S. GAAP, consist of adjustments to incorporate the Adjusted EBITDAre from investments we acquired or stabilized during the applicable quarter and Adjusted EBITDAre from investments we disposed of during the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the period, consistent with the requirements of Article 11 of Regulation S-X. The annualized Pro Forma Adjustments are consistent with the debt service coverage ratio calculated under financial covenants for our senior unsecured notes. The following table summarizes our Annualized Pro Forma Adjustments related to our Annualized Pro Forma Adjusted EBITDAre calculation for the periods indicated below (in thousands):
| Three months ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Annualized pro forma adjustments from investments acquired or stabilized | $ | 76,606 | $ | 83,152 | ||||||||||
| Annualized pro forma adjustments from investments disposed | 2,077 | (953) | ||||||||||||
| Annualized Pro Forma Adjustments | $ | 78,683 | $ | 82,199 |
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FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS AND NORMALIZED FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS
We define FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trusts' definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets, plus provisions for impairments of depreciable real estate assets, and reduced by gain on property sales. We define Normalized FFO, a non-GAAP financial measure, as FFO excluding merger, transaction, and other costs, net. We define diluted FFO and diluted normalized FFO as FFO and normalized FFO adjusted for dilutive noncontrolling interests.
The following summarizes our FFO and Normalized FFO (in millions, except per share data):
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| FFO available to common stockholders | $ | 937.7 | $ | 785.7 | 19.3 | % | |||||||||||||||||||||||||||||
| FFO per common share (1) | $ | 1.05 | $ | 0.94 | 11.7 | % | |||||||||||||||||||||||||||||
| Normalized FFO available to common stockholders | $ | 937.9 | $ | 879.8 | 6.6 | % | |||||||||||||||||||||||||||||
| Normalized FFO per common share (1) | $ | 1.05 | $ | 1.05 | 0.0 | % |
(1) All per share amounts are presented on a diluted per common share basis.
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The following is a reconciliation of net income available to common stockholders (which we believe is the most comparable U.S. GAAP measure) to FFO and Normalized FFO. Also presented is information regarding distributions paid to common stockholders and the weighted average number of common shares used for the basic and diluted computation per share (dollars in thousands, except per share amounts):
| Three months ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net income available to common stockholders | $ | 249,815 | $ | 129,696 | |||||||||||||||||||
| Depreciation and amortization | 608,935 | 581,064 | |||||||||||||||||||||
| Depreciation of furniture, fixtures and equipment | (538) | (623) | |||||||||||||||||||||
| Provisions for impairment of real estate | 97,418 | 88,197 | |||||||||||||||||||||
| Gain on sales of real estate | (22,537) | (16,574) | |||||||||||||||||||||
| Proportionate share of adjustments for unconsolidated entities | 6,255 | 4,674 | |||||||||||||||||||||
| FFO adjustments allocable to noncontrolling interests | (1,693) | (751) | |||||||||||||||||||||
| FFO available to common stockholders | $ | 937,655 | $ | 785,683 | |||||||||||||||||||
| FFO allocable to dilutive noncontrolling interests | 2,425 | 1,340 | |||||||||||||||||||||
| Diluted FFO | $ | 940,080 | $ | 787,023 | |||||||||||||||||||
| FFO available to common stockholders | $ | 937,655 | $ | 785,683 | |||||||||||||||||||
| Merger, transaction, and other costs, net | 279 | 94,104 | |||||||||||||||||||||
| Normalized FFO available to common stockholders | $ | 937,934 | $ | 879,787 | |||||||||||||||||||
| Normalized FFO allocable to dilutive noncontrolling interests | 2,425 | 1,340 | |||||||||||||||||||||
| Diluted Normalized FFO | $ | 940,359 | $ | 881,127 | |||||||||||||||||||
| FFO per common share, basic and diluted | $ | 1.05 | $ | 0.94 | |||||||||||||||||||
| Normalized FFO per common share, basic and diluted | $ | 1.05 | $ | 1.05 | |||||||||||||||||||
| Distributions paid to common stockholders | $ | 711,824 | $ | 636,499 | |||||||||||||||||||
| FFO after distributions | $ | 225,831 | $ | 149,184 | |||||||||||||||||||
| Normalized FFO after distributions | $ | 226,110 | $ | 243,288 | |||||||||||||||||||
| Weighted average number of common shares used for FFO and Normalized FFO: | |||||||||||||||||||||||
| Basic | 891,666 | 834,940 | |||||||||||||||||||||
| Diluted | 895,033 | 837,037 | |||||||||||||||||||||
We consider FFO and Normalized FFO to be appropriate supplemental measures of a REIT’s operating performance as they are based on a net income analysis of property portfolio performance that adds back items such as depreciation and impairments for FFO, and adds back merger, transaction, and other costs, net, for Normalized FFO. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative.
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ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS
We define AFFO, a non-GAAP measure, as FFO adjusted for unique revenue and expense items, which we believe are not as pertinent to the measurement of our ongoing operating performance. We define diluted AFFO as AFFO adjusted for dilutive noncontrolling interests.
The following summarizes our AFFO (in millions, except per share data):
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| AFFO available to common stockholders | $ | 949.7 | $ | 862.9 | 10.1 | % | |||||||||||||||||||||||||||||
| AFFO per common share (1) | $ | 1.06 | $ | 1.03 | 2.9 | % |
(1) All per share amounts are presented on a diluted per common share basis.
We consider AFFO to be an appropriate supplemental measure of our performance. Most companies in our industry use a similar measurement, but they may use the term “CAD” (for Cash Available for Distribution), “FAD” (for Funds Available for Distribution) or other terms. Our AFFO calculations may not be comparable to AFFO, CAD or FAD reported by other companies, and other companies may interpret or define such terms differently than we do.
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The following is a reconciliation of net income available to common stockholders (which we believe is the most comparable U.S. GAAP measure) to Normalized FFO and AFFO. Also presented is information regarding distributions paid to common stockholders and the weighted average number of common shares used for the basic and diluted computation per share (in thousands, except per share amounts). Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported AFFO.
| Three months ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net income available to common stockholders | $ | 249,815 | $ | 129,696 | |||||||||||||||||||
| Cumulative adjustments to calculate Normalized FFO (1) | 688,119 | 750,091 | |||||||||||||||||||||
| Normalized FFO available to common stockholders | 937,934 | 879,787 | |||||||||||||||||||||
| Debt-related non-cash items: | |||||||||||||||||||||||
| Amortization of net debt discounts and deferred financing costs | 6,633 | 1,397 | |||||||||||||||||||||
| Amortization of acquired interest rate swap value (2) | 3,711 | 2,804 | |||||||||||||||||||||
| Capital expenditures from operating properties: | |||||||||||||||||||||||
| Leasing costs and commissions | (880) | (927) | |||||||||||||||||||||
| Recurring capital expenditures | (19) | — | |||||||||||||||||||||
| Other non-cash items: | |||||||||||||||||||||||
| Non-cash change in allowance for credit losses (3) | 19,171 | 1,292 | |||||||||||||||||||||
| Amortization of share-based compensation | 5,899 | 9,252 | |||||||||||||||||||||
| Straight-line rent and expenses, net | (43,812) | (44,860) | |||||||||||||||||||||
| Amortization of above and below-market leases, net | 15,326 | 14,274 | |||||||||||||||||||||
| Deferred tax benefit | (104) | — | |||||||||||||||||||||
| Proportionate share of adjustments for unconsolidated entities | 37 | 920 | |||||||||||||||||||||
| Other adjustments (4) | 5,820 | (1,068) | |||||||||||||||||||||
| AFFO available to common stockholders | $ | 949,716 | $ | 862,871 | |||||||||||||||||||
| AFFO allocable to dilutive noncontrolling interests | 2,401 | 1,359 | |||||||||||||||||||||
| Diluted AFFO | $ | 952,117 | $ | 864,230 | |||||||||||||||||||
| AFFO per common share: | |||||||||||||||||||||||
| Basic | $ | 1.07 | $ | 1.03 | |||||||||||||||||||
| Diluted | $ | 1.06 | $ | 1.03 | |||||||||||||||||||
| Distributions paid to common stockholders | $ | 711,824 | $ | 636,499 | |||||||||||||||||||
| AFFO after distributions | $ | 237,892 | $ | 226,372 | |||||||||||||||||||
| Weighted average number of common shares used for AFFO: | |||||||||||||||||||||||
| Basic | 891,666 | 834,940 | |||||||||||||||||||||
| Diluted | 895,033 | 837,037 |
(1)See reconciling items for Normalized FFO presented under “Funds from Operations Available to Common Stockholders ("FFO") and Normalized Funds from Operations Available to Common Stockholders ("Normalized FFO")".
(2)Includes the amortization of the purchase price allocated to interest rate swaps acquired in the Merger.
(3)Credit losses primarily relate to the impairment of financing receivables.
(4)Includes non-cash foreign currency losses (gains) from remeasurement to USD, mark-to-market adjustments on investments and derivatives that are non-cash in nature, obligations related to financing lease liabilities, and adjustments allocable to noncontrolling interests.
We believe the non-GAAP financial measure AFFO provides useful information to investors because it is a widely accepted industry measure of the operating performance of real estate companies that is used by industry analysts and investors who look at and compare those companies. In particular, AFFO provides an additional measure to compare the operating performance of different REITs without having to account for differing depreciation assumptions and other unique revenue and expense items which are not pertinent to measuring a particular company’s on-going operating performance. Therefore, we believe that AFFO is an appropriate supplemental performance metric, and that the most appropriate U.S. GAAP performance metric to which AFFO should be reconciled is net income available to common stockholders. Presentation of the information regarding FFO, Normalized FFO, and AFFO is intended to assist the reader in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO, Normalized FFO, and AFFO in the same way,
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so comparisons with other REITs may not be meaningful. Furthermore, FFO, Normalized FFO, and AFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as alternatives to net income as an indication of our performance. FFO, Normalized FFO, and AFFO should not be considered as alternatives to reviewing our cash flows from operating, investing, and financing activities. In addition, FFO, Normalized FFO, and AFFO should not be considered as measures of liquidity, our ability to make cash distributions, or our ability to pay interest payments.
PROPERTY PORTFOLIO INFORMATION
At March 31, 2025, most of the properties in our portfolio were leased under net lease agreements. A net lease typically requires the client to be responsible for monthly rent and certain property operating expenses including property taxes, insurance, and maintenance. In addition, clients of our properties typically pay rent increases based on: (1) fixed increases, (2) increases tied to inflation (typically subject to ceilings), or (3) additional rent calculated as a percentage of the clients' gross sales above a specified level.
We define total portfolio annualized base rent as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables, as of the balance sheet date, multiplied by 12, excluding percentage rent, interest income on loans and preferred equity investments, and including our pro rata share of such revenues from properties owned by unconsolidated joint ventures. We believe total portfolio annualized base rent is a useful supplemental operating measure, as it excludes properties that were no longer owned at the balance sheet date and includes the annualized rent from properties acquired during the quarter. Total portfolio annualized base rent has not been reduced to reflect reserves recorded as adjustments to U.S. GAAP rental revenue in the periods presented.
Top 20 Industry Concentrations
We are engaged in a single business activity, which is the leasing of property to clients, generally on a net basis. That business activity spans various geographic boundaries and includes property types and clients engaged in various industries. Even though we have a single segment, we believe our investors continue to view diversification as a key component of our investment philosophy and so we believe it remains important to present certain information regarding our property portfolio classified according to the business of the respective clients, expressed as a percentage of our total portfolio annualized base rent:
| Percentage of Total Portfolio Annualized Base Rent by Industry | ||||||||||||||||||||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
| Grocery | 10.3% | 10.1% | ||||||||||||||||||||||||||||||||||||||||||
| Convenience Stores | 9.9 | 10.2 | ||||||||||||||||||||||||||||||||||||||||||
| Dollar Stores | 6.3 | 6.4 | ||||||||||||||||||||||||||||||||||||||||||
| Home Improvement | 6.3 | 6.0 | ||||||||||||||||||||||||||||||||||||||||||
| Restaurants-Quick Service | 4.9 | 4.9 | ||||||||||||||||||||||||||||||||||||||||||
| Drug Stores | 4.6 | 4.7 | ||||||||||||||||||||||||||||||||||||||||||
| Automotive Service | 4.5 | 4.5 | ||||||||||||||||||||||||||||||||||||||||||
| Health and Fitness | 4.3 | 4.3 | ||||||||||||||||||||||||||||||||||||||||||
| Restaurants-Casual Dining | 3.9 | 4.0 | ||||||||||||||||||||||||||||||||||||||||||
| General Merchandise | 3.4 | 3.2 | ||||||||||||||||||||||||||||||||||||||||||
| Gaming | 3.2 | 3.2 | ||||||||||||||||||||||||||||||||||||||||||
| Home Furnishings | 3.0 | 2.8 | ||||||||||||||||||||||||||||||||||||||||||
| Health Care | 2.7 | 2.7 | ||||||||||||||||||||||||||||||||||||||||||
| Sporting Goods | 2.3 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||
| Apparel Stores | 2.3 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||
| Transportation Services | 2.3 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||
| Wholesale Clubs | 2.3 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||
| Theaters | 2.1 | 2.1 | ||||||||||||||||||||||||||||||||||||||||||
| Entertainment | 1.8 | 1.8 | ||||||||||||||||||||||||||||||||||||||||||
| Motor Vehicle Dealerships | 1.8 | 1.8 |
Property Type Composition
The following table sets forth certain property type information regarding our property portfolio as of March 31, 2025 (dollars and square footage in thousands):
| Property Type | Number of Properties | Leasable Square Feet (1) | Total Portfolio Annualized Base Rent | Percentage of Total Portfolio Annualized Base Rent | ||||||||||||||||||||||
| Retail | 14,989 | 216,321 | $ | 4,035,507 | 79.9 | % | ||||||||||||||||||||
| Industrial | 568 | 116,239 | 729,690 | 14.4 | ||||||||||||||||||||||
| Gaming | 2 | 5,053 | 162,635 | 3.2 | ||||||||||||||||||||||
| Other (2) | 68 | 4,190 | 124,230 | 2.5 | ||||||||||||||||||||||
| Total | 15,627 | 341,803 | $ | 5,052,062 | 100.0 | % |
(1)Represents leasable building square footage and includes our portfolio of unconsolidated joint ventures based on ownership percentage. Excludes 2,962 acres of leased land categorized as agriculture at March 31, 2025.
(2)"Other" primarily includes 14 properties classified as office with $35.9 million in annualized base rent, 27 properties classified as agriculture with $35.1 million in annualized base rent, 21 properties classified as country clubs with $25.1 million in annualized base rent, and three properties classified as data centers with $24.1 million in annualized base rent, as well as one land parcel under development.
Client Diversification
The following table sets forth the 20 largest clients in our property portfolio, expressed as a percentage of total portfolio annualized base rent, which does not give effect to deferred rent or interest earned on loans and preferred equity investments, at March 31, 2025:
| Client | Number of Leases | Percentage of Total Portfolio Annualized Base Rent (1) | ||||||||||||
| 7-Eleven | 825 | 3.4 | % | |||||||||||
| Dollar General | 1,754 | 3.3 | ||||||||||||
| Walgreens | 402 | 3.2 | ||||||||||||
| Dollar Tree / Family Dollar | 1,364 | 3.0 | ||||||||||||
| EG Group Limited | 414 | 2.1 | ||||||||||||
| Wynn Resorts | 1 | 2.0 | ||||||||||||
| Life Time Fitness | 38 | 1.9 | ||||||||||||
| FedEx | 82 | 1.9 | ||||||||||||
| (B&Q) Kingfisher | 62 | 1.8 | ||||||||||||
| BJ's Wholesale Club | 45 | 1.6 | ||||||||||||
| Asda | 39 | 1.6 | ||||||||||||
| Sainsbury's | 38 | 1.5 | ||||||||||||
| Tractor Supply | 223 | 1.3 | ||||||||||||
| Tesco | 26 | 1.2 | ||||||||||||
| CVS Pharmacy | 211 | 1.2 | ||||||||||||
| MGM (Bellagio) (2) | 1 | 1.2 | ||||||||||||
| LA Fitness | 65 | 1.2 | ||||||||||||
| Home Depot | 40 | 1.1 | ||||||||||||
| AMC Theatres | 39 | 1.0 | ||||||||||||
| Walmart / Sam's Club | 62 | 1.0 | ||||||||||||
| Total | 5,731 | 36.4 | % |
(1)Amounts for each client are calculated independently; therefore, the individual percentages may not sum to the total.
(2)Represents our proportionate share of the annualized base rent of the unconsolidated joint venture.
Lease Expirations
The following table sets forth certain information regarding the timing of the lease term expirations in our portfolio (excluding rights to extend a lease at the option of the client) and their contribution to total portfolio annualized base rent as of March 31, 2025 (dollars and square footage in thousands):
| Total Portfolio (1) | |||||||||||||||||||||||||||||
| Expiring Leases | Total Portfolio Annualized Base Rent | Percentage of Total Portfolio Annualized Base Rent | |||||||||||||||||||||||||||
| Year | Retail | Non-Retail | |||||||||||||||||||||||||||
| 2025 | 568 | 17 | $ | 124,524 | 2.5 | % | |||||||||||||||||||||||
| 2026 | 931 | 53 | 232,852 | 4.6 | |||||||||||||||||||||||||
| 2027 | 1,621 | 50 | 364,541 | 7.2 | |||||||||||||||||||||||||
| 2028 | 1,862 | 72 | 458,009 | 9.1 | |||||||||||||||||||||||||
| 2029 | 1,855 | 49 | 445,231 | 8.8 | |||||||||||||||||||||||||
| 2030 | 1,094 | 44 | 325,587 | 6.4 | |||||||||||||||||||||||||
| 2031 | 697 | 54 | 327,021 | 6.5 | |||||||||||||||||||||||||
| 2032 | 1,132 | 47 | 313,629 | 6.2 | |||||||||||||||||||||||||
| 2033 | 956 | 27 | 279,233 | 5.5 | |||||||||||||||||||||||||
| 2034 | 803 | 30 | 337,656 | 6.7 | |||||||||||||||||||||||||
| 2035 | 607 | 23 | 187,671 | 3.7 | |||||||||||||||||||||||||
| 2036 | 604 | 23 | 195,123 | 3.9 | |||||||||||||||||||||||||
| 2037 | 553 | 23 | 159,990 | 3.2 | |||||||||||||||||||||||||
| 2038 | 377 | 24 | 147,797 | 2.9 | |||||||||||||||||||||||||
| 2039 | 545 | 7 | 156,415 | 3.1 | |||||||||||||||||||||||||
| 2040-2143 | 1,983 | 125 | 996,783 | 19.7 | |||||||||||||||||||||||||
| Total | 16,188 | 668 | $ | 5,052,062 | 100.0 | % |
(1)Leases on our multi-client properties are counted separately in the table above.
Geographic Diversification
The following table sets forth certain geographic information regarding our property portfolio as of March 31, 2025 (square footage in thousands):
| Location | Number of Properties | Percent Leased | Approximate Leasable Square Feet | Percentage of Total Portfolio Annualized Base Rent | |||||||||||||||||||
| Alabama | 502 | 99 | % | 6,031 | 1.8 | % | |||||||||||||||||
| Alaska | 16 | 100 | 623 | 0.2 | |||||||||||||||||||
| Arizona | 292 | 99 | 4,663 | 1.8 | |||||||||||||||||||
| Arkansas | 308 | 100 | 3,511 | 0.9 | |||||||||||||||||||
| California | 381 | 99 | 15,022 | 4.9 | |||||||||||||||||||
| Colorado | 204 | 100 | 3,938 | 1.4 | |||||||||||||||||||
| Connecticut | 59 | 98 | 2,664 | 0.6 | |||||||||||||||||||
| Delaware | 26 | 100 | 283 | 0.1 | |||||||||||||||||||
| Florida | 1,083 | 99 | 13,624 | 5.3 | |||||||||||||||||||
| Georgia | 714 | 99 | 11,601 | 3.5 | |||||||||||||||||||
| Hawaii | 22 | 100 | 48 | 0.1 | |||||||||||||||||||
| Idaho | 40 | 98 | 403 | 0.2 | |||||||||||||||||||
| Illinois | 603 | 98 | 14,119 | 4.2 | |||||||||||||||||||
| Indiana | 489 | 99 | 12,371 | 2.5 | |||||||||||||||||||
| Iowa | 124 | 99 | 4,356 | 0.8 | |||||||||||||||||||
| Kansas | 217 | 99 | 5,635 | 1.0 | |||||||||||||||||||
| Kentucky | 445 | 99 | 7,030 | 1.5 | |||||||||||||||||||
| Louisiana | 379 | 100 | 5,921 | 1.7 | |||||||||||||||||||
| Maine | 113 | 99 | 1,396 | 0.5 | |||||||||||||||||||
| Maryland | 101 | 98 | 4,423 | 1.2 | |||||||||||||||||||
| Massachusetts | 217 | 100 | 7,885 | 3.9 | |||||||||||||||||||
| Michigan | 580 | 98 | 8,609 | 2.6 | |||||||||||||||||||
| Minnesota | 290 | 100 | 5,686 | 1.7 | |||||||||||||||||||
| Mississippi | 345 | 99 | 5,438 | 1.1 | |||||||||||||||||||
| Missouri | 444 | 98 | 6,829 | 1.8 | |||||||||||||||||||
| Montana | 30 | 100 | 401 | 0.2 | |||||||||||||||||||
| Nebraska | 89 | 99 | 1,342 | 0.3 | |||||||||||||||||||
| Nevada | 82 | 99 | 4,646 | 1.9 | |||||||||||||||||||
| New Hampshire | 70 | 99 | 1,307 | 0.4 | |||||||||||||||||||
| New Jersey | 156 | 97 | 2,692 | 1.3 | |||||||||||||||||||
| New Mexico | 145 | 100 | 2,160 | 0.7 | |||||||||||||||||||
| New York | 377 | 100 | 6,839 | 2.8 | |||||||||||||||||||
| North Carolina | 488 | 99 | 10,155 | 2.6 | |||||||||||||||||||
| North Dakota | 26 | 100 | 597 | 0.2 | |||||||||||||||||||
| Ohio | 844 | 96 | 22,774 | 4.2 | |||||||||||||||||||
| Oklahoma | 400 | 97 | 5,713 | 1.5 | |||||||||||||||||||
| Oregon | 43 | 95 | 751 | 0.3 | |||||||||||||||||||
| Pennsylvania | 368 | 99 | 7,419 | 2.0 | |||||||||||||||||||
| Rhode Island | 34 | 100 | 344 | 0.2 | |||||||||||||||||||
| South Carolina | 393 | 99 | 6,196 | 1.8 | |||||||||||||||||||
| South Dakota | 39 | 100 | 603 | 0.2 | |||||||||||||||||||
| Tennessee | 578 | 100 | 9,846 | 2.5 | |||||||||||||||||||
| Texas | 1,880 | 97 | 35,689 | 9.9 | |||||||||||||||||||
| Utah | 57 | 100 | 2,619 | 0.6 | |||||||||||||||||||
| Vermont | 19 | 100 | 175 | 0.1 | |||||||||||||||||||
| Virginia | 422 | 98 | 9,212 | 2.6 | |||||||||||||||||||
| Washington | 85 | 99 | 1,899 | 0.7 | |||||||||||||||||||
| West Virginia | 110 | 100 | 1,099 | 0.4 | |||||||||||||||||||
| Wisconsin | 327 | 100 | 8,494 | 1.8 | |||||||||||||||||||
| Wyoming | 24 | 100 | 195 | 0.1 | |||||||||||||||||||
| Puerto Rico | 6 | 100 | 59 | * | |||||||||||||||||||
| U.S. Virgin Islands | 1 | 100 | 38 | * | |||||||||||||||||||
| France | 28 | 100 | 1,407 | 0.3 | |||||||||||||||||||
| Germany | 4 | 100 | 190 | * | |||||||||||||||||||
| Ireland | 19 | 100 | 1,946 | 0.5 | |||||||||||||||||||
| Italy | 37 | 100 | 2,566 | 0.7 | |||||||||||||||||||
| Portugal | 5 | 100 | 142 | * | |||||||||||||||||||
| Spain | 98 | 100 | 8,051 | 1.3 | |||||||||||||||||||
| United Kingdom | 349 | 100 | 32,133 | 12.6 | |||||||||||||||||||
| Total/average | 15,627 | 99 | % | 341,803 | 100.0 | % | |||||||||||||||||
| •*Less than 0.1% |
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
For information on the impact of new accounting standards on our consolidated financial statements, see note 1, Summary of Significant Accounting Policies, to our Consolidated Financial Statements.
CRITICAL ACCOUNTING POLICIES
Our consolidated financial statements have been prepared in accordance with U.S. GAAP and are the basis for our discussion and analysis of financial condition and results of operations. Preparing our consolidated financial statements requires us to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. We believe that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. There have been no material changes to the Critical Accounting Policies disclosed in our annual report on Form 10-K for the year ended December 31, 2024. This summary should be read in conjunction with the more complete discussion of our accounting policies and procedures included in note 1, Summary of Significant Accounting Policies and Procedures and New Accounting Standards, to our consolidated financial statements in our annual report.
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