10-Q - REALTY INCOME CORP (0000726728) (Filer)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2026

or

☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-13374

REALTY INCOME CORPORATION

(Exact name of registrant as specified in its charter)

11995 El Camino Real, San Diego, California 92130

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (858) 284-5000

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of

the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant

was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        

Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be

submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for

such shorter period that the registrant was required to submit such files).  Yes  ☒  No  ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer,"

“accelerated filer,” "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended

transition period for complying with any new or revised financial accounting standards provided pursuant to

Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes  ☐  No  ☒

As of October 28, 2026, there were 950,997,048 shares of common stock outstanding.

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REALTY INCOME CORPORATION

Index to Form 10-Q

September 30, 2026

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PART I.                             FINANCIAL INFORMATION

Item 1:          Financial Statements

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

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)

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, 2026 and 2025

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)

Nine months ended September 30, 2026 and 2025

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)

For supplemental disclosures, see note 16, Supplemental 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, 2026 (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, 2026, we owned or held interests in a diversified portfolio of 15,536 properties located in all 50

states of the United States ("U.S."), the United Kingdom ("U.K."), and eight other countries in Europe.

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, 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 only of 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, 2026 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, 2025, which are included in our 2025 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

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.

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As of September 30, 2026, we are considered the primary beneficiary of our U.S. Core Plus Fund (the "Fund"), our

strategic joint ventures with KKR & Co. Inc. ("KKR") and Apollo Global Management, Inc. ("Apollo"), 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 as of September 30, 2026 and December

31, 2025 (in thousands):

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. For further details, see note 9, Noncontrolling Interests.

Reclassifications. The 'Other revenue' line item from prior periods has been disaggregated into the following line

items: 'Interest income on financing receivables', 'Interest and dividend income on loans and preferred equity

investments', and 'Other' to provide further detail on amounts included as 'Other' in our consolidated statements of

income and comprehensive income. 'Provisions for impairment' has also been disaggregated into the following line

items: 'Provisions for impairment of real estate' and 'Provisions for credit losses on loans and financing receivables'

in our consolidated statements of income and comprehensive income. Finally, 'Investment in loans and financing

receivables, net' has been disaggregated from 'Other assets, net' on our consolidated balance sheets. Prior periods

have been reclassified to conform with the current period’s presentation.

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.

Net Income per Common Share. Basic net income per common share is computed by dividing net income

available to common stockholders by the weighted average number of common shares outstanding during each

period. Diluted net income per common share is computed by dividing net income available to common

stockholders, plus income attributable to dilutive shares and convertible common units for the period, by the

weighted average number of common shares that would have been outstanding assuming the issuance of common

shares for all dilutive common shares outstanding during the reporting period, including common shares required to

satisfy the exchange obligation for convertible notes under the if-converted method, assuming all such convertible

notes were converted at the beginning of the reporting period, or date of issuance, if later. For further details, see

note 15, Net Income per Common Share.

Income Taxes. We have elected to be taxed as a real estate investment trust ("REIT"), under Section 856 of the

U.S. Internal Revenue Code of 1986, as amended (the “Code”). 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. We are liable for taxes in our

applicable international territories and have made the appropriate provisions in those territories. Therefore, the

income taxes recorded in our consolidated statements of income and comprehensive income represent amounts for

U.S. income taxes on our TRS entities, city and state income and franchise taxes, as well as income taxes for the

applicable international territories.

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We recognize deferred income tax in our taxable subsidiaries, including certain international jurisdictions. Deferred

income tax assets and liabilities are generally the result of temporary differences between book and tax accounting,

such as timing differences caused by different useful lives used for depreciation. We provide for a valuation

allowance for deferred income tax assets if we believe some or all of the deferred income tax assets may not be

realized. We had $13.1 million and $4.3 million of net deferred tax liabilities as of September 30, 2026 and

December 31, 2025, respectively, which are reported in 'Other liabilities' on our consolidated balance sheets.

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 our client’s sales, or percentage rent, is

recognized only after our client exceeds its sales breakpoint. Rental increases based upon changes in the

consumer price indices are recognized only after the changes in the indices have occurred and are then applied

according to the lease agreements. Lease termination fees, which are included in rental revenue, are amortized

over the remaining term of the lease until we have no continuing obligation to provide services to such former client.

Contractually obligated rental revenue from our clients for recoverable real estate taxes and operating expenses is

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.

Other revenue includes certain property-related revenue not included in rental revenue. Interest income on financing

receivables includes interest income recognized on financing receivables for certain leases with above-market

terms.

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 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.

In addition to the client-specific collectability assessment conducted, we may also recognize a general allowance,

as a reduction to rental revenue, for our operating lease receivables which are not expected to be fully collectible.

We had $5.8 million and $5.1 million of general allowance as of September 30, 2026 and December 31, 2025,

respectively.

Loans Receivable. Our investments in loans are classified as held for investment and are carried at their amortized

cost basis. We recognize interest income on loans receivable using a method that approximates 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 that 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 have

made an accounting policy election to record accrued interest on our loan portfolio separate from our loan

receivable and other lending investments. These loans are presented in 'Investment in loans and financing

receivables, net' and the related interest receivable is presented in 'Other assets, net' on our consolidated balance

sheets.

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Acquisition, Development and Construction ("ADC") Arrangements. We originate loans to third-party

borrowers for the acquisition, development, and construction of real estate. Each ADC arrangement is evaluated in

accordance with ASC 310, Receivables, which involves the determination of whether an arrangement should be

accounted for as a loan receivable or as an equity method investment. This analysis is applied only where the

borrower entity is not subject to consolidation under ASC 810, Consolidation. Specifically, we first assess whether

we are expected to receive more than 50% of the expected residual profits from the project, defined as profit above

a reasonable lender return from the sale, refinancing, or other use of the property. If our expected participation in

residual profits exceeds 50%, the arrangement must be accounted for as an equity method investment. If our

expected participation is 50% or less, we further evaluate whether the arrangement exhibits characteristics more

consistent with a loan or an equity method investment. This evaluation involves judgment and considers various

factors, including the significance of borrower equity in the project, loan-to-cost and loan-to-value metrics relative to

market, the existence of guarantees or binding lease arrangements, and interest rate and fee terms relative to

market, among others. We reassess the classification of each ADC arrangement if facts and circumstances

subsequently change in a manner that could affect the initial classification. Any reclassification is applied

prospectively. As of September 30, 2026, we have determined that all of our ADC loan arrangements have

characteristics more consistent with a loan than an equity method investment, and accordingly account for them as

loan receivables.

Financing Receivables. For properties we acquire that qualify as sale-leaseback transactions and for which 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 'Investment in loans and financing receivables, net' on our consolidated balance

sheets. Rent payments are allocated between rental income and the financing receivable. Our net investments in

sales-type and direct financing leases are also accounted for as financing receivables. Interest income on financing

receivables is recognized using the interest rate implicit in the lease and presented within 'Interest income on

financing receivables' in our consolidated statements of income and comprehensive income.

Allowance for Credit Losses. The allowance for credit losses, which is recorded as a reduction to 'Investment in

loans and financing receivables, net' on our consolidated balance sheets, is based on our clients' respective credit

ratings, our historical experience, and the expected value of the underlying collateral upon its repossession. We

generally apply probability of default, discounted cash flow, or loss rate methods considering the risk characteristics

of each asset or pool. 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. The measurement of expected

credit losses is also applicable to off-balance sheet credit exposures such as unfunded loan commitments. The

allowance for credit losses attributed to unfunded commitments is included in 'Other liabilities' on our consolidated

balance sheets. Changes in our allowance for credit losses are presented in 'Provisions for credit losses on loans

and financing receivables' in our consolidated statements of income and comprehensive income. For further details,

see note 5, Investments in Loans and Financing Receivables.

Merger, Transaction, and Other Costs, Net. Merger, transaction, and other costs, net, includes (i) expensed

acquisition costs, including certain costs incurred for credit investment loans, (ii) organization costs for potential

strategic ventures and business lines, (iii) placement fees incurred in fundraising of the Fund, (iv) merger-related

transaction costs, and (v) other costs that do not align with the ongoing operations of our business. During the three

and nine months ended September 30, 2026, we incurred $2.7 million and $15.5 million, respectively, of merger,

transaction, and other costs, net consisting primarily of placement fees incurred in fundraising for the Fund and

certain strategic venture organization costs.

Equity Offering Costs. Underwriting commissions and offering costs have been reflected as a reduction of

additional paid-in capital on our consolidated balance sheets. Costs incurred in connection with the issuance of

noncontrolling interests, including direct and incremental costs associated with forming joint ventures and admitting

third-party investors, are capitalized as equity offering costs. Costs that are not directly attributable to the issuance

of equity are expensed as incurred.

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Recent Accounting Standards Not Yet Adopted. In September 2025, the Financial Accounting Standards Board

("FASB") issued Accounting Standards Update ("ASU") 2025-06, Intangibles—Goodwill and Other—Internal-Use

Software, which simplifies the capitalization guidance by removing references to software development project

stages and further updates so that the guidance considers various software development methods. The

amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim

reporting periods within those annual reporting periods, with early adoption permitted. The amendments in this

update permit an entity to apply the new guidance using a prospective, retrospective or modified transition

approach. While we are currently evaluating the impact of this pronouncement, we do not expect it will have a

material impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—

Expense Disaggregation Disclosures, requiring all public business entities to provide additional disclosure of the

nature of expenses included in the income statement. This ASU is effective for fiscal years beginning after

December 15, 2026, and for interim reporting periods beginning after December 15, 2027, on a prospective basis,

with early adoption permitted. While the adoption is not expected to have an impact on our financial statements, it is

expected to result in incremental disclosures within the footnotes to our consolidated financial statements.

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

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3.Investments in Real Estate

A.Acquisitions of Real Estate

Below is a summary of our acquisitions for the nine months ended September 30, 2026 (unaudited):