O | Q2 2025

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Overview

• FFO of $1.06 in-line.

• Revenue of $1.41B (+5.2% Y/Y) beats by $80M.

KEY Takeaways

• Realty Income invested $1.2B at a 7.2% initial cash yield, with 76% going to Europe.

• Europe remains attractive due to cheaper capital, better yields, and stronger deal terms.

• Overall deal flow hit a record $43B this quarter, but only 3% passed their strict screening process.

• Portfolio occupancy is 98.6%, with rent recapture at 103.4% on renewals.

• AFFO guidance for 2025 increased on the low end to $4.24–$4.28; expected investment for the year is ~$5B.

NOTES

Realty Income (O) turned in another steady quarter, proving once again that its mix of scale, diversification, and discipline is still a winning playbook.

The company invested $1.2 billion in the second quarter at a 7.2% initial cash yield, with roughly 76% of that going into Europe. Management spent much of the Q&A explaining why the region is so attractive right now—cheaper capital, better yields, and stronger deal terms—and how they’re building a private capital platform to capture deals that don’t fit the public balance sheet.

They see this as a way to boost returns and keep growth steady through different market conditions. For now, they expect the Europe/U.S. split to stay about the same, though a drop in U.S. interest rates could make domestic deals more appealing.

U.S. investment was smaller at $282 million, but that was by design—they passed on $3.7 billion worth of potential deals that didn’t meet their return targets.

Overall, deal flow was huge. Realty Income sourced a record $43 billion in opportunities this quarter—matching all of 2024 in just three months—but only about 3% made it through their strict screening process. Part of that surge came from new areas like data centers and private credit solutions, which give them more ways to put money to work beyond traditional net lease real estate.

Unsurprisingly, the portfolio is holding strong. Occupancy sits at 98.6%, and rent recapture is running at 103.4% on renewals. For 2025, they raised the low end of their AFFO guidance to $4.24–$4.28 and now expect to invest around $5 billion for the year.

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