Realty Income Corporation (O) Earnings Call Transcript & Summary

We appreciate everyone being on this call about Realty Income's operating results for the fourth quarter and the entire 2025 year. Present to talk about how we did are Sumit Roy, our President and Chief Executive Officer; Jonathan Pong, who serves as Chief Financial Officer and Treasurer; Neil Abraham, President of Realty Income International; and Mark Hagan, our Chief Investment Officer. On this call, certain remarks we make could fall under the category of forward-looking statements per federal securities law. What actually happens for the company down the road might be materially different from anything addressed in those forward-looking statements. The factors behind possible differences will be spelled out more thoroughly in the company's filing on Form 10-K. While we take questions, a limit of 2 questions will be in effect. Should you wish to pose more questions, you are welcome to get back into the queue. I'll now hand things over to Sumit Roy, our CEO.

Thanks, Lauren, and hello, everybody. During 2025, our platform, discipline, and global reach converged, producing consistent results and setting Realty Income up for its next phase of growth. For the fourth quarter, AFFO per share came in at $1.08, and for the entire year it was $4.28, underpinned by 98.9% occupancy and 103.9% rent recapture, which underscores how stable and diverse our cash flows are. During Q4, we put roughly $2.4 billion to work, or $2.3 billion on a pro rata basis for our ownership stake, achieving a 7.1% initial cash yield, fueled by robust opportunities across Europe and by completing our $800 million perpetual preferred investment alongside Blackstone in the Las Vegas City Center real estate assets. For the full year, our deployment totaled roughly $6.3 billion — about $6.2 billion on a pro rata basis — carrying a 7.3% initial cash yield, while investment-grade customers accounted for 30% of acquisition cash income. On the disposition side, we sold 425 properties for approximately $744 million, a move that enhanced portfolio quality and freed up capital for redeployment into higher-return opportunities. Staying true to our disciplined approach, we confront client-specific risks directly; with At Home, having caught store-level trends early, we began divesting select assets ahead of its Chapter 11 filing. Over the 18 months leading up to that filing, we disposed of eight properties for nearly $80 million, which meaningfully reduced our exposure. When it came to the remaining 31 locations, we achieved a blended recapture rate just over 80%, which matches the pattern we've typically observed in bankruptcy results. Only a single rejection occurred, and that matter was resolved in Q4. Given that the company now runs on what we view as a more solid financial foundation, we think our decision to act early, our rigorous approach to underwriting, and our hands-on management of assets have protected value over the long haul. The At Home episode also illustrates how our in-house predictive analytics tool steers us toward taking initiative. Through store-level insight, we gained an early view of operating results, but by leveraging wider predictive analytics to assess closure risk, the durability of rent, and how easily real estate can be repurposed, we're able to pinpoint which properties posed greater long-term hazards. Teaming up with the asset management group, we were able to offload certain riskier properties on favorable terms and dramatically reduce our footprint ahead of the bankruptcy filing. When that filing ultimately occurred, our review validated how resilient the properties we retained would prove to be. That same approach guides the way we manage the broader portfolio. During the fourth quarter, we booked $18.9 million in lease termination income, a reflection of how proactively we address possible credit concerns and renewal exposure. In cases where a path toward higher and better uses is evident, we continue to seek out terminations as well. Moves like these allow us to protect value over the long term while managing our exposure carefully across the entire portfolio. Overseas, the platform we've built remains a source of competitive strength. We've noted previously that compelling opportunities continue to emerge in Europe when you weigh risk against reward, and we consistently evaluate whether other markets make sense for extending the advantages created by our competitive moat. In the past month, we entered Mexico — that move forms part of a broader strategic partnership with GIC — and under that arrangement we provide the bulk of build-to-suit development financing along with a takeout commitment amounting to $200 million, connected to a high-quality industrial portfolio denominated in U.S. dollars. This stands as another example of how our scale, our cross-border reach, and our balance sheet open up new swim lanes of growth, executed in a disciplined and repeatable fashion. Within our global approach, we are entering Mexico carefully, with partnerships as the foundation, collaborating with GIC and Hines; through this framework, we can finance build-to-suit projects at attractive effective yields, using forward commitments at capitalization rates that compare favorably to U.S. properties, while preserving our intended risk-adjusted returns. Initially, our scope is limited and rolled out in stages, centered on Mexico City and Guadalajara, key logistics hubs with strong supply-demand dynamics, consistent rent appreciation, and tenants rated investment-grade. Our investments consist of mission-critical, build-to-suit facilities of institutional caliber, leased in U.S. dollars. Looking ahead, we view Mexico as a long-term strategic winner from nearshoring and plan to grow in a targeted manner as market conditions further develop. We're also taking into account what's happening on the ground right now, such as closer cooperation between authorities in Mexico and the U.S., which could help create a steadier operating environment down the road. Even though conditions in the near term are still shifting and market sentiment is liable to swing around, we think this underscores why our entry has been phased and built around partnerships, and why we hold long-term confidence in Mexico's industrial fundamentals. In addition to moving into Mexico, the U.S. portion of the joint venture with GIC that we previously announced is now being carried out under a comparable structure. Through this partnership, Realty Income and GIC will develop properties on a programmatic basis totaling approximately $1.5 billion, mostly industrial build-to-suit. Earlier this month, our joint venture completed its inaugural deal — a $58.5 million commitment — together with an agreement to forward-purchase a contemporary industrial asset located in Dallas, which is occupied by a Fortune 500 logistics services customer. This opening transaction illustrates how the build-to-suit and financing pieces of this partnership function in real life, serving mission-critical clients, generating interest income throughout the development phase, and establishing a transparent route to owning high-quality real estate, shared with GIC, a like-minded long-term investor. One hallmark of Realty Income's development is combining our operating platform with capital that is diversified and partnership-focused; this orientation toward relationships keeps molding how we source deals. Roughly 89% of the deals we completed in the fourth quarter came through channels driven by relationships, which highlights how deep our network of clients and partners runs. Beyond the GIC alliance, we deepened ties with Blackstone by way of an $800 million perpetual preferred equity interest in Las Vegas City Center — the second joint venture we've formed with Blackstone involving a top-tier Las Vegas Strip casino deal. Because this asset carries such strategic weight for MGM, the structure delivers appealing risk-adjusted returns alongside downside protection, plus a right of first offer on an iconic Las Vegas Strip property, which shows we can pull off sizable, structured transactions built on relationships. As we move into 2026, what we anticipate is a stable core operation, one backed by careful capital deployment, solid occupancy levels, and a project backlog showing off both how deep our sourcing capabilities run and how adaptable our multi-product structure is; leveraging worldwide connections, key alliances, and channels for private capital, our goal is to chase top-tier prospects spanning different regions and financing arrangements. On strategy, three areas of focus shape where we put capital during 2026. The first is to strengthen ties with clients in situations where we can serve as a solutions partner, especially within mission-critical, retail, and industrial spaces, and more and more via development and structured solutions, such as through the GIC platform. The second is to expand what we can invest in by targeting repeatable, premium-quality adjacent areas that fit our approach to underwriting and produce dependable contractual revenue. As a one-stop shop for net lease solutions, our platform sits in a strong position to source and put together such deals. The third is to maximize capital efficiency through broadening where our equity comes from and preserving flexibility on the balance sheet, something Jonathan will detail further. Tying this all together, Realty Income at present functions as a comprehensive real estate capital supplier with worldwide scope, multi-product strengths, and a broader array of capital avenues fueling our expansion engine, underpinned by a top-tier portfolio producing steady and rising cash flows. The traction observed as 2025 came to a close, paired with the alliances and platforms we've built, highlights how powerful our flywheel is and our capacity to compound value over the long haul. With that said, I'll hand things over to Jonathan.

Thank you, Sumit. Hello, everyone, and good afternoon. From the standpoint of diversifying our capital base, 2025 proved to be a foundational year; we took great pride in rolling out our first-ever open-end fund here in the U.S., pulling in more than $1.5 billion of third-party equity from upwards of 40 institutional backers, including state, city, county, and employee pension funds, sovereign wealth funds, asset managers, foundations, and consultants. The reason we set up this open-end perpetual life vehicle is that this structure stood out as the most strategic, valuable, and fitting one for our long-duration net lease operation, which is recognized for its steadiness and absence of volatility. We feel humbled by how investors responded to our values, our performance record as a public company, our best-in-class human capital, and our unmatched access to proprietary data and insights across a seasoned global real estate portfolio spanning more than 15,500 properties. As Sumit noted earlier, we were likewise happy to put in place a programmatic strategic relationship with GIC, one that matches our operating platform with a long-term and disciplined capital partner. Although build-to-suit industrial development will be the primary focus of this partnership, we anticipate teaming up on many large-scale opportunities, since both sides share a focus on deploying capital at scale, enabling us to generate superior value for our respective stakeholders. Let me take a brief moment to underscore the broader design underlying these initiatives. Neither our GIC partnership nor the launch of our fund business is meant to contribute in just a single period; these are programmatic vehicles that widen our opportunity set today while building in embedded pathways for recurring compounding growth over time. Now to fourth-quarter highlights: we closed out the year with more than $4.1 billion of liquidity on a pro rata basis, alongside a net debt to pro forma adjusted EBITDA ratio of 5.4 times, sitting squarely inside our long-term target range. After year-end, we completed our inaugural convertible note offering, generating gross proceeds slightly above $862 million through a three-year convertible note at 3.5%. We directed $102 million of those proceeds toward buying back 1.8 million shares of common stock, which lowered potential share dilution and let us minimize the effect on the stock price while pricing the transaction. The rest of the proceeds went toward repaying a $500 million note maturity in January carrying a 5.05% rate, which means immediate earnings accretion resulted from the exercise. Our balance sheet is set up to play offense on the investment front in 2026; we finish the year with cash and unsettled forward equity amounting to roughly $1.1 billion. Combined with an annualized run rate exceeding $900 million in free cash flow, that gives us more than $2 billion of equity, or $3 billion of fully levered dry powder, to pursue an active deal pipeline; on top of that, we have about $400 million of undrawn third-party equity capital committed to our open-end fund. That contributes additional liquidity for deploying accretive capital at scale. Efficiency in operations stays a top focus; we closed out the year at a cash G&A margin of only 3.2%, all while bringing on skilled personnel throughout our worldwide company, which finished the year with close to 550 people across our vertically integrated platform. We take pride in our capacity to bring in excellent talent at every level of the organization, all while keeping one of the leanest cost margins in the sector. Moving to 2026 guidance, we're rolling out AFFO per share guidance of $4.38-$4.42, which reflects faster AFFO per share growth compared with 2025. Beyond the $8 billion investment guidance for the year, key assumptions in our model reflect solid underlying portfolio fundamentals and, specifically, incorporate credit-related loss of 40 to 50 basis points of revenue, a significant decrease from the 70 basis points we saw in 2025. We anticipate lease termination income will again be a significant earnings contributor in 2026, since we're projecting $30 million-$40 million given what we can currently see. As Sumit noted, this income comes from our proactive asset management work. We anticipate this income will stay a recurring component of our business. Our expense margins keep showing the efficiency of our operations; for 2026, we're guiding to unreimbursed property expense margin of roughly 1.5% of revenue. We anticipate cash G&A expenses will be only 20 to 23 basis points of gross asset value. Lastly, we expect to bring in about $10 million of base management fees from our open-end fund in 2026, which could shift somewhat based on how quickly capital calls happen for investments made in the fund. Now, to wrap up our prepared remarks, I'll hand it back to Sumit.

Thank you, Jonathan. Before we take questions from the line, allow me a quick recap. As Realty Income moves into 2026, its core operations remain resilient, its roster of capital partners has widened, and its worldwide pipeline of opportunities is deeper than it has ever been at any moment in the company's history. The venture we formed alongside GIC, the investment we made in a city center together with Blackstone, and the successful cornerstone capital raise for our first private fund — each of these speaks to how our business has developed and how our investment buy box has grown. We stayed strict when it came to underwriting, picky about where we put money to work, and committed to compounding long-term value on a per share basis. We can't wait to keep showing that our tested operating platform and our tireless dedication to producing durable income are held in high regard by the market. Operator, we're ready to take questions.

Hi, thanks for taking my questions. Realty Income has moved into various ways of raising capital and producing yield—new channels like private capital, additional JV partners, build-to-suit efforts, a range of geographies, and loans. How differently do you expect Realty Income to appear three to five years from now?

Linda, that's a great question. Clearly, everything you're seeing at present—in certain recent announcements we've made, and so on—has formed part of our strategy for a number of years now. If you consider the way Realty Income has developed, we were once a business that was entirely retail and centered solely on the US; over time, that produced, first, fresh investment channels sitting next to our core competency. We brought in the international business, we brought in additional asset types, and began concentrating on credit investments alongside our current client base, aiming to be seen as the single-stop provider of solutions for our clients. The next piece of this puzzle concerned how we funded our business. Clearly, on the fixed income side, as we expanded across multiple geographies, we could diversify where our fixed income capital came from. On the equity side, it was always our public markets here in the US, which has served us very well across our 31-year history as a public company. What the last couple of years have demonstrated is the volatility that can arise at certain moments in economic cycles; that somewhat restricts our capacity to fully employ a platform able to do roughly $10 billion of investment annually, which we've demonstrated in prior years. That was the question we asked ourselves internally: how do we begin to diversify where our equity capital comes from? How do we build partnerships enabling us to fully employ a platform constructed for scale and size? What you're seeing more recently, and what you'll keep seeing, is us leaning into these various capital sources, forming partnerships with like-minded, long-term investors such as GIC, working very closely with existing partners and strengthening those relationships, such as with Blackstone, who regard us as real estate partners that might potentially serve as a solution for them at certain moments. Three to five years from now, all of these different avenues, including the open-ended fund, the core plus fund we've put into place, I believe will be far more mature and will let us generate this growth profile that is far more commensurate with what our average growth profile has been across the last 30, 31 years. That is what I see unfolding over the next three to five years. Look, we've always been viewed as a company with the following two brands. Reliability and trust — those matter — and for a very long stretch, expansion has likewise been an integral piece of what Realty Income is about, that 5% rate of growth we've delivered over the years. Come 2025, the figure sat nearer to 2. What we're attempting to resolve, and I think we — you know, the market is beginning to recognize — you know, the way our size and scale can be leveraged to set us apart effectively and make us a business with a genuinely distinctive, you know, investable mousetrap, plus capital sources that let us reach that third component, growth. Trust, reliability and growth — those are why everything we do gets done. My belief is that within the coming three to five years, each of these avenues will have fully matured and will let us be the business we've historically been across the last 31 years.

Thanks, Sumit. I've got one for Jonathan; regarding the $8 billion acquisitions guidance for 2026, what cap rate are you anticipating, and which assumptions inform that outlook?

Hi, Linda, instead of providing cap rate guidance, I'd put it this way: we anticipate spreads, on a leverage neutral basis, to look pretty much like they did in 2025 and like they've looked over our history. Roughly 150 to 160 basis points versus that weighted average cost of capital, the short-term weighted average cost of capital.

Thanks.

Good afternoon, and thanks for taking my question. Maybe I'll just build on what was asked before, though from another angle: your acquisition cap rate moved lower on a sequential basis during the fourth quarter. Could you discuss what the cap rate environment currently looks like? Does that reflect the assets you're purchasing, or does it reflect competition? I'm simply trying to understand whether that acquisition cap rate is heading lower right now.

That's a good question, Michael. Look, I don't believe a 20 basis point shift in cap rates between one quarter and the next truly tells you much about the broader market. What actually closes during a quarter depends on so many factors. When you present an average cap rate across all investments completed, it kind of fails to capture how diverse the products we pursue really are. Clearly, some assets we acquire fall below that average cap rate, while others sit above it; what really matters is more about what happens to close in a particular quarter, and what slips into the following quarter, and that is what produces these 10 to 20 basis points of variation in average cap rates. Let me pull back and give you our view: if you look at recent quarters — I'd say 3, 4, 5 quarters — cap rates have stayed within that low 7% zip code. That mostly mirrors what's happening with the cost of capital and what's happening on the competitive side. Look, should the cost of capital keep getting better, I think cap rates will mirror that. Today, competition on the private side has mostly been fairly muted, again, because of the higher cost of debt present in the market. Were that to shift — and I'm not predicting it will — but were it to shift, you'd see additional competition arriving from the private side of the equation too. Those are the variables I'd watch to gauge where cap rates are headed over the next 12 months. I'll tell you that, across the last six quarters, the cap rate environment has remained fairly stable.

Understood, and thank you, Sumit. As a quick follow-up, could you perhaps discuss the G&A guidance? My understanding is you achieved 21 — that figure was 21 basis points between 2025 and 2026. The range you've given seems, at its midpoint, to tick upward somewhat. Could you walk us through, in a general sense, the reasons G&A might rise in a meaningful way? And perhaps that also captures certain investments the company is making. Where exactly are you putting money into the business at present?

Appreciate it, Mike. To begin, I'd note that the G&A approach we're now using for guidance is a percentage of GAV. The rationale there is that, as you know, some of our vehicles are consolidated while others are unconsolidated. Once you begin drawing on the revenue line in the income statement, the complete picture isn't provided. If you examine 2025 on a like-for-like basis, applying that GAV approach, we come in at roughly 21 basis points for cash G&A. Our guidance calls for 20 to 23. That isn't truly a significant shift. One point I'd make is that we've brought in a great deal of excellent talent to the team. We closed 2024 with roughly 468 employees. At the close of 2025, the number is around 544. That's about 76 people brought on board, weighted toward the latter portion of the year. In our view, we possess a highly robust competitive moat worldwide, and much of that added headcount sits overseas in Europe, and it's clear how significant Europe has proven for our expansion. That's something we take great satisfaction in. Looking at 2026, too, we do plan to add a handful of positions. When you consider a platform at present producing $5.3 billion-$5.4 billion in yearly base revenue, with more than 15,500 assets, and with intentions for substantial growth, we firmly believe we can recruit top-tier talent to scale the business while still maintaining one of the industry's most efficient G&A margins.

Thanks a lot, and best of luck for 2026.

Appreciate it, Mike.

Hello there, and thanks for having me on. So, for my opening question, could you assist me in connecting the dots on this AFFO guidance? I mean, the acquisition outlook is quite robust at $8 billion, which came in higher than anticipated, yet it seems to me that the AFFO projection might have fallen short of what the street had in mind. I'd like to know, what are the areas of caution embedded in your guidance, or what might the street be overlooking in this case?

Sure, John — what it really boils down to is the guidance on credit losses. When we talk about credit loss guidance sitting at 40 to 50 basis points of rental revenue, there's a decent amount of conservatism baked into that. Here we are in late February, and just like always, I think we'd prefer to gain a bit more visibility into how things are actually unfolding before we go ahead and tighten that guide and bring it down. If you work backwards to see what that translates to in terms of dollars, more than half of it relates to unidentified credits where, honestly, we don't see much of a high risk that they'll actually be used. That's likely the primary thing we'd call out.

All right, that clears things up quite a bit. Now for my follow-up, I want to circle back to the yields you were discussing a moment ago. With this extra $2 billion you're deploying — perhaps on top of the 6, so to speak — how should we frame it? Is this you entering different verticals, or...? What's the right way to think about the yields attached to that? Is it simply that the acquisition landscape has improved, yet cap rates on these added deals might be tighter? What is it that gives you the ability to increase leverage to that degree?

When I think about investments, yield isn't really the lens I use—spread is, since that's ultimately the thing that pushes our AFFO per share growth. I'd simply underwrite to our historical track record, and that's the 150 to 155 basis points of spread on that $8 billion. John, there are so many components that feed into that mix. For instance, what's the timing on that $8 billion? Clearly, the reason we've put out a, a pretty sizable figure is that our pipeline is very strong. We feel really good about what's going on in the U.S. and what's going on in Europe, and now what we're seeing in some of the additional geographies we've entered; that gives us a lot of confidence that, you know, we've finally reached a point where we can lean into the market, and we have, you know, all these various channels for financing our business that give us this confidence. That's the way I'd think about, you know, this $8 billion—it's a testament to how confident we are in the products we invest in. There are no new products that we'll be sharing with the market in the near future. These are products we've already invested in, and we'll continue to sort of lean into it, and that's what's going to make up the majority of the $8 billion.

Thanks.

Thanks. Good afternoon. Apologies once more — regarding that roughly $8 billion figure for investment volume guidance, could you clarify it, please? It seems that is at 100%, so perhaps walk us through what portion is wholly owned versus what sits in the private fund. Should we take it that the entire private fund gets deployed in the near term, and maybe break down the split between development and acquisitions, and do you also anticipate this being a heavy disposition year?

Excellent question, Joshua. We'll share a certain degree of visibility, but clearly it's a year that keeps shifting, and we'll watch how it unfolds; within our fund, $1.1 billion has already been deployed, assuming we reach our $1.7 billion, which we remain on track to achieve by the end of March, we hold roughly $600 million of dry powder, equity that still must be put to work. Clearly, we can apply some leverage to this instrument, and that is what will go toward the fund. What remains uncertain is how much additional capital can be raised following the cornerstone, and only time will tell. We'll set that to one side. Everything else will come from the balance sheet — that's how you ought to approach modeling our investment figures. Is that clear?

Yes. Is there anything you can share regarding dispositions?

Regarding dispositions, as you're aware, we came in at approximately $740 million for 2025. For 2026, you ought to anticipate a comparable figure. This is, once again, an area where we're beginning to push much harder, and the run rate across recent years is something you've observed. Yes, and that represents what we're aiming for in 2026.

Great. Thank you very much.

Sure.

Yes, thanks, everyone. Sumit, there are plenty of worries right now about how AI might affect pretty much every part of the economy. Recognizing that nothing is certain here, what's your take on the chance that AI disrupts things, judged against the portfolio you hold today? Does that shift in any way how you intend to put money to work down the road?

Brad, excellent question; our view of AI is that it's a wonderful instrument that lets us run our operations even more effectively as we move ahead; we began using AI-style tools among the earliest adopters back in 2019, and we've built machine learning tools of our own that are genuinely woven into each piece of what we do as a business now. We're reorganizing things on the inside in terms of how we approach all the information the company generates and the company pulls in, how that will all be structured, and so forth, into data lakes, and that in turn will let us speed up even more the take-up of AI across a range of distinct vertical functional parts of our operations, so we keep widening the gap between us and everyone else, between us and the other firms we come up against. This isn't a frightening thing for us. Plenty of people here at the company feel quite at ease with technology. A number of us spent earlier chapters of our careers in the tech world, and we're glad to see the innovation taking place. You're completely correct, Brad. The pace is extremely fast. Take something such as lease abstraction — around four months back it had a success rate of 80%, 82%, and now it's nearer to 90%. Those kinds of advances will keep happening, and the hardest thing for businesses will be figuring out how to build the infrastructure that lets you take advantage of AI and generate the benefits of scale. That's the direction the world is heading. We're sitting in a strong spot to take on this innovation, and from a maturity standpoint, I'd say we're considerably ahead of the curve, so bring it on.

All right, thank you for that. Jonathan, it's clear you've just wrapped up the convertible notes offering. Could you share your perspective on how this fits into the toolkit? Was it something tied specifically to the moment we were in, or do you see it becoming a more routine occurrence down the road?

Yes, Brett, as you put it, the way we looked at it was simply one more instrument in the toolkit. Flexibility matters to us; we believe in making use of, you know, the full menu of capital options at our disposal. You know, we have a reputation as a very active issuer of capital, and much of that is equity. When you consider the conversion premium, we managed to structure 20%, which brings you into the high $60 range, you know, thinking about issuing that on the ATM at spot versus effectively at a 20% premium, we were fine, you know, with that possibility within three years. I think I'd also point out, you know, our US dollar cost of debt on a 10-year basis stands at 5%, and the debt we're repaying, you know, was north of 5%. At 3.5%, we see that as, you know, an accretive use of proceeds compared to what we would otherwise have done. Something we'll examine from time to time, probably not to a significant degree, but when circumstances warrant, you know, we've now established ourselves in this market.

All right, thank you.

Hello, and thanks. I simply have a few additional items I'd like to raise regarding your guidance. Based on the midpoint, it appears that both your occupancy projections for the year and your same-store rent estimates have decreased somewhat. Could you perhaps elaborate on the assumptions underpinning those two components of the guidance?

Sure. Regarding the occupancy figure, Smeed, the number we provide is a physical occupancy figure, and when you've got a number of smaller concepts that essentially contain vacancies, those can shift the occupancy figure by the basis point changes we've discussed. Listen, we're fairly confident in the 98.5. And it will mostly depend on the kinds of expirations we encounter, along with the size of those assets set to expire in 2026, which are generally more, you know, smaller assets carrying fewer rents. As I recall, the 2026 expiration schedule represents roughly 3% of our rent. What determines how physical occupancy will appear in any particular year is really the types of assets, you know, that are expiring during that year. If you recall our 2025 guidance, I think it fell within a comparable range, maybe even a touch lower, and we finished at 98.9%; that's our guidance. We're quite at ease with it, and there may be some conservatism involved, but we would prefer to be conservative rather than incorrect.

Smeed, let me jump in on that same store point too — you know, when you look at the whole portfolio, it's running roughly a 1.5% CAGR, purely on a contractual basis. And with the guidance sitting at 1% to 1.3%, that's basically there to account for whatever credit-related losses we might or might not experience in 2026. Much of that stems from credit loss we haven't even identified yet, which may never materialize — it's a conservative approach. That's what drives most of it. I'd also mention that there are a tenant or two where restructuring happened during the fourth quarter, and the annualized effect of that is showing up in the 2026 guidance figure.

Thanks.

Hi, I've got 2 questions that should be quick. Regarding that investment guidance, would it still be accurate to state that, you know, between Europe and the U.S., that's where you're finding the most compelling chances for putting additional money to work? If you could just discuss which geographies, and even which parts of the capital structure, offer the best places to deploy those extra dollars, that would be great. Thanks.

Absolutely, Ron. When you examine the fourth quarter, the source of volume essentially flipped. Around 60%—very nearly 60%—came from the U.S., while 40% originated elsewhere globally. Before that period, Europe was the primary engine behind so much of that volume. Consider Europe: in 2025, with $6 billion in acquisitions, the activity was predominantly driven by our European efforts rather than what we did in the U.S. What I want you to remember is that during the fourth quarter and as we move into 2026, momentum is beginning to build in the U.S. too. Europe remains a place where we have substantial visibility, and our key differentiators—what we offer relative to competitors—keep generating a disproportionate share of volume for us. My belief is that throughout 2026 this will persist; and since Mexico has now been brought into the fold, I think you'll keep seeing us pursue opportunities and so forth. Purely from a mathematical standpoint, the more regions we bring in, the rationale for doing so is that it helps expand our TAM and enhances our capacity to source deals. This transition is simply a natural outgrowth of our constantly evolving business. That's the final point I'll leave you with. The encouraging news I'm seeing—and both Mark Hagan and Neil have conveyed the same to me—is that strong momentum exists across every geography where we currently operate; we anticipate 2026 being an outstanding year for us.

Okay. The next thing from me is, as you know, there's been plenty of discussion between us across the past 12 to 18 months regarding things like gaming, certain data centers, and a few retail parks. I'm simply attempting to take the temperature on how those sorts of opportunities are developing. Is a particular one turning out stronger compared with another? Is a particular one slipping behind? How exactly are those efforts progressing? Thank you.

Ron, that's an excellent question, and I'll do my best to keep this tight. Here's the thing — we told everyone we'd be extremely choosy when it comes to gaming. I think it's clear from where our gaming capital has gone that we've exercised exactly that kind of discipline. What sits beneath those investments — the assets we're exposed to — are, as some might put it, among the finest properties in the whole gaming sector; so that's one tick. Every one of them is delivering strong results. Nothing has caught us off guard. Honestly, I'd even go further: the Boston property, at the outset, came with a certain level of coverage that was already quite robust, yet looking at that coverage right now, it sits 100 basis points above the level we assumed when we first underwrote the deal. Once again, that's been a real positive. Our retail park approach is genuinely beginning to pay off. When you examine what our releasing spreads have looked like — we acquired some vacant space. Certain strategic discussions Neil and the team are holding with customers who have ambitious growth plans stretching across 2026 and past that point are now translating into the value creation we'd underwritten for. My view is that the majority of initiatives currently being carried out are significantly further along than what we'd originally assumed. So that's a second tick, and, as you know, we hold the longest-standing position in the U.K. retail park space, we've got a solid footprint in Ireland, and we're now beginning to test whether that identical playbook can work across the remainder of Europe. That approach has likewise earned a second tick. Data centers remain a segment where our focus on expansion is intense. As we've stated before, extreme selectivity is the rule. We'll ensure our partners are the finest developers in the category, and that the eventual exposure we carry to these assets rests on fundamentals solid enough to convince us they'll keep performing past that first lease period. If you examine where our money has gone and everything we've disclosed so far, I think it's fair to call that another double tick. Now, we'd like to speed up our data center deployment, yet we won't pursue that by accepting greater risk. Ron, all three of those segments you brought up stay absolutely central to what we're doing, and it remains the case — and it should — that you can count on further investment from us.

Thanks so much.

Sure.

Hi there, many thanks. To start, when you consider your cost of capital, the stock's done really strongly so far this year. I suppose what I'm wondering is, now that your equity cost of capital has gotten better, does that shift your view on the investment outlook in any way, and perhaps let you pursue real estate acquisitions more aggressively at somewhat lower cap rates while still keeping solid deal spreads? Just want your take on that.

Yeah. Look, we feel truly fortunate that the market is beginning to appreciate the value proposition we offer. The improvement in our cost of capital is an extra lever we're able to draw on. As for how we approach underwriting and how we approach risk-adjusted returns, that happens on an asset-by-asset basis. Being able to finance those assets more cheaply, I believe, naturally translates into wider spreads; it's also the case that we can go after assets that sit a bit further down the cap rate scale and still achieve our historical spreads, and that's something we'll explore. I don't think, Jay, that it alters how we approach underwriting assets. We're heavily focused on day one accretion. That's what our investors want, together with ensuring the overall return profile of that investment hits our long-term hurdle rates. None of that changes.

All right, that's helpful. I want to ask a follow-up about the private capital fund, the one with $1.5 billion of co-commitment committed to date. Should we anticipate a material contribution to bottom line earnings in 2026 from that private fund? Or does more of the AFFO earnings contribution get picked up in 2027?

Accretion shows up in June 2026 — the $10+ million in base management fees carries a pretty good margin. The costs Realty Income incurs to produce that are really the dedicated team we have, which today numbers about seven individuals, plus some other costs we bear at the Realty level. Margins are still, on a flow-through basis to Realty, somewhere in the 70+% area; that's because we've got a platform with 550 employees, so we don't have to build from scratch the way other subscale players would.

Okay, thanks very much.

Sure.

Hello. My apologies, Bill—this is the first one. Hello, this is Haendel St. Juste with Mizuho. Sumit, I'd like to revisit something you said before, when you mentioned that it would take another 3 to 5 years before all the adjustments you're implementing show up as genuine growth. What I'm wondering is whether you mean we ought to anticipate a growth trajectory from Realty Income over the coming years that resembles what you're projecting for this year, based on what you said regarding spreads, dispositions, lease term fees, and perhaps your thinking on levers available to potentially boost that growth in the near term? Thank you.

Yes. Handel, when I noticed the name, I was about to ask whether you'd formally changed it, but I think it... I'll say no more about that. Listen, all of our efforts go toward ensuring that those three words I spoke aloud—trust, reliability, and growth—remain tied to Realty Income. The past couple of years have represented somewhat of an anomaly regarding that third element; we began, as you know, developing channels to essentially return to a company capable of growing at a rate that keeps us among the most appealing businesses to put money into within the real estate space. That's the aim, Handel, and I think what you're beginning to observe now are those channels that possess no other finish line, and we can discuss that at greater length. Every single one was purposefully designed to determine how it might contribute, as you know, to earnings growth for the business. That's the reason we're doing what we're doing. I believe Linda's question involved a 3 to 5-year horizon. As you know, that's what I expect—that we, during that period, will not only have those channels fully developed, but they will begin making a significant contribution to our growth profile and bring us to levels we've reached before and hopefully even surpass it in certain years when we experience outsized growth, exactly as we've done historically. That's the aim.

Okay, thanks, everyone. That's everything from my side.