Realty Income Corporation O reported second-quarter 2026 adjusted funds from operations (AFFO) of $1.09 per share, which improved 3.8% year over year and was in line with the Zacks Consensus Estimate.
The quarter benefited from active capital deployment. The company raised its 2026 FFO guidance. Total revenues rose 9.7% to $1.55 billion and beat the consensus mark of $1.54 billion.
Management highlighted announcement of a $6 billion hyperscale data center joint venture and the continued expansion of Realty Income Investment Management. Fitch Ratings also assigned the company an “A” long-term issuer rating with a stable outlook.
Realty Income Keeps Capital Deployment Elevated
Realty Income invested $2.57 billion during the quarter, or $2.07 billion at its pro-rata share. The initial weighted average cash yield was 7.3%.
Real estate acquisitions totaled $1.80 billion, while development investments were $135.4 million. Other investments, including various loans across the United States and Europe, came in at $628.7 million and carried a 9.2% initial weighted average cash yield.
The company also sold 80 properties for net proceeds of $160.7 million. These transactions generated a $38.3 million gain on real estate sales.
Realty Income Maintains Strong Leasing Metrics
The company ended the quarter with interests in 15,588 properties leased to 1,798 clients across 92 industries. The weighted average remaining lease term was about 8.6 years. Portfolio occupancy remained high at 98.8%, up 20 basis points year over year.
The same-store rental revenues increased 1.2% on a constant-currency basis. Realty Income achieved a 102.7% rent recapture rate on re-leased properties. New annualized base rent on those units totaled $110.3 million versus prior annual rent of $107.4 million.
Realty Income Benefits From Broader Income Sources
Rental revenues, including reimbursements, increased to $1.43 billion from $1.34 billion in the prior-year quarter. Interest income on financing receivables was nearly flat at $32.0 million.
Interest and dividend income on loans and preferred equity investments climbed to $88.5 million from $39.5 million. This increase reflected Realty Income’s wider use of credit investments alongside traditional property acquisitions.
Realty Income Sees Mixed Cost Trends
Interest expense increased to $312.1 million from $283.8 million a year ago. General and administrative expenses also rose to $57.6 million from $49.3 million. However, provisions for real estate impairment fell sharply to $54.2 million from $142.3 million.
Realty Income Retains Ample Liquidity
Realty Income had $3.47 billion of total available liquidity at its pro-rata share as of June 30, 2026. Net debt to annualized pro forma adjusted EBITDAre was 5.4X.
During the quarter, the company raised $843.0 million from common stock sales, mainly through forward sales under its at-the-market program. As of Aug. 5, unsettled forward sales represented about $1.3 billion in expected net proceeds.
The annualized dividend was $3.252 per share at quarter-end. Dividends paid during the quarter represented 74.5% of AFFO per share.
Subsequent to quarter-end, Realty Income issued €600 million of 3.625% senior unsecured notes due in July 2032. It also expanded both its unsecured revolving credit facilities and global commercial paper programs to $5.5 billion.
Realty Income Raises 2026 Outlook
The company increased its 2026 AFFO guidance to $4.44-$4.45 per share from $4.41-$4.44. The revised range implies about 4% growth at the midpoint. The Zacks Consensus Estimate is pinned at $4.45, which lies at the upper end of the guided range.
Realty Income also raised its full-year investment-volume outlook to $10.0 billion from $9.5 billion. Same-store rent growth is now projected at 1.1%-1.3% compared with the prior range of 1.0%-1.3%, while occupancy is still expected to be about 98.5%.
O’s Zacks Rank
Realty Income currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Retail REITs
Federal Realty Investment Trust FRT reported second-quarter 2026 core FFO per share of $1.88, up 6.8% year over year and ahead of the Zacks Consensus Estimate of $1.85. Results reflected higher rental income, record comparable leasing volume and growth in adjusted comparable property operating income (POI).
Regency Centers Corporation REG reported second-quarter 2026 NAREIT FFO per share of $1.21, beating the Zacks Consensus Estimate of $1.20. The results reflected solid leasing demand, with same-property NOI advancing 3.8%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Realty Income Corporation (O): Free Stock Analysis Report
Federal Realty Investment Trust (FRT): Free Stock Analysis Report
Regency Centers Corporation (REG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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