10-Q · May 6, 2026
Realty Income Corporation reported Q1 2026 earnings with total revenue of $1.55 billion, up 12.2% year-over-year, and EPS of $1.13, exceeding estimates of $1.10. The company also announced a dividend increase and…
Earnings analysis · 10-Q
O earnings analysis
Filed November 2, 2026 · Our reading of the company's report
The latest report
Realty Income delivered strong operating growth in Q3 2026, with revenue up 10.3% year over year to $1.622 billion, GAAP diluted EPS rising to $0.43, and AFFO per share increasing 3.7% to $1.12. Leasing metrics,…
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Realty Income delivered strong operating growth in Q3 2026, with revenue up 10.3% year over year to $1.622 billion, GAAP diluted EPS rising to $0.43, and AFFO per share increasing 3.7% to $1.12. Leasing metrics, occupancy, investment volume, and private-capital activity were favorable, while industrial and European rental revenue grew faster than the broader portfolio. However, higher impairments and credit-loss provisions, rising interest expense, $31.7 billion of debt, substantial investment cash outflows, and expected ATM share settlement offset the operating momentum, supporting a neutral assessment.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $0.43
What stood out
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Revenue accelerated on portfolio growth
Q3 2026 revenue increased 10.3% year over year to $1.622 billion from $1.471 billion and was approximately 13.4% above Q2 2026 revenue of $1.43 billion. Interest and dividend income on loans and preferred equity rose $53.9 million year over year to $105.0 million.
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EPS and AFFO improved
GAAP diluted EPS increased to $0.43 from $0.35 year over year and $0.37 in Q2 2026. AFFO per diluted share rose 3.7% year over year to $1.12, while AFFO available to common stockholders increased 7.0% to $1.061 billion.
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Same-store leasing remained positive
Same-store rental revenue increased $13.5 million year over year in Q3 to $1.188 billion. The company re-leased units at a 103.5% rent recapture rate, with new annualized base rent of $67.6 million versus prior annual rent of $65.3 million.
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Investment activity stayed strong
The company invested $2.6 billion during Q3 and $7.9 billion year to date, including 182 properties and other investments in Q3. Q3 investment had an initial weighted average cash yield of 6.8%, while year-to-date investment had a 7.1% yield.
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Liquidity platform expanded
Liquidity capacity expanded as revolving credit facilities increased to $5.5 billion from $4.0 billion and commercial paper capacity increased to $5.5 billion from $3.0 billion. At September 30, 2026, $5.4 billion was available on the RI facilities and the company reported compliance with its debt covenants.
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Occupancy and private capital advanced
Portfolio occupancy was 98.8% at September 30, 2026, with 182 properties available for lease or sale out of 15,536 properties. The company also completed the KKR joint venture, receiving $600.5 million from KKR for a 49% interest in European assets.
What to watch
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Higher vacancy-related impairments
Q3 impairment provisions increased to $111.6 million from $75.4 million year over year, primarily due to vacant and expected vacancies. The filing states that the impairment valuation used an 8.6% weighted average capitalization rate, and future cash-flow estimates remain highly judgmental.
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Credit losses are increasing
Credit-loss provisions rose to $14.2 million from $11.6 million year over year and totaled $60.6 million for the first nine months versus $31.9 million in the prior-year period. Management attributed the increase partly to deterioration in the creditworthiness of certain clients.
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Leverage and near-term maturities
Total consolidated debt was $31.7 billion at September 30, 2026, while cash and cash equivalents were $368.5 million. Commercial paper borrowings of $1.5 billion were scheduled to mature between October 2026 and November 2026, creating refinancing exposure.
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Growth requires substantial capital
Operating cash flow was $2.946 billion for the first nine months, versus $7.005 billion of investing cash outflows, including $5.580 billion of real estate investment and $1.922 billion of loan and preferred-equity investments. The filing does not report free cash flow, but the cash-flow profile indicates substantial external capital needs for growth.
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Potential ATM dilution
The company had 18.5 million shares subject to unsettled forward sale confirmations, representing expected net proceeds of approximately $1.1 billion, and expected to settle the agreements by December 30, 2026. This creates potential equity dilution for existing shareholders.
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Higher borrowing costs
Interest expense increased 13.3% year over year to $333.6 million in Q3, primarily because average borrowings increased to $32.0 billion from $28.9 billion. Management disclosed that a 1% change in rates on variable-rate debt would change annual interest costs by $21.3 million.
Management's outlook
The 10-Q does not provide new quantitative annual revenue or EPS guidance. The previously disclosed 2026 guidance changes were reported in the November 2, 2026 earnings release rather than in this filing.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.