TenQ

The Realty Income story

Realty Income owns shops and warehouses leased to single tenants and pays monthly dividends, with the central question being whether expansion into more properties, lending and joint ventures can sustain growth per share.

Written from Realty Income's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $55.35share price, last close
  • $52.4Bmarket value
  • 16/36TenQ Score checks passed

The story in brief

  • Per share progress. Adjusted funds from operations, or AFFO, per share rose 3.8% to $1.09 in the quarter to June 2026, supporting higher guidance for 2026.
  • Rents held firm. Occupancy was 98.8% at June 30, 2026, while rent recapture of 102.7% meant properties leased again during the quarter earned more rent than under their previous leases.
  • Dividend coverage differs. Dividends represented 74.5% of diluted AFFO in the quarter to June 2026, but TenQ's separate FFO test shows coverage of interest plus distributions at 0.91x.

What drives the business

  • Realty Income's core business is owning freestanding commercial properties under long leases, with tenants typically paying taxes, insurance and maintenance and many contracts including scheduled rent increases.
  • At June 30, 2026, it owned or held interests in 15,588 properties leased to 1,798 clients across 92 industries, with approximately 8.6 years remaining on leases on average.
  • Expansion beyond traditional property ownership includes a $6 billion hyperscale data center joint venture, an investment management platform and construction loans in Mexico linked to its strategic partnership with GIC.
  • In the quarter to June 2026, Realty Income invested $2.6 billion, including $2.1 billion at its proportionate ownership share, at an initial weighted average cash yield of 7.3%.
  • Access to financing supports that expansion, with revolving credit facilities and commercial paper programs expanded to $5.5 billion each in July 2026, followed by a $1.0 billion offering of 3.750% convertible senior notes due 2031 in August 2026.

What the price assumes

TenQ does not measure the growth implied by Realty Income's $55.35 share price through a reverse DCF because a property trust's free cash flow does not measure what it earns.

Its FFO yield of 6.9% clears TenQ's 5.0% threshold, although only 2 of 6 Value checks pass.

Revenue grew 10.9% over the last twelve months, below its 19.8% annual pace over the last three years, and TenQ's per share growth check records FFO per share growth of -5.8%.

What could change the story

  • Expansion depends on access to debt and equity funding, making financing costs important alongside $26.5 billion of total debt and $553 million of cash and short-term investments.
  • The share count rose 48.4% over the last three years, a constraint on translating portfolio growth into growth per share, although Realty Income repurchased approximately 3.0 million shares alongside the August 2026 convertible offering.
  • TenQ's failed interest-plus-distributions coverage check highlights a funding constraint that is not captured by the dividend's share of quarterly AFFO alone.
  • Single-tenant properties lose their rental stream when tenants leave, while lending and joint ventures introduce credit risk and arrangements that may limit Realty Income's control over underlying investments.

What to watch next

  • The next releases will test Realty Income's raised 2026 AFFO per share guidance of between $4.44 and $4.45, representing approximately 4% growth at the midpoint, alongside planned investment volume of $10.0 billion.
  • Same store rent growth of 1.2% in the quarter to June 2026 provides a comparison for management's 2026 range of between 1.1% and 1.3%, with occupancy expected at approximately 98.5%.
  • Investment yields, financing costs and the diluted share count will show how much expansion contributes per share, while dividend coverage will show how much AFFO remains after monthly payments.

Sources

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