⁽¹⁾

⁽¹⁾In July 2020, we issued $350 million of 3.250% senior unsecured notes, which constituted a further issuance of, and formed a single series with, the $600 million senior notes issued in May 2020. See note 21, Subsequent Events.

⁽²⁾Represents the principal balance (in U.S. dollars) of the Sterling-denominated private placement of £315.0 million converted at the applicable exchange rates on June 30, 2020, and December 31, 2019, respectively.

~~Represents the principal balance (in U.S. dollars) of the Sterling-denominated private placement of £315.0 million based on the applicable exchange rate on June 30, 2019.~~

The following table summarizes the maturity of our notes and bonds payable as of June 30, ~~2019,~~2020, excluding net unamortized original issuance premiums and deferred financing costs (dollars in millions):

Year of Maturity Principal
2021 $ 250
2022 950
2023 750
Thereafter 4,350
Totals $ 6,300


Year of Maturity	Principal
2022	$	950
2023	750
2024	350
Thereafter	4,591
Totals	$	6,641

As of June 30, ~~2019,~~2020, the weighted average interest rate on our notes and bonds payable was ~~3.9%~~3.8% and the weighted average remaining years until maturity was ~~8.8~~8.3 years. All of our outstanding notes and bonds payable have fixed interest rates and contain various covenants, with which we remained in compliance as of June 30, ~~2019.~~2020. Additionally, interest on all of our senior unsecured note and bond obligations is paid semiannually.

B.Note Repayment

In January ~~2018,~~2020, we ~~repaid~~completed the early redemption on all $250.0 million in principal amount of our ~~$350 million of~~ outstanding ~~2.000%~~5.750% notes due January 2021, plus accrued and unpaid ~~interest upon maturity.~~

interest. As a result of the early redemption, we recognized a $9.8 million loss on extinguishment of debt on our consolidated statement of income for the six months ended June 30, 2020.

C.Note Issuances

In May ~~2019,~~2020, we issued ~~£315~~$600.0 million of ~~2.730%~~3.250% senior unsecured notes due ~~May 2034,~~January 2031, or the ~~2034~~2031 Notes. The public offering price for the 2031 Notes ~~through a private placement.~~was 98.987% of the principal amount, for an effective yield to maturity of 3.364% and gross proceeds of $593.9 million.

In June 2019, we issued ~~$500~~$500.0 million of 3.250% senior unsecured notes due June 2029, or the 2029 Notes. The public offering price for the 2029 Notes was ~~99.36%~~99.359% of ~~the~~ principal amount, for an effective yield to maturity of 3.326% and ~~net~~gross proceeds of ~~approximately $492.2~~$496.8 million.

In ~~April 2018,~~May 2019, we issued ~~$500~~£315.0 million of ~~3.875% senior~~2.730% unsecured notes due 2025, or the 2025 Notes. The public offering price for the 2025 Notes was 99.50% of the principal amount, for an effective yield to maturity of 3.957% and net proceeds of approximately $493.1 million.May 2034, through a private placement.

The ~~net~~ proceeds from each of these offerings were used to repay borrowings outstanding under our credit facility, to fund investment opportunities, and for other general corporate purposes.


9.	~~Issuances of Common Stock~~

A.9.Issuances of Common Stock

A. Issuance of Common Stock in an ~~Overnight~~ Underwritten Public Offering

In ~~May 2019,~~March 2020, we issued ~~12,650,000~~9,690,500 shares of common stock in an ~~overnight~~ underwritten public ~~offering.~~offering, including 690,500 shares purchased by the underwriters upon the exercise of their option to purchase additional shares. After deducting underwriting discounts and other offering costs of ~~$31.0~~$21.2 million, the net proceeds of ~~$845.1~~$728.9 million were used to repay borrowings under our credit facility, to fund investment opportunities, and for other general corporate purposes.

B. At-the-Market (ATM) Program

Under our "at-the-market" equity distribution plan, or our ATM program, up to 33,402,405 shares of common stock may be offered and sold (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the New York Stock Exchange ("NYSE: O") at prevailing market prices or at negotiated prices. At June 30, 2020, we had31,891,256shares remaining for future issuance under our ATM program. We anticipate maintaining the availability of our ATM program in the future, including the replenishment of authorized shares issuable thereunder.

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The following table outlines common stock issuances pursuant to our ATM program (dollars in millions):


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Shares of common stock issued under the ATM program	1,511,149		1,706,695		1,511,149		1,706,695
Gross proceeds	$	95.7	$	124.2	$	95.7	$	124.2

C. Dividend Reinvestment and Stock Purchase Plan

Our Dividend Reinvestment and Stock Purchase Plan, or our DRSPP, provides our common stockholders, as well as new investors, with a convenient and economical method of purchasing our common stock and reinvesting their distributions. Our DRSPP also allows our current stockholders to buy additional shares of common stock by reinvesting all or a portion of their distributions. Our DRSPP authorizes up to 26,000,000 common shares to be issued. ~~During the second quarter of 2019,~~At June 30, 2020, we ~~issued 27,520~~had 11,573,851 shares ~~and raised approximately $1.9 million~~remaining for future issuance under our DRSPP. During the first six months of 2019, we issued 59,418 shares and raised approximately $4.1 million under our DRSPP. During the second quarter of 2018, we issued 47,128 shares and raised approximately $2.5 million under our DRSPP. During the first six months of 2018, we issued 93,061 shares and raised approximately $4.8 million under our DRSPP. From the inception ofDRSPP program.

The following table outlines common stock issuances pursuant to our DRSPP ~~through June 30, 2019, we have issued 14,289,228 shares and raised approximately $675.0 million.~~program (dollars in millions):


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Shares of common stock issued under the DRSPP program	44,817		27,520		78,817		59,418
Gross proceeds	$	2.4	$	1.9	$	4.8	$	4.1

Our DRSPP includes a waiver approval process, allowing larger investors or institutions, per a formal approval process, to purchase shares at a small discount, if approved by us. We did not issue shares under the waiver approval process during the first six months of ~~2019~~2020 or ~~2018.~~2019.

~~C. At-the-Market (ATM)~~ ~~Programs~~

Under our "at-the-market" equity distribution plan, or our ATM program, shares of common stock may be offered and sold (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the NYSE at prevailing market prices or at negotiated prices. Our ATM program authorizes up to 28,961,855 common shares to be issued. During the second quarter and first six months of 2019, we issued 1,706,695 shares and raised approximately $124.2 million under the ATM program. During the second quarter and first six months of 2018, we issued 5,575,273 shares and raised approximately $298.0 million under the ATM program. From the inception of our current and prior ATM programs through June 30, 2019, we have issued 35,252,834 shares and raised $2.1 billion. At June 30, 2019, we had 18,747,166 shares remaining for future issuance under our ATM program.

10. Noncontrolling Interests

~~In January 2013,~~The 2 noncontrolling interests in entities that we ~~completed our acquisition of ARCT. Equity issued as consideration for this transaction included common and preferred~~consolidate include an operating partnership, units issued by Tau Operating Partnership, L.P., or Tau Operating Partnership, the consolidated subsidiary which owns properties acquired through the ARCT acquisition. In January 2019, we redeemed all 317,022 remaining common units of Tau Operating Partnership for cash, and paid off the outstanding balance and interest on the $70.0 million senior unsecured term loan entered in January 2013 in conjunction with our acquisition of ARCT. Following the redemption, we hold 100% of the ownership interests of Tau

~~Operating Partnership and continue to consolidate the entity. As part of this transaction, our taxable REIT subsidiary, Crest Net Lease, obtained a 0.11% interest in Tau Operating Partnership.~~

~~In June 2013, we completed the acquisition of a portfolio of properties by issuing common partnership units in~~ Realty Income, L.P. ~~as consideration for the acquisition. Additionally, in March 2019~~, and in March and April 2018, we completed the acquisitions of additional properties, by paying both cash and by issuing additional common partnership units in Realty Income, L.P as consideration for the acquisitions. At June 30, 2019, the remaining units from these issuances represent a ~~1.9% ownership in Realty Income, L.P. We hold the remaining 98.1% interests in this entity and consolidate the entity.~~

Neither of the common partnership units have voting rights. Both common partnership units are entitled to monthly distributions equal to the amount paid to common stockholders of Realty Income, and are redeemable in cash or Realty Income common stock, at our option, and at a conversion ratio of one to one, subject to certain exceptions. Noncontrolling interests with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the issuer, were evaluated to determine whether temporary or permanent equity classification on the balance sheet was appropriate. We determined that the units meet the requirements to qualify for presentation as permanent equity.

~~In 2016, we completed the acquisition of two properties by acquiring a controlling interest in two separate entities. In December 2018, we~~joint venture acquired all of the outstanding minority ownership interests associated with one of these entities. We are the managing member of the remaining entity, and possess the ability to control the business and manage the affairs of the entity. At June 30, 2019, we and our subsidiaries held a 95.0% interest in the remaining entity, which is fully consolidated into our consolidated financial statements.

during 2019.The following table represents the change in the carrying value of all noncontrolling interests through June 30, ~~2019~~2020 (dollars in thousands):


	Realty Income, L.P. units ⁽¹⁾		Other Noncontrolling Interests		Total
Carrying value at December 31, 2019	$	24,596	$	5,106	$	29,702
Distributions	(647)		(147)		(794)
Allocation of net income	479		83		562
Carrying value at June 30, 2020	$	24,428	$	5,042	$	29,470

Tau Operating
Partnership units⁽¹⁾

Realty Income, L.P.
units⁽²⁾

Other
Noncontrolling
Interests

Total
Carrying value at December 31, 2018 $ 13,356
$ 17,912
$ 968
$ 32,236
Redemptions (13,356 ) —
—
(13,356 )
Shares issued in conjunction with acquisition —
6,286
—
6,286
Distributions —
(588 ) —
(588 )
Allocation of net income —
505
9
514
Carrying value at June 30, 2019 $ —
$ 24,115
$ 977
$ 25,092

⁽¹⁾~~317,022 Tau Operating Partnership units were issued on January 22, 2013. No shares remained outstanding as of June 30, 2019, and 317,022 shares remained outstanding as of December 31, 2018.~~

⁽²⁾~~534,546 Realty Income, L.P. units were issued on June 27, 2013,~~ 242,007 units were issued on March 30, 2018, 131,790 units were issued on April 30, 2018, and 89,322 units were issued on March 28, 2019. 463,119 ~~and 373,797~~ remained outstanding asat each of June 30, ~~2019~~2020 and December 31, ~~2018, respectively.~~2019.

At June 30, 2020 and December 31, ~~2018, Tau Operating Partnership,~~2019, Realty Income, L.P., and ~~an entity~~the joint venture acquired during ~~2016~~2019 were considered variable interest entities, or VIEs, in which we were deemed the primary beneficiary based on our controlling financial interests. In January 2019, we redeemed all 317,022 remaining Tau Operating Partnership units held by nonaffiliates for $20.2 million and recorded the excess over carrying value of $6.9 million as a reduction to common stock and paid in capital. Following the redemption, we hold 100% of the ownership interests of Tau Operating Partnership, L.P., and continue to consolidate the entity. At June 30, 2019, Realty Income, L.P. and the entity acquired during 2016 were considered VIEs. Below is a summary of selected financial data of consolidated VIEs included in the consolidated balance sheets at June 30, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):

June 30, 2019
December 31, 2018
Net real estate $ 644,571
$ 2,903,093
Total assets 737,441
3,259,495
Total debt 15,800
191,565
Total liabilities 102,408
320,800


	June 30, 2020		December 31, 2019
Net real estate	$	640,302	$	654,305
Total assets	731,943		744,394
Total liabilities	51,688		52,087

11. Financial Instruments and Fair Value Measurements

Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The disclosure for assets and liabilities measured at fair value requires allocation to a three-level valuation hierarchy. This valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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We believe that the carrying values reflected in our consolidated balance sheets reasonably approximate the fair values for cash and cash equivalents, accounts receivable, escrow deposits, loans receivable, line of credit payable, term loans and all other liabilities, due to their short-term nature or interest rates and terms that are consistent with market, except for our mortgages payable assumed in connection with acquisitions and our senior notes and bonds payable, which are disclosed as follows (dollars in millions):


June 30, 2020	Carrying value		Estimated fair value
Mortgages payable assumed in connection with acquisitions ⁽¹⁾	$	393.7	$	403.8
Notes and bonds payable ⁽²⁾	6,640.6		7,360.0


June 30, 2019	Carrying value		Estimated fair value
December 31, 2019					December 31, 2019	Carrying value		Estimated fair value
Mortgages payable assumed in connection with acquisitions ⁽¹⁾	$	295.9	$	305.3	Mortgages payable assumed in connection with acquisitions ⁽¹⁾	$	408.4	$	417.7
Notes and bonds payable ⁽²⁾	6,299.9		6,713.7		Notes and bonds payable ⁽²⁾	6,317.6		6,826.1

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14. Impairments

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A provision is made for impairment if estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property. Key factors that we utilize in this analysis include projected rental rates, estimated holding periods, ~~historical sales and re-leases,~~ capital expenditures and property sales capitalization rates. If a property is classified as held for sale, it is carried at the lower of carrying cost or estimated fair value, less estimated cost to sell, and depreciation of the property ceases.

During the second quarter of ~~2019,~~2020, we ~~recorded total provisions~~assessed the key assumptions used in our impairment analysis for ~~impairment~~the impact of ~~$13.1 million~~the COVID-19 pandemic on ~~eight properties classified as held for sale, two~~our portfolio, focusing on tenants experiencing difficulties meeting their lease obligations to us. As a result of this analysis, we determined that the carrying values of 8 properties classified as held for investment ~~and four sold properties. For the first six months of 2019,~~were not recoverable. As a result, we recorded ~~total~~ provisions for ~~impairment~~impairments of ~~$17.7~~$8.2 million on ~~ten~~these properties, ~~classified~~which are included as ~~held for sale, two properties classified as held for investment, and 12 sold properties.~~

~~In comparison,~~part of our total impairments recorded during the second quarter of ~~2018, we recorded total~~2020.

The following table summarizes our provisions for impairment ~~of $4.0 million on one property classified as held for investment and 17 sold properties. For~~during the ~~first six months of 2018, we recorded total provisions for impairment of $18.2 million on two properties classified as held for investment and 23 sold properties.~~periods indicated below (dollars in millions):


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Total provisions for impairment	$	13.9	$	13.1	$	18.3	$	17.7
Number of properties:
Classified as held for sale	7		—		8		—
Classified as held for investment	11		2		14		2
Sold	7		12		14		22

15. Distributions Paid and Payable

We pay monthly distributions to our common stockholders. The following is a summary of monthly distributions paid per common share for the first six months of ~~2019~~2020 and ~~2018:~~2019:

Month 2019
2018
January $ 0.2210
$ 0.2125
February 0.2255
0.2190
March 0.2255
0.2190
April 0.2260
0.2195
May 0.2260
0.2195
June 0.2260
0.2195
Total $ 1.3500
$ 1.3090


Month	2020		2019
January	$	0.2275	$	0.2210
February	0.2325		0.2255
March	0.2325		0.2255
April	0.2330		0.2260
May	0.2330		0.2260
June	0.2330		0.2260
Total	$	1.3915	$	1.3500

At June 30, ~~2019,~~2020, a distribution of ~~$0.2265~~$0.2335 per common share was payable and was paid in July ~~2019.~~2020.

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16. Net Income per Common Share

Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each period. Diluted net income per common share is computed by dividing net income available to common stockholders, plus income attributable to dilutive shares and convertible common units, for the period by the weighted average number of common shares that would have been outstanding assuming the issuance of common shares for all potentially dilutive common shares outstanding during the reporting period.

The following is a reconciliation of the denominator of the basic net income per common share computation to the denominator of the diluted net income per common share ~~computation.~~computation:

Three months ended June 30, Six months ended June 30,
2019
2018
2019
2018
Weighted average shares used for the basic net income per share computation 311,032,972
284,928,969
307,293,949
284,469,689
Incremental shares from share-based compensation 289,190
126,265
286,178
137,625
Weighted average partnership common units convertible to common shares that were dilutive —
317,022
—
317,022
Weighted average shares used for diluted net income per share computation 311,322,162
285,372,256
307,580,127
284,924,336
Unvested shares from share-based compensation that were anti-dilutive 25,171
237,861
29,069
164,111
Weighted average partnership common units convertible to common shares that were anti-dilutive 463,119
359,980
420,679
207,948


	Three months ended June 30,			Six months ended June 30,
	2020	2019	2020	2019
Weighted average shares used for the basic net income per share computation	343,515,406	311,032,972	340,061,487	307,293,949
Incremental shares from share-based compensation	169,853	289,190	219,778	286,178
Weighted average shares used for diluted net income per share computation	343,685,259	311,322,162	340,281,265	307,580,127
Unvested shares from share based compensation that were anti-dilutive	122,222	25,171	65,623	29,069
Weighted average partnership common units convertible to common shares that were anti-dilutive	463,119	463,119	463,119	420,679

17. Supplemental Disclosures of Cash Flow Information

Cash paid for interest was $149.4 million in the first six months of 2020 and $134.9 million in the first six months of ~~2019 and $111.9~~2019.

Cash paid for income taxes was $5.3 million in the first six months of ~~2018.~~

~~Interest capitalized to properties under development was $353,000 in the first six months of 2019~~2020 and ~~$130,000 in the first six months of 2018.~~

~~Cash paid for income taxes was~~ $3.1 million in the first six months of ~~2019 and $2.9 million in the first six months of 2018.~~2019.

The following non-cash activities are included in the accompanying consolidated financial statements:

A. During the first six months of 2020, the fair value of net derivative liabilities decreased by $28.6 million.

B. Non-refundable deposits from 2019 of $13.8 million were applied to acquisitions during the first six months of 2020.

C. As a result of the adoption of Accounting Standards Update, or ASU, 2016-02 in 2019, we recorded $132.0 million of lease liabilities and related right of use assets as lessee under operating leases ~~during the first six months of~~on January 1, 2019.

B.D. During the first six months of 2019, we issued 89,322 common partnership units of Realty Income, L.P. ~~totaling $6.3 million, as partial consideration for an acquisition of properties.~~

~~C. During the first six months of 2018, we issued 373,797 common partnership units of Realty Income, L.P.~~ as partial consideration for an acquisition of properties, totaling ~~$18.8~~$6.3 million.

~~D. During the first six months of 2018, we completed the acquisition of a property using $7.5 million in funds that were held in a non-refundable escrow account.~~

Per the requirements of ASU 2016-18 (Topic 230, Statement of Cash Flows), the following table provides a reconciliation of cash and cash equivalents reported within the consolidated balance sheets to the total of the cash, cash equivalents and restricted cash reported within the consolidated statements of cash flows (dollars in thousands):


	June 30, 2020		June 30, 2019
Cash and cash equivalents shown in the consolidated balance sheets	$	35,345	$	27,136
Restricted escrow deposits ⁽¹⁾	81,683		1,323
Impounds related to mortgages payable ⁽¹⁾	13,290		11,433
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	130,318	$	39,892

June 30, 2019
June 30, 2018
Cash and cash equivalents shown in the consolidated balance sheets $ 27,136
$ 30,717
Restricted escrow deposits ⁽¹⁾
1,323
7,054
Impounds related to mortgages payable ⁽¹⁾
11,433
7,029
Total cash, cash equivalents, and restricted cash shown in the consolidated
statements of cash flows
$ 39,892
$ 44,800

⁽¹⁾Included within other assets, net on the consolidated balance sheets (see note 3). These amounts consist of cash that we are legally entitled to, but that is not immediately available to us. As a result, these amounts were considered restricted as of the dates presented.

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18. Segment Information

We evaluate performance and make resource allocation decisions on an industry by industry basis. For financial reporting purposes, we have grouped our tenants into 4950 activity segments. All of the properties are incorporated into one of the applicable segments. Unless otherwise specified, all segments listed below are located within the U.S. Because almost all of our leases require the tenant to pay operating expenses, rental revenue is the only component of segment profit and loss we measure.

The following tables set forth certain information regarding the properties owned by us, classified according to the business of the respective tenants (dollars in thousands):


Assets, as of:	June 30, 2020		December 31, 2019
Segment net real estate:
Automotive service	$	284,069	$	288,453
Automotive tire services	229,406		232,709
Beverages	277,264		279,373
Child care	216,687		208,326
Convenience stores	2,025,986		2,057,157
Dollar stores	1,426,580		1,427,950
Drug stores	1,589,216		1,618,854
Financial services	381,332		389,634
General merchandise	535,432		475,418
Grocery stores - U.S.⁽¹⁾	903,343		922,349
Grocery stores - U.K.⁽¹⁾	682,378		663,210
Health and fitness	1,082,135		1,019,796
Home improvement	499,420		495,305
Restaurants-casual dining	552,711		576,526
Restaurants-quick service	1,070,095		1,059,155
Theaters - U.S. ⁽¹⁾	861,151		878,103
Transportation services	711,739		769,614
Wholesale club	390,312		396,690
Other non-reportable segments	2,818,888		2,738,150
Total net real estate	16,538,144		16,496,772
Intangible assets:
Automotive service	56,812		58,854
Automotive tire services	6,545		7,322
Beverages	1,380		1,509
Child care	20,844		21,997
Convenience stores	126,567		131,808
Dollar stores	80,232		82,701
Drug stores	175,374		183,319
Financial services	15,968		17,130
General merchandise	74,759		66,135
Grocery stores - U.S.⁽¹⁾	171,874		180,197
Grocery stores - U.K.⁽¹⁾	196,666		153,407
Health and fitness	71,881		74,428
Home improvement	71,497		72,979
Restaurants-casual dining	21,964		23,289
Restaurants-quick service	49,954		52,353
Theaters - U.S. ⁽¹⁾	33,983		36,089
Transportation services	56,087		66,055
Wholesale club	21,816		23,372
Other non-reportable segments	258,672		240,439
Other corporate assets	1,051,528		564,641
Total assets	$	19,102,547	$	18,554,796

Assets, as of: June 30, 2019
December 31, 2018
Segment net real estate:
Automotive service $ 282,770
$ 210,668
Automotive tire services 234,890
238,939
Beverages 281,481
284,910
Child care 179,456
151,640
Convenience stores 1,729,843
1,756,732
Dollar stores 1,127,619
1,117,250
Drug stores 1,463,695
1,490,261
Financial services 401,990
414,613
General merchandise 352,454
317,424
Grocery stores - U.S.⁽¹⁾
844,322
774,526
Grocery stores - U.K.⁽¹⁾
450,002
—
Health and fitness 982,281
882,515
Home improvement 491,104
424,494
Restaurants-casual dining 542,624
559,616
Restaurants-quick service 1,001,528
964,980
Theaters 869,915
555,990
Transportation services 740,720
758,133
Wholesale club 405,719
412,203
Other non-reportable segments 2,557,853
2,528,623
Total segment net real estate 14,940,266
13,843,517
Intangible assets:
Automotive service 59,969
61,951
Automotive tire services 7,881
8,696
Beverages 1,637
1,765
Child care 17,178
12,277
Convenience stores 106,950
108,714
Dollar stores 49,312
48,842
Drug stores 158,895
165,558
Financial services 18,708
20,426
General merchandise 44,766
43,122
Grocery stores - U.S.⁽¹⁾
169,280
144,551
Grocery stores - U.K.⁽¹⁾
102,892
—
Health and fitness 66,113
71,609
Home improvement 74,158
57,928
Restaurants-casual dining 17,317
18,153
Restaurants-quick service 54,029
54,448
Theaters 33,124
25,811
Transportation services 67,684
73,577
Wholesale club 24,928
26,484
Other non-reportable segments 233,743
255,685
Goodwill:
Automotive service 436
437
Automotive tire services 862
862
Child care 4,830
4,863
Convenience stores 1,981
1,983
Restaurants-casual dining 1,815
1,841
Restaurants-quick service 1,044
1,052
Other non-reportable segments 3,568
3,592
Other corporate assets 485,264
202,739
Total assets $ 16,748,630
$ 15,260,483

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	Three months ended June 30,				Six months ended June 30,					Three months ended June 30,						Six months ended June 30,
Revenue	2019		2018		2019		2018		Revenue	2020		2019		2020		2019
Segment rental revenue:									Segment rental revenue:
Automotive service	$	8,039	$	7,021	$	15,230	$	14,030	Automotive service	$	8,661	$	8,039	$	17,332	$	15,230
Automotive tire services	7,952		7,708		15,751		15,147		Automotive tire services	8,115		7,952		15,948		15,751
Beverages	7,915		7,836		15,831		15,673		Beverages	7,996		7,915		15,991		15,831
Child care	7,760		5,216		15,587		10,916		Child care	8,714		7,760		18,195		15,587
Convenience stores	41,432		34,008		82,646		61,869		Convenience stores	46,819		41,432		93,552		82,646
Dollar stores	25,112		23,237		50,098		46,487		Dollar stores	31,595		25,112		62,986		50,098
Drug stores	32,343		32,436		65,513		64,775		Drug stores	35,617		32,343		70,916		65,513
Financial services	7,694		6,890		15,412		13,891		Financial services	7,573		7,694		15,116		15,412
General merchandise	8,610		7,290		15,520		14,159		General merchandise	11,887		8,610		23,404		15,520
Grocery stores - U.S.⁽¹⁾	17,211		15,673		33,336		31,338		Grocery stores - U.S.⁽¹⁾	19,485		17,211		38,994		33,336
Grocery stores - U.K.⁽¹⁾	2,915		—		2,915		—		Grocery stores - U.K.⁽¹⁾	11,739		2,915		22,143		2,915
Health and fitness	26,254		23,614		52,479		47,057		Health and fitness	27,961		26,254		56,239		52,479
Home improvement	10,664		9,339		20,479		18,583		Home improvement	11,382		10,664		22,692		20,479
Restaurants-casual dining	11,385		11,029		22,674		21,989		Restaurants-casual dining	11,431		11,385		23,969		22,674
Restaurants-quick service	21,515		17,083		43,244		33,362		Restaurants-quick service	18,820		21,515		42,128		43,244
Theaters	20,909		17,565		38,565		35,335
Theaters - U.S. ⁽¹⁾									Theaters - U.S. ⁽¹⁾	24,448		20,909		49,014		38,565
Transportation services	16,192		15,762		32,218		31,548		Transportation services	15,975		16,192		31,960		32,218
Wholesale club	9,464		9,341		19,057		18,873		Wholesale club	9,588		9,464		19,176		19,057
Other non-reportable segments and tenant reimbursements	80,886		74,217		161,734		148,081		Other non-reportable segments and tenant reimbursements	92,395		80,886		182,603		161,734
Rental (including reimbursable)	364,252		325,265		718,289		643,113		Rental (including reimbursable)	410,201		364,252		822,358		718,289
Other	1,198		3,621		1,526		4,068		Other	4,435		1,198		6,619		1,526
Total revenue	$	365,450	$	328,886	$	719,815	$	647,181	Total revenue	$	414,636	$	365,450	$	828,977	$	719,815

⁽¹⁾~~During~~Our investments in industries outside of the ~~second quarter of 2019, we acquired 12 grocery stores located in the U.K. Grocery stores in the~~ U.S. ~~and U.K.~~ are managed as ~~two~~ separate operating segments.

19. Common Stock Incentive Plan

In 2012, our Board of Directors adopted and stockholders approved the Realty Income Corporation 2012 Incentive Award Plan, or the 2012 Plan, to enable us to motivate, attract and retain the services of directors and employees considered essential to our long-term success. The 2012 Plan offers our directors and employees an opportunity to own our stock or rights that will reflect our growth, development and financial success. Under the terms of the 2012 plan, the aggregate number of shares of our common stock subject to options, restricted stock, stock appreciation rights, restricted stock units, performance shares and other awards, will be no more than 3,985,734 shares. The 2012 Plan has a term of ten years from the date it was adopted by our Board of Directors.

The amount of share-based compensation costs recognized in general and administrative expense on our consolidated statements of income and comprehensive income was $4.9 million during the second quarter of 2020, $4.5 million during the second quarter of 2019, ~~$5.0~~$10.4 million during the ~~second quarter~~first six months of ~~2018,~~2020 (including$1.8 million of accelerated share-based compensation costs for our former Chief Financial Officer ("CFO") upon his departure from the company) and $7.3 million during the first six months of ~~2019 and $8.7 million during~~2019. Upon the departure of our former CFO in the first ~~six months~~quarter of ~~2018.~~2020, we incurred a severance charge of $3.5 million, consisting of $1.6 million of cash, $1.8 million related to share-based compensation expense and $58,000 of professional fees.

A. Restricted Stock

A.~~Restricted Stock~~

During the first six months of ~~2019,~~2020, we granted ~~79,927~~100,473 shares of common stock under the 2012 Plan. This included ~~32,000~~36,000 total shares of restricted stock granted to the independent members of our Board of Directors in connection with our annual awards in May ~~2019, 20,000~~2020, 24,000 shares of which vested immediately ~~8,000~~and 12,000 shares of which vest in equal parts over a ~~three-year~~three-year service ~~period, and 4,000 shares of which~~period. Our restricted stock awards vest over a ~~one-year~~four-year service ~~period. With~~period, with the exception of shares granted to our independent directors, and 4,541 shares granted to ~~employees vest over a four-year service period.~~our former CFO, which vested upon his departure from the Company.

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As of June 30, ~~2019,~~2020, the remaining unamortized share-based compensation expense related to restricted stock totaled ~~$13.0~~$11.5 million, which is being amortized on a straight-line basis over the service period of each applicable

award. The amount of share-based compensation is based on the fair value of the stock at the grant date. We define the grant date as the date the recipient and Realty Income have a mutual understanding of the key terms and conditions of the award, and the recipient of the grant begins to benefit from, or be adversely affected by, subsequent changes in the price of the shares.

B.Performance Shares and Restricted Stock Units

During the first six months of ~~2019,~~2020, we granted ~~115,137~~98,844 performance shares, as well as dividend equivalent rights, to our executive officers. The performance shares are earned based on our Total Shareholder Return (TSR) performance relative to select industry indices and peer groups as well as achievement of certain operating metrics, and vest 50% on the first and second January 1 after the end of the ~~three-year~~three-year performance period, subject to continued service.

During the first six months of ~~2019,~~2020, we also granted ~~5,482~~9,966 restricted stock units, all of which vest over a ~~four-year~~four-year service period. These restricted stock units have the same economic rights as shares of restricted stock.

As of June 30, ~~2019,~~2020, the remaining share-based compensation expense related to the performance shares and restricted stock units totaled ~~$12.2~~$13.8 million. The fair value of the performance shares were estimated on the date of grant using a Monte Carlo Simulation model. The performance shares are being recognized on a tranche-by-tranche basis over the service period. The amount of share-based compensation for the restricted stock units is based on the fair value of our common stock at the grant date. The restricted stock units are being recognized on a straight-line basis over the service period.

20. Commitments and Contingencies

In the ordinary course of business, we are party to various legal actions which we believe are routine in nature and incidental to the operation of our business. We believe that the outcome of the proceedings will not have a material adverse effect upon our consolidated financial position or results of operations.

At June 30, ~~2019,~~2020, we had commitments of ~~$9.6~~$12.2 million for re-leasing costs, recurring capital expenditures, and non-recurring building improvements. In addition, as of June 30, ~~2019,~~2020, we had committed ~~$24.2~~$3.6 million under construction contracts related to development projects, which is expected to be paid in the next twelve months.

We have certain properties that are subject to ground leases which are accounted for as operating leases. At June 30, 2019, minimum future rental payments for the next five years and thereafter are as follows (dollars in millions):

Ground Leases
Paid by
Realty Income ⁽¹⁾

Ground Leases
Paid by
Our Tenants ⁽²⁾
Total
2019 $ 0.8
$ 6.8
$ 7.6
2020 1.5
13.5
15.0
2021 1.3
13.2
14.5
2022 1.2
13.1
14.3
2023 1.2
13.1
14.3
Thereafter 19.9
82.1
102.0
Total $ 25.9
$ 141.8
$ 167.7
Present value adjustment for remaining lease payments ⁽³⁾
(40.9 )
Lease liability - operating leases, net $ 126.8


⁽¹⁾	~~Realty Income currently pays the ground lessors directly for the rent under the ground leases.~~


⁽²⁾	Our tenants, who are generally sub-tenants under the ground leases, are responsible for paying the rent under these ground leases. In the event a tenant fails to pay the ground lease rent, we are primarily responsible for the rent payment.

⁽³⁾The range of discount rates used to calculate the present value of the lease payments is 3.09% to 5.50%. At June 30, 2019, the weighted average discount rate is 4.29% and the weighted average remaining lease term is 12.7 years. The discount rates are derived using a hypothetical corporate credit curve for the ground leases based on our outstanding senior notes and relevant market data. The discount rates are specific for individual leases primarily based on the lease term.

21. Subsequent Events

•In July ~~2019,~~2020, we declared a dividend of ~~$0.2265~~ $0.2335per share to our common stockholders, which will be paid in August ~~2019.~~2020.

•In July 2020, we issued $350 million of additional aggregate amount of our existing 3.250% senior unsecured notes due in January 2031, or the 2031 Notes. The public offering price for the 2031 Notes was 108.241% of the principal amount, for an effective yield to maturity of 2.341%. The gross proceeds of approximately $378.8 million from this offering will be used to repay borrowings under our credit facility, to fund potential investment opportunities and for other general corporate purposes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ~~including the documents incorporated by reference,~~ contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. When used in this quarterly report, the words “estimated”, “anticipated”, “expect”, “believe”, “intend” and similar expressions are intended to identify forward-looking statements. Forward-looking statements include discussions of strategy, plans, or intentions of management. Forward-looking statements are subject to risks, uncertainties, and assumptions about Realty Income Corporation, including, among other things:

•Our anticipated growth strategies;

•Our intention to acquire additional properties and the timing of these acquisitions;

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•Our intention to sell properties and the timing of these property sales;

•Our intention to re-lease vacant properties;

•Anticipated trends in our business, including trends in the market for long-term, net leases of freestanding, single-tenant properties; ~~and~~

•Future expenditures for development ~~projects.~~projects; and

•The impact of the COVID-19 pandemic, or future pandemics, on us, our business, our tenants, or the economy generally.

Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. In particular, some of the factors that could cause actual results to differ materially are:

•Our continued qualification as a real estate investment trust;

•General ~~local~~domestic and foreign business and economic conditions;

•Competition;

•Fluctuating interest and currency rates;

•Access to debt and equity capital markets;

~~Continued volatility~~•Volatility and uncertainty in the credit markets and broader financial markets;

•Other risks inherent in the real estate business including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments, and potential damages from natural disasters;

•Impairments in the value of our real estate assets;

•Changes in income tax laws and rates;

•The continued evolution of the COVID-19 pandemic and the measures taken to limit its spread, and its impacts on us, our business, our tenants, or the economy generally;

•The timing and pace of reopening efforts at the local, state and national level in response to the COVID-19 pandemic;

•The outcome of any legal proceedings to which we are a party or which may occur in the future; and

•Acts of terrorism and war.

Additional factors that may cause risks and uncertainties include those discussed in the sections entitled “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, for the fiscal year ended December 31, ~~2018~~.2019 and those discussed in this section and the "Item 1.A.- Risk Factors" in Part II of this report.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date that this quarterly report was filed with the Securities and Exchange Commission, or SEC. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this quarterly report or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, the forward-looking events discussed in this quarterly report might not occur.

THE COMPANY

Realty Income, The Monthly Dividend Company^®, is an S&P 500 company dedicated to providing stockholders with dependable monthly dividends that increase over time. The company is structured as a real estate investment trust, or REIT, requiring it annually to distribute at least 90% of its taxable income (excluding net capital gains) in the form

of dividends to its stockholders. The monthly dividends are supported by the cash flow generated from real estate owned under long-term ~~net~~ lease agreements with commercial tenants.

Realty Income was founded in 1969, and listed on the New York Stock Exchange (NYSE: O) in 1994. ~~For over 50~~Over the past 51 years, Realty Income has been acquiring and managing freestanding commercial properties that generate rental revenue under long-term ~~net~~ lease ~~agreements.~~agreements with commercial tenants. The company is a member of the S&P ~~High Yield~~500 Dividend ~~Aristocrats®~~Aristocrats^® index for having increased its dividend every year for ~~more than 21~~the last 25 consecutive ~~years.~~years or more.

At June 30, ~~2019,~~2020, we owned a diversified portfolio:

•Of ~~5,951~~6,541 properties;

•With an occupancy rate of ~~98.3%~~98.5%, or ~~5,849~~6,440 properties leased and ~~102~~101 properties available for ~~lease;~~lease or sale;

~~Leased to 265 different commercial tenants doing~~•Doing business in 4950 separate industries;

•Located in 49 U.S. states, Puerto Rico and the United Kingdom (U.K.);

•With ~~over 98.4~~approximately 106.4 million square feet of leasable space;

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•With a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately ~~9.4~~9.0 years; and

•With an average leasable space per property of approximately ~~16,538~~16,270 square feet; approximately ~~11,827~~12,000 square feet per retail property and ~~229,101~~224,490 square feet per industrial property.

Of the ~~5,951~~6,541 properties in the portfolio at June 30, ~~2019, 5,922,~~2020, 6,505, or ~~99.5%~~99.4%, are single-tenant properties, of which ~~5,824~~6,407 were leased, and the remaining are multi–tenant properties.

Unless otherwise specified, references to rental revenue in the Management's Discussion and Analysis of Financial Condition and Results of Operations are exclusive of reimbursements from tenants for recoverable real estate taxes and operating expenses totaling ~~$16.4~~$21.0 million and ~~$11.4~~$16.4 million for the second quarters of ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$33.8~~$41.3 million and ~~$22.7~~$33.8 million for the first six months of ~~2019~~2020 and ~~2018,~~2019, respectively.

Investment Philosophy

We believe that owning an actively managed, diversified portfolio of ~~primarily single-tenant~~ commercial properties under long-term, net lease agreements produces consistent and predictable ~~income.~~income over time. A net lease typically requires the tenant to be responsible for monthly rent and certain property operating expenses including property taxes, insurance, and maintenance. In addition, tenants of our properties typically pay rent increases based on: (1) increases in the consumer price index (typically subject to ceilings), (2) fixed increases, or (3) additional rent calculated as a percentage of the tenants’ gross sales above a specified level. We believe that a portfolio of properties under long-term ~~net~~ lease agreements with commercial tenants generally produces a more predictable income stream than many other types of real estate portfolios, while continuing to offer the potential for growth in rental income.

Diversification is also a key component of our investment philosophy. We believe that diversification of the portfolio by tenant, industry, geography, and ~~to a certain extent,~~ property type leads to more consistent and predictable income for our stockholders by reducing vulnerability that can come with any single concentration. Our investment activities have led to a diversified property portfolio that, as of June 30, ~~2019,~~2020, consisted of ~~5,951~~6,541 properties located in 49 U.S. states, Puerto Rico and the U.K., ~~leased to 265 different commercial tenants~~and doing business in 4950 industries. ~~Each~~None of the 4950 industries represented in our property portfolio accounted for no more than ~~11.9%~~12.0% of our rental revenue for the quarter ended June 30, ~~2019.~~2020.

Investment Strategy

When identifying new properties for investment, we generally focus on acquiring high-quality real estate that tenants consider important to the successful operation of their business. We generally seek to acquire real estate that has the following characteristics:

•Properties that are freestanding, commercially-zoned with a single tenant;

•Properties that are in significant markets or strategic locations critical to generating revenue for our tenants (i.e. they need the property in which they operate in order to conduct their business);

•Properties that we deem to be profitable for the tenants and/or can generally be characterized as important to the successful operations of the company’s business;

•Properties that are located within attractive demographic areas relative to the business of our ~~tenants, generally fungible, and have good visibility and easy access to major thoroughfares;~~tenants;

•Properties with real estate valuations that approximate replacement costs;

•Properties with rental or lease payments that approximate market ~~rents;~~rents for similar properties; and

•Properties that can be purchased with the simultaneous execution or assumption of long-term ~~net~~ lease agreements with commercial tenants, offering both current income and the potential for future rent increases.

We seek to invest in ~~industries~~properties owned by tenants that are already or could become leaders in ~~which several well-organized tenants are capturing market share through the selection~~their respective businesses supported by mechanisms including (but not limited to) occupancy of prime real estate locations, ~~supported by superior~~pricing, merchandise assortment, service, quality, ~~control,~~ economies of scale, consumer branding, and advertising. In addition, we frequently acquire large portfolios of single-tenant properties net leased to different tenants operating in a variety of industries. We have an internal team dedicated to sourcing such opportunities, often using our relationships with various tenants, owners/developers, brokers and advisers to uncover and secure transactions. We also undertake thorough research and analysis to identify what we consider to be appropriate property locations, tenants, and industries for investment. This research expertise is instrumental to uncovering net lease opportunities in markets where we believe we can add value.

In selecting potential investments, we look for tenants with the following attributes:

•Tenants with reliable and sustainable cash flow;

•Tenants with revenue and cash flow from multiple sources;

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•Tenants that are willing to sign a long-term lease (10 or more years); and

•Tenants that are large owners and users of real estate.

From a retail perspective, our investment strategy is to target tenants that have a service, non-discretionary, and/or low-price-point component to their business. We believe these characteristics better position tenants to operate in a variety of economic conditions and to compete more effectively with internet retailers. As a result of the execution of this strategy, approximately 95% of our annualized retail rental revenue at June 30, ~~2019~~2020 is derived from tenants with a service, non-discretionary, and/or low price point component to their business. From a non-retail perspective, we target industrial properties leased to industry leaders that are primarily investment grade rated companies. We believe these characteristics enhance the stability of the rental revenue generated from these properties.

After applying this investment strategy, we pursue those transactions where we believe we can achieve an attractive investment spread over our cost of capital and favorable risk-adjusted returns. We will continue to evaluate all investments for consistency with our objective of owning net lease assets.

Underwriting Strategy

In order to be considered for acquisition, properties must meet stringent underwriting requirements. We have established a four-part analysis that examines each potential investment based on:

•The aforementioned overall real estate characteristics, including demographics, replacement cost, and comparative rental rates;

•Industry, tenant (including credit profile), and market conditions;

•Store profitability for retail locations if profitability data is available; and

•The importance of the real estate location to the operations of the tenants’ business.

We believe the principal financial obligations for most of our tenants typically include their bank and other debt, payment obligations to suppliers, and real estate lease obligations. Because we typically own the land and building in which a tenant conducts its business or which are critical to the tenant’s ability to generate revenue, we believe the risk of default on a tenant’s lease obligation is less than the tenant’s unsecured general obligations. It has been our experience that tenants must retain their profitable and critical locations in order to survive. Therefore, in the event of reorganization, we believe they are less likely to reject a lease of a profitable or critical location because this would terminate their right to use the property.

Thus, as the property owner, we believe that we will fare better than unsecured creditors of the same tenant in the event of reorganization. If a property is rejected by the tenant during reorganization, we own the property and can either lease it to a new tenant or sell the property. In addition, we believe that the risk of default on real estate leases can be further mitigated by monitoring the performance of the tenants’ individual locations and considering whether to proactively sell locations that meet our criteria for disposition.

Prior to entering into any transaction, our research department conducts a review of a tenant’s credit quality. The information reviewed may include reports and filings, including any public credit ratings, financial statements, debt and equity analyst reports, and reviews of corporate credit spreads, stock prices, market capitalization, and other financial metrics. We conduct additional due diligence, including additional financial reviews of the tenant and a more comprehensive review of the business segment and industry in which the tenant operates. We continue to

monitor our tenants’ credit quality on an ongoing basis by reviewing the available information previously discussed, and providing summaries of these findings to management. ~~Approximately 49%~~At June 30, 2020, approximately 48% of our annualized rental revenue comes from properties leased to investment grade rated companies, their subsidiaries or ~~their subsidiaries.~~affiliated companies. At June 30, ~~2019,~~2020, our top 20 tenants (based on percentage of total portfolio annualized rental revenue) represented approximately ~~55%~~53% of our annualized revenue and 12 of these tenants have investment grade credit ratings or are subsidiaries or affiliates of investment grade companies.

Asset Management Strategy

In addition to pursuing new properties for investment, we seek to increase earnings and distributions to stockholders through active asset management.

Generally, our asset management efforts seek to achieve:

•Rent increases at the expiration of existing leases, when market conditions permit;

•Optimum exposure to certain tenants, industries, and markets through re-leasing vacant properties and selectively selling properties;

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•Maximum asset-level returns on properties that are re-leased or sold;

•Additional value creation from the existing portfolio by enhancing individual properties, pursuing alternative uses, and deriving ancillary revenue; and

•Investment opportunities in new asset classes for the portfolio.

We continually monitor our portfolio for any changes that could affect the performance of our tenants, our tenants’ industries, and the real estate locations in which we have invested. We also regularly analyze our portfolio with a view towards optimizing its returns and enhancing its overall credit quality. Our active asset management strategy pursues asset sales when we believe the reinvestment of the sale proceeds will:

•Generate higher returns;

•Enhance the credit quality of our real estate portfolio;

•Extend our average remaining lease term; and/or

•Strategically decrease tenant, industry, or geographic concentration.

At June 30, 2019, we classified 25 properties with a carrying amount of $18.5 million as held for sale on our balance sheet. For the remainder of 2019, we intend to continue our active disposition efforts to further enhance our real estate portfolio and anticipate reaching approximately $75 to $100 million in annual property sales. We plan to invest these proceeds into new property acquisitions, if there are attractive opportunities available. However, we cannot guarantee that we will sell properties during the remainder of 2019 at our estimated values or be able to invest the property sale proceeds in new properties.

The active management of the portfolio is an essential component of our long-term strategy of maintaining high occupancy. ~~Since 1970, our occupancy rate at the end of each year has never been below 96%. However, we cannot assure you that our future occupancy levels will continue to equal or exceed 96%.~~

Impact of Real Estate and Credit Markets

In the commercial real estate market, property prices generally continue to fluctuate. Likewise, during certain periods, including the current market, the global credit markets have experienced significant price volatility, dislocations, and liquidity disruptions, which may impact our access to and cost of capital. We continually monitor the commercial real estate and global credit markets carefully and, if required, will make decisions to adjust our business strategy accordingly.

RECENT DEVELOPMENTS

Increases in Monthly Dividends to Common Stockholders

We have continued our ~~50-year~~51-year policy of paying monthly dividends. In addition, we increased the dividend four times during ~~2019.~~2020. As of ~~July 2019,~~April 2020, we have paid 8791 consecutive quarterly dividend increases and increased the dividend ~~102~~107 times since our listing on the NYSE in 1994.

2019 Dividend increases
Month
Declared
Month
Paid
Dividend
per share

Increase
per share

1st increase Dec 2018 Jan 2019 $ 0.2210
$ 0.0005
2nd increase Jan 2019 Feb 2019 $ 0.2255
$ 0.0045
3rd increase Mar 2019 Apr 2019 $ 0.2260
$ 0.0005
4th increase Jun 2019 Jul 2019 $ 0.2265
$ 0.0005
The following table summarizes our dividend increases in 2020:


2020 Dividend increases	Month Declared	Month Paid	Dividend per share		Increase per share
1st increase	Dec 2019	Jan 2020	$	0.2275	$	0.0005
2nd increase	Jan 2020	Feb 2020	$	0.2325	$	0.0050
3rd increase	Mar 2020	Apr 2020	$	0.2330	$	0.0005
4th increase	Jun 2020	Jul 2020	$	0.2335	$	0.0005

The dividends paid per share during the first six months of ~~2019~~2020 totaled approximately ~~$1.350,~~$1.392, as compared to approximately ~~$1.309~~$1.350 during the first six months of ~~2018,~~2019, an increase of ~~$0.041,~~$0.042, or 3.1%.

The monthly dividend of ~~$0.2265~~$0.2335 per share represents a current annualized dividend of ~~$2.718~~$2.802 per share, and an annualized dividend yield of approximately ~~3.9%~~4.7% based on the last reported sale price of our common stock on the NYSE of ~~$68.97~~$59.50 on June 30, ~~2019.~~2020. Although we expect to continue our policy of paying monthly dividends, we cannot guarantee that we will maintain our current level of dividends, that we will continue our pattern of increasing dividends per share, or what our actual dividend yield will be in any future period.

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Acquisitions During the Second Quarter and First Six Months of ~~2019~~2020

Below is a listing of our acquisitions in the U.S. and U.K. for the periods indicated below:


	Number of Properties	Square Feet (in millions)	Investment ($ in millions)		Weighted Average Lease Term (Years)	Initial Average Cash Lease Yield
Three months ended June 30, 2020 ⁽¹⁾
Acquisitions - U.S. (in 15 states)	26	0.4	$	94.3	12.9	6.4	%
Acquisitions - U.K. ⁽²⁾	2	0.1	58.2		9.9	6.1	%
Total acquisitions	28	0.5	152.5		11.8	6.3	%
Properties under development - U.S.	4	0.1	1.7		10.4	10.3	%
Total ⁽³⁾	32	0.6	$	154.2	11.8	6.3	%

Six months ended June 30, 2020 ⁽¹⁾
Acquisitions - U.S. (in 25 states)	80	1.8	$	412.6	14.4	6.5	%
Acquisitions - U.K. ⁽²⁾	6	0.5	223.7		11.8	5.3	%
Total acquisitions	86	2.3	636.3		13.6	6.1	%
Properties under development - U.S.	8	0.2	3.9		10.5	8.8	%
Total ⁽⁴⁾	94	2.5	$	640.2	13.6	6.1	%

Number of Properties

Square Feet
(in millions)

Investment
($ in millions)

Weighted Average Lease Term (Years)
Initial Average Cash Lease Yield
Three months ended June 30, 2019 ⁽¹⁾

Acquisitions - U.S. (in 28 states)
78
2.3
$ 532.3
14.8
6.9 %
Acquisitions - U.K. ⁽²⁾
12
1.1
549.2
14.8
5.3 %
Total Acquisitions 90
3.4
1,081.5
14.8
6.1 %
Properties under Development - U.S. 12
0.4
13.2
15.9
7.3 %
Total ⁽³⁾
102
3.8
$ 1,094.7
14.8
6.1 %

Six months ended June 30, 2019 ⁽¹⁾

Acquisitions - U.S. (in 34 states)
175
4.2
$ 1,040.9
15.9
6.8 %
Acquisitions - U.K. ⁽²⁾
12
1.1
549.2
14.8
5.3 %
Total Acquisitions 187
5.3
1,590.1
15.5
6.3 %
Properties under Development - U.S. 12
0.4
24.1
16.5
7.2 %
Total ⁽⁴⁾
199
5.7
$ 1,614.2
15.6
6.3 %
⁽¹⁾None of our investments during the three and six months ended June 30, 2020 caused any one tenant to be 10% or more of our total assets at June 30, 2020. All of our investments in acquired properties during the three and six months ended June 30, 2020 are 100% leased at the acquisition date.

⁽¹⁾

⁽²⁾Represents investments of £46.8 million during the three months ended June 30, 2020 and £180.1 million during the six months ended June 30, 2020 converted at the applicable exchange rate on the date of acquisition.

⁽³⁾The tenants occupying the new properties operate in 8 industries, and are 100.0% retail, based on rental revenue. Approximately 41% of the rental revenue generated from acquisitions during the second quarter of 2020 is from investment grade rated tenants, their subsidiaries or affiliated companies.

⁽⁴⁾The tenants occupying the new properties operate in 17 industries, and are 96.5% retail and 3.5% industrial, based on rental revenue. Approximately 37% of the rental revenue generated from acquisitions during the first six months of 2020 is from investment grade rated tenants, their subsidiaries or affiliated companies.

~~None of our investments during 2019 caused any one tenant to be 10% or more of our total assets at June 30, 2019. All of our 2019 investments are 100% leased.~~


⁽²⁾	~~Represents investment of £433.9 million, multiplied by the applicable exchange rate on the closing date of acquisition.~~


⁽³⁾	The tenants occupying the new properties operate in 15 industries, and are 99.4% retail and 0.6% industrial, based on rental revenue. Approximately 12% of the rental revenue generated from acquisitions during the second quarter of 2019 is from investment grade rated tenants and their subsidiaries.


⁽⁴⁾	The tenants occupying the new properties operate in 17 industries, and are 99.1% retail and 0.9% industrial, based on rental revenue. Approximately 18% of the rental revenue generated from acquisitions during the first six months of 2019 is from investment grade rated tenants and their subsidiaries.

The initial average cash lease yield for a property is generally computed as estimated contractual first year cash net operating income, which, in the case of a net leased property, is equal to the aggregate cash base rent for the first full year of each lease, divided by the total cost of the property. Since it is possible that a tenant could default on the payment of contractual rent, we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above.

In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return. When the lease does not provide for a fixed rate of return on a property under development or expansion, the initial average cash lease yield is computed as follows: estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs. We may continue to pursue development or expansion opportunities under similar arrangements in the future.

Portfolio Discussion

Leasing Results

At June 30, ~~2019,~~2020, we had ~~102~~101 properties available for lease or sale out of ~~5,951~~6,541 properties in our portfolio, which represents a ~~98.3%~~98.5% occupancy rate based on the number of properties in our portfolio.

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~~Since March 31, 2019, when we reported 102 properties available~~

The following tables summarizes our leasing results for ~~lease out of 5,774 and a 98.3% occupancy rate, we had 102 lease expirations, re-leased 86 properties and sold 16 vacant properties during~~ the quarter ended June 30, 2019. Of the 86 properties re-leased during the second quarter of 2019, 82 properties were re-leased to the same tenants and four were re-leased to new tenants after a period of vacancy. periods indicated below:


Properties available for lease at March 31, 2020			97
Lease expirations			81
Re-leases to same tenant ⁽¹⁾			(60)
Re-leases to new tenant ⁽¹⁾⁽²⁾			(5)
Vacant Dispositions			(12)
Properties available for lease at June 30, 2020			101

⁽¹⁾The annual new rent on these re-leases was ~~$23.8~~$15.334 million, as compared to the previous annual rent of ~~$23.7~~$15.128 million ~~which represents~~on the same properties, representing a rent recapture rate of ~~100.4%~~101.4% on the properties re-leased during the quarter ended June 30, ~~2019.~~2020.

~~Since December 31, 2018, when we reported 80~~⁽²⁾Re-leased two properties available for lease out of 5,797 and a 98.6% occupancy rate, we had 210 lease expirations, re-leased 157 properties and sold 31 vacant properties during the six months ended June 30, 2019. Of the 157 properties re-leased during the first six months of 2019, 148 properties were re-leased to the same tenants, four were re-leased to new tenants without a period of vacancy, and ~~five were re-leased~~three properties to new tenants after a period of vacancy.


Properties available for lease at December 31, 2019			94
Lease expirations			190
Re-leases to same tenant ⁽¹⁾			(150)
Re-leases to new tenant ⁽¹⁾⁽²⁾			(8)
Vacant Dispositions			(25)
Properties available for lease at June 30, 2020			101

⁽¹⁾The annual new rent on these ~~157 leases~~re-leases was ~~$41.6~~$33.152 million, as compared to the previous annual rent of ~~$40.7~~$33.124 million ~~which represents~~on the same properties, representing a rent recapture rate of ~~102.2%~~100.1% on the properties re-leased during the first six months of ~~2019.~~2020.

⁽²⁾Re-leased three properties to new tenants without a period of vacancy, and five properties to new tenants after a period of vacancy.

As part of our re-leasing costs, we pay leasing commissions to unrelated, third party real estate brokers consistent with the commercial real estate industry standard, and sometimes provide tenant rent concessions. We do not consider the collective impact of the leasing commissions or tenant rent concessions to be material to our financial position or results of operations.

At June 30, ~~2019,~~2020, our average annualized rental revenue was approximately ~~$14.75~~$15.17 per square foot on the ~~5,849~~6,440 leased properties in our portfolio. At June 30, ~~2019,~~2020, we classified 2532 properties, with a carrying amount of ~~$18.5~~$40.6 million, as held for sale on our balance sheet. The expected sale of these properties does not represent a strategic shift that will have a major effect on our operations and financial results and is consistent with our existing disposition strategy to further enhance our real estate portfolio and maximize portfolio returns.

Investments in Existing Properties

In the second quarter of ~~2019,~~2020, we capitalized costs of ~~$3.1~~$2.3 million on existing properties in our portfolio, consisting of ~~$707,000~~$973,000 for re-leasing costs, ~~$116,000~~$23,000 for recurring capital expenditures, and $2.3 million for non-recurring building improvements. In the second quarter of 2018, we capitalized costs of $2.4 million on existing properties in our portfolio, consisting of $1.5 million for re-leasing costs, $135,000 for recurring capital expenditures and $723,000 for non-recurring building improvements.

In the first six months of 2019, we capitalized costs of $6.1 million on existing properties in our portfolio, consisting of $1.0 million for re-leasing costs, $172,000 for recurring capital expenditures, and $4.9$1.3 million for non-recurring building improvements. In the first six months of ~~2018,~~2020, we capitalized costs of ~~$5.6~~$4.4 million on existing properties in our portfolio, consisting of ~~$2.5~~$1.1 million for re-leasing costs, ~~$147,000~~$23,000 for recurring capital expenditures, and ~~$3.0~~$3.3 million for non-recurring building improvements.

The majority of our building improvements relate to roof repairs, HVAC improvements, and parking lot resurfacing and replacements. The amounts of our capital expenditures can vary significantly, depending on the rental market, tenant credit worthiness, the lease term and the willingness of tenants to pay higher rents over the terms of the leases.

We define recurring capital expenditures as mandatory and recurring landlord capital expenditure obligations that have a limited useful life. We define non-recurring capital expenditures as property improvements in which we invest additional capital that extend the useful life of the properties.

~~Tau Operating Partnership Buyout and Term Loan Payoff~~

In January 2019, we redeemed all of the 317,022 remaining common units of Tau Operating Partnership, L.P. held by nonaffiliates for cash. Following the redemption, we hold 100% of the ownership interests of Tau Operating Partnership, L.P., and continue to consolidate the entity. Additionally, in January 2019, we paid off the outstanding balance and interest on the $70.0 million senior unsecured term loan entered in January 2013 in conjunction with our acquisition of ARCT. Following the redemption, we hold 100% of the ownership interests of Tau Operating Partnership, L.P., and continue to consolidate the entity. As part of this transaction, our taxable REIT subsidiary, Crest Net Lease, obtained a 0.11% interest in Tau Operating Partnership.

Note Issuances

In ~~May 2019,~~July 2020, we issued ~~£315~~$350 million of ~~2.730% senior unsecured notes due May 2034, or the 2034 Notes, through a private placement.~~

~~In June 2019, we issued $500 million~~additional aggregate amount of our existing 3.250% senior unsecured notes due ~~June 2029,~~in January 2031, or the ~~2029~~2031 Notes. The public offering price for ~~the 2029 Notes~~these notes was ~~99.36%~~108.241% of the principal amount, for an effective yield to maturity of ~~3.326%~~2.341% and ~~net~~gross proceeds of approximately ~~$492.2~~$378.8 million.

In May 2020, we issued $600 million of the 2031 Notes. The ~~net~~public offering price for the 2031 Notes was 98.987% of the principal amount, for an effective yield to maturity of 3.364% and gross proceeds of approximately $593.9 million.

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The proceeds from each of these offerings were used to repay borrowings outstanding under our credit facility, to fund investment opportunities, and for other general corporate purposes.

Equity Capital Raising

During the second quarter ~~and first six months~~ of ~~2019,~~2020, we raised ~~$1.0 billion~~$98.1 million from the sale of common stock at a weighted average ~~prices~~price of ~~$69.67 and $69.66, respectively.~~$63.07, primarily through our At-The-Market-Program.

~~Net Income Available to Common Stockholders~~

Net income available to common stockholders was $95.2 million in the second quarter of 2019, compared to $96.4 million in the second quarter of 2018, a decrease of $1.2 million. On a diluted per common share basis, net income available to common stockholders was $0.31 in the second quarter of 2019, compared to $0.34 in the second quarter of 2018, a decrease of $0.03, or 8.8%.

~~Net income available to common stockholders was $206.1 million in~~During the first six months of ~~2019,~~2020, we raised $850.6 million from the sale of common stock at a weighted average price of $75.40, primarily from 9,690,500 shares issued in an overnight underwritten public offering during the first quarter of 2020, including 690,500 shares purchased by the underwriters upon the exercise of their option to purchase additional shares.

Term Loan Redemption

In June 2020, we repaid the $250.0 million term loan in full upon maturity.

Chief Financial Officer Departure

In March 2020 and as ~~compared~~previously announced, Paul Meurer, our former EVP, Chief Financial Officer ("CFO"), departed from the Company. We continue our search for a new CFO. As a result of Mr. Meurer's departure, we recognized an executive severance charge of $3.5 million during the first quarter of 2020, consisting of $1.6 million of cash, $1.8 million related to ~~$179.5~~share–based compensation expense and $58,000 of professional fees.

Early Redemption of 5.75% Notes Due January 2021

In January 2020, we completed the early redemption on all $250.0 million in principal amount of our outstanding 5.750% notes due January 2021, plus accrued and unpaid interest. As a result of the early redemption, we recognized a $9.8 million loss on extinguishment of debt during the first ~~six months~~quarter of ~~2018,~~2020.

Impact of COVID-19

The COVID-19 pandemic and the measures taken to limit its spread are negatively impacting global, national and regional economies across many industries, including the industries in which some of our tenants operate, and have disrupted the businesses and operations of some of our tenants, each of which has had and may continue to have an adverse impact on our business, results of operations, financial condition, and liquidity. These impacts may increase in severity as the duration of ~~$26.6 million. On~~the pandemic lengthens. See "Item 1A--Risk Factors" in Part II of this report for more information regarding the actual and potential future impacts of the COVID-19 pandemic and the measures taken to limit its spread on our tenants and our business, results of operations, financial condition and liquidity.

As a ~~diluted per common share basis, net income available~~result of this challenging environment, we continue to ~~common stockholders was $0.67~~work diligently with our tenants most affected by the pandemic to understand their financial liquidity and their ability to satisfy their contractual obligations to us. As we carefully navigate this difficult economic period with our tenants, our focus is on finding resolutions that preserve the long-term relationships we have built with many of our tenants.

The majority of concessions granted to our tenants during the second quarter of 2020 as a result of the COVID-19 pandemic have been rent deferrals with the original lease term unchanged. In these cases, we have currently determined that the collection of deferred rent is probable. In addition, as we believe to be the case with many retail landlords, we received many short-term rent relief requests, most often in the ~~first six months~~form of ~~2019,~~rent deferral requests, or requests for further discussion from tenants. We believe that not all tenant requests will ultimately result in modification agreements, nor have we relinquished our contractual rights under our lease agreements for leases in which rent concessions have not yet been granted. Our collections and concessions from April through July 2020 and our rent relief requests to-date may not be indicative of collections, concessions or requests in any future period.

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Percentages of Contractual Rent Collected as ~~compared~~of July 31, 2020


	Month Ended April 30, 2020	Month Ended May 31, 2020	Month Ended June 30, 2020	Quarter Ended June 30, 2020	Month Ended July 31, 2020


Contractual rent collected⁽¹⁾ across total portfolio	88.4%	84.9%	86.1%	86.5%	91.5%
Contractual rent collected⁽¹⁾from top 20 tenants⁽²⁾	83.0%	82.1%	82.5%	82.5%	90.7%
Contractual rent collected⁽¹⁾from investment grade tenants⁽³⁾	100.0%	98.4%	98.9%	99.1%	100.0%

⁽¹⁾Contractual rent is the aggregate cash amount charged to ~~$0.63~~tenants inclusive of monthly base rent receivables. U.K. rent (which is payable in pounds Sterling) was converted at the exchange rate in effect on May 1, 2020 for rents collected for the month of April 2020, on June 1, 2020 for rents collected for the month of May 2020, on July 1, 2020 for rents collected for the month of June 2020, and on July 31, 2020 for rents collected for the month of July 2020.

⁽²⁾We define top 20 tenants as our 20 largest tenants based on percentage of total portfolio annualized contractual rental revenue as of the last day of such period.

⁽³⁾We define investment grade tenants as tenants with a credit rating, and tenants that are subsidiaries or affiliates of companies with a credit rating, of Baa3/BBB- or higher from one of the three major rating agencies (Moody’s/S&P/Fitch).

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The following table provides information relating to April through July 2020 rent collections by industry through July 31, 2020:


	Percentage of Total Contractual Rent Due							Percentage of Total Contractual Rent Collected as of:
	July 2020 ⁽¹⁾	June 2020 ⁽¹⁾	May 2020 ⁽¹⁾	April 2020 ⁽¹⁾	July 2020 ⁽¹⁾	June 2020 ⁽¹⁾	May 2020 ⁽¹⁾	April 2020 ⁽¹⁾
U.S.
Aerospace	0.7%	0.7%	0.7%	0.7%	0.7%	0.7%	0.7%	0.7%
Apparel stores	1.3	1.3	1.3	1.2	1.3	1.1	0.9	1.2
Automotive collision services	1.1	1.0	1.0	1.0	1.1	1.0	1.0	1.0
Automotive parts	1.6	1.6	1.6	1.6	1.5	1.6	1.6	1.6
Automotive service	2.5	2.5	2.5	2.5	2.3	1.9	2.0	2.5
Automotive tire services	2.0	2.0	2.0	2.1	2.0	1.9	1.7	2.1
Beverages	2.0	2.0	2.0	2.0	2.0	2.0	2.0	2.0
Child care	2.2	2.1	2.2	2.1	1.8	1.6	0.7	1.6
Consumer electronics	0.3	0.3	0.3	0.3	0.3	0.3	0.3	0.3
Consumer goods	0.6	0.6	0.6	0.6	0.6	0.6	0.6	0.6
Convenience stores	12.2	12.1	12.0	12.1	12.1	12.0	11.9	12.0
Crafts and novelties	0.8	0.8	0.7	0.7	0.8	0.8	0.7	0.6
Diversified industrial	0.7	0.7	0.7	0.7	0.7	0.7	0.7	0.7
Dollar stores	7.9	7.9	7.9	7.9	7.9	7.9	7.9	7.9
Drug stores	8.5	8.5	8.5	8.6	8.5	8.5	8.5	8.6
Education	0.2	0.2	0.2	0.2	0.1	0.2	0.2	0.2
Electric utilities	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1
Entertainment	0.3	0.3	0.3	0.3	0.1	0.1	0.2	0.3
Equipment services	0.4	0.4	0.4	0.4	0.4	0.4	0.4	0.4
Financial services	1.9	1.9	1.9	1.9	1.9	1.9	1.9	1.9
Food processing	0.7	0.7	0.7	0.7	0.7	0.7	0.7	0.7
General merchandise	2.8	2.8	2.8	2.8	2.8	2.8	2.8	2.8
Government services	0.7	0.7	0.7	0.7	0.7	0.7	0.6	0.6
Grocery stores	5.0	5.1	5.1	5.1	5.0	5.1	5.1	5.1
Health and beauty	0.2	0.2	0.2	0.2	0.2	0.2	0.2	0.2
Health and fitness	7.1	7.1	7.2	7.2	6.3	3.0	3.5	3.6
Health care	1.6	1.6	1.6	1.6	1.6	1.6	1.6	1.6
Home furnishings	0.8	0.8	0.8	0.9	0.7	0.7	0.4	0.5
Home improvement	2.9	2.9	2.9	2.9	2.9	2.9	2.9	2.9
Machinery	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1
Motor vehicle dealerships	1.6	1.6	1.6	1.6	1.6	1.6	1.6	1.6
Office supplies	0.2	0.2	0.2	0.2	0.1	0.1	0.1	0.1
Other manufacturing	0.6	0.6	0.6	0.6	0.5	0.5	0.5	0.6
Packaging	0.9	0.9	0.9	0.9	0.9	0.9	0.9	0.9
Paper	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1
Pet supplies and services	0.7	0.7	0.7	0.7	0.7	0.7	0.7	0.7
Restaurants - casual dining	3.1	3.1	3.1	3.1	2.7	2.7	2.5	2.7
Restaurants - quick service	5.7	5.7	5.7	5.7	5.0	4.8	4.5	5.3
Shoe stores	0.2	0.2	0.2	0.2	*	*	*	0.2
Sporting goods	0.8	0.8	0.8	0.8	0.8	0.6	0.8	0.8
Telecommunications	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5
Theaters	5.9	6.0	5.9	6.0	0.9	—	0.2	0.2
Transportation services	4.2	4.2	4.2	4.2	4.2	4.2	4.2	4.2
Wholesale clubs	2.4	2.4	2.4	2.4	2.4	2.4	2.4	2.4
Other	0.1	0.2	0.2	0.2	0.1	0.1	0.1	0.1
Total U.S.	96.2%	96.2%	96.1%	96.4%	87.7%	82.3%	81.0%	84.8%
U.K.
Grocery stores	3.7	3.7	3.8	3.5	3.7	3.7	3.8	3.5
Theaters	*	*	*	*	—	—	—	—
Health care	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1
Total U.K.	3.8%	3.8%	3.9%	3.6%	3.8%	3.8%	3.9%	3.6%
Totals	100.0%	100.0%	100.0%	100.0%	91.5%	86.1%	84.9%	88.4%

* Less than 0.1%

⁽¹⁾ Contractual rent is the aggregate cash amount charged to tenants inclusive of monthly base rent receivables. U.K. rent (which is payable in pounds Sterling) was converted at the exchange rate in effect on May 1, 2020 for rents collected for the month of April 2020, on June 1, 2020 for rents collected for the month of May 2020, on July 1, 2020 for rents collected for the month of June 2020, and on July 31, 2020 for rents collected for the month of July 2020.

As the adverse impacts of the COVID-19 pandemic and the measures taken to limit its spread continue to evolve, the ability of our tenants to continue to pay rent to us may further diminish, and therefore we cannot assure you that our rental collections from April through July are indicative of our rental collections in August or in the future. As a result of the impacts of the COVID-19 pandemic and the measures taken to limit its spread, our revenues in the

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second half of 2020 may decline relative to the first ~~six months~~half of ~~2018, an~~2020, and that decline may continue or increase ~~of $0.04, or 6.3%.~~in subsequent periods as long as such impacts continue to exist.

Summarized Financial Results

The following summarizes our select financial results (dollars in millions, except per share data):


													% Increase
	Three months ended June 30,						Six months ended June 30,						Three months	Six months
	2020		2019		2020		2019
Total revenue	$	414.6	$	365.5	$	829.0	$	719.8	13.4	%	15.2	%
Net income available to common stockholders ⁽¹⁾	$	107.8	$	95.2	$	254.7	$	206.1	13.2	%	23.6	%
Net income per share ⁽²⁾	$	0.31	$	0.31	$	0.75	$	0.67	—	%	11.9	%
Funds from operations (FFO) available to common stockholders	$	288.3	$	251.5	$	565.4	$	497.2	14.6	%	13.7	%
FFO per share ⁽²⁾	$	0.84	$	0.81	$	1.66	$	1.62	3.7	%	2.5	%
Adjusted funds from operations (AFFO) available to common stockholders	$	295.2	$	253.9	$	592.5	$	502.7	16.3	%	17.9	%
AFFO per share ⁽²⁾	$	0.86	$	0.82	$	1.74	$	1.63	4.9	%	6.7	%

⁽¹⁾The calculation to determine net income available to common stockholders includes ~~impairments,~~provisions for impairment, gains from the sale of ~~properties,~~real estate, and foreign currency gains and ~~losses, which~~losses. These items can vary from ~~period~~quarter to ~~period based on timing~~quarter and can significantly impact net income available to common ~~stockholders.~~stockholders and period to period comparisons.

Gains from the sale of properties during the second quarter of 2019 were $6.9 million, as compared to gains from the sale of properties of $7.8 million during the second quarter of 2018. Gains from the sale of properties during the first six months of 2019 were $14.2 million, as compared to gains from the sale of properties of $11.0 million during the first six months of 2018.

Total provisions for impairment recorded during the second quarter of 2019 were $13.1 million, as compared to provisions for impairment of $4.0 million during the second quarter of 2018. Total provisions for impairment recorded during the first six months of 2019 were $17.7 million, as compared to provisions for impairment of $18.2 million during the first six months of 2018.

~~Funds from Operations Available to Common Stockholders (FFO)~~

~~In the second quarter of 2019, FFO increased by $25.4 million, or 11.2%, to $251.5 million, compared to $226.1 million in the second quarter of 2018. On~~⁽²⁾All per share amounts are presented on a diluted per common share ~~basis,~~basis.

Net income available to common stockholders and FFO ~~was $0.81 in the second quarter of 2019, compared to $0.79 in the second quarter of 2018, an increase of $0.02, or 2.5%.~~

~~In the first six months of 2019, FFO increased by $46.2 million, or 10.2%, to $497.2 million, compared to $451.0 million~~ in the first six months of ~~2018. On a diluted per common share basis, FFO was $1.62~~2020 were impacted by the following transactions recorded in the first ~~six months of 2019, compared to $1.58 in the first six months of 2018, an increase of $0.04, or 2.5%.~~

~~Adjusted Funds from Operations Available to Common Stockholders (AFFO)~~

~~In the second~~ quarter of ~~2019, AFFO increased by $26.9~~2020: (i) a $9.8 million ~~or 11.9%,~~loss on extinguishment of debt due to ~~$253.9~~the January 2020 early redemption of the 5.750% notes due 2021, and (ii) a $3.5 million compared to $227.0 million in the second quarter of 2018. On a diluted per common share basis, AFFO was $0.82 in the second quarter of 2019, compared to $0.80 in the second quarter of 2018, an increase of $0.02, or 2.5%.

In the first six months of 2019, AFFO increased by $51.2 million, or 11.3%, to $502.7 million, compared to $451.5 million in the first six months of 2018. On a diluted per common share basis, AFFO was $1.63 in the first six months of 2019, compared to $1.59 in the first six months of 2018, an increase of $0.04, or 2.5%.

executive severance charge for our former chief financial officer.

See our discussion of FFO and AFFO (which are not financial measures under generally accepted accounting principles, or GAAP), later in the section entitled “Management’s Discussion and Analysis of Financial Condition

and Results of Operations,” in this quarterly report, which includes a reconciliation of net income available to common stockholders to FFO and AFFO.

LIQUIDITY AND CAPITAL RESOURCES

Capital Philosophy

Historically, we have met our long-term capital needs by issuing common stock, preferred stock and long-term unsecured notes and bonds. Over the long term, we believe that common stock should be the majority of our capital structure; however, we may issue ~~additional~~ preferred stock or debt securities. We may issue common stock when we believe that our share price is at a level that allows for the proceeds of any offering to be accretively invested into additional properties. In addition, we may issue common stock to permanently finance properties that were initially financed by our revolving credit facility or debt securities. However, we cannot assure you that we will have access to the capital markets at all times and at terms that are acceptable to us.

Our primary cash obligations, for the current year and subsequent years, are included in the “Table of Obligations,” which is presented later in this section. We expect to fund our operating expenses and other short-term liquidity requirements, including property acquisitions and development costs, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs and cash distributions to common ~~and preferred~~ stockholders, primarily through cash provided by operating activities, borrowing on our credit facility and ~~periodically~~ through public securities offerings.

Conservative Capital Structure

We believe that our stockholders are best served by a conservative capital structure. Therefore, we seek to maintain a conservative debt level on our balance sheet and solid interest and fixed charge coverage ratios. At June 30, ~~2019,~~2020, our total outstanding borrowings of senior unsecured notes and bonds, term loans, mortgages payable and credit facility borrowings were ~~$7.1~~$7.91 billion, or approximately ~~24.4%~~27.8% of our total market capitalization of ~~$29.1~~$28.47 billion.

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We define our total market capitalization at June 30, ~~2019~~2020 as the sum of:

•Shares of our common stock outstanding of ~~318,218,713,~~345,023,421, plus total common units outstanding of 463,119, multiplied by the last reported sales price of our common stock on the NYSE of ~~$68.97~~$59.50 per share on June 30, ~~2019,~~2020, or ~~$22.0~~$20.56 billion;

•Outstanding borrowings of ~~$8.0~~$628.6 million on our revolving credit ~~facility;~~facility, including £329.5 million British Pounds Sterling-denominated borrowings;

•Outstanding mortgages payable of ~~$295.9~~$393.7 million, excluding net mortgage premiums of ~~$3.7~~$2.3 million and deferred financing costs of ~~$156,000;~~$1.1 million;

•Outstanding borrowings of ~~$500.0~~$250.0 million on our term ~~loans,~~loan, excluding deferred financing costs of ~~$1.2 million;~~$742,000; and

•Outstanding senior unsecured notes and bonds of ~~$6.3~~$6.64 billion, including a Sterling-denominated private placement of£315.0 million, and excluding unamortized net ~~unamortized~~ original issuance premiums of ~~$6.8 million~~$3,000 and deferred financing costs of ~~$38.6~~$38.5 million.

Universal Shelf Registration

In November 2018, we filed a shelf registration statement with the SEC, which is effective for a term of three years and will expire in November 2021. In accordance with SEC rules, the amount of securities to be issued pursuant to this shelf registration statement was not specified when it was filed and there is no specific dollar limit. The securities covered by this registration statement include (1) common stock, (2) preferred stock, (3) debt securities, (4) depositary shares representing fractional interests in shares of preferred stock, (5) warrants to purchase debt securities, common stock, preferred stock, or depositary shares, and (6) any combination of these securities. We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

At-the-Market (ATM) ~~Programs~~Program

Under our ~~ATM~~"at-the-market" equity distribution plan, or our ATM program, up to 33,402,405 shares of common stock may be offered and sold (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the NYSE at prevailing market prices or at negotiated prices. ~~Our ATM program authorizes up to 28,961,855 common shares to be issued.~~ During the second quarter and first six months of ~~2019,~~2020, we issued ~~1,706,695~~1,511,149 shares and raised approximately ~~$124.2~~$95.7 million under the ATM program. ~~From the inception of our~~

~~current and prior ATM programs through June 30, 2019, we have issued 35,252,834 shares and raised $2.1 billion.~~ At June 30, ~~2019,~~2020, we had ~~18,747,166~~31,891,256 shares remaining for future issuance under our ~~current~~ ATM program. We anticipate maintaining the availability of our ATM program in the future, including the replenishment of authorized shares issuable thereunder.

Issuance of Common Stock

In ~~May 2019,~~March 2020, we issued ~~12,650,000~~9,690,500 shares of common stock in an overnight underwritten public ~~offering.~~offering, including 690,500 shares purchased by the underwriters upon the exercise of their option to purchase additional shares. After deducting underwriting discounts and other offering costs of ~~$31.0~~$21.2 million, the net proceeds of ~~$845.1~~$728.9 million were primarily used to repay borrowings under our revolving credit facility.

Dividend Reinvestment and Stock Purchase Plan

Our Dividend Reinvestment and Stock Purchase Plan, or our DRSPP, provides our common stockholders, as well as new investors, with a convenient and economical method of purchasing our common stock and reinvesting their distributions. Our DRSPP also allows our current stockholders to buy additional shares of common stock by reinvesting all or a portion of their distributions. Our DRSPP authorizes up to 26,000,000 common shares to be issued. Our DRSPP includes a waiver approval process, allowing larger investors or institutions, per a formal approval process, to purchase shares at a small discount, if approved by us. During the second quarter of 2019, we issued 27,520 shares and raised approximately $1.9 million under our DRSPP. During the first six months of 2019, we issued 59,418 shares and raised approximately $4.1 million under our DRSPP. We did not issue shares under the waiver approval process during the first six months of ~~2019. From the inception of~~2020. At June 30, 2020, we had 11,573,851 shares remaining for future issuance under our DRSPP ~~through June 30, 2019,~~program. During the second quarter of 2020, we ~~have~~ issued ~~14,289,228~~44,817 shares and raised approximately ~~$675.0 million.~~$2.4 million under our DRSPP. During the first six months of 2020, we issued 78,817 shares and raised approximately $4.8 million under our DRSPP.

Revolving Credit Facility

We have a ~~$3.25~~$3.0 billion unsecured revolving ~~credit facility, or our~~ credit facility with an initial term that expires in March 2023 and includes, at our option, two six-month extensions. The multicurrency revolving facility allows us to borrow in up to 14 currencies, including U.S. dollars. Our revolving credit facility has a $1.0 billion expansion ~~option.~~option, which is subject to obtaining lender commitments. Under our revolving credit facility, our investment grade credit ratings as of June 30, ~~2019~~

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2020 provide for financing at the London Interbank Offered Rate, commonly referred to as LIBOR, plus 0.775% with a facility commitment fee of 0.125%, for all-in drawn pricing of 0.90% over LIBOR.

The borrowing rate is subject to an interest rate floor and may change if our investment grade credit ratings change. We also have other interest rate options available to us under our credit facility. Our credit facility is unsecured and, accordingly, we have not pledged any assets as collateral for this obligation.

At June 30, ~~2019,~~2020, we had a borrowing capacity of ~~approximately $3.0~~$2.4 billion available on our revolving credit facility and an outstanding balance of ~~$8.0 million.~~$628.6 million, including £329.5 million Sterling. The weighted average interest rate on borrowings under our revolving credit facility during the first six months of ~~2019~~2020 was ~~3.3%~~1.6% per annum. We must comply with various financial and other covenants in our credit facility. At June 30, ~~2019,~~2020, we were in compliance with these covenants. We expect to use our credit facility to acquire additional properties and for other general corporate purposes. Any additional borrowings will increase our exposure to interest rate risk.

We generally use our credit facility for the short-term financing of new property acquisitions. Thereafter, we generally seek to refinance those borrowings with the net proceeds of long-term or permanent financing, which may include the issuance of common stock, preferred stock or debt securities. We cannot assure you, however, that we will be able to obtain any such refinancing, or that market conditions prevailing at the time of the refinancing will enable us to issue equity or debt securities at acceptable terms. We regularly review our credit facility and may seek to extend, renew or replace our credit facility, to the extent we deem appropriate.

Term Loans

In October 2018, in conjunction with entering into our revolving credit facility, we entered into a $250.0 million senior unsecured term loan, which matures in March ~~2024.~~2024, and is governed by the credit agreement that governs our revolving credit facility. Borrowing under this term loan bears interest at the current one-month LIBOR, plus 0.85%. In conjunction with this term loan, we also entered into an interest rate swap which effectively fixes our per annum interest on this term loan at 3.89%.

In June 2015, in conjunction with entering into our previous revolving credit facility, we entered into a $250.0 million senior unsecured term loan ~~maturing~~which matured in June 2020.Borrowing under this term loan ~~bears~~bore interest at the current one-month LIBOR, plus 0.90%. In conjunction with this term loan, we also entered into an interest rate swap which effectively ~~fixes~~fixed our per annum interest rate on this term loan at 2.62%. In June 2020, we repaid the term loan in full upon maturity.

Mortgage Debt

As of June 30, ~~2019,~~2020, we had ~~$295.9~~$393.7 million of mortgages payable, all of which were assumed in connection with our property acquisitions. Additionally, at June 30, ~~2019,~~2020, we had net premiums totaling ~~$3.7~~$2.3 million on these mortgages and deferred financing costs of ~~$156,000.~~$1.1 million. We expect to pay off the mortgages payable as soon as prepayment penalties have declined to a level that would make it economically feasible to do so. During the first six months of ~~2019,~~2020, we made ~~$2.5~~$14.7 million in principal ~~payments.~~payments, including the repayment of one mortgage in full for $11.4 million.

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Notes Outstanding

Our senior unsecured note and bond obligations consist of the following as of June 30, ~~2019,~~2020, sorted by maturity date (dollars in millions):


3.250% notes, $450 issued in October 2012 and $500 issued in December 2017, both due in October 2022	$	950
4.650% notes, issued in July 2013 and due in August 2023	750
3.875% notes, issued in June 2014 and due in July 2024	350
3.875% notes, issued in April 2018 and due in April 2025	500
4.125% notes, $250 issued in September 2014 and $400 issued in March 2017, both due in October 2026	650
3.000% notes, issued in October 2016 and due in January 2027	600
3.650% notes, issued in December 2017 and due in January 2028	550
3.250% notes, issued in June 2019 and due in June 2029	500
3.250% notes, issued in May 2020 and due in January 2031	600
2.730% notes, issued in May 2019 and due in May 2034 ⁽¹⁾	391
5.875% bonds, $100 issued in March 2005 and $150 issued in June 2011, both due in March 2035	250
4.650% notes, $300 issued in March 2017 and $250 issued in December 2017, both due in March 2047	550
Total principal amount	$	6,641
Unamortized net original issuance premiums and deferred financing costs	(39)
	$	6,602

5.750% notes, issued in June 2010 and due in January 2021 $ 250
3.250% notes, $450 issued in October 2012 and $500 issued in December 2017, both due in October 2022 950
4.650% notes, issued in July 2013 and due in August 2023 750
3.875% notes, issued in June 2014 and due in July 2024 350
3.875% notes, issued in April 2018 and due in April 2025 500
4.125% notes, $250 issued in September 2014 and $400 issued in March 2017, both due in October 2026 650
3.000% notes, issued in October 2016 and due in January 2027 600
3.650% notes, issued in December 2017 and due in January 2028 550
3.250% notes, issued in June 2019 and due in June 2029 500
2.730% notes, issued in May 2019 and due in May 2034 ⁽¹⁾
400
5.875% bonds, $100 issued in March 2005 and $150 issued in June 2011, both due in March 2035 250
4.650% notes, $300 issued in March 2017 and $250 issued in December 2017, both due in March 2047 550
Total principal amount $ 6,300
Unamortized net original issuance premiums and deferred financing costs (32 )
$ 6,268

⁽¹⁾Represents the principal balance (in U.S. dollars) of the Sterling-denominated private placement of £315.0 million ~~based on~~converted at the applicable exchange rate on June 30, ~~2019.~~2020.

In July 2020, we issued $350 million of 3.250% senior unsecured notes due in January 2031, which constituted a further issuance of, and formed a single series with, the $600 million senior notes issued in May 2020. The public offering price for these notes was 108.24% of the principal amount, for an effective yield to maturity of 2.341%. The net proceeds of approximately $376.6 million from this offering were used to repay borrowings under our credit facility, to fund potential investment opportunities and for other general corporate purposes.

All of our outstanding notes and bonds have fixed interest rates and contain various covenants, with which we remained in compliance as of June 30, ~~2019.~~2020. Additionally, interest on all of our senior note and bond obligations is paid semiannually.

The following is a summary of the key financial covenants for our senior unsecured notes, as defined and calculated per the terms of our senior notes and bonds. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show our ability to incur additional debt under the terms of our senior notes and bonds as well as to disclose our current compliance with such covenants, and are not measures of our liquidity or performance. The actual amounts as of June 30, ~~2019~~2020 are:



Note Covenants	Required	Actual
Limitation on incurrence of total debt	< 60% of adjusted assets	~~39.0~~38.1	%
Limitation on incurrence of secured debt	< 40% of adjusted assets	~~1.7~~1.9	%
Debt service coverage (trailing 12 months)⁽¹⁾	> 1.5x	~~4.4x~~		5.4x
Maintenance of total unencumbered assets	> 150% of unsecured debt	~~259.3~~267.3	%

⁽¹⁾Our debt service coverage ratio is calculated on a pro forma basis for the preceding four-quarter period on the assumptions that: (i) the incurrence of any ~~Debt~~debt (as defined in the covenants) incurred by us since the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other ~~Debt~~debt since the first day of such four-quarter period), (ii) the repayment or retirement of any of our ~~Debt~~debt since the first day of such four-quarter period, and (iii) any acquisition or disposition by us of any asset or group since the first day of such four quarters had in each case occurred on July 1, ~~2018~~2019 and subject to certain additional adjustments. Such pro forma ratio has been prepared on the basis required by that debt service covenant, reflects various estimates and assumptions and is subject to other uncertainties, and therefore does not purport to reflect what our actual debt service coverage ratio would have been had transactions referred to in clauses (i), (ii) and (iii) of the preceding sentence occurred as of July 1, ~~2018,~~2019, nor does it purport to reflect our debt service coverage ratio for any future period. Our fixed charge coverage ratio is calculated in the same manner as our debt service coverage ratio, except that preferred stock dividends are also added to the denominator; since we redeemed our Class F preferred dividends in April 2017, our fixed charge coverage ratio is equivalent to our debt service coverage ratio. The following is our calculation of debt service and fixed charge coverage at June 30, ~~2019~~2020 (in thousands, for trailing twelve months):

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Three Months Ended June 30, Six months ended June 30,
2019
2018
2019
2018
Net income available to common stockholders $ 95,194
$ 96,380
$ 206,136
$ 179,543
Cumulative adjustments to calculate FFO ⁽¹⁾
156,295
129,702
291,028
271,421
FFO available to common stockholders 251,489
226,082
497,164
450,964
Amortization of share-based compensation 4,527
4,995
7,291
8,657
Amortization of deferred financing costs ⁽²⁾
1,133
1,014
2,173
1,858
Amortization of net mortgage premiums (354 ) (354 ) (708 ) (813 )
Loss (gain) on interest rate swaps 686
(792 ) 1,364
(2,799 )
Straight-line payments from cross-currency swaps ⁽³⁾
799
—
799
—
Leasing costs and commissions (707 ) (1,536 ) (1,030 ) (2,452 )
Recurring capital expenditures (116 ) (135 ) (172 ) (147 )
Straight-line rent (7,230 ) (6,267 ) (12,092 ) (11,632 )
Amortization of above and below-market leases 3,627
3,907
7,741
7,771
Other adjustments ⁽⁴⁾
81
74
139
142
Total AFFO available to common stockholders $ 253,935
$ 226,988
$ 502,669
$ 451,549
AFFO allocable to dilutive noncontrolling interests 368
236
—
465
Diluted AFFO $ 254,303
$ 227,224
$ 502,669
$ 452,014

AFFO per common share:
Basic $ 0.82
$ 0.80
$ 1.64
$ 1.59
Diluted $ 0.82
$ 0.80
$ 1.63
$ 1.59

Distributions paid to common stockholders $ 208,864
$ 187,488
$ 413,410
$ 373,044

AFFO available to common stockholders in excess of distributions paid to common stockholders $ 45,071
$ 39,500
$ 89,259
$ 78,505
Weighted average number of common shares used for computation per share:
Basic 311,032,972
284,928,969
307,293,949
284,469,689
Diluted 311,785,281
285,372,256
307,580,127
284,924,336

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⁽¹⁾	~~See reconciling items for FFO presented under “Funds from Operations Available to Common Stockholders (FFO).”~~


⁽²⁾	Includes the amortization of costs incurred and capitalized upon issuance of our notes payable, assumption of our mortgages payable and upon issuance of our term loans. The deferred financing costs are being amortized over the lives of the respective mortgages and term loans. No costs associated with our credit facility agreements or annual fees paid to credit rating agencies have been included.


⁽³⁾	Straight-line payments from cross-currency swaps represent quarterly payments in U.S. dollars received by us from counterparties in exchange for associated foreign currency payments. These USD payments are fixed and determinable for the duration of the associated hedging transaction.


⁽⁴⁾	Includes adjustments allocable to noncontrolling interests, obligations related to financing lease liabilities, and foreign currency gains and losses as a result of intercompany debt and remeasurement transactions.

We believe the non-GAAP financial measure AFFO provides useful information to investors because it is a widely accepted industry measure of the operating performance of real estate companies that is used by industry analysts and investors who look at and compare those companies. In particular, AFFO provides an additional measure to compare the operating performance of different REITs without having to account for differing depreciation assumptions and other unique revenue and expense items which are not pertinent to measuring a particular company’s on-going operating performance. Therefore, we believe that AFFO is an appropriate supplemental performance metric, and that the most appropriate GAAP performance metric to which AFFO should be reconciled is net income available to common stockholders.

Presentation of the information regarding FFO and AFFO is intended to assist the reader in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and AFFO in the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and AFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as alternatives to net income as an indication of our performance. FFO and AFFO should not be considered as alternatives to reviewing our cash flows from operating, investing, and financing activities. In addition, FFO and AFFO should not be considered as measures of liquidity, our ability to make cash distributions, or our ability to pay interest payments.

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PROPERTY PORTFOLIO INFORMATION

At June 30, ~~2019,~~2020, we owned a diversified portfolio:

•Of ~~5,951~~6,541 properties;

•With an occupancy rate of ~~98.3%~~98.5%, or ~~5,849~~6,440 properties leased and ~~102~~101 properties available for ~~lease;~~lease or sale;

~~Leased to 265 different commercial tenants doing~~•Doing business in 4950 separate industries;

•Located in 49 U.S. states, Puerto Rico and the U.K.;

•With ~~over 98.4~~approximately 106.4 million square feet of leasable space;

•With a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.0 years; and

~~Of the 5,951 properties we owned at~~At June 30, ~~2019, 5,849~~2020, 6,440 properties were leased under net lease agreements. A net lease typically requires the tenant to be responsible for monthly rent and certain property operating expenses including property taxes, insurance, and maintenance. In addition, our tenants are typically subject to future rent increases based on increases in the consumer price index (typically subject to ceilings), additional rent calculated as a percentage of the tenants’ gross sales above a specified level, or fixed increases.

~~At June 30, 2019, our 265 commercial tenants, which we define as retailers with over 50 locations and non-retailers with over $500 million in annual revenues, represented approximately 95%~~

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Table of ~~our annualized revenue. We had 333 additional tenants, representing approximately 5% of our annualized revenue at June 30, 2019, which brings our total tenant count to 598 tenants.~~Contents

Industry Diversification

The following table sets forth certain information regarding our property portfolio classified according to the business of the respective tenants, expressed as a percentage of our total rental revenue:


Percentage of Rental Revenue (excluding reimbursable) by Industry
	For the Quarter Ended June 30, 2020	For the Years Ended
			Dec 31, 2019		Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015
U.S.
Aerospace	0.7%	0.8%		0.8%		0.9%		1.0%		1.1%
Apparel stores	1.4	1.1		1.3		1.6		1.9		2.0
Automotive collision services	1.1	1.1		0.9		1.0		1.0		1.0
Automotive parts	1.7	1.6		1.7		1.3		1.3		1.4
Automotive service	2.2	2.3		2.2		2.2		1.9		1.9
Automotive tire services	2.1	2.2		2.4		2.6		2.7		2.9
Beverages	2.1	2.3		2.5		2.7		2.6		2.7
Child care	2.2	2.3		1.7		1.8		1.9		2.0
Consumer electronics	0.3	0.3		0.3		0.3		0.3		0.3
Consumer goods	0.6	0.6		0.7		0.8		0.9		0.9
Convenience stores	12.0	11.9		11.2		9.6		8.7		9.2
Crafts and novelties	0.8	0.6		0.7		0.6		0.6		0.6
Diversified industrial	0.6	0.7		0.8		0.9		0.9		0.8
Dollar stores	8.1	7.3		7.5		7.9		8.6		8.9
Drug stores	9.1	9.0		10.2		10.9		11.2		10.6
Education	0.2	0.2		0.3		0.3		0.3		0.3
Electric utilities	0.1	0.1		0.1		0.1		0.1		0.1
Entertainment	0.3	0.4		0.4		0.4		0.5		0.5
Equipment services	0.4	0.4		0.4		0.4		0.6		0.5
Financial services	2.0	2.1		2.3		2.4		1.8		1.7
Food processing	0.8	0.6		0.5		0.6		1.1		1.2
General merchandise	3.0	2.5		2.3		2.0		1.8		1.7
Government services	0.7	0.8		0.9		1.0		1.1		1.2
Grocery stores	5.0	4.9		5.0		4.4		3.1		3.0
Health and beauty	0.2	0.3		0.2		*		*		*
Health and fitness	7.1	7.5		7.4		7.5		8.1		7.7
Health care	1.6	1.4		1.5		1.4		1.5		1.7
Home furnishings	0.8	0.7		0.8		0.9		0.8		0.9
Home improvement	2.9	3.0		3.0		2.6		2.5		2.4
Machinery	0.1	0.1		0.1		0.1		0.1		0.1
Motor vehicle dealerships	1.6	1.9		1.9		2.1		1.9		1.6
Office supplies	0.2	0.2		0.2		0.2		0.3		0.3
Other manufacturing	0.6	0.6		0.7		0.8		0.8		0.7
Packaging	1.0	1.0		1.1		1.0		0.8		0.8
Paper	0.1	0.1		0.1		0.1		0.1		0.1
Pet supplies and services	0.8	0.5		0.5		0.6		0.6		0.7
Restaurants - casual dining	3.0	3.2		3.2		3.8		3.9		3.8
Restaurants - quick service	4.8	6.2		5.7		5.1		4.9		4.2
Shoe stores	0.2	0.3		0.5		0.6		0.7		0.7
Sporting goods	0.8	0.9		1.1		1.4		1.6		1.8
Telecommunications	0.5	0.5		0.6		0.6		0.6		0.7
Theaters	6.3	6.3		5.5		5.0		4.9		5.1
Transportation services	4.2	4.6		5.0		5.4		5.5		5.4
Wholesale clubs	2.5	2.7		3.0		3.3		3.6		3.8
Other	0.1	0.6		0.8		0.8		0.9		1.0
Total U.S.	96.9%	98.7%		100.0%		100.0%		100.0%		100.0%
U.K.
Grocery stores	3.0	1.3		—		—		—		—
Health care	0.1	—		—		—		—		—
Theaters	*	*		—		—		—		—
Total U.K.	3.1%	1.3%		—		—		—		—
Totals	100.0%	100.0%		100.0%		100.0%		100.0%		100.0%

*Less than 0.1%

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Percentage of Rental Revenue (excluding reimbursable) by Industry

For the
Quarter Ended
June 30, 2019
For the Years Ended

Dec 31,
2018

Dec 31,
2017

Dec 31,
2016

Dec 31,
2015

Dec 31,
2014

U.S.
Aerospace 0.8 % 0.8 % 0.9 % 1.0 % 1.1 % 1.2 %
Apparel stores 1.2
1.3
1.6
1.9
2.0
2.0

Automotive collision services 1.1
0.9
1.0
1.0
1.0
0.8

Automotive parts 1.6
1.7
1.3
1.3
1.4
1.3

Automotive service 2.3
2.2
2.2
1.9
1.9
1.8

Automotive tire services 2.3
2.4
2.6
2.7
2.9
3.2

Beverages 2.3
2.5
2.7
2.6
2.7
2.8

Child care 2.2
1.7
1.8
1.9
2.0
2.2

Consumer appliances 0.5
0.5
0.5
0.5
0.6
0.5

Consumer electronics 0.3
0.3
0.3
0.3
0.3
0.3

Consumer goods 0.6
0.7
0.8
0.9
0.9
0.9

Convenience stores 11.9
11.2
9.6
8.7
9.2
10.1

Crafts and novelties 0.6
0.7
0.6
0.6
0.6
0.6

Diversified industrial 0.7
0.8
0.9
0.9
0.8
0.5

Dollar stores 7.2
7.5
7.9
8.6
8.9
9.6

Drug stores 9.3
10.2
10.9
11.2
10.6
9.5

Education 0.2
0.3
0.3
0.3
0.3
0.4

Electric utilities 0.1
0.1
0.1
0.1
0.1
0.1

Entertainment 0.4
0.4
0.4
0.5
0.5
0.5

Equipment services 0.4
0.4
0.4
0.6
0.5
0.6

Financial services 2.2
2.3
2.4
1.8
1.7
1.8

Food processing 0.5
0.5
0.6
1.1
1.2
1.4

General merchandise 2.5
2.3
2.0
1.8
1.7
1.5

Government services 0.8
0.9
1.0
1.1
1.2
1.3

Grocery stores 5.0
5.0
4.4
3.1
3.0
3.0

Health and beauty 0.3
0.2
*
*
*
*

Health and fitness 7.5
7.4
7.5
8.1
7.7
7.0

Health care 1.4
1.5
1.4
1.5
1.7
1.8

Home furnishings 0.7
0.8
0.9
0.8
0.9
0.9

Home improvement 3.0
3.0
2.6
2.5
2.4
1.7

Insurance *
0.1
0.1
0.1
0.1
0.1

Jewelry *
0.1
0.1
0.1
0.1
0.1

Machinery 0.1
0.1
0.1
0.1
0.1
0.2

Motor vehicle dealerships 1.7
1.9
2.1
1.9
1.6
1.6

Office supplies 0.2
0.2
0.2
0.3
0.3
0.4

Other manufacturing 0.7
0.7
0.8
0.8
0.7
0.7

Packaging 1.0
1.1
1.0
0.8
0.8
0.8

Paper 0.1
0.1
0.1
0.1
0.1
0.1

Pet supplies and services 0.5
0.5
0.6
0.6
0.7
0.7

Restaurants - casual dining 3.3
3.2
3.8
3.9
3.8
4.3

Restaurants - quick service 6.2
5.7
5.1
4.9
4.2
3.7

Shoe stores 0.6
0.5
0.6
0.7
0.7
0.9

Sporting goods 0.9
1.1
1.4
1.6
1.8
1.6

Telecommunications 0.5
0.6
0.6
0.6
0.7
0.7

Theaters 6.0
5.5
5.0
4.9
5.1
5.3

Transportation services 4.7
5.0
5.4
5.5
5.4
5.2

Wholesale clubs 2.7
3.0
3.3
3.6
3.8
4.1

Other 0.1
0.1
0.1
0.2
0.2
0.2

Total U.S. 99.2 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
U.K.
Grocery Stores 0.8
-
-
-
-
-

Total U.K. 0.8 % -
-
-
-
-

Totals 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Table of Contents


*	~~Less than 0.1%~~

Property Type Composition

The following table sets forth certain property type information regarding our property portfolio as of June 30, ~~2019~~2020 (dollars in thousands):


Property Type	Number of Properties	Approximate Leasable Square Feet ⁽¹⁾	Rental Revenue for the Quarter Ended June 30, 2020 ⁽²⁾		Percentage of Rental Revenue
Retail	6,364	76,343,300	$	326,516	83.9	%
Industrial	119	26,714,300	42,344		10.9
Office	43	3,175,700	13,660		3.5
Agriculture	15	184,500	6,716		1.7
Totals	6,541	106,417,800	$	389,236	100.0	%

Property Type
Number of
Properties
Approximate
Leasable
Square Feet
Rental Revenue for the
Quarter Ended
June 30, 2019 ⁽¹⁾

Percentage of
Rental Revenue

Retail 5,777 68,324,900 $ 286,866
82.5 %
Industrial 117 26,804,800 40,933
11.8
Office 42 3,104,200 13,080
3.8
Agriculture 15 184,500 6,647
1.9
Totals 5,951 98,418,400 $ 347,526
100.0 %
⁽¹⁾Includes leasable building square footage. Excludes 3,300 acres of leased land categorized as agriculture at June 30, 2020.


⁽¹⁾ ⁽²⁾Includes rental revenue for all properties owned at June 30, 2020. Excludes revenue of $1 from sold properties and rental revenue (reimbursable) of $20,964.	~~Includes rental revenue for all properties owned at June 30, 2019. Excludes revenue of $321 from sold properties and rental revenue (reimbursable) of $16,405.~~

Tenant Diversification

The following table sets forth the 20 largest tenants in our property portfolio, expressed as a percentage of total portfolio annualized contractual rental revenue, which does not give effect to deferred rent, at June 30, ~~2019:~~2020:


Tenant	Number of Leases	% of Rental Revenue ⁽¹⁾
Walgreens	248	6.0	%
7-Eleven	403	4.7	%
Dollar General	771	4.5	%
FedEx	41	3.9	%
Dollar Tree / Family Dollar	550	3.4	%
LA Fitness	57	3.4	%
Regal Cinemas (Cineworld)	42	2.9	%
AMC Theaters	32	2.7	%
Walmart / Sam's Club	54	2.5	%
Sainsbury's	16	2.5	%
Lifetime Fitness	16	2.4	%
Circle K (Couche-Tard)	280	1.9	%
BJ's Wholesale Clubs	15	1.8	%
CVS Pharmacy	88	1.6	%
Treasury Wine Estates	17	1.6	%
Super America (Marathon)	161	1.6	%
Kroger	22	1.5	%
GPM Investments / Fas Mart	207	1.4	%
TBC Corp	159	1.2	%
Home Depot	19	1.2	%
Total	3,198	52.8	%

Tenant
Number of
Leases

% of Rental Revenue⁽¹⁾

Walgreens 215
5.8 %
7-Eleven 398
5.2 %
FedEx 42
4.5 %
Dollar General 604
3.8 %
LA Fitness 53
3.5 %
Dollar Tree / Family Dollar 469
3.2 %
Regal Cinemas 41
3.2 %
AMC Theatres 33
3.1 %
Wal-Mart / Sam's Club 53
2.8 %
Lifetime Fitness 14
2.3 %
Circle K (Couche-Tard) 295
2.2 %
Sainsbury's 12
2.0 %
BJ's Wholesale Clubs 15
1.9 %
Treasury Wine Estates 17
1.8 %
CVS Pharmacy 84
1.7 %
Kroger 22
1.7 %
Super America (Marathon) 137
1.6 %
GPM Investments / Fas Mart 210
1.5 %
TBC Corp 159
1.4 %
Home Depot 17
1.3 %
Totals 2,890
54.5 %


⁽¹⁾	~~Excludes rental revenue (reimbursable).~~

~~Service Category Diversification~~⁽¹⁾Excludes rental revenue (reimbursable). Amounts for ~~our Retail Properties~~

~~The following table sets forth certain information regarding~~each tenant are calculated independently; therefore, the ~~properties owned at June 30, 2019, classified according~~individual percentages may not sum to the ~~business types and the level~~total.

-52-

Table of ~~services they provide (dollars in thousands):~~

Retail Rental Revenue for the Quarter Ended
June 30, 2019 ⁽¹⁾
Percentage of Retail Rental Revenue
Tenants Providing Services
Automotive collision services $ 3,844
1.3 %
Automotive service 8,039
2.8
Child care 7,787
2.7
Education 804
0.3
Entertainment 1,293
0.5
Equipment services 114
*
Financial services 6,664
2.3
Health and fitness 26,065
9.1
Health care 2,189
0.8
Telecommunications 86
*
Theaters 20,879
7.3
Transportation services 250
0.1
Other 94
*
78,108
27.2
Tenants Selling Goods and Services
Automotive parts (with installation) 1,621
0.6
Automotive tire services 7,952
2.8
Convenience stores 41,298
14.4
Health and beauty 13
*
Motor vehicle dealerships 5,992
2.1
Pet supplies and services 645
0.2
Restaurants - casual dining 10,682
3.7
Restaurants - quick service 21,522
7.5
89,725
31.3
Tenants Selling Goods
Apparel stores 4,019
1.4
Automotive parts 3,384
1.2
Book stores 113
*
Consumer electronics 1,113
0.4
Crafts and novelties 1,874
0.6
Dollar stores 25,108
8.7
Drug stores 30,852
10.8
General merchandise 7,488
2.6
Grocery stores 20,133
7.0
Home furnishings 2,227
0.8
Home improvement 9,337
3.3
Jewelry 175
0.1
Office supplies 569
0.2
Shoe stores 185
0.1
Sporting goods 2,988
1.0
Wholesale clubs 9,468
3.3
119,033
41.5 %
Totals $ 286,866
100.0 %


*	~~Less than 0.1%~~


⁽¹⁾Contents	~~Includes rental revenue for all retail leases for properties owned at June 30, 2019. Excludes revenue of $60,660 from non-retail leases, $321~~ ~~from sold properties, and $16,405 of rental revenue (reimbursable).~~

Lease Expirations

The following table sets forth certain information regarding the timing of the lease term expirations in our portfolio (excluding rights to extend a lease at the option of the tenant) and their contribution to rental revenue for the quarter ended June 30, ~~2019~~2020 (dollars in thousands):


Total Portfolio⁽¹⁾
	Expiring Leases			Approximate Leasable Square Feet		Rental Revenue for the Quarter Ended June 30, 2020		% of Rental Revenue
Year	Retail	Non-Retail
2020	66	8	1,433,500	$	3,824	1.0	%
2021	357	14	3,280,200	12,381		3.2
2022	412	22	8,899,800	20,176		5.2
2023	549	23	10,227,100	30,864		8.0
2024	411	16	7,076,900	22,793		5.9
2025	475	19	7,932,400	28,146		7.3
2026	328	4	5,185,200	17,853		4.6
2027	564	6	7,310,600	23,785		6.1
2028	442	14	10,394,400	27,513		7.1
2029	533	6	9,088,100	29,230		7.5
2030	258	14	5,003,500	23,384		6.0
2031	315	26	6,844,700	29,223		7.5
2032	135	4	3,799,400	15,155		3.9
2033	283	3	3,682,900	18,661		4.8
2034	322	1	4,548,400	28,012		7.2
2035 - 2045	890	5	9,596,600	57,219		14.7
Totals	6,340	185	104,303,700	$	388,219	100.0	%

⁽¹⁾The lease expirations for leases under construction are based on the estimated date of completion of those projects. Excludes revenue of $1,017 from expired leases, $1 from sold properties, and $20,964 of rental revenue (reimbursable) at June 30, 2020. Leases on our multi-tenant properties are counted separately in the table above.

-53-

Total Portfolio⁽¹⁾

Expiring
Leases
Approx.
Leasable
Sq. Feet

Rental
Revenue

% of
Rental
Revenue

Year Retail Non-Retail
2019 77 5 871,100
3,188
0.9
2020 213 11 3,041,400
10,651
3.1
2021 325 15 5,286,600
15,167
4.4
2022 413 22 9,371,400
21,163
6.1
2023 544 23 9,981,100
30,168
8.7
2024 385 15 6,410,100
20,566
6.0
2025 350 15 6,284,000
22,658
6.6
2026 312 4 4,665,000
16,124
4.7
2027 538 5 6,331,800
22,393
6.5
2028 342 14 9,338,900
22,480
6.5
2029 420 7 7,900,900
23,972
7.0
2030 173 14 3,783,400
19,039
5.5
2031 311 25 6,120,400
27,749
8.0
2032 102 4 3,304,300
12,937
3.7
2033 271 — 2,336,900
15,683
4.5
2034-2043 964 4 11,163,800
61,273
17.8
Totals 5,740 183 96,191,100
$ 345,211
100.0 %


⁽¹⁾ Table of Contents	The lease expirations for leases under construction are based on the estimated date of completion of those projects. Excludes revenue of $2,315 from 122 expired leases, $321 from sold properties, and $16,405 of rental revenue (reimbursable) at June 30, 2019. Leases on our multi-tenant properties are counted separately in the table above.

Geographic Diversification

The following table sets forth certain state-by-state information regarding our property portfolio as of June 30, ~~2019~~2020 (dollars in thousands):


Location	Number of Properties	Percent Leased		Approximate Leasable Square Feet	Rental Revenue for the Quarter Ended June 30, 2020 ⁽¹⁾		Percentage of Rental Revenue
Alabama	227	98	%	2,148,400	$	7,796	2.0	%
Alaska	3	100		274,600	536		0.1
Arizona	153	99		2,085,300	8,825		2.3
Arkansas	102	99		1,183,200	3,472		0.9
California	231	99		6,643,800	34,210		8.8
Colorado	100	96		1,582,900	5,943		1.5
Connecticut	21	90		1,378,200	4,088		1.0
Delaware	19	100		101,400	690		0.2
Florida	432	98		4,697,800	20,648		5.3
Georgia	300	98		4,612,100	14,476		3.7
Idaho	14	93		103,200	441		0.1
Illinois	296	98		6,396,500	22,230		5.7
Indiana	204	99		2,565,600	10,499		2.7
Iowa	45	100		2,443,200	4,414		1.1
Kansas	122	96		2,256,800	6,251		1.6
Kentucky	93	100		1,826,100	5,358		1.4
Louisiana	137	96		1,905,500	6,177		1.6
Maine	27	100		277,800	1,473		0.4
Maryland	38	100		1,494,000	6,449		1.7
Massachusetts	59	95		942,800	4,529		1.2
Michigan	223	100		2,610,800	9,322		2.4
Minnesota	172	99		2,326,800	11,108		2.9
Mississippi	187	98		2,021,800	5,657		1.5
Missouri	187	96		3,019,600	9,493		2.4
Montana	12	100		89,100	536		0.1
Nebraska	62	97		866,400	2,274		0.6
Nevada	24	96		1,196,900	2,153		0.5
New Hampshire	14	100		321,500	1,464		0.4
New Jersey	79	99		1,252,000	7,622		2.0
New Mexico	60	100		504,200	2,002		0.5
New York	139	98		3,028,600	16,532		4.2
North Carolina	202	99		3,334,500	11,236		2.9
North Dakota	8	100		126,900	336		0.1
Ohio	342	98		6,731,800	17,311		4.4
Oklahoma	191	98		2,377,600	8,145		2.1
Oregon	30	100		644,600	2,278		0.6
Pennsylvania	223	100		2,265,900	9,127		2.3
Rhode Island	3	100		158,000	815		0.2
South Carolina	179	97		1,811,000	8,408		2.2
South Dakota	23	96		258,500	683		0.2
Tennessee	260	99		3,850,400	11,892		3.1
Texas	804	99		11,630,800	41,467		10.7
Utah	23	100		949,700	2,339		0.6
Vermont	1	100		65,500	191		*
Virginia	219	99		3,357,000	10,994		2.8
Washington	50	98		913,400	3,726		1.0
West Virginia	36	100		528,100	1,854		0.5
Wisconsin	128	98		3,106,200	9,003		2.3
Wyoming	9	100		63,900	379		0.1
Puerto Rico	4	100		28,300	150		*
U.K.	24	100		2,058,800	12,234		3.1
Totals\Average	6,541	98	%	106,417,800	$	389,236	100.0	%

*Less than 0.1%

⁽¹⁾Includes rental revenue for all properties owned at June 30, 2020. Excludes revenue of $1 from sold properties and$20,964 of tenant reimbursement revenue.

-54-

Location Number of Properties Percent Leased
Approximate Leasable
Square Feet
Rental Revenue
for the Quarter Ended
June 30, 2019⁽¹⁾

Percentage of Rental
Revenue

Alabama 170 97 % 1,594,400 $ 6,015
1.7 %
Alaska 3 100
274,600 536
0.2
Arizona 119 100
1,825,900 7,114
2.1
Arkansas 86 100
919,900 2,460
0.7
California 199 99
6,329,700 30,814
8.9
Colorado 96 96
1,552,500 5,644
1.6
Connecticut 20 95
519,700 1,981
0.6
Delaware 18 100
93,000 661
0.2
Florida 400 98
4,362,800 19,172
5.5
Georgia 287 97
4,425,600 13,893
4.0
Idaho 12 100
87,000 389
0.1
Illinois 284 99
6,257,500 21,557
6.2
Indiana 191 99
2,330,900 9,257
2.7
Iowa 40 93
3,040,000 4,391
1.3
Kansas 115 95
2,133,700 5,669
1.6
Kentucky 84 99
1,721,700 4,803
1.4
Louisiana 116 97
1,607,000 5,358
1.6
Maine 18 100
203,700 1,225
0.4
Maryland 37 100
1,069,800 5,051
1.5
Massachusetts 58 91
782,100 3,623
1.0
Michigan 194 99
2,209,200 7,621
2.2
Minnesota 165 98
2,250,300 10,568
3.0
Mississippi 170 97
1,869,300 5,345
1.5
Missouri 177 95
2,848,300 8,574
2.5
Montana 11 100
87,000 498
0.1
Nebraska 42 100
687,800 1,714
0.5
Nevada 24 96
1,196,900 2,445
0.7
New Hampshire 13 100
313,100 1,404
0.4
New Jersey 74 99
1,003,300 5,946
1.7
New Mexico 36 100
374,900 1,133
0.3
New York 126 100
2,836,700 15,743
4.5
North Carolina 192 99
3,186,000 10,372
3.0
North Dakota 6 83
117,700 178
*
Ohio 311 99
7,107,200 18,081
5.2
Oklahoma 183 100
2,247,000 6,902
2.0
Oregon 28 100
591,500 2,339
0.7
Pennsylvania 223 99
2,290,600 11,006
3.2
Rhode Island 3 100
158,000 815
0.2
South Carolina 180 99
1,796,200 8,072
2.3
South Dakota 15 100
195,200 473
0.1
Tennessee 253 97
3,718,500 11,174
3.2
Texas 721 99
10,834,500 38,867
11.2
Utah 22 100
933,000 2,268
0.7
Vermont 2 100
88,000 365
0.1
Virginia 212 99
3,134,900 10,146
2.9
Washington 48 98
791,600 3,058
0.9
West Virginia 25 100
418,100 1,457
0.4
Wisconsin 120 98
2,787,800 7,997
2.3
Wyoming 6 100
54,700 288
0.1
Puerto Rico 4 100
28,300 149
*
U.K. 12 100
1,131,300 $ 2,915
0.8
Totals\Average 5,951 98 % 98,418,400 $ 347,526
100.0 %


*	~~Less than 0.1%~~


⁽¹⁾ Table of Contents	~~Includes rental revenue for all properties owned at June 30, 2019. Excludes revenue of $321 from sold properties and $16,405 of tenant reimbursement revenue.~~

IMPACT OF INFLATION

Tenant leases generally provide for limited increases in rent as a result of increases in the tenants’ sales volumes, increases in the consumer price index (typically subject to ceilings), or fixed increases. We expect that inflation will

cause these lease provisions to result in rent increases over time. During times when inflation is greater than increases in rent, as provided for in the leases, rent increases may not keep up with the rate of inflation.

Moreover, our use of net lease agreements tends to reduce our exposure to rising property expenses due to inflation because the tenant is responsible for property expenses. Inflation and increased costs may have an adverse impact on our tenants if increases in their operating expenses exceed increases in ~~revenue~~revenue.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

For ~~information on~~ the ~~impact of recent~~period ended June 30, 2020 there were no recently adopted accounting pronouncements that had a material impact on our ~~business, see note 2 of the Notes to the Consolidated Financial Statements.~~business.

OTHER INFORMATION

Our common stock is listed on the NYSE under the ticker symbol “O” with a CUSIP number of 756109-104. Our central index key number is 726728.

We maintain a corporate website at www.realtyincome.com. On our website we make available, free of charge, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, Form 3s, Form 4s, Form 5s, current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file these reports with the Securities and Exchange Commission, or SEC. None of the information on our website is deemed to be part of this report.

~~Corporate Responsibility~~

Realty Income is committed to conducting our business according to the highest ethical standards. We are dedicated to providing an engaging, diverse, and safe work environment for our employees, operating our business in an environmentally conscious manner, and upholding our corporate responsibilities as a public company for the benefit of our shareholders. As The Monthly Dividend Company^®, our mission is to provide our stockholders with monthly dividends that increase over time. How we manage and use the physical, financial and talent resources that enable us to achieve this mission, demonstrates our commitment to corporate responsibility.

~~Environmental Practices~~

Our focus on the environment is demonstrated by how we manage our day-to-day activities at our corporate headquarters. At our headquarters, we promote energy efficiency and encourage practices such as:

~~Powering down office equipment at the end of the day;~~

~~Implementing file-sharing technology and automatic “duplex mode” to limit paper use;~~

~~Adopting electronic approval systems;~~

~~Encouraging employees to carpool to our headquarters; and~~

~~Recycling paper waste.~~

With respect to recycling and reuse practices, we encourage the use of recycled products and the recycling of materials during our operations. Cell phones, wireless devices and office equipment are recycled or donated whenever possible. In 2018, we sent more than 28,500 pounds of paper to our offsite partner for recycling.

In addition, our headquarters was constructed according to the State of California energy efficiency standards (specifically following California Green Building Standards Code and Title 24 of the California Code of Regulations), with features such as an automatic lighting control system with light-harvesting technology, a building management system that monitors and controls energy use, an energy-efficient PVC roof and heating and cooling system, and drought-tolerant landscaping with recycled materials. We continue to evaluate our current operations, strive to improve our environmental performance, and implement sustainable business practices.

The properties in our portfolio are primarily net leased to our tenants who are responsible for maintaining the buildings and are in control of their energy usage and environmental sustainability practices. We work with our tenants to promote environmental responsibility at the properties we own, with some locations achieving LEED (Leadership in Energy and Environmental Design) certification.

Our Asset Management team has engaged with a renewable energy development company to identify assets that would maximize energy efficiency initiatives throughout our property portfolio. These initiatives include solar energy arrays, battery storage, and charging stations. In addition, we continue to explore regional opportunities with our

~~tenants in order to qualify for city and county renewable energy or energy efficiency programs to conserve our world’s finite resources.~~

Realty Income also has an internal "Green Team" that encourages our employees to focus on environmentally-smart choices to further reduce our environmental impact as a company. The Green Team, which includes executive and officer-level employees, works to positively impact the environment through education and engagement within the company and local communities, focusing on waste, energy, and water management.

~~Company Culture and Employees~~

We put great effort into cultivating an inclusive company culture. We are one team, and together we are committed to a culture that provides an engaging work environment and encourages respect, collaboration, humility, transparency, and integrity. Regular open communication is central to how we work, and our employees take pride in our 50-year history of providing monthly dividends to our stockholders. We hire talented employees with diverse backgrounds and perspectives, and work to provide an environment where capable team members have fulfilling careers in the real estate industry.

~~Social Responsibility~~

We are committed to providing a positive and engaging work environment for our employees and taking an active role in the betterment of the communities in which our employees and shareholders live and work. Our employees are awarded compensation that is in line with those of our peers and competitors, including generous healthcare benefits (medical, dental, vision) for all employees and their families, participation in a 401(k) plan with a matching contribution from Realty Income, restricted stock awards based on company performance, competitive paid time-off benefits, a well-being program, continued education and development opportunities, up to 16 weeks of paid maternity leave, and an infant-at-work program for new parents. We also have a long-standing commitment to being an equal opportunity employer and adhere to all Equal Employer Opportunity Policy guidelines.

We believe that giving back to our community is an extension of our mission to improve the lives of our shareholders, our employees, and their families. Realty Income and its employees have taken an active role in supporting communities through civic involvement with non-profit organizations and corporate donations. Our non-profit activities resulted in approximately 810 company-sponsored employee volunteer hours in 2018, principally through our partnership with San Diego Habitat for Humanity. We are proud of the efforts we have made to date and look forward to continuing to strengthen our impact as part of the successful operations of The Monthly Dividend Company^®.

~~Additional information on Realty Income’s commitment to social responsibility may be found on our website.~~

~~Corporate Governance~~

We believe that nothing is more important than a company’s reputation for integrity and serving as a responsible fiduciary for its shareholders. We are committed to managing the company for the benefit of our stockholders and are focused on maintaining good corporate governance. Practices that illustrate this commitment include, but are not limited to:

~~Our Board of Directors is currently comprised of nine directors, eight of whom are independent, non-employee directors;~~

~~In accordance with our continued focus on board refreshment, in July 2018, we added two new independent, non-employee directors;~~

~~Our Board of Directors is elected on an annual basis with a majority vote standard;~~

~~Our Directors conduct annual self-evaluations and participate in orientation and continuing education programs;~~

~~An Enterprise Risk Management evaluation is conducted annually to identify and assess company risk;~~

~~Each committee within our Board of Directors is comprised entirely of independent directors; and~~

We adhere to all other corporate governance principles outlined in our Corporate Governance Guidelines. These guidelines, as well as our bylaws, committee charters and other governance documents may be found on our website.

~~Business Ethics~~

We are committed to conducting our business according to the highest ethical standards and upholding our corporate responsibilities as a public company operating for the benefit of our shareholders. Our Board of Directors has adopted a Code of Business Ethics that applies to our directors, officers, and other employees. The Code of

Business Ethics includes our commitment to dealing fairly with all of our customers, service providers, suppliers, and competitors. We conduct annual training with our employees regarding ethical behavior and require all employees to acknowledge the terms of, and abide by, our Code of Business Ethics, which is also available on our website. Our employees have access to members of our Board of Directors to report anonymously, if desired, any suspicion of misconduct by any member of our senior management or executive team. Anonymous reporting is always available through the company’s whistleblower hotline and reported to our Audit Committee quarterly.

Item 3: Quantitative and Qualitative Disclosures about Market Risk

We are exposed to interest rate changes primarily as a result of our credit facility, term loans, mortgages payable, and long-term notes and bonds used to maintain liquidity and expand our real estate investment portfolio and operations. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flow and to lower our overall borrowing costs. To achieve these objectives we issue long-term notes and bonds, primarily at fixed rates.

In order to mitigate and manage the effects of interest rate risks on our operations, we may utilize a variety of financial instruments, including interest rate swaps, interest rate locks and caps. The use of these types of instruments to hedge our exposure to changes in interest rates carries additional risks, including counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant changes in interest rates will cause a significant loss of basis in the contract. To limit counterparty credit risk we will seek to enter into such agreements with major financial institutions with favorable credit ratings. There can be no assurance that we will be able to adequately protect against the foregoing risks or realize an economic benefit that exceeds the related amounts incurred in connection with engaging in such hedging activities. We do not enter into any derivative transactions for speculative or trading purposes.

The following table presents by year of expected maturity, the principal amounts, average interest rates and estimated fair values of our fixed and variable rate debt as of June 30, ~~2019.~~2020. This information is presented to evaluate the expected cash flows and sensitivity to interest rate changes (dollars in millions):

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Expected Maturity Data


Year of Maturity	Fixed rate debt		Weighted average rate on fixed rate debt		Variable rate debt		Weighted average rate on variable rate debt
2020	$	69.5	4.80	%	$	—	—	%
2021	68.8		5.61		—		—
2022	1,061.8		3.43		—		—
2023	770.6		4.64		628.6		0.91
2024	712.2		3.97		—		—
Thereafter	4,601.4		3.73		—		—
Totals ⁽¹⁾	$	7,284.3	3.83	%	$	628.6	0.91	%
Fair Value ⁽²⁾	$	8,013.8			$	628.6

Year of Maturity
Fixed rate
debt

Weighted average rate
on fixed rate debt

Variable rate
debt

Weighted average rate
on variable rate debt

2019 $ 2.4
5.62 % $ 15.8
4.19 %
2020 332.4
3.21
—
—
2021 317.0
5.73
—
—
2022 1,059.7
3.43
—
—
2023 756.7
4.65
8.0
2.24
Thereafter 4,611.8
3.81
—
—
Totals ⁽¹⁾
$ 7,080.0
3.90 % $ 23.8
3.53 %
Fair Value ⁽²⁾
$ 7,503.2
$ 23.8

⁽¹⁾Excludes net premiums recorded on mortgages payable, net original issuance premiums recorded on notes payable and deferred financing costs on mortgages payable, notes payable, and term loans. At June 30, 2020, the unamortized balance of net premiums on mortgages payable is $2.3 million, the unamortized balance of net original issuance premiums on notes payable is $3,000, and the balance of deferred financing costs on mortgages payable is $1.1 million, on notes payable is $38.5 million, and on term loans is $742,000. In June 2020, we repaid our $250.0 million senior term loan in full, which matured in June 2020.

⁽¹⁾

⁽²⁾We base the estimated fair value of the publicly-traded fixed rate senior notes and bonds at June 30, 2020 on the indicative market prices and recent trading activity of our senior notes and bonds payable. We base the estimated fair value of our fixed rate and variable rate mortgages and private senior notes payable at June 30, 2020 on the relevant forward interest rate curve, plus an applicable credit-adjusted spread. We believe that the carrying value of the credit facility balance and term loans balance reasonably approximate their estimated fair values at June 30, 2020.

Excludes net premiums recorded on mortgages payable, net original issuance premiums recorded on notes payable and deferred financing costs on mortgages payable, notes payable, and term loans. At June 30, 2019, the unamortized balance of net premiums on mortgages payable is $3.7 million, the unamortized balance of net original issuance premiums on notes payable is $6.8 million, and the balance of deferred financing costs on mortgages payable is $156,000, on notes payable is $38.6 million, and on term loans is $1.2 million.

⁽²⁾

We base the estimated fair value of the publicly-traded fixed rate senior notes and bonds at June 30, 2019 on the indicative market prices and recent trading activity of our senior notes and bonds payable. We base the estimated fair value of our fixed rate and variable rate mortgages and private senior notes payable at June 30, 2019 on the relevant forward interest rate curve, plus an applicable credit-adjusted spread. We believe that the carrying value of the credit facility balance and term loans balance reasonably approximate their estimated fair values at June 30, 2019.

The table above incorporates only those exposures that exist as of June 30, ~~2019.~~2020. It does not consider those exposures or positions that could arise after that date. As a result, our ultimate realized gain or loss, with respect to interest rate fluctuations, would depend on the exposures that arise during the period, our hedging strategies at the time, and interest rates.

All of our outstanding notes and bonds have fixed interest rates. ~~All~~At June 30, 2020, all of our mortgages payable ~~except two mortgages totaling $23.0 million at June 30, 2019, have~~had fixed interest ~~rates. After factoring in arrangements that limit our exposure~~rates, except one variable rate mortgage on one property totaling $7.0 million, which has been swapped to a fixed interest ~~rate risk and effectively fix our per annum interest rates, our mortgage debt subject to~~

~~variable rates totals $15.8 million at June 30, 2019.~~rate. Interest on our revolving credit facility and term loan ~~balances~~balance is variable. However, the variable interest rate feature on our term loans has been mitigated by interest rate swap agreements. Based on our revolving credit facility balance of ~~$8.0~~$628.6 million at June 30, ~~2019,~~2020, a 1% change in interest rates would change our interest rate costs by ~~$80,000~~$6.3 million per year.

During ~~the second quarter of~~ 2019, we commenced foreign operations and acquired real property in the U.K. and have continued to acquire U.K. properties in 2020. As a result, we are subject to currency fluctuations that may, from time to time, affect our financial condition and results of operations. Increases or decreases in the value of ~~British pound sterling~~Sterling relative to the U.S. dollar impact the amount of net income we earn from our investments in the U.K. We mitigate these foreign currency exposures with non-U.S. denominated borrowings and cross-currency swaps. If we increase our international presence through investments in properties outside the U.S., we may also decide to transact additional business or borrow funds in currencies other than U.S. dollars.

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and ~~Chief~~Interim Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of and for the quarter ended June 30, ~~2019,~~2020, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, under the supervision and with the participation of management, including our Chief Executive Officer and ~~Chief~~Interim Principal Financial Officer.

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Based on the foregoing, our Chief Executive Officer and ~~Chief~~Interim Principal Financial Officer concluded that our disclosure controls and procedures were effective and were operating at a reasonable assurance level.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the following risk factor, which supplements and should be read in conjunction with the information appearing under "Item 1A. Risk Factors" in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

The COVID-19 pandemic has disrupted our operations and is expected to continue to have an adverse effect on our business, results of operations, financial condition and liquidity.

In late 2019, COVID-19 was first reported in Wuhan, China, and on March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The outbreak has spread globally and has led governments and other authorities around the world, including federal, state and local authorities in the United States and elsewhere, to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders.

The COVID-19 pandemic has had, and other pandemics in the future could have, repercussions across global economies and financial markets. The COVID-19 pandemic and the measures taken to limit its spread have adversely impacted regional, national and global economic activity and have contributed to significant volatility and negative pressure in financial markets. The impact of the COVID-19 pandemic has been rapidly evolving and, as cases of COVID-19 have continued to increase and be identified, many countries, including the United States and United Kingdom, have reacted by, among other things, instituting quarantines and restricting travel. Many national, state and local governments, including in areas where we own properties, have also reacted by instituting quarantines, restrictions on travel, shelter-in-place orders, restrictions on types of business that may continue to operate, school closures, limitations on attendance at events or other gatherings, and social distancing requirements, and additional national, state and local governments may implement similar restrictions.

As a result, the COVID-19 pandemic and the measures taken to limit its spread are negatively impacting the global, national and regional economies generally and many industries, directly or indirectly, and those impacts are likely to continue and may increase in severity, including potentially triggering a prolonged period of negative or limited economic growth. Factors that have contributed or may contribute to the adverse impact of the COVID-19 pandemic and the measures taken to limit its spread on the business, results of operations, financial condition and liquidity of us and our tenants include, without limitation, the following:

•A complete or partial closure of, or other operational limitations or issues at, properties operated by our tenants resulting from government action (including quarantine, shelter-in-place or similar orders requiring that people remain in their homes) or tenant action;

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•Reduced economic activity, the deterioration in our or our tenants’ ability to operate in affected areas and any delays in the supply of products or services to our tenants may impact certain of our tenants’ businesses, results of operations, financial condition and liquidity and may cause certain of our tenants to be unable to meet their obligations to us in full, or at all, and to seek, whether through negotiation, restructuring or bankruptcy, reductions or deferrals in their rent payments and other obligations to us or early termination of their leases;

•We may experience difficulties in leasing, selling or redeveloping vacant properties or renewing expiring or terminated leases on terms we consider acceptable, or at all;

•We may experience difficulty accessing the bank lending, capital markets and other financial markets on attractive terms, or at all, and a severe disruption or instability in the national or global financial markets or deterioration in credit and financing conditions may adversely affect our cost of capital, our access to capital to acquire additional properties necessary to grow our business and to fund our business operations, our ability to pay dividends on our common stock, our ability to pay the principal of and interest on our indebtedness and our other liabilities on a timely basis, and our tenants’ ability to fund their business operations and meet their obligations to us and others;

•The financial impact of the COVID-19 pandemic, could negatively impact our credit ratings, the interest rates on our borrowings, and, if the COVID-19 pandemic continues for an extended period of time, our future compliance with financial covenants under our credit facility and other debt instruments, which could result in a default and potentially an acceleration of indebtedness, any of which could negatively impact our ability to make additional borrowings under our revolving credit facility or incur other indebtedness, and pay dividends on our common stock and to pay the principal of and interest on our indebtedness and our other obligations when due;

•The impact of the COVID-19 pandemic on the market value of our properties may require that we incur impairment charges, asset write-downs or similar charges;

•The impact on the ability of our employees, including members of our management team or board of directors, to fulfill their duties to us as a result of the COVID-19 pandemic, either as a result of measures taken to limit its spread or as a result of infection; and

•A general decline in business activity and demand for real estate transactions could adversely affect our ability to grow our portfolio of properties.

The extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or limit its impact, and the direct and indirect economic effects of the pandemic and containment measures. To date, the COVID-19 pandemic and the measures taken to limit its spread have adversely impacted and may continue to adversely impact, among other things, the ability of a number of our tenants’ to generate adequate, or in certain cases, any revenue from their businesses, the ability or willingness of many of our tenants to pay rent in full, or at all, or on a timely basis, and our ability to collect rent from our tenants. It may also adversely impact our ability to enforce remedies for the failure to pay rent, our occupancy levels, our ability to acquire properties or complete construction projects, and may otherwise negatively affect our business.

In addition, most of our tenants operate retail businesses that depend on customer traffic. As a result, conditions that lead to a decline in customer traffic (including quarantine, shelter-in-place or similar orders requiring that people remain in their homes or orders requiring business closures) have had and so long as those conditions continue to exist will continue to have an adverse effect on the business, results of operations, financial condition and liquidity of a number of our tenants, and their willingness or ability to pay rent, to renew expiring leases or to enter into new leases on terms favorable to us, or at all.

As a result of the foregoing, we cannot predict the number of tenants that will not pay rent in the future, nor can we predict whether tenants who have paid rent in the past will continue to do so or whether tenants who have deferred rent will pay such rent in the future. As the COVID-19 pandemic continues, tenants may cease to pay their rent obligations to us in full or at all, and tenants may elect not to renew their leases, seek to terminate their leases, seek relief from their leases (including through negotiation, restructuring or bankruptcy), or decline to renew expiring leases or enter into new leases, all of which may adversely impact our rental revenue and occupancy rates, generate additional expenses, result in impairment charges or other write-downs of assets, and adversely impact our results of operations, financial condition and liquidity. In addition, as we believe to be the case with many retail landlords, we have received many short-term rent relief requests, most often in the form of rent deferral requests, or requests for further discussion from tenants. Collections and rent relief requests to-date may not be indicative of collections or requests in any future period.

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Likewise, the deterioration of global economic conditions as a result of the pandemic may ultimately lead to a further decrease in occupancy levels and rental rates across our portfolio as tenants reduce or defer their spending, institute restructuring plans or file for bankruptcy. Some of our major tenants have experienced temporary closures of some or all of their properties or have substantially reduced their operations in response to the COVID-19 pandemic, and additional tenants may do so in the future. In addition, the measures taken to prevent the spread of COVID-19 (including quarantine, shelter-in-place or similar orders requiring that people remain in their homes) have led and may lead to further closures, or other operational issues at our properties, or delays in acquisition activities, construction projects, and other corporate actions, all of which may materially adversely impact our operations.

In addition, in light of the uncertain and rapidly evolving situation relating to the COVID-19 pandemic, we have taken certain precautionary measures within our organization intended to help reduce the risk of the virus to our employees, our tenants, and the communities in which we operate, including the following:

• We have instructed all of our employees to work remotely;

• We have suspended all non-essential travel worldwide for our employees; and

• We have suspended employee attendance at industry events and in-person work-related meetings.

While we anticipate that the foregoing measures are temporary, we cannot predict the specific duration for which these precautionary measures will stay in effect, and we may elect to take additional measures as the information available to us continues to develop. These actions, and any future actions we may take in response to the COVID-19 pandemic, could further negatively impact our business, financial condition, results of operations and liquidity.

For the foregoing reasons, we expect that the impact of the COVID-19 pandemic and related containment measures, including the impact on regional, national and global economies, will likely adversely affect our business, results of operations, financial condition and liquidity, and, given unpredictability of the scope, severity and duration of the pandemic, such impacts may be material.

To the extent the COVID-19 pandemic and related containment measures continue to adversely affect regional, national and global economic conditions and financial markets, as well as the business, results of operations, financial conditions and liquidity of us and our tenants, it may also have the effect of heightening many of the risks described in this ‘‘Risk Factors’’ section and elsewhere in this Quarterly Report on Form 10-Q and many of the risks described under the caption ‘‘Risk Factors’’ and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019 and our subsequent quarterly reports on Form 10-Q, including the risks resulting from our significant indebtedness; our need to generate sufficient cash flows to service our indebtedness, to pay dividends on our common stock and provide for our other cash needs; our ongoing need for external financing; our ability to access borrowings under our credit facility; our ability to comply with the covenants contained in the agreements that govern our indebtedness; our dependency on key personnel; and the impact of negative market conditions or adverse events on our tenants. In addition, in light of the COVID-19 pandemic and the measures taken to limit its spread, our historical information regarding our business, properties, results of operations, financial condition or liquidity may not be representative of the future results of operations, financial condition, liquidity or other financial or operating results of us, our properties or our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following shares of stock were withheld for state and federal payroll taxes on the vesting of employee stock awards, as permitted under the 2012 Incentive Award Plan of Realty Income Corporation:

~~233~~•208 shares of stock, at a weighted average price of ~~$72.17,~~$51.18, in April ~~2019;~~2020;

~~1,258~~•35,964 shares of stock, at a weighted average price of ~~$69.08,~~$49.92, in May ~~2019;~~2020; and

~~242~~•123 shares of stock, at a weighted average price of ~~$71.10,~~$56.64, in June ~~2019.~~2020.

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Item 6: Exhibits

Exhibit No.

Description

Articles of Incorporation and Bylaws

2.1

Agreement and Plan of Merger, dated as of September 6, 2012 (File No. 001-13374), by and among Realty Income Corporation, Tau Acquisition LLC and American Realty Capital Trust, Inc. (filed as exhibit 2.1 to the Company’s Form 8-K, filed on September 6, 2012 and incorporated herein by reference).

2.2

First Amendment to Agreement and Plan of Merger, dated as of January 6, 2013, by and among Realty Income Corporation, Tau Acquisition LLC and American Realty Capital Trust, Inc. (filed as exhibit 2.1 to the Company’s Form 8-K, filed on January 7, 2013 (File No. 001-13374) and incorporated herein by reference).

3.1

Articles of Incorporation of the Company, as amended by amendment No. 1 dated May 10, 2005 and amendment No. 2 dated May 10, 2005 (filed as exhibit 3.1 to the Company’s Form 10-Q for the quarter ended June 30, 2005 (File No. 033-69410) and incorporated herein by reference).

3.2

Articles of Amendment dated July 29, 2011 (filed as exhibit 3.1 to the Company's Form 8-K, filed on August 2, 2011 (File No. 001-13374) and incorporated herein by reference).

3.3

Articles of Amendment dated June 21, 2012 (filed as exhibit 3.1 to the Company's Form 8-K, filed on June 21, 2012 (File No. 001-13374) and incorporated herein by reference).

3.4

Articles of Amendment dated May 14, 2019 (filed as exhibit 3.1 to the Company's Form 8-K, filed on May 16, 2019 (File No. 001-13374) and incorporated herein by reference).

3.5

Amended and Restated Bylaws of the Company dated ~~March 13, 2018~~February 19, 2020 (filed as exhibit 3.1 to the Company’s Form 8-K, filed on ~~March 14,~~February 20, 2018 (File No. 001-13374) and incorporated herein by reference).

3.6

Articles Supplementary dated June 30, 1998 establishing the terms of the Company's Class A Junior Participating Preferred Stock (filed as exhibit A to exhibit 1 ofto the Company's Form 8-A12B, filed on June 26, 1998 (File No. 001-13374) and incorporated herein by reference).

3.7

Articles Supplementary dated May 24, 1999 establishing the terms of the Company's 93/8% Class B Cumulative Redeemable Preferred Stock (filed as exhibit 4.1 onto the Company's Form 8-K, filed on May 25, 1999 (File No. 001-13374) and incorporated herein by reference).

3.8

Articles Supplementary dated July 28, 1999 establishing the terms of the Company's 91/2% Class C Cumulative Redeemable Preferred Stock (filed as exhibit 4.1 onto the Company's Form 8-K, filed on July 30, 1999 (File No. 001-13374) and incorporated herein by reference).

3.9

Articles Supplementary dated May 24, 2004 and the Articles Supplementary dated October 18, 2004 establishing the terms of the Company's 7.375% Monthly Income Class D Cumulative Redeemable Preferred Stock (filed as exhibit 3.8 onto the Company's Form 8-A12B, filed on May 25, 2004 (File No. 001-13374) and incorporated herein by reference).

3.10

Articles Supplementary dated November 30, 2006 establishing the terms of the Company's 6.75% Monthly Income Class E Cumulative Redeemable Preferred Stock (filed as exhibit 3.5 onto the Company's Form 8-A12B, filed on December 5, 2006 (File No. 001-13374) and incorporated herein by reference).

3.11

Articles Supplementary to the Articles of Incorporation of the Company classifying and designating the 6.625% Monthly Income Class F Cumulative Redeemable Preferred Stock, dated February 3, 2012 (the “First Class F Articles Supplementary”) (filed as exhibit 3.1 to the Company’s Form 8-K, filed on February 3, 2012 (File No. 001-13374) and incorporated herein by reference).

3.12

Certificate of Correction to the First Class F Articles Supplementary, dated April 11, 2012 (filed as exhibit 3.2 to the Company’s Form 8-K, filed on April 17, 2012 (File No. 001-13374) and incorporated herein by reference).

3.13

Articles Supplementary to the Articles of Incorporation of the Company classifying and designating additional shares of the 6.625% Monthly Income Class F Cumulative Redeemable Preferred Stock, dated April 17, 2012 (filed as exhibit 3.3 to the Company’s Form 8-K, filed on April 17, 2012 (File No. 001-13374) and incorporated herein by reference).

Instruments defining the rights of security holders, including indentures

4.1

Indenture dated as of October 28, 1998 between the Company and The Bank of New York (filed as exhibit 4.1 to the Company’s Form 8-K, filed on October 28, 1998 (File No. 001-13374) and incorporated herein by reference).

4.2

Form of 5.875% Senior Notes due 2035 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on March 11, 2005 (File No. 033-69410) and incorporated herein by reference).

4.3

Officer’s Certificate pursuant to sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York, as Trustee, establishing a series of securities entitled 5.875% Senior Debentures due 2035 (filed as exhibit 4.3 to the Company’s Form 8-K, filed on March 11, 2005 (File No. 033-69410) and incorporated herein by reference).

4.4

~~Form of 5.750% Notes due 2021 (filed as exhibit 4.2 to Company’s Form 8-K, filed on June 29, 2010 (File No. 001-13374) and incorporated herein by reference).~~

~~4.5~~

Officer’s Certificate pursuant to sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as Successor Trustee, establishing a series of securities entitled 5.750% Notes due 2021 (filed as exhibit 4.3 to the Company’s Form 8-K, filed on June 29, 2010 (File No. 001-13374) and incorporated herein by reference).

~~4.6~~

Form of Common Stock Certificate (filed as exhibit 4.16 to the Company’s Form 10-Q for the quarter ended September 30, 2011, filed on October 28, 2011 (File No. 001-13374) and incorporated herein by reference).

~~4.7~~4.5

Form of 3.250% Note due 2022 (filed as exhibit 4.3 to the Company’s Form 8-K, filed on October 10, 2012 (File No. 001-13374) and incorporated herein by reference).

~~4.8~~4.6

Officer’s Certificate pursuant to sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, establishing a series of securities entitled “2.000% Notes due 2018” and establishing a series of securities entitled “3.250% Notes due 2022” (filed as exhibit 4.4 to the Company’s Form 8-K, filed on October 10, 2012 (File No. 001-13374) and incorporated herein by reference).


4.7
~~4.9~~	Form of 4.650% Note due 2023 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on July 16, 2013 (File No. 001-13374) and incorporated herein by reference).
~~4.10~~4.8		Officer’s Certificate pursuant to sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, establishing a series of securities entitled “4.650% Notes due 2023” (filed as exhibit 4.3 to the Company’s Form 8-K, filed on July 16, 2013 (File No. 001-13374) and incorporated herein by reference).
~~4.11~~4.9		Form of 3.875% Note due 2024 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on June 25, 2014 and incorporated herein by reference).
~~4.12~~4.10		Officer’s Certificate pursuant to sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, establishing a series of securities entitled “3.875% Notes due 2024” (filed as exhibit 4.3 to the Company’s Form 8-K, filed on June 25, 2014 and incorporated herein by reference).

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~~4.13~~4.11

Form of 4.125% Note due 2026 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on September 23, 2014 and incorporated herein by reference).

~~4.14~~4.12

Officer’s Certificate pursuant to sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, establishing a series of securities entitled “4.125% Notes due 2026” (filed as exhibit 4.3 to the Company’s Form 8-K, filed on September 23, 2014 and incorporated herein by reference).

~~4.15~~4.13

Form of 3.000% Note due 2027 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on October 12, 2016 and incorporated herein by reference).

~~4.16~~4.14

Officer’s Certificate pursuant to sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, establishing a series of securities entitled “3.000% Notes due 2027” (filed as exhibit 4.3 to the Company’s Form 8-K, filed on October 12, 2016 and incorporated herein by reference).

~~4.17~~4.15

Form of 4.650% Note due 2047 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on March 15, 2017 and incorporated herein by reference).

~~4.18~~4.16

Form of 4.125% Note due 2026 (filed as exhibit 4.3 to the Company’s Form 8-K, filed on March 15, 2017 and incorporated herein by reference).

~~4.19~~4.17

Officers’ Certificate pursuant to Sections 201, 301, and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A. as successor trustee, establishing a series of securities entitled “4.650% Notes due 2047” and re-opening a series of securities entitled “4.125% Notes due 2026” (filed as exhibit 4.4 to the Company’s Form 8-K, filed on March 15, 2017 and incorporated herein by reference).

~~4.20~~4.18

Form of 3.650% Note due 2028 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on December 6, 2017 and incorporated herein by reference).

~~4.21~~4.19

Form of 3.250% Note due 2022 (filed as exhibit 4.3 to the Company’s Form 8-K, filed on December 6, 2017 and incorporated herein by reference).

~~4.22~~4.20

Form of 4.650% Note due 2047 (filed as exhibit 4.4 to the Company’s Form 8-K, filed on December 6, 2017 and incorporated herein by reference).

~~4.23~~4.21

Officers’ Certificate pursuant to Sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, establishing a series of securities entitled “3.650% Notes due 2028” and re-opening a series of securities entitled “3.250% Notes due 2022” and “4.650% Notes due 2047.” (filed as exhibit 4.5 to the Company’s Form 8-K, filed on December 6, 2017 and incorporated herein by reference).

~~4.24~~4.22

Form of 3.875% Note due 2025 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on April 4, 2018 and incorporated herein by reference).

~~4.25~~4.23

Officers’ Certificate pursuant to Sections 201, 301, and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A. as successor trustee, establishing a series of securities entitled “3.875% Notes due 2025” and re-opening a series of securities entitled “4.125% Notes due 2026” (filed as exhibit 4.3 to the Company’s Form 8-K, filed on April 4, 2018 and incorporated herein by reference).

~~4.26~~4.24

Form of 3.250% Note due 2029 (filed as exhibit 4.2 to the Company's Form 8-K, filed on June 16, 2019 and incorporated herein by reference).

~~4.27~~4.25

Officers’ Certificate pursuant to Sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, establishing a series of securities entitled “3.250% Notes due 2029." (filed as exhibit 4.3 to the Company's Form 8-K, filed on June 16, 2019 and incorporated herein by reference).

~~Certifications~~4.26

Description of Securities (filed as exhibit 4.28 to the Company's 10-K, filed on February 24, 2020 and incorporated herein by reference).

*31.14.27

Form of 3.250% Note due 20 31 (filed as exhibit 4.2 to the Company’s Form 8-K, filed on May 8, 2020 and incorporated herein by reference).

4.28

Form of 3.250% Note due 2031 (filed as exhibit 4.2 to the Company's Form 8-K, filed on July 16 , 2020 and incorporated herein by reference).

4.29

Officers' Certificate, dated May 8, 2020, pursuant to Sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, establishing a series of securities entitled "3.250% Notes due 2031." (filed as exhibit 4.3 to the Company's Form 8-K, filed on May 8, 2020, and incorporated herein by reference).

4.30

Officers' Certificate, dated July 16, 2020, pursuant to Sections 201, 301 and 303 of the Indenture dated October 28, 1998 between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, re-opening a series of securities entitled "3.250% Notes due 2031." (filed as exhibit 4.3 to the Company's Form 8-K, filed on July 16, 2020, and incorporated herein by reference).

Certifications

*31.1

Rule 13a-14(a) Certifications as filed by the Chief Executive Officer pursuant to SEC release No. 33-8212 and ~~34-47551.~~34-47551.

*31.2

Rule 13a-14(a) Certifications as filed by the ~~Chief~~Interim Principal Financial Officer pursuant to SEC release No. 33-8212 and 34-47551.

*32

Section 1350 Certifications as furnished by the Chief Executive Officer and the ~~Chief~~Interim Principal Financial Officer pursuant to SEC release No. 33-8212 and 34-47551.

Interactive Data Files

*101

The following materials from Realty Income Corporation’s Quarterly Report on Form 10-Q for the period ended June 30, ~~2019~~2020 formatted in Inline Extensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Stockholders' Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.

*104

The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2019,~~2020, formatted in Inline Extensible Business Reporting Language.

* Filed herewith.

-61-

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



			REALTY INCOME CORPORATION

Date: August ~~6, 2019~~4, 2020			/s/ SEAN P. NUGENT
			Sean P. Nugent
			~~Senior Vice President, Controller~~Interim Principal Financial Officer and Treasurer
			(Principal Accounting Officer)

~~-56-~~-62-



Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Common Stock, $0.01 Par Value	O	New York Stock Exchange


PART I.			FINANCIAL INFORMATION	Page
Item 1:			Financial Statements

~~PART I.~~			~~FINANCIAL INFORMATION~~	~~Page~~
~~Item 1:~~	~~Financial Statements~~

	Consolidated Balance Sheets	2
			Consolidated Statements of Income and Comprehensive Income	3
			Consolidated Statements of Equity	4
			Consolidated Statements of Cash Flows	5
			Notes to Consolidated Financial Statements	6

Item 2:			Management’s Discussion and Analysis of Financial Condition and Results of Operations

			Forward-Looking Statements	23
			The Company	2324
			Recent Developments	2627
			Liquidity and Capital Resources	3033
			Results of Operations	3539
			Funds from Operations Available to Common Stockholders (FFO)	4146
			Adjusted Funds from Operations Available to Common Stockholders (AFFO)	4247
			Property Portfolio Information	4450
			Impact of Inflation	4955
			Impact of Recent Accounting Pronouncements	5055
			Other Information	5055

Item 3:			Quantitative and Qualitative Disclosures About Market Risk	5255

Item 4:			Controls and Procedures	5356

PART II.			OTHER INFORMATION

Item 2:1A:			Risk Factors	57

Item 2:			Unregistered Sales of Equity Securities and Use of Proceeds	5359

Item 6:			Exhibits	5460

SIGNATURE					5662


	June 30, 2019			December 31, 2018				June 30, 2020		December 31, 2019
ASSETS	(unaudited)						ASSETS	(unaudited)
Real estate, at cost:
Real estate held for investment, at cost:							Real estate held for investment, at cost:
Land	$	5,058,572		$	4,682,660		Land	$	5,772,734	$	5,684,034
Buildings and improvements	12,774,967			11,858,806			Buildings and improvements	14,096,997		13,833,882
Total real estate, at cost	17,833,539			16,541,466
Total real estate held for investment, at cost							Total real estate held for investment, at cost	19,869,731		19,517,916
Less accumulated depreciation and amortization	(2,911,779		)	(2,714,534		)	Less accumulated depreciation and amortization	(3,367,420)		(3,117,919)
Net real estate held for investment	14,921,760			13,826,932
Real estate held for sale, net	18,506			16,585
Net real estate	14,940,266			13,843,517
Real estate held for investment, net							Real estate held for investment, net	16,502,311		16,399,997
Real estate and lease intangibles held for sale, net							Real estate and lease intangibles held for sale, net	40,551		96,775
Cash and cash equivalents	27,136			10,387			Cash and cash equivalents	35,345		54,011
Short-term investment							Short-term investment	300,000		—
Accounts receivable	165,470			144,991			Accounts receivable	255,609		181,969
Lease intangible assets, net	1,308,564			1,199,597			Lease intangible assets, net	1,508,177		1,493,383
Goodwill	14,536			14,630
Other assets, net	292,658			47,361			Other assets, net	460,554		328,661
Total assets	$	16,748,630		$	15,260,483		Total assets	$	19,102,547	$	18,554,796

LIABILITIES AND EQUITY							LIABILITIES AND EQUITY
Distributions payable	$	72,752		$	67,789		Distributions payable	$	81,384	$	76,728
Accounts payable and accrued expenses	156,859			133,765			Accounts payable and accrued expenses	201,176		177,039
Lease intangible liabilities, net	330,893			310,866			Lease intangible liabilities, net	322,744		333,103
Other liabilities	251,244			127,109			Other liabilities	248,547		262,221
Line of credit payable	8,000			252,000			Line of credit payable	628,551		704,335
Term loans, net	498,829			568,610			Term loans, net	249,258		499,044
Mortgages payable, net	299,397			302,569			Mortgages payable, net	394,816		410,119
Notes payable, net	6,268,062			5,376,797			Notes payable, net	6,602,152		6,288,049
Total liabilities	7,886,036			7,139,505			Total liabilities	8,728,628		8,750,638
Commitments and contingencies							Commitments and contingencies
Stockholders’ equity:							Stockholders’ equity:
Common stock and paid in capital, par value $0.01 per share, 740,200,000 shares authorized, 318,218,713 shares issued and outstanding as of June 30, 2019 and 370,100,000 shares authorized, 303,742,090 shares issued and outstanding as of December 31, 2018	11,722,036			10,754,495
Common stock and paid in capital, par value $0.01 per share, 740,200,000 shares authorized, 345,023,421 and 333,619,106 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively							Common stock and paid in capital, par value $0.01 per share, 740,200,000 shares authorized, 345,023,421 and 333,619,106 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	13,704,121		12,873,849
Distributions in excess of net income	(2,869,937		)	(2,657,655		)	Distributions in excess of net income	(3,306,588)		(3,082,291)
Accumulated other comprehensive loss	(14,597		)	(8,098		)	Accumulated other comprehensive loss	(53,084)		(17,102)
Total stockholders’ equity	8,837,502			8,088,742			Total stockholders’ equity	10,344,449		9,774,456
Noncontrolling interests	25,092			32,236			Noncontrolling interests	29,470		29,702
Total equity	8,862,594			8,120,978			Total equity	10,373,919		9,804,158
Total liabilities and equity	$	16,748,630		$	15,260,483		Total liabilities and equity	$	19,102,547	$	18,554,796



	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
REVENUE
Rental (including reimbursable)	$	364,252		$	325,265		$	718,289		$	643,113
Other	1,198			3,621			1,526			4,068
Total revenue	365,450			328,886			719,815			647,181

EXPENSES
Depreciation and amortization	150,426			133,999			287,943			265,102
Interest	72,488			66,628			142,508			126,043
General and administrative	18,585			17,954			33,693			33,638
Property (including reimbursable)	21,342			16,236			42,978			32,788
Income taxes	1,155			1,208			2,600			2,431
Provisions for impairment	13,061			3,951			17,733			18,172
Total expenses	277,057			239,976			527,455			478,174
Gain on sales of real estate	6,891			7,787			14,154			11,005
Foreign currency and derivative gains, net	136			—			136			—
Net income	95,420			96,697			206,650			180,012
Net income attributable to noncontrolling interests	(226		)	(317		)	(514		)	(469		)
Net income available to common stockholders	$	95,194		$	96,380		$	206,136		$	179,543

Amounts available to common stockholders per common share:
Net income, basic and diluted	$	0.31		$	0.34		$	0.67		$	0.63

Weighted average common shares outstanding:
Basic	311,032,972			284,928,969			307,293,949			284,469,689
Diluted	311,322,162			285,372,256			307,580,127			284,924,336

Other comprehensive income:
Net income available to common stockholders	$	95,194		$	96,380		$	206,136		$	179,543
Foreign currency translation adjustment	(6		)	—			(6		)	—
Unrealized loss on derivatives, net	(2,794		)	—			(6,493		)	—
Comprehensive income available to common stockholders	$	92,394		$	96,380		$	199,637		$	179,543


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
REVENUE
Rental (including reimbursable)	$	410,201	$	364,252	$	822,358	$	718,289
Other	4,435		1,198		6,619		1,526
Total revenue	414,636		365,450		828,977		719,815

EXPENSES
Depreciation and amortization	168,328		150,426		332,913		287,943
Interest	77,841		72,488		153,766		142,508
Property (including reimbursable)	26,452		21,342		52,058		42,978
General and administrative	19,063		18,585		40,027		33,693
Income taxes	2,838		1,155		5,601		2,600
Provisions for impairment	13,869		13,061		18,347		17,733
Total expenses	308,391		277,057		602,712		527,455
Gain on sales of real estate	1,323		6,891		39,829		14,154
Foreign currency and derivative gains (losses), net	502		136		(1,062)		136
Loss on extinguishment of debt	—		—		(9,819)		—
Net income	108,070		95,420		255,213		206,650
Net income attributable to noncontrolling interests	(246)		(226)		(562)		(514)
Net income available to common stockholders	$	107,824	$	95,194	$	254,651	$	206,136

Amounts available to common stockholders per common share:
Net Income:
Basic and Diluted	$	0.31	$	0.31	$	0.75	$	0.67

Weighted average common shares outstanding:
Basic	343,515,406		311,032,972		340,061,487		307,293,949
Diluted	343,685,259		311,322,162		340,281,265		307,580,127

Other comprehensive income:
Net income available to common stockholders	$	107,824	$	95,194	$	254,651	$	206,136
Foreign currency translation adjustment	22		(6)		414		(6)
Unrealized loss on derivatives, net	(10,534)		(2,794)		(36,396)		(6,493)
Comprehensive income available to common stockholders	$	97,312	$	92,394	$	218,669	$	199,637



	Shares of common stock	Common stock and paid in capital			Distributions in excess of net income			Accumulated other comprehensive loss			Total stockholders’ equity			Noncontrolling interests			Total equity
Balance, March 31, 2019	303,807,421	$	10,748,467		$	(2,752,775	)	$	(11,797	)	$	7,983,895		$	25,181		$	8,009,076
Net income	—	—			95,194			—			95,194			226			95,420
Other comprehensive loss	—	—			—			(2,800		)	(2,800		)	—			(2,800		)
Distributions paid and payable	—	—			(212,356		)	—			(212,356		)	(315		)	(212,671		)
Share issuances, net of costs	14,384,215	969,162			—			—			969,162			—			969,162
Share-based compensation, net	27,077	4,407			—			—			4,407			—			4,407
Balance, June 30, 2019	318,218,713	$	11,722,036		$	(2,869,937	)	$	(14,597	)	$	8,837,502		$	25,092		$	8,862,594

Balance, March 31, 2018	284,380,175	$	9,625,200		$	(2,357,220	)	$	—		$	7,267,980		$	29,679		$	7,297,659
Net Income	—	—			96,380			—			96,380			317			96,697
Distributions paid and payable	—	—			(188,953		)	—			(188,953		)	(473		)	(189,426		)
Share issuances, net of costs	5,622,401	295,897			—			—			295,897			—			295,897
Issuance of common partnership units	—	—			—			—			—			6,704			6,704
Reallocation of equity	—	(492		)	—			—			(492		)	492			—
Share-based compensation, net	21,699	4,938			—			—			4,938			—			4,938
Balance, June 30, 2018	290,024,275	$	9,925,543		$	(2,449,793	)	$	—		$	7,475,750		$	36,719		$	7,512,469


	Six Months Ended June 30,							Six months ended June 30,
	2019			2018				2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES							CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	206,650		$	180,012		Net income	$	255,213	$	206,650
Adjustments to net income:							Adjustments to net income:
Depreciation and amortization	287,943			265,102			Depreciation and amortization	332,913		287,943
Amortization of share-based compensation	7,291			8,657			Amortization of share-based compensation	10,400		7,291
Non-cash revenue adjustments	(4,351		)	(4,029		)	Non-cash revenue adjustments	(1,507)		(4,351)
Loss on extinguishment of debt							Loss on extinguishment of debt	9,819		—
Amortization of net premiums on mortgages payable	(708		)	(813		)	Amortization of net premiums on mortgages payable	(710)		(708)
Amortization of deferred financing costs	3,960			3,469			Amortization of deferred financing costs	4,916		3,960
Loss (gain) on interest rate swaps	1,364			(2,799		)
Foreign currency and derivative gains, net	(136		)	—
Loss on interest rate swaps							Loss on interest rate swaps	1,992		1,364
Foreign currency and derivative losses (gains), net							Foreign currency and derivative losses (gains), net	1,062		(136)
Gain on sales of real estate	(14,154		)	(11,005		)	Gain on sales of real estate	(39,829)		(14,154)
Provisions for impairment on real estate	17,733			18,172			Provisions for impairment on real estate	18,347		17,733
Change in assets and liabilities							Change in assets and liabilities
Accounts receivable and other assets	(11,250		)	2,785			Accounts receivable and other assets	(61,091)		(11,250)
Accounts payable, accrued expenses and other liabilities	(4,679		)	17,718			Accounts payable, accrued expenses and other liabilities	(16,881)		(4,679)
Net cash provided by operating activities	489,663			477,269			Net cash provided by operating activities	514,644		489,663
CASH FLOWS FROM INVESTING ACTIVITIES							CASH FLOWS FROM INVESTING ACTIVITIES
Investment in real estate	(1,604,575		)	(829,818		)	Investment in real estate	(632,174)		(1,604,575)
Improvements to real estate, including leasing costs	(11,767		)	(17,017		)	Improvements to real estate, including leasing costs	(4,710)		(11,767)
Proceeds from sales of real estate	51,052			47,526			Proceeds from sales of real estate	133,643		51,052
Insurance proceeds received	—			3,836
Collection of loans receivable	—			5,267
Purchase of short-term investment							Purchase of short-term investment	(300,000)		—
Insurance and other proceeds received							Insurance and other proceeds received	108		—
Non-refundable escrow deposits	(9,619		)	—			Non-refundable escrow deposits	—		(9,619)
Net cash used in investing activities	(1,574,909		)	(790,206		)	Net cash used in investing activities	(803,133)		(1,574,909)
CASH FLOWS FROM FINANCING ACTIVITIES							CASH FLOWS FROM FINANCING ACTIVITIES
Cash distributions to common stockholders	(413,410		)	(373,044		)	Cash distributions to common stockholders	(474,294)		(413,410)
Borrowings on line of credit	1,404,000			1,140,000			Borrowings on line of credit	2,324,409		1,404,000
Payments on line of credit	(1,648,000		)	(716,000		)	Payments on line of credit	(2,385,859)		(1,648,000)
Principal payment on term loan	(70,000		)	(125,866		)	Principal payment on term loan	(250,000)		(70,000)
Proceeds from notes and bonds payable issued	895,774			497,500			Proceeds from notes and bonds payable issued	593,922		895,774
Principal payment on notes payable	—			(350,000		)	Principal payment on notes payable	(250,000)		—
Principal payments on mortgages payable	(2,492		)	(13,447		)	Principal payments on mortgages payable	(14,730)		(2,492)
Payments upon extinguishment of debt							Payments upon extinguishment of debt	(9,445)		—
Proceeds from common stock offerings, net	845,061			—			Proceeds from common stock offerings, net	728,883		845,061
Proceeds from dividend reinvestment and stock purchase plan	4,098			4,806			Proceeds from dividend reinvestment and stock purchase plan	4,815		4,098
Proceeds from At-the-Market (ATM) program, net	122,155			297,983			Proceeds from At-the-Market (ATM) program, net	94,076		122,155
Redemption of common units	(20,225		)	—			Redemption of common units	—		(20,225)
Distributions to noncontrolling interests	(635		)	(758		)	Distributions to noncontrolling interests	(794)		(635)
Net receipts on derivative settlements							Net receipts on derivative settlements	2,421		—
Debt issuance costs	(7,331		)	(4,436		)	Debt issuance costs	(5,526)		(7,331)
Other items, including shares withheld upon vesting	(4,195		)	(11,143		)	Other items, including shares withheld upon vesting	(7,901)		(4,195)
Net cash provided by financing activities	1,104,800			345,595			Net cash provided by financing activities	349,977		1,104,800
Effect of exchange rate changes on cash and cash equivalents	(733		)	—			Effect of exchange rate changes on cash and cash equivalents	(2,175)		(733)
Net increase in cash, cash equivalents and restricted cash	18,821			32,658			Net increase in cash, cash equivalents and restricted cash	59,313		18,821
Cash, cash equivalents and restricted cash, beginning of period	21,071			12,142			Cash, cash equivalents and restricted cash, beginning of period	71,005		21,071
Cash, cash equivalents and restricted cash, end of period	$	39,892		$	44,800		Cash, cash equivalents and restricted cash, end of period	$	130,318	$	39,892


A.	Accounts Receivable consist of the following at:	June 30, 2020		December 31, 2019
	Straight-line rent receivables	$	161,033	$	147,047
	Other receivables	94,576		34,922
		$	255,609	$	181,969



A.	Lease intangible assets, net, consist of the following at:	June 30, 2019			December 31, 2018
	In-place leases	$	1,400,686		$	1,321,979
	Accumulated amortization of in-place leases	(587,683		)	(546,573		)
	Above-market leases	674,515			583,109
	Accumulated amortization of above-market leases	(178,954		)	(158,918		)
		$	1,308,564		$	1,199,597



B.	Other assets, net, consist of the following at:	June 30, 2019		December 31, 2018
	Right of use asset - operating leases, net	$	125,346	$	—
	Financing receivables	59,938		—
	Right of use asset - financing leases	36,901		—
	Credit facility origination costs, net	12,564		14,248
	Prepaid expenses	11,443		11,595
	Impounds related to mortgages payable	11,433		9,555
	Value-added tax receivable	10,644		—
	Non-refundable escrow deposits	9,619		200
	Corporate assets, net	5,446		5,681
	Derivative assets and receivables - at fair value	5,433		3,100
	Restricted escrow deposits	1,323		1,129
	Other items	2,568		1,853
		$	292,658	$	47,361


D.	Distributions payable consist of the following declared distributions at:	June 30, 2020		December 31, 2019
	Common stock distributions	$	81,276	$	76,622
	Noncontrolling interests distributions	108		106
		$	81,384	$	76,728


E.	Accounts payable and accrued expenses consist of the following at:	June 30, 2020		December 31, 2019
	Derivative liabilities and payables - at fair value	$	73,980	$	26,359
	Notes payable - interest payable	71,274		75,114
	Property taxes payable	21,964		18,626
	Value-added tax payable	4,921		13,434
	Accrued income taxes	4,481		4,450
	Accrued costs on properties under development	1,860		5,870
	Mortgages, term loans, credit line - interest payable and interest rate swaps	1,496		1,729
	Other items	21,200		31,457
		$	201,176	$	177,039


F.	Lease intangible liabilities, net, consist of the following at:	June 30, 2020		December 31, 2019
	Below-market leases	$	449,013	$	447,522
	Accumulated amortization of below-market leases	(126,269)		(114,419)
		$	322,744	$	333,103


G.	Other liabilities consist of the following at:	June 30, 2020		December 31, 2019
	Lease liability - operating leases, net	$	119,718	$	122,285
	Rent received in advance and other deferred revenue	116,517		127,687
	Security deposits	6,212		6,303
	Lease liability - financing leases	6,100		5,946
		$	248,547	$	262,221

H.	Short-term investment
	Short-term investment represents a term deposit with a bank that was not readily convertible to cash as of June 30, 2020. The term deposit matured on July 24. 2020.


	Acquisitions - U.S.		Acquisitions - U.K.
Six months ended June 30, 2020	(USD)		(£ Sterling)
Land ⁽¹⁾	$	82.9	£	22.8
Buildings and improvements	278.4		60.8
Lease intangible assets	54.5		42.0
Other assets⁽²⁾	1.5		54.5
Lease intangible liabilities	(2.3)		—
Other liabilities ⁽³⁾	(0.9)		—
	$	414.1	£	180.1


1.	~~Management Statement~~


4.	~~Investments in Real Estate~~



	Number of Properties	Square Feet (in millions)	Investment ($ in millions)		Weighted Average Lease Term (Years)	Initial Average Cash Lease Yield
Three months ended June 30, 2019 ⁽¹⁾
Acquisitions - U.S. (in 28 states)	78	2.3	$	532.3	14.8	6.9	%
Acquisitions - U.K. ⁽²⁾	12	1.1	549.2		14.8	5.3	%
Total Acquisitions	90	3.4	1,081.5		14.8	6.1	%
Properties under Development - U.S.	12	0.4	13.2		15.9	7.3	%
Total ⁽³⁾	102	3.8	$	1,094.7	14.8	6.1	%

Six months ended June 30, 2019 ⁽¹⁾
Acquisitions - U.S. (in 34 states)	175	4.2	$	1,040.9	15.9	6.8	%
Acquisitions - U.K. ⁽²⁾	12	1.1	549.2		14.8	5.3	%
Total Acquisitions	187	5.3	1,590.1		15.5	6.3	%
Properties under Development - U.S.	12	0.4	24.1		16.5	7.2	%
Total ⁽⁴⁾	199	5.7	$	1,614.2	15.6	6.3	%


	Acquisitions - U.S.		Acquisitions - U.K.
Six months ended June 30, 2019	(USD)		(£ Sterling)
Land ⁽¹⁾	$	234.7	£	164.4
Buildings and improvements	704.5		182.0
Lease intangible assets	80.3		90.8
Other assets⁽²⁾	53.8		—
Lease intangible liabilities	(23.0)		(3.3)
Other liabilities⁽³⁾	(7.4)		—
	$	1,042.9	£	433.9


⁽¹⁾	~~All of our 2018 investments were 100% leased upon acquisition.~~


	Net decrease to rental revenue		Increase to amortization expense
2020	$	(12,694)	$	64,254
2021	(24,568)		122,159
2022	(23,020)		110,185
2023	(21,483)		97,909
2024	(19,872)		89,245
Thereafter	(93,824)		506,220
Totals	$	(195,461)	$	989,972


As Of	Number of Properties ⁽¹⁾	Weighted Average Stated Interest Rate ⁽²⁾		Weighted Average Effective Interest Rate ⁽³⁾		Weighted Average Remaining Years Until Maturity	Remaining Principal Balance		Unamortized Premium and Deferred Financing Costs Balance, net		Mortgage Payable Balance
6/30/2020	91	4.9	%	4.6	%	2.7	$	393,690	$	1,126	$	394,816
12/31/2019	92	4.9	%	4.6	%	3.1	$	408,419	$	1,700	$	410,119



	Tau Operating Partnership units⁽¹⁾			Realty Income, L.P. units⁽²⁾			Other Noncontrolling Interests		Total
Carrying value at December 31, 2018	$	13,356		$	17,912		$	968	$	32,236
Redemptions	(13,356		)	—			—		(13,356		)
Shares issued in conjunction with acquisition	—			6,286			—		6,286
Distributions	—			(588		)	—		(588		)
Allocation of net income	—			505			9		514
Carrying value at June 30, 2019	$	—		$	24,115		$	977	$	25,092


⁽¹⁾⁽²⁾Excludes non-cash original issuance premiums and discounts recorded on notes payable. The unamortized balance of the net original issuance premiums was approximately $3,000 at June 30, 2020, and $6.3 million at December 31, 2019. Also excludes deferred financing costs of $38.5 million at June 30, 2020 and $35.9 million at December 31, 2019.	Excludes non-cash net premiums recorded on the mortgages payable. The unamortized balance of these net premiums was $3.7 million at June 30, 2019, and $4.4 million at December 31, 2018. Also excludes deferred financing costs of $156,000 at June 30, 2019 and $183,000 at December 31, 2018.


⁽²⁾	Excludes non-cash original issuance premiums and discounts recorded on notes payable. The unamortized balance of the net original issuance premiums was $6.8 million at June 30, 2019, and $10.5 million at December 31, 2018. Also excludes deferred financing costs of $38.6 million at June 30, 2019 and $33.7 million at December 31, 2018.


Derivative Type	Accounting Classification	Hedge Designation	Notional Amount					Strike	Effective Date	Maturity Date		Fair Value - asset (liability)
			June 30,		December 31,					June 30,		December 31,
			2020		2019					2020		2019
Interest rate swap	Derivative	Cash flow	$	6.9	$	7.0	6.03%	09/25/2012	09/03/2021	$	(0.3)	$	(0.2)
Interest rate swap	Derivative	Cash flow	—		250.0		1.72%	06/30/2015	06/30/2020	—		(0.1)
Interest rate swap	Derivative	Cash flow	250.0		250.0		3.04%	10/24/2018	03/24/2024	(25.9)		(14.7)
Cross-currency swap ⁽¹⁾	Derivative	Cash flow	41.6		41.6		(2)	05/20/2019	05/22/2034	5.0		(2.6)
Cross-currency swap ⁽¹⁾	Derivative	Cash flow	41.6		41.6		(3)	05/20/2019	05/22/2034	4.9		(2.6)
Cross-currency swap ⁽¹⁾	Derivative	Cash flow	41.6		41.6		(4)	05/20/2019	05/22/2034	4.6		(2.9)
Cross-currency swap ⁽¹⁾	Derivative	Cash flow	41.6		41.6		(5)	05/20/2019	05/22/2034	4.5		(3.2)
Forward-starting swap	Derivative	Cash flow	75.0		—		2.02%	(6)	06/30/2033	(7.9)		—
Forward-starting swap	Derivative	Cash flow	75.0		—		1.94%	(6)	11/30/2032	(7.8)		—
Forward-starting swap	Derivative	Cash flow	25.0		—		1.67%	(6)	11/30/2032	(2.0)		—
Forward-starting swap	Derivative	Cash flow	125.0		—		1.75%	(6)	06/30/2033	(9.9)		—
Forward-starting swap	Hybrid debt	Cash flow	125.0		—		1.88%	(6)	11/30/2032	(12.3)		—
Forward-starting swap	Hybrid debt	Cash flow	75.0		—		2.00%	(6)	06/30/2033	(7.8)		—
			$	923.3	$	673.4				$	(54.9)	$	(26.3)


⁽²⁾	~~GBP fixed rates initially at 4.82% and escalating to 10.96%, and USD fixed rate at 9.800%.~~


⁽⁵⁾	~~GBP fixed rates initially at 4.82% and escalating to 10.96%, and USD fixed rate at 9.755%.~~



2019	$	702,914
2020	1,391,004
2021	1,346,312
2022	1,279,325
2023	1,197,424
Thereafter	8,049,370
Total	$	13,966,349



	June 30, 2019		June 30, 2018
Cash and cash equivalents shown in the consolidated balance sheets	$	27,136	$	30,717
Restricted escrow deposits ⁽¹⁾	1,323		7,054
Impounds related to mortgages payable ⁽¹⁾	11,433		7,029
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	39,892	$	44,800



	Ground Leases Paid by Realty Income ⁽¹⁾		Ground Leases Paid by Our Tenants ⁽²⁾		Total
2019	$	0.8	$	6.8	$	7.6
2020	1.5		13.5		15.0
2021	1.3		13.2		14.5
2022	1.2		13.1		14.3
2023	1.2		13.1		14.3
Thereafter	19.9		82.1		102.0
Total	$	25.9	$	141.8	$	167.7
Present value adjustment for remaining lease payments ⁽³⁾					(40.9		)
Lease liability - operating leases, net					$	126.8



2019 Dividend increases	Month Declared	Month Paid	Dividend per share		Increase per share
1st increase	Dec 2018	Jan 2019	$	0.2210	$	0.0005
2nd increase	Jan 2019	Feb 2019	$	0.2255	$	0.0045
3rd increase	Mar 2019	Apr 2019	$	0.2260	$	0.0005
4th increase	Jun 2019	Jul 2019	$	0.2265	$	0.0005



Net income available to common stockholders	$	390,207
Plus: interest expense, excluding the amortization of deferred financing costs	273,761
Plus: provision for taxes	5,509
Plus: depreciation and amortization	562,621
Plus: provisions for impairment	25,830
Plus: pro forma adjustments	84,901
Less: gain on sales of real estate	(27,792		)

Income available for debt service, as defined	$	1,315,037

Total pro forma debt service charge	$	298,605

Debt service and fixed charge coverage ratio	4.4


Net income available to common stockholders	$	484,997
Plus: interest expense, excluding the amortization of deferred financing costs	292,348
Plus: loss on extinguishment of debt	9,819
Plus: provision for taxes	9,159
Plus: depreciation and amortization	638,931
Plus: provisions for impairment	40,800
Plus: pro forma adjustments	71,742
Less: gain on sales of real estate	(55,671)

Income available for debt service, as defined	$	1,492,125

Total pro forma debt service charge	$	278,214

Debt service and fixed charge coverage ratio	5.4


Year of Maturity	Credit Facility ⁽¹⁾		Notes and Bonds ⁽²⁾		Term Loan ⁽³⁾		Mortgages Payable ⁽⁴⁾		Interest ⁽⁵⁾		Ground Leases Paid by Realty Income ⁽⁶⁾		Ground Leases Paid by Our Tenants ⁽⁷⁾		Other ⁽⁸⁾		Totals
2020	—		—		—		69.5		136.4		0.8		6.8		7.9		221.4
2021	—		—		—		68.8		279.6		1.5		13.5		7.9		371.3
2022	—		950.0		—		111.8		275.8		1.5		13.4		—		1,352.5
2023	628.6		750.0		—		20.6		236.8		1.4		13.5		—		1,650.9
2024	—		350.0		250.0		112.2		192.3		1.4		13.6		—		919.5
Thereafter	—		4,590.6		—		10.8		1,212.7		18.8		69.1		—		5,902.0
Totals	$	628.6	$	6,640.6	$	250.0	$	393.7	$	2,333.6	$	25.4	$	129.9	$	15.8	$	10,417.6



Year of Maturity	Credit Facility ⁽¹⁾		Notes and Bonds ⁽²⁾		Term Loan ⁽³⁾		Mortgages Payable ⁽⁴⁾		Interest ⁽⁵⁾		Ground Leases Paid by Realty Income ⁽⁶⁾		Ground Leases Paid by Our Tenants ⁽⁷⁾		Other ⁽⁸⁾		Totals
2019	$	—	$	—	$	—	$	18.2	$	138.6	$	0.8	$	6.8	$	16.9	$	181.3
2020	—		—		250.0		82.4		272.7		1.5		13.5		16.9		637.0
2021	—		250.0		—		67.0		256.6		1.3		13.2		—		588.1
2022	—		950.0		—		109.7		245.8		1.2		13.1		—		1,319.8
2023	8.0		750.0		—		6.7		210.8		1.2		13.1		—		989.8
Thereafter	—		4,349.9		250.0		11.9		1,256.6		19.9		82.1		—		5,970.4
Totals	$	8.0	$	6,299.9	$	500.0	$	295.9	$	2,381.1	$	25.9	$	141.8	$	33.8	$	9,686.4


⁽²⁾	~~Excludes non-cash original issuance discounts and premiums recorded on notes payable of $6.8 million and deferred financing costs of $38.6 million at June 30, 2019.~~