Realty Income Corp. (O)

Realty Income buys freestanding commercial properties and lets them to the businesses that operate in them under long-term net leases. Under a net lease the occupier, which the company calls its client, pays most or all of the property-level costs, so the landlord collects a contractual rent rather than running a building. It was founded in 1969 and held over 15,500 properties at the end of 2025 across all 50 US states, the United Kingdom and eight other European countries.

How a net lease works

Clients are typically responsible for most or all property-level operating expenses, including property taxes, insurance and maintenance. Realty Income receives contractually defined rental payments, many of which carry rent increases written into the lease. The company states the intended effect: a stable and predictable revenue stream, built-in growth over time, and reduced exposure to variable operating costs.

What it owns

At the end of 2025 the portfolio was 15,511 properties. By share of annualised base rent, retail was 79.1 percent across 14,864 properties, industrial 15.4 percent across 577, gaming 3.1 percent across two, and other 2.4 percent across 68, the last category mostly agricultural land. Beyond the buildings it holds 2,962 acres of leased agricultural land.

The largest client, 7-Eleven, was 3.3 percent of portfolio annualised base rent across 812 leases, followed by Dollar General at 3.2 percent across 1,797 leases, Walgreens at 3.1 percent across 400, and Family Dollar at 2.6 percent across 1,257.

What it looks for in a tenant

Within retail the company primarily targets properties supporting service-oriented, non-discretionary or low-price-point business models, on the reasoning that uses providing essential or recurring services tend to show more resilient demand through economic cycles. It also prioritises retail clients it judges resilient to e-commerce, whether through necessity-based offerings, experiential components, or omnichannel strategies that link the store to the website.

Across the whole book it looks for a blend of investment grade, investment grade equivalent and other creditworthy clients, with business models and cash flow characteristics it judges resilient, in locations strategically important to the client's own operations. Client selection, site quality and portfolio construction are supported by data-driven analytics.

Where it is growing

The filing names four growth initiatives. Geographic expansion, applying the same net lease approach in markets that offer diversification and long-term fundamentals, entered in some cases through joint ventures with institutional partners. Property type expansion, which in recent years has meant more investment in data centres, gaming and industrial real estate. Credit investments across the real estate capital structure rather than only equity ownership: loans and preferred equity interests totalled $3.1 billion at the end of 2025, up from $1.5 billion a year earlier. And a private capital business run through joint ventures, private funds and other arrangements.

One segment

The company reports a single business activity, the leasing of property to clients generally on a net lease basis, spanning several countries, property types and client industries. It notes that it keeps the diversification disclosures because investors view diversification as a key part of its investment philosophy even though there is only one segment.

How it funds itself

A combination of long-term debt, equity, retained cash flow and capital recycled from selling properties. The company says it manages the balance sheet for financial flexibility, access to multiple forms of capital and a conservative leverage profile, and that its scale and cost of capital are what let it pursue investments.

From Realty Income's annual report on Form 10-K for the year ended 31 December 2025. The filing