Realty Income grew Q2 2026 AFFO per share 3.8% to $1.09 on acquisitions and loan income (same-store rent +1.2%), GAAP EPS rose to $0.37 as impairments fell, and it raised 2026 AFFO guidance to $4.44-$4.45.
Revenue
$1.5B
+9.7% YoY
Net income
$344M
+74.7% YoY
Diluted EPS
$0.37
+68.2% YoY
Q2 2026: AFFO per share up 3.8% to $1.09, driven mostly by acquisitions and loan income, not rent growth
Realty Income owns about 15,600 freestanding commercial properties (mostly retail, plus industrial, gaming and now data centers) leased to roughly 1,800 tenants on long-term "net leases", where the tenant pays the property taxes, insurance and maintenance. It turns that rent into a dividend paid every month. For the quarter ended June 30, 2026 it reported:
Total revenue of $1,547.7 million, up 9.7% from $1,410.4 million.
GAAP net income available to common stockholders of $344.0 million ($0.37 per share), up from $196.9 million ($0.22), mostly because property write-downs (impairments) fell from $142.3 million to $54.2 million.
AFFO of $1.09 per share, up 3.8% from $1.05. This is the figure the company, and most REIT investors, treat as the real scorecard.
Occupancy of 98.8%, up from 98.6% a year earlier (98.9% at March 31).
Management raised its full-year 2026 AFFO guidance to $4.44–$4.45 per share (from $4.41–$4.44).
Why AFFO matters more than net income here
Accounting rules make a property owner deduct depreciation, a charge that assumes buildings lose value on a fixed schedule every year. For a REIT like this one it is a large non-cash expense: $644.7 million this quarter, almost twice the net income figure. Land and well-located buildings often do not actually lose value that way, so net income understates how much cash the business produces.
REITs therefore report FFO (funds from operations): net income with real-estate depreciation and impairments added back and gains on property sales taken out. AFFO (adjusted FFO) goes further and strips out other non-cash items (such as "straight-line" rent, an accounting smoothing of future rent increases) and subtracts recurring capital spending. It is the closest thing to the cash available to pay dividends. Realty Income's monthly dividends in Q2 totaled $0.812 per share, or 74.5% of AFFO per share, which is what makes the dividend look covered even though it is more than twice GAAP EPS.
Key figures
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Source: Form 10-Q for the quarter ended June 30, 2026 and the Q2 2026 earnings release (Exhibit 99.1 to the 8-K filed August 5, 2026).
What drove the quarter
Growth came from buying things, not from existing rents. The 10-Q's rental revenue bridge shows properties acquired in 2025–2026 added $89.5 million of rent year over year, while properties sold removed $18.6 million. The 14,619 properties owned throughout both periods ("same-store", meaning an apples-to-apples comparison of the same buildings) produced only $14.2 million more, a 1.2% increase. That is typical for a net-lease landlord: most leases have small fixed or inflation-linked increases, and 79.8% of the 17,440 in-place leases contain some form of rent escalator. Growth has to come mainly from deploying new capital at a yield above the cost of that capital.
Loans are becoming a real revenue line. Interest and dividend income on loans and preferred equity more than doubled, from $39.5 million to $88.5 million. The 10-Q attributes this to "the growth in our loan and preferred equity portfolio," which rose by about $2.8 billion year over year. That $49.0 million increase alone is more than a third of the $137.3 million total revenue gain. It also brought a cost: provisions for credit losses rose to $7.3 million from $1.1 million, "due to initial expected credit losses on loans acquired during the period." (AFFO adds these provisions back, so they reduce GAAP profit but not AFFO.)
Investment pace stayed high. Realty Income invested $2.6 billion in the quarter ($2.1 billion at its own share) at an initial weighted average cash yield of 7.3%, and $5.3 billion in the first half. The biggest new item is a joint venture with Cloud Capital, in which it expects to invest up to $1.4 billion for a 45% stake in three Northern Virginia hyperscale data centers valued at more than $6.0 billion, on leases of 15 to 20 years. The first, already-operating asset closed after quarter-end.
Leasing held up. Of 480 lease expirations handled in the quarter, 385 were renewed with the same tenant and 34 went to new tenants. New rent on re-leased properties was $110.3 million a year versus $107.4 million before, a 102.7% recapture rate: re-leased space is renting for slightly more than it did.
Why GAAP profit jumped much faster than AFFO. Pre-tax income rose from $223.1 million to $396.3 million, but most of that $173 million gain is from lower impairments ($88.1 million less), which the 10-Q says reflects "larger impairments recorded in 2025 related to properties leased to clients in bankruptcy." Depreciation was roughly flat ($644.7 million vs. $647.8 million) because the prior year carried accelerated write-offs on those same bankrupt-tenant leases. Neither item affects AFFO, which is why the 74.7% net income increase and the 3.8% AFFO increase tell very different stories. The AFFO figure is the one that reflects the recurring business.
Costs of growth: interest, overhead and new shares
Interest expense rose 10.0% to $312.1 million, "primarily due to higher average borrowings," with average debt up about $1.5 billion to $30.3 billion and the weighted average rate up to 3.97% from 3.88%. Amortization of net note and mortgage discounts also jumped from $1.0 million to $8.4 million. (AFFO adds these non-cash debt items back.)
General and administrative costs rose 16.8% to $57.6 million (4.0% of revenue excluding reimbursements, up from 3.7%), "primarily due to higher employee costs as we continue to invest in our people and our platform," as the company builds out its asset-management business.
Share dilution. AFFO in dollars grew 7.9%, but diluted shares grew about 3.4%, so AFFO per share grew only 3.8%. Realty Income raised $843.0 million by selling 13.7 million shares at an average $61.52 in the quarter and had about $1.3 billion more in unsettled forward equity sales as of August 5. A net-lease REIT funds most acquisitions this way, so per-share growth depends on buying properties at yields comfortably above what the new equity and debt cost.
Partners now take a bigger share of profit. Net income attributable to noncontrolling interests (the portion owed to outside partners in joint ventures) rose to $26.6 million from $2.1 million. This follows the March 2026 deal in which Apollo paid $1.0 billion for a 49% interest in a venture holding 492 of Realty Income's retail properties. Realty Income swapped part of its future rent for up-front capital it can reinvest.
Leverage was 5.4x net debt to annualized pro forma adjusted EBITDAre (the company's own leverage measure, similar to debt divided by a year of cash operating earnings). After the quarter, Fitch assigned an 'A' issuer rating with a Stable Outlook, and the company expanded its revolving credit facilities and commercial paper programs to $5.5 billion each.
Takeaway: The headline "net income up 75%" is mostly the absence of last year's bankruptcy-related write-downs. The underlying business grew AFFO per share 3.8%. Same-store rent added only about 1% of that, so the growth came from $2+ billion a quarter of new investment, an increasing share of it loans and joint ventures, funded partly with new shares. The dividend is well covered at 74.5% of AFFO. How fast it keeps growing depends on Realty Income continuing to invest at around 7% yields while its borrowing costs creep up.
Guidance and outlook
Management raised its 2026 guidance on August 5 (prior guidance from May 6 in brackets):
2026 guidance item
Revised
Prior
H1 2026 actual
AFFO per share
$4.44 – $4.45
$4.41 – $4.44
$2.22
Net income per share
$1.59 – $1.60
$1.60 – $1.63
$0.70
Same-store rent growth
1.1% – 1.3%
1.0% – 1.3%
1.0%
Occupancy
~98.5%
~98.5%
98.8%
Investment volume (at 100%)
$10.0 billion
$9.5 billion
$5.3 billion
Lease termination income
$45 – $50 million
$45 – $50 million
$41 million
CEO Sumit Roy said the raise reflects "approximately 4% growth rate at the midpoint." Two details are worth noting:
Most of the year's lease-termination income is already booked. $41 million of the $45–50 million full-year estimate came in the first half, and the 10-Q's rental bridge shows the bulk of it ("other excluded revenue," mainly termination fees) landed in Q1: $42.1 million for the half versus $1.8 million in Q2. That one-off income helps explain why first-half AFFO per share grew 5.2% while Q2 grew 3.8%, and it will not recur in the second half. Q2's 3.8% is the better guide to the underlying rate.
The investment target went up, but net income guidance went down slightly. The guidance footnote says net income excludes future impairments and currency or derivative gains/losses. In the guidance bridge, the lower net income range is offset by higher expected real estate depreciation ($2.66 vs. $2.65 per share) and other adjustments ($0.19 vs. $0.16), which is how net income guidance can fall while AFFO guidance rises.
Our read: Reaching the $4.445 midpoint requires second-half AFFO of about $2.22–$2.23 per share, or roughly $1.11–$1.12 a quarter, a modest step up from Q2's $1.09. That looks achievable given the $5.3 billion invested in the first half at around 7.2% cash yields and the data-center assets arriving. The risks are on the funding side: interest expense is growing faster than revenue (10.0% vs. 9.7%), newer debt carries higher coupons than the 3.97% portfolio average (for example 4.750% on the April 2033 notes before swaps), and continued share issuance limits per-share growth. On the credit side, loan and preferred equity income ($88.5 million) is still small next to about $1.4 billion of quarterly rental revenue, but its credit-loss provisions and yields are now worth watching each quarter. Occupancy at 98.8%, above the ~98.5% guided, shows no sign of tenant stress in the core portfolio.
The full Form 10-Q for Q2 2026 (filed August 6, 2026) is the source for all income statement, MD&A and FFO/AFFO figures above; guidance, same-store rent growth and dividend coverage come from the August 5, 2026 earnings release.