Realty Income Q2 Earnings Call Highlights

Realty Income raised its 2026 outlook after second-quarter adjusted funds from operations, or AFFO, per share growth of 3.8% to $1.09, supported by investment activity across industrial properties, Europe, private-capital vehicles and data centers. Year-to-date AFFO per share reached $2.22, up 5.2% from the same period of 2025. Chief Executive Officer Sumit Roy said the company increased the midpoint of its full-year AFFO guidance by $0.02, setting a new range of $4.44 to $4.45 per share. The midpoint implies approximately 4% annual growth. The company also lifted its 2026 investment-volume target to $10 billion from $9.5 billion, citing a robust investment pipeline. Realty Income expects approximately $9 billion of that amount to be invested at its share. Realty Income reported approximately $2.6 billion of global investments during the second quarter, or $2.1 billion at its pro-rata share, at an initial weighted average cash yield of 7.3%. U.S. investments accounted for roughly $1.7 billion at Realty Income's share and carried a 7.4% weighted average cash yield. Industrial assets represented about $800 million of U.S. activity and approximately 65% of global real estate investments for the quarter. Roy said industrial acquisitions were supported by improving market fundamentals and contractual rent escalators generally ranging from 2% to 3.5% annually. Nearly half of industrial acquisition net operating income came from investment-grade clients, he said. The company invested about $400 million in Europe at a weighted average yield of 7%. Neil Abraham, chief strategy officer and president of Realty Income International, said the European pipeline includes grocery, do-it-yourself retail, industrial logistics, onshoring and advanced-manufacturing opportunities. Abraham said the company remains constructive on Europe, despite geopolitical uncertainty earlier in the year. He also said cap-rate pressure in the United Kingdom and much of Europe has generally been downward due to institutional capital inflows, with Germany an exception. Realty Income's U.S. Core Plus Fund acquired approximately $673 million of assets globally during the quarter, with industrial accounting for more than half of the volume and retail comprising the remainder. The fund's remaining cornerstone commitments were fully deployed, bringing total gross asset value to approximately $3 billion. Assets acquired by the fund in the second quarter generated a 6% weighted average cash yield. Roy said the fund enables Realty Income to pursue lower-initial-yield assets that may not be accretive on the company's balance sheet while generating man...