Realty Income Q2 AFFO Falls Short of Estimates, Revenues Rise Y/Y

Realty Income Corporation O reported second-quarter 2025 adjusted funds from operations (AFFO) per share of $1.05, which marginally missed the Zacks Consensus Estimate of $1.06. The reported figure compared unfavorably with the prior-year quarter’s AFFO of $1.06 per share.

Results display year-over-year growth in the top line. The company benefited from expansionary effects and a healthy pipeline of opportunities globally. However, a rise in interest expenses affected the results to some extent.

Total revenues were $1.41 billion, which surpassed the Zacks Consensus Estimate of $1.40 billion. The top line rose 5.3% year over year.

Per Sumit Roy, president and CEO of Realty Income, “Realty Income’s ability to deliver attractive, consistent total operational returns across economic cycles reflects the fundamental strength of our platform, combining the benefits of scale, diversification, and disciplined execution. As demand for durable income solutions accelerates amidst a growing retiree demographic, and as corporations increasingly seek to unlock capital from real estate, we believe our model is well-positioned to thrive.”

O’s Quarter in Detail

In the second quarter, same-store rental revenues of $1.17 billion from 14,622 properties under lease witnessed a rise of 1.1% from the prior-year period.

The portfolio occupancy of 98.6% as of June 30, 2025, increased 10 basis points (bps) sequentially, while it decreased 20 bps year over year. In the reported quarter, the company achieved a rent recapture rate of 103.4% on re-leasing properties.

Interest expenses were up 14.9% year over year to $283.8 million in the reported quarter.

In the reported quarter, O invested $1.17 billion in 102 properties and properties under development or expansion.

The company sold 73 properties in the quarter, with net sales proceeds of $116.8 million and $38.6 million of gain on the sale of real estate.

O’s Balance Sheet

Realty Income exited the second quarter of 2025 with $5.1 billion of liquidity. This comprised cash and cash equivalents of $800.4 million, unsettled At-The-Market forward equity of $422.8 million and $3.9 billion of availability under its unsecured revolving credit facility.

Net debt to annualized pro-forma adjusted EBITDAre was 5.5X.

Realty Income’s 2025 Guidance

Management revised its 2025 AFFO per share guidance in the range of $4.24-$4.28 compared to the prior guided range of $4.22-$4.28. The Zacks Consensus Estimate is pegged at $4.27, which is within the company’s guided range.

Full-year projections assume same-store rent growth of approximately 1% and occupancy of more than 98%. O increased full-year investment volume of approximately $5 billion compared to prior guidance of $4 billion.

Realty Income currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Realty Income Corporation Price, Consensus and EPS Surprise

Realty Income Corporation price-consensus-eps-surprise-chart | Realty Income Corporation Quote

Performance of Other Retail REITs

Regency Centers Corporation REG reported second-quarter 2025 NAREIT funds from operations (FFO) per share of $1.16, surpassing the Zacks Consensus Estimate of $1.12. The figure increased 9.4% from the prior-year quarter.

REG’s results reflected healthy leasing activity. It witnessed a year-over-year improvement in the same-property net operating income (NOI) and base rents during the quarter.

Simon Property Group, Inc.’s SPG second-quarter 2025 real estate FFO per share of $3.05 surpassed the Zacks Consensus Estimate of $3.04. This compares favorably with the real estate FFO of $2.93 a year ago.

Results reflected an increase in revenues, backed by a rise in the base minimum rent per square foot and occupancy levels for SPG.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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