Europe Leads Realty Income's Investment Surge: What Comes Next?

Realty Income’s O strategy continues to tilt toward Europe, and that shift has become one of the company’s most important growth engines. In the third quarter of 2025, the REIT deployed $1.4 billion, and an outsized 72% of that total went to European assets. These deals carried an 8% initial cash yield, a meaningful premium to U.S. transactions and a key contributor to the firm’s ability to maintain attractive spreads despite a competitive domestic landscape. 

This is in response to a fragmented European net-lease landscape, a larger addressable market and a meaningfully lower cost of euro-denominated debt. That combination creates wider spreads that Realty Income can capture at scale. With Europe now representing nearly $16 billion in gross asset value, the company’s early-mover advantage continues to deepen as it broadens relationships and expands sourcing across the continent.

Investment volume trends reinforce that momentum. Since the beginning of the year through the third quarter, activity reached $3.9 billion, surpassing all of 2024, excluding the Spirit merger. The strength of the pipeline, highlighted by $31 billion sourced in the third quarter, allowed Realty Income to raise its 2025 investment guidance to $5.5 billion. The company expects Europe to remain a major contributor to hitting that target, given the steady visibility into large-scale, higher-yielding opportunities.

Operational discipline supports this investment engine. Realty Income continues to recycle capital out of lower-return or vacant assets and reinvest into higher-yielding European and credit investments, improving portfolio quality while protecting spreads. This recycling process amplifies the benefits of the European pivot by freeing incremental capacity for deployment. Ultimately, Europe has become Realty Income’s most effective lever for growth, deal velocity and spread preservation, shaping both investment pacing and near-term guidance.

Where Do Other Retail REITs See Growth Opportunities?

Simon Property Group SPG is expanding its portfolio through development, redevelopment and acquisitions. Earlier this year, Simon Property acquired its partner's interest in Brickell City Centre, and its $512 million investment comprises retail and parking components, a premier mixed-use property in Miami, FL. Recently, Simon Property acquired the remaining 12% interest in the Taubman Realty Group. 

Kimco Realty KIM is driving growth through redevelopments, selective acquisitions and asset recycling. During the third quarter, Kimco acquired the remaining 85% ownership interest in Tanasbourne Village for a pro-rata purchase price of $65.9 million. Kimco sold two shopping centers, namely Gresham Town Fair, located in Gresham, OR, for $31.8 million, and Southfield Plaza, located in Southfield, MI, for $14.4 million. For 2025, Kimco plans total acquisitions (including structured investments), net of dispositions, of $100-$125 million.

O’s Price Performance, Valuation and Estimates

Shares of Realty Income have risen 5.5% year to date against the industry’s decline of 5.8%.

From a valuation standpoint, O trades at a forward 12-month price-to-FFO of 12.82, below the industry as well as its one-year median of 13.14. It carries a Value Score of D.

While the Zacks Consensus Estimate for O’s 2025 FFO per share has been revised southward, the same for 2026 has been tweaked northward over the past 30 days.

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

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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