Aug 6, 2025 4 min read (O) Realty Income Corp

Realty Income Q2 2025 Earnings Update

AFFO per share matched estimates at $1.05.
Guidance increased slightly (from $4.25 to $4.26) and is now a penny above the consensus estimate for 2025.
Realty Income continues to deliver modest growth in AFFO per share and easily cover the dividend.
Issuing shares and purchasing real estate remains an important part of the strategy.
Disclosure: I have a small position in Realty Income.

For Realty Income (O), AFFO per share is usually the most important metric.

AFFO Consensus Estimate for Q2 2025: $1.05
AFFO Per Share Result: $1.05
Outcome: Matches consensus estimate.

Note: The consensus estimate for FFO (not AFFO) was $1.06. Some websites may incorrectly use the consensus estimate for FFO for comparisons to AFFO.

Realty Income Guidance for AFFO

Old Guidance for 2025 AFFO: $4.22 to $4.28. Midpoint $4.25.
New Guidance for 2025 AFFO: $4.24 to $4.28. Midpoint $4.26.
Guidance is increased $.01.
Consensus Estimate for 2025 AFFO: $4.25
2024 AFFO (for reference): $4.19

The dividend rate is currently $3.228 per share, which is around a 75.8% payout ratio on AFFO guidance.

Biggest Issues?

The primary issue for Realty Income is still that they have a few weak tenants to handle. Not a huge deal, but it creates some headwinds that reduce the growth rate in AFFO per share.

The ideal scenario for Realty Income is one where interest rates decline.

However, Realty Income has been able to leverage their international exposure to get access to debt at a lower interest rate by borrowing in Euros. That brings the rate down. What about the currency exposure? Realty Income owns some European assets, which helps normalize the exposure. They have both assets and liabilities in euros, allowing the two to largely offset each other for exposure.

The Guidance Slide

The slide for guidance is included below:

Source: Realty Income

Issuing Shares

During the quarter, Realty Income was using their ATM (at the market) program for “forward agreements”.

What are “forward agreements”? They are a technique that allows the REIT to lock in the price for issuing shares in the next few quarters.

The buyer and seller are both committed. Realty Income could issue shares earlier and then just sit on the cash until their real estate deals are ready to close. Why not do that? Because it would make the financial statements more complex for people comparing quarterly growth rates.

This strategy allows them to issue the shares shortly before they close on the real estate, so the shares outstanding don’t balloon before the real estate is acquired.

It can feel a bit awkward for investors initially, but it can help to improve the transparency of the financial statements when comparing quarterly results.

During the quarter Realty Income settled the issuance of 11.2 million shares of common stock sold at a weighted average price of $56.39 per share.

As of the end of Q2 2025, Realty Income still had another 7.6 million shares left to settle at a weighted average price of $56.81 per share. During July, they locked in prices for issuing another 4 million shares.

This is not a problem because Realty Income is putting this capital to work buying real estate. They simply need to clear a reasonable spread between the cost of capital and the rates on acquisitions.

I use the following table to help investors make sense of the equity issuance:

Realty Income should be issuing shares. That’s part of how the REIT generates value for shareholders. Realty Income almost always trades above NAV (Net Asset Value). When that happens, they can usually issue shares and take advantage of opportunities to acquire real estate accretive rates. Realty Income simply needs to have a high enough return on the real estate to offset the cost of issuing shares and the debt issued along with those shares.

This was a huge part of Realty Income’s strong performance over multiple decades.

What about the share price being flat for so many years? That can happen. Realty Income was still generating growth in AFFO per share. However, the large increase in interest rates a few years ago created a major headwind for the REIT.

It reduced the growth in AFFO per share (because higher rates on debt increased the weighted average cost of capital) and it put pressure on the multiple because income investors had a greater variety of options available to choose from.

Earnings Call Notes

We’re getting this article out fast, so it’s coming out right before the earnings call. The earnings call starts at 2:00 p.m. PDT. That’s 5:00 on the East Coast.

Consensus Estimates

I grabbed some slides from TIKR to show the results and consensus estimates.

Realty Income Results for AFFO Per Share