Realty Income (O): What This Company Actually Does

How Realty Income makes money

Realty Income raises capital from stock and bond investors, buys buildings, and leases them to more than 15,500 tenants under "net leases" — where the tenant, not Realty Income, pays property taxes, insurance, and maintenance. That structure lets Realty Income collect stable rent while continuously raising fresh capital to buy more buildings and grow the rent pie.

Rent flows back to shareholders as a monthly dividend — 75.2% of AFFO is paid out. Source: 10-K FY2025, p.7.

Where the revenue comes from

Source: 10-K FY2025, p.7, p.1, p.92.

Customers and competitors

The top 20 tenants combined account for 35.8% of rent — no single tenant exceeds 10%, limiting the impact of any one tenant's failure, though the company remains exposed to broad retail-sector downturns.

• Agree Realty — smaller in scale but with a higher share of investment-grade tenants, a "high-quality retail net lease" specialist.
• National Retail Properties — the most similar business model, focused on US growth without international expansion.
• W. P. Carey — a broader portfolio spanning industrial, warehouse, and build-to-suit real estate alongside retail.

Source: 10-K FY2025, p.7.

The metric that matters most in this sector

Occupancy shows how full the portfolio stays; same-store rent growth shows how much more existing tenants pay each year, as distinct from growth from buying new buildings.

Occupancy has held remarkably steady at 98.5-99% for four years. Same-store rent growth, by contrast, runs low (0.5-1.9% a year) because lease-contract rent escalators are typically fixed at modest rates. In short: this is a company that grows primarily by buying new buildings, not by aggressively raising rent on existing ones.

Source: respective years' 10-K.

Leadership and ownership

CEO Sumit Roy has held the role since October 2018, was President from 2015, and joined the company in 2011 in Acquisitions — an internal promotion. The company's 1969 founder is no longer involved in management. The largest holders are Vanguard (12.2%), BlackRock (9.8%), and State Street (6.5%) — mostly index funds; management's direct stake is under 1%.

Source: DEF 14A 2026.

Capital returns

Source: 10-K FY2025, p.28, p.47; DEF 14A 2026, Appendix A.

How this company could fail

• Interest rate and capital-raising risk — growth depends on raising capital via stock and bonds and buying buildings where rental yield exceeds the cost of that capital. Rising rates raise funding costs while making the stock less attractive versus Treasuries. 2025 net debt/adjusted EBITDA is 5.5x.
• Retail-sector slowdown risk — 79.1% of the portfolio is retail. Individual tenant concentration is low, but a broad retail downturn or e-commerce disruption could hit many tenants' ability to pay rent simultaneously.
• Share-issuance dependence and dilution risk — growing without buybacks means that if new-share issuance outpaces actual rent and AFFO growth, per-share value could get diluted rather than enhanced.

Source: 10-K FY2025, p.43, p.7; DEF 14A 2026, Appendix A.

Five-year financials

Source: 10-K FY2021-FY2025 MD&A and financial statements, respective years.

What we still don't know

• How much new-acquisition pipeline continues through the remaining 2026 quarters isn't clear without the latest earnings call.
• Whether newly acquired asset classes (data centers, gaming) actually generate higher returns than legacy retail/industrial isn't separately disclosed.
• Exactly how much new-investment spread (yield minus funding cost) would compress under further rate increases can't be calculated from this data alone.