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By Brian Nelson, CFA
Realty Income (O) recently reported fourth quarter results that were mixed. Net income available to common stockholders was $296.1 million, or $0.32 per share, while adjusted funds from operations was $1.08 per share, a penny light of expectations. The REIT invested $2.4 billion, with its pro-rata share of $2.3 billion achieving an initial weighted average cash yield of 7.1%. Realty Income achieved a rent recapture rate of 104.9% on properties released. Net debt to annualized pro forma adjusted EBITDAre was 5.4x.
Management had the following to say about the results:
2025 represented another year of consistent returns and deliberate execution of strategic initiatives that will amplify our competitive strengths. The momentum in our business is palpable. Our fourth quarter investment volume of $2.4 billion represents a meaningful acceleration in activity, and our active pipeline for 2026 is reflected in our initial investment volume guidance of approximately $8.0 billion. In concert with healthy portfolio occupancy and underlying tenant credit, we are introducing 2026 AFFO per share guidance of $4.38 – $4.42, representing annual growth of approximately 2.8% at the midpoint and approximately 9% total operational return.
Our growth outlook is supported by an ever-expanding global addressable market. Our unique platform now benefits from additional sources of private capital, including our U.S. Core Plus fund and GIC partnership. We are honored by the trust we have established with these investors and are energized by the opportunity to deliver reliable long-term value for all stakeholders.
Looking to 2026, net income per share is targeted in the range of $1.65-$1.69, while adjusted funds from operations (AFFO) per share is expected in the range of $4.38-$4.42, up from $4.28 per share in 2025. Same store rent growth for the year is targeted in the range of 1%-1.3%, with occupancy approximately at 98.5%. As mentioned in its comments, investment volume is expected at $8 billion for 2026, up from $6.3 billion in 2025. On March 11, Realty Income raised its dividend 0.2%, to $0.2705 per share on a monthly basis. Its forward estimated yield stands at 5.3%.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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