O changes
Pick any two versions below to diff them.
- Price
- $56.08 → $55.35(−1.3%)
- Discount
- 20% to 28% → 21% to 29%(+1.0 pts)
- Next earnings
- 2026-11-05 → 2026-11-02
- Next earnings is estimate
- Yes → No
- Thesis
- The market prices Realty Income as a bond-like stock that suffers when interest rates stay high. Realty Income grows by buying properties with borrowed money and new shares, so its growth depends on the spread between property yields and its cost of capital. Interest expense rose to $604 million in the first half of 2026 from $552 million a year earlier. AFFO per share grows slowly, by about 4% a year: Realty Income expects $4.44 to $4.45 for 2026. Some large tenants are retailers under pressure, such as pharmacies and discount stores. For the gap to close, three things must be true. Interest rates must fall, or Realty Income must keep buying properties at yields well above its cost of capital, as with the 7.3% initial cash yield on Q2 2026 investments. Occupancy must stay near 99% and rent recapture on re-leased properties must stay above 100%. New growth channels, such as the data center joint venture and the investment management funds, must add to AFFO per share growth. The Q3 2026 report, estimated for about on November 52, 2026, gives the next test. The 2027 guidance in February 2027 shows the growth rate for next year. If rates fall, the gap can close over the next four to eight quarters. The main reason it may not close is interest rates that stay high, which keep the value of income stocks low.
- Checkpoints
- Nov 52, 2026 (estimate): Q3 2026 results: AFFO per share and investment yields. Pending. Watch: AFFO per share growth near 4% and occupancy near 99% pass; a cut in 2026 guidance or occupancy below 98% fails. Feb 2027 (estimate): 2027 AFFO per share guidance. Pending. Watch: 2027 guidance for AFFO per share growth of about 4% or more passes; guidance for lower growth fails.