Noncontrolling Interests

12 Months Ended

Dec. 31, 2021

Noncontrolling InterestsThere are four entities with noncontrolling interests that we consolidate, including an operating partnership, Realty Income, L.P., two development joint ventures, one acquired in May 2021, one acquired in December 2020, and a joint venture acquired in 2019. From time to time, we complete the acquisitions of assets in by issuing additional common partnership units in Realty Income, L.P. as consideration for the acquisitions. In November 2021, we issued 300,604 common partnership units in Realty Income, L.P. in connection with the acquisition of seven properties and recorded $20.4 million of non-controlling interests. In December 2021, we issued 240,586 common partnership units in Realty Income, L.P. in connection with the acquisition of one property and recorded $16.6 million of non-controlling interests. In addition, during November 2021 we issued 56,400 of common partnership units in Realty Income, L.P. in exchange for VEREIT OP units in connection with our merger with VEREIT and recorded noncontrolling interests of $1.8 million. At December 31, 2021, outstanding common partnership units in Realty

Income, L.P. represent 4.2% ownership interest in Realty Income L.P. We hold the remaining 95.8% interest and consolidate the entity.

None of our common partnership units have voting rights. Common partnership units are entitled to monthly distributions equal to the amount paid to common stockholders of Realty Income, and are redeemable in cash or Realty Income common stock, at our option, and at a conversion ratio of 1.02934 due to the Orion Divestiture, subject to certain exceptions. Prior to the Orion Divestiture, the conversion ratio was one to one. These issuances with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the issuer, were evaluated to determine whether temporary or permanent equity classification on the balance sheet was appropriate. We determined that the units meet the requirements to qualify for presentation as permanent equity.

In May 2021 and December 2020, we completed the respective acquisition of a development property by acquiring a controlling interest in a joint venture. We are the managing member of these two joint ventures, and possess the ability to control the business and manage the affairs of these entities. At December 31, 2021, we and our subsidiaries held an 72.4% interest in the joint venture established in May 2021 and an 94.5% interest in the joint venture established in December 2020.

In December 2019, we completed the acquisition of nine properties by acquiring a controlling interest in a joint venture. We are the managing member of this joint venture, and possess the ability to control the business and manage the affairs of this entity. At December 31, 2021, we and our subsidiaries held an 89.9% interest, and consolidated this entity in our consolidated financial statements.

The following table represents the change in the carrying value of all noncontrolling interests through December 31, 2021 (in thousands):


	Realty Income, L.P. units (1)		Other Noncontrolling Interests		Total
Carrying value at December 31, 2019	$	24,596	$	5,106	$	29,702
Reallocation of equity	(47)		—		(47)
Additions to noncontrolling interest	—		3,168		3,168
Distributions	(1,297)		(299)		(1,596)
Allocation of net income	848		172		1,020
Carrying value at December 31, 2020	$	24,100	$	8,147	$	32,247
Contributions	36,975		6,415		43,390
Issued in merger	3,160		—		3,160
Orion divestiture	(1,352)		—		(1,352)
Reallocation of equity	(42)		—		(42)
Distributions	(1,574)		(294)		(1,868)
Allocation of net income	1,149		142		1,291
Carrying value at December 31, 2021	$	62,416	$	14,410	$	76,826

(1) 242,007 units were issued on March 30, 2018, 131,790 units were issued on April 30, 2018, 89,322 units were issued on March 28, 2019, 56,400 units were issued on November 1, 2021, 300,604 units were issued on November 30, 2021, and 240,586 units were issued on December 30, 2021. 1,060,709 units remained outstanding as of December 31, 2021.

At December 31, 2021 and 2020, respectively, Realty Income, L.P. and certain of our joint venture investments were considered variable interest entities, or VIEs, in which we were deemed the primary beneficiary based on our controlling financial interests. Below is a summary of selected financial data of consolidated VIEs included in the consolidated balance sheets at December 31, 2021 and 2020 (in thousands):


	December 31, 2021		December 31, 2020
Net real estate	$	688,229	$	635,963
Total assets	$	795,670	$	723,668
Total liabilities	$	57,057	$	47,962