UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2023, or

☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-13374

REALTY INCOME CORPORATION

(Exact name of registrant as specified in its charter)

Maryland	33-0580106
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

11995 El Camino Real, San Diego, California 92130

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (858) 284-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Common Stock, $0.01 Par Value	O	New York Stock Exchange
1.125% Notes due 2027	O27A	New York Stock Exchange
1.875% Notes due 2027	O27B	New York Stock Exchange
1.625% Notes due 2030	O30	New York Stock Exchange
4.875% Notes due 2030	O30A	New York Stock Exchange
1.750% Notes due 2033	O33A	New York Stock Exchange
5.125% Notes due 2034	O34	New York Stock Exchange
2.500% Notes due 2042	O42	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒     No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," “accelerated filer,” "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒

There were 708,787,568 shares of common stock outstanding as of July 31, 2023.

REALTY INCOME CORPORATION

Index to Form 10-Q

June 30, 2023

PART I.	FINANCIAL INFORMATION	Page
Item 1:	Financial Statements (Unaudited)
	Consolidated Balance Sheets	2
	Consolidated Statements of Income and Comprehensive Income	3
	Consolidated Statements of Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Forward-Looking Statements	25
	Overview	25
	Recent Developments	26
	Liquidity and Capital Resources	29
	Results of Operations	33
	Non-GAAP Measures	37
	Property Portfolio Information	43
	Impact of Recent Accounting Pronouncements	48
	Critical Accounting Policies	48
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4:	Controls and Procedures	49
PART II.	OTHER INFORMATION
Item 1A:	Risk Factors	50
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 5:	Other Information	50
Item 6:	Exhibits	51
SIGNATURE		52

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PART 1. FINANCIAL INFORMATION

Item 1: Financial Statements

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts) (unaudited)

	June 30, 2023		December 31, 2022
ASSETS
Real estate held for investment, at cost:
Land	$	14,011,325	$	12,948,835
Buildings and improvements	32,652,912		29,707,751
Total real estate held for investment, at cost	46,664,237		42,656,586
Less accumulated depreciation and amortization	(5,485,766)		(4,904,165)
Real estate held for investment, net	41,178,471		37,752,421
Real estate and lease intangibles held for sale, net	17,324		29,535
Cash and cash equivalents	253,693		171,102
Accounts receivable, net	620,599		543,237
Lease intangible assets, net	5,238,400		5,168,366
Goodwill	3,731,478		3,731,478
Other assets, net	2,940,701		2,276,953
Total assets	$	53,980,666	$	49,673,092
LIABILITIES AND EQUITY
Distributions payable	$	182,855	$	165,710
Accounts payable and accrued expenses	559,383		399,137
Lease intangible liabilities, net	1,439,968		1,379,436
Other liabilities	855,496		774,787
Line of credit payable and commercial paper	990,257		2,729,040
Term loan, net	1,324,285		249,755
Mortgages payable, net	841,690		853,925
Notes payable, net	16,475,589		14,278,013
Total liabilities	22,669,523		20,829,803
Commitments and contingencies (Note 17)
Stockholders’ equity:
Common stock and paid in capital, par value $0.01 per share, 1,300,000 shares authorized, 708,773 and 660,300 shares issued and outstanding as of June 30, 2023, and December 31, 2022, respectively	37,149,380		34,159,509
Distributions in excess of net income	(6,102,226)		(5,493,193)
Accumulated other comprehensive income	96,057		46,833
Total stockholders’ equity	31,143,211		28,713,149
Noncontrolling interests	167,932		130,140
Total equity	31,311,143		28,843,289
Total liabilities and equity	$	53,980,666	$	49,673,092

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share amounts) (unaudited)

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
REVENUE
Rental (including reimbursable)	$	995,289	$	800,800	$	1,920,578	$	1,600,365
Other	23,916		9,619		43,026		17,397
Total revenue	1,019,205		810,419		1,963,604		1,617,762
EXPENSES
Depreciation and amortization	472,278		409,437		923,755		813,199
Interest	183,857		110,121		337,989		216,524
Property (including reimbursable)	94,703		52,180		164,100		104,522
General and administrative	36,829		34,139		70,996		66,838
Provisions for impairment	29,815		7,691		42,993		14,729
Merger and integration-related costs	341		2,729		1,648		9,248
Total expenses	817,823		616,297		1,541,481		1,225,060
Gain on sales of real estate	7,824		40,572		12,103		50,728
Foreign currency and derivative (loss) gain, net	(2,552)		7,480		7,770		6,890
Gain on extinguishment of debt	—		127		—		127
Equity in income and impairment of investment in unconsolidated entities	411		(6,627)		411		(5,673)
Other income, net	3,020		2,806		5,750		4,658
Income before income taxes	210,085		238,480		448,157		449,432
Income taxes	(12,932)		(14,658)		(24,882)		(25,639)
Net income	197,153		223,822		423,275		423,793
Net income attributable to noncontrolling interests	(1,738)		(615)		(2,844)		(1,217)
Net income available to common stockholders	$	195,415	$	223,207	$	420,431	$	422,576
Amounts available to common stockholders per common share:
Net income available to common stockholders per common share, basic and diluted	$	0.29	$	0.37	$	0.63	$	0.71
Weighted average common shares outstanding:
Basic	674,109		601,672		667,357		597,778
Diluted	674,593		602,031		668,108		598,141
Net income available to common stockholders	$	195,415	$	223,207	$	420,431	$	422,576
Total other comprehensive income (loss):
Foreign currency translation adjustment	29,046		(48,992)		57,796		(59,698)
Unrealized (loss) gain on derivatives, net	(6,410)		33,454		(8,572)		77,144
Total other comprehensive income (loss)	$	22,636	$	(15,538)	$	49,224	$	17,446
Comprehensive income available to common stockholders	$	218,051	$	207,669	$	469,655	$	440,022

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY 

(in thousands) (unaudited)

Three months ended June 30, 2023, and 2022

	Shares of common stock	Common stock and paid in capital		Distributions in excess of net income		Accumulated other comprehensive income		Total stockholders’ equity		Noncontrolling interests		Total equity
Balance, March 31, 2023	673,207	$	34,958,608	$	(5,772,923)	$	73,421	$	29,259,106	$	128,232	$	29,387,338
Net income	—	—		195,415		—		195,415		1,738		197,153
Other comprehensive income	—	—		—		22,636		22,636		—		22,636
Distributions paid and payable	—	—		(524,718)		—		(524,718)		(1,597)		(526,315)
Share issuances, net of costs	35,519	2,183,194		—		—		2,183,194		—		2,183,194
Contributions by noncontrolling interests	—	—		—		—		—		39,559		39,559
Share-based compensation, net	47	7,578		—		—		7,578		—		7,578
Balance, June 30, 2023	708,773	$	37,149,380	$	(6,102,226)	$	96,057	$	31,143,211	$	167,932	$	31,311,143
Balance, March 31, 2022	601,567	$	30,236,374	$	(4,772,112)	$	37,917	$	25,502,179	$	76,546	$	25,578,725
Net income	—	—		223,207		—		223,207		615		223,822
Other comprehensive loss	—	—		—		(15,538)		(15,538)		—		(15,538)
Distributions paid and payable	—	—		(450,245)		—		(450,245)		(894)		(451,139)
Share issuances, net of costs	15,961	1,060,529		—		—		1,060,529		—		1,060,529
Share-based compensation, net	36	6,480		—		—		6,480		—		6,480
Balance, June 30, 2022	617,564	$	31,303,383	$	(4,999,150)	$	22,379	$	26,326,612	$	76,267	$	26,402,879
Six months ended June 30, 2023 and 2022
	Shares of common stock	Common stock and paid in capital		Distributions in excess of net income		Accumulated other comprehensive income		Total stockholders’ equity		Noncontrolling interests		Total equity
Balance, December 31, 2022	660,300	$	34,159,509	$	(5,493,193)	$	46,833	$	28,713,149	$	130,140	$	28,843,289
Net income	—	—		420,431		—		420,431		2,844		423,275
Other comprehensive income	—	—		—		49,224		49,224		—		49,224
Distributions paid and payable	—	—		(1,029,464)		—		(1,029,464)		(4,611)		(1,034,075)
Share issuances, net of costs	48,226	2,982,094		—		—		2,982,094				2,982,094
Contributions by noncontrolling interests	—	—		—		—		—		39,559		39,559
Share-based compensation, net	247	7,777		—		—		7,777		—		7,777
Balance, June 30, 2023	708,773	$	37,149,380	$	(6,102,226)	$	96,057	$	31,143,211	$	167,932	$	31,311,143
Balance December 31, 2021	591,262	$	29,578,212	$	(4,530,571)	$	4,933	$	25,052,574	$	76,826	$	25,129,400
Net income	—	—		422,576		—		422,576		1,217		423,793
Other comprehensive income	—	—		—		17,446		17,446		—		17,446
Distributions paid and payable	—	—		(891,155)		—		(891,155)		(1,776)		(892,931)
Share issuances, net of costs	26,133	1,720,573		—		—		1,720,573		—		1,720,573
Share-based compensation, net	169	4,598		—		—		4,598		—		4,598
Balance, June 30, 2022	617,564	$	31,303,383	$	(4,999,150)	$	22,379	$	26,326,612	$	76,267	$	26,402,879

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

	Six months ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	423,275	$	423,793
Adjustments to net income:
Depreciation and amortization	923,755		813,199
Amortization of share-based compensation	13,923		11,643
Non-cash revenue adjustments	(33,420)		(25,332)
Gain on extinguishment of debt	—		(127)
Amortization of net premiums on mortgages payable	(6,396)		(7,091)
Amortization of net premiums on notes payable	(30,657)		(31,423)
Amortization of deferred financing costs	12,568		7,081
(Loss) gain on interest rate swaps	(3,600)		1,446
Foreign currency and unrealized derivative loss, net	(6,289)		(6,890)
Gain on sales of real estate	(12,103)		(50,728)
Equity in income and impairment of investment in unconsolidated entities	(411)		5,673
Distributions from unconsolidated entities	—		1,490
Provisions for impairment on real estate	42,993		14,729
Change in assets and liabilities
Accounts receivable and other assets	25,733		134,019
Accounts payable, accrued expenses and other liabilities	116,742		(34,921)
Net cash provided by operating activities	1,466,113		1,256,561
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in real estate	(4,686,800)		(3,166,063)
Improvements to real estate, including leasing costs	(29,458)		(29,654)
Proceeds from sales of real estate	60,460		272,245
Return of investment from unconsolidated entities	3,927		746
Insurance proceeds received	7,198		16,046
Non-refundable escrow deposits	(1,935)		(13,815)
Net cash used in investing activities	(4,646,608)		(2,920,495)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash distributions to common stockholders	(1,012,336)		(884,109)
Borrowings on line of credit and commercial paper programs	27,136,997		9,366,868
Payments on line of credit and commercial paper programs	(28,911,973)		(9,724,268)
Proceeds from term loan	1,029,383		—
Proceeds from notes payable issued	2,074,883		1,405,691
Principal payments on mortgages payable	(8,070)		(225,951)
Proceeds from common stock offerings, net	2,976,683		1,712,696
Proceeds from dividend reinvestment and stock purchase plan	5,411		5,731
Distributions to noncontrolling interests	(3,038)		(1,776)
Net (payments) receipts on derivative settlements	(9,285)		7,474
Debt issuance costs	(25,108)		(27,272)
Other items, including shares withheld upon vesting	(6,146)		(4,899)
Net cash provided by financing activities	3,247,401		1,630,185
Effect of exchange rate changes on cash and cash equivalents	21,075		(24,955)
Net increase (decrease) in cash, cash equivalents and restricted cash	87,981		(58,704)
Cash, cash equivalents and restricted cash, beginning of period	226,881		332,369
Cash, cash equivalents and restricted cash, end of period	$	314,862	$	273,665

For supplemental disclosures, see note 15, Supplemental Disclosures of Cash Flow Information.

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(unaudited)

1.    Basis of Presentation

Realty Income Corporation (“Realty Income,” the “Company,” “we,” “our” or “us”) was founded in 1969 and is organized as a Maryland corporation. We invest in commercial real estate and have elected to be taxed as a real estate investment trust ("REIT"). We are listed on the New York Stock Exchange ("NYSE") under the symbol “O”.

As of June 30, 2023, we owned or held interests in a diversified portfolio of 13,118 properties located in all 50 states of the United States ("U.S."), Puerto Rico, the United Kingdom ("U.K."), Spain, Italy, and Ireland, with approximately 255.5 million square feet of leasable space.

Our accompanying unaudited consolidated financial statements were prepared from our books and records in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily an indication of the results that may be expected for the entire year. Readers of this quarterly report should refer to our audited consolidated financial statements for the year ended December 31, 2022, which are included in our 2022 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report. The U.S. dollar (“USD”) is our reporting currency. Unless otherwise indicated, all dollar amounts are expressed in USD.

For our consolidated subsidiaries whose functional currency is not the USD, we translate their financial statements into USD at the time we consolidate those subsidiaries’ financial statements. Generally, assets and liabilities are translated at the exchange rate in effect at the balance sheet date. The resulting translation adjustments are included in 'Accumulated other comprehensive income' ("AOCI") in the consolidated balance sheets. Certain balance sheet items, primarily equity and capital-related accounts, are reflected at the historical exchange rate. Income statement accounts are translated using the average exchange rate for the period.

We and certain of our consolidated subsidiaries have intercompany and third-party debt that is not denominated in our functional currency. When the debt is remeasured to the functional currency of the entity, a gain or loss can result. The resulting adjustment is reflected in 'Foreign currency and derivative (loss) gain, net' in the consolidated statements of income and comprehensive income. Intercompany accounts and transactions are eliminated in consolidation.

Principles of Consolidation. These consolidated financial statements include the accounts of Realty Income and all other entities in which we have a controlling financial interest. We evaluate whether we have a controlling financial interest in an entity in accordance with Accounting Standards Codification ("ASC") 810, Consolidation.

Voting interest entities are entities considered to have sufficient equity at risk and which the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. We consolidate voting interest entities in which we have a controlling financial interest, which we typically have through holding of a majority of the entity’s voting equity interests.

Variable interest entities ("VIEs") are entities that lack sufficient equity at risk or where the equity holders either do not have the obligation to absorb losses, do not have the right to receive residual returns, do not have the right to make decisions about the entity’s activities, or some combination of the above. A controlling financial interest in a VIE is present when an entity has a variable interest, or a combination of variable interests, that provides the entity with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. An entity that meets both conditions above is deemed the primary beneficiary and consolidates the VIE. We reassess our initial evaluation of whether an entity is a VIE when certain reconsideration events occur. We reassess our determination of whether we are the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances.

-6-

At June 30, 2023, Realty Income, L.P. and certain investments, including investments in joint ventures, are considered 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 June 30, 2023, and December 31, 2022 (in thousands):

	June 30, 2023		December 31, 2022
Net real estate	$	2,432,712	$	920,032
Total assets	$	3,165,836	$	1,082,346
Total liabilities	$	159,014	$	60,127

The portion of a consolidated entity not owned by us is recorded as a noncontrolling interest. Noncontrolling interests are reflected on our consolidated balance sheets as a component of equity. Noncontrolling interests that were created or assumed as part of a business combination or asset acquisition were recognized at fair value as of the date of the transaction (see note 9, Noncontrolling Interests).

Reclassification. Certain prior period amounts have been reclassified to conform to the current year presentation.

Value-added tax receivable is now included in 'Other assets, net', in the consolidated balance sheets. Previously, this was categorized as 'Accounts receivable, net' in the consolidated balance sheets.

Use of Estimates. The consolidated financial statements were prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segment Reporting. We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and assesses our performance.

Income Taxes. We have elected to be taxed as a REIT, under the Internal Revenue Code of 1986, as amended. We believe we have qualified and continue to qualify as a REIT. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income in the U.S., we generally will not be required to pay U.S. income taxes on such income. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements, except for federal income taxes of our taxable REIT subsidiaries ("TRS"). A TRS is a subsidiary of a REIT that is subject to federal, state and local income taxes, as applicable. Our use of TRS entities enables us to engage in certain business activities while complying with the REIT qualification requirements and to retain any income generated by these businesses for reinvestment without the requirement to distribute those earnings. For our international territories, we are liable for taxes in the United Kingdom and Spain. Accordingly, provisions have been made for U.K. and Spain income taxes. Therefore, the income taxes recorded on our consolidated statements of income and comprehensive income represent amounts accrued or paid by Realty Income and its subsidiaries for U.S. income taxes on our TRS entities, city and state income and franchise taxes, and income taxes for the U.K. and Spain.

Earnings and profits that determine the taxability of distributions to stockholders differ from net income reported for financial reporting purposes primarily due to differences in the estimated useful lives and methods used to compute depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things.

We regularly analyze our various international, federal and state filing positions and only recognize the income tax effect in our financial statements when certain criteria regarding uncertain income tax positions have been met. We believe that our income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities. Therefore, no provisions for uncertain tax positions have been recorded on our consolidated financial statements.

-7-

Lease Revenue Recognition and Accounts Receivable. The majority of our leases are accounted for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Any rental revenue contingent upon our client’s sales, or percentage rent, is recognized only after our client exceeds their sales breakpoint. Rental increases based upon changes in the consumer price indexes are recognized only after the changes in the indexes have occurred and are then applied according to the lease agreements. Contractually obligated rental revenue from our clients for recoverable real estate taxes and operating expenses are included in contractually obligated reimbursements by our clients, a component of rental revenue, in the period when such costs are incurred. Taxes and operating expenses paid directly by our clients are recorded on a net basis.

Other revenue includes certain property-related revenue not included in rental revenue and interest income recognized on financing receivables for certain leases with above-market terms.

We assess the probability of collecting substantially all of the lease payments to which we are entitled under the original lease contract as required under Topic 842, Leases. We assess the collectability of our future lease payments based on an analysis of creditworthiness, economic trends and other facts and circumstances related to the applicable clients. If we conclude the collection of substantially all lease payments under a lease is less than probable, rental revenue recognized for that lease is limited to cash received going forward, existing operating lease receivables, including those related to straight-line rental revenue, must be written off as an adjustment to rental revenue, and no further operating lease receivables are recorded for that lease until such future determination is made that substantially all lease payments under that lease are now considered probable. If we subsequently conclude that the collection of substantially all lease payments under a lease is probable, a reversal of lease receivables previously written off is recognized.

Goodwill. Goodwill is not amortized, but is subject to impairment reviews annually, or more frequently if necessary. Goodwill is qualitatively assessed to determine whether a quantitative impairment assessment is necessary. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized, and the asset is written down to its estimated fair value. We perform our annual goodwill impairment assessment as of June 30. During the six months ended June 30, 2023 and 2022, there were no impairments of goodwill.

Concentration of Credit Risk. There were no clients who accounted for more than more than 10% of our total revenue for each of the six months ended June 30, 2023, and 2022.

Recent Accounting Pronouncements. The Company reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements.

2.    Supplemental Detail for Certain Components of Consolidated Balance Sheets (in thousands):

A.	Accounts receivable, net, consist of the following at:	June 30, 2023		December 31, 2022
	Straight-line rent receivables, net	$	440,939	$	363,993
	Client receivables, net	179,660		179,244
		$	620,599	$	543,237

B.	Lease intangible assets, net, consist of the following at:	June 30, 2023		December 31, 2022
	In-place leases	$	5,649,747	$	5,324,565
	Accumulated amortization of in-place leases	(1,715,425)		(1,409,878)
	Above-market leases	1,824,355		1,697,367
	Accumulated amortization of above-market leases	(520,277)		(443,688)
		$	5,238,400	$	5,168,366

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C.	Other assets, net, consist of the following at:	June 30, 2023		December 31, 2022
	Financing receivables	$	1,556,342	$	933,116
	Right of use asset - operating leases, net	589,237		603,097
	Right of use asset - financing leases	538,168		467,920
	Value-added tax receivable	51,983		24,726
	Prepaid expenses	39,595		28,128
	Impounds related to mortgages payable	37,174		18,152
	Derivative assets and receivables – at fair value	32,730		83,100
	Restricted escrow deposits	23,995		37,627
	Credit facility origination costs, net	14,730		17,196
	Corporate assets, net	13,649		12,334
	Investment in sales type lease	6,003		5,951
	Non-refundable escrow deposits	1,935		5,667
	Other items	35,160		39,939
		$	2,940,701	$	2,276,953

D.	Accounts payable and accrued expenses consist of the following at:	June 30, 2023		December 31, 2022
	Notes payable - interest payable	$	169,773	$	129,202
	Derivative liabilities and payables – at fair value	93,017		64,724
	Accrued costs on properties under development	65,981		26,559
	Property taxes payable	63,337		45,572
	Value-added tax payable	44,981		23,375
	Accrued income taxes	40,826		22,626
	Accrued property expenses	26,718		25,290
	Mortgages, term loans, and credit line - interest payable	7,802		5,868
	Other items	46,948		55,921
		$	559,383	$	399,137

E.	Lease intangible liabilities, net, consist of the following at:	June 30, 2023		December 31, 2022
	Below-market leases	$	1,728,348	$	1,617,870
	Accumulated amortization of below-market leases	(288,380)		(238,434)
		$	1,439,968	$	1,379,436

F.	Other liabilities consist of the following at:	June 30, 2023		December 31, 2022
	Lease liability - operating leases, net	$	428,178	$	440,096
	Rent received in advance and other deferred revenue	358,086		269,645
	Lease liability - financing leases	49,208		49,469
	Security deposits	20,024		15,577
		$	855,496	$	774,787

3.    Investments in Real Estate

A.    Acquisitions of Real Estate

Below is a summary of our acquisitions for the six months ended June 30, 2023:

	Number of Properties	Leasable Square Feet (in thousands)	Investment ($ in millions)		Weighted Average Lease Term (Years)	Initial Weighted Average Cash Lease Yield (1)
Acquisitions - U.S.	747	12,483	$	3,408.9	15.9	6.9	%
Acquisitions - Europe	31	4,181	788.7		9.3	7.4	%
Total acquisitions	778	16,664	$	4,197.6	14.6	7.0	%
Properties under development (2)	219	5,635	569.9		16.5	6.5	%
Total (3)	997	22,299	$	4,767.5	14.8	6.9	%

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(1)The initial weighted average cash lease yield for a property is generally computed as estimated contractual first year cash net operating income, which, in the case of a net leased property, is equal to the aggregate cash base rent for the first full year of each lease, divided by the total cost of the property. Since it is possible that a client could default on the payment of contractual rent (defined as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables), we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above. Contractual net operating income used in the calculation of initial weighted average cash lease yield includes approximately $1.5 million received as settlement credits as reimbursement of free rent periods for the six months ended June 30, 2023.

In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return. When the lease does not provide for a fixed rate of return on a property under development or expansion, the initial weighted average cash lease yield is computed as follows: estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs.

(2)Includes £8.7 million of investments in three U.K. development properties and €10.2 million of investment in one Spain development property, converted at the applicable exchange rates on the funding dates.

(3)Our clients occupying the new properties are 89.9% retail and 10.1% industrial based on annualized contractual rent. Approximately 26% of the annualized contractual rent generated from acquisitions during the six months ended June 30, 2023 is from our investment grade rated clients, their subsidiaries or affiliated companies.

The aggregate purchase price of the assets acquired during the six months ended June 30, 2023 has been allocated as follows (in millions):

	Acquisitions - USD		Acquisitions - Sterling		Acquisitions - Euro
Land (1)	$	665.4	£	141.0	€	15.2
Buildings and improvements	2,259.3		318.8		22.1
Lease intangible assets (2)	328.6		76.3		14.4
Other assets (3)	620.9		59.7		—
Lease intangible liabilities (4)	(99.4)		(6.8)		(0.9)
Other liabilities (5)	(57.0)		(0.1)		—
	$	3,717.8	£	588.9	€	50.8

(1)Sterling-denominated land includes £7.6 million of right of use assets under long-term ground leases.

(2)The weighted average amortization period for acquired lease intangible assets is 11.6 years.

(3)USD-denominated other assets consist entirely of financing receivables with above-market terms. Sterling-denominated other assets consist of £11.1 million of financing receivables with above-market terms and £48.6 million of right-of-use assets accounted for as finance leases.

(4)The weighted average amortization period for acquired lease intangible liabilities is 16.8 years.

(5)USD-denominated other liabilities consist entirely of deferred rent on certain below-market leases.

The properties acquired during the six months ended June 30, 2023 generated total revenues of $70.8 million and net income of $32.9 million during the six months ended June 30, 2023.

B.    Investments in Existing Properties

During the six months ended June 30, 2023, we capitalized costs of $31.9 million on existing properties in our portfolio, consisting of $26.3 million for non-recurring building improvements, $5.5 million for re-leasing costs, and $0.1 million for recurring capital expenditures. In comparison, during the six months ended June 30, 2022, we capitalized costs of $37.8 million on existing properties in our portfolio, consisting of $31.8 million for non-recurring building improvements, $3.2 million for re-leasing costs, and $2.8 million for recurring capital expenditures.

C.    Properties with Existing Leases

The value of the in-place and above-market leases is recorded to 'Lease intangible assets, net' on our consolidated balance sheets, and the value of the below-market leases is recorded to 'Lease intangible liabilities, net' on our consolidated balance sheets.

The values of the in-place leases are amortized as depreciation and amortization expense. The amounts amortized to expense for all of our in-place leases, for the six months ended June 30, 2023, and 2022 were $319.4 million and $318.3 million, respectively.

The values of the above-market and below-market leases are amortized over the term of the respective leases, including any bargain renewal options, as an adjustment to rental revenue in the consolidated statements of income and comprehensive income. The amounts amortized as a net decrease to rental revenue for capitalized above-market and below-market leases for the six months ended June 30, 2023, and 2022 were $86.8 million and $48.6 million, respectively. If a lease was to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recorded to revenue or expense, as appropriate.

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The following table presents the estimated impact during the next five years and thereafter related to the amortization of the above-market and below-market lease intangibles and the amortization of the in-place lease intangibles at June 30, 2023 (dollars in thousands):

	Net increase (decrease) to rental revenue		Increase to amortization expense
2023	$	(31,009)	$	313,260
2024	(56,416)		571,588
2025	(49,649)		492,288
2026	(41,955)		439,340
2027	(33,293)		381,063
Thereafter	348,212		1,736,783
Totals	$	135,890	$	3,934,322

D.    Gain on Sales of Real Estate

The following table summarizes our properties sold during the periods indicated below (dollars in millions):

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Number of properties	29		70		55		104
Net sales proceeds	$	31.9	$	150.0	$	60.5	$	272.2
Gain on sales of real estate	$	7.8	$	40.6	$	12.1	$	50.7

4.    Revolving Credit Facility and Commercial Paper Programs

A.    Credit Facility

We have a $4.25 billion unsecured revolving multicurrency credit facility that matures in June 2026, includes two six-month extensions that can be exercised at our option, and allows us to borrow in up to 14 currencies, including USD. Our revolving credit facility also has a $1.0 billion expansion option, which is subject to obtaining lender commitments. Under our revolving credit facility, our current investment grade credit ratings provide for USD borrowings at the Secured Overnight Financing Rate ("SOFR"), plus 0.725% with a SOFR adjustment charge of 0.10% and a revolving credit facility fee of 0.125%, for all-in pricing of 0.95% over SOFR, British Pound Sterling at the Sterling Overnight Indexed Average (“SONIA”), plus 0.725% with a SONIA adjustment charge of 0.0326% and a revolving credit facility fee of 0.125%, for all-in pricing of 0.8826% over SONIA, and Euro Borrowings at one-month Euro Interbank Offered Rate (“EURIBOR”), plus 0.725%, and a revolving credit facility fee of 0.125%, for all-in pricing of 0.85% over one-month EURIBOR.

As of June 30, 2023, we had a borrowing capacity of $3.4 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $867.5 million, comprised of £644.0 million Sterling and €45.0 million Euro borrowings, as compared to an outstanding balance at December 31, 2022 of $2.0 billion, comprised of €1.8 billion Euro and £70.0 million Sterling borrowings.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 4.6% and 1.5% during the six months ended June 30, 2023, and 2022, respectively. At June 30, 2023, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 5.6%. Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at June 30, 2023, we were in compliance with the covenants under our revolving credit facility.

As of June 30, 2023, credit facility origination costs of $14.7 million are included in other assets, net, as compared to $17.2 million at December 31, 2022, on our consolidated balance sheets. These costs are being amortized over the remaining term of our revolving credit facility.

B.    Commercial Paper Programs

We have a USD-denominated unsecured commercial paper program, under which we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $1.5 billion, as well as a Euro-denominated unsecured commercial paper program, which permits us to issue additional unsecured commercial

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notes up to a maximum aggregate amount of $1.5 billion (or foreign currency equivalent). Our Euro-denominated unsecured commercial paper program may be issued in USD or various foreign currencies, including but not limited to, Euros, Sterling, Swiss Francs, Yen, Canadian Dollars, and Australian Dollars, in each case, pursuant to customary terms in the European commercial paper market.

The commercial paper ranks on a parity in right of payment with all of our other unsecured senior indebtedness outstanding from time to time, including borrowings under our revolving credit facility, our term loans and our outstanding senior unsecured notes. Proceeds from commercial paper borrowings are used for general corporate purposes.

As of June 30, 2023, the balance of borrowings outstanding under our commercial paper programs was $122.7 million, consisting entirely of USD borrowings, as compared to $701.8 million outstanding commercial paper borrowings, including €361.0 million of Euro-denominated borrowings, at December 31, 2022. The weighted average interest rate on outstanding borrowings under our commercial paper programs was 4.5% and 0.8% for the six months ended June 30, 2023, and 2022, respectively. As of June 30, 2023, our weighted average interest rate on outstanding borrowings under our commercial paper programs was 5.4%. We use our $4.25 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper programs. The commercial paper borrowings generally carry a term of less than a year.

5.    Term Loans

In January 2023, we entered into a term loan agreement, permitting us to incur multicurrency term loans, up to an aggregate of $1.5 billion in total borrowings. As of June 30, 2023, we had $1.1 billion in multicurrency borrowings, including $90.0 million, £705.0 million, and €85.0 million in outstanding borrowings. The 2023 term loans initially mature in January 2024 and include two 12-month maturity extensions that can be exercised at our option. Our A3/A- credit ratings provide for a borrowing rate of 80 basis points over the applicable benchmark rate, which includes adjusted SOFR for USD-denominated loans, adjusted SONIA for Sterling-denominated loans, and EURIBOR for Euro-denominated loans. In conjunction with our 2023 term loans, we entered into interest rate swaps which fix our per annum interest rate. As of June 30, 2023, the effective interest rate, after giving effect to the interest rate swaps, was 5.0%.

We also have a $250.0 million senior unsecured term loan, which matures in March 2024. In conjunction with this term loan, we also entered into an interest rate swap. As of June 30, 2023, the effective interest rate on this term loan, after giving effect to the interest rate swap, was 3.8%.

At June 30, 2023, deferred financing costs of $4.4 million are included net of the term loans principal balance, as compared to $0.2 million related to our $250.0 million term loan at December 31, 2022, on our consolidated balance sheets. These costs are being amortized over the remaining term of the term loans. As of June 30, 2023, we were in compliance with the covenants contained in the term loans.

6.    Mortgages Payable

During the six months ended June 30, 2023, we made $8.1 million in principal payments, including the full repayment of one mortgage for $5.7 million. No mortgages were assumed during the six months ended June 30, 2023. Assumed mortgages are secured by the properties on which the debt was placed and are considered non-recourse debt with limited customary exceptions which vary from loan to loan.

Our mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage without the prior consent of the lender. At June 30, 2023, we were in compliance with these covenants.

The balance of our deferred financing costs, which are classified as part of 'Mortgages payable, net', on our consolidated balance sheets, was $0.7 million at June 30, 2023 and $0.8 million at December 31, 2022. These costs are being amortized over the remaining term of each mortgage.

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The following table summarizes our mortgages payable as of June 30, 2023 and December 31, 2022 (dollars in millions):

As Of	Number of Properties (1)	Weighted Average Stated Interest Rate (2)		Weighted Average Effective Interest Rate (3)		Weighted Average Remaining Years Until Maturity	Remaining Principal Balance		Unamortized Premium and Deferred Financing Costs Balance, net		Mortgage Payable Balance
June 30, 2023	135	4.8	%	3.3	%	0.9	$	836.3	$	5.4	$	841.7
December 31, 2022	136	4.8	%	3.3	%	1.4	$	842.3	$	11.6	$	853.9

(1)At June 30, 2023, there were 17 mortgages on 135 properties and at December 31, 2022, there were 18 mortgages on 136 properties. With the exception of one Sterling-denominated mortgage which is paid quarterly, the mortgages require monthly payments with principal payments due at maturity. At June 30, 2023 and December 31, 2022, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0% to 6.9% at June 30, 2023 and December 31, 2022, respectively.

(3) Effective interest rates ranged from 2.0% to 6.6% and 2.7% to 6.6% at June 30, 2023 and December 31, 2022, respectively.

The following table summarizes the maturity of mortgages payable as of June 30, 2023, excluding $5.4 million related to unamortized net premiums and deferred financing costs (dollars in millions):

Year of Maturity	Principal
2023	$	14.1
2024	740.5
2025	43.9
2026	12.0
2027	22.3
Thereafter	3.5
Totals	$	836.3

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7.    Notes Payable

A.    General

At June 30, 2023, our senior unsecured notes and bonds are USD-denominated and Sterling-denominated. Foreign-denominated notes are converted at the applicable exchange rate on the balance sheet date. The following are sorted by maturity date (in thousands):

				Carrying Value (USD) as of
	Maturity Dates	Principal (Currency Denomination)		June 30, 2023		December 31, 2022
4.600% Notes due 2024	February 6, 2024	$	499,999	$	499,999	$	499,999
3.875% Notes due 2024	July 15, 2024	$	350,000	350,000		350,000
3.875% Notes due 2025	April 15, 2025	$	500,000	500,000		500,000
4.625% Notes due 2025	November 1, 2025	$	549,997	549,997		549,997
5.050% Notes due 2026	January 13, 2026	$	500,000	500,000		—
0.750% Notes due 2026	March 15, 2026	$	325,000	325,000		325,000
4.875% Notes due 2026	June 1, 2026	$	599,997	599,997		599,997
4.125% Notes due 2026	October 15, 2026	$	650,000	650,000		650,000
1.875% Notes due 2027	January 14, 2027	£	250,000	317,700		301,225
3.000% Notes due 2027	January 15, 2027	$	600,000	600,000		600,000
1.125% Notes due 2027	July 13, 2027	£	400,000	508,320		481,960
3.950% Notes due 2027	August 15, 2027	$	599,873	599,873		599,873
3.650% Notes due 2028	January 15, 2028	$	550,000	550,000		550,000
3.400% Notes due 2028	January 15, 2028	$	599,816	599,816		599,816
2.200% Notes due 2028	June 15, 2028	$	499,959	499,959		499,959
4.700% Notes due 2028	December 15, 2028	$	400,000	400,000		—
3.250% Notes due 2029	June 15, 2029	$	500,000	500,000		500,000
3.100% Notes due 2029	December 15, 2029	$	599,291	599,291		599,291
4.850% Notes due 2030	March 15, 2030	$	600,000	600,000		—
3.160% Notes due 2030	June 30, 2030	£	140,000	177,912		168,686
1.625% Notes due 2030	December 15, 2030	£	400,000	508,320		481,960
3.250% Notes due 2031	January 15, 2031	$	950,000	950,000		950,000
3.180% Notes due 2032	June 30, 2032	£	345,000	438,426		415,691
5.625% Notes due 2032	October 13, 2032	$	750,000	750,000		750,000
2.850% Notes due 2032	December 15, 2032	$	699,655	699,655		699,655
1.800% Notes due 2033	March 15, 2033	$	400,000	400,000		400,000
1.750% Notes due 2033	July 13, 2033	£	350,000	444,780		421,715
4.900% Notes due 2033	July 15, 2033	$	600,000	600,000		—
2.730% Notes due 2034	May 20, 2034	£	315,000	400,302		379,544
5.875% Bonds due 2035	March 15, 2035	$	250,000	250,000		250,000
3.390% Notes due 2037	June 30, 2037	£	115,000	146,142		138,563
2.500% Notes due 2042	January 14, 2042	£	250,000	317,700		301,225
4.650% Notes due 2047	March 15, 2047	$	550,000	550,000		550,000
Total principal amount				$	16,383,189	$	14,114,156
Unamortized net premiums, deferred financing costs and cumulative basis adjustment on fair value hedge (1)				92,400		163,857
				$	16,475,589	$	14,278,013

(1) In January 2023, in conjunction with the pricing of these senior unsecured notes due January 2026, we entered into three-year, fixed-to-variable interest rate swaps, which are accounted for as fair value hedges. See Note 11, Derivative Instruments for further details.

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The following table summarizes the maturity of our notes and bonds payable as of June 30, 2023, excluding $92.4 million related to unamortized net premiums, deferred financing costs, and basis adjustment on interest rate swaps designated as fair value hedges (dollars in millions):

Year of Maturity	Principal
2023	$	—
2024	850.0
2025	1,050.0
2026	2,075.0
2027	2,025.9
Thereafter	10,382.3
Totals	$	16,383.2

As of June 30, 2023, the weighted average interest rate on our notes and bonds payable was 3.6%, and the weighted average remaining years until maturity was 6.7 years.

Interest incurred on all of the notes and bonds was $144.1 million and $103.0 million for the three months ended June 30, 2023, and 2022, respectively, and $274.4 million and $206.1 million for the six months ended June 30, 2023, and 2022, respectively.

Our outstanding notes and bonds are unsecured; accordingly, we have not pledged any assets as collateral for these or any other obligations. Interest on our £400 million of 1.625% senior unsecured notes issued in October 2020, our £400 million of 1.125% senior unsecured notes issued in July 2021, our £350 million of 1.750% senior unsecured notes also issued in July 2021, our £250 million of 1.875% senior unsecured notes issued in January 2022, and £250 million of 2.500% senior unsecured notes also issued in January 2022 is paid annually. Interest on our remaining senior unsecured note and bond obligations is paid semiannually.

All of these notes and bonds contain various covenants, including: (i) a limitation on incurrence of any debt which would cause our debt to total adjusted assets ratio to exceed 60%; (ii) a limitation on incurrence of any secured debt which would cause our secured debt to total adjusted assets ratio to exceed 40%; (iii) a limitation on incurrence of any debt which would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of total unencumbered assets not less than 150% of our outstanding unsecured debt. At June 30, 2023, we were in compliance with these covenants.

B.    Note Issuances

During the six months ended June 30, 2023, we issued the following notes and bonds (in millions):

	Date of Issuance	Maturity Date	Principal amount			Price of par value		Effective semi-annual yield to maturity
5.050% Notes	January 2023	January 2026	$	500.0	(1)	99.618	%	5.189	%
4.850% Notes	January 2023	March 2030	$	600.0		98.813	%	5.047	%
4.700% Notes	April 2023	December 2028	$	400.0		98.949	%	4.912	%
4.900% Notes	April 2023	July 2033	$	600.0		98.020	%	5.148	%

(1)    In January 2023, we issued $500 million of 5.05% senior unsecured notes due January 13, 2026, which are callable at par on January 13, 2024.

In July 2023, we issued €550.0 million of 4.875% senior unsecured notes due July 2030 and €550.0 million of 5.125% senior unsecured notes due July 2034. See note 18, Subsequent Events, for further details.

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8.    Issuances of Common Stock

A.    At-the-Market ("ATM") Program

Under our current ATM program, we may offer and sell up to 120.0 million shares of common stock (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers' transactions on the NYSE under the ticker symbol "O" at prevailing market prices or at negotiated prices. Upon settlement, subject to certain exceptions, we may elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which cases we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser. As of June 30, 2023, we had 24.3 million additional shares remaining for future issuance under our ATM program. We anticipate maintaining the availability of our ATM program in the future, including the replenishment of authorized shares issuable thereunder.

The following table outlines common stock issuances pursuant to our ATM programs (dollars in millions):

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Shares of common stock issued under the ATM program(1)	35,475,153		15,899,972		48,139,631		25,973,181
Gross proceeds	$	2,195.7	$	1,067.3	$	2,997.4	$	1,727.5
Sales agents' commissions and other offering expenses	(15.2)		(10.7)		(20.7)		(14.8)
Net proceeds	$	2,180.5	$	1,056.6	$	2,976.7	$	1,712.7

(1) During the three and six months ended June 30, 2023, 20.7 million and 46.3 million shares were sold, respectively, and 35.5 million and 48.1 million shares were settled pursuant to forward sale confirmations, respectively. In addition, as of June 30, 2023, 4.9 million shares of common stock subject to forward sale confirmations have been executed, but not settled, at a weighted average initial price of $59.33 per share. We currently expect to fully settle forward sale agreements outstanding by September 30, 2023, representing $287.0 million in net proceeds, for which the weighted average forward price at June 30, 2023 was $58.72 per share.

B.    Dividend Reinvestment and Stock Purchase Plan ("DRSPP")

Our DRSPP, provides our common stockholders, as well as new investors, with a convenient and economical method of purchasing our common stock and reinvesting their distributions. Our DRSPP also allows our current stockholders to buy additional shares of common stock by reinvesting all or a portion of their distributions. Our DRSPP authorizes up to 26.0 million common shares to be issued. At June 30, 2023, we had 11.1 million shares remaining for future issuance under our DRSPP program.  

The following table outlines common stock issuances pursuant to our DRSPP program (dollars in millions):

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Shares of common stock issued under the DRSPP program	44,118		43,260		85,781		84,631
Gross proceeds	$	2.7	$	2.9	$	5.4	$	5.7

9.    Noncontrolling Interests

As of June 30, 2023, we have six entities with noncontrolling interests that we consolidate, consisting of our operating partnership, (Realty Income, L.P.), a joint venture formed in 2023 in connection with the acquisition of properties, a joint venture acquired in December 2019, and three development joint ventures (one acquired in December 2020, one acquired in May 2021, and one acquired in April 2023).

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The following table represents the change in the carrying value of all noncontrolling interests through June 30, 2023 (in thousands):

	Realty Income, L.P. units (1)		Other Noncontrolling Interests		Total
Carrying value at December 31, 2022	$	115,801	$	14,339	$	130,140
Contributions (2)	—		39,559		39,559
Distributions (3)	(2,826)		(1,785)		(4,611)
Allocation of net income	1,925		919		2,844
Carrying value at June 30, 2023	$	114,900	$	53,032	$	167,932

(1) 1,795,167 units were outstanding as of both June 30, 2023 and December 31, 2022.

(2) Includes contributions of $39.2 million for the issuance of a 5.0% joint venture interest as partial consideration paid on property acquisitions and contributions of $0.4 million related to a 5.0% interest in a development joint venture.

(3) Includes a non-cash reduction of noncontrolling interest of $1.5 million from our partner's responsibility to absorb construction cost overages for a development joint venture during the six months ended June 30, 2