Noncontrolling Interests

3 Months Ended

Mar. 31, 2026

As of March 31, 2026, we have 14 entities with noncontrolling interests that we consolidate, including the Fund, Apollo, Realty Income, L.P., and interests in consolidated property partnerships not wholly-owned by us.

We have an open-end, perpetual life private fund, which is consolidated by Realty Income. In March 2026, we closed our cornerstone equity capital raise round, securing $1.7 billion in commitments from third-party institutional investors, of which $167.5 million was committed during the three months ended March 31, 2026. During the same period, we called $638.0 million of capital. As of March 31, 2026, we owned approximately 38.5% of the outstanding limited partnership interests in the Fund.

In March 2026, we established our Managed Insurance and Retirement Annuity investment platform as a vehicle to pursue various co-investment opportunities with institutional investors. On March 31, 2026, we completed the formation of MDC Mercury 2604 Venture, LLC (the "Apollo JV") and entered into an Amended and Restated Limited Liability Company Agreement (the “JV Agreement”) with Apollo in connection with our Managed Insurance and Retirement Annuity strategic initiative. Pursuant to the JV Agreement, we contributed 492 net lease properties in exchange for 51,000,000 Class A Shares in the Apollo JV, and Apollo contributed $1.0 billion in cash in exchange for a noncontrolling equity interest of 49,000,000 Class B Shares in the Apollo JV (such contributions by Realty Income and Apollo, collectively, the "Apollo JV Transaction").

The Apollo JV is a variable interest entity ("VIE") under ASC 810 because the decision-making authority of the Manager (our wholly owned subsidiary, Realty Income Property Management Co I, LLC) is not conveyed through an equity interest, and the equity holders as a group therefore lack the power to direct the activities that most significantly affect the Apollo JV's economic performance. We consolidate the Apollo JV as its primary beneficiary because we have both (i) the power to direct the activities that most significantly affect its economic performance through our role as the sole exclusive Manager that is exercisable independent of our equity ownership and (ii) the obligation to absorb losses and right to receive benefits that could potentially be significant to the Apollo JV through our 51% equity interest and other contractual arrangements. The Class B Shares are classified as permanent equity (noncontrolling interest) on our consolidated balance sheet because all redemption features are solely within our control.

The Apollo JV Transaction was accounted for as an issuance of noncontrolling interest in a consolidated subsidiary without a loss of control. We received $1.0 billion for Apollo’s initial capital contribution. The carrying amount of Apollo's 49% share of the net assets was $778.3 million, which was recognized as noncontrolling interest, with the difference of $221.7 million recorded as an increase to additional paid-in capital ("APIC"). Direct and incremental transaction costs of $20.6 million were recorded as a reduction of APIC.

The JV Agreement provides for, among other things, quarterly distributions of available cash flow to the Apollo JV’s members. Prior to Apollo achieving the Target IRR (as defined in the JV Agreement), the Class B Member will receive a default allocation of 55% of available cash flow, which may decrease to 49% if the Apollo JV’s NOI outperforms an upper level of certain performance metric, or increase to 60% if the Apollo JV’s NOI underperforms a lower level of certain performance metric. Because the parties' economic interests are not proportionate to their stated ownership percentages, we allocate income and loss attributable to the noncontrolling interest using the hypothetical liquidation at book value ("HLBV") method, taking into account any capital transactions between the Company and Apollo.

With respect to Realty Income, L.P., as of March 31, 2026, outstanding common partnership units in our operating partnership represented a 9.95% ownership interest. We hold the remaining 90.05% interest and consolidate the entity.

The following table represents the change in the carrying value of all noncontrolling interests through March 31, 2026 (in thousands):


	U.S. Core Plus Fund		Apollo		Realty Income, L.P. units (1)		Other Noncontrolling Interests		Total
Carrying value as of December 31, 2025	$	477,081	$	—	$	165,663	$	42,529	$	685,273
Contributions	642,732		1,000,000		—		4,642		1,647,374
Distributions	(7,882)		—		(2,237)		(833)		(10,952)
Allocation of net income	7,935		—		1,412		(178)		9,169
Reallocation of equity	(20,936)		(221,744)		—		—		(242,680)
Carrying value as of March 31, 2026	$	1,098,930	$	778,256	$	164,838	$	46,160	$	2,088,184

(1) 2,681,808 units were outstanding as of both March 31, 2026 and December 31, 2025.

As of March 31, 2026, we are considered the primary beneficiary of our Fund, Realty Income, L.P. and other VIEs. For further information, see note 1, Summary of Significant Accounting Policies.