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# Realty Income Put 42% Of Its Quarterly Investment Into Europe As CEO Cites Higher Rates
- URL: https://www.bullished.co/realty-income-put-42-of-its-quarterly-investment-into-europe-as-ceo-cites-higher-rates-54862bcd/
- Published: 2026-11-03T00:21:21.000Z
- Updated: 2026-11-03T00:21:21.000Z
- Description: CEO Sumit Roy says higher long-term rates favor Europe, credit and private capital, while the REIT raised its 2026 per-share earnings outlook.
- Author: Matteo Parrino
- Tags: Earnings, O, Industry: Real Estate

[Realty Income](https://www.bullished.co/tag/o/) put about $940 million into Europe in the third quarter, 42% of its pro rata investment volume, and CEO Sumit Roy told analysts on the company's [earnings call](https://seekingalpha.com/news/4662844-realty-income-q3-earnings-revenue-beat-as-occupancy-rents-edge-up?ref=bullished.co) Monday that higher long-term rates have shifted "the most attractive investment economics towards Europe." The REIT, which owns net lease real estate, also raised its 2026 adjusted funds from operations guidance to [$4.45 to $4.46 per share](https://seekingalpha.com/news/4662844-realty-income-q3-earnings-revenue-beat-as-occupancy-rents-edge-up?ref=bullished.co).

## Europe, credit and co-investments

Roy said higher rates have also favored credit investments and co-investments managed with private capital, which give the company ways to improve its spreads when rate swings squeeze acquisition math at home. The European purchases carried an initial weighted average cash yield of 7.1%, and more than 85% of that volume was industrial.

Credit investments came to about $250 million, over 10% of volume. Roy called credit "a complement" to traditional real estate, not a substitute, and said it should stay a very small, single-digit share of a balance sheet of $85 billion to $90 billion. The credit book's duration was right around 3.4 years.

Total investment in the quarter was about [$2.6 billion](https://www.prnewswire.com/news-releases/realty-income-announces-operating-results-for-the-three-and-nine-months-ended-september-30-2026-302926890.html?ref=bullished.co), including $2.2 billion at the company's pro rata share at a 6.8% cash yield. Management said that produced a spread of about 170 basis points (1.7 percentage points) over its blended cost of capital of roughly 5%. Roy said the company sourced a record $59 billion of potential deals, a 4.4% selectivity rate. Adjusted funds from operations per share were $1.12, up 3.7% from a year earlier.

## U.S. retail and the 78% question

Asked where U.S. retail settles as a share of the portfolio, Roy said "We love U.S. retail," but added that it has less internal rent growth than the new focus areas. He said "some amount of repositioning is warranted" toward a more balanced, more diversified portfolio, referring to a 78% figure that he said is mostly U.S. retail.

Dispositions reached about $527 million in the quarter, including $395 million of occupied sales at a 7.1% net cap rate. Year-to-date proceeds of about $875 million already exceed full-year 2025 volume, and Roy said he expects sales to stay elevated in the fourth quarter.

## Fourth-quarter deals are pre-funded

The company reaffirmed its [$10 billion](https://www.prnewswire.com/news-releases/realty-income-announces-operating-results-for-the-three-and-nine-months-ended-september-30-2026-302926890.html?ref=bullished.co) investment target, and Roy said fourth-quarter deals are effectively pre-funded. Chief Financial Officer Jonathan Pong said public equity covered only 19% of pro rata investment volume this year, against an annual average of 47% over the prior three years. In July the company issued €600 million of notes at about 3.7%, and in August it sold $1 billion of 3.75% convertible notes.

A joint venture with KKR, which invested €528 million for a 49% stake in 54 European retail and industrial properties, lets Realty Income call that interest between years 10 and 17 at a 6.4% internal rate of return, Pong said. He said the company is less eager to repeat such deals at current pricing.

Pong also said guidance now calls for occupancy above 98.5% and credit losses of about 30 basis points, down from 40.

Pong said the company has about $2.9 billion of debt maturing next year at 2.9%, and that euro borrowing is about 80 basis points cheaper than U.S. dollar debt.

Learn

- [How To Read An Earnings Call Transcript: Start With Guidance, Then Find What's Missing →](https://www.bullished.co/learn/how-to-read-an-earnings-call/)  
How to read an earnings call transcript: check guidance first, look for dropped metrics, compare growth with last quarter, and watch hedged wording.

### Sources

- [Realty Income Q3 earnings, revenue beat as occupancy, rents edge up (O:NYSE) | Seeking Alpha](https://seekingalpha.com/news/4662844-realty-income-q3-earnings-revenue-beat-as-occupancy-rents-edge-up?ref=bullished.co) — seekingalpha.com
- [Realty Income Corp. (O) Reports Q3 Earnings: What Key Metrics Have to Say](https://finance.yahoo.com/markets/stocks/articles/realty-income-corp-o-reports-213001276.html?ref=bullished.co) — Yahoo Finance
- [Realty Income Corp. (O) Tops Q3 FFO and Revenue Estimates](https://finance.yahoo.com/real-estate/articles/realty-income-corp-o-tops-212503568.html?.tsrc=rss&ref=bullished.co) — Yahoo Finance
- [Realty Income Corporation (O) stock price, news, quote and history - Yahoo Finance](https://au.finance.yahoo.com/quote/O/?ref=bullished.co) — Yahoo Finance
- [Realty Income Announces Operating Results for the Three and Nine Months Ended September 30, 2026](https://www.prnewswire.com/news-releases/realty-income-announces-operating-results-for-the-three-and-nine-months-ended-september-30-2026-302926890.html?ref=bullished.co) — prnewswire.com

### More on Realty Income

- [Realty Income Lifts 2026 AFFO Guidance To $4.45–$4.46 A Share, Trims Net Income Outlook](https://www.bullished.co/realty-income-lifts-2026-affo-guidance-to-4-45-4-46-a-share-trims-net-income-outlook-d35c380c/)

[All Realty Income (O) coverage →](https://www.bullished.co/tag/o/)