O · Earnings call · 2026Q2T · Full report

Interest Rate Environment

REALTY INCOME CORP · 2026-08-05 · Importance 38 · Surprise 24

Management said the 10-year Treasury outlook is more important than its current level for net-lease cap rates. If the 10-year remains in the 4.6% to 5% range, historical relationships suggest cap rates should follow upward, although increased U.S. competition is keeping them lower in the near term. Management expects cap rates to adjust eventually in a highly elevated cost-of-capital environment. In Europe, lower borrowing costs remain supportive, while the U.K. has higher debt costs and Germany may face more upward cap-rate pressure.

Key facts

• Outstanding borrowings on credit facilities and commercial paper represent the company's only exposure to variable-rate debt and they intend to maintain variable-rate exposure at 10% or less of total outstanding debt