Financial Data and Key Metrics Changes - Realty Income reported an AFFO per share of $1.06, reflecting a year-over-year growth of 2.9%, continuing a long-standing track record of positive growth in AFFO per share [6][10] - The company achieved total operational returns of 8.9% for the quarter, supported by a 6% dividend yield [6][10] - The portfolio occupancy rate ended at 98.5%, slightly below the previous quarter but above the historical median of 98.2% [11] Business Line Data and Key Metrics Changes - The portfolio consists of over 15,600 properties across 91 industries and nearly 1,600 unique clients, with 34% of clients being investment grade and an average rent coverage of 2.9 times [10][11] - The company invested a total of $1.4 billion in the first quarter, with 72% of this volume coming from five transactions over $50 million [7][8] - In the U.S., $479 million was invested at an 8.3% weighted average initial cash yield, while in Europe, $893 million was invested at a 7% average initial cash yield [7][8] Market Data and Key Metrics Changes - Europe accounted for 65% of total investment volume this quarter, indicating a strategic focus on this region due to compelling opportunities [8][9] - The company noted a significant portfolio discount when competing for high-quality net lease investments in the marketplace [7] Company Strategy and Development Direction - Realty Income is strategically diversifying its business model across client types, asset classes, and geographies, which has proven valuable in the current macroeconomic environment [4][5] - The company is maintaining its outlook for 2025 AFFO per share in the range of $4.22 to $4.28, despite potential rent loss expectations [13] - The launch of the U.S. Core Plus Fund is seen as a strategic opportunity to broaden capital sources and investment capabilities [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market uncertainties due to the diversified platform spanning multiple geographies and asset types [13][19] - The company remains cautious but optimistic about future investment opportunities, particularly in the U.S. as market conditions stabilize [31][92] - Management highlighted that there have been no material surprises or incremental headwinds from recent geopolitical uncertainties [13] Other Important Information - Realty Income sold 55 properties for total net proceeds of $93 million, with $63 million related to vacant properties [12] - The company has a robust balance sheet with a net debt to annualized pro forma adjusted EBITDA of 5.4 times and a fixed charge coverage ratio of 4.7 times [18] Q&A Session Summary Question: Activity in Europe vs. U.S. Opportunities - Management noted that 65% of investment volume came from Europe due to favorable conditions, while they are still seeing opportunities in the U.S. but are cautious about downside risks [22][25] Question: Rent Recapture Rate - The rent recapture rate was 103.9%, with management attributing a slight decline in re-leasing to a one-off situation, primarily due to a few theater assets [27][28] Question: Guidance and Market Uncertainty - Management chose to maintain guidance due to market uncertainty and the need to find the right risk-adjusted opportunities [30][31] Question: Tariff Impact on Portfolio - Management stated that they do not expect any new impacts from tariffs, as previous assessments have been incorporated into their guidance [34][35] Question: U.S. Core Plus Fund and Competition - Management expressed optimism about raising private capital despite current market conditions, highlighting the company's unique position in the sector [37][40] Question: Balance Sheet and Liquidity - Management detailed their funding sources and capital requirements to meet acquisition guidance, indicating confidence in their balance sheet [45][46] Question: Investment in Plenty - Management provided an update on their investment in Plenty, indicating a capital at risk of $40 million but expressing confidence in the company's potential recovery [78][82]