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Realty Income Expands in Europe: Can the Region Drive More Growth?
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Key Takeaways
Realty Income formed a euro-denominated KKR joint venture to expand in Europe beyond public equity.
Europe made up about 20% of Realty Income's annualized base rent and over 30% of first-half investments.
Realty Income invested $396.8 million in Europe in Q2 at a 7% initial weighted average cash yield.
Realty Income’s (O - Free Report) recent European move is less about buying property and more about changing how it funds growth. In September, the REIT agreed with KKR to establish a euro-denominated joint venture, extending its private-capital strategy into Europe. KKR is investing €528 million for a 49% stake in a stabilized portfolio contributed by Realty Income. This gives Realty Income another way to expand without relying only on public equity.
Europe is a meaningful part of Realty Income’s portfolio. By June 2026, the region represented about 20% of annualized base rent, with 671 properties, roughly $1 billion of annualized rent and about $18 billion of gross asset value. Realty Income has invested more than $17 billion there since entering in 2019.
The financing backdrop helps explain the focus. Realty Income issued €600 million of 3.625% senior unsecured notes in July at a 3.716% effective yield. Management has said Europe offers lower borrowing costs and less competition than the United States, which can support investment spreads when acquisition pricing remains disciplined.
Recent deployment shows the region is generating deals. Realty Income invested $396.8 million in Europe during the second quarter at a 7% initial weighted average cash yield, taking first-half European volume to $1.68 billion. This represented more than 30% of the company’s $5.34 billion of total investment activity through June.
However, there are limits to the opportunity. Management said international clients had been cautious earlier in 2026, while institutional capital has been pushing down cap rates in parts of the U.K. Still, international re-leasing produced a 112.9% rent recapture rate in the second quarter, giving Realty Income a source of growth beyond acquisitions.
Realty Income’s Peers Expand Across the United States & Europe
W. P. Carey Inc. (WPC - Free Report) continues to balance investment between the United States and Europe and owned 1,748 net-lease properties as of June 30. W. P. Carey also raised 2026 investment guidance to $1.7-$2.1 billion during the second-quarter earnings call, supporting continued deployment across both regions overall. W. P. Carey had completed around $1.4 billion of investment volume through mid-September, with clear visibility into more than $1.9 billion for the full year.
Global Net Lease Inc. (GNL - Free Report) has meaningful European exposure, with 26% of annualized straight-line rent coming from Europe as of June 30, 2026. Global Net Lease completed its $535 million Modiv Industrial acquisition in August, lifting industrial exposure to about 50%. Global Net Lease is also reducing office exposure through ongoing asset sales.
O’s Price Performance, Valuation and Estimates
Shares of Realty Income have declined 9.9% over the past six months, underperforming the industry and lagging the S&P 500 composite.
Image Source: Zacks Investment Research
From a valuation standpoint, O trades at a forward 12-month price-to-FFO of 12.13, below the industry as well as its one-year median of 13.72. It carries a Value Score of D.
Image Source: Zacks Investment Research
Over the past month, while estimates for 2026 FFO per share have been revised marginally downward, estimates for 2027 have been tweaked slightly upward.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Realty Income Expands in Europe: Can the Region Drive More Growth?
Key Takeaways
Realty Income’s (O - Free Report) recent European move is less about buying property and more about changing how it funds growth. In September, the REIT agreed with KKR to establish a euro-denominated joint venture, extending its private-capital strategy into Europe. KKR is investing €528 million for a 49% stake in a stabilized portfolio contributed by Realty Income. This gives Realty Income another way to expand without relying only on public equity.
Europe is a meaningful part of Realty Income’s portfolio. By June 2026, the region represented about 20% of annualized base rent, with 671 properties, roughly $1 billion of annualized rent and about $18 billion of gross asset value. Realty Income has invested more than $17 billion there since entering in 2019.
The financing backdrop helps explain the focus. Realty Income issued €600 million of 3.625% senior unsecured notes in July at a 3.716% effective yield. Management has said Europe offers lower borrowing costs and less competition than the United States, which can support investment spreads when acquisition pricing remains disciplined.
Recent deployment shows the region is generating deals. Realty Income invested $396.8 million in Europe during the second quarter at a 7% initial weighted average cash yield, taking first-half European volume to $1.68 billion. This represented more than 30% of the company’s $5.34 billion of total investment activity through June.
However, there are limits to the opportunity. Management said international clients had been cautious earlier in 2026, while institutional capital has been pushing down cap rates in parts of the U.K. Still, international re-leasing produced a 112.9% rent recapture rate in the second quarter, giving Realty Income a source of growth beyond acquisitions.
Realty Income’s Peers Expand Across the United States & Europe
W. P. Carey Inc. (WPC - Free Report) continues to balance investment between the United States and Europe and owned 1,748 net-lease properties as of June 30. W. P. Carey also raised 2026 investment guidance to $1.7-$2.1 billion during the second-quarter earnings call, supporting continued deployment across both regions overall. W. P. Carey had completed around $1.4 billion of investment volume through mid-September, with clear visibility into more than $1.9 billion for the full year.
Global Net Lease Inc. (GNL - Free Report) has meaningful European exposure, with 26% of annualized straight-line rent coming from Europe as of June 30, 2026. Global Net Lease completed its $535 million Modiv Industrial acquisition in August, lifting industrial exposure to about 50%. Global Net Lease is also reducing office exposure through ongoing asset sales.
O’s Price Performance, Valuation and Estimates
Shares of Realty Income have declined 9.9% over the past six months, underperforming the industry and lagging the S&P 500 composite.
Image Source: Zacks Investment Research
From a valuation standpoint, O trades at a forward 12-month price-to-FFO of 12.13, below the industry as well as its one-year median of 13.72. It carries a Value Score of D.
Image Source: Zacks Investment Research
Over the past month, while estimates for 2026 FFO per share have been revised marginally downward, estimates for 2027 have been tweaked slightly upward.
Image Source: Zacks Investment Research
At present, Realty Income carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.