Notes Payable

3 Months Ended

Mar. 31, 2022

Notes payable

Debt

Debt

Notes Payable

A.    General

Our senior unsecured notes and bonds are U.S. dollar denominated and Sterling denominated. Foreign denominated notes are converted at the applicable exchange rate on the balance sheet date. The following are sorted by maturity date (in millions):

	Principal Amount (Currency Denomination)		Carrying Value (USD) as of
			March 31, 2022		December 31, 2021
4.600% notes, $500 issued February 2014, of which $485 was exchanged in November 2021, both due in February 2024 (1)	$	500	$	500	$	500
3.875% notes, issued in June 2014 and due in July 2024	$	350	350		350
3.875% notes, issued in April 2018 and due in April 2025	$	500	500		500
4.625% notes, $550 issued October 2018, of which $544 was exchanged in November 2021, both due in November 2025 (1)	$	550	550		550
0.750% notes, issued December 2020 and due in March 2026	$	325	325		325
4.875% notes, $600 issued June 2016, of which $596 was exchanged in November 2021, both due in June 2026 (1)	$	600	600		600
4.125% notes, $250 issued in September 2014 and $400 issued in March 2017, both due in October 2026	$	650	650		650
1.875% notes, issued in January 2022 and due in January 2027	£	250	329		—
3.000% notes, issued in October 2016 and due in January 2027	$	600	600		600
1.125% notes, issued in July 2021 and due in July 2027	£	400	526		541
3.950% notes, $600 issued August 2017, of which $594 was exchanged in November 2021, both due in August 2027 (1)	$	600	600		600
3.650% notes, issued in December 2017 and due in January 2028	$	550	550		550
3.400% notes, $600 issued June 2020, of which $598 was exchanged in November 2021, both due in January 2028 (1)	$	600	600		600
2.200% notes, $500 issued November 2020, of which $497 was exchanged in November 2021, both due in June 2028 (1)	$	500	500		500
3.250% notes, issued in June 2019 and due in June 2029	$	500	500		500
3.100% notes, $600 issued December 2019, of which $596 was exchanged in November 2021, both due in December 2029 (1)(2)	$	599	599		599
1.625% notes, issued in October 2020 and due December 2030	£	400	526		541
3.250% notes, $600 issued in May 2020 and $350 issued in July 2020, both due in January 2031	$	950	950		950
2.850% notes, $700 issued November 2020, of which $699 was exchanged in November 2021, both due in December 2032 (1)	$	700	700		700
1.800% notes, issued in December 2020 and due in March 2033	$	400	400		400
1.750% notes, issued in July 2021 and due in July 2033	£	350	460		474
2.730% notes, issued in May 2019 and due in May 2034	£	315	413		427
5.875% bonds, $100 issued in March 2005 and $150 issued in June 2011, both due in March 2035	$	250	250		250
2.500% notes, issued in January 2022 and due in January 2042	£	250	329		—
4.650% notes, $300 issued in March 2017 and $250 issued in December 2017, both due in March 2047	$	550	550		550
Total principal amount			$	12,857	$	12,257
Unamortized net premiums and deferred financing costs			212		243
			$	13,069	$	12,500

(1) Carrying Value (USD) includes the portion of the VEREIT OP notes that remained outstanding, totaling $39.1 million in the aggregate at each of March 31, 2022, and December 31, 2021, that were not exchanged in the exchange offers commenced by us with respect to the outstanding bonds of VEREIT OP in connection with the consummation of the merger with VEREIT (the "Exchange Offers").

(2) These notes were originally issued by VEREIT OP in December of 2019 for the principal amount of $600 million. The amount of Realty Income debt issued through the Exchange Offers was $599 million, resulting from cancellations due to late tenders that forfeited the early participation premium of $30 per $1,000 principal amount and cash paid in lieu of fractional shares.

In April 2022 we entered into a definitive agreement for the private placement of £600 million of senior unsecured notes. See note 20, Subsequent Events.

The following table summarizes the maturity of our notes and bonds payable as of March 31, 2022, excluding net unamortized premiums of $272.7 million and deferred financing costs of $60.6 million (dollars in millions):

Year of Maturity	Principal
2024	$	850
2025	1,050
2026	1,575
Thereafter	9,382
Totals	$	12,857

As of March 31, 2022, the weighted average interest rate on our notes and bonds payable was 3.2% and the weighted average remaining years until maturity was 7.7 years.

Interest incurred on all of the notes and bonds was $103.1 million and $63.2 million for the three months ended March 31, 2022, and March 31, 2021, respectively.

Our outstanding notes and bonds are unsecured; accordingly, we have not pledged any assets as collateral for these or any other obligations. Interest on our £400 million of 1.625% senior unsecured notes issued in October 2020, our £400 million of 1.125% senior unsecured notes issued in July 2021, our £350 million of 1.750% senior unsecured notes also issued in July 2021, our £250 million of 1.875% senior unsecured notes issued in January 2022, and £250 million of 2.500% senior unsecured notes also issued in January 2022 is paid annually. Interest on our remaining senior unsecured note and bond obligations is paid semiannually.

All of these notes and bonds contain various covenants, including: (i) a limitation on incurrence of any debt which would cause our debt to total adjusted assets ratio to exceed 60%; (ii) a limitation on incurrence of any secured debt which would cause our secured debt to total adjusted assets ratio to exceed 40%; (iii) a limitation on incurrence of any debt which would cause our debt service coverage ratio to be less than 1.5 times; and(iv) the maintenance at all times of total unencumbered assets not less than 150% of our outstanding unsecured debt. At March 31, 2022, we were in compliance with these covenants.

B.    Note Repayment

In January 2021, we redeemed all $950.0 million in principal amount of our outstanding 3.250% notes due October 2022, plus accrued and unpaid interest. As a result of the early redemption, we recognized a $46.5 million loss on extinguishment of debt on our consolidated statement of income for the three months ended March 31, 2021. There were no comparable repayments for the three months ended March 31, 2022.

C.    Note Issuances

During the three months ended March 31, 2022, we issued the following notes and bonds (in millions):

First Quarter 2022 Issuances	Date of Issuance	Maturity Date	Principal amount used		Price of par value		Effective yield to maturity
1.875% Notes	January 2022	January 2027	£	250	99.487	%	1.974	%
2.500% Notes	January 2022	January 2042	£	250	98.445	%	2.584	%

There were no comparable note issuances during the three months ended March 31, 2021.

The proceeds from each of these offerings were used to repay borrowings outstanding under our credit facility, to fund investment opportunities, and for other general corporate purposes