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v3.22.2.2

Notes Payable | 9 Months Ended
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Sep. 30, 2022
Debt |
Debt | Mortgages Payable During the nine months ended September 30, 2022, we made $311.1 million in principal payments, including the full repayment of 12 mortgages for $308.0 million. During the nine months ended September 30, 2021, we made $56.0 million in principal payments, including the full repayment of six mortgages for $53.3 million. We assumed eight mortgages on 17 properties totaling $45.1 million during the nine months ended September 30, 2022, as compared to the assumption of one Sterling-denominated mortgage on one property totaling £31.0 million for the nine months ended September 30, 2021. Assumed mortgages are secured by the properties on which the debt was placed and are considered non-recourse debt with limited customary exceptions which vary from loan to loan. Our mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage without the prior consent of the lender. At September 30, 2022, we were in compliance with these covenants. The balance of our deferred financing costs, which are classified as part of 'Mortgages payable, net', on our consolidated balance sheets, was $926,000 at September 30, 2022, and $790,000 at December 31, 2021. These costs are being amortized over the remaining term of each mortgage. The following table summarizes our mortgages payable as of September 30, 2022, and December 31, 2021, respectively (dollars in thousands):
As Of | Number of Properties (1) |  | Weighted Average Stated Interest Rate (2) |  | Weighted Average Effective Interest Rate (3) |  | Weighted Average Remaining Years Until Maturity |  | Remaining Principal Balance |  | Unamortized Premium and Deferred Financing Costs Balance, net |  | Mortgage Payable Balance
9/30/2022 | 136 |  | 4.8 | % |  | 3.3 | % |  | 1.6 |  | $ | 840,682 |  |  | $ | 14,681 |  |  | $ | 855,363 |
12/31/2021 | 267 |  | 4.8 | % |  | 3.5 | % |  | 1.8 |  | $ | 1,114,129 |  |  | $ | 27,866 |  |  | $ | 1,141,995 |
(1)At September 30, 2022, there were 18 mortgages on 136 properties. At December 31, 2021, there were 22 mortgages on 267 properties. With the exception of one Sterling-denominated mortgage which is paid quarterly, the mortgages require monthly payments with principal payments due at maturity. At September 30, 2022 and December 31, 2021, all mortgages were at fixed interest rates. (2) Stated interest rates ranged from 3.0% to 6.9% at each of September 30, 2022 and December 31, 2021. (3) Effective interest rates ranged from 2.6% to 6.6% and 2.6% to 6.0% at September 30, 2022 and December 31, 2021, respectively. The following table summarizes the maturity of mortgages payable, excluding net premiums of $15.6 million and deferred financing costs of $926,000 as of September 30, 2022 (dollars in millions):
Year of Maturity |  | Principal
2022 |  | $ | 1.1
2023 |  | 22.0
2024 |  | 740.5
2025 |  | 39.2
2026 |  | 12.0
Thereafter |  | 25.9
Totals |  | $ | 840.7
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
|  |  | September 30, 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 |  |  | 279 |  |  | — |
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 |  |  | 446 |  |  | 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 |
3.160% notes, issued in June 2022 and due in June 2030 | £ | 140 |  |  | 156 |  |  | — |
1.625% notes, issued in October 2020 and due December 2030 | £ | 400 |  |  | 446 |  |  | 541 |
3.250% notes, $600 issued in May 2020 and $350 issued in July 2020, both due in January 2031 | $ | 950 |  |  | 950 |  |  | 950 |
3.180% notes, issued in June 2022 and due in June 2032 | £ | 345 |  |  | 384 |  |  | — |
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 |  |  | 390 |  |  | 474 |
2.730% notes, issued in May 2019 and due in May 2034 | £ | 315 |  |  | 350 |  |  | 427 |
5.875% bonds, $100 issued in March 2005 and $150 issued in June 2011, both due in March 2035 | $ | 250 |  |  | 250 |  |  | 250 |
3.390% notes, issued in June 2022 and due in June 2037 | £ | 115 |  |  | 128 |  | — |
2.500% notes, issued in January 2022 and due in January 2042 | £ | 250 |  |  | 279 |  |  | — |
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 |  |  | $ | 13,132 |  |  | $ | 12,257 |
Unamortized net premiums and deferred financing costs |  |  | 184 |  |  | 243 |
|  |  | $ | 13,316 |  |  | $ | 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 September 30, 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. The following table summarizes the maturity of our notes and bonds payable as of September 30, 2022, excluding net unamortized premiums of $241.3 million and deferred financing costs of $56.6 million (dollars in millions):
Year of Maturity |  | Principal
2024 |  | $ | 850 |
2025 |  | 1,050 |
2026 |  | 1,575 |
Thereafter |  | 9,657 |
Totals |  | $ | 13,132 |
As of September 30, 2022, the weighted average interest rate on our notes and bonds payable was 3.3% and the weighted average remaining years until maturity was 7.3 years. Interest incurred on all of the notes and bonds was $107.9 million and $65.8 million for the three months ended September 30, 2022 and September 30, 2021, respectively, and $314.0 million and $191.7 million for the nine months ended September 30, 2022 and September 30, 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 September 30, 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 in the consolidated statements of income and comprehensive income for the nine months ended September 30, 2021. There were no comparable repayments for the nine months ended September 30, 2022. C. Note Issuances During the nine months ended September 30, 2022 and 2021, we issued the following notes and bonds (in millions):
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 | %
3.160% Notes | June 2022 |  | June 2030 |  | £ | 140 |  |  | 100.000 | % |  | 3.160 | %
3.180% Notes | June 2022 |  | June 2032 |  | £ | 345 |  |  | 100.000 | % |  | 3.180 | %
3.390% Notes | June 2022 |  | June 2037 |  | £ | 115 |  |  | 100.000 | % |  | 3.390 | %
2021 Issuances | Date of Issuance |  | Maturity Date |  | Principal amount used |  | Price of par value |  | Effective yield to maturity
1.125% Notes | July 2021 |  | July 2027 |  | £ | 400 |  |  | 99.305 | % |  | 1.242 | %
1.750% Notes | July 2021 |  | July 2033 |  | £ | 350 |  |  | 99.842 | % |  | 1.757 | %
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. In October 2022, we issued $750.0 million of 5.625% senior unsecured notes due October 2032. See Note 19, Subsequent Events.

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