Realty Income and Spirit Realty to create $63bn net lease REIT via merger

Realty Income Corporation is acquiring smaller NYSE-listed US net lease real estate investment trust Spirit Realty Capital in a $9.3bn (€8.8bn) deal.

Realty Income is merging with Spirit Realty by offering Spirit Realty shareholders 0.762 newly-issued Realty Income common shares for each common share they own.

Realty Income owns over 13,100 real estate properties primarily under long-term net lease agreements with commercial clients. As of the end of the first half of 2023, Spirit Realty held a US portfolio of 2,064 retail, industrial and other properties in 49 states.

The deal, expected to close during the first quarter of 2024, will result in Realty Income and Spirit shareholders owning approximately 87% and 13%, respectively, of the combined company which will have a $63bn enterprise value.

Sumit Roy, president and CEO of Realty Income, said: “We expect that this transaction will create immediate and meaningful earnings accretion while enhancing the diversification and depth of our high-quality real estate portfolio. Spirit’s assets are highly complementary to our existing portfolio, extending our investments in industries that have proven to generate durable cash flows over several economic cycles.

“We also believe this merger will strengthen our longstanding relationships with existing clients and allow us to curate new ones with partners whose growth ambitions can accelerate alongside Realty Income.”

Jackson Hsieh, president and CEO of Spirit Realty said: “This transaction is the culmination of these accomplishments, and merging with Realty Income offers Spirit’s shareholders immediate value by providing a more competitive cost of capital, an A-rated balance sheet, broader tenant diversification, and the ability to leverage economies of scale.”

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