Dealmaker: Realty Income to Acquire 454 Properties in $1.25B Transaction

Realty Income Corp., San Diego, agreed to acquire 454 single-tenant retail properties from a CIM Group affiliate for $1.25 billion.

The firms expect the transaction to close in several tranches with most properties in the portfolio expected to close this year.

The portfolio carries a 9.7-year weighted-average remaining lease term and generates 58 percent of rental revenue from investment-grade rated companies or their subsidiaries. Realty Income Corp. said it expects the transaction to be executed at an approximate 7 percent cash cap rate.

The portfolio’s 454 properties total 5.1 million leasable square feet. They are currently leased to 59 different tenants in 20 industries, with Texas and California representing the top states by rental revenue. Top tenant concentrations for the portfolio include 145 Dollar General stores, 75 Dollar Tree/Family Dollar stores and 37 Walgreens drugstores. Dollar stores make up 24.5 percent of the portfolio, followed by convenience stores and drug stores.

“We believe this portfolio acquisition demonstrates the importance of size and scale as a competitive advantage in the net lease industry,” said Realty Income Corp. President and CEO Sumit Roy.

Realty Income Corp. is one of the largest companies in the net lease REIT sector. It will finance the acquisition with its $3 billion revolving credit facility. The REIT said it expects to assume $131 million in existing mortgage debt at a 4.5 percent weighted-average interest rate and a 5.3-year weighted-average remaining term to maturity.