Net Lease Acquisition to Benefit REIT Shareholders

Realty Income Corp., a REIT that specializes in net lease investments, has signed purchase agreements to acquire up to 33 single-tenant, retail, distribution, office, and manufacturing properties under long-term net leases—for approximately $544 million. The portfolio has approximately $291 million of existing mortgage debt.

Realty Income says that it anticipates paying off approximately $223 million of the debt at, or shortly after, acquiring the properties. “We anticipate paying off the remaining $68 million in mortgage debt as soon as prepayment penalties and other costs make it economically feasible to do so,” said a spokesperson for the REIT.

The properties to be acquired are located in 17 different states and consist of approximately 3.8 million square feet of leasable space. The average remaining lease term of the properties is over 11 years, which is consistent with the average remaining lease term of Realty Income's existing portfolio of approximately 2,500 net-leased properties.

The majority of the lease revenue from these properties is generated from investment-grade tenants or their operating subsidiaries, including Caterpillar, FedEx Corp., International Paper, AMC Theaters, Cinemark Theaters, Regal Cinemas, and Walgreens. “The acquisition should provide us with the additional lease revenue from which we pay increasing monthly dividends to our shareholders,” said Realty Income's CEO Tom A. Lewis.