SAN DIEGO, Dec. 30, 2022 /PRNewswire/ — Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company®, today announced that it has signed a definitive agreement to acquire up to 185 single-tenant retail and industrial properties from subsidiaries of CIM Real Estate Finance Trust, Inc. (CMFT), a non-listed REIT which is sponsored by an affiliate of CIM Group, for approximately $894 million in cash. The portfolio composition may vary based upon the completion of our due diligence and the potential exercise of rights of first refusal related to certain properties. The transaction is expected to close in the first quarter of 2023, subject to customary closing conditions, approvals and completion of due diligence.
Inclusive of all 185 properties, the transaction is expected to be executed at an approximate 7.1% cash cap rate for the total portfolio, which has a weighted average remaining lease term of approximately 9.2 years with approximately 48% of total portfolio annualized contractual rent derived from investment-grade rated clients.
“We are pleased to execute our fourth portfolio transaction with CIM since 2019, demonstrating our continued access to high-quality portfolio opportunities at attractive risk-adjusted returns and our sustained momentum on both the forward equity and acquisition fronts. Upon closing, this transaction will be immediately accretive to earnings on a leverage-neutral basis and is highly complementary to our existing portfolio,” said Sumit Roy, Realty Income’s President & Chief Executive Officer.
The aggregate 185 property portfolio is anticipated to consist of up to 4.6 million square feet, leased to 55 retail clients who in the aggregate represent 95% of the total portfolio annualized contractual rent and four industrial clients who in the aggregate represent 5% of the total portfolio annualized contractual rent. Lowe’s Home Improvement and Walgreens are expected to represent the top two clients by projected total portfolio annualized contractual rent, at 11.9% and 7.6%, respectively. Approximately 28.9% of the total portfolio annualized contractual rent is expected to be leased to our top 20 clients. Drug Stores, Home Improvement, and Grocery are expected to represent the top three industries by projected total portfolio annualized contractual rent at 12.1%, 12.1%, and 11.9% of portfolio rent, respectively. Texas and Illinois are expected to represent the top two states by total portfolio annualized contractual rent, at 10.2% and 9.0%, respectively. Additionally, approximately 95% of the total portfolio annualized contractual rent is expected to be leased to our existing clients.
The top 10 client concentrations for the portfolio are estimated to be:
Number of Properties
% of Total Portfolio Annualized
Contractual Rent(1)
Lowe’s
8
11.9 %
Walgreens
14
7.6 %
United Oil (Apro)
15
6.6 %
Bob Evans
20
5.6 %
Kroger
5
5.5 %
CVS
10
4.6 %
Hobby Lobby
5
4.0 %
Kohl’s
3
3.5 %
CarMax
1
3.0 %
National Tire & Battery
8
3.0 %
Top 10 Client Total
89
55.3 %
(1) Based on the aggregate 185 property portfolio and the projected total portfolio annualized contractual rent.
Amounts and percentages used in this press release are subject to change based on the final composition of the portfolio at closing.
Realty Income does not expect the acquisition, once completed, to have a meaningful impact on its existing client and industry concentrations.
About Realty Income
Realty Income, The Monthly Dividend Company®, is an S&P 500 company and member of the S&P 500 Dividend Aristocrats® index. We invest in people and places to deliver dependable monthly dividends that increase over time. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 11,700 real estate properties owned under long-term net lease agreements with commercial clients. To date, the company has declared 630 consecutive common stock monthly dividends throughout its 53-year operating history and increased the dividend 118 times since Realty Income’s public listing in 1994 (NYSE: O). Additional information about the company can be obtained from the corporate website at www.realtyincome.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. When used in this press release, the words “estimated,” “anticipated,” “expect,” “believe,” “intend,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements also include discussions of our business and portfolio including portfolio acquisitions and the related properties timing, concentrations, rent, properties, clients, and impact to the current portfolio, future operations and results, the announcement of operating results, strategy, plans, and the intentions of management. Forward-looking statements are subject to risks, uncertainties, and assumptions about us, which may cause our actual future results to differ materially from expected results. Some of the factors that could cause actual results to differ materially are, among others, our continued qualification as a real estate investment trust; general domestic and foreign business and economic conditions; competition; fluctuating interest and currency rates; access to debt and equity capital markets; continued volatility and uncertainty in the credit markets and broader financial markets; other risks inherent in the real estate business including our clients’ defaults under leases, potential liability relating to environmental matters, illiquidity of real estate investments, and potential damages from natural disasters; impairments in the value of our real estate assets; changes in income tax laws and rates; the continued evolution of the COVID-19 pandemic and the measures taken to limit its spread, and its impacts on us, our business, our clients (including those in the theater industry), or the economy generally; the timing and pace of reopening efforts at the local, state and national level in response to the COVID-19 pandemic and developments, such as the unexpected surges in COVID-19 cases, that cause a delay in or postponement of reopenings; the outcome of any legal proceedings to which we are a party or which may occur in the future; acts of terrorism and war; any effects of uncertainties regarding whether the anticipated benefits or results of our merger with VEREIT, Inc. will be achieved; and those additional risks and factors discussed in our reports filed with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements. Those forward-looking statements are not guarantees of future plans and performance and speak only as of the date of this press release. Actual plans and operating results may differ materially from what is expressed or forecasted in this press release. We do not undertake any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.
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SOURCE Realty Income Corporation
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