SAN DIEGO, Sept. 3, 2019 /PRNewswire/ -- Realty Income
Corporation (Realty Income, NYSE: O), The Monthly Dividend
Company®, today announced that it has signed a
definitive agreement to acquire 454 single-tenant retail properties
from CIM Real Estate Finance Trust, Inc. ("CMFT"), a non-listed
REIT which is sponsored by an affiliate of CIM Group, for
approximately $1.25 billion in cash.
The transaction is expected to close in various tranches with the
acquisition of most of the properties in the portfolio expected to
close in 2019, subject to customary closing conditions.
The transaction is expected to be executed at an approximate 7%
cash cap rate, resulting in an investment spread relative to our
first-year weighted average cost of capital well above the
company's historical average. The portfolio carries a weighted
average remaining lease term of 9.7 years and generates 58% of
total rental revenue from investment-grade rated companies or their
subsidiaries.
"This transaction is additive to our existing high-quality real
estate portfolio and is immediately accretive on a leverage-neutral
basis. We believe this portfolio acquisition demonstrates the
importance of size and scale as a competitive advantage in the net
lease industry," said Sumit Roy,
Realty Income's President & Chief Executive Officer. "As the
largest company in the net lease REIT sector, we believe we are
uniquely positioned to integrate sizeable transactions with minimal
impact to our existing tenant and industry concentrations and our
overall portfolio risk profile. As a result of this transaction, we
are increasing our 2019 acquisition guidance and 2019 AFFO per
share guidance. We intend to finance the acquisition using our
$3.0 billion revolving credit
facility, which currently has approximately $2.8 billion of available capacity."
Upon completion of the acquisition, Realty Income expects to
assume existing mortgage debt totaling approximately
$131 million at a weighted average interest rate of 4.5% and a
weighted average remaining term to maturity of 5.3 years.
Updated 2019 Guidance
|
Range
|
|
Prior
|
|
Revised
|
Acquisitions (in
billions)
|
$2.0 -
$2.5
|
|
$3.25 -
$3.50
|
Net Income per
share
|
$1.33 -
$1.38
|
|
$1.32 -
$1.37
|
Adjusted Funds from
Operations
Available to Common Stockholders
(AFFO) per share
|
$3.28 -
$3.33
|
|
$3.29 -
$3.34
|
Funds from Operations
Available to
Common Stockholders (FFO) per
share
|
$3.26 -
$3.31
|
|
$3.26 -
$3.31
|
|
|
|
|
The company considers FFO and AFFO to be appropriate
supplemental measures of a Real Estate Investment Trust's (REIT's)
operating performance. Realty Income defines FFO, a non-GAAP
measure, consistent with the National Association of Real Estate
Investment Trusts' (NAREIT's) definition, as net income available
to common stockholders, plus depreciation and amortization of real
estate assets, plus impairments of real estate assets, and reduced
by gains on property sales. AFFO further adjusts FFO for unique
revenue and expense items, which the company believes are not as
pertinent to the measurement of the company's ongoing operating
performance. The primary driver of the difference in adjustments to
guidance for net income per share, AFFO per share, and FFO per
share is the add-back of expected depreciation from the properties
to be acquired for the purposes of calculating AFFO and FFO.
Presentation of the information regarding FFO and AFFO is intended
to assist the reader in comparing the operating performance of
different REITs, although it should be noted that not all REITs
calculate FFO and AFFO in the same way, so comparisons with other
REITs may not be meaningful. FFO and AFFO should not be considered
as alternatives to reviewing our cash flows from operating,
investing, and financing activities. In addition, FFO and AFFO
should not be considered as measures of liquidity, our ability to
make cash distributions, or our ability to pay interest
payments.
Portfolio Profile
The portfolio being acquired from CMFT consists of 454
properties with approximately 5.1 million leasable square feet. The
properties in the portfolio are currently leased to 59 different
tenants across 20 industries, with Texas and California representing the top two states by
projected rental revenue for the forward twelve-month period
beginning July 1, 2019, at 11.0% and
7.2%, respectively.
Based on the tenant and industry concentrations for this
portfolio, Realty Income does not expect the acquisition, once
completed, to have a meaningful impact on its existing tenant and
industry concentrations.
The top 10 tenant concentrations for the portfolio are as
follows:
|
Number of
Properties
|
|
% of Total Portfolio
Rent (1)
|
Dollar
General
|
145
|
|
15.8%
|
Walgreens
|
37
|
|
14.8%
|
Dollar Tree / Family
Dollar
|
75
|
|
8.7%
|
United Oil
|
28
|
|
7.2%
|
Biolife Plasma
Services
|
9
|
|
4.1%
|
Western Refining
(Marathon)
|
24
|
|
3.7%
|
QuickChek
|
6
|
|
3.5%
|
PetSmart
|
9
|
|
3.1%
|
7-Eleven
|
9
|
|
2.8%
|
Mattress
Firm
|
14
|
|
2.4%
|
Top 10 Tenant
Total
|
354
|
|
66.2%
|
(1) Based on projected rental revenue
for the forward twelve-month period beginning July 1, 2019. Total
does not foot due to rounding.
|
The top 10 industry concentrations for the portfolio are as
follows:
|
Number of
Properties
|
|
% of Total Portfolio
Rent (1)
|
Dollar
Stores
|
220
|
|
24.5%
|
Convenience
Stores
|
73
|
|
19.4%
|
Drug
Stores
|
42
|
|
16.0%
|
Restaurants – Casual
Dining
|
24
|
|
6.8%
|
Grocery
Stores
|
13
|
|
6.7%
|
Health and
Fitness
|
4
|
|
4.8%
|
Health
Care
|
10
|
|
4.4%
|
Pet Supplies and
Services
|
9
|
|
3.1%
|
Home
Furnishings
|
18
|
|
3.1%
|
Home
Improvement
|
2
|
|
2.0%
|
Top 10 Industry
Total
|
415
|
|
90.8%
|
(1) Based on projected rental revenue
for the forward twelve-month period beginning July 1,
2019
|
About Realty Income
Realty Income, The Monthly Dividend Company®, is an
S&P 500 company dedicated to providing stockholders with
dependable monthly income. The company is structured as a REIT, and
its monthly dividends are supported by the cash flow from over
5,900 real estate properties owned under long-term lease agreements
with commercial tenants. To date, the company has declared 590
consecutive common stock monthly dividends throughout its 50-year
operating history and increased the dividend 102 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
Statements in this press release that are not strictly
historical are "forward-looking" statements. Forward-looking
statements involve known and unknown risks, which may cause the
company's actual future results to differ materially from expected
results. These risks include, among others, general economic
conditions, local and foreign real estate conditions, tenant
financial health, the availability of capital to finance planned
growth, continued volatility and uncertainty in the credit markets
and broader financial markets, changes in foreign currency exchange
rates, property acquisitions (including the acquisitions described
herein), and the timing and completion of these acquisitions,
charges for property impairments, and the outcome of any legal
proceedings to which the company is a party, as described in the
company's filings with the Securities and Exchange Commission.
Consequently, forward-looking statements should be regarded solely
as reflections of the company's current operating plans and
estimates. Actual operating results may differ materially from what
is expressed or forecast in this press release. The company
undertakes no 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