Realty Income to Buy Spirit Realty for $9.3B

Realty Income Corp., a real estate investment trust, agreed to acquire Spirit Realty Capital, Inc. in an all-stock transaction for roughly $9.3 billion.

Spirit shareholders will receive 0.762 newly issued Realty Income shares for each Spirit share they own, valuing each Spirit share at approximately $37.34, or about a 15% premium to Spirit’s closing price of $32.35 on Friday. Upon closing of the deal, Realty Income shareholders will own 87% of the combined company and Spirit shareholders will own the rest.

The deal is expected to add more than 2.5% to annualized adjusted FFO per share and to be leverage-neutral. No new external capital is anticipated to be required to finance the acquisition.

“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,” said Sumit Roy, president and CEO of Realty Income.

The combined portfolio’s annualized contractual rent will increase to $4.5 billion from $3.8 billion, the companies said. While convenience stores will remain Realty Income’s largest industry, its share of the combined portfolio is expected to decline to 10.2% compared with 11.1% of Realty Income’s annualized contractual rent on a standalone basis.

The deal is expected to close in Q1 2024.

Wells Fargo is serving as sole financial advisor and Latham & Watkins is acting as legal advisor to Realty Income. J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are serving as financial advisors and Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Spirit.