Capital Ideas: New Partners, New Equity for REITs
How publicly traded Realty Income is tapping private dollars to help fuel growth.
REITs are bypassing a difficult public trading environment by accessing private capital through joint ventures and private investment funds. The trend is not brand new, but it’s exciting to learn how the bigger REITs have been able to run with it.
At Nareit’s REITweek conference, I sat down with Jonathan Pong, executive vice president, CFO & treasurer of Realty Income, the largest net lease REIT with 15,500 properties in 92 industries, to talk about the company’s recent and growing partnerships with private investors.
Pong told me the company has been “leaning into” relationships with investors that don’t have a REIT mandate but have real estate exposure. As a result, this year the company has accessed generous buckets of new capital for expanding its platform.
Realty Income’s U.S. Open-End Core Plus LP fund for institutional investors held a$1.7 billion cornerstone capital raise. The fund is targeting a diversified portfolio of retail and industrial properties. “It’s an extension of what we do and have done as a public company for 32 years,” Pong said.
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Realty Income also formed a $1 billion stragetic partnership with Apollo Global Management’s subsidiary Athene Holding, the largest insurance company for retirement annuities. Realty Income seeded the venture with a varied portfolio of 492 single-tenant retail properties that are 49 percent owned by Apollo and 51 percent owned by Realty Income. The return expectations on these properties for “quite low,” Pong said, but they will deliver the predictable, monthly income to investors this growing demographic seeks.
“There’s a lot of capital coming into fixed-rate annuities,” Pong stressed.
And Realty Income formed a $1.5 billion joint venture with Government Investment Corp. to do build-to-suit projects. The venture with GIC will target industrial projects predominantly.
All of the partnerships are expected to be programmatic, but they are not embedded in the company’s $9.5 billion investment volume guidance for 2026.
Slow and steady
While it has been a “blessing to be a public REIT” because of the access to efficient capital, Pong explained, there is often a mismatch between the quick results public investors want and the long-term “appreciate-over-time” strategy that the company has pursued and that many private investors are seeking. “We’re very much a sleep-at-night story,” he said.
On the other hand, these new ventures help a company founded in 1968 and public since 1994 show it can remain nimble and aggressive amid a somewhat crowded net lease REIT space.
“We have to prove to the market that being bigger doesn’t mean you aren’t going to grow as fast,” Pong said.
The company is also staying on the cutting edge by, with the help of artificial intelligence, harnessing its vast amounts of data to create proprietary and predictive analytics for underwriting acquisitions.
“That’s something that’s unique to us and something public companies can bring to co-investors and say, ‘This is what we bring to the table,'” Pong said.
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