Realty Income Buys $894M Portfolio

Expected to close in the first quarter, the transaction includes 185 retail and industrial assets.

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Realty Income Corp. has agreed to acquire a 4.6 million-square-foot portfolio, consisting of 185 retail and industrial non-core, net lease properties. CIM Real Estate Finance Trust Inc. is selling the facilities for $894 million.

Realty Income will pay the acquisition price in cash. Subject to customary closing conditions and the completion of due diligence, the transaction is expected to close during the first quarter of 2023.

The sale is expected to be executed at an approximately 7.1 percent cash cap rate for the entire portfolio, which has a weighted average remaining lease term (WALT) of roughly 9.2 years, with approximately 48 percent of total portfolio annualized contractual rent derived from investment-grade rated clients.

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Following the final close of the transaction, CMFT’s net lease portfolio will consist of 199 retail, office and industrial properties with a 99.7 percent occupancy and a WALT of 11.5 years. CMFT’s senior loan portfolio totaled $4.6 billion as of September 2022.

Sumit Roy, president & CEO of Realty Income, said in prepared remarks that this portfolio transaction marks the fourth deal with CIM. The first one closed in 2019, when Realty acquired a $1.3 billion fully leased retail portfolio consisting of 454 properties totaling 5.1 million square feet. According to CommercialEdge data, Realty Income currently owns 5,399 retail assets totaling roughly 127 million square feet.

The current portfolio is leased to 55 retail companies, including Lowe’s Home Improvement with eight properties, and Walgreens with 14 properties, having an annualized contractual rent at 11.9 percent and 7.6 percent, respectively. Most of the assets are part of three main industries, including drug stores, home improvement and grocery, and are mostly concentrated in Texas and Illinois.

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