Realty Income Announces $1.5 Billion Sale-Leaseback of Convenience Store Properties from EG Group

Rhea-AI Summary

On March 6, 2023, Realty Income Corporation (NYSE: O) announced a definitive agreement to acquire up to 415 single-tenant convenience store properties from EG Group for approximately $1.5 billion. The acquisition is expected to have an estimated cap rate of 6.9% and a 20-year average initial lease term. Approximately 80% of the annualized rent is anticipated from properties in the Northeast U.S., particularly Massachusetts, New York, and Florida. The deal is expected to close in Q2 2023, pending customary conditions and due diligence.

Positive

• Acquiring up to 415 properties at a cap rate of 6.9% could enhance portfolio yield.
• 20-year average lease term provides long-term rental income stability.
• 80% of annualized rent from recognizable brands like Cumberland Farms ensures stable cash flows.

Negative

• None.

SAN DIEGO, March 6, 2023 /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 415 single-tenant convenience store properties located in the U.S. from EG Group, a leading independent convenience retailer based in the United Kingdom. The portfolio is expected to be acquired at an estimated cap rate of approximately 6.9% and have a 20-year weighted average initial lease term. The transaction is expected to close in the second quarter of 2023, subject to customary closing conditions, approvals, and completion of due diligence.   

Approximately 80% of the total portfolio annualized contractual rent is expected to be generated from properties in the Northeast U.S., including approximately 116 properties in Massachusetts, 87 properties in New York, and 74 in Florida, which are the top three representative states in the portfolio. Over 80% of the total portfolio annualized contractual rent is expected to be generated from properties operated under the Cumberland Farms brand. Other representative EG Group brands in the portfolio include Tom Thumb, Fastrac and Sprint, and the average property size of the portfolio is approximately 3,700 square feet. Pro forma for the completion of the transaction, the convenience store industry and the EG Group are expected to represent approximately 11.3% and 2.9%, respectively, of Realty Income's total portfolio annualized contractual rent.

"Our core investment philosophy is to partner with leading operators in industries that have demonstrated an ability to deliver favorable risk-adjusted returns over the long term," said Sumit Roy, Realty Income's President & Chief Executive Officer. "We believe this portfolio includes brands that are among the most recognizable convenience store brands on the east coast, and the convenience store industry has long been a well-performing staple in our real estate portfolio. We are pleased with the portfolio's attractive real estate quality, store-level cash flow coverage, and average property size."      

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 12,200 real estate properties primarily owned under long-term net lease agreements with commercial clients. To date, the company has declared 632 consecutive common stock monthly dividends throughout its 54-year operating history and increased the dividend 119 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.

About EG Group
Founded in 2001 by the Issa family, United Kingdom-based EG Group is a leading independent convenience retailer, which has established partnerships with global brands, as well as a focused portfolio of proprietary brands. The business has an established pedigree of delivering an excellent Grocery & Merchandise, Foodservice and Fuel proposition in all the markets in which it operates.

EG Group currently employs more than 50,000 colleagues working in over 6,600 sites across the UK&I, Europe, USA and Australia. The business is regularly recognised for innovation and investment in convenience retail assets, employees and systems. Zuber Issa and Mohsin Issa, Founders and co- CEOs, EG Group, were jointly named the 2018 EY Entrepreneur of the Year in the UK.

Further information at www.eg.group.

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," "continue," "should," "may," "likely," "plans," and similar expressions are intended to identify forward-looking statements. Forward-looking statements include discussions of our business and portfolio, including our intention to acquire additional properties and the anticipated timing and terms of these acquisitions, and the announcement of 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, the ability to satisfy the conditions to closing of the proposed transaction, and the timing thereof; the outcome of our due diligence review; our continued qualification as a REIT; general domestic and foreign business and economic or financial conditions; competition; fluctuating interest and currency rates; inflation and its impact on our clients and us; access to debt and equity capital markets and other sources of funding; 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, increased client bankruptcies, 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 domestic and foreign income tax laws and rates; our clients' solvency; property ownership through joint ventures and partnerships which may limit control of the underlying investments; the continued evolution of the COVID-19 pandemic or future epidemics or pandemics, the measures taken to limit their spread, and the impacts on us, our business, our clients (including those in the theater and fitness industries), or the economy generally; the loss of key personnel; 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.

View original content to download multimedia:https://www.prnewswire.com/news-releases/realty-income-announces-1-5-billion-sale-leaseback-of-convenience-store-properties-from-eg-group-301762632.html

SOURCE Realty Income Corporation

FAQ

What was Realty Income's recent acquisition announcement?

Realty Income announced it will acquire up to 415 convenience store properties from EG Group for approximately $1.5 billion.

What is the estimated cap rate for Realty Income's acquisition?

The estimated cap rate for the acquisition is approximately 6.9%.

When is the expected closing date for Realty Income's acquisition?

The acquisition is expected to close in the second quarter of 2023.

What percentage of rent will come from the Northeast U.S. in Realty Income's acquisition?

Approximately 80% of the annualized contractual rent will be generated from properties in the Northeast U.S.

How long are the leases for Realty Income's new acquisitions?

The average initial lease term for the acquired properties is expected to be 20 years.