Realty Income Prices $600 Million Offering of Senior Notes Due 2035

Rhea-AI Summary

Realty Income (NYSE: O) has announced the pricing of a $600 million public offering of senior unsecured notes due 2035, with a 5.125% interest rate. The notes were priced at 98.371% of principal amount, yielding an effective semi-annual rate of 5.337% to maturity.

The proceeds will be used for general corporate purposes, including the repayment of $500 million of 3.875% notes due April 15, 2025, potential borrowings under revolving credit facility, property development, acquisitions, and portfolio improvements. The offering is expected to close on April 10, 2025.

Wells Fargo Securities, BofA Securities, J.P. Morgan, Mizuho, and TD Securities are serving as active joint book-running managers for the offering.

Positive

• Refinancing of higher-cost debt with $500M of 3.875% notes being replaced
• Strategic capital raise provides flexibility for property acquisitions and development
• Strong banking syndicate supporting the offering indicates market confidence

Negative

• Higher interest rate on new notes (5.125%) compared to retiring notes (3.875%)
• Notes priced at discount (98.371%) indicates challenging market conditions
• Increased debt service costs will impact cash flow

Insights

Financial Analyst

This $600 million senior notes offering represents a strategic refinancing move by Realty Income with several key implications. The company is primarily addressing its upcoming debt maturity, replacing $500 million of 3.875% notes due April 15, 2025 with these new 5.125% notes due 2035 (effective yield of 5.337%).

The higher interest rate reflects current market conditions, resulting in approximately $6.25 million in additional annual interest expenses on the refinanced portion. However, this represents a minimal impact for a company with Realty Income's scale ($50.9 billion market cap). More importantly, the transaction extends the debt maturity profile by ten years, reducing near-term refinancing risk.

The pricing at 98.371% of face value indicates reasonable market acceptance without significant premium or discount, suggesting investor confidence in Realty Income's credit profile despite the higher rate environment.

The additional $100 million beyond the maturing debt provides incremental capital for potential acquisitions, development, or other corporate purposes, giving management additional financial flexibility without significantly impacting leverage metrics.

For a REIT known as "The Monthly Dividend Company" with 657 consecutive monthly dividends and 30 years of dividend growth, maintaining a well-laddered debt maturity profile through proactive refinancing is essential for long-term financial stability and continuing its dividend aristocrat status.

SAN DIEGO, April 1, 2025 /PRNewswire/ -- Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company^®, today announced the pricing of a public offering of $600 million of 5.125% senior unsecured notes due 2035 (the "Notes"). The public offering price for the Notes was 98.371% of the principal amount for an effective semi-annual yield to maturity of 5.337%.

The net proceeds from this offering will be used for general corporate purposes, which may include, among other things, the repayment or repurchase of our indebtedness, including $500.0 million of outstanding 3.875% notes due April 15, 2025, and/or borrowings under our revolving credit facility and commercial paper programs, foreign currency swaps or other hedging instruments, the development, redevelopment and acquisition of additional properties, acquisition or business combination transactions, and the expansion and improvement of certain properties in our portfolio.

This offering is expected to close on April 10, 2025, subject to the satisfaction of customary closing conditions.

The active joint book-running managers for the offering are Wells Fargo Securities, BofA Securities, J.P. Morgan, Mizuho, and TD Securities.

A copy of the prospectus supplement and prospectus, when available, related to this offering may be obtained by contacting: Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, Attn: WFS Customer Service, Email: wfscustomerservice@wellsfargo.com, by telephone (toll free) at 1-800-645-3751; BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, Attention: Prospectus Department, by telephone at (800) 294-1322; J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179, Attention: Investment Grade Syndicate Desk, 3rd Floor, Facsimile: 212-834-6081; Mizuho Securities USA LLC, 1271 Avenue of the Americas, New York, New York 10020, by telephone (toll-free) at 1-866-271-7403; and TD Securities (USA) LLC, 1 Vanderbilt Avenue, 11th Floor, New York, New York 10017, by telephone (toll free) at 1-855-495-9846.   

These securities are offered pursuant to a Registration Statement that has become effective under the Securities Act of 1933, as amended. These securities are only offered by means of the prospectus included in the Registration Statement and the prospectus supplement related to the offering. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any offer or sale of these securities in any state or other jurisdiction where, or to any person to whom, the offer, solicitation, or sale of these securities would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Realty Income

Realty Income (NYSE: O), an S&P 500 company, is real estate partner to the world's leading companies^®. Founded in 1969, we invest in diversified commercial real estate and have a portfolio of over 15,600 properties in all 50 U.S. states, the U.K., and six other countries in Europe. We are known as "The Monthly Dividend Company^®" and have a mission to invest in people and places to deliver dependable monthly dividends that increase over time. Since our founding, we have declared 657 consecutive monthly dividends and are a member of the S&P 500 Dividend Aristocrats^® index for having increased our dividend for the last 30 consecutive years.

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 growth strategies and intentions to acquire or dispose of properties (including geographies, timing, partners, clients and terms); re-leases, re-development and speculative development of properties and expenditures related thereto; future operations and results; the announcement of operating results, strategy, plans, and the intentions of management; statements made regarding our share repurchase program; settlement of shares of common stock sold pursuant to forward sale confirmations under our at-the-market program; dividends, including the amount, timing and payments of dividends; and trends in our business, including trends in the market for long-term leases of freestanding, single-client properties. 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, our continued qualification as a real estate investment trust; general domestic and foreign business, 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 (including the terms and partners of such funding); continued volatility and uncertainty in the credit markets and broader financial markets; other risks inherent in the real estate business including our clients' solvency, client 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; property ownership through co-investment ventures, funds, joint ventures, partnerships and other arrangements which may transfer or limit our control of the underlying investments; epidemics or pandemics including measures taken to limit their spread, the impacts on us, our business, our clients, and 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; the anticipated benefits from mergers and acquisitions; 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 results may differ materially from what is expressed or forecasted in this press release and expectations and forecasts made in the forward-looking statements discussed in this press release may not materialize. We do not undertake any obligation to update forward-looking statements or to publicly release the results of any forward-looking statements that may be made to reflect events or circumstances after the date these statements were made or to reflect the occurrence of unanticipated events.

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SOURCE Realty Income Corporation

FAQ

What are the key terms of Realty Income's (O) 2035 senior notes offering?

The offering is for $600 million of senior unsecured notes due 2035 with a 5.125% interest rate, priced at 98.371% of principal amount, yielding 5.337% semi-annually.

How will Realty Income (O) use the proceeds from the 2035 notes offering?

The proceeds will primarily repay $500M of 3.875% notes due April 2025, plus potential credit facility borrowings, property development, acquisitions, and portfolio improvements.

When will Realty Income's (O) $600M senior notes offering close?

The offering is expected to close on April 10, 2025, subject to customary closing conditions.

Which banks are managing Realty Income's (O) 2035 notes offering?

Wells Fargo Securities, BofA Securities, J.P. Morgan, Mizuho, and TD Securities are the active joint book-running managers.