Realty Income Closes $9.3B Spirit Capital Acquisition

January 22, 2024

This deal adds 61.6 million square feet to the REIT’s portfolio.

The merger between Realty Income Corp. and Spirit Realty Capital, a deal that was announced in late October, closed on Tuesday. The transaction has been approved by the shareholders of Spirit with 99.8 percent of votes in favor, representing 86.4 percent of the outstanding shares of Spirit’s common stock.

As a result, Realty Income will acquire Spirit Realty Capital in an all-stock transaction valued at $9.3 billion. The resulting entity will have an enterprise value of roughly $63 billion.

Realty Income currently owns more than 13,250 commercial properties in the U.S., encompassing retail, industrial and agricultural assets boasting an average 98.8 percent occupancy rate. Following the merger, some 2,037 net-leased properties, totaling some 61.6 million square feet—Spirit’s holdings at the end of the third quarter—will be added to its portfolio.

Merger details

Under the terms of the agreement, Spirit shareholders will receive 0.762 newly issued Realty Income common shares for each Spirit common share. In addition, all Spirit’s outstanding shares of Series A Cumulative Redeemable Preferred Stock will be exchanged for shares of Realty Income Series A Cumulative Redeemable Preferred Stock.

Wells Fargo acted as financial advisor for Realty Income, while Latham & Watkins served as legal advisor. Spirit’s financial advisor team included J.P. Morgan Securities and Morgan Stanley & Co., and Wachtell, Lipton, Rosen & Katz provided legal representation.

Other Realty Income ventures

Realty Income has been involved in a couple more significant transactions last year. Early 2023, the REIT acquired a 4.6 million-square-foot portfolio which included 185 retail and industrial facilities. CIM Real Estate Finance Trust Inc. sold the assets for $894 million.

Later on, in March, Realty Income expanded its holdings with the addition of 415 single-tenant convenience store properties. The transaction, a sale-leaseback with EG Group, was valued at $1.5 billion.