Realty Income Buys Spirit Realty Capital for About $9.3 Billion

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Bill McColl
Bill McColl
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Bill McColl has 25+ years of experience as a senior producer and writer for TV, radio, and digital media leading teams of anchors, reporters, and editors in creating news broadcasts, covering some of the most notable news stories of the time.

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Published October 30, 2023
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Key Takeaways

  • Realty Income Corp., a commercial property real estate investment trust (REIT), said it would buy another REIT, Spirit Realty Capital, for $9.3 billion in an all-stock deal.
  • The agreement gives Spirit shareholders 0.762 share of newly issued Realty Income shares for each Spirit share they own.
  • The purchase price represents a 15.4% premium to Spirit's closing price Friday.

Realty Income Corp. (O), a commercial real estate investment trust (REIT), said it would acquire a single-tenant specialized REIT, Spirit Realty Capital (SRC), in an all-stock transaction valued at about $9.3 billion.

Under the terms of the agreement, Spirit investors will receive 0.762 newly issued Realty Income share for every Spirit Realty share they own. That would come out to $37.34 per share, a 15.4% premium to the stock’s closing price Friday. Realty Income investors will own 87% of the combined firm, with Spirit Realty shareholders holding the rest.

The merger is expected to create an enterprise value of approximately $63 billion for the combined company, which Realty Income said would enhance the REIT’s “size, scale, and diversification to expand its runway for future growth.”

Realty Income Chief Executive Officer (CEO) Sumit Roy said that the purchase will create “immediate and meaningful earnings accretion,” anticipated to be more than 2.5% to the company’s annualized adjusted funds from operations per share.

Realty Income noted that it wouldn't be relying on capital markets to complete the deal, and that it will assume existing debt with “low, in-place rates.” The transaction is expected to close in the first quarter of next year. 

The news sent shares of Realty Income falling Monday to their lowest level since the beginning of the pandemic in 2020. Spirit Realty Capital shares rose almost 8%. 

Realty Income, Spirit Realty Capital's 5-Year Share Performance

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  1. Realty Income Corp. "Realty Income To Acquire Spirit Realty Capital in $9.3 Billion Transaction."

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