Realty Income Corp. (NYSE: O) has announced it will acquire Spirit Realty Capital Inc. (NYSE: SRC) in an all-stock transaction valued at approximately $9.3 billion.
Realty Income is an S&P 500 company and member of the S&P 500 Dividend Aristocrats index. The company is structured as a real estate investment trust (REIT) and its monthly dividends are supported by the cash flow from over 13,100 real estate properties primarily owned under long-term net lease agreements with commercial clients. Spirit Realty Capital is a net-lease REIT that primarily invests in single-tenant, operationally essential real estate assets, subject to long-term leases. As of the second quarter of this year, its portfolio consisted of 2,064 retail, industrial and other properties across 49 states, which were leased to 345 tenants operating in 37 industries.
The merger is subject to customary closing conditions, including the approval of Spirit shareholders, and is expected to close during the first quarter of 2024. Additionally, from the date of the merger agreement through the closing of the transaction, Spirit may declare and pay regular, quarterly cash dividends to holders of its common stock and to holders of its preferred stock. No approval of Realty Income shareholders will be required in connection with the merger.
“The merger with Spirit is yet another example of how our size, scale, and unique platform value continue to create substantial value for our shareholders,” said Sumit Roy, president and CEO of Realty Income. “Spirit’s assets are highly complementary to our existing portfolio, extending our investments in industries that have proven to generate durable cash flows over several economic cycles. We also believe this merger will strengthen our longstanding relationships with existing clients and allow us to curate new ones with partners whose growth ambitions can accelerate alongside Realty Income.”
Jackson Hsieh, president and CEO of Spirit Realty added, “Since the board appointed me CEO in 2017, our leadership team and dedicated associates have effectuated numerous accomplishments, including improved tenant quality and asset diversification, implementation of advanced analytical tools and processes, and an excellent balance sheet with well-laddered maturities and below-market fixed debt costs. This transaction is the culmination of these accomplishments, and merging with Realty Income offers Spirit’s shareholders immediate value by providing a more competitive cost of capital, an A-rated balance sheet, broader tenant diversification, and the ability to leverage economies of scale.”