Realty Income has entered into a definitive agreement to acquire VEREIT in an all-stock transaction, paying about $11 billion for the REIT that would create a combined company with an enterprise value of $50 billion.
Under the terms of the agreement, VEREIT shareholders will receive 0.705 shares of Realty Income stock for every share of VEREIT stock they own.
Once the deal closes, the two REITs will spin off most of their office properties into one new, self-managed publicly traded REIT with Realty Income continuing as the surviving public entity.
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Realty Income will remain focused on single-tenant net lease retail and industrial properties in the US and UK.
Realty Income and former VEREIT shareholders are expected to own approximately 70% and 30%, respectively, of both Realty Income and the new REIT.
The transaction will provide diversification and growth opportunities for Realty Income, the company says, as well as debt refinancing opportunities.
"We believe the merger with VEREIT will generate immediate earnings accretion and value creation for Realty Income's shareholders while enhancing our ability to execute on our ambitious growth initiatives," said Sumit Roy, president and CEO of Realty Income says in prepared remarks. "VEREIT's real estate portfolio is highly complementary to ours, which we expect to further enhance the consistency and durability of our cash flows."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
