Realty Income Buys 185 Retail, Industrial Assets for $894M

Realty Income has signed a definitive agreement to acquire up to 185 single-tenant retail and industrial properties from subsidiaries of CIM Real Estate Finance Trust for $894 million in cash. CIM Real Estate Finance Trust is a non-listed REIT which is sponsored by an affiliate of CIM Group.

The portfolio has a weighted average remaining lease term of approximately 9.2 years with approximately 48% of total portfolio annualized contractual rent coming from investment-grade rated clients.

This is Realty Income’s fourth portfolio transaction with CIM, according to CEO Sumit Roy.

The portfolio consists of 4.6 million square feet, leased to 55 retail clients who represent 95% of the annualized contractual rent and four industrial clients who represent the remaining 5%. Lowe’s Home Improvement and Walgreens are the top two clients by projected total portfolio annualized contractual rent, at 11.9% and 7.6%, respectively.

Drug stores, home improvement, and the grocery categories are expected to represent the top three industries at 12.1%, 12.1%, and 11.9% of portfolio rent, respectively. Texas and Illinois are the top two states at 10.2% and 9.0%, respectively.

The transaction is expected to close in the first quarter of 2023, subject to customary closing conditions, approvals and the completion of due diligence.

A Strong Year for Acquisitions 

Realty Income had a strong 2022 for deals, according to its most recent earnings report, acquiring $1.9 billion in the third quarter for approximately $5.1 billion in acquisitions year to date, Roy said during the Nov. 3 earnings call. 

“A significant portion of the properties purchased in Q3 were part of portfolio deals or large transactions,” he said. “We believe these deals were accessible to us because of our size, scale, relationships, ability to close, access to and cost of capital together with our research and technology-driven analytic capabilities.”