Realty Income Corporation has signed a definitive agreement to acquire 454 single-tenant retail properties from CIM Real Estate Finance Trust, Inc. (“CMFT”), a publicly registered non-listed real estate investment trust (“REIT”) which is sponsored by an affiliate of CIM Group, for approximately $1.25 billion in cash.
The transaction is expected to close in various tranches with the acquisition of most of the properties in the portfolio expected to close in 2019, subject to customary closing conditions.
The transaction is expected to be executed at an approximate 7% cash cap rate, resulting in an investment spread relative to our first-year weighted average cost of capital well above the company’s historical average.
The portfolio carries a weighted average remaining lease term of 9.7 years and generates 58% of total rental revenue from investment-grade rated companies or their subsidiaries.
The 454 single-tenant properties are 100% leased to 59 different tenants across 20 industries and encompass approximately 5.1 million gross rentable square feet across 41 states. Notable tenants include Dollar General, Walgreens, Dollar Tree/Family Dollar and United Oil.
“This transaction is additive to our existing high-quality real estate portfolio and is immediately accretive on a leverageneutral basis. We believe this portfolio acquisition demonstrates the importance of size and scale as a competitive advantage in the net lease industry,” said Sumit Roy, Realty Income’s President & Chief Executive Officer.
“As the largest company in the net lease REIT sector, we believe we are uniquely positioned to integrate sizeable transactions with minimal impact to our existing tenant and industry concentrations and our overall portfolio risk profile. As a result of this transaction, we are increasing our 2019 acquisition guidance and 2019 AFFO per share guidance. We intend to finance the acquisition using our $3.0 billion revolving credit facility, which currently has approximately $2.8 billion of available capacity,” he added.
Upon completion of the acquisition, Realty Income expects to assume existing mortgage debt totaling approximately $131 million at a weighted average interest rate of 4.5% and a weighted average remaining term to maturity of 5.3 years.