Realty Income Corporation and Spirit Realty Capital have entered into a definitive merger agreement under which Realty Income will acquire Spirit in an all-stock transaction valued at an enterprise value of approximately $9.3 billion.
No new external capital is expected to be required to finance the transaction, said Realty Income in a statement.
The merger, once completed, will result in an enterprise value of approximately $63 billion for the combined company.
Under the terms of the merger agreement, Spirit shareholders will receive 0.762 newly-issued Realty Income common shares for each Spirit common share they own. At closing, this will result in Realty Income and Spirit shareholders owning approximately 87% and 13%, respectively, of the combined company.
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.
“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 Chief Executive Officer of Realty Income.
“We expect that this transaction will create immediate and meaningful earnings accretion, while enhancing the diversification and depth of our high-quality real estate portfolio. 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. Moreover, our technology and infrastructure investments following the VEREIT merger in 2021 have amplified our efficiency in integrating assets and augmented our capabilities in maximizing the value of our properties.”
Jackson Hsieh, President and Chief Executive Officer of Spirit Realty said, “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.”
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