- Real Estate Income Corp., a commercial real estate investment trust (REIT), announced it would purchase another REIT, Spirit Realty Capital, for $9.3 billion in an all-stock transaction .
- The deal gives Spirit shareholders 0.762 shares. of newly issued Realty Income shares for each Spirit share they own.
- The purchase price represents a 15.4% premium to Spirit's closing price Friday.
Realty Income Corp. (O), a commercial real estate investment trust (REIT), announced that it will acquire a single-tenant specialty REIT, Spirit Realty Capital (SRC), in an all-stock transaction valued at approximately $9.3 billion.
Under the terms of the agreement, Spirit investors will receive 0.762 shares of newly issued Realty Income stock for each Spirit Realty share they own. That would come to $37.34 per share, a 15.4% premium to the stock's closing price on Friday. Realty Income investors will own 87% of the combined company, with Spirit Realty shareholders owning the remainder.
The merger is expected to create an enterprise value of approximately $63 billion for the combined company, which Realty Income said would enhance the REIT's “size, scale and diversification to ;broaden its path for future growth”.
Sumit Roy, CEO of Realty Income, said the purchase would create “an immediate and significant increase in earnings,” which is expected to represent more than 2.5% of the company's annualized adjusted funds from operations per share .
Realty Income noted that 39;il& We will not rely on the capital markets to close the deal and will take over the existing debt with “low and in place rates”. The transaction is expected to be completed in the first quarter of next year.
The news sent shares by Realty Revenue fell Monday to its lowest level since the pandemic began in 2020. Shares of Spirit Realty Capital rose nearly 8%.
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