Realty Income Agrees to Acquire 185-Property Retail Portfolio from CIM for $894 Million

by Hayden Spiess

San Diego — Realty Income Corp. (NYSE: O), a publicly traded REIT, has agreed to acquire up to 185 single-tenant retail and industrial properties from subsidiaries of CIM Real Estate Finance Trust Inc. for approximately $894 million.

The exact composition of the portfolio depends on completion of due diligence and the potential exercise of rights of first refusal related to certain properties. If the entire 185 properties are included, the transaction will represent a 7.1 percent capitalization rate.

“We believe the deployment of net sales proceeds will continue to advance our program to generate sustainable and increasing dividends for our shareholders through earnings growth,” says Richard Ressler, president, CEO and chairman of CIM Real Estate Finance Trust. “Additionally, this transaction increases our flexibility as we seek to capitalize on investment opportunities resulting from the current market environment.”

The properties feature a weighted average remaining lease term of approximately 9.2 years with approximately 48 percent of the portfolio’s annualized contractual rent derived from investment-grade rated clients.

The properties total 4.6 million square feet, with 55 retail clients representing 95 percent of the total portfolio rent. The remaining 5 percent comes from four industrial clients.

The top two renters in the portfolio are Lowe’s Home Improvement and Walgreens, which represent 11.9 percent and 7.6 percent of the total portfolio rent, respectively. Other major tenants include 20 Bob Evans restaurant locations, 10 CVS pharmacies, five Hobby Lobby stores and five Kroger grocery stores.

The top three industries represented by projected total portfolio rent are drug stores at 12.1 percent, home improvement at 12.1 percent and grocery at 11.9 percent. The top two states by projected total portfolio rent are Texas with 10.2 percent and Illinois with 9 percent.

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

CIM Real Estate Finance Trust is a public, non-listed REIT. Affiliates of CIM Group manage the company.

San Diego-based Realty Income’s stock price opened at $63.86 per share on Tuesday, Jan. 3, down from $71.41 one year ago.

Kari Lloyd

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