Realty Income Secures $1 Billion Apollo Investment for 500-Asset Joint Venture
Realty Income secured a $1.0 billion equity investment from Apollo for a 49% stake in a joint venture owning roughly 500 U.S. single-tenant retail properties under long-term net leases. The arrangement has 100% permanent equity treatment and includes a call option to redeem Apollo’s stake with a capped 6.875% IRR.
1. Strategic Partnership and Joint Venture
Realty Income and Apollo have formed a joint venture in which Apollo provided $1 billion for a 49% equity interest in a portfolio of approximately 500 U.S. single-tenant retail properties under long-term net leases. Realty Income will continue to manage the assets and operate the portfolio.
2. Portfolio Composition and Financial Structure
The portfolio generates about $140 million in annualized base rent, with a weighted average remaining lease term of 9.1 years and 28% investment grade exposure. Top industries include dollar stores, quick service restaurants, drug stores, grocery and health & fitness operators.
3. Equity Treatment and Call Option
Rating agencies Moody’s and S&P granted the transaction 100% permanent equity treatment, and Realty Income holds a call option to redeem Apollo’s stake between years 7 and 15 at a price ensuring a 6.875% capped internal rate of return for Apollo. Future tranches will flex with long-term interest rates.