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Realty Income to Buy Half-Billion-Dollar Net-Lease Portfolio
www.cpexecutive.com | 2013-12-23 17:25
Realty Income Corp. is closing the year with a bang. The company just announced that it has entered into a definitive agreement to acquire an 84-property portfolio of single-tenant net-leased retail and industrial real estate assets from Inland Diversified Real Estate Trust Inc. The price tag: $503 million.
The group of properties is 100 percent leased to 16 tenants and spans 22 states. In addition to assuming approximately $154 million of existing debt, Realty Income will shell out $349 million in cash for the assets.
It’s not every real estate company that can make that payment, but Realty Income is well-equipped. In October, the company expanded its unsecured acquisition credit facility by 50 percent, taking it from $1 billion to $1.5 billion.
Buying big has been a bit of a theme for Realty Income in 2013. At the beginning of the year, the company completed the $3 billion acquisition of American Realty Capital Trust.
For Inland Diversified, the disposition of the collection of net-lease properties paves the way for the final stage of the company’s national retail portfolio liquidity event.
If all goes as planned, the transaction will close in a series tranches during the first quarter of 2014. The first closing is on schedule for January.
As for the net-lease investment arena in general, it’s been a year of change.
“In a nutshell, the net-lease market in 2013 saw cap rate compression halt around mid-year and begin to slide upward,” Winston Orzechowski, research director with commercial real estate services firm Calkain Cos., told Commercial Property Executive. “And we expect cap rates to continue to increase in 2014 as higher interest rates come into play.”
The group of properties is 100 percent leased to 16 tenants and spans 22 states. In addition to assuming approximately $154 million of existing debt, Realty Income will shell out $349 million in cash for the assets.
It’s not every real estate company that can make that payment, but Realty Income is well-equipped. In October, the company expanded its unsecured acquisition credit facility by 50 percent, taking it from $1 billion to $1.5 billion.
Buying big has been a bit of a theme for Realty Income in 2013. At the beginning of the year, the company completed the $3 billion acquisition of American Realty Capital Trust.
For Inland Diversified, the disposition of the collection of net-lease properties paves the way for the final stage of the company’s national retail portfolio liquidity event.
If all goes as planned, the transaction will close in a series tranches during the first quarter of 2014. The first closing is on schedule for January.
As for the net-lease investment arena in general, it’s been a year of change.
“In a nutshell, the net-lease market in 2013 saw cap rate compression halt around mid-year and begin to slide upward,” Winston Orzechowski, research director with commercial real estate services firm Calkain Cos., told Commercial Property Executive. “And we expect cap rates to continue to increase in 2014 as higher interest rates come into play.”
