ESCONDIDO, CALIF. — Escondido-based REIT Realty Income Corp. (RIC) has signed a definitive agreement to purchase a portfolio of single-tenant, net-leased properties for approximately $544 million. The portfolio contains 33 properties totaling 3.8 million square feet that are located in 17 states.
While the vast majority of RIC's holdings are retail properties, a majority of this portfolio contains other property types. Distribution properties make up 34 percent of the portfolio's lease revenue, with tenants that include Aviall Services, Caterpillar, FedEx Corp. and International Paper. Manufacturing properties make up 8 percent of the portfolio's revenue, with tenants that include Coca-Cola and MeadWestvaco Corporation. Office properties make up 25 percent of the leasing revenue, with tenants that include Fiserv Inc., Novus International, Solae and T-Mobile USA. The final one-third of the portfolio comprises retail properties, with tenants that include AMC Theatres, Cinemark Theatres, Regal Cinemas and Walgreens. The portfolio has an average remaining lease term of more than 11 years.
RIC will fund the purchase with cash on hand as well as through its revolving credit facility. The majority of the properties will close during the first half of the year. In a statement, Realty Income CEO Tom Lewis states that the portfolio contains $291 million in existing mortgage debt. His company anticipates paying off $223 million of the debt at closing or shortly thereafter. The remaining $68 million will be paid off as soon as prepayment penalties and other costs make it feasible to do so.
Following closing, approximately 86.1 percent of RIC's pro forma rental revenue will come from retail properties. The remaining revenue will come from industrial properties (7 percent), agricultural properties (4.3 percent) and office properties (2.6 percent). The REIT controls a portfolio of 2,500 properties located nationwide.
— Coleman Wood