Realty Income (O) announces international expansion with Sainsbury portfolio.
Realty Income Corp. (O) announced today that it is under contract to acquire 12 supermarket properties in the UK for £429 million. The properties are currently leased to J Sainsbury PLC, who will execute new 15-year triple-net leases as part of this transaction. The acquisition is expected to close in May 2019. Realty Income said that it expects to issue £300 million of 15-year debt to finance the acquisition, with 15-year currency swaps used to hedge the remaining equity component.
The Sainsbury portfolio acquisition represents Realty Income's initial step into the European property market. However, management noted that with annual single-tenant transaction volumes in the $30-$35 billion range, it expects to see attractive follow-on opportunities given Realty Income's "industry-leading scale, size and cost of capital." As part of the expansion effort, the company expects to establish a London office later this year.
A link to Realty Income's 51-page investor presentation is included here.