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Spirit Realty's stock rallies on $9 billion buyout by Realty Income Corp.

By Steve Gelsi

Spirit Realty Capital Inc.'s stock was up by 8% on Monday after it agreed to be acquired by Realty Income Corp. in a deal that values the Dallas-based real-estate-investment company at $9.3 billion.

The deal comes one trading day after Spirit Realty's stock closed at a three-year low.

Realty Income's stock (O) was down 5.5% to $46.40 in regular trading. The stock is on track for its lowest close since April 6, 2020, when it closed at $45.33 a share, according to Dow Jones Market Data. The stock is on pace for the largest percent decrease since June 11, 2020, when it fell 6.84%.

Realty Income has agreed to pay 0.762 newly issued Realty Income common shares for each Spirit Realty Capital (SRC) common share.

The buyout price for the company values Spirit Realty at $37.34 a share, a 15.4% premium over its $32.35-a-share close on Friday.

Realty Income is buying Spirit Realty's portfolio of 2,064 retail and industrial properties in 49 states. Spirit had a 99.8% occupied rate as of June 30.

About 39% of Realty Income's portfolio is in service retail, while about 26% is industrial and about 15% is in discretionary retail space. About 3% of its portfolio is office space, which has been impacted by lower demand due to employees working from home in the wake of the COVID-19 pandemic.

Realty Income said the deal will provide it with more than 2.5% accretion to its annualized adjusted funds from operations, or AFFO, per share.

Realty Income shareholders will own 87% of the combined company which will have a value of $63 billion. Spirit Realty shareholders will hold 13%.

The two real-estate companies expect the deal to close during the first quarter.

Also read: Blackstone sells Bellagio stake to Realty Income Corp. in post-COVID rebound

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

 

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10-30-23 1402ET

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