Realty Income to Merge With Vereit In All-Stock Transaction

Realty Income Corporation and Vereit Inc. have entered into a definitive merger agreement by which Realty Income will acquire Vereit in an all-stock transaction, creating a combined company with an enterprise value of approximately $50 billion. Under the terms of the agreement, Vereit shareholders will receive 0.705 shares of Realty Income stock for every share of Vereit stock they own.

Immediately following the closing, the companies expect to spin off of substantially all of the office properties of both companies into a new, self-managed, publicly-traded REIT (SpinCo). Following the merger and the spin-off, Realty Income will continue as the surviving public entity. Realty Income and former Vereit shareholders are expected to own approximately 70% and 30%, respectively, of both Realty Income and SpinCo.

“We believe the merger with Vereit will generate immediate earnings accretion and value creation for Realty Income’s shareholders while enhancing our ability to execute on our ambitious growth initiatives,” said Sumit Roy, president and CEO of Realty Income. “Together, our company will enjoy increased size, scale and diversification, continuing to distance Realty Income as the leader in the net lease industry. Vereit’s real estate portfolio is highly complementary to ours, which we expect to further enhance the consistency and durability of our cash flows.”

After giving pro-forma effect for the closing of the merger and assuming the anticipated spin-off of the office assets, Realty Income’s shareholders will own a diversified global portfolio of approximately 10,300 primarily single-tenant, net-lease commercial real estate properties located in 50 U.S. states, Puerto Rico and the U.K.

“The objective of our management team from initiation in 2015 was to revitalize Vereit and increase the value of the enterprise,” said Glenn Rufrano, CEO of Vereit. “We put an excellent team in place, enhanced the portfolio, created an investment-grade balance sheet and resolved all legacy issues. The board and management have concluded that a merger with Realty Income, the premier net lease company, will enable us to recognize the value created. The combined company provides all of our constituencies the opportunity to benefit from the advantageous cost of capital and growth potential generated by this transaction.”

Moelis & Company LLC is serving as lead financial advisor, Wells Fargo Securities is serving as financial advisor, and Latham & Watkins LLP is acting as legal advisor to Realty Income. J.P. Morgan Securities LLC is serving as exclusive financial advisor and Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Vereit.


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