A Dallas-based real estate investor is being swallowed up by a major California-based real estate company in a $9.3 billion deal.
Spirit Realty Capital Inc. owns more than 2,000 properties across the country, most of which are retail stores and warehouses acquired from long-term building occupiers. Spirit Realty he relocated to Dallas from Arizona in 2015.
The largest share of the company's real estate is in Texas.
Spirit Realty has agreed to be acquired by San Diego-based Realty Income Corporation in an all-stock transaction. Realty Income operates the same net-lease real estate investment business and owns more than 13,000 properties, including stores and warehouses, across the United States and Europe.
The combined real estate investment trust would have an estimated value of $63 billion, which Realty Income officials say will provide greater growth opportunities.
“This transaction enhances the diversification and depth of our high-quality real estate portfolio and provides immediate and meaningful revenue accretion,” Sumit Roy, president and CEO of Realty Income, said in a statement. I look forward to what will happen.” “Spirit's assets are highly complementary to our existing portfolio and expand our investments in industries that are proven to generate sustainable cash flows over several economic cycles.
“We also believe this merger will strengthen our long-standing relationships with existing clients and enable us to select new clients with partners who can accelerate our growth ambitions along with our real estate revenue.”
Both Spirit Realty and Realty Income target retailers and other businesses looking to capture capital from the properties they own.
In 2021, Realty Income purchased a large warehouse in North Fort Worth that used to house an Amazon fulfillment center.
Spirit Realty collects approximately $695 million in annual rent from retailers such as Life Time Fitness, At Home, Dollar Tree, and Home Depot, which purchase real estate to occupy buildings on long-term leases. is being converted into cash.
Spirit Realty also owns more than 20 private golf and country clubs operated by Dallas-based Invited Clubs (formerly known as ClubCorp). In 2021, Spirit Realty acquired the popular Prestonwood Country Club in Far North Dallas from Club Corp.
“The merger with Realty Income will result in a more competitive cost of capital, an A-rated balance sheet, and extensive tenant diversification,” Jackson Hsieh, CEO of Spirit Realty, said in a statement. “By providing the ability to leverage economies of scale, we deliver immediate value to Spirit's shareholders.”
Under the terms of the merger agreement, Spirit Realty shareholders will be compensated with Realty Income stock. The transaction is expected to close in early 2024.
The acquisition of Spirit Realty does not require significant new debt. Realty Income will assume approximately $4.1 billion of existing Spirit debt at a weighted average interest rate of 3.48%.
After the merger, convenience stores will occupy the largest share of the properties of both companies. Approximately 15% of the combined company's rents will come from industrial real estate.
Real Estate Income has been in business for 54 years. Last year, the investor expanded into gaming real estate with his $1.7 billion acquisition of Wynn Encore Boston Harbor Resort and Casino.
After convenience stores, its largest holdings include supermarkets, 100-yen stores, hardware stores, and drug stores.
