Realty Income (NYSE: O) has announced it will acquire VEREIT (NYSE: VER) in an all stock transaction worth approximately $11 billion. Following the transaction, the two REITs will have an enterprise value of about $50 billion and be the sixth largest REIT in the MSCI US REIT Index by market cap.
The two REITs have announced plans to spin off their office portfolios into a separate company after the deal closes, limiting exposure to the struggling asset class and allowing them to focus on net-lease and industrial properties. The deal is also expected to be 10% accretive to Realty Income’s AFFO per share within the first year.
Realty Income is also expecting to derive significant long term benefits from its superior credit credit rating. The company is hoping to utilize this advantage to refinance much of VEREIT’s debt at lower rates, enhancing long-term profitability.
The deal is expected to close in the fourth quarter of 2021.