Realty Income Corporation · NYSE:O
Realty Income — Merger or Acquisition (October 2023)
20 slides from Realty Income's merger presentation, Oct 30, 2023
Slide 1: Realty Income to Acquire Spirit Realty
Realty Income to Acquire Spirit Realty October 30, 2023
Slide 2: Cautionary Note Regarding Forward-Looking Statements
2 Cautionary Note Regarding Forward-Looking Statements This communication may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, the Private Securities Litigation Reform Act o
Slide 3: Participants in the Solicitation; Non-GAAP Financial Measures
3 Participants in the Solicitation Realty Income, Spirit and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Realty Income, i
Slide 4: Realty Income is the Global Leader in a Fragmented Net Lease Sector
Realty Income is the Global Leader in a Fragmented Net Lease Sector 4 76% Non-discretionary, Low Price Point and/or Service-oriented Retail 13% 2% 9% SIZE, SCALE AND QUALITY DIVERSIFIED REAL ESTATE PORTFOLIO enterprise value ~$54B annualized base rent ~$3.8B credit ratings by Moody’s & S&P A3 / A-ye
Slide 5: Transaction Structure
5 Transaction Structure • All-stock acquisition by Realty Income Corporation (“Realty Income”) of Spirit Realty Capital, Inc. (“Spirit”) • Spirit’s shareholders to receive 0.762 of a share of Realty Income for each Spirit common share • Pro forma ownership of ~87.5% for Realty Income’s shareholders
Slide 6: Transaction Rationale
6 Transaction Rationale 1 Immediate AFFO Accretion and Meaningful Anticipated Annual Cost Synergies • Transaction expected to be over 2.5% accretive to Realty Income AFFO per share • Expected annual synergies of approximately $50 million, or approximately $30 million excluding stock-based compensati
Slide 7: Immediate AFFO Accretion and Meaningful Anticipated Annual Cost Synergies
Immediate AFFO Accretion and Meaningful Anticipated Annual Cost Synergies 7 Multiple AFFO levers expected to drive over 2.5% AFFO per share accretion to shareholders on a leverage-neutral basis Below-Market Capital Stack Operating Cost Savings Multiple Differential Over 2.5% AFFO per share accretion
Slide 8: Attractive Capital Stack Requires No New Capital Raise to Fund the Acquisition
Attractive Capital Stack Requires No New Capital Raise to Fund the Acquisition 8 Sources: Commercial Real Estate Alert, Trepp. Note: Balance sheet data as of 6/30/2023. Market interest rate data as of 10/27/2023. The assumption of unsecured term loans, CMBS mortgages and swaps shall be subject to th
Slide 9: Spirit's Complementary Portfolio Aligns with Core Strategy
1.3% 1.5% 4.8% 12.1% 8.5% 6.4% 65.4% <$5M $5M-$20M $20M-$50M $50M-$200M $200M-$500M $500M-$1B >$1B Spirit’s Complementary Portfolio Aligns with Core Strategy 9 Source: Spirit public filings. Portfolio and financial data as of 6/30/2023. (1) Percentages based on ABR. (2) Represents corporate-level re
Slide 10: Spirit's Standalone Portfolio Primarily Comprised of Resilient Retail & Industrial
Spirit’s Standalone Portfolio Primarily Comprised of Resilient Retail & Industrial ABR $179M WALT (yrs) 12.4 RE Investments $2.5B 45.9% Distribution 43.9% Manufacturing 7.3% Industrial Outdoor Storage 3.1% Flex REPRESENTATIVE CLIENTS 60.9% Service RESILIENT RETAIL PORTFOLIO(1) 17.7% Non-Discretionar
Slide 11: Further Diversifies Portfolio and Increases Investment Capacity
∆ 3.4% 3.4% 3.0% 2.7% 2.3% 2.2% 2.1% 1.9% 1.7% 1.6% 1.6% 1.6% 1.4% 1.3% 1.3% 1.1% 1.1% 1.1% 1.1% 1.0% (0.4%) (0.4%) (0.2%) (0.5%) (0.4%) (0.4%) (0.2%) 0.4% 0.1% (0.2%) (0.3%) (0.3%) (0.1%) (0.2%) (0.1%) (0.1%) (0.1%) 0.1% (0.2%) (0.1%) ∆ Further Diversifies Portfolio and Increases Investment Capacit
Slide 12: Bottom-Up Underwriting Gives Confidence in Portfolio's Potential
Bottom-Up Underwriting Gives Confidence in Portfolio’s Potential 12 4 Financial data per reported filings as of 6/30/2023. (1) Percentages based on ABR. 1 Benchmarked assets with reported performance against Realty Income’s portfolio and historical outcomes(1) • Substantial visibility into property
Slide 13: Maintains Best-In-Class Credit Profile and Balance Sheet Flexibility
Maintains Best-In-Class Credit Profile and Balance Sheet Flexibility 13 Source: FactSet. Market data as of 10/27/2023; foreign exchange rates, balance sheet and financial data per reported filings as of 6/30/2023, adjusted for €1.1 billion Euro bond issuance and additional $200 million term loan at
Slide 14: Well-Staggered Maturities with Manageable Near-Term Refinancing Need
$1,094 $3,166 $2,048 $2,051 $1,101 $1,888 $950 $1,888 $868 $800 $300 $800 $450 $400 $500 $454 $350 $137 $1,841 $1,894 $4,333 $2,848 $2,501 $1,501 $2,388 $1,404 $2,238 $1,445 $2,265 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Thereafter Foreign exchange rates, balance sheet and financial d
Slide 15: Combined Portfolio Creates Significant Balance Sheet Scale, Capacity and Resilience
Combined Portfolio Creates Significant Balance Sheet Scale, Capacity and Resilience 15 Source: FactSet. Market data as of 10/27/2023; foreign exchange rates, balance sheet and financial data of 6/30/2023, adjusted for €1.1 billion Euro bond issuance and additional $200 million term loan at fixed rat
Slide 16: Benefits of Scale and Size: Growth Optionality
Combined Financial data as of 6/30/2023. Dollars in millions. Note: Metrics include non-GAAP measures that could be calculated differently by each company. (1) Based on illustrative 7% acquisition cap rate. 16 Benefits of Scale and Size: Growth Optionality Unmatched capacity to buy large portfolios
Slide 17: Benefits of Scale and Size: Corporate Efficiency
Source: Public filings. Financial data as of 6/30/2023. Note: Metrics include non-GAAP measures that could be calculated differently by each company. (1) Based on 2Q 2023 G&A divided by total revenue, excluding rental revenue (reimbursable). (2) Adjusted EBITDA based on total revenue less property e
Slide 18: Realty Income Moves Up in the S&P 500, Expanding Access to Capital
$62.2 $63.0 $63.3 $63.3 $63.7 $63.7 $64.1 153 152 150 151 149 148 147 $53.3 $53.9 $53.9 $54.1 $54.4 $54.8 $55.3 178 177 176 175 174 173 172 Realty Income Moves Up in the S&P 500, Expanding Access to Capital 18 Source: FactSet. Notes: TEV in billions of USD; Combined based on 0.762x exchange ratio an
Slide 19: Realty Income Becomes One of the Largest REITs in the S&P 500
$154.3 $188.8 $191.7 $255.1 $260.1 $261.9 $266.4 $303.9 10 9 8 7 6 5 4 2 $51.6 $54.1 $56.9 $58.2 $63.3 $70.4 $82.8 $124.2 5 9 8 4 6 10 3 1 Realty Income Becomes One of the Largest REITs in the S&P 500 19 Source: FactSet. Notes: TEV in billions of USD; volumes in millions of USD; Combined based on 0.
Slide 20: Conservative Underwriting of Credit and Real Estate to Retain Upside
4 Conservative Underwriting of Credit and Real Estate to Retain Upside 20 1 2 3 6 Immediate AFFO Accretion and Meaningful Anticipated Annual Cost Synergies Complementary Portfolio Exposure Improves Diversification and Increases Investment Capacity Across Key Industries and Clients 5 Preserves Best-i