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Realty Income Says Large Institutional Buyers Seek Single Tenant Assets in Europe


During the first quarter, Realty Income Corp. invested approximately $520 million in high-quality real estate and investment spread, well above the company’s historical average. According to the firm’s CEO, Sumit Roy, the company continues to see ample transaction flow that meets its investment parameters. “Subsequent to quarter end, we announced our international expansion through a GBP429 million sale leaseback transaction in the UK with Sainsbury’s under long-term triple-net leases,” he said on the firm’s Q1 earnings call.

“This represents a natural evolution of our Company’s strategy and we will continue to grow our international platform as we are well-positioned to capitalize on a significant addressable market in the UK and mainland Europe,” he said. “From a strategic standpoint, we believe there is a dearth of large institutional buyers pursuing the quality of single tenant net leased assets in Europe that we intend to invest in. Given our portable size, scale and cost of capital advantages, we believe we have a unique ability to execute sizable portfolio transactions with best-in-class operators.”

This transaction was relationship-driven and was completed on an off-market negotiated basis, he added. “We look forward to further developing relationships with other industry leaders like Sainsbury’s as we expand our international platform. Concurrent with the announcement of our sale leaseback transaction with Sainsbury’s, we increased our 2019 AFFO per share guidance to a range of $3.28 to $3.33 from a prior range of $3.25 to $3.31 and we increased our 2019 acquisition guidance to a range of $2 billion to $2.5 billion.”

He pointed out that the REIT’s portfolio continues to be diversified by tenant, industry, geography and to a certain extent property type, which contributes to the stability of the company’s cash flow. “At quarter end, our properties were leased to 261 commercial tenants in 48 different industries located in 49 states and Puerto Rico. 82% of our rental revenue is from our traditional retail properties. The largest component outside of retail is industrial properties at nearly 12% of rental revenue.”