Realty Income Corporation O announced that Apollo-managed funds and affiliates plan to invest $1 billion in Realty Income. This investment will secure a 49% interest in a new joint venture (JV) entity that is expected to own a diversified portfolio of single-tenant retail properties under long-term net leases. Subject to finalization and execution of the documentation and customary closing conditions, the deal is expected to close on March 31, 2026.
The JV represents a key pillar of Realty Income's private capital initiative, aimed at broadening the company's funding options and complementing its access to the public equity markets. Realty Income expects that this long-term partnership with Apollo will deliver a flexible source of equity for investing in stabilized assets over the long term, all while maintaining a healthy balance sheet and financial flexibility.
As of December 31, 2025, the anticipated portfolio features approximately 500 U.S. retail properties with $140 million in cash annualized base rent, a weighted average remaining lease term of 9.1 years, and 28% investment grade. It also shows a compound annual contractual growth rate of 1%. The portfolio comprises the top five industries, comprising, Dollar Stores, Quick Service Restaurants, Drug Stores, Grocery and Health & Fitness. These metrics are subject to finalization and may change based on the final composition of the portfolio.
Realty Income will continue to manage the portfolio of these retail properties under a long-term management agreement. The portfolio will benefit from reliable contractual cash flows, bolstered by the company's operating platform and long-standing asset management expertise.
Realty Income holds the right to call and redeem Apollo's equity interest in the joint venture from year 7 through year 15, with the future call price calculated to ensure a capped IRR of 6.875% to Apollo during its ownership period.
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 8.6% compared with the industry's rise of 13.5%.
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Stocks to Consider
Some better-ranked stocks from the retail REIT sector are Kimco KIM and Tanger, Inc. SKT, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for KIM’s 2026 FFO per share has moved 2 cents northward to $1.81 over the past two months.
The consensus estimate for SKT’s 2026 FFO per share has moved 3 cents upward to $2.46 over the past month.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
