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Realty Income (O) Debuts in Spain With Carrefour Transaction

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Realty Income Corporation (O - Free Report) is focused on growth through exploring accretive acquisition opportunities. The company recently expanded into continental Europe with a €93-million strategic sale-leaseback transaction in Spain.

The move, which marks the company’s “debut strategic expansion into Spain”, comprises seven properties under long-term net lease agreements with Carrefour and its real estate subsidiary Carrefour Property.

According to Sumit Roy, president and chief executive officer of Realty Income, the move “represents a natural evolution of our international growth strategy with leading clients."

The company’s latest move is a strategic fit as Carrefour enjoys the second-highest grocery market share in Spain. In fact, it has emerged as the eighth largest retailer in the world, operating more than 13,000 stores with different formats across more than 30 countries. Its non-discretionary business model comprises an omni-channel strategy, helping achieve resiliency through various economic cycles. Even amid the turbulence in the industry, its same-store sales increased 7.8% in 2020.

Therefore, this tie-up with Europe's largest food retailer aligns with the company’s investment strategy of partnering with prominent operators in industries enjoying consistent sales trends throughout the different economic cycles and having limited cash flow volatility.

The solid property acquisition volume at the decent investment spreads has played a key role in boosting the company’s performance. During first-half 2021, Realty Income invested $2.16 billion in 254 properties and properties under development or expansion. This included $994.8 million in U.K. properties.

Additionally, in August, Realty Income also inched closer to the VEREIT Inc. merger with its shareholders and VEREIT stockholders approving all of the proposals essential for the deal’s closure. The merger is expected to close during fourth-quarter 2021. The combined entity is poised to benefit from the enhanced size, scale, diversification and synergies, particularly through the accretive debt-refinancing opportunities.

Shares of this Zacks Rank #2 (Buy) company have gained 1.4% so far in the quarter compared with the industry’s rally of 0.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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