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Realty Income (O) Accomplishes Spin-off of Office Assets

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Realty Income (O - Free Report) has announced the completion of the spin-off of Orion Office REIT Inc. (ONL - Free Report) . The move comes as part of Realty Income’s merger with VEREIT, Inc. and its plan of the subsequent spin-off of all the office assets from Realty Income and VEREIT into a new independent publicly traded REIT.

Per the spin-off terms, for every 10 shares of Realty Income common stock held as of the record date of Nov 2, 2021, stockholders of Realty Income received one share of the ONL common stock. In lieu of fractional shares, Realty Income common stockholders will receive cash.

Realty Income announced the closing of the merger with VEREIT on Nov 1. The combined entity is poised to benefit from the enhanced size, scale, diversification and synergies. Also, the spin-off streamlines the company’s business.

During third-quarter earnings, incorporating this merger and the spin-off of office assets, management raised its adjusted funds from operations (AFFO) per share guidance. Management projected 2021 AFFO per share at $3.55 to $3.60, suggesting an increase of 5.5% annual growth based on the mid-point. Realty Income’s AFFO per share includes the increased acquisition guidance of more than $5 billion.

Realty Income also forecast 2022 AFFO per share at $3.84 to $3.97, indicating 9.2% annual growth based on the mid-point.

With the top industries selling essential goods and services, accretive buyouts and a robust balance-sheet position, Realty Income is well poised to grow. Yet, store closures and bankruptcies are concerns. While these situations are improving, any disruption from COVID-19 variants might impact the recovery.

Shares of Zacks Rank #2 (Buy) O have gained 8.8% in the past six months compared with the industry’s rally of 6.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment ResearchImage Source: Zacks Investment Research

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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.