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Realty Income & Apollo Set to Form a Strategic Partnership
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Key Takeaways
Realty Income to form JV as Apollo invests $1B for a 49% stake in a net lease retail portfolio.
JV will hold single-tenant retail properties under long-term net leases.
Deal expected to close on March 31, 2026; O can use call option for Apollo stake from 7th through 15th year.
Realty Income Corporation (O - Free Report) 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%.
View the Zacks #1 Rank List
Image: Bigstock
Realty Income & Apollo Set to Form a Strategic Partnership
Key Takeaways
Realty Income Corporation (O - Free Report) 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%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the retail REIT sector are Kimco (KIM - Free Report) and Tanger, Inc. (SKT - Free Report) , 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.