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Realty Income Forms Joint Venture: Can Data Centers Lift Growth?
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Key Takeaways
Realty Income formed a joint venture to invest in stabilized hyperscale data centers with long-term leases.
O plans up to $1.4B for the venture, with about $700M of initial funding in Q2 and Q3 2026.
Realty Income will first acquire a 45% stake in a fully leased Northern Virginia hyperscale data center.
Realty Income Corporation (O - Free Report) is expanding its presence in the data centers through a new joint venture with Cloud Capital, its affiliates, and a global institutional investor. The venture will target stabilized hyperscale assets leased to investment-grade tenants under long-term triple-net leases.
The first move is the planned acquisition of three data center assets in key markets. Realty Income will initially acquire a 45% stake in the first asset, a fully leased hyperscale data center in Northern Virginia’s “data center alley,” one of the most active data center markets in the United States.
The company expects to invest up to $1.4 billion in the venture over time, with about $700 million of initial funding planned for the second and third quarters of 2026. The structure gives Realty Income room to pursue additional qualifying data center developments and acquisitions in the United States and Europe.
The deal also fits Realty Income’s broader push beyond traditional retail real estate. Its investor presentation lists data centers as part of a roughly $14 trillion total addressable market across core and high-growth sectors, and notes existing exposure through a build-to-suit joint venture with Digital Realty.
Realty Income enters this expansion with scale behind it. As of March 31, 2026, the company owned 15,571 properties, served 1,786 clients across 92 industries, had a 98.9% occupancy rate and generated about $5.2 billion in annualized base rent, giving it a large platform for this newer asset class.
How Are Other Retail REITs Partnering?
Simon Property Group (SPG - Free Report) is using partnerships to widen its retail ecosystem, combining ownership stakes, platform investments and brand alliances to drive traffic, redevelopment and mixed-use demand. Its ties with Catalyst, Rue Gilt Groupe and Jamestown support its retail, e-commerce and real estate capabilities. In first-quarter 2026, total portfolio NOI rose 6.7%.
Kimco Realty (KIM - Free Report) partnership approach centers on capital-light growth through joint ventures, institutional relationships and structured investments that expand its grocery-anchored, mixed-use platform without overburdening the balance sheet. These arrangements support residential densification, redevelopment and higher-yield financing opportunities across U.S. markets. In the first quarter of 2026, Kimco invested $76.4 million in structured investments.
O’s Price Performance, Valuation and Estimates
Shares of Realty Income have gained 8.5% in the past six months, underperforming the industry’s growth of 21%.
Image Source: Zacks Investment Research
From a valuation standpoint, O trades at a forward 12-month price-to-FFO of 13.71, below the industry but ahead of its one-year median of 13.60. It carries a Value Score of C.
Image Source: Zacks Investment Research
Over the past 30 days, estimates for O’s 2026 FFO per share have been revised upward to $4.45, while estimates for 2027 have been revised upward to $4.59.
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.
View the Zacks #1 Rank List
Image: Bigstock
Realty Income Forms Joint Venture: Can Data Centers Lift Growth?
Key Takeaways
Realty Income Corporation (O - Free Report) is expanding its presence in the data centers through a new joint venture with Cloud Capital, its affiliates, and a global institutional investor. The venture will target stabilized hyperscale assets leased to investment-grade tenants under long-term triple-net leases.
The first move is the planned acquisition of three data center assets in key markets. Realty Income will initially acquire a 45% stake in the first asset, a fully leased hyperscale data center in Northern Virginia’s “data center alley,” one of the most active data center markets in the United States.
The company expects to invest up to $1.4 billion in the venture over time, with about $700 million of initial funding planned for the second and third quarters of 2026. The structure gives Realty Income room to pursue additional qualifying data center developments and acquisitions in the United States and Europe.
The deal also fits Realty Income’s broader push beyond traditional retail real estate. Its investor presentation lists data centers as part of a roughly $14 trillion total addressable market across core and high-growth sectors, and notes existing exposure through a build-to-suit joint venture with Digital Realty.
Realty Income enters this expansion with scale behind it. As of March 31, 2026, the company owned 15,571 properties, served 1,786 clients across 92 industries, had a 98.9% occupancy rate and generated about $5.2 billion in annualized base rent, giving it a large platform for this newer asset class.
How Are Other Retail REITs Partnering?
Simon Property Group (SPG - Free Report) is using partnerships to widen its retail ecosystem, combining ownership stakes, platform investments and brand alliances to drive traffic, redevelopment and mixed-use demand. Its ties with Catalyst, Rue Gilt Groupe and Jamestown support its retail, e-commerce and real estate capabilities. In first-quarter 2026, total portfolio NOI rose 6.7%.
Kimco Realty (KIM - Free Report) partnership approach centers on capital-light growth through joint ventures, institutional relationships and structured investments that expand its grocery-anchored, mixed-use platform without overburdening the balance sheet. These arrangements support residential densification, redevelopment and higher-yield financing opportunities across U.S. markets. In the first quarter of 2026, Kimco invested $76.4 million in structured investments.
O’s Price Performance, Valuation and Estimates
Shares of Realty Income have gained 8.5% in the past six months, underperforming the industry’s growth of 21%.
Image Source: Zacks Investment Research
From a valuation standpoint, O trades at a forward 12-month price-to-FFO of 13.71, below the industry but ahead of its one-year median of 13.60. It carries a Value Score of C.
Image Source: Zacks Investment Research
Over the past 30 days, estimates for O’s 2026 FFO per share have been revised upward to $4.45, while estimates for 2027 have been revised upward to $4.59.
Image Source: Zacks Investment Research
Realty Income currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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.