A Carmel Valley real estate investment firm has closed on $214.6 million sale and leaseback deals with a grocery store chain covering 10 properties in Spain.
Realty Income Corp. (NYSE O) and Carrefour with its real estate subsidiary, Carrefour Property, and is among $4.5 billion in real estate investments Realty Income expects to make in 2021, said Sumit Roy, president and CEO of Realty Income.
Carrefour is a multinational French food retailer with more than 12,000 stores around the world, according to the company’s website.
Most of Realty Income’s investments – about 91% prior to the Carrefour deal - are in the United States, including San Diego County, but Roy said Realty Income also owns property in the United Kingdom.
“We are predominantly a U.S. domiciled company,” Roy said, adding that the company for some time has aspired to have “a global footprint.”
The deal with Carrefour is Realty Income’s first venture in continental Europe with more likely, Roy said.
“All of Western Europe is fair game,” Roy said. “We’ve talked to the market about continuing to expand to Western Europe for a couple of quarters. This is basically a culmination of those discussions with the market.”
He said Realty Income is in discussions with other European companies but declined to give details.
“We’re not in a position to share that,” Roy said.
Built to Perform
About 84% of Realty Income’s investments are in retail, with about 11.5% in industrial property, 2.8% in office and 1.6% in agricultural property, according to the company’s website.
“When you think about retail, you immediately think about regional malls, shopping centers,” Roy said.
Those have suffered during the COVID pandemic and even before as ecommerce took hold and shopping habits changed.
Realty Income invests primarily in free-standing retail stores where sales have remained strong throughout the pandemic.
“Our real estate portfolio is built to perform through a variety of economic conditions,” Roy said. “We are big on convenience stores, grocery stores, drug stores – all of which performed fairly well, including dollar stores. All of those industries experienced positive tail winds during the pandemic.”
The emergence of COVID variants has been a bit of a setback, but Roy said he’s “fairly comfortable” that areas where Realty Income is invested “are well situated to address potential variants of COVID.”
“We feel the worst is behind us,” Roy said.
Founded in Escondido in 1969, Realty Income has posted positive earnings in 24 of the past 25 years, according to Roy.
“The exception was 2009 during the financial crisis. It’s a very consistent business model. Even last year, we were able to grow our earnings despite the pandemic at 2.1%,” Roy said. “We are a local company that in some ways is not very well known in the local market.”
Since 1994, Realty Income has delivered a compound average annual total shareholder return of 15.3%.
Calling itself “The Monthly Dividend Company,” Realty Income is a member of the S&P Dividend Aristocrats index, which is composed of companies that have increased their dividends every year for the past 25 years.
In May, Realty Income signed an agreement to acquire VERETT, Inc., a real estate investment trust based in Phoenix.
That all-stock transaction was estimated to be worth $11 billion.
As of June 30, Realty Income was valued at about $35 billion. When the VERETT deal is completed – expected by the end of the year – the company is expected to be valued at $50 billion.
Realty and VEREIT in August announced that Realty Income stockholders and VEREIT stockholders approved all of the proposals necessary for the closing of the transaction.
Looking ahead, Roy said that Realty Income is optimistic about its segment of the retail market and the overall economy.
“We are very hopeful. We think the economic growth in the U.S. and globally is stabilizing,” Roy said. “There are a lot of lessons learned during that will help businesses to continue to stay open.”
Realty Income Corp.
President and CEO: Sumit Roy
Headquarters: Carmel Valley
Business: Real estate investment trust
Revenue: $1.73 billion 2021; $1.65 billion 2020
Stock symbol: O NYSE
Notable: Realty Income has declared 615 consecutive common stock monthly dividends and has increased the dividend 112 times since its listing on the New York Stock Exchange in 1994.