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OFFON

REALTY INCOME CORPORATION

(O)
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REALTY INCOME : Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K/A)

06/04/2021 | 06:22am EDT

Item 1.01 Entry Into a Material Definitive Agreement.



The Transactions


On April 29, 2021, Realty Income Corporation, a Maryland corporation ("Realty Income" or "the Company"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Rams MD Subsidiary I, Inc., a Maryland corporation and a direct wholly owned subsidiary of Realty Income ("Merger Sub 1"), Rams Acquisition Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of the Company ("Merger Sub 2"), VEREIT, Inc., a Maryland corporation ("VEREIT") and VEREIT Operating Partnership, L.P., a Delaware limited partnership ("VEREIT OP"). The Merger Agreement provides for the merger of Merger Sub 2 with and into VEREIT OP with VEREIT OP surviving as a wholly owned subsidiary of Realty Income (the "Partnership Merger") and, immediately following the Partnership Merger, the Merger Agreement provides for the merger of VEREIT with and into Merger Sub 1 (the "Merger" and together with the Partnership Merger, the "Mergers"), with Merger Sub 1 surviving as a wholly owned subsidiary of Realty Income.



Merger Agreement



The Merger


Pursuant to the terms and subject to the conditions of the Merger Agreement, at the date and time the Merger becomes effective (the "Effective Time"), (i) each share of VEREIT common stock, par value $0.01 per share (the "VEREIT Common Stock") will automatically be converted into a number of newly issued shares of Realty Income Common Stock equal to 0.705 (the "Exchange Ratio") of a newly issued share of common stock, par value $0.01 per share, of Realty Income ("Realty Income Common Stock") for each share of VEREIT Common Stock, subject to adjustment as provided in the Merger Agreement and (ii) each share of VEREIT Series F Preferred Stock issued and outstanding immediately prior to the Effective Time will automatically be cancelled and retired and shall cease to exist, but the holders of such shares will retain the right to receive the Series F Preferred Stock Redemption Amount (as defined below) on the redemption date set forth in the Series F Preferred Stock Redemption Notice (as defined below). Holders of shares of VEREIT Common Stock will receive cash in lieu of fractional shares.

Immediately prior to the Mergers, VEREIT will issue a notice of redemption (the "Series F Preferred Stock Redemption Notice") with respect to all of the outstanding shares of VEREIT Series F Preferred Stock with a redemption date as set forth in the Series F Preferred Stock Redemption Notice, and Realty Income will cause funds to be deposited in escrow to pay the redemption price for each share of VEREIT Series F Preferred Stock at the liquidation preference of $25.00 plus all accrued and unpaid dividends up to and including the redemption date set forth in the Series F Preferred Stock Redemption Notice (such amount, the "Series F Preferred Stock Redemption Amount").



The Partnership Merger


Pursuant to the terms and subject to the conditions of the Merger Agreement,, at the date and time the Partnership Merger becomes effective (the "Partnership Merger Effective Time"), (i) each outstanding VEREIT OP Common Unit (as defined in the Merger Agreement) owned by VEREIT immediately prior to the Partnership Merger Effective Time, subject to the terms and conditions set forth in the Merger Agreement, will remain outstanding as a common unit of partnership interest in the surviving entity, and (ii) each outstanding VEREIT OP Common Unit owned by a partner of the VEREIT OP other than VEREIT (each such partner, a "VEREIT OP Minority Partner") that is issued and outstanding immediately prior to the Partnership Merger Effective Time, subject to the terms and conditions set forth in the Merger Agreement, will be converted into the number of newly issued shares of Realty Income Common Stock equal to the Exchange Ratio, subject to adjustment as provided in the Merger Agreement, (iii) each outstanding VEREIT Series F Preferred Unit that is issued and outstanding immediately prior to the Partnership Merger Effective Time (other than VEREIT OP Series F Preferred Units owned by VEREIT), subject to the terms and conditions of the Merger Agreement, will be converted into the right to receive $25.00, plus all accumulated and unpaid distributions to and including the redemption date that is set forth in the Series F Preferred Stock Redemption Notice (the "Series F Preferred Unit Redemption Amount"), and (iv) each VEREIT OP Series F Preferred Unit owned by VEREIT that is issued and outstanding immediately prior to the Partnership Merger Effective Time, subject to the terms and conditions of the Merger Agreement, will remain outstanding as one Series F Preferred Unit or the surviving entity. The VEREIT OP Minority Partners will receive cash in lieu of fractional shares.

Treatment of Equity Awards



Pursuant to the terms and subject to the conditions of the Merger Agreement, as of the Effective Time, each outstanding VEREIT equity-based award will be treated as follows: (i) each VEREIT stock option that is outstanding and unexercised as of immediately prior to the Effective Time will be converted into a Realty Income stock option to purchase a number of shares of Realty Income Common Stock (rounded down to the nearest whole number of shares) equal to the product obtained by multiplying the number of shares of VEREIT Common Stock subject to such VEREIT stock option by the Exchange Ratio, at an exercise price per share of Realty Income Common Stock (rounded up to the nearest whole cent) equal to the quotient obtained by dividing the exercise price per share of VEREIT Common Stock of such VEREIT stock option by the Exchange Ratio; (ii) each award of VEREIT restricted stock units that is outstanding as of immediately prior to the Effective Time will be converted into a Realty Income restricted stock unit award with respect to a number of whole shares of Realty Income Common Stock (rounded to the nearest whole number of shares) equal to the product obtained by multiplying (A) (1) for time-based restricted stock units, the number of shares of VEREIT Common Stock subject to such restricted stock unit award as of immediately prior to the Effective Time or (2) for performance-based restricted stock units, the number of shares of VEREIT Common Stock subject to such performance-based restricted stock unit award determined based on actual level of achievement of the applicable performance goals as of immediately prior to the Effective Time (in accordance with the applicable award agreement and the terms of the Merger Agreement) by (B) the Exchange Ratio, and will be credited with a dividend equivalent balance that is equal to the dividend equivalent balance credited on the corresponding VEREIT restricted stock units as of immediately prior to the Effective Time; and (iii) each VEREIT deferred stock unit award that is outstanding as of immediately prior to the Effective Time will generally be converted into the right to receive the number of share of Realty Income Common Stock equal to the product obtained by multiplying the Exchange Ratio by the number of shares underlying such award. Each converted award will continue to be subject to the same vesting and other terms and conditions as applied to the corresponding VEREIT award as of immediately prior to the Effective Time, except that Realty Income restricted stock units resulting from the conversion of performance-based VEREIT restricted stock units will, following the Effective Time, be subject to the time-vesting conditions applicable to the performance-based VEREIT restricted stock units, but will no longer be subject to performance-vesting conditions.

Contemplated Spin-Off of Office Properties

It is contemplated that after the Effective Time, subject to the terms and conditions of the Merger Agreement, Realty Income and VEREIT will contribute certain of their office real properties (the "OfficeCo Business") to a newly formed wholly owned subsidiary of Realty Income ("OfficeCo"), and Realty Income will distribute all of the outstanding voting shares of common stock in OfficeCo to Realty Income's shareholders (which, at that time, would also include the VEREIT stockholders as a result of the Merger) on a pro rata basis (the "Spin-Off"). Following the consummation of the Spin-Off, Realty Income and VEREIT intend for OfficeCo to operate as a separate, publicly-traded REIT. Subject to the terms and conditions of the Merger Agreement, the parties may also seek to sell some or all of the OfficeCo Business in connection with the closing of the Mergers.




Certain Governance Matters



The Merger Agreement provides that the boards of directors of Realty Income and VEREIT will mutually select two members of the VEREIT board of directors who will be appointed to the Realty Income board of directors immediately following the Effective Time. After the Effective Time, the parties intend to maintain the office of VEREIT located in Phoenix, Arizona for at least seven (7) years from the date of the Merger Agreement.

Certain Other Terms and Conditions of the Merger Agreement

The Merger Agreement contains customary representations and warranties from each of Realty Income and VEREIT. VEREIT has agreed to customary pre-closing covenants, including covenants to use commercially reasonable efforts to operate its business in the ordinary course and to refrain from taking certain actions without Realty Income's consent. Realty Income has agreed to customary pre-closing covenants, including a more limited set of covenants to refrain from taking certain actions without VEREIT's consent. Each party has agreed to additional covenants, including, among others, covenants . . .

Item 7.01 Regulation FD Disclosure.

In connection with the announcement of the Merger Agreement, Realty Income and VEREIT provided information regarding the proposed transaction in connection with presentations to analysts and investors. The updated information made available in connection with the presentations is furnished as Exhibit 99.1 hereto and incorporated by reference in this Item 7.01.

The foregoing information in this Item 7.01., including the information contained in the investor presentation in Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is not incorporated by reference into any of Realty Income's filings, whether made before or after the date hereof, regardless of any general incorporation language in any such filing.









Forward Looking Statements


This communication may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which Realty Income and VEREIT operate and beliefs of and assumptions made by Realty Income management and VEREIT management, involve uncertainties that could significantly affect the financial or operating results of Realty Income, VEREIT, the combined company or any company spun-off by the combined company. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed transactions involving Realty Income and VEREIT, including future financial and operating results, plans, objectives, expectations and intentions. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future - including statements relating to creating value for stockholders, benefits of the proposed transactions to clients, employees, stockholders and other constituents of the combined company, integrating our companies, cost savings and the expected timetable for completing the proposed transactions - are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and, therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. For example, these forward-looking statements could be affected by factors including, without limitation, risks associated with the ability to consummate the proposed merger and the timing of the closing of the proposed merger; the ability to secure favorable interest rates on any borrowings incurred in connection with the proposed transactions; the impact of indebtedness incurred in connection with the proposed transactions; the ability to successfully integrate our operations and employees; the ability to realize anticipated benefits and synergies of the proposed transactions as rapidly or to the extent anticipated by financial analysts or investors; potential liability for a failure to meet regulatory or tax-related requirements, including the maintenance of REIT status; material changes in the dividend rates on securities or the ability to pay dividends on common shares or other securities; potential changes to tax legislation; changes in demand for developed properties; adverse changes in the financial condition of joint venture partner(s) or major tenants; risks associated with the acquisition, development, expansion, leasing and management of properties; risks associated with the ability to consummate the Spin-Off and the terms thereof, and the timing of the closing of the proposed spin-off; risks associated with the ability to consummate any sales of office property assets of Realty Income and VEREIT and the impact of such sales on OfficeCo or the combined company; failure to obtain debt financing to capitalize OfficeCo; risks associated with the geographic concentration of Realty Income, VEREIT or OfficeCo; risks associated with the industry concentration of tenants; the potential impact of announcement of the proposed transactions or consummation of the proposed transactions on business relationships, including with clients, employees, customers and competitors; unfavorable outcomes of any legal proceedings that have been or may be instituted against Realty Income, VEREIT or any company spun-off by the combined company; costs related to uninsured losses, condemnation, or environmental issues; the ability to retain key personnel; costs, fees, expenses and charges related to the proposed transactions and the actual terms of the financings that may be obtained in connection with the proposed transactions; changes in local, national and international financial markets, insurance rates and interest rates; general adverse economic and local real estate conditions; the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; foreign currency exchange rates; increases in operating costs and real estate taxes; changes in dividend policy or ability to pay dividends for Realty Income's or VEREIT's common stock or preferred stock; impairment charges; unanticipated changes in Realty Income's or VEREIT's intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity; pandemics or other health crises, such as coronavirus (COVID-19); and those additional risks and factors discussed in reports filed with the U.S. Securities and Exchange Commission ("SEC") by Realty Income and VEREIT. Moreover, other risks and uncertainties of which Realty Income or VEREIT are not currently aware may also affect each of the companies' forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by Realty Income or VEREIT on their respective websites or otherwise. Neither Realty Income nor VEREIT undertakes any obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction, Realty Income and VEREIT will file with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-4 containing a joint proxy statement/prospectus and other documents regarding the proposed transaction. The joint proxy statement/prospectus will contain important information about the proposed transaction and related matters but is not a part of or incorporated by reference in this Current Report on Form 8-K/A.

STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT REALTY INCOME, VEREIT AND THE PROPOSED TRANSACTION.

Investors and security holders of Realty Income and VEREIT will be able to obtain free copies of the registration statement, the joint proxy statement/prospectus and other relevant documents filed by Realty Income and VEREIT with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by Realty Income with the SEC are also available on Realty Income's website at www.realtyincome.com, and copies of the documents filed by VEREIT with the SEC are available on VEREIT's website at www.vereit.com. None of the foregoing documents is a part of or incorporated by reference into this Current Report on Form 8-K/A.

Realty Income, VEREIT and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Realty Income's and VEREIT's stockholders in respect of the proposed transaction. Information regarding Realty Income's directors and executive officers can be found in Realty Income's definitive proxy statement filed with the SEC on April 1, 2021. Information regarding VEREIT's directors and executive officers can be found in VEREIT's definitive proxy statement filed with the SEC on April 15, 2021. Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed transaction if and when they become available. These documents are available on the SEC's website and from Realty Income or VEREIT, as applicable, using the sources indicated above, but none of those documents is a part of or incorporated by reference . . .

Item 9.01 Financial Statements and Exhibits.




  (d) Exhibits.




Exhibit No                                  Description

  2.1*         Agreement and Plan of Merger, dated as of April 29, 2021, by and among
             Realty Income Corporation, Rams MD Acquisition Sub I, Inc., Rams
             Acquisition Sub II, LLC, VEREIT, Inc. and VEREIT Operating Partnership,
             L.P. (incorporated by reference to Exhibit 2.1 to the Company's Current
             Report on Form 8-K filed on April 30, 2021).
  99.1         Updated Joint Investor Presentation, dated April 29, 2021 (incorporated
             by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K
             filed on April 30, 2021).
104          Cover Page Interactive Data File (formatted as inline XBRL and contained
             in Exhibit 101)



*Pursuant to Item 601 (6)(2) of Regulation S-K, the Disclosure Letters to the

Merger Agreement (identified therein) have been omitted from this Report and

           will be furnished to the SEC supplementally upon request.

© Edgar Online, source Glimpses

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