Realty Income and KKR to Establish Euro-Denominated Joint Venture, Advancing Realty Income's Private Capital Platform

Realty Income (O) and KKR (KKR) will form a euro‑denominated joint venture expected to own a diversified, stabilized European net lease portfolio contributed by Realty Income.

Rhea-AI Summary

Realty Income (O) and KKR (KKR) will form a euro‑denominated joint venture expected to own a diversified, stabilized European net lease portfolio contributed by Realty Income.

KKR-advised capital accounts intend to invest €528 million for a 49% equity interest, while Realty Income retains 51%, continues to manage the properties through its European platform, and expects the structure to receive 100% permanent equity treatment from rating agencies. The portfolio, spanning Spain, Ireland, Poland and the Netherlands, is contributed at an effective 5.9% initial cap rate after recurring asset management fees, with estimated year 1 cash NOI of €67.7 million, a weighted average remaining lease term of 7.2 years, and 59% investment‑grade rent exposure. Closing is expected on September 30, 2026, subject to customary conditions.

Positive

• €528 million gross proceeds to Realty Income for a 49% JV stake
• Portfolio contributed at 5.9% initial cap rate after management fees
• Expected 100% permanent equity treatment by rating agencies
• Estimated year 1 cash NOI of €67.7 million from JV portfolio
• Weighted average remaining lease term of 7.2 years across 54 properties
• Investment‑grade tenants contribute 59% of portfolio base rent
• Realty Income call option after year 10 with KKR IRR capped at 6.3%–6.5%

Negative

• None.

News Explained

Realty Income retains the right to redeem KKR’s 49% joint-venture interest after year 10 and through year 17; the future price is designed to cap KKR’s return, with that capped IRR set at closing and expected at 6.3%–6.5%.

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- Strategic Partnership Extends Realty Income's Private Capital Formation Strategy into Europe

- €528 Million KKR Investment for 49% Equity Interest in Stabilized European Portfolio Contributed by Realty Income

- 5.9% Initial Cap Rate Post-Management Fees

- 100% Permanent Equity Treatment Expected by Rating Agencies

SAN DIEGO and NEW YORK, Sept. 14, 2026 /PRNewswire/ -- Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company^®, and KKR (NYSE: KKR) today announced the formation of a new euro-denominated joint venture that is expected to own a diversified portfolio of existing European net lease real estate assets contributed by Realty Income, spanning four markets and a broad mix of industries and tenants. Capital accounts advised by KKR intend to make an initial investment of €528 million to acquire a 49% equity interest in the joint venture, with Realty Income retaining a 51% ownership interest and continuing to manage the portfolio through its European operating platform.

"This transaction marks another important step in Realty Income's evolution as the leading global net lease platform," said Sumit Roy, Realty Income's President and Chief Executive Officer. "Building on the private capital foundation we have established in the U.S., our strategic partnership with KKR extends this strategy into Europe and demonstrates both the portability of our competitive advantages across borders and the confidence that leading institutional investors have in our platform. We believe the long-term cost and structure of this equity financing create meaningful upside for our shareholders, while further diversifying our capital sources beyond the public markets."

"We are proud to support Realty Income as it extends its private capital strategy into Europe through this bespoke capital solution, designed with the flexibility to expand in line with the company's evolving needs. This transaction builds on KKR's 50-year history of combining partnership with scaled, long-term capital to help leading companies around the world create lasting value," said Christopher Sheldon, KKR Partner.

"We are pleased to invest alongside Realty Income, one of the world's largest net lease REITs, in a diversified portfolio of high-quality, hard-to-replace assets across key markets in Europe, supported by strong underlying real estate fundamentals. We look forward to working together as Realty Income continues to grow its presence in the region," said Seb d'Avanzo, Co-Head of European Real Estate Equity at KKR.

The transaction is expected to close on September 30, 2026, subject to customary closing conditions.

Lazard acted as financial advisor and DLA Piper served as legal advisor to Realty Income. Citi served as financial advisor and Latham & Watkins LLP served as legal advisor to KKR.

Transaction Highlights

Under the terms of the transaction, Realty Income is expected to receive gross proceeds of approximately €528 million in exchange for KKR's acquisition of a 49% equity interest in a euro-denominated joint venture that indirectly owns a diversified portfolio of stabilized net lease assets across four countries in Europe. Realty Income will retain a 51% interest in the joint venture, manage the properties under a long-term management agreement and continue to control day-to-day asset management.

The portfolio is being contributed at an effective 5.9% initial cap rate after recurring asset management fees payable to Realty Income. Realty Income will retain the right to exercise a call option to redeem KKR's equity interest after year 10 and through year 17 of the joint venture, with the future call price calculated to ensure a capped IRR to KKR during its ownership period. The value of the capped IRR will be set upon closing of the transaction and is expected to be between 6.3% and 6.5%.

Key portfolio metrics of the anticipated portfolio, as of June 30, 2026, are as follows:

Countries represented: Spain, Ireland, Poland, Netherlands

Total properties: 54

Total units: 140 

Estimated year 1 cash annual net operating income: €67.7 million

Weighted average remaining lease term: 7.2 years

Investment grade exposure (as percentage of total portfolio base rent): 59%

Expected compound annual contractual growth rate: 1.6%

Top five industries / client categories: Grocery, Transportation Services, Home Improvement, Home Furnishings, Automotive Parts

Portfolio metrics are subject to finalization and may change based on the final composition of the portfolio.

About Realty Income

Realty Income (NYSE: O), an S&P 500 company, is real estate partner to the world's leading companies^®. Founded in 1969, we serve our clients as a full-service real estate capital provider. As of June 30, 2026, we have a portfolio of over 15,500 properties in all 50 U.S. states, the U.K., and eight other countries in Europe. We are known as "The Monthly Dividend Company^®" and have a mission to invest in people and places to deliver dependable monthly dividends that increase over time. Since our founding, we have declared 675 consecutive monthly dividends and are a member of the S&P 500 Dividend Aristocrats^® index for having increased our dividend for over 31 consecutive years. Additional information about the company can be found at www.realtyincome.com.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR's insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR's investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR's website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group's website at www.globalatlantic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this press release, the words "estimate," "anticipate," "assume," "expect," "believe," "intend," "continue," "should," "may," "likely," "plan," "seek" and similar expressions are intended to identify forward-looking statements. Forward-looking statements include our capital formation strategy, discussions of the joint venture with KKR, including the execution and completion thereof, the expected proceeds ownership interests, portfolio including its contribution, metrics and management, fees, call option, and capped IRR related thereto, entry into subsequent joint ventures or other private capital arrangements on a programmatic basis, our business and portfolio including management thereof, and the intentions of management. Forward-looking statements are subject to risks, uncertainties, and assumptions about us, which may cause our actual future results to differ materially from expected results. Some of the factors that could cause actual results to differ materially are, among others, our ability to execute and close the joint venture on the anticipated terms, or at all, our and the joint venture's financial performance; our continued qualification as a real estate investment trust; general domestic and foreign business, economic, or financial conditions; competition; fluctuating interest and currency rates; inflation and its impact on our clients and us; access to debt and equity capital markets and other sources of funding (including the terms, structure, and partners of such funding); volatility and uncertainty in the credit and financial markets; other risks inherent in the real estate private capital, credit and mezzanine investments, and joint ventures or co-investment ventures, including solvency, defaults and defaults under leases, bankruptcies, potential liability relating to environmental matters, illiquidity of real estate investments (including rights of first refusal or rights of first offer), and potential damages from natural disasters; impairments in the value of our real estate assets; volatility and changes in domestic and foreign laws and the application, enforcement or interpretation thereof (including with respect to tax laws and rates); property ownership through co-investment ventures, funds, joint ventures, partnerships and other arrangements which, among other things, may transfer or limit our control of the underlying investments; epidemics or pandemics; the loss of key personnel; the threat and outcome of any legal proceedings to which we are a party or which may occur in the future; acts of terrorism and war; the anticipated benefits from mergers, acquisitions, co-investment ventures, funds, joint ventures, partnerships, and other arrangements; and those additional risks and factors discussed in our reports filed with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are not guarantees of future plans and performance and speak only as of the date of this press release. Past operating results and performance are provided for informational purposes and are not a guarantee of future results. There can be no assurance that historical trends will continue. Actual plans and results may differ materially from what is expressed or forecasted in this press release and forecasts made in the forward-looking statements discussed in this press release may not materialize. We do not undertake any obligation to update forward-looking statements or publicly release the results of any forward-looking statements that may be made to reflect events or circumstances after the date these statements were made or to reflect the occurrence of unanticipated events.

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SOURCE Realty Income Corporation

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What countries and property metrics define the joint venture portfolio?

The anticipated portfolio spans Spain, Ireland, Poland and the Netherlands, and as of June 30, 2026, includes 54 properties with 140 units. Portfolio metrics are subject to finalization and may change based on the final composition.

How will management and control of the joint venture be structured?

Realty Income will retain a 51% ownership interest, manage the properties under a long‑term management agreement, and continue to control day‑to‑day asset management through its European operating platform.

How is rent growth expected to behave within the JV portfolio?

The expected compound annual contractual growth rate for the portfolio is 1.6%, based on current lease terms.

Which tenant industries are most represented in the JV portfolio?

The top five industries or client categories by portfolio exposure are Grocery, Transportation Services, Home Improvement, Home Furnishings and Automotive Parts.