Realty Income Announces Results of Early Participation In Exchange Offers And Consent Solicitations

Rhea-AI Summary

Realty Income Corporation (Realty Income, NYSE: O) announced the successful exchange offer for Spirit Notes, with high percentages of outstanding principal amounts of each series of Spirit Notes being tendered and consents received to the Proposed Amendments. The Registration Statement for the issuance of the Realty Notes was filed with the SEC and declared effective on January 3, 2024.

Financial Analyst

The exchange offer and consent solicitation made by Realty Income Corporation for the Spirit Notes represent a strategic financial restructuring aimed at simplifying the company's debt profile. The high percentage of tenders received across various maturities, averaging above 97%, indicates strong bondholder support for the transaction. This could be interpreted as a positive signal to the market about the financial health and future prospects of Realty Income. However, it's crucial to assess the new terms of the Realty Notes, including interest rates and covenants, compared to the Spirit Notes to understand the impact on the company's cost of capital and financial flexibility.

The elimination of restrictive covenants through the Proposed Amendments could afford Realty Income greater operational leeway, potentially enabling more aggressive growth strategies or capital allocation decisions. However, this may also introduce higher risk for debt holders, as covenants are typically in place to protect their interests. The absence of an early participation premium for late tenders could reduce the total expense of the exchange offer for Realty Income, though it may also result in lower participation rates post-Early Consent Date.

Legal Expert

The legal implications of the Proposed Amendments to the indenture of the Spirit Notes are significant. By obtaining consents from a majority of bondholders, Realty Income is legally permitted to alter the terms of the existing debt, which in this case includes the removal of most restrictive covenants. This action will likely impact the governance and leverage capabilities of the company, potentially altering its risk profile. Stakeholders should be aware of these changes as they could affect the company's obligations and bondholders' rights.

Furthermore, the effectiveness of the Registration Statement and the subsequent Prospectus filing with the SEC indicate regulatory compliance with securities laws, providing a layer of due diligence and disclosure that investors can rely on. The legal processes involved in such transactions are complex and require careful scrutiny to ensure that the rights and interests of all parties are adequately protected and that the company's actions align with corporate governance best practices.

Market Research Analyst

The response to the exchange offer reflects broader market sentiment towards Realty Income's creditworthiness and strategic direction. The near-complete tendering of the Spirit Notes suggests confidence among investors, which could bode well for the company's reputation in the capital markets. It's important to consider, however, the context of the current interest rate environment and credit market conditions, as these will influence the attractiveness of the new Realty Notes versus the existing Spirit Notes.

Additionally, the potential increase in operational flexibility post-amendments could enable Realty Income to pursue acquisitions or other investments, which might drive growth and impact the company's market position. The long-term success of this strategy will depend on the company's ability to leverage the increased flexibility without substantially increasing its risk profile or diluting shareholder value.

SAN DIEGO, Jan. 10, 2024 /PRNewswire/ -- Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company^®, today announced that, as of 5:00 p.m., New York City time, on January 10, 2024 (the "Early Consent Date"), the aggregate principal amounts of each series of notes listed in the table below (collectively, the "Spirit Notes") previously issued by Spirit Realty, L.P., had been validly tendered and not validly withdrawn in connection with Realty Income's previously announced offers to exchange all validly tendered and accepted Spirit Notes of each such series for notes to be issued by Realty Income (collectively, the "Realty Notes"), and the related solicitation of consents from holders of the Spirit Notes to amend the indenture governing the Spirit Notes to, among other things, eliminate substantially all of the restrictive covenants in such indenture (the "Proposed Amendments"). Holders of Spirit Notes who validly tender such notes after the Early Consent Date and at or prior to 5:00 p.m., New York City Time, January 19, 2024, unless extended (the "Expiration Date") will not receive the early participation premium which is equal to $30 principal amount of Realty Notes. A Registration Statement on Form S-4 (File No. 333-276143) (the "Registration Statement") relating to the issuance of the Realty Notes was filed with the U.S. Securities and Exchange Commission ("SEC") on December 19, 2023, was amended by Amendment No. 1 to Form S-4 filed with the SEC on January 2, 2024, and was declared effective by the SEC on January 3, 2024. A prospectus, which forms a part of the Registration Statement, was filed with the SEC and dated January 3, 2024 (the "Prospectus").

Series of Spirit Notes		Tenders and Consents Received as of the Early Consent Date		Percentage of Total Outstanding Principal Amount of Such Series of Spirit Notes
4.450% Notes due 2026		$291,106,000		97.04 %
3.200% Notes due 2027		$292,405,000		97.47 %
2.100% Notes due 2028		$443,637,000		98.59 %
4.000% Notes due 2029		$391,705,000		97.93 %
3.400% Notes due 2030		$484,540,000		96.91 %
3.200% Notes due 2031		$444,916,000		98.87 %
2.700% Notes due 2032		$347,579,000		99.31 %

As of the Early Consent Date, we have received valid consents to the Proposed Amendments from the holders of at least a majority of the outstanding aggregate principal amount of each series of the Spirit Notes, each voting as separate series. Accordingly, subject to the below, the Proposed Amendments will become effective on the settlement date, which is expected to be on or about the second business day following the Expiration Date. The consummation of the exchange offers and consent solicitations (together, the "Exchange Offers") is subject to, and conditional upon, the satisfaction or waiver of the conditions set forth in the Prospectus, including, among other things, the consummation of the Merger (which cannot be waived) and is currently expected to close in the first quarter of 2024 subject to customary closing conditions. The Exchange Offers will expire at 5:00 p.m., New York City time on January 19, 2024, unless extended. Tendered Spirit Notes may be validly withdrawn at any time prior to the Expiration Date. Consents to the Proposed Amendments may not be revoked. Realty Income may terminate or withdraw the Exchange Offers at any time for any reason.

The closing of the Merger is not conditioned upon the completion of the Exchange Offers.

The dealer manager for the Exchange Offers is:

Wells Fargo Securities, LLC
550 South Tryon Street, 5^th Floor
Charlotte, North Carolina 28202
Attention: Liability Management Group
Collect: (704) 410-4759
Toll Free: (866) 309-6316
Email: liabilitymanagement@wellsfargo.com

The exchange agent and information agent for the Exchange Offers is:

D.F. King & Co., Inc.
48 Wall Street, 22nd Floor 
New York, New York 10005 

Bank and Brokers Call Collect: (212) 269-5550 
All Others, Please Call Toll-Free: (866) 796-7184
Email: realtyincome@dfking.com

Requests for copies of the Prospectus can be made directly to the exchange agent and information agent listed above. 

This press release shall not constitute an offer to sell, or a solicitation of an offer to buy, any of the securities described herein and is also not a solicitation of the related consents. The Exchange Offers may be made only pursuant to the terms and conditions of the Prospectus and the other related materials.

About Realty Income
Realty Income, The Monthly Dividend Company^®, is an S&P 500 company and member of the S&P 500 Dividend Aristocrats^® index. We invest in people and places to deliver dependable monthly dividends that increase over time. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 13,250 real estate properties primarily owned under long-term net lease agreements with commercial clients. To date, the company has declared 643 consecutive common stock monthly dividends throughout its 55-year operating history and increased the dividend 123 times since Realty Income's public listing in 1994 (NYSE: O).

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 Exchange Act of 1934, as amended. When used in this press release, the words "estimated," "anticipated," "expect," "believe," "intend," "continue," "should," "may," "likely," "plans," and similar expressions are intended to identify forward-looking statements. Forward-looking statements include discussions of Realty Income's business and portfolio; strategy, plans, and the intentions of management; and statements regarding the Exchange Offers and Merger including the anticipated closing dates, projected impact of the Merger with Spirit on its business, results of operations, financial condition or prospects. Forward-looking statements are subject to risks, uncertainties, and assumptions about us which may cause its actual future results to differ materially from expected results. Some of the factors that could cause actual results to differ materially are, among others, its 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 its clients and us; access to debt and equity capital markets and other sources of funding; continued volatility and uncertainty in the credit markets and broader financial markets; other risks inherent in the real estate business including its clients' defaults under leases, increased client bankruptcies, potential liability relating to environmental matters, illiquidity of real estate investments, and potential damages from natural disasters; impairments in the value of its real estate assets; changes in domestic and foreign income tax laws and rates; its clients' solvency; property ownership through joint ventures and partnerships which may limit control of the underlying investments; current or future epidemics or pandemics, measures taken to limit their spread, the impacts on Realty Income, its business, its clients (including those in the theater and fitness industries), and the economy generally; the loss of key personnel; the outcome of any legal proceedings to which Realty Income is a party or which may occur in the future; acts of terrorism and war; the structure, timing and completion of the Merger or Exchange Offers and any effects of the announcement, pendency or completion of the Merger, including the anticipated benefits therefrom; and those additional risks and factors discussed in its reports filed with the SEC. 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. Actual plans and operating results may differ materially from what is expressed or forecasted in this press release. Realty Income does 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.

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SOURCE Realty Income Corporation

FAQ

What did Realty Income announce?

Realty Income announced a successful exchange offer for Spirit Notes.

When was the Registration Statement for the Realty Notes filed and declared effective?

The Registration Statement was filed on December 19, 2023, and declared effective on January 3, 2024.

What are the series of Spirit Notes involved in the exchange offer?

The series of Spirit Notes involved are 4.450% Notes due 2026, 3.200% Notes due 2027, 2.100% Notes due 2028, 4.000% Notes due 2029, 3.400% Notes due 2030, 3.200% Notes due 2031, and 2.700% Notes due 2032.

What is the ticker symbol for Realty Income Corporation?

The ticker symbol for Realty Income Corporation is O.