Realty Income Corporation (NYSE: O), a real estate investment trust, on Monday announced a strategic partnership with GIC, including a programmatic joint venture with over $1.5 billion in combined capital commitments. The partnership aims to expand Realty Income's logistics real estate portfolio and diversify its sources of capital beyond public markets.
The joint venture will focus on developing build-to-suit logistics properties in the U.S., pre-leased under long-term net leases to tenants with investment grade-equivalent credit ratings. Properties acquired through the venture will be majority-owned by Realty Income.
The agreement also covers the construction financing and takeout purchase of a $200 million industrial portfolio in Mexico, marking Realty Income's first investment in the country. The Mexico properties, located in Mexico City and Guadalajara, are pre-leased to Global Fortune 100 companies under long-term net leases. Realty Income will purchase the properties upon completion of construction.
Additionally, GIC will serve as a cornerstone investor in Realty Income's U.S. Core Plus fund.
"Our size, track record, industry-leading team, and predictive data analytics platform affords us the ability to source, underwrite, and asset manage a diversified portfolio in a highly efficient manner. We believe our ongoing partnership with one of the world's most respected real estate investors will amplify these strengths and further expand our addressable market of investments, unlocking incremental growth opportunities for Realty Income at higher effective returns than would otherwise be possible," said Sumit Roy, President and CEO of Realty Income.
"We continue to have high conviction in the net lease sector to generate strong, long-term, predictable cash yields for our portfolio. This partnership complements our existing direct exposure to the U.S. net lease space, unlocking direct access to the logistics investment-grade segment of the market where we expect continued growth," said Cai Wenzheng, Head of Americas, Real Estate, at GIC.
Realty Income shares closed at $58.17 on Friday, up 0.55%.
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