Realty Income Launches $875 Million Upsized Convertible Note Offering and Plans Share Repurchase

(RTTNews) – Realty Income Corp. (O) announced Tuesday that it priced an upsized $875 million offering of 3.750% convertible senior notes maturing in 2031, expanding the prior $750 million plan.

The notes are expected to settle on August 14.

The company also granted initial purchasers an option to purchase up to an additional $125 million of notes.

These notes will be senior, unsecured obligations of the company and will mature on August 15, 2031.

Interest will be payable semiannually at a 3.750% annual rate, starting February 15, 2027.

The initial conversion rate is 13.7512 shares per $1,000 of principal, corresponding to an initial conversion price of roughly $72.72 per share—a 17.5% premium to Realty Income’s August 11 closing price of $61.89.

The company expects net proceeds of approximately $859 million, or $981.9 million if the full $125 million option is exercised.

The company plans to allocate roughly $29.1 million of the proceeds to fund capped call transactions and about $188.7 million to repurchase approximately 3 million shares at the same time as the offering.

The remaining proceeds will be directed toward general corporate purposes such as debt repayment, share repurchases, hedging activities, property development, redevelopment, acquisitions, business combinations, and portfolio enhancements.

The capped call transactions are anticipated to limit dilution of the company’s common stock upon conversion of the notes and to offset certain cash payments that exceed the principal amount.

The initial cap price for the capped call transactions is approximately $83.55 per share, which reflects a 35% premium to Realty Income’s August 11 closing price.

Realty Income Corp. is trading slightly higher in the overnight session, up 0.16% to $61.99 on the New York Stock Exchange.

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