8-KOther EventsExhibits & Filings

REALTY INCOME CORP 8-K Report, Corporate Update (Jun 16, 2022)

Filed June 16, 2022For Securities:O

Summary

Realty Income Corporation (O) has entered into a new "at-the-market" (ATM) sales agreement, replacing its previous program which was terminated. This new agreement allows the company to offer and sell up to 120 million shares of its common stock through a large syndicate of agents. The offering can be structured in two ways: direct sales by the company through the agents, or via forward sale agreements where a forward purchaser borrows and sells shares to hedge their position, with Realty Income settling the obligation later. This provides flexibility in managing equity offerings and potential capital raising. The primary use of proceeds from any shares issued under this new ATM program will be for general corporate purposes. This includes potential debt repayment, property acquisitions, development, and portfolio enhancements. The termination of the prior ATM program, under which a significant portion of shares were sold, indicates a transition to this new, larger capacity equity raising facility. Investors should monitor share issuance and how proceeds are deployed, as this ATM facility could impact share dilution and the company's capital structure.

Key Highlights

  • 1Realty Income has initiated a new "at-the-market" (ATM) equity offering program, allowing for the sale of up to 120 million shares of common stock.
  • 2The new sales agreement replaces a previous ATM program that has been terminated.
  • 3The program involves a broad syndicate of agents, providing extensive distribution capabilities.
  • 4Shares can be sold directly by Realty Income or through forward sale agreements with "Forward Purchasers", offering flexibility in capital raising.
  • 5Proceeds from the sale of shares are intended for general corporate purposes, including debt repayment, property acquisitions, and portfolio development.
  • 6The company can choose to physically settle, cash settle, or net share settle forward sale agreements, impacting the ultimate cash proceeds and potential share dilution.
  • 7Commissions to agents for sales through the ATM program will generally not exceed 2.0% of gross sales prices, but may be higher in certain negotiated transactions.

Frequently Asked Questions

The new sales agreement establishes an "at-the-market" (ATM) equity offering program that allows Realty Income to sell up to 120 million shares of its common stock over time. This provides the company with a flexible mechanism to raise capital for general corporate purposes, such as debt reduction, property acquisitions, and development projects.

Shares can be sold directly by Realty Income through the agents acting as sales agents. Alternatively, the company can enter into forward sale agreements with "Forward Purchasers." In the latter case, the Forward Purchaser will typically borrow and sell shares to hedge their position, and Realty Income will settle these agreements later, either by delivering shares or cash.

Forward sale agreements allow Realty Income to secure potential future capital. However, the settlement process is important. If settled in cash, the company receives proceeds. If settled by net share delivery, the company may not receive proceeds and could effectively issue shares to the Forward Purchaser to cover the obligation. This flexibility means the ultimate impact on the company's cash and share count can vary depending on how these agreements are settled.

The company intends to use any net cash proceeds raised from this ATM program for general corporate purposes. This includes but is not limited to repaying or repurchasing indebtedness, funding the development and acquisition of additional properties, and enhancing existing properties within its portfolio.