Realty Income Corp and KKR Form €528 Million European Net Lease Joint Venture Across Four Countries
Realty Income Corp and KKR have agreed to form a euro-denominated joint venture in which KKR will invest €528 million for a 49% equity interest in a stabilized portfolio of European net lease assets, the companies announced Sept. 14, 2026. Realty Income will retain a 51% ownership stake and continue to manage the portfolio through its European operating platform.
The transaction is expected to close Sept. 30, 2026, subject to customary closing conditions. The portfolio is being contributed at an effective 5.9% initial cap rate after recurring asset management fees payable to Realty Income.
Portfolio Composition and Financial Metrics
The anticipated portfolio spans 54 properties and 140 units across Spain, Ireland, Poland, and the Netherlands. As of June 30, 2026, the portfolio was projected to generate €67.7 million in year-one cash annual net operating income, with a weighted average remaining lease term of 7.2 years. Investment-grade tenants account for 59% of total portfolio base rent, and the expected compound annual contractual rent growth rate is 1.6%.
The top five industry and client categories represented in the portfolio are grocery, transportation services, home improvement, home furnishings, and automotive parts. Portfolio metrics remain subject to finalization and may change based on the final composition of the contributed assets.
Deal Structure and Exit Mechanics
Under the terms of the agreement, Realty Income will receive gross proceeds of approximately €528 million in exchange for KKR's 49% equity interest. Realty Income retains the right to exercise a call option to redeem KKR's equity interest after year 10 and through year 17 of the joint venture. The future call price is structured to ensure a capped IRR to KKR during its ownership period, with that cap expected to be set between 6.3% and 6.5% at closing.
Rating agencies are expected to treat the KKR investment as 100% permanent equity, a structural feature Realty Income highlighted as meaningful to its balance sheet positioning.
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.
Executives Comment on the Partnership
"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," said Christopher Sheldon, KKR Partner. "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."
"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," said Seb d'Avanzo, Co-Head of European Real Estate Equity at KKR. "We look forward to working together as Realty Income continues to grow its presence in the region."
Private Capital Strategy and Market Context
The joint venture extends a private capital formation strategy Realty Income has been building out in the United States into its European operations. In its second-quarter 2026 results, Realty Income reported that 73% of equity capital raised year-to-date came from private capital sources, including $1.2 billion from private-capital partnerships and $1.0 billion from insurance capital. The company also raised its full-year 2026 AFFO per share guidance midpoint to $4.44–$4.45 and lifted its investment volume guidance to $10 billion.
The transaction functions in part as a capital recycling move: Realty Income unlocks cash today from a mature European pool while retaining operating control and the majority of the portfolio's economics. The structure gives the company an alternative to public equity issuance as a funding mechanism for continued growth.
European real estate investment volumes have been recovering, with monitored-country investment reaching €76.2 billion in the first half of 2026, up 15% year over year. Within that environment, long-lease, income-oriented net lease strategies have attracted investor interest, particularly where tenant credit quality and lease duration support tighter pricing. The portfolio's 59% investment-grade exposure and 7.2-year weighted average lease term are characteristics consistent with the 5.9% contribution cap rate.
As of June 30, 2026, Realty Income held a portfolio of more than 15,500 properties across all 50 U.S. states, the United Kingdom, and eight other countries in Europe. The company's annualized dividend stood at $3.252 per share and it had declared 675 consecutive monthly dividends. Realty Income is a member of the S&P 500 Dividend Aristocrats index, having increased its dividend for over 31 consecutive years.
KKR is a global investment firm offering alternative asset management, capital markets, and insurance solutions. Its insurance subsidiaries operate under Global Atlantic Financial Group.
Sources
Realty Income Corporation Press Release, PR Newswire, Sept. 14, 2026