Realty Income Corp Announces $1.0B Joint Venture With Apollo, Selling 49% Stake in U.S. Retail Real Estate Portfolio

Realty Income Corp (NYSE: O) and Apollo (NYSE: APO) announced Thursday that Apollo-managed funds and affiliates intend to invest $1.0 billion to acquire a 49% equity interest in a new joint venture entity holding a diversified portfolio of approximately 500 U.S. single-tenant retail real estate properties subject to long-term net leases. The transaction is expected to close March 31, 2026, subject to finalization and execution of the documentation and customary closing conditions.

Realty Income will retain a 51% ownership stake and continue to manage the portfolio under a long-term management agreement, preserving operational control while unlocking a new source of private capital. Goldman Sachs & Co. LLC acted as exclusive structuring agent and financial advisor to Realty Income; Wells Fargo served as financial advisor to Apollo.

Deal Structure and Key Terms

Under the terms of the transaction, Apollo's $1.0 billion investment represents gross proceeds to Realty Income in exchange for a 49% interest in the joint venture, which indirectly owns a net lease portfolio comprised entirely of single-tenant retail properties. As of December 31, 2025, the portfolio generated $140 million in cash annualized base rent, carried a weighted average remaining lease term of 9.1 years, and had a compound annual contractual rent growth rate of 1.0%.

The top five tenant industries in the portfolio by base rent are Dollar Stores (9.9%), Quick Service Restaurants (8.3%), Drug Stores (7.9%), Grocery (7.7%), and Health & Fitness (7.5%). Investment-grade tenants account for 28% of total portfolio base rent. Portfolio metrics are subject to finalization and may change based on the final composition of the portfolio.

Realty Income retains a call option to redeem Apollo's equity interest beginning in year seven and through year fifteen of the joint venture. The future call price is calculated to ensure a capped internal rate of return of 6.875% to Apollo during its ownership period. Both Moody's and S&P have granted the structure permanent equity treatment, which Realty Income said is expected to generate cost savings relative to its long-term cost of public equity capital.

Realty Income CFO Jonathan Pong said, "This structured equity funding arrangement with Apollo is expected to unlock a source of meaningful savings relative to our long-term cost of public equity capital. Further, the cost of future tranches of this capital is expected to flex commensurate with long-term interest rates and will be priced independent of public markets, supporting a more stable source of equity. We are pleased that this structure has received permanent equity treatment by both Moody's and S&P."

Strategic Rationale: Diversifying Beyond Public Markets

The joint venture represents a cornerstone component of Realty Income's private capital initiative, which is designed to diversify the company's sources of capital and complement its access to public equity markets. Realty Income described the long-term partnership with Apollo as intended to provide a scalable source of equity to support investment activity in long-duration, stabilized assets while maintaining balance sheet strength and financial flexibility.

Realty Income President and Chief Executive Officer Sumit Roy said, "We are pleased to announce Apollo's targeted equity investment in a highly diversified, income-producing portfolio. As real estate partner to the world's leading companies, we expect this partnership will serve as a template for a multi-billion-dollar, programmatic co-investing relationship in the U.S. Our size, scale, and longstanding commitment to providing dependable monthly dividends to investors make this a natural fit with Apollo's insurance capital. Realty Income has demonstrated the ability to attract scaled commitments from partners looking to invest in our operating platform, and this new joint venture will further expand our access to efficient sources of private funding from one of the world's leading financial institutions."

Apollo Partner Jamshid Ehsani said, "This transaction represents a landmark deal in the public REIT space. We believe the combination of Apollo's long-term capital with Realty Income's large, growing and diversified portfolio of high-quality net lease assets creates a highly complementary partnership. This partnership with Realty Income represents a programmatic framework for long-term alignment and repeatable capital deployment over time."

Apollo Partner Joseph Jackson commented, "Realty Income is a leading global net lease real estate player with a long track record of disciplined growth and portfolio performance. Apollo's intention to make a substantial upfront and anticipated follow-on investments into Realty Income's high-quality assets demonstrates our ability to deliver differentiated capital solutions tailored to our partner's objectives."

Retail Real Estate Portfolio in Context

The approximately 500 properties entering the joint venture represent a subset of Realty Income's broader portfolio of more than 15,500 properties across all 50 U.S. states, the United Kingdom, and eight other European countries as of December 31, 2025. The company, founded in 1969, has declared 669 consecutive monthly dividends and is a member of the S&P 500 Dividend Aristocrats index, having increased its dividend for more than 31 consecutive years.

The retail real estate assets contributed to the joint venture are single-tenant properties subject to long-term net leases, a structure that generates stable, contractual cash flows as described by Realty Income in its announcement.

Since 2020, Apollo has originated more than $100 billion in bespoke capital solutions for companies including Intel, Keurig Dr Pepper, Air France-KLM, BP, Sony, AB InBev, and Vonovia. As of December 31, 2025, Apollo reported approximately $938 billion in assets under management.

Transaction Context

The structure — featuring permanent equity treatment from rating agencies, a capped IRR for the private capital partner, and a call option window for the REIT — is characterized by Realty Income as a cornerstone of its private capital initiative. Realty Income described the Apollo relationship as programmatic, signaling the potential for additional tranches of capital under a similar framework over time.

The transaction is subject to finalization and execution of documentation and customary closing conditions, with an expected close date of March 31, 2026. Portfolio metrics disclosed are as of December 31, 2025, and are subject to change based on the final composition of the portfolio.