Realty Income Corp Closes $694M Term Loan With Goldman Sachs Affiliate to Support San Diego Energy Prepay

Realty Income Corp (NYSE: O), the San Diego-based real estate investment trust known as The Monthly Dividend Company, announced March 23 the closing of a $694 million unsecured term loan due January 2036, which the company described as a novel addition to its capital markets toolkit and a further diversification of its long-term debt funding sources.

The loan was extended by Aron Energy Prepay 60 LLC, an affiliate of The Goldman Sachs Group, Inc., and priced at an all-in fixed rate of 4.91%. Through a cross-currency swap converting $500 million of the proceeds into approximately €431 million — including related interest payments — over the term of the loan, Realty Income achieved an effective blended borrowing rate of 4.34%.

Transaction Structure and Financing Mechanics

The term loan is structured as a senior unsecured obligation of Realty Income, ranking pari passu with the company's other senior unsecured indebtedness. No property collateral underlies the transaction. Rather than a traditional real estate acquisition or mortgage financing, this deal represents a bilateral corporate debt arrangement tied to a broader energy procurement transaction.

San Diego Community Power, California's second-largest Community Choice Aggregator serving nearly one million customers across the San Diego region, entered into a long-term electricity supply arrangement to secure clean, cost-effective power through a forward commodity contract. To facilitate the arrangement, Community Power utilized a municipal prepay structure — a well-established mechanism enabling a public agency to issue municipal bonds and use the proceeds to prepay for future electricity deliveries.

The recipient of that prepayment, Aron Energy Prepay 60 LLC, is lending a portion of the proceeds to Realty Income through the unsecured term loan. Realty Income, in turn, makes fixed, scheduled monthly payments over the life of the loan. Goldman Sachs & Co. LLC served as sole underwriter on the municipal bond financing component of the broader transaction.

Realty Income is not issuing municipal bonds, is not guaranteeing or otherwise obligated to make payments on such municipal bonds, and does not receive tax-exempt financing in connection with this transaction. The company also has no exposure to electricity markets or commodity price risk. Its role is limited to the term loan itself.

Strategic Rationale: Diversifying Long-Term Capital Sources

For Realty Income, the transaction represents what Chief Financial Officer and Treasurer Jonathan Pong described as a debut in this type of financing structure. "We are pleased to partner with San Diego Community Power for our debut transaction to support its prepayment of commodity costs," Pong said. "This transaction allows us to support our local community by providing dependable monthly income to San Diego Community Power to achieve a fixed discount for a portion of its future energy needs. Moreover, this unique source of capital represents further diversification of our sources of long-term capital, providing us with a cost of fixed-rate debt priced below that of similar tenor public unsecured debt."

The effective blended rate of 4.34% — achieved after accounting for the cross-currency swap on a portion of the proceeds — positions this financing below comparable public unsecured debt benchmarks, according to the company. The term loan matures in January 2036 and extends Realty Income's debt maturity profile while locking in fixed-rate obligations.

Community Power's Energy Procurement Goals

For San Diego Community Power, the transaction is framed as a tool for advancing long-term clean energy procurement without sacrificing fiscal discipline. The agency serves customers in San Diego, Chula Vista, Encinitas, La Mesa, National City, Imperial Beach, and unincorporated communities of San Diego County.

"Transactions like this demonstrate how community choice aggregators like San Diego Community Power can use sophisticated, responsible financial tools to advance our climate goals without sacrificing affordability," said Karin Burns, CEO of San Diego Community Power. "It supports our long-term clean and renewable energy strategy while keeping fiscal responsibility front and center for the communities we serve."

Realty Income's Portfolio and Dividend Track Record

Realty Income, an S&P 500 company founded in 1969, holds a 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 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 latest term loan adds a non-traditional, non-property-backed financing channel to Realty Income's capital structure. The company did not disclose specific use-of-proceeds details beyond the loan's role in the broader San Diego Community Power energy prepay structure.

Market Implications for REIT Debt Diversification

The transaction is notable for its structure, which links a publicly traded REIT's corporate debt to a municipal energy financing mechanism — an arrangement that Realty Income characterized as a strategic addition to its capital markets toolkit. The deal does not involve a real estate acquisition or any real estate collateral.

Realty Income's use of a cross-currency swap on a portion of the proceeds reflects the company's management of currency exposure across its international portfolio, which spans the U.K. and multiple European markets. By converting $500 million of the dollar-denominated loan into approximately €431 million in effective euro-denominated obligations, the company aligns a portion of its debt costs with its European operations.

The term loan ranks equally with Realty Income's other senior unsecured debt, meaning existing creditors face no subordination as a result of the transaction.