CIM Real Estate Finance Trust Inc., a publicly registered non-listed real estate investment trust formerly known as Cole Credit Property Trust IV, has agreed to sell 454 single-tenant properties to Realty Income Corporation (NYSE: O) for approximately $1.25 billion.
Realty Income is a publicly-traded REIT that owns 5,900 real estate properties throughout the United States.
“[CIM Real Estate Finance Trust] intends to deploy the net sale proceeds to pursue a more diversified investment strategy across the capital structure, ultimately transitioning to a mortgage REIT, by balancing its existing core of necessity commercial real estate with a portfolio of commercial mortgage loans and other credit investments,” noted Mark Selman, managing director for portfolio oversight at CIM Group.
The 454 single-tenant properties involved in the acquisition are 100 percent leased and total approximately 5.1 million rentable square feet across 41 states. Notable tenants include Dollar General, Walgreens, Dollar Tree/Family Dollar and United Oil.
The majority of the transaction is anticipated to close by the end of the year.
“Given the size and scope of CMFT’s single-tenant portfolio, we were able to sell a portion of the assets that were attractive to Realty Income while maintaining strong metrics following the transaction,” said Selman. “We will continue to sell shopping centers and certain single-tenant assets as we execute on our repositioning strategy over the next 12 to 24 months.”
Following the final close of the transaction, the REIT’s portfolio is expected to consist of 503 property totaling approximately 20.1 million gross rentable square feet of commercial space across 43 states. Those assets are 93.9 percent leased with a weighted average lease term of 8.5 years and represent 33 industry sectors.
The $1.25 billion purchase price will be paid mainly in cash, subject to Realty Income’s option to seek the assumption of certain existing debt totaling approximately $131 million.
CIM Real Estate Finance Trust invests in commercial real estate primarily leased to creditworthy tenants under long-term net leases. The REIT launched its offering in January 2012 and raised more than $3 billion prior to closing in April 2014. The REIT’s multi-billion portfolio was comprised of 852 properties, including nine properties owned through a joint venture arrangement, as of the second quarter of 2019.