Realty Income announced a $1 billion strategic partnership with Apollo, marking a significant step forward in its private capital initiative. Under the agreement, Apollo-managed funds will acquire a 49% equity interest in a newly formed joint venture that will own a diversified portfolio of approximately 500 U.S. single-tenant retail properties.
The portfolio generates about $140 million in annualized base rent and features a weighted average remaining lease term of 9.1 years. Realty Income will retain management of the assets under a long-term agreement, leveraging its operating platform and expertise in net lease real estate.
The transaction is structured to provide Realty Income with cost-efficient, long-term equity capital that is treated as permanent equity by rating agencies. The company expects this to reduce its cost of capital compared to public equity while providing a stable and scalable funding source for future investments.
As part of the agreement, Realty Income retains a call option to repurchase Apollo’s stake between years 7 and 15, with pricing designed to cap Apollo’s internal rate of return at 6.875% over the investment period.
The joint venture is expected to serve as a framework for a broader, multi-billion-dollar co-investment relationship, enabling repeatable capital deployment into stabilized, income-generating real estate assets.
Key characteristics of the portfolio include exposure to industries such as dollar stores, quick service restaurants, drug stores, grocery, and health and fitness, with 28% of rent coming from investment-grade tenants and a contractual annual rent growth rate of approximately 1%.
The transaction is expected to close on March 31, 2026, subject to customary conditions.
KEY QUOTES
“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.”
Sumit Roy, President and Chief Executive Officer of Realty Income
“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.”
Jonathan Pong, Chief Financial Officer of Realty Income
“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.”
Jamshid Ehsani, Partner at Apollo
“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.”
Joseph Jackson, Partner at Apollo
