|
Maryland
(State or other jurisdiction of
incorporation or organization) |
| |
6798
(Primary Standard Industrial
Classification Code Number) |
| |
33-0580106
(I.R.S. Employer
Identification No.) |
|
|
Copies to:
|
| ||||||
|
William J. Cernius, Esq.
Charles Ruck, Esq. Darren Guttenberg, Esq. Latham & Watkins LLP 650 Town Center Drive 20th Floor Costa Mesa, California 92626 (714) 540-1235 |
| |
Lauren Goldberg
Executive Vice President, General Counsel and Secretary VEREIT, Inc. 2325 East Camelback Road, 9th Floor Phoenix, Arizona 85016 (800) 606-3610 |
| |
Adam Emmerich, Esq.
Karessa Cain, Esq. Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 (212) 403-1000 |
|
|
Large accelerated filer
☒
|
| |
Accelerated filer
☐
|
|
|
Non-accelerated filer
☐
|
| |
Smaller reporting company
☐
|
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| | ||||||||||||||||||||||||||||
Title of Each Class of
Securities to Be Registered |
| | |
Amount
to Be Registered |
| | |
Proposed
Maximum Offering Price Per Share |
| | |
Proposed
Maximum Aggregate Offering Price |
| | |
Amount of
Registration Fee |
| ||||||||||||
Common Stock, par value $0.01 per share
|
| | | | | 163,243,030(1) | | | | | | | N/A | | | | | | $ | 10,984,171,910.25(2) | | | | | | $ | 1,198,373.16(3) | | |
|
|
| |
|
|
|
Sincerely,
|
| |
Sincerely,
|
|
|
|
| |
|
|
|
Sumit Roy
President, Chief Executive Officer Realty Income Corporation |
| |
Glenn J. Rufrano
Chief Executive Officer VEREIT, Inc. |
|
|
Realty Income Corporation
11995 El Camino Real San Diego, California 92130 (858) 284-5000 Attn.: Investor Relations |
| |
VEREIT, Inc.
2325 E. Camelback Road, 9th Floor Phoenix, Arizona 85016 (800) 606-3610 Attn.: Investor Relations |
|
|
or
|
| |
or
|
|
|
|
| |
|
|
|
Georgeson LLC
1290 Avenue of the Americas, 9th Floor New York, New York 10104 Call Toll-Free: (866) 785-7395 Email: realtyincome@georgeson.com |
| |
Okapi Partners LLC
1212 Avenue of the Americas, 24th Floor New York, New York 10036 Call Toll-Free: (855) 305-0856 Email: info@okapipartners.com |
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| | |
Page
|
| |||
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| | | | 139 | | | |
| | | | 141 | | | |
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| | | | 148 | | | |
| | | | 150 | | | |
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| | | | 171 | | | |
| | | | 180 | | | |
| | | | 194 | | | |
| | | | 194 | | | |
| | | | 195 | | | |
| | | | 197 | | | |
| | | | 198 | | | |
| | | | A-1 | | | |
| | | | B-1 | | | |
| | | | C-1 | | |
|
if you are a Realty Income stockholder:
|
| |
if you are a VEREIT stockholder:
|
|
|
Georgeson LLC
1290 Avenue of the Americas, 9th Floor New York, New York 10104 Call Toll-Free: (866) 785-7395 Email: realtyincome@georgeson.com |
| |
Okapi Partners LLC
1212 Avenue of the Americas, 24th Floor New York, New York 10036 Call Toll-Free: (855) 305-0856 Email: info@okapipartners.com |
|
| | |
Realty Income Common
Stock (Close) |
| |
VEREIT Common
Stock (Close) |
| |
VEREIT Common
Stock (adjusted by Exchange Ratio) (Close) |
| |||||||||
April 28, 2021
|
| | | $ | 68.60 | | | | | $ | 41.26 | | | | | $ | 48.36 | | |
, 2021
|
| | | $ | | | | | $ | | | | | $ | | | |
| | |
Realty Income
|
| |
VEREIT
|
| ||||||||||||||||||||||||||||||||||||||||||
|
Historical
|
| |
Pro Forma
for Merger |
| |
Historical
|
| |
Pro Forma
for Merger |
| ||||||||||||||||||||||||||||||||||||||
|
Three
Months Ended March 31, 2021 |
| |
Year Ended
December 31, 2020 |
| |
Three
Months Ended March 31, 2021 |
| |
Year Ended
December 31, 2020 |
| |
Three
Months Ended March 31, 2021 |
| |
Year Ended
December 31, 2020 |
| |
Three
Months Ended March 31, 2021 |
| |
Year Ended
December 31, 2020 |
| ||||||||||||||||||||||||||
Book earnings per share
|
| | | $ | 0.26 | | | | | $ | 1.15 | | | | | $ | 0.28 | | | | | $ | 0.48 | | | | | $ | 0.50 | | | | | $ | 0.72 | | | | | $ | 0.20 | | | | | $ | 0.34 | | |
Diluted earnings per share
|
| | | $ | 0.26 | | | | | $ | 1.14 | | | | | $ | 0.28 | | | | | $ | 0.48 | | | | | $ | 0.50 | | | | | $ | 0.72 | | | | | $ | 0.20 | | | | | $ | 0.34 | | |
Cash dividends declared per share
|
| | | $ | 0.70 | | | | | $ | 2.80 | | | | | $ | 0.70(1) | | | | | $ | 2.80(1) | | | | | $ | 0.46 | | | | | $ | 1.84 | | | | | $ | 0.50(2) | | | | | $ | 1.97 | | |
Book value per share (period end)
|
| | | $ | 30.88 | | | | | | | | | | | $ | 42.50 | | | | | | | | | | | $ | 29.43 | | | | | | | | | | | $ | 29.96 | | | | | | | | |
|
Implied Exchange Ratio Range:
|
| |
Merger Exchange Ratio
|
|
|
0.516x – 0.878x
|
| |
0.705x
|
|
Selected Publicly Traded Company
|
| |
Enterprise
Value / 2021E EBITDA |
| |
Enterprise
Value / 2022E EBITDA |
| |
Price /
2021E FFO |
| |
Price /
2022E FFO |
| |
Price /
2021E AFFO |
| |
Price /
2022E AFFO |
| |
Premium or
Discount to Consensus NAV |
| |||||||||||||||||||||
Realty Income Corp.
|
| | | | 20.4x | | | | | | 18.2x | | | | | | 20.4x | | | | | | 18.8x | | | | | | 19.7x | | | | | | 18.7x | | | | | | 31.9% | | |
W.P. Carey Inc.
|
| | | | 18.3x | | | | | | 17.3x | | | | | | 15.9x | | | | | | 15.4x | | | | | | 15.0x | | | | | | 14.6x | | | | | | 10.1% | | |
STORE Capital Corporation
|
| | | | 19.2x | | | | | | 16.9x | | | | | | 19.1x | | | | | | 17.8x | | | | | | 18.5x | | | | | | 17.4x | | | | | | 39.2% | | |
VEREIT, Inc.
|
| | | | 15.4x | | | | | | 14.5x | | | | | | 12.9x | | | | | | 12.4x | | | | | | 12.8x | | | | | | 12.3x | | | | | | 1.5% | | |
National Realty Properties, Inc.
|
| | | | 19.2x | | | | | | 17.9x | | | | | | 18.0x | | | | | | 17.0x | | | | | | 16.7x | | | | | | 16.3x | | | | | | 12.9% | | |
Spirit Realty Capital, Inc.
|
| | | | 16.8x | | | | | | 15.1x | | | | | | 15.5x | | | | | | 14.7x | | | | | | 15.1x | | | | | | 14.5x | | | | | | 14.3% | | |
Agree Realty Corporation
|
| | | | 20.5x | | | | | | 16.7x | | | | | | 20.4x | | | | | | 19.1x | | | | | | 20.8x | | | | | | 19.5x | | | | | | 20.8% | | |
Broadstone Net Lease, Inc.
|
| | | | 15.1x | | | | | | 13.8x | | | | | | 13.6x | | | | | | 13.1x | | | | | | 15.0x | | | | | | 14.1x | | | | | | (0.6)% | | |
Essential Properties Realty Trust, Inc.
|
| | | | 20.6x | | | | | | 16.2x | | | | | | 21.0x | | | | | | 19.1x | | | | | | 21.1x | | | | | | 19.0x | | | | | | 45.7% | | |
Four Corners Property Trust, Inc.
|
| | | | 19.7x | | | | | | 17.8x | | | | | | 19.1x | | | | | | 18.1x | | | | | | 19.1x | | | | | | 18.3x | | | | | | 16.9% | | |
Metric
|
| |
Selected Range: Realty Income
|
| |
Implied Equity Value Range Per Share:
Realty Income |
|
Enterprise Value / 2021E EBITDA
|
| |
19.00x – 21.00x
|
| |
$62.81 – $71.49
|
|
Enterprise Value / 2022E EBITDA
|
| |
16.00x – 18.50x
|
| |
$57.53 – $69.59
|
|
Share price / 2021E FFO
|
| |
18.00x – 21.00x
|
| |
$59.19 – $69.05
|
|
Share Price / 2022E FFO
|
| |
17.00x – 19.50x
|
| |
$59.89 – $68.69
|
|
Share price / 2021E AFFO
|
| |
16.50x – 21.00x
|
| |
$56.93 – $72.45
|
|
Share Price / 2022E AFFO
|
| |
16.00x – 20.00x
|
| |
$56.77 – $70.96
|
|
Premium (Discount) to NAV
|
| |
10.0% – 45.0%
|
| |
$57.44 – $75.72
|
|
Metric
|
| |
Selected Range: VEREIT
|
| |
Implied Equity Value Range Per Share:
VEREIT |
|
Enterprise Value / 2021E EBITDA
|
| |
15.00x – 19.00x
|
| |
$39.50 – $56.95
|
|
Enterprise Value / 2022E EBITDA
|
| |
13.50x – 17.50x
|
| |
$34.36 – $52.25
|
|
Share price / 2021E FFO
|
| |
12.50x – 16.50x
|
| |
$40.51 – $53.48
|
|
Share Price / 2022E FFO
|
| |
12.00x – 16.00x
|
| |
$40.34 – $53.78
|
|
Share price / 2021E AFFO
|
| |
12.50x – 15.50x
|
| |
$40.75 – $50.53
|
|
Share Price / 2022E AFFO
|
| |
12.00x – 15.00x
|
| |
$40.66 – $50.82
|
|
Premium (Discount) to NAV
|
| |
(5.0)% – 15.0%
|
| |
$38.67 – $46.81
|
|
Metric
|
| |
Implied Exchange Ratio Range
|
|
Enterprise Value / 2021E EBITDA
|
| |
0.552x – 0.907x
|
|
Enterprise Value / 2022E EBITDA
|
| |
0.494x – 0.908x
|
|
Share price / 2021E FFO
|
| |
0.587x – 0.904x
|
|
Share Price / 2022E FFO
|
| |
0.587x – 0.898x
|
|
Share price / 2021E AFFO
|
| |
0.562x – 0.888x
|
|
Share Price / 2022E AFFO
|
| |
0.573x – 0.895x
|
|
Premium (Discount) to NAV
|
| |
0.511x – 0.815x
|
|
| | |
Implied Per Share Equity Value
|
| |||||||||
|
Low
|
| |
High
|
| ||||||||
VEREIT P/2021E AFFO
|
| | | $ | 42.50 | | | | | $ | 49.00 | | |
VEREIT P/2022E AFFO
|
| | | $ | 41.50 | | | | | $ | 50.00 | | |
VEREIT Implied Capitalization Rate
|
| | | $ | 44.25 | | | | | $ | 52.75 | | |
| | |
Implied Per Share Equity Value
|
| |||||||||
|
Low
|
| |
High
|
| ||||||||
Realty Income P/2021E AFFO
|
| | | $ | 51.75 | | | | | $ | 71.50 | | |
Realty Income P/2022E AFFO
|
| | | $ | 51.50 | | | | | $ | 69.25 | | |
Realty Income Implied Capitalization Rate
|
| | | $ | 59.25 | | | | | $ | 71.75 | | |
| | |
Implied Per Share Equity Value
|
| |||||||||
|
Low
|
| |
High
|
| ||||||||
VEREIT Discounted Cash Flow
|
| | | $ | 32.50 | | | | | $ | 44.25 | | |
Realty Income Discounted Cash Flow
|
| | | $ | 50.25 | | | | | $ | 70.00 | | |
| | |
Implied Exchange Ratios
|
| |||||||||
|
Low
|
| |
High
|
| ||||||||
P/2021E AFFO
|
| | | | 0.594x | | | | | | 0.947x | | |
P/2022E AFFO
|
| | | | 0.599x | | | | | | 0.971x | | |
Implied Capitalization Rate
|
| | | | 0.617x | | | | | | 0.890x | | |
Discounted Cash Flow
|
| | | | 0.464x | | | | | | 0.881x | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
|
2021E
|
| |
2022E
|
| |
2023E
|
| |||||||||||
|
(in millions, other than per share data)
|
| |||||||||||||||||
Total Revenue
|
| | | $ | 1,823 | | | | | $ | 2,013 | | | | | $ | 2,310 | | |
Total Net Operating Income (NOI)(1)
|
| | | $ | 1,714 | | | | | $ | 1,900 | | | | | $ | 2,181 | | |
EBITDA(2)
|
| | | $ | 1,624 | | | | | $ | 1,805 | | | | | $ | 2,072 | | |
Funds from Operations (FFO)(3)
|
| | | $ | 1,253 | | | | | $ | 1,452 | | | | | $ | 1,689 | | |
Adjusted Funds from Operations (AFFO)(4)
|
| | | $ | 1,314 | | | | | $ | 1,462 | | | | | $ | 1,696 | | |
FFO / Share(3)(5)
|
| | | $ | 3.29 | | | | | $ | 3.52 | | | | | $ | 3.80 | | |
AFFO / Share(4)(6)
|
| | | $ | 3.45 | | | | | $ | 3.55 | | | | | $ | 3.81 | | |
Dividends / Share(7)
|
| | | $ | 2.82 | | | | | $ | 2.85 | | | | | $ | 2.95 | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
|
2021E
|
| |
2022E
|
| |
2023E
|
| |||||||||||
|
(in millions, other than per share data)
|
| |||||||||||||||||
Total Revenue
|
| | | $ | 1,206 | | | | | $ | 1,238 | | | | | $ | 1,292 | | |
Total Net Operating Income (NOI)(1)
|
| | | $ | 1,069 | | | | | $ | 1,098 | | | | | $ | 1,147 | | |
EBITDA(2)
|
| | | $ | 1,009 | | | | | $ | 1,033 | | | | | $ | 1,080 | | |
Funds from Operations (FFO)(3)
|
| | | $ | 744 | | | | | $ | 781 | | | | | $ | 845 | | |
Adjusted Funds from Operations (AFFO)(4)
|
| | | $ | 748 | | | | | $ | 787 | | | | | $ | 851 | | |
FFO / Share(3)(5)
|
| | | $ | 3.24 | | | | | $ | 3.36 | | | | | $ | 3.48 | | |
AFFO / Share(4)(6)
|
| | | $ | 3.26 | | | | | $ | 3.39 | | | | | $ | 3.50 | | |
Dividends / Share(7)
|
| | | $ | 1.93 | | | | | $ | 2.03 | | | | | $ | 2.10(8) | | |
| | |
Year Ending December 31,
|
| |||||||||||||||
|
2021E
|
| |
2022E
|
| |
2023E
|
| |||||||||||
|
(in millions, except
per share data) |
| |||||||||||||||||
Cash Net Operating Income (Cash NOI)(1)
|
| | | $ | 1,047 | | | | | $ | 1,107 | | | | | $ | 1,207 | | |
Adjusted Funds from Operations (AFFO)(2)
|
| | | $ | 753 | | | | | $ | 816 | | | | | $ | 911 | | |
Weighted Average Shares
|
| | | | 231 | | | | | | 241 | | | | | | 254 | | |
AFFO / Share
|
| | | $ | 3.26 | | | | | $ | 3.39 | | | | | $ | 3.59 | | |
Net Acquisitions(3)
|
| | | $ | 794 | | | | | $ | 1,450 | | | | | $ | 1,450 | | |
| | |
Year Ending December 31,
|
| |||||||||||||||
|
2021E
|
| |
2022E
|
| |
2023E
|
| |||||||||||
|
(in millions, except
per share data) |
| |||||||||||||||||
Cash Net Operating Income (Cash NOI)(1)(2)
|
| | | $ | 1,704 | | | | | $ | 1,885 | | | | | $ | 2,160 | | |
Adjusted Funds from Operations (AFFO)(1)
|
| | | $ | 1,314 | | | | | $ | 1,462 | | | | | $ | 1,696 | | |
Weighted Average Shares
|
| | | | 381 | | | | | | 412 | | | | | | 445 | | |
AFFO / Share
|
| | | $ | 3.45 | | | | | $ | 3.55 | | | | | $ | 3.81 | | |
Net Acquisitions
|
| | | $ | 3,418 | | | | | $ | 3,325 | | | | | $ | 3,900 | | |
Named Executive Officer
|
| |
Cash ($)(1)
|
| |
Equity($)(2)
|
| |
Perquisites /
Benefits($)(3) |
| |
Total ($)(4)
|
| ||||||||||||
Glenn Rufrano
|
| | | | 8,128,767 | | | | | | 20,279,508 | | | | | | 30,237 | | | | | | 28,438,512 | | |
Michael J. Bartolotta
|
| | | | 2,701,089 | | | | | | 4,285,241 | | | | | | 12,919 | | | | | | 6,999,249 | | |
Lauren Goldberg
|
| | | | 2,383,572 | | | | | | 3,958,242 | | | | | | 7,393 | | | | | | 6,349,207 | | |
Paul H. McDowell
|
| | | | 2,510,579 | | | | | | 4,156,795 | | | | | | 12,919 | | | | | | 6,680,293 | | |
Thomas W. Roberts
|
| | | | 2,574,082 | | | | | | 5,024,804 | | | | | | 15,615 | | | | | | 7,614,501 | | |
Named Executive Officer
|
| |
Severance ($)
|
| |
Prorated Bonus ($)
|
| |
Total ($)
|
| |||||||||
Glenn Rufrano
|
| | | | 7,500,000 | | | | | | 628,767 | | | | | | 8,128,767 | | |
Michael J. Bartolotta
|
| | | | 2,415,000 | | | | | | 286,089 | | | | | | 2,701,089 | | |
Lauren Goldberg
|
| | | | 2,152,500 | | | | | | 231,072 | | | | | | 2,383,572 | | |
Paul H. McDowell
|
| | | | 2,257,500 | | | | | | 253,079 | | | | | | 2,510,579 | | |
Thomas W. Roberts
|
| | | | 2,310,000 | | | | | | 264,082 | | | | | | 2,574,082 | | |
Named Executive Officer
|
| |
VEREIT Stock
Options ($) |
| |
VEREIT RSU
Awards ($) |
| |
Dividend
Equivalents ($) |
| |
Total ($)
|
| ||||||||||||
Glenn Rufrano
|
| | | | 485,675 | | | | | | 18,917,513 | | | | | | 876,320 | | | | | | 20,279,508 | | |
Michael J. Bartolotta
|
| | | | 485,675 | | | | | | 3,640,053 | | | | | | 159,513 | | | | | | 4,285,241 | | |
Lauren Goldberg
|
| | | | 485,675 | | | | | | 3,326,804 | | | | | | 145,763 | | | | | | 3,958,242 | | |
Paul H. McDowell
|
| | | | 485,675 | | | | | | 3,520,788 | | | | | | 150,332 | | | | | | 4,156,795 | | |
Thomas W. Roberts
|
| | | | 485,675 | | | | | | 4,345,998 | | | | | | 193,131 | | | | | | 5,024,804 | | |
| | |
Realty Income Common
Stock |
| |
VEREIT Common Stock
|
| ||||||||||||||||||||||||||||||
Date
|
| |
High
|
| |
Low
|
| |
Close
|
| |
High
|
| |
Low
|
| |
Close
|
| ||||||||||||||||||
April 28, 2021
|
| | | $ | 69.33 | | | | | $ | 68.50 | | | | | $ | 68.60 | | | | | $ | 41.65 | | | | | $ | 41.19 | | | | | $ | 41.26 | | |
, 2021
|
| | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | |
| | |
Realty Income Common
Stock |
| |
VEREIT Common Stock
|
| ||||||||||||||||||||||||||||||
Date
|
| |
High
|
| |
Low
|
| |
Close
|
| |
High
|
| |
Low
|
| |
Close
|
| ||||||||||||||||||
April 28, 2021
|
| | | $ | 69.33 | | | | | $ | 68.50 | | | | | $ | 68.60 | | | | | $ | 48.88 | | | | | $ | 48.29 | | | | | $ | 48.36 | | |
, 2021
|
| | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | |
| | |
High
|
| |
Low
|
| |
Dividend
Declared |
| |||||||||
2018 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 57.07 | | | | | $ | 47.26 | | | | | $ | 0.6575 | | |
Second Quarter
|
| | | $ | 54.99 | | | | | $ | 48.81 | | | | | $ | 0.6590 | | |
Third Quarter
|
| | | $ | 59.18 | | | | | $ | 52.74 | | | | | $ | 0.6605 | | |
Fourth Quarter
|
| | | $ | 66.85 | | | | | $ | 55.56 | | | | | $ | 0.6620 | | |
2019 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 74.14 | | | | | $ | 61.60 | | | | | $ | 0.6770 | | |
Second Quarter
|
| | | $ | 73.94 | | | | | $ | 66.21 | | | | | $ | 0.6785 | | |
Third Quarter
|
| | | $ | 77.50 | | | | | $ | 67.70 | | | | | $ | 0.6800 | | |
Fourth Quarter
|
| | | $ | 82.17 | | | | | $ | 71.45 | | | | | $ | 0.6815 | | |
2020 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 84.92 | | | | | $ | 38.00 | | | | | $ | 0.6980 | | |
Second Quarter
|
| | | $ | 65.56 | | | | | $ | 43.41 | | | | | $ | 0.6995 | | |
Third Quarter
|
| | | $ | 66.80 | | | | | $ | 56.33 | | | | | $ | 0.7010 | | |
Fourth Quarter
|
| | | $ | 65.09 | | | | | $ | 57.09 | | | | | $ | 0.7025 | | |
2021 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 64.60 | | | | | $ | 57.00 | | | | | $ | 0.7040 | | |
Second Quarter
|
| | | $ | | | | | $ | | | | | $ | | | |||
Third Quarter (through , 2021)
|
| | | $ | | | | | $ | | | | | | | | |
| | |
High
|
| |
Low
|
| |
Dividend
Declared |
| |||||||||
2018 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 39.15 | | | | | $ | 33.10 | | | | | $ | 0.6875 | | |
Second Quarter
|
| | | $ | 37.85 | | | | | $ | 32.60 | | | | | $ | 0.6875 | | |
Third Quarter
|
| | | $ | 40.00 | | | | | $ | 35.58 | | | | | $ | 0.6875 | | |
Fourth Quarter
|
| | | $ | 39.55 | | | | | $ | 34.40 | | | | | $ | 0.6875 | | |
2019 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 42.80 | | | | | $ | 35.00 | | | | | $ | 0.6875 | | |
Second Quarter
|
| | | $ | 48.58 | | | | | $ | 39.63 | | | | | $ | 0.6875 | | |
Third Quarter
|
| | | $ | 50.65 | | | | | $ | 43.85 | | | | | $ | 0.6875 | | |
Fourth Quarter
|
| | | $ | 50.25 | | | | | $ | 45.10 | | | | | $ | 0.6875 | | |
2020 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 50.90 | | | | | $ | 17.78 | | | | | $ | 0.6875 | | |
Second Quarter
|
| | | $ | 36.80 | | | | | $ | 19.00 | | | | | $ | 0.3850 | | |
Third Quarter
|
| | | $ | 36.40 | | | | | $ | 29.85 | | | | | $ | 0.3850 | | |
Fourth Quarter
|
| | | $ | 39.03 | | | | | $ | 30.05 | | | | | $ | 0.3850 | | |
2021 | | | | | | | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 40.67 | | | | | $ | 34.76 | | | | | $ | 0.4620 | | |
Second Quarter
|
| | | $ | | | | | $ | | | | | $ | 0.4620 | | |
| | |
Realty Income
Historical, As Reclassified (Note 3) |
| |
VEREIT
Historical, As Reclassified (Note 3) |
| |
Merger
Adjustments (Note 5) |
| |
Item in
Note 5 |
| |
Pro Forma
Combined |
| ||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate held for investment, at cost:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land
|
| | | $ | 6,672,885 | | | | | $ | 2,698,232 | | | | | $ | 593,773 | | | |
[1]
|
| | | $ | 9,964,890 | | |
Buildings and improvements
|
| | | | 15,171,070 | | | | | | 9,941,903 | | | | | | 783,350 | | | |
[1]
|
| | | | 25,896,323 | | |
Total real estate held for investment,
at cost |
| | | | 21,843,955 | | | | | | 12,640,135 | | | | | | 1,377,123 | | | | | | | | | 35,861,213 | | |
Less accumulated depreciation and amortization
|
| | | | (3,668,269) | | | | | | (2,909,417) | | | | | | 2,909,417 | | | |
[2]
|
| | | | (3,668,269) | | |
Real estate held for investment, net
|
| | | | 18,175,686 | | | | | | 9,730,718 | | | | | | 4,286,540 | | | | | | | | | 32,192,944 | | |
Real estate and lease intangibles held for sale, net
|
| | | | 22,500 | | | | | | 4,888 | | | | | | 6,412 | | | |
[3]
|
| | | | 33,800 | | |
Cash and cash equivalents
|
| | | | 183,984 | | | | | | 318,561 | | | | | | (374,066) | | | |
[8] [12]
|
| | | | 128,479 | | |
Accounts receivable, net
|
| | | | 307,017 | | | | | | 330,871 | | | | | | (278,871) | | | |
[4]
|
| | | | 359,017 | | |
Lease intangible assets, net
|
| | | | 1,820,146 | | | | | | 931,832 | | | | | | 1,779,006 | | | |
[5]
|
| | | | 4,530,984 | | |
Goodwill
|
| | | | 14,114 | | | | | | 1,337,773 | | | | | | (120,500) | | | |
[6]
|
| | | | 1,231,387 | | |
Other assets, net
|
| | | | 456,123 | | | | | | 322,715 | | | | | | 24,466 | | | |
[7]
|
| | | | 803,304 | | |
Total assets
|
| | | $ | 20,979,570 | | | | | $ | 12,977,358 | | | | | $ | 5,322,987 | | | | | | | | $ | 39,279,915 | | |
LIABILITIES AND EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions payable
|
| | | $ | 88,662 | | | | | $ | 106,989 | | | | | $ | (1,041) | | | |
[8]
|
| | | $ | 194,610 | | |
Accounts payable and accrued expenses
|
| | | | 200,168 | | | | | | 116,486 | | | | | | 76,000 | | | |
[9]
|
| | | | 392,654 | | |
Lease intangible liabilities, net
|
| | | | 313,907 | | | | | | 117,121 | | | | | | 382,580 | | | |
[10]
|
| | | | 813,608 | | |
Other liabilities
|
| | | | 277,325 | | | | | | 264,968 | | | | | | — | | | | | | | | | 542,293 | | |
Line of credit payable and commercial
paper |
| | | | 675,000 | | | | | | — | | | | | | — | | | | | | | | | 675,000 | | |
Term loan, net
|
| | | | 249,407 | | | | | | — | | | | | | — | | | | | | | | | 249,407 | | |
Mortgages payable, net
|
| | | | 282,037 | | | | | | 1,035,328 | | | | | | 61,075 | | | |
[11]
|
| | | | 1,378,440 | | |
Notes payable, net
|
| | | | 7,326,051 | | | | | | 4,586,252 | | | | | | 338,994 | | | |
[11]
|
| | | | 12,251,297 | | |
Total liabilities
|
| | | | 9,412,557 | | | | | | 6,227,144 | | | | | | 857,608 | | | | | | | | | 16,497,309 | | |
Stockholders’ equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Preferred stock and paid-in capital
|
| | | | — | | | | | | 371,781 | | | | | | (371,781) | | | |
[12]
|
| | | | — | | |
Common stock and paid-in capital
|
| | | | 15,371,016 | | | | | | 12,981,320 | | | | | | (1,737,692) | | | |
[12]
|
| | | | 26,614,644 | | |
Distributions in excess of net income
|
| | | | (3,827,660) | | | | | | (6,610,678) | | | | | | 6,581,472 | | | |
[12]
|
| | | | (3,856,866) | | |
Accumulated other comprehensive (loss) income
|
| | | | (8,484) | | | | | | 634 | | | | | | (634) | | | |
[12]
|
| | | | (8,484) | | |
Total stockholders’ equity
|
| | | | 11,534,872 | | | | | | 6,743,057 | | | | | | 4,471,365 | | | | | | | | | 22,749,294 | | |
Noncontrolling interests
|
| | | | 32,141 | | | | | | 7,157 | | | | | | (5,986) | | | |
[13]
|
| | | | 33,312 | | |
Total equity
|
| | | | 11,567,013 | | | | | | 6,750,214 | | | | | | 4,465,379 | | | | | | | | | 22,782,606 | | |
Total liabilities and equity
|
| | | $ | 20,979,570 | | | | | $ | 12,977,358 | | | | | $ | 5,322,987 | | | | | | | | $ | 39,279,915 | | |
| | |
Realty Income
Historical |
| |
VEREIT
Historical, As Reclassified (Note 3) |
| |
Merger
Adjustments (Note 5) |
| |
Item in
Note 5 |
| |
Pro Forma
Combined |
| |
Item in
Note 5 |
| ||||||||||||||||||
REVENUE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Rental (including reimbursable)
|
| | | $ | 439,365 | | | | | $ | 290,309 | | | | | $ | 18,460 | | | | | | [14] | | | | | $ | 748,134 | | | | | | | | |
Other
|
| | | | 3,439 | | | | | | 4,166 | | | | | | — | | | | | | | | | | | | 7,605 | | | | | | | | |
Total revenue
|
| | | | 442,804 | | | | | | 294,475 | | | | | | 18,460 | | | | | | | | | | | | 755,739 | | | | | | | | |
EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 177,985 | | | | | | 108,075 | | | | | | 95,789 | | | | | | [15] | | | | | | 381,849 | | | | | | | | |
Interest
|
| | | | 73,075 | | | | | | 60,736 | | | | | | (15,191) | | | | | | [16] | | | | | | 118,620 | | | | | | | | |
Property (including reimbursable)
|
| | | | 28,499 | | | | | | 30,605 | | | | | | 1,436 | | | | | | [17] | | | | | | 60,540 | | | | | | | | |
General and administrative
|
| | | | 20,796 | | | | | | 15,948 | | | | | | 3,448 | | | | | | [18] | | | | | | 40,192 | | | | | | | | |
Income taxes
|
| | | | 6,225 | | | | | | 928 | | | | | | — | | | | | | | | | | | | 7,153 | | | | | | | | |
Provisions for impairment
|
| | | | 2,720 | | | | | | 31,849 | | | | | | — | | | | | | | | | | | | 34,569 | | | | | | | | |
Total expenses
|
| | | | 309,300 | | | | | | 248,141 | | | | | | 85,482 | | | | | | | | | | | | 642,923 | | | | | | | | |
Gain on sales of real estate
|
| | | | 8,401 | | | | | | 76,074 | | | | | | — | | | | | | | | | | | | 84,475 | | | | | | | | |
Foreign currency and derivative gains, net
|
| | | | 804 | | | | | | — | | | | | | — | | | | | | | | | | | | 804 | | | | | | | | |
Equity in income of unconsolidated entities
|
| | | | — | | | | | | 447 | | | | | | — | | | | | | | | | | | | 447 | | | | | | | | |
Loss on extinguishment of debt
|
| | | | (46,473) | | | | | | (2,132) | | | | | | — | | | | | | | | | | | | (48,605) | | | | | | | | |
Income from continuing operations
|
| | | | 96,236 | | | | | | 120,723 | | | | | | (67,022) | | | | | | | | | | | | 149,937 | | | | | | | | |
Income attributable to noncontrolling interests
|
| | | | (296) | | | | | | (76) | | | | | | — | | | | | | | | | | | | (372) | | | | | | | | |
Income from continuing operations available to common stockholders
|
| | | $ | 95,940 | | | | | $ | 120,647 | | | | | $ | (67,022) | | | | | | | | | | | $ | 149,565 | | | | | | | | |
Income from continuing operations available to common stockholders per common share: | | ||||||||||||||||||||||||||||||||||||
Basic and diluted
|
| | | $ | 0.26 | | | | | $ | 0.50 | | | | | | | | | | | | | | | | | $ | 0.28 | | | | | | [20] | | |
Weighted average common shares outstanding: | | ||||||||||||||||||||||||||||||||||||
Basic
|
| | | | 371,522,607 | | | | | | 229,159,472 | | | | | | (67,435,394) | | | | | | | | | | | | 533,246,685 | | | | | | [20] | | |
Diluted
|
| | | | 371,601,901 | | | | | | 229,429,867 | | | | | | (67,188,665) | | | | | | | | | | | | 533,843,103 | | | | | | [20] | | |
| | |
Realty Income
Historical |
| |
VEREIT
Historical, As Reclassified (Note 3) |
| |
Merger
Adjustments (Note 5) |
| |
Item in
Note 5 |
| |
Pro Forma
Combined |
| |
Item in
Note 5 |
| ||||||||||||||||||
REVENUE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Rental (including reimbursable)
|
| | | $ | 1,639,533 | | | | | $ | 1,158,285 | | | | | $ | 58,161 | | | | | | [14] | | | | | $ | 2,855,979 | | | | | | | | |
Other
|
| | | | 12,092 | | | | | | 9,691 | | | | | | — | | | | | | | | | | | | 21,783 | | | | | | | | |
Total revenue
|
| | | | 1,651,625 | | | | | | 1,167,976 | | | | | | 58,161 | | | | | | | | | | | | 2,877,762 | | | | | | | | |
EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 677,038 | | | | | | 452,008 | | | | | | 375,298 | | | | | | [15] | | | | | | 1,504,344 | | | | | | | | |
Interest
|
| | | | 309,336 | | | | | | 265,660 | | | | | | (63,016) | | | | | | [16] | | | | | | 511,980 | | | | | | | | |
Property (including reimbursable)
|
| | | | 104,603 | | | | | | 122,967 | | | | | | 5,744 | | | | | | [17] | | | | | | 233,314 | | | | | | | | |
General and administrative
|
| | | | 73,215 | | | | | | 68,487 | | | | | | 15,509 | | | | | | [18] | | | | | | 157,211 | | | | | | | | |
Income taxes
|
| | | | 14,693 | | | | | | 4,513 | | | | | | — | | | | | | | | | | | | 19,206 | | | | | | | | |
Provisions for impairment
|
| | | | 147,232 | | | | | | 65,075 | | | | | | — | | | | | | | | | | | | 212,307 | | | | | | | | |
Merger-related costs
|
| | | | — | | | | | | — | | | | | | 76,000 | | | | | | [19] | | | | | | 76,000 | | | | | | | | |
Total expenses
|
| | | | 1,326,117 | | | | | | 978,710 | | | | | | 409,535 | | | | | | | | | | | | 2,714,362 | | | | | | | | |
Gain on sales of real estate
|
| | | | 76,232 | | | | | | 95,292 | | | | | | — | | | | | | | | | | | | 171,524 | | | | | | | | |
Foreign currency and derivative gains (losses), net
|
| | | | 4,585 | | | | | | (85,392) | | | | | | — | | | | | | | | | | | | (80,807) | | | | | | | | |
Equity in income and gain on disposition of unconsolidated entities
|
| | | | — | | | | | | 3,539 | | | | | | — | | | | | | | | | | | | 3,539 | | | | | | | | |
Loss on extinguishment of debt
|
| | | | (9,819) | | | | | | (1,486) | | | | | | — | | | | | | | | | | | | (11,305) | | | | | | | | |
Income from continuing operations
|
| | | | 396,506 | | | | | | 201,219 | | | | | | (351,374) | | | | | | | | | | | | 246,351 | | | | | | | | |
Income attributable to noncontrolling interests
|
| | | | (1,020) | | | | | | (91) | | | | | | — | | | | | | | | | | | | (1,111) | | | | | | | | |
Income from continuing operations available to common stockholders
|
| | | $ | 395,486 | | | | | $ | 201,128 | | | | | $ | (351,374) | | | | | | | | | | | $ | 245,240 | | | | | | | | |
Income from continuing operations available to common stockholders per common share: | | ||||||||||||||||||||||||||||||||||||
Basic
|
| | | $ | 1.15 | | | | | $ | 0.72 | | | | | | | | | | | | | | | | | $ | 0.48 | | | | | | [20] | | |
Diluted
|
| | | $ | 1.14 | | | | | $ | 0.72 | | | | | | | | | | | | | | | | | $ | 0.48 | | | | | | [20] | | |
Weighted average common shares outstanding: | | ||||||||||||||||||||||||||||||||||||
Basic
|
| | | | 345,280,126 | | | | | | 217,548,175 | | | | | | (55,824,097) | | | | | | | | | | | | 507,004,204 | | | | | | [20] | | |
Diluted
|
| | | | 345,415,258 | | | | | | 217,862,005 | | | | | | (55,548,984) | | | | | | | | | | | | 507,728,279 | | | | | | [20] | | |
| | |
March 31, 2021
|
| |||
Rent and tenant receivables and other assets, net
|
| | | $ | 368,926 | | |
Less: Straight-line rent receivable, net
|
| | | | (278,871) | | |
Less: Accounts receivable, net
|
| | | | (52,000) | | |
Operating lease right-of-use assets
|
| | | | 191,443 | | |
Investments in unconsolidated entities
|
| | | | 80,513 | | |
Restricted cash
|
| | | | 12,704 | | |
Other assets, net, as presented
|
| | | $ | 322,715 | | |
| | |
March 31, 2021
|
| |||
Straight-line rent receivable, net
|
| | | $ | 278,871 | | |
Accounts receivable, net
|
| | | | 52,000 | | |
Accounts receivable, net, as presented
|
| | | $ | 330,871 | | |
| | |
March 31, 2021
|
| |||
Intangible lease assets
|
| | | $ | 1,883,826 | | |
Less: Accumulated amortization
|
| | | | (951,994) | | |
Lease intangible assets, net, as presented
|
| | | $ | 931,832 | | |
| | |
March 31, 2021
|
| |||
Deferred rent and other liabilities
|
| | | $ | 62,944 | | |
Operating lease liabilities
|
| | | | 202,024 | | |
Other liabilities, as presented
|
| | | $ | 264,968 | | |
| | |
March 31, 2021
|
| |||
Preferred stock
|
| | | $ | 149 | | |
Additional paid-in capital
|
| | | | 371,632 | | |
Preferred stock and paid-in capital, as presented
|
| | | $ | 371,781 | | |
| | |
March 31, 2021
|
| |||
Common stock
|
| | | $ | 2,291 | | |
Additional paid-in capital
|
| | | | 13,350,661 | | |
Less: Additional paid-in capital related to preferred stock
|
| | | | (371,632) | | |
Common stock and paid-in capital, as presented
|
| | | $ | 12,981,320 | | |
| | |
For the three
months ended March 31, 2021 |
| |
For the year ended
December 31, 2020 |
| ||||||
Fees from managed partnerships
|
| | | $ | 500 | | | | | $ | 3,081 | | |
Other income, net
|
| | | | 3,666 | | | | | | 6,610 | | |
Other, as presented
|
| | | $ | 4,166 | | | | | $ | 9,691 | | |
| | |
For the thre
months ended March 31, 2021 |
| |
For the year ended
December 31, 2020 |
| ||||||
Acquisition-related
|
| | | $ | 1,354 | | | | | $ | 4,790 | | |
Litigation and non-routine costs, net
|
| | | | 68 | | | | | | 2,348 | | |
General and administrative
|
| | | | 14,526 | | | | | | 61,349 | | |
General and administrative, as presented
|
| | | $ | 15,948 | | | | | $ | 68,487 | | |
| | |
Amount
|
| |||
Estimated shares of VEREIT common stock and VEREIT OP common units to be exchanged(a)
|
| | | | 229,281,987 | | |
Exchange Ratio
|
| | | | 0.705 | | |
Estimated shares of Realty Income common stock to be issued
|
| | | | 161,643,801 | | |
Closing price of Realty Income common stock on June 1, 2021(b)
|
| | | $ | 69.35 | | |
Estimated fair value of Realty Income common stock to be issued to former holders of VEREIT common stock and VEREIT OP common units(b)
|
| | | $ | 11,209,998 | | |
Redemption of VEREIT Series F Preferred Stock and VEREIT OP Series F Preferred OP Units(c)
|
| | | | 374,066 | | |
Estimated fair value of VEREIT’s equity-based compensation awards attributable
to pre-combination services(d) |
| | | | 33,630 | | |
Consideration to be transferred
|
| | | $ | 11,617,694 | | |
Preliminary fair value of VEREIT mortgages payable and notes payable assumed
by Realty Income |
| | | | 6,021,649 | | |
Total estimated preliminary purchase price
|
| | | $ | 17,639,343 | | |
| | |
Amount
|
| |||
Total estimated preliminary purchase price
|
| | | $ | 17,639,343 | | |
Assets: | | | | | | | |
Real estate held for investment
|
| | | $ | 14,017,258 | | |
Real estate and lease intangibles held for sale
|
| | | | 11,300 | | |
Lease intangible assets
|
| | | | 2,710,838 | | |
Cash and cash equivalents
|
| | | | 318,561 | | |
Accounts receivable
|
| | | | 52,000 | | |
Other assets
|
| | | | 347,181 | | |
Total assets acquired
|
| | | $ | 17,457,138 | | |
| | |
Amount
|
| |||
Liabilities: | | | | | | | |
Distributions payable
|
| | | $ | 105,948 | | |
Accounts payable and accrued expenses(a)
|
| | | | 163,280 | | |
Lease intangible liabilities
|
| | | | 499,701 | | |
Other liabilities
|
| | | | 264,968 | | |
Mortgages payable
|
| | | | 1,096,403 | | |
Notes payable
|
| | | | 4,925,246 | | |
Total liabilities assumed
|
| | | $ | 7,055,546 | | |
Estimated preliminary fair value of net assets acquired
|
| | | $ | 10,401,592 | | |
Add: Estimated preliminary fair value of noncontrolling interests acquired
|
| | | | 1,171 | | |
Goodwill
|
| | | $ | 1,217,273 | | |
|
| | |
Estimated
fair value |
| |
Less: Elimination
of historical carrying value |
| |
Total pro forma
adjustment |
| |||||||||
Land
|
| | | $ | 3,292,005 | | | | | $ | (2,698,232) | | | | | $ | 593,773 | | |
Buildings and improvements
|
| | | | 10,725,253 | | | | | | (9,941,903) | | | | | | 783,350 | | |
| | |
Amount
|
| |||
Preliminary allocation of fair value: | | | | | | | |
In-place leases
|
| | | $ | 2,063,904 | | |
Leasing commissions and marketing costs
|
| | | | 290,457 | | |
Above-market lease assets
|
| | | | 356,477 | | |
Less: Elimination of historical carrying value of lease intangible assets, net
|
| | | | (931,832) | | |
Total pro forma adjustment
|
| | | $ | 1,779,006 | | |
| | |
Mortgages
payable |
| |
Notes
payable |
| ||||||
Estimated fair value
|
| | | $ | 1,096,403 | | | | | $ | 4,925,246 | | |
Less: Elimination of historical carrying value, including unamortized
deferred financing costs and net discounts |
| | | | (1,035,328) | | | | | | (4,586,252) | | |
Total pro forma adjustment
|
| | | $ | 61,075 | | | | | $ | 338,994 | | |
| | |
Preferred stock
and paid-in capital |
| |
Common stock
and paid-in capital |
| |
Distributions
in excess of net income |
| |
Accumulated
other comprehensive (loss) income |
| ||||||||||||
Redemption of the VEREIT Series F Preferred Stock(a)
|
| | | $ | (371,781) | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Issuance of Realty Income common stock(b)
|
| | | | — | | | | | | 11,209,998 | | | | | | — | | | | | | — | | |
Settlement and exchange of VEREIT equity-based awards(c)
|
| | | | — | | | | | | 33,630 | | | | | | — | | | | | | — | | |
Elimination of VEREIT’s historical equity balances
|
| | | | — | | | | | | (12,981,320) | | | | | | 6,610,678 | | | | | | (634) | | |
Realty Income merger related costs(d)
|
| | | | — | | | | | | — | | | | | | (29,206) | | | | | | — | | |
Total pro forma adjustment
|
| | | $ | (371,781) | | | | | $ | (1,737,692) | | | | | $ | 6,581,472 | | | | | $ | (634) | | |
| | |
Elimination of
historical amounts(a) |
| |
Recognition of
post-combination amounts |
| |
Total
pro forma adjustment |
| |||||||||
For the three months ended March 31, 2021 | | | | | | | | | | | | | | | | | | | |
Straight-line rents
|
| | | $ | (4,470) | | | | | $ | 16,737 | | | | | $ | 12,267 | | |
Amortization of above-market and below-market lease intangibles
|
| | | | 1,537 | | | | | | 4,656 | | | | | | 6,193 | | |
Total pro forma adjustment
|
| | | $ | (2,933) | | | | | $ | 21,393 | | | | | $ | 18,460 | | |
For the year ended December 31, 2020 | | | | | | | | | | | | | | | | | | | |
Straight-line rents
|
| | | $ | (23,149) | | | | | $ | 59,908 | | | | | $ | 36,759 | | |
Amortization of above-market and below-market lease intangibles
|
| | | | 2,777 | | | | | | 18,625 | | | | | | 21,402 | | |
Total pro forma adjustment
|
| | | $ | (20,372) | | | | | $ | 78,533 | | | | | $ | 58,161 | | |
| | |
For the three months
ended March 31, 2021 |
| |
For the year ended
December 31, 2020 |
| ||||||
Buildings and improvements
|
| | | $ | 99,405 | | | | | $ | 397,618 | | |
Tenant improvements
|
| | | | 31,095 | | | | | | 124,379 | | |
In-place leases and leasing commissions and marketing costs
|
| | | | 72,167 | | | | | | 288,667 | | |
Less: Elimination of historical depreciation and amortization(a)
|
| | | | (106,878) | | | | | | (435,366) | | |
Total pro forma adjustment
|
| | | $ | 95,789 | | | | | $ | 375,298 | | |
| | |
For the three months
ended March 31, 2021 |
| |
For the year ended
December 31, 2020 |
| ||||||
Elimination of historical deferred financing costs amortization
|
| | | $ | (2,555) | | | | | $ | (15,114) | | |
Elimination of historical amortization of net (discounts)/premiums
|
| | | | (248) | | | | | | 1,650 | | |
Amortization of the fair value adjustment on mortgages and notes payable
|
| | | | (12,388) | | | | | | (49,552) | | |
Total pro forma adjustment
|
| | | $ | (15,191) | | | | | $ | (63,016) | | |
| | |
For the three months
ended March 31, 2021 |
| |
For the year ended
December 31, 2020 |
| ||||||
Numerator | | | | | | | | | | | | | |
Pro forma income from continuing operations available to common stockholders
|
| | | $ | 149,565 | | | | | $ | 245,240 | | |
Denominator | | | | | | | | | | | | | |
Realty Income historical weighted average common shares outstanding
|
| | | | 371,522,607 | | | | | | 345,280,126 | | |
VEREIT common stock and VEREIT OP common units converted into Realty Income common stock (229,281,987 shares and units outstanding, multiplied by the Exchange Ratio of 0.705)
|
| | | | 161,643,801 | | | | | | 161,643,801 | | |
VEREIT DSU Awards converted into Realty Income common
stock (113,868 units, multiplied by the Exchange Ratio of 0.705) |
| | | | 80,277 | | | | | | 80,277 | | |
Pro forma weighted average common shares outstanding –
basic |
| | | | 533,246,685 | | | | | | 507,004,204 | | |
Realty Income historical weighted average dilutive shares
|
| | | | 79,294 | | | | | | 135,132 | | |
Unvested VEREIT equity-based awards exchanged into Realty
Income equity-based awards |
| | | | 517,124 | | | | | | 588,943 | | |
Pro forma weighted average common shares outstanding –
diluted |
| | | | 533,843,103 | | | | | | 507,728,279 | | |
Pro forma income from continuing operations available to common stockholders per common share:
|
| | | | | | | | | | | | |
Basic and diluted
|
| | | $ | 0.28 | | | | | $ | 0.48 | | |
| | |
Rights of Realty Income Stockholders
|
| |
Rights of VEREIT Stockholders
|
|
Authorized Capital
Stock or Shares of Beneficial Interest |
| |
Realty Income is authorized to issue an aggregate of 810,100,000 shares of capital stock, consisting of (1) 740,200,000 shares of common stock, par value $0.01 per share; and (2) 69,900,000 shares of preferred stock, par value $0.01 per share.
|
| |
VEREIT is authorized to issue an aggregate of 1,610,000,000 shares of capital stock, consisting of (1) 1,500,000,000 shares of common stock, par value $0.01 per share; (2) 10,000,000 shares of manager’s stock, par value $0.01 per share; and (3) 100,000,000 shares of preferred stock, par value $0.01 per share.
|
|
| | |
As of the record date, there were issued and outstanding shares of Realty Income common stock. There are no shares of Realty Income preferred stock outstanding.
Preferred Stock. The Realty Income board of directors is authorized to cause Realty Income to issue preferred stock from time-to-time in such class or series and with such preferences, conversion or other rights, voting powers, restrictions, limitations as to transferability, dividends or other distributions, qualifications or other provisions as may be fixed by the Realty Income board of directors.
|
| |
As of the record date, there were issued and outstanding shares of VEREIT common stock and shares of VEREIT Series F Preferred Stock. There are no shares of VEREIT manager’s stock outstanding.
Preferred Stock. The VEREIT board of directors is authorized to cause VEREIT to issue or classify or reclassify any unissued shares of preferred stock from time-to-time in such classes or series and with such preferences, conversion or other rights, voting powers, restrictions, limitations as to dividend rights, qualifications, liquidation preferences or other terms or conditions of redemption of such shares as may be fixed by the VEREIT board of directors.
|
|
| | |
Rights of Realty Income Stockholders
|
| |
Rights of VEREIT Stockholders
|
|
Voting Rights
|
| |
Each outstanding share of Realty Income common stock is entitled to one vote per share on all matters upon which common stockholders are entitled to vote.
If a quorum exists, action on a matter is approved if the votes cast favoring the action exceed the votes cast opposing the action, except for (i) votes pertaining to Realty Income qualifying or continuing to qualify as a REIT, which requires the affirmative vote of the holders of at least two-thirds of all votes entitled to be cast on the matter, and (ii) a dissolution, share exchange, merger, consolidation or sale of substantially all of Realty Income’s assets, or amendment to the Realty Income Articles, which requires the affirmative vote of the holders of at least a majority of all votes entitled to be cast on the matter. See “Vote on Mergers, Consolidations or Sales of Substantially All Assets” and “Charter Amendments.”
|
| |
Each outstanding share of VEREIT common stock is entitled to one vote per share on all matters upon which stockholders are entitled to vote.
Each outstanding share of VEREIT Series F Preferred Stock is entitled to one vote per share on certain limited matters, unless the shares have been redeemed or called for redemption, including the election of two directors whenever dividends on any shares of VEREIT Series F Preferred Stock shall be in arrears for 18 or more dividend periods; the issuance, increase in or reclassification of any class or series of VEREIT capital stock ranking senior to the VEREIT Series F Preferred Stock; an amendment of the VEREIT Articles that materially and adversely affects the VEREIT Series F Preferred Stock; or a consolidation or merger, or a share exchange that affects the VEREIT Series F Preferred Stock, unless each share of VEREIT Series F Preferred Stock then outstanding remains outstanding without a material adverse change to its terms or is converted into preferred stock of the surviving entity having terms substantially identical to those of the VEREIT Series F Preferred Stock.
Generally, if a quorum exists and except as otherwise required by statute or the VEREIT Articles, action on a matter is approved if the votes cast favoring the action exceed the votes cast opposing the action, except for (i) a merger, consolidation or sale of substantially all of VEREIT’s assets, which requires the affirmative vote of the holders of at least a majority of all votes entitled to be cast on the matter; (ii) removal of a director with or without cause, which requires the affirmative vote of two-thirds of the total votes entitled to be cast in the election of directors; (iii) amendments to certain provisions of the VEREIT Articles, which requires the affirmative vote of the holders of at least two-thirds of all the votes entitled to be cast on the matter; and (iv) unless the shares of VEREIT Series F Preferred Stock have
|
|
| | |
Rights of Realty Income Stockholders
|
| |
Rights of VEREIT Stockholders
|
|
| | | | | |
been redeemed or called for redemption, certain matters relating to the VEREIT Series F Preferred Stock, as described above, which require the affirmative vote of the holders of at least two-thirds of the outstanding shares of the VEREIT Series F Preferred Stock. See “Vote on Mergers, Consolidations or Sales of Substantially All Assets” and “Charter Amendments.”
|
|
Cumulative Voting
|
| |
Realty Income does not permit cumulative voting with respect to the election of its directors.
|
| |
VEREIT does not permit cumulative voting with respect to the election of its directors.
|
|
Size of the Board of
Directors |
| |
At any regular meeting or at any special meeting called for that purpose, a majority of Realty Income’s entire board of directors may establish, increase or decrease the number of directors; provided that the number thereof shall not be less than the minimum number required by the Maryland General Corporation Law. Directors are elected at each annual meeting of stockholders and hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her death, retirement, resignation or removal.
As of the record date, the Realty Income board of directors consists of nine directors. Upon closing of the Merger, the Realty Income board of directors will consist of directors.
|
| |
Solely by resolution, a majority of VEREIT’s entire board of directors may establish, increase or decrease the number of directors; provided that the number thereof shall not be less than the minimum number required by the Maryland General Corporation Law nor more than 15. Each director is elected at each annual meeting of stockholders and holds office until the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her death, resignation or removal.
As of the record date, the VEREIT board of directors consists of nine directors.
|
|
Classified Board / Term
of Directors |
| |
The Realty Income board of directors is not classified. The directors of Realty Income hold office until the next annual meeting of stockholders and until their successors are elected and qualified.
|
| |
The VEREIT board of directors is not classified. The directors of VEREIT hold office for a term of one year until the next annual meeting of VEREIT stockholders and serve until their successors are elected and qualified.
|
|
Removal of Directors
|
| |
The MGCL provides that stockholders may remove directors with or without cause unless the Realty Income Articles provide that directors may be removed only for cause. However, if a director is elected by a particular voting group, that director may only be removed by the requisite vote of that voting group.
The Realty Income Articles provide that subject to the rights of one or more classes or series of Realty Income preferred stock to elect or remove one or
|
| |
The MGCL provides that stockholders may remove directors with or without cause unless the VEREIT Articles provide that directors may be removed only for cause. However, if a director is elected by a particular voting group, that director may only be removed by the requisite vote of that voting group.
The VEREIT Articles provide that, subject to the rights of one or more classes or series of VEREIT preferred stock to elect or remove one or more
|
|
| | |
Rights of Realty Income Stockholders
|
| |
Rights of VEREIT Stockholders
|
|
| | |
more directors, any Realty Income director, or Realty Income’s entire board of directors, may be removed only with cause by the affirmative vote of holders of at least a majority of all shares of capital stock entitled to vote on the election of directors voting together as a single class.
“Cause” shall mean with respect to any particular director a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to Realty Income through bad faith or active and deliberate dishonesty.
|
| |
directors, any VEREIT director may be removed with or without cause by the affirmative vote of holders of at least two-thirds of all shares entitled to vote on the election of directors.
|
|
Election of Directors
|
| |
Directors are elected at the annual meeting of stockholders by the affirmative vote of a majority of the votes cast with respect to such director nominee; provided, however, that if the Realty Income board of directors determines that the number of nominees exceeds the number of directors to be elected at such meeting, each of the directors shall be elected by the affirmative vote of a plurality of the votes cast.
|
| |
Directors are elected at the annual meeting of stockholders by the affirmative vote of a majority of the votes cast with respect to such director nominee; provided, however, that each of the directors shall be elected by the affirmative vote of a plurality of the votes cast if (i) the secretary receives notice that a stockholder has validly nominated a person for election to the board of directors and (ii) the nomination has not been withdrawn on or before the 10th day before VEREIT first mails its notice for such meeting.
|
|
Filling Vacancies of
Directors |
| |
Any vacancies on the Realty Income board of directors for any cause other than an increase in the number of directors can be filled by a majority of the remaining directors, even if the remaining directors do not constitute a quorum. Vacancies created through an increase in the number of directors may be filled by the affirmative vote of the entire board of directors.
|
| |
Any vacancies on the VEREIT board of directors for any cause, including an increase in the number of directors, can be filled by a majority of the remaining directors, even if the remaining directors do not constitute a quorum.
|
|
Charter Amendments
|
| |
The MGCL provides that, if the amendment is declared advisable by the Board of Directors, the affirmative vote of two-thirds of all outstanding stock entitled to vote is required to amend the charter of a Maryland corporation. However, the MGCL permits a corporation to reduce the voting requirement in its charter to allow for the approval of an amendment to the charter by the affirmative vote of no less than a majority of the shares outstanding and entitled to vote on the matter.
|
| |
The MGCL provides that, if the amendment is declared advisable by the Board of Directors, the affirmative vote of two-thirds of all outstanding stock entitled to vote is required to amend the charter of a Maryland corporation. However, the MGCL permits a corporation to reduce the voting requirement in its charter to allow for the approval of an amendment to the charter by the affirmative vote of no less than a majority of the shares outstanding and entitled to vote on the matter.
|
|
| | |
Rights of Realty Income Stockholders
|
| |
Rights of VEREIT Stockholders
|
|
| | |
The Realty Income Articles provide that an amendment to the Realty Income Articles declared advisable by the Board of Directors may be approved by the affirmative vote of a majority of the shares outstanding and entitled to vote on the matter.
|
| |
The VEREIT Articles provide that VEREIT reserves the right to make any amendment now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the VEREIT Articles, of any shares of outstanding stock. In addition, any amendments to the provisions relating to the amendment of the VEREIT Articles and the removal of directors may only be made if declared advisable by the VEREIT board of directors and approved by the affirmative vote of two-thirds of all votes entitled to be cast. VEREIT may, with the approval of a majority of the VEREIT board of directors and without any action by the stockholders, amend the VEREIT Articles to increase or decrease the aggregate number of authorized shares or the number of authorized shares of any class or series that VEREIT has authority to issue.
|
|
Bylaw Amendments
|
| |
The Realty Income board of directors has the power to adopt, amend or repeal the Realty Income Bylaws, provided, however, the provisions related to (i) the written statement Realty Income is required to furnish to stockholders, (ii) investment policy and restrictions, (iii) the annual report and (iv) the definitions in Article I of the Realty Income Bylaws to the extent used in the provision related to amendments to the Realty Income Bylaws, may not be amended, repealed or modified, or inconsistent provisions adopted with respect thereto, without the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast on the matter. In addition, pursuant to a binding proposal that is properly submitted by stockholders for approval at a duly called annual meeting or special meeting of stockholders, the stockholders shall have the power, by the affirmative vote of a majority of all votes entitled to be cast on the matter, to alter or repeal any provision of the Realty Income Bylaws and to adopt new provisions of the Realty Income Bylaws, in any such case to the extent permitted by and consistent with the Realty Income Articles, Realty Income Bylaws and
|
| |
The VEREIT board of directors shall have the power to alter, amend or repeal the VEREIT Bylaws, provided, however, the provisions related to (i) the Maryland Control Share Acquisition Act, (ii) the Maryland Business Combinations Statute, and (iii) limitations on the power of the VEREIT board of directors to amend the VEREIT Bylaws may not be altered, amended or repealed, without the affirmative vote of the majority of the votes cast by the VEREIT common stockholders. To the extent permitted by law, VEREIT stockholders may also amend the VEREIT Bylaws by the affirmative vote of a majority of all the votes entitled to be cast on the matter pursuant to a binding proposal submitted by a stockholder that (i) owned shares of VEREIT common stock in the amount and for the duration of time specified in Rule 14a-8 under the Exchange Act on the date the bylaw proposal is delivered or mailed to and received by the secretary in accordance with the VEREIT Bylaws and (ii) continuously owns such shares through the date of the annual or special meeting of stockholders where such proposal will be considered.
|
|
| | |
Rights of Realty Income Stockholders
|
| |
Rights of VEREIT Stockholders
|
|
| | | applicable law. | | | | |
Vote on Merger,
Consolidations or Sales of Substantially All Assets |
| |
The MGCL provides that a dissolution, merger, consolidation, share exchange or sale of substantially all of a corporation’s assets must be declared advisable by the Board of Directors and approved by the stockholders of a corporation by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter. However, the MGCL permits a corporation in its charter to reduce the voting requirement to allow for the approval of a dissolution, merger, consolidation, share exchange or sale of substantially all of the corporation’s assets by the affirmative vote of no less than a majority of the votes entitled to be cast on the matter.
Notwithstanding any provision of law permitting or requiring any action to be taken or authorized by the affirmative vote of the holders of a greater number of votes, the Realty Income Articles provide that any action shall be effective and valid if taken or authorized by the affirmative vote of a majority of all the votes entitled to be cast on the matter.
|
| |
The MGCL provides that a dissolution, merger, consolidation, share exchange or sale of substantially all of a corporation’s assets must be declared advisable by the Board of Directors and approved by the stockholders of a corporation by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter. However, the MGCL permits a corporation in its charter to reduce the voting requirement to allow for the approval of a dissolution, merger, consolidation, share exchange or sale of substantially all of the corporation’s assets by the affirmative vote of no less than a majority of the votes entitled to be cast on the matter.
Notwithstanding any provision of law permitting or requiring any action to be taken or authorized by the affirmative vote of the holders of a greater number of votes, the VEREIT Articles provide that any action shall be effective and valid if declared advisable by the VEREIT board of directors and taken or authorized by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter.
|
|
Ownership Limitations
|
| |
With certain exceptions, the actual, constructive or beneficial ownership by any person of more than 9.8% (by value or by number of shares, whichever is more restrictive) of the outstanding shares of Realty Income common stock is generally prohibited.
|
| |
With certain exceptions, the constructive or beneficial ownership by any person of more than 9.8% in value of the aggregate of VEREIT’s outstanding shares of stock or more than 9.8% (by value or by number of shares, whichever is more restrictive) of the outstanding shares of VEREIT common stock is generally prohibited.
|
|
| | |
The Realty Income board of directors, in its sole discretion, may exempt a person from the limitation on a person beneficially owning common shares in excess of the ownership limitation if the board obtains such representation and undertakings from such person as are reasonably necessary to ascertain that no individual’s beneficial ownership of such common shares will violate the ownership limitation or that such violation will not cause Realty Income to fail to qualify as a REIT under the Code,
|
| |
The VEREIT board of directors, in its sole discretion, may exempt a person from the limitation of a person beneficially or constructively owning shares in excess of the ownership limitation if (i) the board obtains such representation and undertakings from such person as are reasonably necessary to ascertain that no individual’s beneficial or constructive ownership of such shares would result in VEREIT being “closely held” under the Code or otherwise failing to qualify as a REIT under the Code,
|
|
| | |
Rights of Realty Income Stockholders
|
| |
Rights of VEREIT Stockholders
|
|
| | |
and agrees that any violation of such representations or undertakings or attempted violation will result in such common stock being transferred into a trust in accordance with the Realty Income Articles.
The Realty Income board of directors, in its sole discretion, may exempt a person from the limitation on a person constructively owning common shares in excess of the ownership limitation if such person does not and represents that it will not own, actually or constructively, an interest in a tenant of Realty Income that would cause Realty Income to own, actually or constructively, more than a 9.8% interest in such tenant and Realty Income obtains such representations and undertakings from such person as are reasonably necessary to ascertain this fact and agrees that any violation or attempted violation will result in such common shares being transferred to a trust in accordance with the Realty Income Articles. Notwithstanding the foregoing, the inability of a person to make the described certification shall not prevent the Realty Income board of directors, in its sole discretion, from exempting such person from the limitation on a person constructively owning common shares in excess of the ownership limit if the Realty Income board of directors determines that the resulting application of Section 856(d)(2)(B) of the Code would affect the characterization of less than 0.5% of the gross income of Realty Income in any taxable year, after taking into account the effect of this sentence with respect to all other common shares to which this sentence applies.
Prior to granting any exception to the ownership limitations, the Realty Income board of directors may require a ruling from the IRS, or an opinion of counsel, in either case in form and substance satisfactory to the Realty Income board of directors in its sole discretion, as it may deem necessary or advisable in order to determine or ensure Realty Income’s status as a REIT.
|
| |
(ii) if such person does not and represents that it will not own, actually or constructively, an interest in a tenant of VEREIT that would cause VEREIT to own, actually or constructively, more than a 9.8% interest in such tenant and VEREIT obtains such representations and undertakings from such person as are reasonably necessary to ascertain this fact and (iii) agrees that any violation or attempted violation will result in such shares being transferred to a trust in accordance with the VEREIT Articles. For purposes of the foregoing sentence, a tenant from whom VEREIT derives and is expected to continue to derive a sufficiently small amount of revenue such that, in the opinion of the VEREIT board of directors, rent from such tenant would not adversely affect VEREIT’s ability to qualify as a REIT will not be treated as a tenant of VEREIT.
Prior to granting any exception to the ownership limitations, the VEREIT board of directors may require a ruling from the IRS, or an opinion of counsel, in either case in form and substance satisfactory to the VEREIT board of directors in its sole discretion, as it may deem necessary or advisable in order to determine or ensure VEREIT’s status as a REIT.
|
|
| | |
Rights of Realty Income Stockholders
|
| |
Rights of VEREIT Stockholders
|
|
Special Meetings of the
Stockholders |
| |
A special meeting of Realty Income stockholders may be called at any time by the Realty Income board of directors, the chairman of the board, the president or the chief executive officer or by the secretary upon the written request of the holders of shares representing at least a majority of all the votes entitled to be cast on any issue proposed to be considered at any such special meeting of stockholders.
|
| |
A special meeting of VEREIT’s stockholders may be called by the VEREIT board of directors, the chairman of the board, the president, the chief executive officer or by the secretary upon the written request of the holders of shares representing at least a majority of all the votes entitled to be cast on any issue proposed to be considered at any such special meeting of stockholders.
|
|
|
Business transacted at the special meeting of stockholders will be limited to the purposes stated in the notice.
|
| |
Business transacted at the special meeting of stockholders will be limited to the purposes stated in the notice.
|
| ||
Advance Notice
Provisions for Stockholder Nominations and Stockholder Business Proposals |
| |
The Realty Income Bylaws provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to the Realty Income board of directors and the proposal of business to be considered by stockholders at the annual meeting may be made only:
•
pursuant to Realty Income’s notice of meeting;
•
by or at the direction of the Realty Income board of directors; or
•
upon timely and proper notice by a stockholder who is a stockholder of record at the time of giving of notice and entitled to vote at the meeting.
In general, notice of stockholder nominations or business for an annual meeting must be delivered not earlier than the 150th day nor later than 5:00 p.m., Pacific Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, unless the annual meeting is advanced or delayed more than 30 days from the anniversary date of the preceding year’s annual proxy meeting, in which case notice must be delivered not earlier than the 150th day nor later than 5:00 p.m., Pacific Time, on the later date of the 120th day prior to the date of such annual meeting or the 10th day following the day on which public announcement of the date of the meeting is first made. Notice of stockholder nominations for a special
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The VEREIT Bylaws provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to the VEREIT board of directors and the proposal of business to be considered by stockholders at the annual meeting may be made only:
•
pursuant to VEREIT’s notice of meeting;
•
by or at the direction of the VEREIT board of directors; or
•
upon timely and proper notice by a stockholder who is a stockholder of record at the time of giving of notice and entitled to vote at the meeting.
In general, notice of stockholder nominations or business for an annual meeting must be delivered not earlier than 5:00 p.m., Eastern Time, on the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, unless the annual meeting is advanced or delayed more than 30 days from the anniversary date of the preceding year’s annual meeting, in which case notice must be delivered not earlier than 5:00 p.m., Eastern Time, on the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the date of such annual meeting or the 10th day following the day on which public announcement of the date of the meeting is first made.
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Rights of Realty Income Stockholders
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Rights of VEREIT Stockholders
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meeting must be delivered not earlier than the 120th day prior to the special meeting, and not later than 5:00 p.m., Pacific Time, on the later of the 90th day prior to the meeting or the 10th day following the day on which the public announcement is first made of the date of the meeting and the nominees proposed by the Realty Income board of directors.
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Notice of stockholder nominations for a special meeting must be delivered not earlier than the 120th day prior to the special meeting, and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to the special meeting or the 10th day following the day on which the public announcement is first made of the date of the special meeting and the nominees proposed by the VEREIT board of directors.
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Notice of Stockholder
Meetings |
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Not less than 10 days nor more than 90 days before each meeting of stockholders, a written notice shall be mailed or electronic transmission shall be delivered to each stockholder entitled to vote at or to notice of such meeting at the address as it appears on the records of Realty Income, if written notice is sent, or to the address or number of the stockholder at which the stockholder receives electronic transmission unless such stockholder waives notice before or after the meeting.
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Not less than 10 days nor more than 90 days before each meeting of stockholders, a written notice shall be mailed or electronic transmission shall be delivered to each stockholder entitled to vote at or to notice of such meeting at the address as it appears on the records of VEREIT, if written notice is sent, or to the address or number of the stockholder at which the stockholder receives electronic transmission unless such stockholder waives notice before or after the meeting.
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State Anti-Takeover
Statutes |
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Under the MGCL, certain “business combinations” (which include a merger, consolidation, share exchange and certain transfers, issuances or reclassifications of equity securities) between a Maryland corporation and any person who beneficially owns 10% or more of the voting power of the corporation’s outstanding voting stock, or an affiliate or associate of the corporation who beneficially owned 10% or more of the voting power of the corporation’s then outstanding stock at any time within the preceding two years, in each case referred to as an “interested stockholder,” or an affiliate thereof, are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by
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Under the MGCL, certain “business combinations” (which include a merger, consolidation, share exchange and certain transfers, issuances or reclassifications of equity securities) between a Maryland corporation and any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock, or an affiliate or associate of the corporation who beneficially owned, directly or indirectly, 10% or more of the voting power of the corporation’s then outstanding stock at any time within the preceding two years, in each case referred to as an “interested stockholder,” or an affiliate thereof, are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the
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Rights of Realty Income Stockholders
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Rights of VEREIT Stockholders
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the interested stockholder or its affiliates or associates. The super-majority vote requirements do not apply, however, to business combinations that are approved or exempted by the board of directors prior to the time that the interested stockholder becomes an interested stockholder or if the business combination satisfies certain minimum price, form of consideration and procedural requirements. To date, Realty Income has not opted out of the business combination provisions of the MGCL.
As permitted by the MGCL, the Realty Income Bylaws contain a provision exempting from the control share acquisition statute all shares of Realty Income capital stock to the fullest extent permitted by the MGCL. See “Maryland Control Share Acquisition Statute.”
Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of the following five provisions:
•
a classified board;
•
a two-thirds stockholder vote requirement for removing a director;
•
a requirement that the number of directors be fixed only by vote of the directors;
•
a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred; and
•
a requirement that requires the request of the holders of at least a majority of all votes entitled to be cast to call a special meeting of stockholders.
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corporation other than shares held by the interested stockholder or its affiliates or associates. The super-majority vote requirements do not apply, however, to business combinations that are approved or exempted by the board of directors prior to the time that the interested stockholder becomes an interested stockholder or if the business combination satisfies certain minimum price, form of consideration and procedural requirements. To date, VEREIT has opted out of the business combination provisions of the MGCL.
As permitted by the MGCL, the VEREIT Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions of any shares of VEREIT capital stock to the fullest extent permitted by the MGCL. See “Maryland Control Share Acquisition Statute.”
Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of the following five provisions:
•
a classified board;
•
a two-thirds stockholder vote requirement for removing a director;
•
a requirement that the number of directors be fixed only by vote of the directors;
•
a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred; and
•
a requirement that requires the request of the holders of at least a majority of all votes entitled to be cast to call a special meeting of stockholders.
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Rights of Realty Income Stockholders
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Rights of VEREIT Stockholders
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To date, Realty Income has not made any of the elections described above, although, independent of these elections, the Realty Income Articles and Realty Income Bylaws contain provisions that directors may be removed only for cause and by the vote of a majority of the votes entitled to be cast and that, generally, vacancies may be filled only by the Realty Income board of directors.
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To date, VEREIT has not made any of the elections described above, although, independent of these elections, the VEREIT Articles and VEREIT Bylaws contain provisions that directors may be removed by the vote of two-thirds of the votes entitled to be cast, that the number of directors will be determined by the affirmative vote of a majority of the VEREIT board of directors, that, generally, vacancies may be filled only by the VEREIT board of directors, and that a request by stockholders to call a special meeting requires at least a majority of all votes entitled to be cast.
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Liability and
Indemnification of Officers and Directors |
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The MGCL permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment as being material to the cause of action. The Realty Income Articles contain such a provision that eliminates such liability to the maximum extent permitted by the MGCL.
The MGCL requires a corporation (unless its charter provides otherwise, which Realty Income’s Articles do not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or are threatened to be made a party by reason of their service in those or other capacities unless it is established that:
•
the act or omission of the director or officer was material to the matter giving rise to the proceeding and
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The MGCL permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment as being material to the cause of action. The VEREIT Articles contain such a provision that eliminates such liability to the maximum extent permitted by the MGCL.
The MGCL requires a corporation (unless its charter provides otherwise, which VEREIT’s Articles do not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or are threatened to be made a party by reason of their service in those or other capacities unless it is established that:
•
the act or omission of the director or officer was material to the matter giving rise to the proceeding and
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Rights of Realty Income Stockholders
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Rights of VEREIT Stockholders
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(1) was committed in bad faith or (2) was the result of active and deliberate dishonesty;
•
the director or officer actually received an improper personal benefit in money, property or services; or
•
in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.
However, under the MGCL, a Maryland corporation may not indemnify a director or officer for an adverse judgment in a suit by or in the right of the corporation or if the director or officer was adjudged liable on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses.
In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and a written undertaking by the director or on the director’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director did not meet the standard of conduct.
The Realty Income Articles obligate Realty Income to provide any indemnification permitted by the laws of Maryland and shall indemnify directors, officers, agents and employees as follows:
•
Realty Income shall indemnify any individual who is a present or former director or officer of Realty Income who is made a party to a proceeding by reason of his or her service in that capacity; and
•
Realty Income shall indemnify any individual who, while a director of Realty Income and at the request of
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(1) was committed in bad faith or (2) was the result of active and deliberate dishonesty;
•
the director or officer actually received an improper personal benefit in money, property or services; or
•
in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.
However, under the MGCL, a Maryland corporation may not indemnify a director or officer for an adverse judgment in a suit by or in the right of the corporation or if the director or officer was adjudged liable on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses.
In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and a written undertaking by the director or on the director’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director did not meet the standard of conduct.
The VEREIT Articles obligate VEREIT to provide any indemnification permitted by the laws of Maryland and shall indemnify directors and officers as follows:
•
VEREIT shall indemnify any individual who is a present or former director or officer of VEREIT who is made or threatened to be made a party to a proceeding by reason of his or her service in that capacity;
•
VEREIT shall indemnify any individual who, while a director or officer of VEREIT and at the request of VEREIT, serves or has
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Rights of Realty Income Stockholders
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Rights of VEREIT Stockholders
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Realty Income, serves or has served as a director, officer, partner or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her status as a present or former director or officer of Realty Income.
Realty Income has also entered into indemnification agreements with certain of its directors and officers, which are intended to provide indemnification to the maximum extent permitted by the MGCL.
Realty Income has purchased directors’ and officers’ liability insurance for the benefit of its directors and officers.
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served as a director, officer, partner, trustee, member or manager of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to a proceeding by reason of his or her service in that capacity; and
•
VEREIT may, with approval of the VEREIT board of directors, indemnify other employees and agents of VEREIT or its predecessor.
VEREIT has also entered into indemnification agreements with certain of its directors and officers, which are intended to provide indemnification to the maximum extent permitted by the MGCL.
VEREIT has purchased directors’ and officers’ liability insurance for the benefit of its directors and officers.
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Stockholder Rights
Plan |
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Realty Income does not have a stockholder rights plan in effect.
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VEREIT does not have a stockholder rights plan in effect.
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Dissenters’ Rights
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The MGCL provides that a stockholder of a corporation is generally entitled to receive payment of the fair value of its stock if the stockholder dissents from certain transactions including a proposed merger, share exchange or a sale of substantially all of the assets of the corporation, or unless the charter reserves the right to do so, any amendment authorized by law to the terms of outstanding stock.
However, dissenters’ rights generally are not available to holders of shares, such as shares of Realty Income common stock, that are registered on a national securities exchange or quoted on a national market security system nor are dissenters rights available if a provision is included in the charter providing that the stockholders are not entitled to such rights.
The Realty Income Articles do not include such charter provisions, but do reserve the right to make any amendment
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The MGCL provides that a stockholder of a corporation is generally entitled to receive payment of the fair value of its stock if the stockholder dissents from certain transactions including a proposed merger, share exchange or a sale of substantially all of the assets of the corporation, or unless the charter reserves the right to do so, any amendment authorized by law to the terms of outstanding stock.
However, dissenters’ rights generally are not available to holders of shares, such as shares of VEREIT common stock and VEREIT Series F Preferred Stock, that are registered on a national securities exchange or quoted on a national market security system nor are dissenters rights available if a provision is included in the charter providing that the stockholders are not entitled to such rights.
The VEREIT Articles provide that stockholders are not entitled to appraisal or dissenters’ rights unless a majority of
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Rights of Realty Income Stockholders
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Rights of VEREIT Stockholders
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to the Realty Income Articles, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the Realty Income Articles, of any shares of outstanding stock.
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the VEREIT board of directors determines that such rights apply to one or more transactions occurring after the date of such determination. In addition, the VEREIT Articles provide that VEREIT reserves the right to make any amendment thereto, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the VEREIT Articles, of any shares of outstanding stock.
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REIT Qualification
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The Realty Income Articles provide that the Realty Income board of directors may revoke or otherwise terminate Realty Income’s REIT election, with the approval of the holders of at least two-thirds of all votes entitled to be cast on the matter, if it determines that it is no longer in Realty Income’s best interests to continue to qualify as a REIT.
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The VEREIT Articles provide that the VEREIT board of directors may revoke or otherwise terminate VEREIT’s REIT election, without the approval of the stockholders, if it determines that it is no longer in VEREIT’s best interests to continue to qualify as a REIT.
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Exclusive Forum
Provision |
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The Realty Income Articles and the Realty Income Bylaws do not contain a provision adopting an exclusive forum.
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The VEREIT Bylaws provide that, unless VEREIT consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland or, if that Court does not have jurisdiction, another state or federal court sitting in Maryland, will be the sole and exclusive forum for (i) any internal corporate claims (as defined in the MGCL), other than any action arising under federal securities laws, including (a) any derivative action or proceeding brought on behalf of VEREIT, (b) any action asserting a claim for a breach of any duty owed to VEREIT or its stockholders by any director, officer or employee of VEREIT, or (c) any action asserting a claim against VEREIT or any of its directors, officers or employees arising pursuant to any provision of the MGCL, the VEREIT Articles or the VEREIT Bylaws, or (ii) any other action asserting a claim against VEREIT or any of its directors, officers or employees that is governed by the internal affairs doctrine.
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| | | | | A-5 | | | |
| | | | | A-5 | | | |
| | | | | A-5 | | | |
| | | | | A-6 | | | |
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| | | | | A-6 | | | |
| | | | | A-6 | | | |
| | | | | A-6 | | | |
| | | | | A-7 | | | |
| | | | | A-8 | | | |
| | | | | A-11 | | | |
| | | | | A-12 | | | |
| | | | | A-13 | | | |
| | | | | A-14 | | | |
| | | | | A-14 | | | |
| | | | | A-14 | | | |
| | | | | A-14 | | | |
| | | | | A-27 | | | |
| | | | | A-39 | | | |
| | | | | A-39 | | | |
| | | | | A-44 | | | |
| | | | | A-46 | | | |
| | | | | A-46 | | | |
| | | | | A-48 | | | |
| | | | | A-48 | | | |
| | | | | A-50 | | | |
| | | | | A-53 | | | |
| | | | | A-53 | | | |
| | | | | A-55 | | | |
| | | | | A-55 | | | |
| | | | | A-56 | | | |
| | | | | A-57 | | | |
| | | | | A-58 | | | |
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| | | | | A-59 | | | |
| | | | | A-62 | | | |
| | | | | A-65 | | | |
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| | | | | A-66 | | |
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| | | | | A-67 | | | |
| | | | | A-68 | | | |
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| | | | | A-70 | | | |
| | | | | A-74 | | | |
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| | | | | A-76 | | | |
| | | | | A-76 | | | |
| | | | | A-76 | | | |
| | | | | A-76 | | | |
| | | | | A-76 | | | |
| | | | | A-77 | | | |
| | | | | A-77 | | | |
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Exhibit A
Terms of Separation and OfficeCo Distribution
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| Preliminary Matters | | | | |
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OfficeCo
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OfficeCo will be a Maryland corporation that is initially a wholly owned direct or indirect subsidiary of Realty Income, or, subject to the consent of VEREIT (not to be unreasonably withheld, conditioned or delayed), VEREIT.
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Separation
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The “Separation” shall mean the separation of OfficeCo from Realty Income following the transfer to OfficeCo of the OfficeCo Business, in accordance with the terms of this Exhibit A and the Agreement.
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OfficeCo Distribution
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The Separation will be effectuated by a pro rata distribution (the “OfficeCo Distribution”) of all of the outstanding shares of OfficeCo common stock to the stockholders of Realty Income pursuant to the Form 10. Realty Income may elect to retain, cause an Affiliate to retain, or sell to a third party, a class of non-voting stock of OfficeCo.
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| Actions To Be Taken Prior to The Separation and The OfficeCo Distribution | | |||
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OfficeCo Business
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Realty Income, VEREIT and their respective Subsidiaries will cooperate and use reasonable best efforts to transfer, following the consummation of the Merger and prior to the Separation, and in accordance with the Reorganization Plan, the office real properties of Realty Income and VEREIT (and their respective Subsidiaries) and certain other identified assets that are listed on Schedule A of the Realty Income Disclosure Schedule (the “OfficeCo Properties”), as well as the material assets primarily related to those properties and material liabilities to the extent related to those properties (including any OfficeCo Financing, the “OfficeCo Business”), unless Realty Income, after consultation with and good faith consideration of any comments from VEREIT, elects to exclude any such OfficeCo Properties, assets or liabilities from the OfficeCo Business.
Realty Income, after consultation with and good faith consideration of any comments from VEREIT, may elect to include certain additional properties, assets or liabilities of VEREIT, Realty Income or its Subsidiaries.
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Reorganization Plan
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Realty Income, VEREIT and their respective Subsidiaries will cooperate and Realty Income shall, following consultation with and good faith consideration of any comments from VEREIT, as promptly as practicable, determine a reorganization plan (as may be amended, the “Reorganization Plan”) to effectuate the transfer of the OfficeCo Business to OfficeCo or Subsidiaries thereof.
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Separation Documents
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Realty Income, VEREIT and OfficeCo, and/or, as applicable, their respective Subsidiaries, will enter into a Separation and Distribution Agreement that will govern the rights and responsibilities of each party with respect to its relationship with the other following the Separation, including with respect to the allocation of assets and liabilities, cross-indemnification and other separation matters, in each case, on such terms as determined by Realty Income, after consultation with and good faith consideration of any comments from VEREIT.
In addition, Realty Income, VEREIT and OfficeCo, or their respective Subsidiaries, will enter into other customary agreements to the extent appropriate to address tax matters, employee matters, transition services and other terms of the Separation and the OfficeCo Distribution, in each case, on such terms as determined by Realty Income, after consultation with and good faith consideration of any comments from VEREIT.
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Financing and Capital Structure
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Realty Income and its Subsidiaries will use reasonable best efforts to procure, adequate financing for the capitalization of OfficeCo, as determined by Realty Income, after consultation with and good faith consideration of any comments from VEREIT (the “OfficeCo Debt Financing”), including the transfer to or assumption by OfficeCo or a Subsidiary thereof of mortgages related to OfficeCo Properties to be determined by Realty Income. VEREIT and its Subsidiaries will cooperate with respect to the OfficeCo Debt Financing on such terms as set forth in, and subject to, Section 5.14 of the Merger Agreement (other than with respect to the transfer to or assumption by OfficeCo or a Subsidiary thereof of mortgages related to OfficeCo Properties, which cooperation shall be on such terms as set forth in, and subject to, Section 5.15 of the Merger Agreement).
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Governance and Management
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OfficeCo’s certificate of incorporation and bylaws will be amended and restated in connection with consummation of the Separation and the OfficeCo Distribution to contain terms and provisions customary for a publicly traded REIT.
Prior to consummation of the Separation and the OfficeCo Distribution, Realty Income will, after consultation with and good faith consideration of any comments from VEREIT, identify and designate (i) individuals to serve on OfficeCo’s board of directors and committees thereof, and (ii) individuals to serve as executive officers of OfficeCo.
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Stock Exchange
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VEREIT and Realty Income and their respective Subsidiaries will use reasonable best efforts to cause the shares of OfficeCo’s common stock to be listed for trading on a nationally recognized U.S. stock exchange, to be selected by Realty Income.
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Form 10
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VEREIT and Realty Income and their respective Subsidiaries will cooperate and use reasonable best efforts to prepare and cause the Form 10 to be filed with and declared effective by the SEC as promptly as practicable.
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Corporate Approvals
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VEREIT and Realty Income and their respective Subsidiaries will cooperate and use reasonable best efforts to procure the requisite corporate and other approvals required to consummate the Separation and the OfficeCo Distribution, including the approval and declaration by the Realty Income board of directors of the OfficeCo Distribution.
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Solvency Opinion
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Realty Income will engage a reputable solvency expert to provide a customary solvency and surplus opinion with respect to Realty Income’s declaration and payment of the OfficeCo Distribution, if deemed necessary by Realty Income.
In furtherance of the foregoing, Realty Income and VEREIT will cooperate to provide such information, projections and analyses as may be required by the solvency expert in order to render such opinion.
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Third Party Consents and Approvals
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VEREIT and Realty Income and their respective Subsidiaries will cooperate and use reasonable best efforts to obtain any Consents required with respect to the Separation and the OfficeCo Distribution in accordance with the Reorganization Plan.
VEREIT and Realty Income will reasonably cooperate and seek to (i) minimize any fees or costs related to obtaining any such Consents, and (ii) cause such Consents, fees or costs to be contingent on and payable after the consummation of the Merger.
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| | | | REALTY INCOME CORPORATION | | |||
| | | | By: | | |
/s/ Michelle Bushore
Michelle Bushore
Executive Vice-President, Chief Legal Officer, General Counsel and Secretary |
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Signature
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Title
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Date
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/s/ Sumit Roy
Sumit Roy
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| | President, Chief Executive Officer and Director (Principal Executive Officer) | | |
June 4, 2021
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/s/ Christie B. Kelly
Christie B. Kelly
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| | Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | | |
June 4, 2021
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/s/ Sean P. Nugent
Sean P. Nugent
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Senior Vice President and Controller
(Principal Accounting Officer) |
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June 4, 2021
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/s/ Michael D. McKee
Michael D. McKee
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| | Director | | |
June 4, 2021
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/s/ Kathleen R. Allen, Ph.D.
Kathleen R. Allen, Ph.D.
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| | Director | | |
June 4, 2021
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/s/ Jacqueline Brady
Jacqueline Brady
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| | Director | | |
June 4, 2021
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Signature
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Title
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Date
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/s/ Larry Chapman
Larry Chapman
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| | Director | | |
June 4, 2021
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/s/ Reginald H. Gilyard
Reginald H. Gilyard
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| | Director | | |
June 4, 2021
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/s/ Priya Cherian Huskins
Priya Cherian Huskins
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| | Director | | |
June 4, 2021
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/s/ Gregory T. McLaughlin
Gregory T. McLaughlin
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| | Director | | |
June 4, 2021
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/s/ Ronald L. Merriman
Ronald L. Merriman
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| | Director | | |
June 4, 2021
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Exhibit
Number |
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Description
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2.1**
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| | | |
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3.1
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| | | |
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3.2
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| | | |
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3.3
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| | | |
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3.4
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| | | |
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3.5
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| | | |
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3.6
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| | | |
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3.7
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| | | |
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3.8
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| | | |
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3.9
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3.10
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3.11
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| | | |
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3.12
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| | | |
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3.13
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| | |
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Exhibit
Number |
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Description
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|
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5.1*
|
| | | |
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8.1*
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| | Form of Tax Opinion of Latham & Watkins LLP. | |
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8.2*
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| | Form of Tax Opinion of Wachtell, Lipton, Rosen & Katz. | |
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23.1*
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| | Form of Consent of Ballard Spahr LLP for legality opinion (included in Exhibit 5.1). | |
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23.2*
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| | | |
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23.3*
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| | | |
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23.4*
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| | | |
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23.5*
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| | | |
|
24.1*
|
| | | |
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99.1*
|
| | | |
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99.2*
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| | | |
|
99.3+
|
| | Form of Proxy Card of Realty Income Corporation. | |
|
99.4+
|
| | Form of Proxy Card of VEREIT, Inc. | |
Exhibit 5.1
[__], 2021
Realty Income Corporation
11995 El Camino Real
San Diego, California 92130
Re: | Realty Income Corporation, a Maryland corporation (the “Company”) — Issuance of up to 163,243,030 shares (the “Shares”) of common stock, par value $0.01 per share (the “Common Stock”), of the Company pursuant to a Registration Statement on Form S-4 as amended (File No. 333-________) (the “Registration Statement”) |
Ladies and Gentlemen:
We have acted as Maryland corporate counsel to the Company in connection with the registration of the Shares under the Securities Act of 1933, as amended (the “Act”), by the Company pursuant to the Registration Statement, which was initially filed with the United States Securities and Exchange Commission (the "Commission") on June __, 2021. The Shares are issuable in connection with the merger (the “Merger”) by and among the Company, VEREIT, Inc. a Maryland corporation (“VEREIT”), VEREIT Operating Partnership, L.P., a Delaware limited partnership (“VEREIT OP”), Rams MD Subsidiary I, Inc., a Maryland corporation and wholly owned subsidiary of Realty Income “Merger Sub 1”) and Rams Acquisition Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Realty Income ( “Merger Sub 2”), as contemplated by and in accordance with the terms and conditions of the Merger Agreement (as defined herein). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Merger Agreement. You have requested our opinion with respect to the matters set forth below.
In our capacity as Maryland corporate counsel to the Company and for the purposes of this opinion, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (collectively, the “Documents”):
(i) | the corporate charter of the Company represented by Articles of Incorporation filed with the State Department of Assessments and Taxation of Maryland (the “Department”) on March 25, 1997, and the articles supplementary, articles of amendment and other charter documents filed with, and accepted for record by, the Department subsequent to March 25, 1997 through the date hereof (collectively, the “Charter”); |
(ii) | the Amended and Restated Bylaws of the Company, adopted as of February 19, 2020, as further amended through the date hereof (the “Bylaws”); |
(iii) | the resolutions adopted by the Board of Directors of the Company on April 28, 2021 (the “Directors’ Resolutions”); |
Realty Income Corporation
__, 2021
Page 2
(iv) | the Agreement and Plan of Merger, dated as of April 29, 2021, by and among the Company, VEREIT, VEREIT OP, Merger Sub 1 and Merger Sub 2 (the “Merger Agreement”); |
(v) | the Registration Statement and the related form of joint proxy statement/prospectus included therein, in the form filed with the Commission pursuant to the Act; |
(vi) | a certificate executed by two officers of the Company, dated as of a recent date (the “Officers’ Certificate”), to the effect that, among other things, the Charter, the Bylaws, the Directors’ Resolutions and the Merger Agreement are true, correct and complete and have not been rescinded or modified and are in full force and effect as of the date of the Officers’ Certificate, and certifying as to the manner of adoption or approval of the Directors’ Resolutions and the execution and delivery of the Merger Agreement; |
(vii) | a status certificate of the Department, dated as of a recent date, to the effect that the Company is duly incorporated and existing under the laws of the State of Maryland; and |
(viii) | such other laws, records, documents, certificates, opinions and instruments as we have deemed necessary to render this opinion, subject to the limitations, assumptions and qualifications noted below. |
In reaching the opinions set forth below, we have assumed the following:
(a) | each person executing any of the Documents on behalf of any party (other than the Company) is duly authorized to do so; |
(b) | each natural person executing any of the Documents is legally competent to do so; |
(c) | all of the Documents submitted to us as originals are authentic; the form and content of any Documents submitted to us as unexecuted drafts do not, and will not, differ in any respect relevant to this opinion from the form and content of such documents as executed and delivered; any of the Documents submitted to us as certified, facsimile or photostatic copies conform to the original document; all signatures on all of the Documents are genuine; all public records reviewed or relied upon by us or on our behalf are true and complete; all statements and information contained in the Documents are true and complete; there has been no modification of, or amendment to, any of the Documents, and there has been no waiver of any provision of any of the Documents by action or omission of the parties or otherwise; |
(d) | all certificates submitted to us, including, without limitation, the Officers’ Certificate, are true, correct and complete both when made and as of the date hereof; |
(e) | all representations and warranties of the Company, VEREIT, VEREIT OP, Merger Sub 1 and Merger Sub 2 made in, or pursuant to, the Merger Agreement (other than representations and warranties of the Company as to legal matters on which opinions are rendered herein) are true and correct; |
Realty Income Corporation
__, 2021
Page 3
(f) | the Merger Agreement has been duly authorized, executed and delivered by the parties thereto (other than the Company) and is the legal, valid and binding obligation of the parties thereto and is enforceable in accordance with its terms, and the Merger and related actions and transactions contemplated by the Merger Agreement, including, without limitation, the issuance of the Shares, will be consummated, and the Merger will become effective, in the manner described in the Merger Agreement and the Registration Statement and in accordance with applicable law; |
(g) | the issuance of the Shares will be duly approved by the requisite vote of the stockholders of the Company in accordance with the Merger Agreement and applicable law; |
(h) | none of the terms or conditions of any agreement, plan or instrument referred to in, or contemplated by, the Merger Agreement will violate any applicable law or will conflict with, or result in a breach or violation of, the Charter or Bylaws of the Company, or any instrument or agreement to which the Company is a party or by which the Company is bound, or any order or decree of any court, administrative or governmental body having jurisdiction over the Company; and |
(i) | none of the Shares will be issued or transferred in violation of any restriction or limitation on ownership and transfer contained in the Charter; and none of the Shares will be issued or transferred to an Interested Stockholder of the Company or any Affiliate thereof, as each term is defined in Subtitle 6 of Title 3 of the Maryland General Corporation Law. |
Based on the foregoing, and subject to the assumptions and qualifications set forth herein, it is our opinion that, as of the date of this letter:
1. | The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Maryland. |
2. | The issuance of the Shares has been duly authorized by all necessary corporate action on the part of the Company and when such Shares are issued and delivered by the Company in accordance with the Directors’ Resolutions, the Registration Statement and the Merger Agreement, such Shares will be validly issued, fully paid and nonassessable. |
The foregoing opinion is limited to the corporation laws of the State of Maryland, and we do not express any opinion herein concerning any other law. We express no opinion as to the applicability or effect of any federal or state securities laws, including the securities laws of the State of Maryland, or as to federal or state laws regarding fraudulent transfers. To the extent that any matter as to which our opinion is expressed herein would be governed by the laws of any jurisdiction other than the State of Maryland, we do not express any opinion on such matter.
This opinion letter is issued as of the date hereof and is necessarily limited to laws now in effect and facts and circumstances presently existing and brought to our attention. We assume no obligation to supplement this opinion letter if any applicable laws change after the date hereof, or if we become aware of any facts or circumstances that now exist or that occur or arise in the future and may change the opinions expressed herein after the date hereof.
Realty Income Corporation
__, 2021
Page 4
We consent to your filing this opinion as an exhibit to the Registration Statement and further consent to the filing of this opinion as an exhibit to the applications to securities commissioners for the various states of the United States for registration of the Shares. We also consent to the identification of our firm as Maryland counsel to the Company in the section of the Registration Statement entitled “Legal Matters”. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Act.
Very truly yours,
Exhibit 8.1
Re: | Agreement and Plan of Merger dated as of April 29, 2021 |
Ladies and Gentlemen:
We have acted as special tax counsel to Realty Income Corporation, a Maryland corporation (“Realty Income”), in connection with the proposed merger (the “Merger”) of VEREIT, Inc., a Maryland corporation (“VEREIT”), with and into Rams MD Subsidiary I, Inc., a Maryland corporation and a direct wholly owned subsidiary of Realty Income (“Merger Sub 1”), with Merger Sub 1 surviving the Merger. The Merger will be consummated pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated as of April 29, 2021, by and among Realty Income, Merger Sub 1, Rams Acquisition Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Realty Income, VEREIT, and VEREIT Operating Partnership, L.P., a Delaware limited partnership. This opinion is being delivered in connection with the Form S-4 initially filed by Realty Income with the Securities and Exchange Commission (the “Commission”) on the date hereof (together with the documents incorporated by reference therein and including the joint proxy statement/prospectus contained therein, the “Registration Statement”). Capitalized terms not defined herein have the meanings specified in the Merger Agreement unless otherwise indicated.
In rendering our opinion, we have examined and, with your consent, are expressly relying upon (without any independent investigation or review thereof) the truth and accuracy of the factual statements, representations and warranties contained in (i) the Merger Agreement (including any Exhibits and Schedules thereto), (ii) the Registration Statement, and (iii) such other documents and corporate records as we have deemed necessary or appropriate for purposes of our opinion.
________, 2021 Page 2 |
We are opining herein only with respect to the federal income tax laws of the United States, and we express no opinion with respect to the applicability thereto, or the effect thereon, of other federal laws, the laws of any state or other jurisdiction or as to any matters of municipal law or the laws of any other local agencies within any state.
Based upon and subject to the foregoing, and subject to the qualifications and limitations stated in the Registration Statement and herein, we are of the opinion that the statements in the Registration Statement under the caption “Material U.S. Federal Income Tax Consequences of the Merger,” insofar as such statements purport to summarize certain provisions of the statutes or regulations referred to therein, are accurate summaries in all material respects.
No opinion is expressed as to any matter not discussed herein.
This opinion is based on various statutory provisions, regulations promulgated thereunder and interpretations thereof by the Internal Revenue Service and the courts having jurisdiction over such matters, all of which are subject to change either prospectively or retroactively. Any such change may affect the conclusions stated herein. Also, any variation or difference in the facts from those set forth in the Registration Statement may affect the conclusions stated herein.
This opinion is rendered in connection with Realty Income’s filing of the Registration Statement. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm name therein under the captions “Material U.S. Federal Income Tax Consequences of the Merger” and “Legal Matters.” In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules or regulations of the Commission promulgated thereunder.
Very truly yours, | |
DRAFT |
Exhibit 8.2
[Letterhead of Wachtell, Lipton, Rosen & Katz]
[●], 2021
VEREIT, Inc.
2325 E. Camelback Road, 9th Floor
Phoenix, AZ 85016
Ladies and Gentlemen:
We have acted as special counsel to VEREIT, Inc., a Maryland corporation (“Vikings”), in connection with the transactions contemplated by the Agreement and Plan of Merger, dated as of April 29, 2021 (as amended or supplemented through the date hereof, the “Agreement”), by and between Realty Income Corporation, a Maryland corporation (“Rams”), Rams MD Subsidiary I, Inc., a Maryland corporation and a direct wholly owned Subsidiary of Rams, Rams Acquisition Sub II, LLC, a Delaware limited liability company and a direct wholly owned Subsidiary of Rams, Vikings and VEREIT Operating Partnership, L.P., a Delaware limited partnership, including the proposed merger (the “Merger”) of Vikings with and into Merger Sub 1, with Merger Sub 1 as the surviving company. In connection with the effectiveness of the Registration Statement on Form S-4 (as amended or supplemented through the date hereof, the “Registration Statement”) of Rams, including the joint proxy statement/prospectus forming a part thereof, relating to the Merger and initially filed with the Securities and Exchange Commission on [●], 2021, you have requested our opinion as to certain U.S. federal income tax matters.
In providing our opinion, we have examined the Agreement, the Registration Statement and such other documents as we have deemed necessary or appropriate for purposes of our opinion. In addition, we have assumed that (i) the transaction will be consummated in accordance with the provisions of the Agreement and as described in the Registration Statement (and no transaction or condition described therein and affecting this opinion will be waived by any party), (ii) the statements concerning the transaction and the parties thereto set forth in the Agreement and in the Registration Statement are true, complete and correct, (iii) all documents submitted to us as originals are authentic, all documents submitted to us as copies conform to the originals, all relevant documents have been or will be duly executed in the form presented to us and all natural persons who have executed such documents are of legal capacity and (iv) all applicable reporting requirements have been or will be satisfied. If any of the above described assumptions are untrue for any reason or if the transaction is consummated in a manner that is different from the manner described in the Agreement or the Registration Statement, our opinion as expressed below may be adversely affected.
Based upon and subject to the foregoing and the exceptions, limitations, assumptions and qualifications described in the Registration Statement, it is our opinion that insofar as it summarizes U.S. federal income tax law, the discussion set forth in the Registration Statement under the caption “Material U.S. Federal Income Tax Consequences of the Merger” is accurate in all material respects.
We express no opinion on any issue relating to the tax consequences of the transactions contemplated by the Agreement or the Registration Statement other than the opinion set forth above. Our opinion is based on current provisions of the Internal Revenue Code of 1986, Treasury Regulations promulgated thereunder, published pronouncements of the Internal Revenue Service and case law, any of which may be changed at any time with retroactive effect. Any change in applicable laws or the facts and circumstances surrounding the transaction, or any inaccuracy in the statements, facts, assumptions or representations upon which we have relied, may affect the continuing validity of our opinion as set forth herein. We assume no responsibility to inform Vikings or any other person of any such change or inaccuracy that may occur or come to our attention.
We are furnishing this opinion solely in connection with the filing of the Registration Statement. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement, and to the references therein to us. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
Exhibit 23.4
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Realty Income Corporation:
We consent to the use of our reports dated February 23, 2021, with respect to the consolidated balance sheets of Realty Income Corporation and subsidiaries as of December 31, 2020 and 2019, and the related consolidated statements of income and comprehensive income, equity and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes, and financial statement schedule III, and the effectiveness of internal control over financial reporting as of December 31, 2020, incorporated herein by reference and to the reference to our firm under the heading “Experts” in the registration statement. Our report on the consolidated financial statements refers to a change in the method of accounting for leases due to the adoption of Accounting Standards Codification Topic 842, Leases.
(signed) KPMG, LLP
San Diego, California
June 3, 2021
Exhibit 23.5
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Registration Statement on Form S-4 of our reports dated February 23, 2021 relating to the financial statements of VEREIT, Inc. and subsidiaries and the effectiveness of VEREIT, Inc. and subsidiaries’ internal control over financial reporting, appearing in the Annual Report on Form 10-K of VEREIT, Inc. for the year ended December 31, 2020. We also consent to the reference to us under the heading "Experts" in such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 4, 2021
Exhibit 23.5
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Registration Statement on Form S-4 of our report dated February 23, 2021 relating to the financial statements of VEREIT Operating Partnership, L.P. and subsidiaries, appearing in the Annual Report on Form 10-K of VEREIT Operating Partnership, L.P. for the year ended December 31, 2020. We also consent to the reference to us under the heading "Experts" in such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 4, 2021
Exhibit 99.1
CONSENT OF MOELIS & COMPANY LLC
June 4, 2021
Board of Directors
Realty Income Corporation
11995 El Camino Real
San Diego, CA 92130
Members of the Board:
We hereby consent to the inclusion of our opinion letter, dated April 28, 2021, to the Board of Directors of Realty Income Corporation (“Realty Income”) as Annex B to, and to the references thereto under the headings “Summary—Opinion of Realty Income’s Financial Advisor”, “The Mergers—Background of the Mergers”, “The Mergers—Realty Income’s Reasons for the Mergers; Recommendations of the Realty Income Board of Directors” and “The Mergers—Opinion of Realty Income’s Financial Advisor” in, the joint proxy statement/prospectus relating to the proposed transaction involving VEREIT, Inc. and Realty Income, which joint proxy statement/prospectus forms a part of the Registration Statement on Form S-4 of Realty Income (the “Registration Statement”).
By giving such consent, we do not thereby admit that we are experts with respect to any part of such Registration Statement within the meaning of the term “expert” as used in, or that we come within the category of persons whose consent is required under Section 7 of, the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours, |
MOELIS & COMPANY LLC |
Exhibit 99.2
CONSENT OF J.P. MORGAN SECURITIES LLC
We hereby consent to (i) the use of our opinion letter dated April 28, 2021 to the Board of Directors of VEREIT, Inc. (the “Company”) included in Annex C to the joint proxy statement/prospectus relating to the proposed merger of the Company and Realty Income Corporation, and (ii) the references to such opinion in such joint proxy statement/prospectus. In giving such consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder, nor do we hereby admit that we are experts with respect to any part of such Registration Statement within the meaning of the term "experts" as used in the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
J.P. MORGAN SECURITIES LLC |
June 4, 2021