Announcement: Moody's says Realty Income's acquisition of VEREIT, Inc. increases scale and durability of cash flows; no immediate impact to ratingsGlobal Credit Research - 30 Apr 2021New York, April 30, 2021 -- Moody's Investors Service, ('Moody's') says that the REIT's definitive agreement to acquire VEREIT, Inc in an all-stock transaction, including the assumption of debt, has no immediate impact on the A3 senior unsecured ratings or stable outlook of Realty Income Corporation. The combined company will result in an enterprise value of approximately $50 billion and is expected to close during the fourth quarter of 2021, subject to customary closing conditions and shareholder approval. Additionally, upon closing of the merger, the companies expect to spin off substantially all of the office properties of both Realty Income and VEREIT into a new, self-managed publicly traded REIT.The proposed transaction highlights Realty Income's competitive advantages as one the largest companies in the net lease sector at a $25 billion market cap. Moody's notes that VEREIT's portfolio of free-standing commercial properties are highly complementary to Realty Income's U.S. portfolio and the combined company should allow Realty Income to capture immediate cost and long-term revenue synergies. Due to the REIT's scale and size, this transaction while significant is expected to have minimal impact on Realty Income's broadly diverse industry profile. Tenant concentration within the top ten tenants will improve modestly with no tenant representing more than 5% of ABR (top 10 tenants will represent 31% of rent versus 36% currently). Convenience stores and grocery stores will remain the REIT's largest exposures at pro-forma 9% and 8% of rent, respectively.Pro-forma debt capitalization for the merger is expected to be leverage-neutral, a positive. Moody's also notes that Realty Income has a long history and track record of maintaining a conservative credit profile even as it has pursued continued growth. As of December 31, 2020, the REIT's leverage on a net debt to EBITDA basis was 5.5x (including Moody's standard adjustments) and fixed charge coverage was approaching 5.0x for the same period, well within our rating parameters.Realty Income Corporation [NYSE: O], headquartered in San Diego, California, USA, is a real estate investment trust that invests in freestanding, single-tenant properties. At December 31, 2020, the REIT had $25 billion in gross assets comprising 6,592 properties located in 49 U.S. states, Puerto Rico and the United Kingdom, with approximately 110.8 million square feet of leasable space.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the ratingThis publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. Alice Chung Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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