Realty Income Corporation and global investment firm KKR have announced a new joint venture to hold a portfolio of European net lease real estate assets. Capital accounts advised by KKR will invest €528 million to secure a 49 per cent equity stake, while Realty Income will hold the remaining 51 per cent interest and continue running property management through its European operation.

The deal is expected to complete on 30 September 2026, subject to customary closing conditions. Rating agencies are anticipated to classify the funding as 100 per cent permanent equity.

“This transaction marks another important step in Realty Income’s evolution as the leading global net lease platform,” said Sumit Roy, President and Chief Executive Officer of Realty Income. “Building on the private capital foundation we have established in the U.S., our strategic partnership with KKR extends this strategy into Europe and demonstrates both the portability of our competitive advantages across borders and the confidence that leading institutional investors have in our platform. We believe the long-term cost and structure of this equity financing create meaningful upside for our shareholders, while further diversifying our capital sources beyond the public markets.”

Christopher Sheldon, KKR Partner, commented on the deal structure. “We are proud to support Realty Income as it extends its private capital strategy into Europe through this bespoke capital solution, designed with the flexibility to expand in line with the company’s evolving needs. This transaction builds on KKR’s 50-year history of combining partnership with scaled, long-term capital to help leading companies around the world create lasting value,” he said.

Seb d’Avanzo, Co-Head of European Real Estate Equity at KKR, added: “We are pleased to invest alongside Realty Income, one of the world’s largest net lease REITs, in a diversified portfolio of high-quality, hard-to-replace assets across key markets in Europe, supported by strong underlying real estate fundamentals. We look forward to working together as Realty Income continues to grow its presence in the region.”

The contributed portfolio carries an effective initial cap rate of 5.9 per cent post-management fees. The assets include 54 properties and 140 units across Spain, Ireland, Poland and the Netherlands. As of 30 June 2026, expected first-year cash net operating income stands at €67.7 million, with a weighted average remaining lease term of 7.2 years and a 1.6 per cent compound annual contractual growth rate. Investment grade tenants make up 59 per cent of total base rent across top sectors such as grocery, transportation services, home improvement, home furnishings and automotive parts.

Realty Income can exercise a call option between years 10 and 17 to redeem KKR’s share, with an expected capped IRR set between 6.3 per cent and 6.5 per cent at closing.

Advising Realty Income were Lazard on finance and DLA Piper on legal matters. Citi provided financial advice and Latham & Watkins LLP acted as legal advisor for KKR.