- Realty Income's (O) deal to acquire 84 single-tenant net-leased properties from Inland Diversified for about $503M doesn't change Morningstar's Todd Lukasik's "narrow moat" rating or his $44 fair value estimate for the stock.
- The deal looks to be consistent with prior acquisitions, says Lukasik, reasonably diversified across geography and industry - and importantly includes industrial and distribution properties. Although, Realty Income didn't disclose the yield, Lukasik expects it to be consistent with the 7% seen in recent deals, though there is a risk the initial yield is lower.
- With the 30-year tailwind of falling interest rates maybe over, the company, says Lukasik is repositioning its portfolio - with a greater focus on investment-grade tenants and nonretail assets. "If any management team can build a moat around these nonretail property types, Realty Income's is probably it. But we don't think these nonretail assets are obviously moaty, so we'll wait for management to demonstrate success."
From other sites
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at CNBC.com (Sep 18, 2012)
at CNBC.com (Sep 6, 2012)
at CNBC.com (May 31, 2012)
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