WASHINGTON (dpa-AFX) - Realty Income Corp. (O) on Tuesday priced an upsized $875 million offering of 3.750% convertible senior notes due 2031, increased from the previously announced $750 million.
The notes are expected to settle on August 14.
The company also granted initial purchasers an option to buy up to an additional $125 million of notes.
The notes will be senior, unsecured obligations of the company and will mature on August 15, 2031.
Interest will be payable semiannually at an annual rate of 3.750%, beginning February 15, 2027.
The initial conversion rate is 13.7512 shares per $1,000 principal amount, representing an initial conversion price of approximately $72.72 per share, a 17.5% premium to Realty Income's August 11 closing price of $61.89.
The company expects net proceeds of approximately $859 million, or $981.9 million if the additional notes option is fully exercised.
The company intends to use approximately $29.1 million of the proceeds to fund capped call transactions and approximately $188.7 million to repurchase about 3 million shares concurrently with the pricing of the offering.
The remaining proceeds will be used for general corporate purposes, including debt repayment or repurchases, hedging activities, property development, redevelopment and acquisitions, business combinations, and portfolio improvements.
The capped call transactions are expected to reduce potential dilution to the company's common stock upon conversion of the notes and offset certain potential cash payments above the principal amount.
The initial cap price for the capped call transactions is approximately $83.55 per share, representing a 35% premium to Realty Income's August 11 closing price.
Realty Income Corp. is trading in the overnight at 0.16% higher, $61.99 on the New York Stock Exchange.
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