Blog: REALTY INCOME : Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K/A) – marketscreener.com

Item 1.01 Entry Into a Material Definitive Agreement.



The Transactions


On April 29, 2021, Realty Income Corporation, a Maryland corporation (“Realty
Income” or “the Company”), entered into an Agreement and Plan of Merger (the
“Merger Agreement”) with Rams MD Subsidiary I, Inc., a Maryland corporation and
a direct wholly owned subsidiary of Realty Income (“Merger Sub 1”), Rams
Acquisition Sub II, LLC, a Delaware limited liability company and a direct
wholly owned subsidiary of the Company (“Merger Sub 2”), VEREIT, Inc., a
Maryland corporation (“VEREIT”) and VEREIT Operating Partnership, L.P., a
Delaware limited partnership (“VEREIT OP”). The Merger Agreement provides for
the merger of Merger Sub 2 with and into VEREIT OP with VEREIT OP surviving as a
wholly owned subsidiary of Realty Income (the “Partnership Merger”) and,
immediately following the Partnership Merger, the Merger Agreement provides for
the merger of VEREIT with and into Merger Sub 1 (the “Merger” and together with
the Partnership Merger, the “Mergers”), with Merger Sub 1 surviving as a wholly
owned subsidiary of Realty Income.



Merger Agreement



The Merger


Pursuant to the terms and subject to the conditions of the Merger Agreement, at
the date and time the Merger becomes effective (the “Effective Time”), (i) each
share of VEREIT common stock, par value $0.01 per share (the “VEREIT Common
Stock”) will automatically be converted into a number of newly issued shares of
Realty Income Common Stock equal to 0.705 (the “Exchange Ratio”) of a newly
issued share of common stock, par value $0.01 per share, of Realty Income
(“Realty Income Common Stock”) for each share of VEREIT Common Stock, subject to
adjustment as provided in the Merger Agreement and (ii) each share of VEREIT
Series F Preferred Stock issued and outstanding immediately prior to the
Effective Time will automatically be cancelled and retired and shall cease to
exist, but the holders of such shares will retain the right to receive the
Series F Preferred Stock Redemption Amount (as defined below) on the redemption
date set forth in the Series F Preferred Stock Redemption Notice (as defined
below). Holders of shares of VEREIT Common Stock will receive cash in lieu of
fractional shares.

Immediately prior to the Mergers, VEREIT will issue a notice of redemption (the
“Series F Preferred Stock Redemption Notice”) with respect to all of the
outstanding shares of VEREIT Series F Preferred Stock with a redemption date as
set forth in the Series F Preferred Stock Redemption Notice, and Realty Income
will cause funds to be deposited in escrow to pay the redemption price for each
share of VEREIT Series F Preferred Stock at the liquidation preference of $25.00
plus all accrued and unpaid dividends up to and including the redemption date
set forth in the Series F Preferred Stock Redemption Notice (such amount, the
“Series F Preferred Stock Redemption Amount”).



The Partnership Merger


Pursuant to the terms and subject to the conditions of the Merger Agreement,, at
the date and time the Partnership Merger becomes effective (the “Partnership
Merger Effective Time”), (i) each outstanding VEREIT OP Common Unit (as defined
in the Merger Agreement) owned by VEREIT immediately prior to the Partnership
Merger Effective Time, subject to the terms and conditions set forth in the
Merger Agreement, will remain outstanding as a common unit of partnership
interest in the surviving entity, and (ii) each outstanding VEREIT OP Common
Unit owned by a partner of the VEREIT OP other than VEREIT (each such partner, a
“VEREIT OP Minority Partner”) that is issued and outstanding immediately prior
to the Partnership Merger Effective Time, subject to the terms and conditions
set forth in the Merger Agreement, will be converted into the number of newly
issued shares of Realty Income Common Stock equal to the Exchange Ratio, subject
to adjustment as provided in the Merger Agreement, (iii) each outstanding VEREIT
Series F Preferred Unit that is issued and outstanding immediately prior to the
Partnership Merger Effective Time (other than VEREIT OP Series F Preferred Units
owned by VEREIT), subject to the terms and conditions of the Merger Agreement,
will be converted into the right to receive $25.00, plus all accumulated and
unpaid distributions to and including the redemption date that is set forth in
the Series F Preferred Stock Redemption Notice (the “Series F Preferred Unit
Redemption Amount”), and (iv) each VEREIT OP Series F Preferred Unit owned by
VEREIT that is issued and outstanding immediately prior to the Partnership
Merger Effective Time, subject to the terms and conditions of the Merger
Agreement, will remain outstanding as one Series F Preferred Unit or the
surviving entity. The VEREIT OP Minority Partners will receive cash in lieu of
fractional shares.

Treatment of Equity Awards



Pursuant to the terms and subject to the conditions of the Merger Agreement, as
of the Effective Time, each outstanding VEREIT equity-based award will be
treated as follows: (i) each VEREIT stock option that is outstanding and
unexercised as of immediately prior to the Effective Time will be converted into
a Realty Income stock option to purchase a number of shares of Realty Income
Common Stock (rounded down to the nearest whole number of shares) equal to the
product obtained by multiplying the number of shares of VEREIT Common Stock
subject to such VEREIT stock option by the Exchange Ratio, at an exercise price
per share of Realty Income Common Stock (rounded up to the nearest whole cent)
equal to the quotient obtained by dividing the exercise price per share of
VEREIT Common Stock of such VEREIT stock option by the Exchange Ratio; (ii) each
award of VEREIT restricted stock units that is outstanding as of immediately
prior to the Effective Time will be converted into a Realty Income restricted
stock unit award with respect to a number of whole shares of Realty Income
Common Stock (rounded to the nearest whole number of shares) equal to the
product obtained by multiplying (A) (1) for time-based restricted stock units,
the number of shares of VEREIT Common Stock subject to such restricted stock
unit award as of immediately prior to the Effective Time or (2) for
performance-based restricted stock units, the number of shares of VEREIT Common
Stock subject to such performance-based restricted stock unit award determined
based on actual level of achievement of the applicable performance goals as of
immediately prior to the Effective Time (in accordance with the applicable award
agreement and the terms of the Merger Agreement) by (B) the Exchange Ratio, and
will be credited with a dividend equivalent balance that is equal to the
dividend equivalent balance credited on the corresponding VEREIT restricted
stock units as of immediately prior to the Effective Time; and (iii) each VEREIT
deferred stock unit award that is outstanding as of immediately prior to the
Effective Time will generally be converted into the right to receive the number
of share of Realty Income Common Stock equal to the product obtained by
multiplying the Exchange Ratio by the number of shares underlying such award.
Each converted award will continue to be subject to the same vesting and other
terms and conditions as applied to the corresponding VEREIT award as of
immediately prior to the Effective Time, except that Realty Income restricted
stock units resulting from the conversion of performance-based VEREIT restricted
stock units will, following the Effective Time, be subject to the time-vesting
conditions applicable to the performance-based VEREIT restricted stock units,
but will no longer be subject to performance-vesting conditions.

Contemplated Spin-Off of Office Properties

It is contemplated that after the Effective Time, subject to the terms and
conditions of the Merger Agreement, Realty Income and VEREIT will contribute
certain of their office real properties (the “OfficeCo Business”) to a newly
formed wholly owned subsidiary of Realty Income (“OfficeCo”), and Realty Income
will distribute all of the outstanding voting shares of common stock in OfficeCo
to Realty Income’s shareholders (which, at that time, would also include the
VEREIT stockholders as a result of the Merger) on a pro rata basis (the
“Spin-Off”). Following the consummation of the Spin-Off, Realty Income and
VEREIT intend for OfficeCo to operate as a separate, publicly-traded REIT.
Subject to the terms and conditions of the Merger Agreement, the parties may
also seek to sell some or all of the OfficeCo Business in connection with the
closing of the Mergers.




Certain Governance Matters



The Merger Agreement provides that the boards of directors of Realty Income and
VEREIT will mutually select two members of the VEREIT board of directors who
will be appointed to the Realty Income board of directors immediately following
the Effective Time. After the Effective Time, the parties intend to maintain the
office of VEREIT located in Phoenix, Arizona for at least seven (7) years from
the date of the Merger Agreement.

Certain Other Terms and Conditions of the Merger Agreement

The Merger Agreement contains customary representations and warranties from each
of Realty Income and VEREIT. VEREIT has agreed to
customary pre-closing covenants, including covenants to use commercially
reasonable efforts to operate its business in the ordinary course and to refrain
from taking certain actions without Realty Income’s consent. Realty Income has
agreed to customary pre-closing covenants, including a more limited set of
covenants to refrain from taking certain actions without VEREIT’s consent. Each
party has agreed to additional covenants, including, among others, covenants
. . .

Item 7.01 Regulation FD Disclosure.

In connection with the announcement of the Merger Agreement, Realty Income and
VEREIT provided information regarding the proposed transaction in connection
with presentations to analysts and investors. The updated information made
available in connection with the presentations is furnished as Exhibit 99.1
hereto and incorporated by reference in this Item 7.01.

The foregoing information in this Item 7.01., including the information
contained in the investor presentation in Exhibit 99.1, shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and is not incorporated by reference into any of
Realty Income’s filings, whether made before or after the date hereof,
regardless of any general incorporation language in any such filing.









Forward Looking Statements


This communication may include “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act. All statements other than
statements of historical fact are “forward-looking statements” for purposes of
federal and state securities laws. These forward-looking statements, which are
based on current expectations, estimates and projections about the industry and
markets in which Realty Income and VEREIT operate and beliefs of and assumptions
made by Realty Income management and VEREIT management, involve uncertainties
that could significantly affect the financial or operating results of Realty
Income, VEREIT, the combined company or any company spun-off by the combined
company. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,”
“seeks,” “estimates,” “will,” and variations of such words and similar
expressions are intended to identify such forward-looking statements. Such
forward-looking statements include, but are not limited to, statements about the
benefits of the proposed transactions involving Realty Income and VEREIT,
including future financial and operating results, plans, objectives,
expectations and intentions. All statements that address operating performance,
events or developments that we expect or anticipate will occur in the future –
including statements relating to creating value for stockholders, benefits of
the proposed transactions to clients, employees, stockholders and other
constituents of the combined company, integrating our companies, cost savings
and the expected timetable for completing the proposed transactions – are
forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are
difficult to predict. Although we believe the expectations reflected in any
forward-looking statements are based on reasonable assumptions, we can give no
assurance that our expectations will be attained and, therefore, actual outcomes
and results may differ materially from what is expressed or forecasted in such
forward-looking statements. For example, these forward-looking statements could
be affected by factors including, without limitation, risks associated with the
ability to consummate the proposed merger and the timing of the closing of the
proposed merger; the ability to secure favorable interest rates on any
borrowings incurred in connection with the proposed transactions; the impact of
indebtedness incurred in connection with the proposed transactions; the ability
to successfully integrate our operations and employees; the ability to realize
anticipated benefits and synergies of the proposed transactions as rapidly or to
the extent anticipated by financial analysts or investors; potential liability
for a failure to meet regulatory or tax-related requirements, including the
maintenance of REIT status; material changes in the dividend rates on securities
or the ability to pay dividends on common shares or other securities; potential
changes to tax legislation; changes in demand for developed properties; adverse
changes in the financial condition of joint venture partner(s) or major tenants;
risks associated with the acquisition, development, expansion, leasing and
management of properties; risks associated with the ability to consummate the
Spin-Off and the terms thereof, and the timing of the closing of the proposed
spin-off; risks associated with the ability to consummate any sales of office
property assets of Realty Income and VEREIT and the impact of such sales on
OfficeCo or the combined company; failure to obtain debt financing to capitalize
OfficeCo; risks associated with the geographic concentration of Realty Income,
VEREIT or OfficeCo; risks associated with the industry concentration of tenants;
the potential impact of announcement of the proposed transactions or
consummation of the proposed transactions on business relationships, including
with clients, employees, customers and competitors; unfavorable outcomes of any
legal proceedings that have been or may be instituted against Realty Income,
VEREIT or any company spun-off by the combined company; costs related to
uninsured losses, condemnation, or environmental issues; the ability to retain
key personnel; costs, fees, expenses and charges related to the proposed
transactions and the actual terms of the financings that may be obtained in
connection with the proposed transactions; changes in local, national and
international financial markets, insurance rates and interest rates; general
adverse economic and local real estate conditions; the inability of major
tenants to continue paying their rent obligations due to bankruptcy, insolvency
or a general downturn in their business; foreign currency exchange rates;
increases in operating costs and real estate taxes; changes in dividend policy
or ability to pay dividends for Realty Income’s or VEREIT’s common stock or
preferred stock; impairment charges; unanticipated changes in Realty Income’s or
VEREIT’s intention or ability to prepay certain debt prior to maturity and/or
hold certain securities until maturity; pandemics or other health crises, such
as coronavirus (COVID-19); and those additional risks and factors discussed in
reports filed with the U.S. Securities and Exchange Commission (“SEC”) by Realty
Income and VEREIT. Moreover, other risks and uncertainties of which Realty
Income or VEREIT are not currently aware may also affect each of the companies’
forward-looking statements and may cause actual results and the timing of events
to differ materially from those anticipated. The forward-looking statements made
in this communication are made only as of the date hereof or as of the dates
indicated in the forward-looking statements, even if they are subsequently made
available by Realty Income or VEREIT on their respective websites or otherwise.
Neither Realty Income nor VEREIT undertakes any obligation to update or
supplement any forward-looking statements to reflect actual results, new
information, future events, changes in its expectations or other circumstances
that exist after the date as of which the forward-looking statements were made.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or approval. In
connection with the proposed transaction, Realty Income and VEREIT will file
with the Securities and Exchange Commission (the “SEC”) a registration statement
on Form S-4 containing a joint proxy statement/prospectus and other documents
regarding the proposed transaction. The joint proxy statement/prospectus will
contain important information about the proposed transaction and related matters
but is not a part of or incorporated by reference in this Current Report on Form
8-K/A.

STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING
ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC CAREFULLY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT REALTY INCOME, VEREIT AND THE PROPOSED TRANSACTION.

Investors and security holders of Realty Income and VEREIT will be able to
obtain free copies of the registration statement, the joint proxy
statement/prospectus and other relevant documents filed by Realty Income and
VEREIT with the SEC through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed by Realty Income with the SEC are also available
on Realty Income’s website at http://www.realtyincome.com, and copies of the documents
filed by VEREIT with the SEC are available on VEREIT’s website at
http://www.vereit.com. None of the foregoing documents is a part of or incorporated by
reference into this Current Report on Form 8-K/A.

Realty Income, VEREIT and their respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from Realty Income’s
and VEREIT’s stockholders in respect of the proposed transaction. Information
regarding Realty Income’s directors and executive officers can be found in
Realty Income’s definitive proxy statement filed with the SEC on April 1, 2021.
Information regarding VEREIT’s directors and executive officers can be found in
VEREIT’s definitive proxy statement filed with the SEC on April 15, 2021.
Additional information regarding the interests of such potential participants
will be included in the joint proxy statement/prospectus and other relevant
documents filed with the SEC in connection with the proposed transaction if and
when they become available. These documents are available on the SEC’s website
and from Realty Income or VEREIT, as applicable, using the sources indicated
above, but none of those documents is a part of or incorporated by reference
. . .

Item 9.01 Financial Statements and Exhibits.




  (d) Exhibits.




Exhibit No                                  Description

  2.1*         Agreement and Plan of Merger, dated as of April 29, 2021, by and among
             Realty Income Corporation, Rams MD Acquisition Sub I, Inc., Rams
             Acquisition Sub II, LLC, VEREIT, Inc. and VEREIT Operating Partnership,
             L.P. (incorporated by reference to Exhibit 2.1 to the Company's Current
             Report on Form 8-K filed on April 30, 2021).
  99.1         Updated Joint Investor Presentation, dated April 29, 2021 (incorporated
             by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K
             filed on April 30, 2021).
104          Cover Page Interactive Data File (formatted as inline XBRL and contained
             in Exhibit 101)



*Pursuant to Item 601 (6)(2) of Regulation S-K, the Disclosure Letters to the

Merger Agreement (identified therein) have been omitted from this Report and

           will be furnished to the SEC supplementally upon request.

© Edgar Online, source Glimpses

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