Realty Income Sees a Potential $8 Trillion Net Lease Market in UK & Europe

Sumit Roy, President and CEO of Realty Income Corp. (NYSE: O), joined Nareit in New York for a video interview at REITweek: 2019 Investor Conference.

Roy discussed the REIT’s recent sale-leaseback transaction with UK supermarket chain Sainsbury’s.

“We like the UK market primarily because it’s a very stable market with very high population and density, but with very limited retail supply. That dynamic is a very propitious environment for real estate investment,” Roy said.

He stressed that the deal is “very much along the lines of what our investment strategy is all about.”

Roy also noted that Realty Income sees a possible $8 trillion market for net lease real estate assets in the UK and Europe, “which is twice what we have in the U.S.” At the same time, a lack of institutional quality, large-scale net lease companies pursuing those types of transactions there, he said, has created a vacuum that Realty Income can take advantage of.

Meanwhile, Roy said Realty Income’s total enterprise value of nearly $30 billion allows it to have one of the lowest costs of capital in the industry. The REIT can also enter into large scale transactions and can get better pricing, he said.