Realty Income Plans First Institutional Private Capital Fund

San Diego-based commercial property REIT Realty Income is setting up its first private capital fund, President and CEO Sumit Roy disclosed during the company’s third-quarter earnings call on November 5.

The new evergreen, open-end fund will target institutional investors, such as pensions, sovereign wealth funds, endowments, foundations, and large insurance companies, but will not be marketed to high-net-worth or retail investors. Roy said development of the fund is a “natural step” in the firm’s “evolution to diversify and enlarge access to equity capital through private markets.”

Historically, Realty Income has engaged primarily in public market investments, but now sees “multiple strategic benefits” in entering the private capital business, observing that the pool of private capital significantly exceeds that of traditional public markets. Underlining Roy’s point, research from the National Association of Real Estate Investment Trusts shows that over 90% of the domestic commercial real estate market is under private capital, valued at approximately $18.8T in assets, which is 10 times larger than that of public real estate markets at $1.9T.

Roy said the firm will leverage its collective resources and long-standing expertise in real estate holdings and employ data-driven insights in structuring the fund, which he expects will provide the firm access to “a deep pool of institutional capital” while supplementing Realty Income’s existing business without significantly impacting its balance sheet.

Source: https://www.fool.com/earnings/call-transcripts/2024/11/05/realty-income-o-q3-2024-earnings-call-transcript/

Written By: Dakota

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