VER - U.S. REITs Build Solid Deal With Unusual Blocks
- Mergers and acquisitions can be too fancy for their own good. Realty Income's roughly $11 billion all-stock deal for rival real estate investment trust Vereit might appear to be guilty of this sin, with some financial engineering and a spinoff on the side.
- The companies estimate some $50 million of cost savings, mainly from cutting back-office overhead. Both firms are REITs, which essentially means no tax bite.
- REITs grow earnings by buying buildings, and investors value them based on the yield their rents throw off relative to the interest they pay. With cheaper debt, acquisitions look more valuable.
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U.S. REITs Build Solid Deal With Unusual Blocks