Realty Income Corporation (NYSE: O) and KKR (NYSE: KKR) announced the formation of a euro-denominated joint venture, with KKR-advised capital accounts investing €528 million for a 49% equity stake in a portfolio of European net lease real estate assets contributed by Realty Income.

Realty Income will retain a 51% ownership interest and continue to manage the portfolio through its European operating platform under a long-term management agreement. The portfolio spans 54 properties across Spain, Ireland, Poland, and the Netherlands, with 140 total units and an estimated first-year cash annual net operating income of €67.7 million as of June 30, 2026.

The portfolio carries a 5.9% initial cap rate after recurring asset management fees. Realty Income holds a call option to redeem KKR's equity interest between years 10 and 17 of the venture, with a capped IRR for KKR expected to be set between 6.3% and 6.5% at closing.

The portfolio's weighted average remaining lease term is 7.2 years, with 59% investment-grade exposure by base rent. Top industries represented include grocery, transportation services, home improvement, home furnishings, and automotive parts. The expected compound annual contractual growth rate is 1.6%.

Realty Income President and CEO Sumit Roy said the partnership "extends this strategy into Europe and demonstrates both the portability of our competitive advantages across borders and the confidence that leading institutional investors have in our platform."

The transaction is expected to close September 30, 2026, subject to customary closing conditions. Lazard and DLA Piper advised Realty Income, while Citi and Latham & Watkins advised KKR.