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California-based real estate investment firm Realty Income Corp. has begun acquiring Cumberland Farms locations throughout Central Massachusetts as part of a $1.5-billion sale-leaseback deal with United Kingdom-based EG Group, the parent company of Cumberland Farms of Westborough.
As part of its plan to buy 116 convenience store properties in Massachusetts, Realty Income began closing the property deals in Central Massachusetts on Monday. As of late Tuesday afternoon, the company had purchased 14 Cumberland Farms properties for a total of $72.7 million in Athol, Auburn, Brookfield, Grafton, Hardwick, Lancaster, Leicester, Northborough, Pepperell, Southborough, Sturbridge, Templeton, and Westminster.
In a sale-leaseback deal, the buyer generally acquires the property and leases the property to the previous owner, who is operating a business at the location. In this case EG Group will continue to operate the Cumberland Farms locations.
Realty Income announced in a March 6 press release it signed an agreement to acquire up to 415 single-tenant convenience store properties. The company anticipates that more than 80% of the total portfolio annualized contractual rent will be generated by properties operated under the Cumberland Farms brand. Of the 415 properties, 116 are expected to be in Massachusetts.
Properties in the portfolio have a 20-year weighted initial lease term.
"Our core investment philosophy is to partner with leading operators in industries that have demonstrated an ability to deliver favorable risk-adjusted returns over the long term," Realty Income President & CEO Sumit Roy said in the press release. "We believe this portfolio includes brands that are among the most recognizable convenience store brands on the East Coast, and the convenience store industry has long been a well-performing staple in our real estate portfolio. We are pleased with the portfolio's attractive real estate quality, store-level cash flow coverage, and average property size."
As of Tuesday, Obsidian ML 6 LLC, an affiliate of Realty Income, has acquired the following Central Massachusetts properties from affiliates of Cumberland Farms’ parent company, according to the Worcester District Registry of Deeds and the Middlesex South Registry of Deeds:
Realty Income is a publicly-traded real estate investment trust, which owns more than 12,000 properties primarily under long-term net lease agreements with commercial clients, according to the press release. The company, which stresses its payment of dividends to investors, reported $3.3 billion in revenue in 2022, with a cost of revenue of $226 million, according to Yahoo Finance.
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