Realty Income Corporation (NYSE: O) and Apollo (NYSE: APO) announced a strategic partnership where Apollo will invest $1 billion for a 49% equity interest in a joint venture owning approximately 500 U.S. retail properties.

The joint venture will include single-tenant retail assets subject to long-term net leases, with Realty Income maintaining management of the portfolio. The properties generate approximately $140 million in cash annualized base rent and have a weighted average remaining lease term of 9.1 years.

Realty Income will retain the right to exercise a call option to redeem Apollo's equity interest between years 7 and 15 of the joint venture, with the call price calculated to ensure a capped internal rate of return of 6.875% to Apollo.

The portfolio includes properties across various retail sectors, with dollar stores representing 9.9% of the portfolio, quick service restaurants at 8.3%, drug stores at 7.9%, grocery at 7.7%, and health and fitness at 7.5%. Investment grade tenants account for 28% of total portfolio base rent.

"This partnership will serve as a template for a multi-billion-dollar, programmatic co-investing relationship in the U.S.," said Sumit Roy, Realty Income's President and Chief Executive Officer.

Apollo Partner Jamshid Ehsani described the transaction as "a landmark deal in the public REIT space" that creates "a highly complementary partnership."

The transaction is expected to close on March 31, 2026, subject to finalization of documentation and customary closing conditions. Goldman Sachs served as exclusive structuring agent and financial advisor to Realty Income, while Wells Fargo Securities advised Apollo.

Both Moody's and S&P have granted the structure permanent equity treatment. Since 2020, Apollo has originated over $100 billion in capital solutions for various companies.