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Realty Income's CEO Discusses Acquisition Of American Realty Capital Trust Conference (Transcript)

And in this transaction, approximately 75% of the rental revenue of the 501 properties, we’ll be acquiring here will be with investment grade tenants, that includes FedEx, Walgreens, CVS, the GSA, Dollar General, Express Scripts, PNC Bank and really a number of other retail and commercial tenants with investment grade.

It will also in one fell swoop make FedEx become our single largest tenant, yet given the size of the two organization being put together, only about 6% of revenue. And overall, the revenue generated by investment grade tenants in our portfolio increase from about 19% today to 34% of the revenue. So it is extremely additive to this very important initiative for us.

The second initiative we’ve been pursuing is, most people who follow us know, is to add to our revenue generated by commercial tenants operating in industries other than retail and this transaction moves that from about 13% of our revenue generated outside to about 20% with the vast majority of all of that revenue coming from investment grade tenants.

Above and beyond the strategic initiative and just looking at the portfolio, this continues to improve the quality of the rental revenue of our portfolio through a substantial additional diversification. If you take a glance on page seven of the slides, you’ll see that the top 15 tenants, which we report each quarter, the revenue from those tenants’ declines from about 49% of revenue to 42% of revenue. So there’s a meaningful difference there.

And if you look at the top few now in descending order, FedEx, as I mentioned, would be our largest tenant at about 6%. It would drop then to AMC Theaters at 3.8%; LA Fitness at 3.7%; Diageo, the large international drinks company at 3.6%; then Walgreens to 3.2% and Super America at 3.1%.

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