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Merger with Spirit Realty Capital, Inc (Tables) | 9 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Schedule of Fair Value of the Consideration Transferred on the Date of the Acquisition | The fair value of the consideration transferred on the date of the acquisition is as follows (in thousands, except share and per share data):
Shares of Spirit common stock exchanged (1) |  | 142,136,567 |
Exchange Ratio |  | 0.762
Shares of Realty Income common stock issued |  | 108,308,064
Opening price of Realty Income common stock on January 23, 2024 |  | $ | 55.80 |
Fair value of Realty Income common stock issued to the former holders of Spirit common stock |  | $ | 6,043,590 |
Shares of Realty Income Series A preferred stock issued in exchange for Spirit Series A preferred stock |  | 6,900,000 |
Opening price of Realty Income Series A preferred stock on January 23, 2024 |  | $ | 24.26 |
Fair value of Realty Income Series A preferred stock issued to the former holders of Spirit Series A preferred stock |  | $ | 167,394 |
Cash paid for fractional shares |  | $ | 51 |
Less: Fair value of Spirit restricted stock and performance awards attributable to post-combination costs (2) |  | $ | (24,751) |
Consideration transferred |  | $ | 6,186,284 |
(1) Includes 142,136,567 shares of Spirit common stock outstanding as of January 23, 2024, which were converted into Realty Income common stock at the Effective Time at an Exchange Ratio of 0.762 per share of Spirit common stock. The portion of the converted unvested Spirit Restricted Stock Awards related to post-combination expense is removed in footnote (2) below. (2) Represents the fair value of fully vested Spirit restricted stock and performance share awards that were accelerated and converted into Realty Income common stock at the Effective Time, reflecting the value attributable to post-combination services. Spirit restricted stock and performance share awards are included in Spirit's outstanding common stock as of the merger date. The fair value attributable to pre-combination services was $41.7 million and is included in the consideration transferred above.
Schedule of Preliminary Estimated Fair Values of the Assets Acquired and Liabilities Assumed at the Date of Acquisition | The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):
|  | At Acquisition Date As Reported March 31, 2024 |  | Measurement Period Adjustments |  | At Acquisition Date As Reported September 30, 2024
ASSETS |  |  |  |  |  |
Land |  | $ | 1,853,895 |  |  | $ | 3,247 |  |  | $ | 1,857,142 |
Buildings and improvements |  | 4,859,162 |  |  | 90,314 |  |  | 4,949,476 |
Total real estate held for investment |  | 6,713,057 |  |  | 93,561 |  |  | 6,806,618 |
Real estate and lease intangibles held for sale |  | 35,650 |  |  | (1,583) |  |  | 34,067 |
Cash and cash equivalents |  | 93,683 |  |  | — |  |  | 93,683 |
Accounts receivable |  | 12,959 |  |  | (145) |  |  | 12,814 |
Lease intangible assets (1) |  | 2,214,615 |  |  | (32,804) |  |  | 2,181,811 |
Goodwill |  | 1,259,864 |  |  | (59,143) |  |  | 1,200,721 |
Other assets (2) |  | 174,672 |  |  | (1,881) |  |  | 172,791 |
Total assets acquired |  | $ | 10,504,500 |  |  | $ | (1,995) |  |  | $ | 10,502,505 |
LIABILITIES |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 56,407 |  |  | $ | (1,934) |  |  | $ | 54,473 |
Lease intangible liabilities (3) |  | 378,369 |  |  | (203) |  |  | 378,166 |
Other liabilities |  | 101,954 |  |  | 142 |  |  | 102,096 |
Term loans |  | 1,300,000 |  |  | — |  |  | 1,300,000 |
Notes payable |  | 2,481,486 |  |  | — |  |  | 2,481,486 |
Total liabilities assumed |  | $ | 4,318,216 |  |  | $ | (1,995) |  |  | $ | 4,316,221 |
Net assets acquired, at fair value |  | $ | 6,186,284 |  |  | $ | — |  |  | $ | 6,186,284 |
Total purchase price |  | $ | 6,186,284 |  |  | $ | — |  |  | $ | 6,186,284 |
(1) The weighted average amortization period for acquired lease intangible assets is 10.8 years. (2) Includes $53.9 million of gross contractual loans receivable, the fair value of which was $47.1 million, and we expect to collect substantially all of the loans receivable as of the acquisition date. (3) The weighted average amortization period for acquired lease intangible liabilities is 8.2 years.
Schedule of Pro Forma Information | The following unaudited pro forma information presents a summary of our combined results of operations for the nine months ended September 30, 2024 and three and nine months ended September 30, 2023, respectively, as if our merger with Spirit had occurred on January 1, 2023 (in millions, except per share data). The following pro forma financial information is not necessarily indicative of the results of operations had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.
|  |  | Three months ended September 30, |  | Nine months ended September 30, |  |
|  |  | 2023 |  | 2024 |  | 2023 |  |
Total revenues |  |  | $ | 1,239.3 |  |  | $ | 3,978.8 |  |  | $ | 3,595.3 |  |  |
Net income |  |  | $ | 250.5 |  |  | $ | 759.4 |  |  | $ | 673.3 |  |  |
Basic and diluted earnings per share |  |  | $ | 0.31 |  |  | $ | 0.88 |  |  | $ | 0.85 |  |  |

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- Definition Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Paragraph 1 -Section 50 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-1 + Details
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