(The following statement was released by the rating agency)

Jan 9 - Standard & Poor's Ratings Services today stated that its ratings on

Realty Income Corp. remain unaffected by the company's and American Realty

Capital Trust (ARCT; 'BB/Watch Pos') Inc.'s recent announcement that

they have amended the terms of their merger agreement. The amended terms include

a higher cash payment ($55.5 million, $52.5 million of which Realty Income will

fund) upon closing, which we view as not material given the roughly $3 billion

total transaction value. Realty Income also announced that it plans to increase

its common dividend upon the closing of the merger by a greater amount than it

had estimated when the transaction was initially announced. We believe that a

higher post-merger dividend precludes near-term improvement to the dividend

payout ratio.

The acquisition will increase Realty Income's total enterprise value (market

basis) to $11.4 billion (at its Sept. 5, 2012, share price). Both companies'

board of directors have unanimously approved the agreement, which requires a

shareholder vote by both companies, which is planned for Jan. 16, 2013. We

expect the transaction to close in the first quarter of 2013.

We expect Realty Income's financial risk profile to remain 'intermediate,' as

the company plans to finance the transaction in a leverage-neutral manner

through the direct issuance of $1.9 billion of its common stock to ARCT

shareholders (0.2874 ratio), the assumption of roughly $526 million of debt,

the immediate repayment of roughly $574 million of outstanding debt and

transaction expenses, and the newly added $55.5 million cash payment ($52.5

million will be funded by Realty Income and $3 million by AR Capital LLC,

including William M. Kahane, Chief Executive Officer, President, and Director

of ARCT, and Nicholas S. Schorsch, Chairman of the board of directors of

ARCT.) We expect ARCT shareholders to own roughly 25.6% of Realty Income's

shares when the acquisition closes.

We consider the pricing (a roughly 6% cap rate) high relative to Realty

Income's higher-yielding acquisitions to date. However, we also believe that

this acquisition advances Realty Income's strategic objective of increasing

its investment in nonretail properties that are leased primarily to

investment-grade rated tenants subject to long-term leases. Pro forma for the

acquisition, Realty Income's tenant diversification improves, and FedEx

('BBB/Stable') becomes the company's largest tenant (6% of revenues). Despite

the broader business platform, we expect Realty Income's business risk profile

to remain 'satisfactory.'

We assume the integration proceeds smoothly, that the financing associated

with the ARCT acquisition occurs as planned with no diminution to Realty

Income's total coverage, and that credit facility usage post-closing remains

moderate. If Realty Income is able to successfully integrate ARCT and absorb

possible tenant stress while maintaining its current financial profile

(including total coverage above 1.1x) and strong liquidity, we would consider

raising the rating. While slimmer post-merger total coverage would temper

upgrade momentum, we view a negative rating action as unlikely in the near

term. However, we would consider revising our outlook to negative if the

company struggles to manage potential large tenant losses such that

fixed-charge coverage drops below 2.6x and/or total coverage of the common

dividend dips below 1.0x.

(New York Ratings Team)

(e-mail: pam.niimi@thomsonreuters.com; Reuters Messaging: pam.niimi.reuters.com@reuters.net; Tel:1-646-223-6330;)

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