Retail parks have led a resurgence in retail real estate investment over the past few years, and US-based Realty Income has been front and center in the UK, Ireland and, increasingly, continental Europe.
Although capital markets have stalled, Realty Income, with a market cap of $51B (£39B, €45B), has built a portfolio worth more than $18B (£14B, €16B) in the UK and Europe over the past seven years, and is now starting to bring joint venture partners into its portfolio.
For the US-listed real estate investment trust, best known for its monthly dividend payments and single-tenant net rental portfolio, the UK and Ireland have become part of what CEO Realty Income calls the “second engine” for growth, and there are few signs of slowing.
Wikimedia Commons/John Sparshatt
Westside Shopping Park in Guiseley is part of a portfolio acquired last year.
Realty Income CEO Sumit Roy said at the European Public Real Estate Association conference last month that the company’s rapid European ascent amid macroeconomic uncertainty required contrarian thinking and “the courage to go against the flow.”
“We have a cost-of-capital advantage, we have scale, we can come in and be a solution provider, help integrate the industry,” he said, stating that the goal is to maintain the same strategy, with long-term, investment-grade tenants and resilient rental structures.
In Realty Income shopping, it has grown to around 390 properties in the UK, which represents around 15% of the global rental roll, plus 24 properties in Ireland, which represents 0.8% of the total rental income. Add to the continent of Europe, and now about a quarter of the profit.
The UK portfolio is worth $13.4B (£10.1B), and the European portfolio is worth $4.7B (£4.2B), according to the company’s Q2 filing. Since its inception, at least in the UK, it has created a portfolio with the same value as the country’s largest REIT.
Retail parks, supermarkets and other needs-led retail properties are central to the strategy: The supply-demand imbalance is increasing, with limited new space, strong occupier demand and long-term tenants, he said. In Q2, newly constructed space was at 120K SF and space approved and likely to be delivered in the next two years was 540K SF, according to Trevor Wood Associates.
Realty Income’s European expansion began in April 2019 with the £429M sale-and-leaseback of 12 UK hypermarkets owned by Sainsbury’s in a joint venture with British Land. The deal creates a model that has since underpinned many UK activities, and has already completed a number of sale-and-leaseback deals with supermarket groups, while its wider European portfolio includes wholesale and home improvement retailers.
A more recent shift to multi-let retail parks has broadened Realty Income’s investment strategy. In January 2025, Realty acquired a portfolio of three properties from AshbyCapital for around £220M, with assets including Morfa Shopping Park in Swansea, Westside Shopping Park in Guiseley and Abbotsinch Shopping Park in Paisley, Scotland.
In June this year, Realty completed the acquisition of a 683K SF portfolio of eight retail parks from Tristan Capital Partners for approximately £260M with a net initial yield of 7.7%. The portfolio includes Brooklands Retail Park and Cardiff Gate in Cardiff, Great Eastern Way in Rotherham, Ravenside in Erdington, 28 East Retail Park in Newport, Hylton Riverside in Sunderland, Riverside Retail Park in Warrington and Hatters Way, Luton.
Irish expansion begins in 2023 with the acquisition of the 179K SF CityEast Retail Park in Limerick and the 138K SF Blackwater Retail Park in Navan, County Meath, from Eden Capital for a combined €45.9M.
In March 2025, Realty Income stepped up, acquiring a retail park portfolio of eight properties assembled by Oaktree Capital Management for €220M, the largest real estate deal in Ireland last year, followed in June by the acquisition of Trinity Collection for €123.5M from Marlet Property Group and M&G-2.
After the company’s Q2 trading update, Roy said that while some international clients had become more cautious about Europe earlier in the year amid geopolitical uncertainty, activity had improved and some of those clients were now actively pursuing transactions.
“Europe continues to offer risk-adjusted investment spreads, supported by lower borrowing costs,” he said. “Our presence in the region and the landscape remain less competitive than in the US [means] we remain constructive in Europe and continue to see it as an important contributor to our growth over time.
Underlining this belief, on September 14, Realty Income and KKR announced the formation of a euro-denominated joint venture, with KKR making an initial investment of €528M to acquire a 49% equity interest in the pan-European portfolio, with Realty Income retaining 51% ownership and continuing to manage the assets. This is one of the largest cross-border European deals of the year, and the portfolio contributed with a closing rate of 5.9%.
In total, 54 properties in Ireland, Spain, Poland and the Netherlands are involved in wholesale, transport services, home improvement, home furnishings and automotive parts.
Highlighting the attractiveness of retail as an asset class, Realty Income International Strategy Officer and President Neil Abraham highlighted institutional capital entering and targeting shopping centers in the UK, particularly out-of-town locations.
“There are quite aggressive bids for these types of assets. In the UK, it’s almost unreal, we’re actually seeing good-sized institutional capital, driving down cap rates,” Abraham said in a second analyst call. “There are also now one or two larger private equity players driving consolidation. I think the logic of the industry is that they are sort of missed playing in the UK, but there are still opportunities throughout Europe. And the low level of the base rate makes it quite accretive on a levered basis.
“So I don’t think we’re seeing upward pressure on cap rates in the UK or, frankly, much of Europe, except Germany. If there is, downward cap rate pressure on UK retail parks will continue.”