WP Carey completes merger with Corporate Property Associates 16 - Global
WP Carey’s merger with its publicly held, non-traded REIT affiliate, Corporate Property Associates 16 – Global Incorporated (CPA:16 – Global), closed on 31 January 2014.
WP Carey issued approximately 30.7 million shares to CPA:16 – Global stockholders, with an exchange rate of 0.1830 shares of WP Carey common stock for each CPA:16 – Global share held at closing.
As a result of the merger, WP Carey now has an equity market capitalisation of approximately USD5.9bn and a total market capitalisation of approximately USD9.6bn. Its global portfolio consists of more than 85 million square feet of corporate real estate leased to over 230 companies around the world. WP Carey will continue to manage CPA:17 – Global, CPA:18 – Global and Carey Watermark Investors, its publicly held, non-traded REIT affiliates.
WP Carey believes that the benefits of the merger include:
• Improved quality of WP Carey's earnings through increased portfolio diversification and by continuing the shift in revenue mix towards stable real estate rental income
• Enhanced access to diverse, efficiently priced sources of capital
• Simplified GAAP financial statements by consolidating joint ventures with CPA:16 – Global, as well as its existing ownership interest in CPA:16 – Global
• Reinforced position as a premier investment manager in the non-traded REIT sector with the 15th successful liquidation of one of its CPA programmes
• Continuation of WP Carey's long-standing tradition of stable dividend growth through anticipated accretion to AFFO per diluted share, with an expected post-transaction minimum annualised dividend of USD3.52 per share
WP Carey has also obtained a senior unsecured credit facility totalling USD1.25bn. The facility is composed of a USD1.0bn revolving line of credit and a USD250m term loan as well as a USD500m accordion feature. Bank of America and JPMorgan Chase Bank acted as joint bookrunners and joint lead arrangers.
The revolving line of credit will mature in four years with an option to extend for one year. The term loan component has a two-year maturity with two separate one-year extension options. The senior unsecured credit facility has an aggregate interest rate that is lower than what the company and CPA:16 – Global paid in aggregate on their respective facilities. WP Carey repaid the USD595m of principal outstanding on its USD625m credit facility as well as USD170m of principal that CPA:16 – Global had outstanding on its credit facility, each of which has been terminated, and expects to use the new facility primarily for potential new investments and general corporate purposes.
Trevor Bond, president and CEO of WP Carey, says: "We believe that the positive balance sheet, earnings and AFFO impact of the merger with CPA:16 – Global, along with the additional liquidity provided by the increased size of our credit facility, will continue to support WP Carey's position as the leading global net lease REIT. Along with our recent investment grade credit ratings by Standard & Poor's and Moody's, the closing of the merger and our increased credit facility reflect our strong business fundamentals and support our strategy of generating solid cash flows and stable dividend growth."
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