American Realty Capital Properties has made an offer to acquire 100 per cent of the outstanding common stock of Cole Credit Property Trust III (CCPT) for at least USD12 per share, or USD5.7bn, in cash and stock.
The transaction, valued at more than USD9bn including assumption of debt, would create the largest and highest quality publicly traded REIT in the net lease sector.
The fully financed proposal offers CCPT III stockholders:
• Consideration: (i) USD12.00 per share in cash or (ii) 0.80 shares of ARCP common stock for each share of CCPT III common stock, with a guarantee that the value of the stock consideration will not be less than USD12.00 per share. This offer represents at least a 20 per cent premium to the original CCPT III offer price of USD10.00 per share.
• Dividend increase: An increase of ARCP's dividend to 93 cents per share upon closing, meaning all CCPT III stockholders who elect stock consideration will receive an equivalent dividend of 74.4 cents per share (93 cents x 0.80), a 15 per cent increase (9.4 cents per share) over CCPT III's current 65 cents per share dividend.
• Integration and operating synergies: ARCP currently estimates that general and administrative (G&A) savings will be not less than USD30m annually. The majority of CCPT III's real estate assets are net lease properties similar to ARCP's existing portfolio, resulting in seamless integration and minimal additional resources or ongoing expense requirements.
ARCP's offer is designed to provide CCPT III's stockholders with a tax-free exchange and instant liquidity, as there will be no lockup and all ARCP shares will be immediately tradable on Nasdaq with significant market support and numerous index inclusions at or subsequent to closing. The offer also provides CCPT III shareholders certainty of execution, timing and value. The cash component of ARCP's proposal is fully funded by cash on hand and borrowing capacity under ARCP's existing line of credit.