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Another Non-Traded REIT Delivers Liquidity Option to its Shareholders

Cole Credit Property Trust, Inc.’s (CCPT) shares of common stock, 77% to be exact, have been tendered to American Realty Capital Properties, Inc. (NASDAQ: ARCP). The offer expired at 5:00pm EST, on Friday, May 16, 2014.

Initially, ARCP’s tender offer was set to expire April 25, 2014, but was extended an extra three weeks, which allowed another 14% of the outstanding shares to be tendered. 

CCPT shareholders will receive $7.25 per share, in cash, with no interest and less any applicable withholding taxes. This includes those that tendered and those that did not because of a pending merger. CCPT will be merged into a wholly-owned subsidiary of ARCP without a vote of the remaining shareholders. As a result, each outstanding share of CCPT not tendered in the offer will be converted into the right to receive the same $7.25 per share. 

CCPT is a public, non-listed REIT that invests primarily in single-tenant commercial properties that are net leased to creditworthy tenants, long-term. As of December 31, 2013, the REIT owned 39 properties across 19 states totaling 956,000 square feet with an average remaining lease term of 7.4 years.

Launched in April of 2004, CCPT offered shares of common stock at a price of $10 per share. By September of 2005, the REIT had closed its initial public offering after it raised over $100 million.

As of March 26, 2014, CCPT had 10,090,951 shares outstanding held by 1,485 stockholders of record according to DST Systems, Inc., the REITs registrar and transfer agent.

Duff & Phelps, an independent valuation and corporate finance firm, provided CCPT’s board of directors a valuation range of $6.33 to $7.72 per share using the NAV methodology. As of December 31, 2013, the board determined that $6.55 per share was an appropriate estimated valuation and it was correct to use the NAV method.

“Our board of directors determined that the NAV methodology was the most appropriate valuation methodology based on the size of our portfolio, as it may be more likely that a potential liquidity transaction would occur through individual or portfolio asset sales rather than through a listing of our shares on a national securities exchange or other significant sale of our equity securities,” according to a filing.