Home Alts News ARC Completes Acquisition of Cole

ARC Completes Acquisition of Cole

image_pdf

American Realty Capital Properties (ARCP) announced today the acquisition of Cole Real Estate Investments is complete. The $11.2 billion merger has created the largest net lease REIT and positions ARCP has a top 15 REIT with an enterprise value of $21.5 billion.

This news follows the successful completion of a $2.55 billion senior unsecured note offering which closed yesterday. The net proceeds of the offering will fund the cash component, fees, and expenses related to the merger, and repayment of Cole’s credit facility. 

Voting stockholders overwhelmingly approved of the merger in a late January vote. ARCP stockholders voted 98.2% in favor while 94.9% of Cole’s shareholders voted in support of the merger.

There are many benefits to a merger of this size such as enhanced scale and competitiveness, operational efficiencies, expense reductions, and cost of capital advantage due to ARCP’s investment grade credit rating.

Nicholas S. Schorsch, Chairman and CEO of ARCP, commented , “With the closing of the Cole acquisition, we have become one of the leading publicly traded REITs, and the dominant net lease REIT, 61% larger than the closest net lease competitor. With the scale and advantages that come with being a $21.5 billion investment grade credit rated company, we expect to enjoy a significant cost of capital advantage. We intend to use this low cost, readily available capital to build out our portfolio and to attract and retain exceptional professionals. With only a 2% cash election by Cole stockholders, we take this as a vote of confidence from the Cole stockholders that ARCP can continue to grow its portfolio aggressively while building out its intellectual capital and further to this, its bench strength.”

Cole stockholders were given the choice of taking cash or shares of ARCP. 98% of outstanding Cole shares received 1.0929 shares of ARCP per share of Cole. The cash payout fetched $13.82 per share. 

ARCP and Cole were the top two direct investment sponsors in terms of capital raised during 2013 according to Robert A. Stanger & Co. Of the $24.6 billion raised in the direct investment industry, these two distribution teams, now one, took in over $11.9 billion in new capital collectively, or 48% of the industry total. 

Lisa E. Beeson, ARCP’s Chief Operating Officer, commented, “We have grown this company rapidly yet deliberately, and with due care. Through this acquisition, we expect to benefit from significant synergies, totaling approximately $70 million. The integration has gone smoothly and we are excited to draw from Cole’s talent pool as we incorporate into ARCP its PCM {Private Capital Management} and wholesale broker-dealer business lines.”