The shareholders of American Finance Trust Inc. and American Realty Capital – Retail Centers of America Inc., two non-traded real estate investment trusts sponsored by AR Global, voted and approved the proposed merger transaction that was announced last September.
The merger creates a single retail-focused REIT with an enterprise value of approximately $3.9 billion. The combined portfolio will total 494 properties, comprising 20.8 million rentable square feet of single-tenant net lease, power center, and lifestyle center assets.
AFIN will acquire all of the outstanding common stock of RCA at an exchange ratio of 0.385 AFIN common shares per RCA share, plus a cash payment equal to $0.95 per RCA share.
“We are pleased to have received the support of our stockholders to approve the merger of AFIN and RCA,” said Michael Weil, chief executive officer and president of AFIN. “This is a strategically important transaction that brings together two high quality portfolios, enhancing AFIN’s position as a premier diversified REIT with a retail focus.”
Of the votes cast and entitled to vote at AFIN’s stockholder meeting, approximately 87.3 percent were in favor of the merger transaction. In a separate vote for stockholders of RCA, the acquisition target, just over 50 percent of the shares were voted, and of those, 75 percent voted in favor of the merger and amendment.
The proposed merger has been severely criticized, particularly by investment bank Robert A. Stanger & Company.
Most recently, a group of ARC-Retail Centers of America shareholders filed a class action lawsuit in federal court to block the merger.
AFIN anticipates completing the transaction in the coming days.
American Finance Trust’s portfolio consists of 459 office, retail, and distribution properties totaling 13.1 million square feet with a total purchase price of $2.2 billion. The portfolio is 100 percent leased with a weighted-average remaining lease term of 9.6 years. The company commenced its initial public offering in April 2013, which closed six months later after raising $1.6 billion.
American Realty Capital—Retail Centers of America went effective in March 2011 and closed in September 2014 after raising $973 million in investor equity. The REIT’s portfolio includes 35 properties totaling 7.5 million square feet with an investment cost of $1.2 billion.