PHOENIX-Local companies Spirit Realty Capital Inc. and Cole Credit Property Trust II have signed a definitive agreement to merge. Once the final dotted lines are signed during Q3, 2013, the result will be the second-largest publicly traded triple-net REIT in the U.S., offering a pro forma enterprise value of approximately $7.1 billion.
According to a press release dealing with the agreed-upon merger, the combined company will retain the Spirit Realty name and trade on the New York Stock Exchange under the ticker symbol “SRC.” It will own or have an interest in 2,012 properties in 48 states as well as enhanced asset to capital and a more broadly diversified portfolio of high-quality real estate assets. Spirit Realty’s management will lead the company.
“This merger significantly accelerates Spirit Realty’s business strategy and better positions us to deliver long-term value to our shareholders,” says Thomas H. Nolan, Jr., chairman and CEO of Spirit Realty in the press release. “CCPT II’s portfolio represents one of the largest and highest-quality portfolios of net lease assets. The addition of CCPT II’s portfolio effectively doubles the size of our portfolio. As a result, the merger further diversifies us both geographically and by industry, reduces our tenant concentration, improves the overall credit quality of our portfolio and increases operating efficiency.” Nolan adds that the positive outlook for the triple-net industry helped drive the merger.
Christopher H. Cole, founder and executive chairman of Cole, adds in the same press release: “The independent directors of the CCPT II Board, with the assistance of legal and financial advisors, thoroughly evaluated potential options to maximize value for our shareholders. We are confident that this transaction is in the best interest of all shareholders.”
The completion of the transaction is subject to the receipt of approval of the majority of shares outstanding of Spirit Realty and CCPT II and customary regulatory approvals and closing conditions. A joint proxy statement/prospectus will be filed on Form S-4 with the Securities and Exchange Commission, which will describe the proposed merger.
Barclays served as financial advisor to Spirit Realty, and Latham & Watkins LLP served as legal advisor to Spirit Realty. Morgan Stanley and UBS Investment Bank served as financial advisors to CCPT II, and Goodwin Procter LLP served as legal advisor to CCPT II. Gleacher & Co. served as financial advisor to the Special Committee of CCPT II and Ropes & Gray LLP served as legal advisor to the Special Committee of CCPT II.
Spirit Realty Capital was formed in 2003 to acquire single-tenant operationally essential real estate, which refers to generally free-standing, commercial real estate facilities where tenants conduct retail, service or distribution activities that are essential to the generation of their sales and profits. Cole Credit Property Trust II Inc. is a non-traded, SEC-registered REIT that invests primarily in high-quality, freestanding, single-tenant buildings net leased to investment grade and other creditworthy tenants throughout the United States. These are typically necessity retailers including drug stores, family restaurants and home improvement stores among others.