NEW YORK CITY-Those who follow @GlobeStcom on Twitter and @GlobeStLIVE may have seen a post teasing the news, but GlobeSt.com has learned that American Realty Capital is about to acquire CapLease for $2.2 billion.
The boards of both REITs have agreed to the terms, and the deal is expected to close in Q3. This will push ARCP into the #3 slot among the largest net lease trusts.
“The combination of ARCP with CapLease allows us to expand and further diversify our property portfolio, fortify our credit quality, reduce our tenant concentration and enhance our management team,” says ARCP chairman and CEO Nick Schorsch in a statement. “This transaction is immediately accretive and is expected to generate approximately $0.11 per share in additional adjusted FFO annually and, upon closing, will allow us to increase our dividends to stockholders by $0.03 per share to an annualized rate of $0.94 per share.”
Schorsch adds that he expects virtually all of CapLease’s executive team to make the move to his shop. One CapLease exec, chairman and CEO Paul McDowell, notes in the same statement that, “Our board has unanimously approved this merger with ARCP as being in the best interests of CapLease and our stockholders, who will receive a certain cash premium for their shares. We believe that the structure of this transaction creates the greatest value for all stockholders over both the near and long term. My management team looks forward to the opportunities of continuing to build out the high quality assets of the company.”
ARCP has been making aquisition news through 2013, of course, and most recently did so in an ultimately still-born attempt to buy Cole Credit III. In an exclusive interview at RealShare Net Lease, Schorsch told GlobeSt.com that he was still on the lookout for logical acquisition targets. Cearly, he found it in CapLease.
ARCP will pay $8.50 per share for each outstanding share of CapLease common stock, and each share of Series A, Series B and Series C preferred stock of CapLease will be converted into the right to receive the sum of $25 in cash plus unpaid dividends. Additionally, ARCP will take on roughly $580 million of CapLease’s $1.2 billion of outstanding debt and repay the balance.