NEW YORK CITY—Two separate announcements Monday by net lease giant American Realty Capital Properties Inc. both involve entities of Phoenix-based Cole Capital, ARCP’s private capital management business. However, ARCP’s COO, Lisa Beeson, tells GlobeSt.com the two announcements are otherwise unrelated, as is their timing. ARCP’s executive chairman, Nicholas Schorsch, who is also chairman and CEO of Cole Credit Property Trust Inc., will keynote RealShare Net Lease, to be held Wednesday morning at Convene in Midtown Manhattan.
In one of these announcements, ARCP has commenced an all-cash offer to buy all 10.1 million outstanding shares of CCPT for $7.25 per share, or approximately $74 million, through a newly formed subsidiary, Desert Acquisition Inc. In the other, ARCP said Cole Corporate Income Trust Inc. has engaged Wells Fargo Securities LLC to assist in its review of potential strategic options following its $1.9-billion initial public offering late last year.
Monday’s announcement regarding CCPT follows a March 17 agreement and plan of merger. “We’re acquiring it at an 8%-cap valuation,” Beeson tells GlobeSt.com. The tender offer expires on April 25, unless it’s extended.
What ARCP will be acquiring via the CCPT merger is a 956,000-square-foot portfolio of 39 single-tenant retail and commercial properties across 19 states. “It’s a portfolio we know well: 43% investment grade tenancy, fully occupied—a strong portfolio,” says Beeson. ARCP manages the portfolio through its Clark Acquisition LLC subsidiary.
CCIT’s hiring of Wells Fargo is part of a process that began last July, Beeson explains. At that time, the net lease REIT said that, after the close of its IPO, it would begin investigating liquidity opportunities. “The Wells Fargo engagement reflects the next step in the company’s exploration of how best to maximize stockholder value,’ CCIT said in an SEC filing Monday.
Asked what those liquidity opportunities might include, Beeson says they run the gamut of “a whole host of options.” Among them are maintaining the status quo, selling the company as one entity, selling it in pieces or doing a reverse merger with another firm.
The 18-million-square-foot CCIT portfolio is divided roughly 50/50 between office and industrial assets, some 85 in all across 30 states. The portfolio’s tenancy is 73% investment grade, says Beeson. “It’s a good geographic diversity; we have a good weighted average lease term in excess of 12 years; and it’s a great mixture of office and industrial assets,” she adds.