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ORLANDO-Locally-based restaurant REIT Trustreet Properties Inc. has entered into an agreement to be acquired by Scottsdale, AZ-based GE Capital Solutions, Franchise Finance. The deal is valued at approximately $3 billion.

Trustreet provides triple-net lease financing to operators of national and regional restaurant chains. The company's core net-lease portfolio has more than 2,000 properties including restaurant brands such as Applebee's, Burger King, Jack in the Box, Pizza Hut and Wendy's.

The transaction involves the payment of $17.05 per outstanding share of Trustreet's common stock and the assumption or refinancing of the company's outstanding debt. GE Capital Solutions, a lender for the US and Canadian franchise markets, will add Trustreet's restaurant 1031 trading platform to its own franchise finance business and will establish an East Coast office at the company's Orlando headquarters. The transaction, which is subject to the approval of Trustreet's common shareholders and other closing conditions, is expected to close in the first quarter 2007.

"Trustreet's sale-leaseback capabilities, combined with GE Capital Solutions' mortgage products, creates an expanded suite of products for restaurant operators," says Trustreet president and CEO Curtis McWilliams, in a statement.During Q2, Trustreet reported funds from operations of $19.7 million, or 29 cents per share. During the quarter, the company acquired 104 properties for $90.7 million and sold 43 properties for $74.2 million.

In the transaction, holders of Trustreet's $1.93 Series A Convertible Redeemable Preferred Stock will receive $25 per share, plus any accrued but unpaid dividends through the closing date. In addition, GE has agreed that, as soon as possible after the merger, it will liquidate the surviving corporation into a subsidiary of GE Capital Solutions. In the liquidation, each holder of a share of Trustreet's 7.5% Series C Convertible Redeemable Preferred Stock will receive $25 per share in cash, plus any then-accrued but unpaid dividends.

Advising Trustreet in the deal were Banc of America Securities LLC and Pillsbury, Winthrop, Shaw, Pittman LLP. GE Capital Solutions' financial advisor was Wachovia Securities and legal advisor was Hogan Hartson LLP. More details of the deal will be reported as GlobeSt.com continues to track the story.

Instant Insights /

GE Capital to Acquire Trustreet for $3B

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