NEW YORK CITY—Two more non-traded REITs that formerly were part of the American Realty Capital lineup have agreed to tie the knot. American Realty Capital—Retail Centers of America Inc. (RCA) and American Finance Trust (AFIN), formerly known as American Realty Capital Trust V Inc., said Tuesday that they would merge in a deal valued at approximately $1.4 billion.

The stock-and-cash merger will create a retail-focused REIT that owns 494 properties totaling 20.8 million square feet, comprised of single-tenant net lease, power center and lifestyle center assets, with an enterprise value of approximately $3.9 billion. The combined company will bear the AFIN name and will be the led by the current AFIN management, with the addition of RCA's Kase Abusharkh as CIO of the multi-tenant portfolio.

“The combination of AFIN and RCA will help the company achieve

critical scale, afford improved access to capital markets, result in significant cost savings for shareholders and increase coverage of our distributions,” says Michael Weil, CEO of AFIN. He calls the proposed merger “a key step forward in our plan to grow earnings.”

With complementary portfolios, the combination of AFIN and RCA will broaden the new company's retail tenant base and reduce AFIN's top 10 tenant concentration to 48% from 75% on an annualized straight-line rent basis as of this past June 30. Post-merger, AFIN will have lower leverage with manageable near-term debt maturities and ample near-term liquidity, the company says, as well as a strong balance sheet for continued growth and acquisitions.

The merger agreement provides RCA with a 45-day go-shop period to solicit superior proposals from third parties. If the merger doesn't go through, RCA will pay AFIN a $5.1-million breakup fee.

UBS Investment Bank is serving as exclusive financial advisor to the special committee of AFIN in connection with the merger, while Pepper Hamilton LLP is serving as legal counsel to the special committee. Proskauer Rose LLP is serving as legal counsel to AFIN. For the RCA board's special committee, BMO Capital Markets is serving as exclusive financial advisor and Arnold & Porter LLP is serving as legal counsel. As with AFIN, Proskauer Rose is serving as legal counsel to RCA.

Last month, Global Net Lease Inc. and American Realty Capital Global Trust II Inc. said they would merge in a deal valued at $647.9 million including the assumption of Global II debt. The single-tenant net lease REIT that will result is expected to have an enterprise value of approximately $3.3 billion, with 345 properties across seven countries.

NEW YORK CITY—Two more non-traded REITs that formerly were part of the American Realty Capital lineup have agreed to tie the knot. American Realty Capital—Retail Centers of America Inc. (RCA) and American Finance Trust (AFIN), formerly known as American Realty Capital Trust V Inc., said Tuesday that they would merge in a deal valued at approximately $1.4 billion.

The stock-and-cash merger will create a retail-focused REIT that owns 494 properties totaling 20.8 million square feet, comprised of single-tenant net lease, power center and lifestyle center assets, with an enterprise value of approximately $3.9 billion. The combined company will bear the AFIN name and will be the led by the current AFIN management, with the addition of RCA's Kase Abusharkh as CIO of the multi-tenant portfolio.

“The combination of AFIN and RCA will help the company achieve

critical scale, afford improved access to capital markets, result in significant cost savings for shareholders and increase coverage of our distributions,” says Michael Weil, CEO of AFIN. He calls the proposed merger “a key step forward in our plan to grow earnings.”

With complementary portfolios, the combination of AFIN and RCA will broaden the new company's retail tenant base and reduce AFIN's top 10 tenant concentration to 48% from 75% on an annualized straight-line rent basis as of this past June 30. Post-merger, AFIN will have lower leverage with manageable near-term debt maturities and ample near-term liquidity, the company says, as well as a strong balance sheet for continued growth and acquisitions.

The merger agreement provides RCA with a 45-day go-shop period to solicit superior proposals from third parties. If the merger doesn't go through, RCA will pay AFIN a $5.1-million breakup fee.

UBS Investment Bank is serving as exclusive financial advisor to the special committee of AFIN in connection with the merger, while Pepper Hamilton LLP is serving as legal counsel to the special committee. Proskauer Rose LLP is serving as legal counsel to AFIN. For the RCA board's special committee, BMO Capital Markets is serving as exclusive financial advisor and Arnold & Porter LLP is serving as legal counsel. As with AFIN, Proskauer Rose is serving as legal counsel to RCA.

Last month, Global Net Lease Inc. and American Realty Capital Global Trust II Inc. said they would merge in a deal valued at $647.9 million including the assumption of Global II debt. The single-tenant net lease REIT that will result is expected to have an enterprise value of approximately $3.3 billion, with 345 properties across seven countries.