ARCP Fires Back at Cole Letter

NEW YORK CITY-Continuing a war of words over its proposal to acquire Cole Credit Property Trust III in a $9-billion deal, locally based American Realty Capital Properties Inc. on Friday issued a rebuttal to Thursday's letter from Phoenix-based Cole Holdings. That letter, under the signature of executive chairman Christopher Cole and president and CEO Marc Nemer and addressed to Cole Holdings' business partners, affirmed the decision by CCPT III's board that the unsolicited ARCP offer “would not be in the best interests of CCPT III and its stockholders,” and that CCPT III's previously announced decision to acquire Cole Holdings would best serve those interests.

“Notwithstanding Cole's assertions to the contrary, ARCP fails to understand how CCPT III's board of directors, Goldman Sachs and its other advisors could thoroughly review, analyze or negotiate the ARCP proposal in the best interests of the CCPT III stockholders while having exerted no effort to engage, or even communicate with, ARCP, its management or its advisors,” ARCP, led by chairman and CEO Nicholas Schorsch, says in a statement.

“While ARCP does not believe that negotiating in a public forum is the most expedient method to maximize stockholder value for CCPT III, ARCP believes that the letter disseminated yesterday by Cole to its business partners is a distraction filled with many inaccuracies and omissions that distort the true nature of ARCP's value-creating proposal,” which would create what Schorsch described in a March 19 letter as “the largest, highest quality publicly traded REIT in the net lease sector.”

ARCP says that none of the Cole letter's assertion disguise the fact that ARCP's proposal provides CCPT III stockholders with “certainty of execution, timing and value in an 80% stock, 20% cash transaction.”  Stockholders who elect to receive ARCP common stock will have “unlimited upside and a floor of $12 per share,” a proposal representing “at least a 20% premium to the original CCPT III offering price of $10.00 per share,” while offering no lock-up and providing “immediate liquidity” for CCPT III's stockholders.

Further, ARCP in its statement says Cole Holdings in its letter disseminates “false or misleading information” rather than engaging ARCP's board “in a constructive manner.” The statement notes that the public markets have been supportive of ARCP's proposal, “as evidenced by outsized trading volume of 22 million shares and an increase in its share price of 5.8% over the past two days.” 

Paraphrasing the Cole Holdings letter, ARCP says in its statement, “We agree with Cole that an 'investor-oriented approach' should be 'designed to ensure appropriate alignment of interests' with stockholders; however, it remains unclear how CCPT III's acquisition of Cole for an amount in excess of $120 million (i.e., its internalization of Cole's other advisory and non-real estate businesses and broker-dealer) embodies this spirit. A Cole Holdings spokesman did not respond to GlobeSt.com's request for comment by deadline Friday afternoon.