ARCP Bumps Up Offer for Cole Credit III

NEW YORK CITY-Following the affirmation Monday from Cole Credit Property Trust III that it intended to go through with its acquisition of Cole Holdings despite a $9-billion offer from American Realty Capital Properties, ARCP on Wednesday said it was increasing its offer for CCPT III to at least $13.59 per share, or $9.7 billion including the assumption of debt. The revised proposal contemplates acquiring the Phoenix-based CCPT III “as a merged entity” after the close of its acquisition of Cole Holdings, chairman and CEO Nicholas Schorsch wrote in a letter to CCPT III's board of directors.

A combined CCPT III and Cole Holdings would be worth at least $6.7 billion in equity, according to Schorsch's letter. “This equity value assumes 492 million shares of CCPT III common stock outstanding, consisting of 481.3 million shares of CCPT III common stock outstanding as of the date of the merger agreement, plus 10.7 million shares of CCPT III common stock to be issued to Cole Holdings in connection with the internalization, each purchased at $13.59 per share,” Schorsch wrote.

“The cash component of our proposal is fully funded by cash on hand at ARCP and borrowing capacity under ARCP's existing credit facility,” he wrote. “Our proposal remains 10% accretive to our ARCP stockholders due to the increased property-level revenues we were able to discern from the data contained in your March 25 filing.”

Further, Schorsch wrote, ARCP continues to believe that “CCPT III stockholders would benefit most from a transaction that would not include the internalization of Cole Holdings. However, we understand that your recent disclosures reflect your commitment to proceed with the internalization. Therefore, our proposal to buy the combined companies is indicative of our continuing commitment to find a way to bring our two companies together—with or without the internalization.” If consummated, the ARCP/CCPT III combination would create the largest publicly traded REIT in the net lease sector.