ARCP, GE Ink $807M Net Lease Deal

NEW YORK CITY-Just days after striking a deal to acquire net lease rival CapLease for $2.2 billion, American Realty Capital Properties is keeping the buying momentum going with an $807-million agreement to acquire 471 assets from GE Capital. The portfolio, a portion of the formerly publicly traded Trustreet Properties Inc. stable, consists mainly of properties net leased to restaurant operators, representing franchises such as IHOP, Jack in the Box, Burger King, Arby's, Taco Bell and Applebee's.

“This transaction allows us to deliver on our promise to acquire $1.1 billion of properties” this year, “and do so earlier than expected in 2013 at a cap rate in excess of 7%,” ARCP CEO and chairman Nicholas Schorsch says in a statement. Adds Mike Weil, ARCP's president, “Following this transaction, our portfolio will be among the strongest net lease REIT programs available to the investor, diversified across industry, geographical location and tenant.”

Further, ARCP CFO Brian Block says in a release that the company's pipeline of additional deals “remains strong.” Once all of the target acquisitions close, “we expect to own a portfolio comprised of 1,264 properties which is 69% investment grade” and which comprises more than 30 million square feet, says Block. “We will use low-cost financing and equity as necessary.”

ARCP says the deal, announced after the markets had closed on Thursday evening, further reduces its credit concentration by adding 137 new tenants. The net lease REIT expects to have a portfolio of more than 225 distinct tenants by later this year.

When the deal for the GE Capital portfolio and other targeted acquisitions are finalized, ARCP expects that '13 pro forma rental revenue from its 10 largest tenants will decline from 60% to 36% of the total. The company's portfolio would then include tenants located in 48 states plus Puerto Rico, spanning 27 industries.