NEW YORK CITY-After closing on its merger with American Realty Capital Trust III this past February and announcing a deal in late May to acquire net lease rival CapLease, American Realty Capital Properties is in big-deal mode again. The company said Tuesday it has signed a merger agreement with American Realty Capital Trust IV to acquired the non-traded REIT for stock and cash in a deal valued at $3.1 billion.
After the merger closes, ARCP will have a 45-million-square-foot portfolio, comprised of 2,579 single tenant properties net leased to 470 tenants across 29 industries in 48 states, and carry a pro forma enterprise value of about $10 billion, according to a release. The merger has already been approved by the independent directors of both companies, and assuming stockholder approval it's expected to close by the end of the third quarter.
When ARCP was first listed on Nasdaq in September 2011, its enterprise value was $250 million, or about 2.5% of the value it will command when the ARCT IV deal is consummated. “More important than sheer growth in size, ARCP over the trailing 12 months has been among the best performing REITs on the exchanges, with total shareholder return of 58% and an increased annualized rental income from less than $25 million to more than $527 million,” Nicholas Schorsch, chairman and CEO of ARCP, says in the release. “With this acquisition we continue to further diversify our asset and tenant base and increase our projected 2014 AFFO per share.”
Partly as a result of the pending ARCT IV deal, ARCP's estimated AFFO for next year will be in the range of $1.19 to $1.25 per share, up 31% from 2013's range of 91 to 95 cents per share. The company also cites reduction of outstanding debt along with refinancing of certain short- and medium-term borrowings as factors in the upward adjustment of its AFFO guidance for the coming year.
On the pending merger, Citigroup Global Markets Inc. is acting as financial advisor and Duane Morris LLP is acting as special legal counsel to ARCP, while BofA Merrill Lynch and Weil, Gotshal & Manges LLP are serving in the same respective capacities for ARCT IV. RCS Capital, the investment banking division of Realty Capital Securities LLC, is acting as financial advisor, and Proskauer Rose LLP is acting as corporate counsel, to both ARCP and ARCT IV.
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