ARCP Readies $300M Note Sale

NEW YORK CITY-American Realty Capital Properties said Tuesday it plans to issue $300 million of convertible senior notes due in 2018. The company did not disclose terms or pricing, and a prospectus filing with the SEC on Tuesday provided no further detail, including the date of the underwritten public offering.

Net proceeds on the sale will be used to repay debt under ARCP's senior secured revolving credit facility or for other general corporate purposes, including more property investments. ARCP will give its underwriters a 30-day option to buy up to $30 million of additional notes.

J.P. Morgan, Citigroup, Barclays, BMO Capital Markets and KeyBanc Capital Markets will act as joint bookrunners for this offering. JMP Securities, Ladenburg Thalmann & Co. Inc. and RCS Capital, the investment banking and capital markets division of Realty Capital Securities LLC, will act as co-managers for this offering. RCS is owned by an entity which is under common ownership with ARCP sponsor AR Capital LLC.

ARCP six weeks ago closed on a pair of private stock placements with combined gross proceeds of $900 million. These were used to fund the common equity components of ARCP's $2.2-billion deal for net lease rival CapLease and the acquisition of an $807-million portfolio of net leased retail properties, mainly restaurants, from GE Capital.

When the stock placements closed on June 10, Nicholas Schorsch, chairman and CEO of ARCP, cited his company's “four-pronged growth strategy.” The prongs of that strategy are: “contractual rental growth, diversification of our credit quality, organic and granular acquisitions, and strategic corporate and portfolio combinations through M&A activities.”

Earlier this month, in a follow-up to its merger with American Realty Capital Trust III that closed this past February, ARCP 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.