NEW YORK — The shareholders of both American Realty Capital Properties Inc. (NASDAQ: ARCP) and Cole Real Estate Investments Inc. (NYSE: COLE) have approved the $11.2 billion merger announced in October. The deal, subject to customary closing conditions, will merge Cole with, and into, a wholly owned subsidiary of ARCP.
Together the trusts will create the world’s largest net lease REIT with a value of $21.5 billion. A press release issued by Cole stated that the transaction was expected to close “promptly.”
At ARCP’s stockholder meeting, approximately 98.2 percent of voting shares approved the transaction, representing 58.8 percent of all shares eligible to vote. At Cole’s stockholder meeting, approximately 94.9 percent of voting shares approved the transaction, representing 65.2 percent of all shares eligible to vote.
“We are thrilled that stockholders from both companies have voted overwhelmingly to approve the proposals related to the ARCP-Cole merger,” says Nicholas Schorsch, chairman and CEO of ARCP. “[Due to] the two companies’ shared disciplined investment philosophy and systematic investment evaluation process that looks closely at credit as well as real estate, we are positioned to provide durable income to our stockholders through growth in property rents and asset appreciation.”
Approximately 2 percent of the aggregate number of eligible Cole shares elected to receive a cash payout of $13.82 per share. The remaining 98 percent of eligible Cole shares will be converted into 1.0929 ARCP shares each.
“We believe that this transaction provides the size, scale and operating efficiencies that will create superior growth opportunities and higher returns for our stockholders,” says Mark Nemer, CEO of Cole. “ARCP continues to demonstrate its ability to grow its net lease business for the benefit of stockholders, and at the same time position the company as the undisputed leader in the net lease category and one of the most successful REITs in the industry.”
Following the merger, ARCP’s portfolio will total nearly 3,700 properties totaling more than 100 million square feet in 49 states, the District of Columbia and Puerto Rico. Those properties are leased to more than 1,100 tenants, and 49 percent of annualized rents will be generated from investment-grade tenants.
The combined portfolio will be 99 percent occupied with an average remaining lease term of 10.5 years. ARCP’s annualized dividend will increase by 6 cents, from 94 cents to $1 per share, as a result of the merger.
Maryland-based American Realty Capital Properties focuses on acquiring single-tenant, freestanding commercial properties subject to net leases with high-credit quality tenants. The company’s stock price closed at $14.21 per share on Thursday, up from $13.89 per share a year ago.
— John McCurdy