In a move that solidifies its leadership in the net lease real estate sector American Realty Capital Properties, Inc. (ARCP) has announced a merger with American Realty Capital Trust IV, Inc. (ARCT IV).
ARCP will acquire all of the outstanding shares of ARCT IV for stock and cash in a transaction valued at approximately $3.1 billion.
As a result of this and other previously announced acquisitions, ARCP will own 2,579 single tenant properties net leased to 470 tenants across 29 industries in 48 states.
ARCP’s projected pro forma enterprise value will be approximately $10 billion, with annualized rent of more than $527 million, of which 57% will be from investment grade tenants.
The acquisition is expected to close by the end of the third quarter of 2013.
ARCP’s chairman and chief executive officer, Nicholas S. Schorsch, said, “Less than two years after listing ARCP on NASDAQ, subject to completing this acquisition and the CapLease merger, together with the recently announced portfolio purchase from GE Capital and other organic acquisitions, we will have increased our enterprise value from $250 million in September 2011 to $10 billion, becoming the second largest net lease REIT.
“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.
“With this acquisition we continue to further diversify our asset and tenant base and increase our projected 2014 AFFO per share.ˮ
Schorsch called the acquisition an example of executing a deliberate and focused strategy to “build size in an industry where size matters.ˮ
Michael Weil, ARCP’s president, noted, “On a pro forma basis, our 470 tenants representing 29 distinct industries will generate $527 million of annualized rents, of which 57% will derive from investment grade tenants.
“The weighted average remaining lease term remains strong at 10 years, near-term lease rollover continues to be modest with 6.6% of our leases maturing through the beginning of 2016, and occupancy remains at 100%.
“ We welcome the ARCT IV shareholders who elect to become ARCP shareholders, and note that their opportunity to participate in durable income-based, growing distributions continues.”