ARCP and Cole managements discuss merger


"This is taking the number two and number three net-lease REITs and creating kind of a game-over, category-killer in the sector," says Cole Real Estate (COLE +8.7%) CEO Marc Nemer of the deal to sell itself to American Realty Capital Properties (ARCP -1.5%) for $11.2B in cash and stock. The combined company will push into first place in size in the popular triple-net-lease sector, surpassing Realty Income (O +0.7%).

ARCP's acquisition-happy chief Nicholas Schorsch in the past has typically raised private money for non-traded REITs and then sold the portfolios to ARCP in order to cash out his investors, but this is a massive public deal. "How many REITs have the ability to raise both public and private capital," he says. "The ability for us to acquire non-traded REITs, either whole or in part, is only increased" by this Cole deal.

S&P 500 inclusion next? The investor presentation (slide 8) notes the combined company's market cap will be larger than index constituents Kimco Realty and Macerich.

Under the impression the CEOs of the two companies hated each other, SNL Financial's Jake Mooney wants the backstory. Earlier this year: Still a non-traded REIT, Cole rebuffs ARCP's buyout attempt for $9.7B.

Earlier today: The deal announcement.

Other triple-net players: National Retail (NNN +1.2%), W.P. Carey (WPC +1%), Spirit Realty (SRC +3.2%), EPR Properties (EPR +0.8%).

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    ARCP American Realty Capital upgrade details -- to Buy at Ladenburg Thalmann; tgt $16...makes COLE worth more too....buy both

     

    23-Oct-13 12:12 ET

     

    ARCP

     

    American Realty Capital upgrade details -- to Buy at Ladenburg Thalmann; tgt $16

     

    Ladenburg Thalmann upgraded ARCP to Buy from Neutral and set tgt at $16 based upon strategic benefits of its recently announced merger with COLE. Benefits include: 1) reduced leverage; 2) more reliable AFFO stream vs. the prior forecast; 3) higher quality AFFO stream 4) the addition of the well-respected and highly connected real estate professionals from COLE; 5) .) better AFFO/sh growth potential now that ARCP will own Cole's private capital business.

     

    makes COLE worth more too....buy both
    23 Oct 2013, 12:33 PM Reply Like
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