Gramercy as a takeout candidate

Zigging higher while the rest of the triple-net-lease sector zagged lower today was Gramercy Property Trust (GPT +1.3%). Chris DeMuth - arguably the hammer on the stock - and REIT expert Brad Thomas riff on the possibility of American Realty Capital Properties (ARCP) eyeing up Gramercy as its next target once the Cole acquisition closes early next year.

ARCP Chairman Nicholas Schorsch is a friend of Gramercy CEO Gordon DuGan, and has tried to hire him in the past, writes DeMuth, and DuGan's skills would make him an excellent CEO of ARCP. Looking at comparable deals, an appropriate price would be around $7.50-$8.50 per share (vs. today's close of $4.57), and Gramercy would likely push for more.

Comments (6)
  • Chris DeMuth Jr.
    , contributor
    Comments (11460) | Send Message
    This could take several months to unfold, but it is reasonable to expect a dividend of at least $0.05 in the first quarter of 2014 potentially followed by takeover interest by ARCP or other acquirers as early as the second quarter of next year.
    31 Oct 2013, 05:46 PM Reply Like
  • Jamie Hogan
    , contributor
    Comment (1) | Send Message
    I would expect them to by ARC V before GPT...and why would they want to pay a 64% or larger premium over what the market prices GPT currently?
    31 Oct 2013, 09:41 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11460) | Send Message
    You could well be right about the alternative target. The premium would not be that large. The supposition is that the market price of GPT would be higher after they pay a dividend and after they have additional growth.
    31 Oct 2013, 10:13 PM Reply Like
  • joeg1969
    , contributor
    Comments (440) | Send Message
    Agreed JH 100%
    1 Nov 2013, 03:55 AM Reply Like
  • Steven Reiman
    , contributor
    Comments (333) | Send Message
    Just to play devil's advocate: Why buy GPT at twice book value when they can just buy properties themselves? How is buying GPT that much over book accretive to ARCP?
    1 Nov 2013, 11:11 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11460) | Send Message
    Good question. The answer would come down to hiring Gordon and speeding up their shopping spree.
    1 Nov 2013, 12:07 PM Reply Like
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