American Realty Capital Properties has agreed to acquire Cole Real Estate Investments in an $11.2 billion deal, the real estate investment trust announced earlier today. The transaction will create a combined real estate portfolio totaling 102 million square feet across 3,732 properties.
“ARCP will become the largest net lease REIT and the new industry leader,” Nicholas Schorsch, chairman and chief executive, said in a prepared statement. “We benefit by uniting not only two exceptional real estate portfolios, but also by joining forces with Cole’s world-class management team.”
The buyer will compensate Cole shareholders with either 1.0929 shares of ARCP stock or $13.82 cash per share. Based on the valuation of ARCP shares, the deal is worth approximately $7 billion. The buyer’s valuation of the transaction likely includes the assumption of related debt.
Shares of Cole, which went public in June, closed at $12.82 on Tuesday and traded up approximately 8 percent to 13.80 early Wednesday. Shares in American Realty Capital Properties opened up sharply before falling to $13.10.
The deal, expected to close in the first half of 2014, will create the world’s largest net-lease REIT, with an enterprise value of $21.5 billion, according to a statement announcing the deal. The combined portfolio will boast properties leased to over 600 tenants in 49 states and Puerto Rico.
“This transaction brings together two high quality property portfolios managed by talented professionals serving investors, broker dealers and financial advisors,” added Marc Nemer, chief executive of Cole, in the statement.
ARCP was advised by Barclays and RCS Capital, while Proskauer Rose provided legal counsel. Barclays also committed $2.75 billion in financing for the deal. Goldman Sachs acted as financial advisor to Cole, with Rosen & Katz, Venable LLP and Morris, Manning and Martin, LLP providing legal counsel.