American Realty Capital Properties Inc.
) inked an agreement to acquire
) in a deal worth approximately $2.2 billion. The acquisition is
a strategic fit and American Realty expects to become the 3rd
largest net lease real estate investment trust (REIT) (based on
total pro forma equity market capitalization) in the U.S. post
American Realty will pay $8.50 per share in cash for each
outstanding share of CapLease common stock. Moreover, each share
of Series A, Series B and Series C preferred stock of CapLease
will be converted into the right to receive $25.00 in cash plus
an amount equal to any accrued and unpaid dividends. American
Realty plans to assume approximately $580 million of CapLease's
$1.2 billion of outstanding debt and repay the balance.
The deal already received the nod from the boards of directors of
both the companies and is expected to close during the third
quarter of 2013, following a stockholder vote by CapLease.
A Strategic Fit
The deal is a strategic fit for American Realty. It would help
the company diversify and expand its portfolio, boost its credit
quality, diversify the tenant base and bring on board an expert
management team from CapLease.
The deal is projected to be to be immediately accretive to
adjusted funds from operations (AFFO) per share of approximately
11 cents per share. Reflecting the positive impact, American
Realty anticipates raising its dividend by 3 cents per share to
an annualized rate of 94 cents.
Moreover, the company has raised its estimates and now expects
2014 AFFO to range from $1.17 - $1.21 per share, rising
approximately 28% over the 2013 AFFO per share of 93 cents.
As a matter of fact, American Realty is focused on the
acquisition and ownership of single tenant freestanding
commercial properties subject to net leases with high credit
quality tenants. The above-mentioned deal creates pro forma
enterprise value of approximately $6.0 billion for the company.
With this deal, the company is expected to ride on the growth
trajectory and benefit its shareholders simultaneously.
American Realty currently holds a Zacks Rank #4 (Sell). However,
other REIT stocks that are performing better and deserve a look
American Assets Trust Inc.
Cedar Realty Trust Inc.
), both carrying a Zacks Rank #2 (Buy).
Funds from operations, a widely accepted and reported measure
of REITs performance, are derived by adding depreciation,
amortization and other non-cash expenses to net income.
AMER ASSETS TR (AAT): Free Stock Analysis
AMER REALTY CAP (ARCP): Free Stock Analysis
CEDAR SHOPN CTR (CDR): Free Stock Analysis
CAPLEASE INC (LSE): Free Stock Analysis
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