American Realty Capital Properties, Inc.
) has penned a deal with the affiliates of
The Blackstone Group L.P.
) to vend a large part of its multi-tenant shopping center
portfolio for $1.975 billion in cash. The divestiture is
strategized to finance the recently disclosed buyout of the $1.5
billion Red Lobster real estate portfolio.
Notably, this is the same portfolio American Capital was
planning to spin-off into a publicly traded REIT, American Realty
Capital Centers, Inc. The company anticipates this transaction to
close in the coming 30 days.
In fact, late last week, American Realty inked a sale-leaseback
deal with a private equity firm, Golden Gate Capital, for the Red
Lobster portfolio. The lease term for 500 premium Red Lobster
properties involves contractual rent escalations of 2% on an annual
basis. Therefore, this portfolio that Golden Gate Capital is in
turn acquiring from
Darden Restaurants, Inc.
), offers notable growth opportunities for American Realty.
With the purchase of the Red Lobster portfolio, American Realty
will achieve its acquisition target of $3.0 billion for 2014, much
ahead of the end of this year. This retail real estate investment
trust (REIT) has further increased its acquisition target to $4.5
billion for full-year 2014.
We view these deals as a strategic fit for American Realty,
given that these are in sync with the company's goal of owning net
lease properties with high credit quality tenants. The move also
paves the way for enhancing shareholders' value going forward.
In addition to the abovementioned deal with Blackstone, American
Realty priced a public offering of 120 million common shares at $12
per share and granted underwriters an option of 30 days to buy up
to 18 million additional shares. The company intends to use the
reaped amount for paying off its outstanding debts and meeting
other corporate needs.
American Realty currently holds a Zacks Rank #3 (Hold). A better
ranked retail REIT is
Regency Centers Corporation
) having a Zacks Rank #2 (Buy).
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