New York -- American Realty Capital Properties has acquired Cole Real Estate Investments for $11.2 billion, creating the world’s largest net lease real estate investment trust, with an enterprise value of $21.5 billion.
ARCP has secured $2.75 billion in fully committed financing from Barclays. The loan is expected to close in the first half of next year.
Updated ARCP pro forma 2014 guidance indicates that adjusted funds from operations will move from $1.13 to $1.19 per share, compared with 2013 guidance of $0.91 to $0.95 per share.
The target payout ratio is 85% to 90%. Upon closing, the ARCP dividend per share will increase to $1.00.
The merged company will be 64% larger than the closes comparable net lease REIT. Size and scale will create operating and revenue efficiencies, including lower cost of capital, superior growth opportunities and higher investor returns.
In addition, the merged portfolio will be 99% leased and feature diversification by asset type, tenancy, industry and geography. Forty-seven percent of tenants will be investment grade. The average remaining lease term will be 11 years.
The combined portfolio will include 3,732 properties leased to more than 600 tenants occupying over 100 million sq. ft. in 49 states and Puerto Rico.
The transaction will also enable ARCP to deleverage significantly, with the net debt to EBITDA ratio declining from 9.1 X to 7.7X by the end of 2014.
Under the terms of the merger agreement, Cole will merge with and into a wholly owned subsidiary of ARCP. Cole stockholders may elect to receive 1.0929 shares of ARCP common stock (reflecting a fixed exchange ratio) or $13.82 in cash for each share of Cole common stock.
The transaction agreement has been unanimously approved by the board of directors of each company and is subject to customary closing conditions, including stockholder votes by both companies.