American Realty Capital Properties Completes Acquisition of American Realty
Capital Trust III
Merger Creates One of the Largest Publicly-Traded Net Lease REITs in the U.S.
ARCP to Ring NASDAQ Closing Bell March 1, 2013
NEW YORK, Feb. 28, 2013
NEW YORK, Feb. 28, 2013 /PRNewswire/ --American Realty Capital Properties,
Inc. ("ARCP") (NASDAQ: ARCP) today announced the closing of its previously
announced transaction to acquire American Realty Capital Trust III, Inc.
("ARCT III"). As previously announced, the merger was unanimously approved
by both companies' boards of directors and was approved by both companies'
stockholders at their respective special meetings held on February 26, 2013.
As a result of the merger, ARCP's NASDAQ listing will be transferred to the
larger NASDAQ Global Select Market and its common stock will continue to trade
under the ticker symbol 'ARCP' starting at market open on February 28, 2013.
To commemorate the closing of the merger and to celebrate the newly combined
company, ARCP will ring the closing bell at the NASDAQ Marketsite Studio in
Times Square at 4:00p.m. ET on March 1, 2013.
Nicholas S. Schorsch, Chairman and Chief Executive Officer of ARCP, referring
to the merger, said, "We are very pleased to have completed this
transformative transaction between ARCP and ARCT III, which combines the best
aspects of both companies' investment strategies, enabling us to solidify our
unique competitive position in the net lease sector. ARCP will provide our
investor base with principal protection, durable income and outsized growth
potential. With continuing guidance from the proven management team that
built both of these companies, in addition to our experienced board of
directors who have been with us since we bought our first properties, we look
forward to taking advantage of the significant opportunities ahead in the net
lease sector in order to maximize value for our stockholders."
Pursuant to the terms of the merger agreement, each outstanding share of ARCT
III was converted into a right to receive, at the election of each ARCT III
stockholder, either: (i) 0.95 of a share of common stock of ARCP; or (ii)
$12.00 in cash. Elections to receive cash were made with respect to
approximately 29.2 million shares of ARCT III common stock, or approximately
16.5% of the outstanding shares.
Pro forma for the merger, ARCP will have a total enterprise value of over $3.1
billion and will be one of the largest publicly-traded net lease REITs and one
of the largest publicly-traded REITs in the U.S. This successful combination
enhances ARCP's real estate portfolio quality, further diversifies its asset
base and creates a net lease portfolio with high credit quality tenants of
long-term and mid-term lease durations.
ARCP's significantly increased enterprise value of $3.1 billion offers the
potential to lower the cost of its equity and debt capital, positions it for
future MSCI and Russell Index inclusions and moves it closer to achieving an
investment grade credit rating. ARCP expects to realize $48.0 million in
operating cost savings over a five-year period.
ARCP is reaffirming previously issued preliminary pro forma 2013 and 2014
adjusted funds from operations ("AFFO") guidance post-merger. ARCP's AFFO is
expected to range between $0.91 and $0.95 per share (fully diluted) in 2013.
ARCP's AFFO is expected to range between $1.06 and $1.10 per share (fully
diluted) in 2014.
ARCT III stockholders who elected to receive common stock in ARCP received an
increase of $0.20 per share to their current annualized distribution,
reflecting ARCP's annualized rate of $0.90 per share, beginning with the March
As previously disclosed, ARCP's board of directors authorized, and ARCP
declared, its fifth consecutive quarterly increase to its annualized
dividend. The annual dividend rate per share increased by $0.005, from $0.895
to $0.900 per annum, and began accruing on February 9, 2013. This new
annualized dividend will be paid monthly to stockholders of record at the
close of the 8^th day of the month, payable on the 15^th of the month.
Accordingly, on March 15, 2013, ARCP will pay a dividend of $0.07500 per share
to its stockholders of record at the close of business on March 8, 2013.
Transfer of Shares
ARCT III stockholders who elected to receive ARCP shares will receive ARCP
shares at a rate of 0.95 ARCP share per ARCT III share. The transfer of ARCT
III stockholders' shares to ARCP's current transfer agent, Computershare,
Inc., is expected to be completed 1 to 3 business days following the close of
the merger. Once ARCT III stockholders' shares are transferred to
Computershare, each shareholder will have the option to hold those shares with
the transfer agent or transfer the shares to a brokerage account of their
choice. The newly issued ARCP shares received by ARCT III stockholders are
eligible to begin trading on March 1, 2013.
Post-Merger Portfolio Information
Upon closing, ARCP will consist of 692 freestanding commercial properties,
net-leased to 49 primarily investment grade rated and other credit tenants,
totaling approximately 16.4 million square feet located in 44 states and
Puerto Rico. The portfolio will operate in 20 distinct industries and will
have an average remaining lease duration of 11.5 years. Approximately 79% of
the anticipated lease revenue will be generated by investment grade and other
credit tenants. ARCP's current portfolio leverage is 24% of its enterprise
value. New acquisitions thus far in 2013 total an aggregate base purchase
price of $212.2 million. An additional $140.0 million of acquisitions have
been placed under contract and are expected to close within 60 days. ARCP
should exceed its estimated target of $400 million of new acquisitions before
the end of 2013. More detailed information on the portfolio can be found in
ARCP's presentation that was filed today.
ARCP's New Board of Directors
In connection with the closing of the merger, Robin A. Ferracone and David
Gong, two members of the respective ARCP and ARCT III boards, stepped down
from their board positions. Both companies value the contributions of both
Ms. Ferracone and Mr. Gong while serving on their respective boards.
ARCP has appointed three new board members, which include Governor Edward G.
Rendell, Scott J. Bowman and William M. Kahane, each of whom brings
significant expertise and fresh perspectives to the ARCP board. The new
directors will join current board members Leslie D. Michelson, Dr. Walter P.
Lomax, Jr., Edward M. Weil, Jr. and Chairman Nicholas S. Schorsch, further
strengthening the insight and acumen of the ARCP board of directors.
Appointment of Brian D. Jones as Chief Operating Officer
Also in connection with the closing of the merger, Brian D. Jones was named
Chief Operating Officer of ARCP, replacing Mr. Weil. Mr. Weil will continue to
serve as President, Treasurer and Secretary of ARCP. Mr. Jones previously
served as the Chief Financial Officer and Treasurer of American Realty Capital
Trust, Inc. from its internalization in March 2012 until the close of its
merger with Realty Income Corporation in January 2013. Mr. Jones has over 18
years of experience in advising public and private real estate companies and
executing a broad range of complex strategic and capital markets transactions.
ARCP is a publicly traded Maryland corporation listed on The NASDAQ Stock
Market that qualified as a real estate investment trust for the year ended
December 31, 2011, focused on acquiring and owning single tenant freestanding
commercial properties subject to net leases with high credit quality tenants.
Additional information about ARCP can be found on ARCP's website at
Funds from Operations and Adjusted Funds from Operations
ARCP considers funds from operations ("FFO") and AFFO, which is FFO as
adjusted to exclude acquisition-related fees and expenses, amortization of
above-market lease assets and liabilities, amortization of deferred financing
costs, straight-line rent, non-cash mark-to-market adjustments, amortization
of restricted stock, non-cash compensation and gains and losses useful
indicators of the performance of a real estate investment trust ("REIT").
Because FFO calculations exclude such factors as depreciation and amortization
of real estate assets and gains or losses from sales of operating real estate
assets (which can vary among owners of identical assets in similar conditions
based on historical cost accounting and useful-life estimates), they
facilitate comparisons of operating performance between periods and between
other REITs in our peer group. Accounting for real estate assets in
accordance with generally accepted accounting principles ("GAAP") implicitly
assumes that the value of real estate assets diminishes predictably over time.
Since real estate values have historically risen or fallen with market
conditions, many industry investors and analysts have considered the
presentation of operating results for real estate companies that use
historical cost accounting to be insufficient by themselves.
Additionally, ARCP believes that AFFO, by excluding acquisition-related fees
and expenses, amortization of above-market lease assets and liabilities,
amortization of deferred financing costs, straight-line rent, non-cash
mark-to-market adjustments, amortization of restricted stock, non-cash
compensation and gains and losses, provides information consistent with
management's analysis of the operating performance of the properties. By
providing AFFO, ARCP believes it is presenting useful information that assists
investors and analysts to better assess the sustainability of our operating
performance. Further, ARCP believes AFFO is useful in comparing the
sustainability of our operating performance with the sustainability of the
operating performance of other real estate companies, including
exchange-traded and non-traded REITs.
As a result, ARCP believes that the use of FFO and AFFO, together with the
required GAAP presentations, provide a more complete understanding of our
performance relative to our peers and a more informed and appropriate basis on
which to make decisions involving operating, financing, and investing
Information set forth herein (including information included or incorporated
by reference herein) contains "forward-looking statements" (as defined in
Section 21E of the Securities Exchange Act of 1934, as amended), which reflect
ARCP's expectations regarding future events. The forward-looking statements
involve a number of risks, uncertainties and other factors that could cause
actual results to differ materially from those contained in the
forward-looking statements. Such forward-looking statements include, but are
not limited to, the new combined company's plans, market and other
expectations, objectives, intentions, as well as any expectations or
projections with respect to the combined company, including regarding future
dividends and market valuations, and estimates of growth, including funds from
operations and adjusted funds from operations, and other statements that are
not historical facts.
The following additional factors, among others, could cause actual results to
differ from those set forth in the forward-looking statements: market
volatility, unexpected costs or unexpected liabilities that may arise from the
transaction; the inability to retain key personnel; continuation or
deterioration of current market conditions; whether or not ARCP common stock
will be included in REIT and public exchange indices; uncertainty regarding
the level of demand for ARCP common stock that inclusion in such indices would
generate; future regulatory or legislative actions that could adversely affect
ARCP; and the business plans of the tenants of ARCP. Additional factors that
may affect future results are contained in ARCP's filings with the SEC, which
are available at the SEC's website at www.sec.gov. ARCP disclaims any
obligation to update and revise statements contained in these materials based
on new information or otherwise.
SOURCE American Realty Capital Properties, Inc.
Contact: Investors, Brian S. Block, AR Capital, LLC, +1-212-415-6500, or
Media, Tony DeFazio, Diccicco Battista Communications, +1-484-342-3600
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