American Realty Capital Properties Inc. raised its bid for Cole Credit Property Trust III Inc. to about $6.7 billion as it seeks to create one of the biggest real estate investment trusts that leases space to single tenants.
American Realty today offered $12.50 a share in cash or 0.80 a share of its common stock for each share of Cole Credit, a Phoenix-based nontraded REIT. Cole rejected American Realty’s initial offer of $12 a share, saying it undervalued the company.
Cole Credit, owner of more than 900 mostly single-tenant office, retail and industrial properties, is trying to fend off American Realty and purchase its sponsor, Cole Holdings Corp., with plans to go public after the merger. The previous bid by American Realty undervalued the company by as much as 22 percent, Cole Holdings Chairman Christopher Cole and Chief Executive Officer Marc Nemer said March 25 in a letter to the company’s business partners.
American Realty revised its bid to include the acquisition of Cole Holdings and take into account property data suggesting increased value for Cole Credit, the New York-based company said today in a letter to Cole Credit’s board. The new bid is valued at about $9.7 billion, including the assumption of debt. Under the stock-payment plan, American Realty guaranteed to pay at least $13.59 for each Cole Credit share.
The proposal “is a full and fair offer and well within the valuation you ascribed to CCPT III and Cole Holdings in your March 25 filing, but without all the attendant risks of a proposed listing on uncertain terms and timing,” American Realty said in the letter.
Meaghan Repko, a spokeswoman for Cole with Joele Frank, Wilkinson Brimmer Katcher, said she couldn’t immediately comment on the offer.
Cole Holdings, based in Phoenix, manages more than 76 million square feet (7 million square meters) of properties. Cole Credit said it expects to complete the purchase by the end of June.