Cole Credit Says American Realty Bid Undervalues CompanyDavid M. Levitt
Cole Credit Property Trust III, a nontraded real estate investment trust, said a $5.7 billion buyout bid by American Realty Capital Properties Inc. undervalues the company by as much as 22 percent.
Cole Credit last week rejected American Realty’s offer of $12 a share or 0.80 of its common stock for each Cole Credit share. Cole would trade at $15.46 a share at an implied yield of 5.3 percent if it were to go public, according to a presentation to investors filed today with the Securities and Exchange Commission. The 5.3 percent yield is based on American Realty’s offer, Phoenix-based Cole said.
Cole Credit is trying to fend off American Realty, a New York-based REIT whose chief executive officer is Nicholas Schorsch, and move ahead with the purchase of its sponsor, Cole Holdings Corp. Cole Credit, owner of more than 900 mostly single-tenant office, retail and industrial properties, said earlier this month the combined company would seek to sell its shares on the New York Stock Exchange after the merger.
“ARCP’s proposal represents a discount, not a premium,” Cole Holdings Chairman Christopher Cole and Chief Executive Officer Marc Nemer said today in a letter to the company’s business partners. “ARCP needs CCPT III to become relevant in the net-lease space, while CCPT III is already a dominant player in the market.”
Schorsch, in an interview, said Cole Credit’s calculation is “just a distraction that’s not true.” American Realty’s offer is better for Cole’s investors because it would guarantee them at least $12 a share, he said.
“We have a bona fide offer out there,” he said. “They haven’t even contacted us.”
“If you read this on face value, they’re clearly signaling in the public environment what they see their value is,” Schorsch said. “And that in itself is progress, right?”
American Realty will review Cole Credit’s latest disclosures “and continue to evaluate our position,” he said.
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.