American Realty Capital Properties buys CapLease Inc. for $2.2 billion

Publish Date: May 29, 2013

Topics: american realty capital, caplease, merger, net-lease, reit

Net-lease property REIT American Realty Capital Properties Inc. (ARCP) plans to buy rival REIT CapLease Inc. for $2.2 billion, including $850 million in assumed debt. ARCP says the deal will make it the third largest net-lease property REIT in the U.S. based on market capitalization.

At the end of first quarter 2013, CapLease owned a portfolio of 64 operating properties scattered across 25 states, with an occupancy rate of 92.9 percent. Only 16 of those are retail properties, including 15 single-tenant retail buildings totaling 991,321 square feet and one 181,000-square-foot shopping center. The majority of the company's portfolio is comprised of office assets, with 36 total properties accounting for more than 5.7 million square feet. Before the closing of the deal, American Realty owns 16.7 million square feet of property, 11 percent of which is leased to retailer Dollar General.

The transaction, which still requires the approval of CapLease shareholders, is expected to close during the third quarter of 2013. The merger agreement provides for a “go-shop” period commencing immediately and ending on July 7, 2013, during which CapLease, with the assistance of its advisors, will actively solicit alternative transaction proposals from third parties.  The merger agreement provides for a termination fee and expense reimbursement of $15 million if CapLease terminates the agreement in connection with a superior proposal that first arose during the go-shop period, subject to certain other terms and conditions described in the merger agreement.

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