By Ilaina Jonas
March 21 American Realty Capital Properties
Inc said on Thursday that it was "surprised but
disappointed" that Cole Credit Property Trust III Inc's had
rejected its $5.7 billion buyout offer, but said it remains
committed to the offer.
Cole Credit said the special committee of its board had
reviewed the offer and concluded it would not be in the best
interests of its stockholders. It said it would proceed with its
acquisition of its external adviser, Cole Holdings Corp.
Shareholders of Cole Credit, a non-listed real estate
investment trust, do not have a vote on either
American Realty had offered to buy Cole Credit for at least
$12 in cash or 0.80 share of its own stock for each Cole Credit
share. The combination would create the largest U.S. real estate
investment trust owning net-leased properties.
Cole Holdings on Thursday, in a letter to its
broker/dealers, said that it also had reviewed American Realty's
offer to Cole Credit and characterized it as "not put forward in
an effort to foster serious consideration."
"Rather than engaging in a constructive manner, ARCP made
their first formal proposal only 12 hours after sending their
letter to the Board," Cole Holdings also said,
Shares of American Realty, which is externally managed by
ARC Property Advisors LLC, rose about 1 percent on Thursday
following a jump of more than 5 percent on Wednesday after the
announcement of its offer.
Net leased properties usually have long leases, and their
tenants, which are often restaurants, drug-store chains and
banks, are responsible for most of the operating costs and
taxes. In some cases, they also are responsible for capital
costs, such as new roofs.
Cole's plans to roll up its manager into the real estate
investment trust that would become publicly traded would require
its shareholders to pay the manager, Cole Holdings, about $120
million in fees. American Realty Capital said its deal included
a $111 million internalization fee to Cole Holdings.
Cole Credit Property Trust III owns 926 properties with a
combined area of nearly 40 million square feet in 47 states and
counts Walgreen Co and CVS Caremark Corp among
American Realty Capital has 1,706 properties, or about 60
million square feet, according the company's presentation. Its
top 10 tenants include Dollar General, Citizens Bank, FedEx Corp