CCPT III Rejects ARCP’s Offer to Buy It

By Gail Kalinsoki, Contributing Editor

Cole Credit Property Trust III has rejected an offer by American Realty Capital Properties to buy it in a cash and stock deal worth up to at least $9 billion that would make the combined entity the largest publicly traded net lease sector REIT.

Two days after it received a letter detailing the ARCP proposal, the Special Committee of the Board of Directors of CCPT III said Thursday morning that it was affirming its previously announced definitive merger agreement to acquire Cold Holdings Corp., its sponsor and a real estate management firm that manages more than $12 billion in assets. The special committee said it had reviewed the ARCP plan and “determined that the proposed sale of  CCPT III at this time would not be in the best interest of CCPT III and its stockholders.” 

CCPT III’s special committee noted that the Cole acquisition would provide a proven management team and a portfolio of more than 2,000 properties with more than 76 million square feet. The committee said the transaction would be immediately accretive to CCPT III’s funds from operation (FFO) and would support an increase in the company’s annualized dividend rate to 70 cents per share upon closing. They would pursue the NYSE listing and be “well positioned to achieve inclusion in a variety of indices over time, such as the Russell 1000, Russell Midcap and MSCI U.S. REIT indices,” according to the statement. The deal is expected to close in the second quarter.

On Wednesday, ARCP made public a letter it had sent to CCPT III, a Phoenix-based non-traded REIT, offering to acquire all of the outstanding common stock of CCPT III for at least $12 a share, or $5.7  billion, in cash and stock. Including the assumption of debt, the purchase would be more than $9 billion, Nicholas S. Schorsch, ARCP chairman and CEO, said in the letter.