{"id":1004080860,"date":"2013-07-26T12:35:59","date_gmt":"2013-07-26T20:35:59","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004080860"},"modified":"2022-12-08T19:53:25","modified_gmt":"2022-12-09T03:53:25","slug":"w-p-carey-fleshes-out-details-of-proposed-4b-merger-with-affiliate-reit","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/w-p-carey-fleshes-out-details-of-proposed-4b-merger-with-affiliate-reit\/","title":{"rendered":"W.P. Carey Fleshes Out Details of Proposed $4B Merger with Affiliate REIT"},"content":{"rendered":"

By Scott Baltic, Contributing Editor<\/i><\/p>\n

\"Trevor<\/a>

Trevor Bond, Carey president & CEO<\/p><\/div>\n

A conference call Friday morning shed more light on the proposed merger between W.P. Carey Inc., of New York, and its publicly held, non-traded REIT affiliate, Corporate Property Associates 16 \u2013 Global Inc. (CPA:16), including the combined company\u2019s assets, ownership and leverage.<\/p>\n

The proposed merger, announced on Thursday, would result in a company with an equity market capitalization of about $6.5 billion and a total enterprise value of $10.1 billion. The merger itself would have a transaction value of about $4.0 billion.<\/p>\n

The definitive merger agreement reportedly has been unanimously approved by the Carey board of directors and by the independent directors of the CPA:16 board of directors. The agreement contains a 30-day go-shop provision, under which the special committee of CPA:16\u2019s board of directors may solicit potential alternative transactions to the merger.<\/p>\n

Currently, Carey\u2019s portfolio has 422 properties, 124 tenants and 39 million square feet in 10 countries; post-merger that would grow to 734 properties, 231 tenants and 86 million square feet in 10 countries. The combined portfolio would consist of 30.2 percent industrial, 23.3 percent office, 18.4 percent warehouse\/distribution, 13.3 percent retail, 4.5 percent self-storage and 10.4 percent other (including health care, nursing homes and hospitality).<\/p>\n

Besides substantially increasing Carey\u2019s size, the merger has been touted as:<\/p>\n

*\u00a0 Continuing Carey\u2019s evolution from a hybrid L.L.C. deriving most of its revenue from investment management fees into a leading global net-lease REIT enhancing its future access to capital,<\/p>\n

*\u00a0 Simplifying its financial statements, and<\/p>\n

*\u00a0 Continuing stable dividend growth, with an anticipated post-merger minimum annualized dividend of $3.52 per share.<\/p>\n

In the conference call, Carey president\/CEO Trevor Bond said that with its balance of various stakeholders\u2019 interests, this transaction fits the truism that in a successful negotiation, no one gets everything they want, but everyone still believes that the deal is mutually valuable.<\/p>\n

Given the reference share price of $69.42, the deal\u2019s cap rate will be around 7.7, said John Park, Carey\u2019s director of strategic planning. The merger would result in \u201ca modest increase in our leverage,\u201d from 28 percent to 36 percent, as net debt to enterprise value, he added.<\/p>\n

Like Bond, Park emphasized how well Carey knows the CPA:16 portfolio.<\/p>\n

Park also noted that \u201cThe combined company will look very different\u201d in terms of its revenue mix.<\/p>\n

Although the combined company\u2019s percentage of earnings from investment management will drop from more than 20 percent to about 10 percent, \u201cWe still like the [investment management] business,\u201d Bond said.<\/p>\n

Catherine Rice, Carey managing director & chief financial officer, noted that the CPA:16 portfolio is overall very similar to Carey\u2019s. \u00aaThe combined company will be the second-largest public net-lease REIT.) Still, she added, the merger would bring further diversification by tenant industry and would reduce tenant concentrations.<\/p>\n

The percentage of investment-grade tenants will decrease from 31 to 22 percent, though Rice noted that Carey\u2019s philosophy has long been amenable to tenants of less than investment grade. Rice also pointed out that only 2.7 percent of leases in the combined company do not have contractual rent increases.<\/p>\n

Finally, the company will be looking to structure its permanent debt as equity plus long-term debt. \u201cWe\u2019re looking for efficient capital, \u201d said Rice.<\/p>\n","protected":false},"excerpt":{"rendered":"

A conference call Friday morning shed more light on the proposed merger between W.P. Carey Inc., of New York, and its publicly held, non-traded REIT affiliate, Corporate Property Associates 16 \u2013 Global Inc., including the combined company\u2019s assets, ownership and leverage. <\/p>\n","protected":false},"author":882,"featured_media":1004080863,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21783,21742],"tags":[],"class_list":["post-1004080860","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment","category-latest"],"acf":[],"yoast_head":"\nW.P. 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