American Realty Capital Properties (ARCP), a popular Real Estate Investment Trust (REIT), has agreed to purchase CapLease Inc, another REIT for $2.2 Billion including debt, according to several reports.
ARCP will reportedly be paying $8.50 for each CapLease common share, accounting for a 20 percent premium from CapLease's Friday closing price. It will also be assuming $580 million of the $1.2 billion debt CapLease currently holds, while repaying the rest. The equity value of the deal is estimated to be around $755 million considering the number of outstanding common stock.
The boards of both companies have mutually agreed to the deal and expect the transaction to close by the third quarter of 2013, reports Investors Business Daily.
By acquiring CapLease, ARCP hopes to make its debut in the single-tenant commercial property market. It claims that the acquisition would make it the third largest REIT in the U.S.
"This transaction will further institutionalize the notion of durable, defensive dividends for our stockholders by allowing them to become owners on a very favorable basis of the third-largest net-lease REIT in the United States," Nicholas Schorsch, chief executive officer of American Realty, said in a statement.
Apparently, the deal will also add 11 cents per share to ARCP's adjusted funds from operations. It plans to increase its dividends by 3 cents per share. Not many jobs will be lost. Most of the employees will be absorbed by ARCP's management including the top tier officials of CapLease, reports Bloomberg.
The acquisition announcement comes just after a month-long controversial, failed deal of ARCP buying Cole Credit Property Trust Inc for around $5.7 billion and operating as one large public REIT that would focus on single office tenants (net-lease sector).
After weeks of speculation and analyzing, Cole Credit declined the offer stating that their bid undervalued the company and also entails "unsustainable" debts. Instead, Cole Credit purchased its sponsor, Cole Holdings.