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American Realty Capital Properties to Acquire ARCT III for $2B

CEO Khai Intela
By Barbra Murray, Contributing Editor Have you heard the latest big news in the real estate realm? American Realty Capital Properties Inc. is set to acquire American Realty Capital Trust III Inc. for a whopping...

By Barbra Murray, Contributing Editor

American Realty Capital Properties to Acquire ARCT III for $2B

Have you heard the latest big news in the real estate realm? American Realty Capital Properties Inc. is set to acquire American Realty Capital Trust III Inc. for a whopping $2.2 billion! This transformative deal will create a powerhouse entity with an enterprise value of $3 billion.

A Merger with a Purpose

ARCP and ARCT III are both net-lease REITs with American Realty Capital as their original sponsor. While they share some similarities, it's their differences that make this merger truly exciting. ARCP focuses on acquiring freestanding, single-tenant commercial properties, while ARCT III specializes in single-tenant retail properties occupied by investment grade and other creditworthy tenants.

A New Force in the Market

Combining their strengths, ARCP and ARCT III will become the fifth-largest publicly-listed net lease REIT, boasting a portfolio of 800 retail and industrial properties spread across 44 states, totaling a massive 18.9 million square feet.

Industry experts are buzzing about this merger, recognizing its potential to transform the net-lease market. Nicholas S. Schorsch, the chief executive of American Realty Capital Properties, stated that "most REIT analysts in the marketplace think it's truly transformative."

Benefits of the Merger

This merger brings several exciting advantages for both ARCP and ARCT III. The combined entity will enjoy a portfolio with longer lease durations, operating synergies, and cost reductions. With an equity market capitalization of $1.9 billion, the merged company will also have greater potential for capital markets benefits.

Furthermore, the adjusted funds from operations of the combined entity are projected to grow by an estimated 16% from 2013 to 2014. This figure is four times the expected growth among peer REITs, suggesting a bright future for the newly united company.

Timing is Everything

The timing of this merger couldn't be better. With the capital markets open and receptive, the merged entity will benefit from a more stable and larger platform. Additionally, the availability of $1.2 billion of fixed-rate debt at 2.45% through a new term loan and revolver solidifies the timing's advantage.

According to Schorsch, the REIT sector's outlook for the future is positive, especially in the net-lease market. People are seeking income, and REITs provide substantial income compared to other non-dividend-paying companies. As the economy remains relatively flat, there is a growing demand for income-based and liquid products, making the net lease market an excellent fit.

Now, as the year draws to a close, keep your eye on this newly united real estate force. Good times are ahead for ARCP and ARCT III, and they're ready to lead the way into a prosperous future.

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American Realty Capital Properties to Acquire ARCT III Caption: The merging of American Realty Capital Properties and American Realty Capital Trust III creates a real estate powerhouse.

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