American Realty, Cole Merge in $11.2 Billion Deal

New York City and Phoenix — The transaction will create the largest net lease REIT with a value of $21.5 billion.

ARCColeMergerFrom left, Marc Nemer, CEO of Cole Real Estate Investments, and Nicholas Schorsch, chairman and CEO of ARCPNew York City and Phoenix — American Realty Capital Properties Inc. and Cole Real Estate Investments Inc. have signed a definitive agreement to merge the two companies. The transaction is valued at $11.2 billion and will create the largest net lease REIT with an enterprise value of $21.5 billion. (The new REIT's value is 64 percent larger than the closest comparable net lease REIT, according to a statement from ARCP and Cole).

The merger agreement has been unanimously approved by the board of directors of each company and is subject to customary closing conditions, including stockholder votes by both companies. ARCP has secured $2.75 billion of fully committed financing from Barclays in connection with the transaction, which is expected to close in the first half of 2014.

"This merger represents a new beginning for former competitors, and we look forward to uniting two of the industry's most talented organizations," says Nicholas Schorsch, chairman and CEO of ARCP. ""We benefit by uniting not only two exceptional real estate portfolios, but also by joining forces with Cole's world-class management team."

Under the terms of the merger agreement, Cole will merge with and into a wholly owned subsidiary of ARCP. Additionally, two of Cole's existing independent directors will become additional independent directors of ARCP, subject to approval by ARCP's current board.

"As I step away from the company which I built and bears my name, I am very proud of and will miss the outstanding people who have helped me construct our world-class enterprise," says Christopher Cole, founder and executive chairman of Cole Real Estate Investments. "I am very proud of our exceptional team and am confident that they will become an integral part of the ARCP family." The combined portfolio will increase the number of distinct tenants to more than 600, occupying more than 100 million square feet in 49 states plus Puerto Rico.

The combined portfolio is expected to total 3,732 properties with approximately 11 years of average remaining lease duration as of year-end 2013.

Barclays and RCS Capital, the investment banking division of Realty Capital Securities LLC, are acting as financial advisors to ARCP, and Proskauer Rose LLP is acting as legal counsel to ARCP in connection with the transaction. Goldman, Sachs & Co. is acting as exclusive financial advisor to Cole. Additionally, Wachtell, Lipton, Rosen & Katz, Venable LLP and Morris, Manning and Martin LLP are acting as legal counsel to Cole, and Sullivan & Cromwell LLP is acting as special counsel to Christopher Cole and certain other executives in connection with the transaction.

— John Nelson

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