ARCP Back in the News: Acquiring CapLease for $2B

American Realty Capital Partners and CapLease Inc. just signed a definitive merger agreement under which ARCP will acquire all of the outstanding shares of CapLease in a transaction valued at approximately $2.2 billion.

Anna Spiewak, News Editor

Nicholas Schorsch, ARCP chairman & CEO

In his last interview with Commercial Property Executive, American Realty Capital chairman & CEO Nicholas Schorsch vowed that his company would be going after other REITs, and he wasn’t bluffing.

ARCP and CapLease, Inc. just signed a definitive merger agreement under which ARCP will acquire all of the outstanding shares of CapLease in a transaction valued at approximately $2.2 billion.

Both companies’ boards of directors have approved the agreement.  Following a stockholder vote by CapLease, the transaction is expected to close during the third quarter of 2013.  As result of the merger, ARCP expects to be the third largest net lease REIT in the nation.

“We are focused on continuing to increase value for ARCP’s investors from our highly accretive property acquisition pipeline and other potential, significant strategic combinations,” Schorsh told CPE back in April, after a notoriously unfruitful attempt to buy Cole Credit III.

ARCP will pay an amount in cash equal to $8.50 per share for each outstanding share of CapLease common stock, and each share of Series A, Series B and Series C preferred stock of CapLease will be converted into the right to receive the sum of $25 in cash plus an amount equal to any accrued and unpaid dividends up to but excluding the closing date of the merger. Also, with respect to CapLease’s $1.2 billion of outstanding debt, ARCP will assume approximately $580 million and repay the balance.

“The combination of ARCP with CapLease allows us to expand and further diversify our property portfolio, fortify our credit quality, reduce our tenant concentration, and enhance our management team,” said Schorsh most recently in a prepared statement. “This transaction is immediately accretive and is expected to generate approximately $0.11per share in additional adjusted funds from operations (“AFFO”) annually and, upon closing, will allow us to increase our dividends to stockholders by $0.03 per share to an annualized rate of $0.94 per share.”

Proskauer Real Estate Capital Markets Group co-head/partner Peter Fass and Proskauer Mergers & Acquisitions Group partner Daniel Ganitsky, including partners Andrew Bettwy (Corporate), Ira Bogner (Employee Benefits), Steven Lichtenfeld (also a co-head of the Real Estate Capital Markets Group), Les Loffman (Tax) and Associate Michael E. Ellis (Corporate) acted as legal counsel to ARCP.

More to come on this breaking news story later.