ARCP Shows Hearty Appetite with $807M Deal for Restaurant-Heavy Portfolio

Barely days after announcing its intended $2.2 billion acquisition of CapLease Inc., American Realty Capital Properties, has jumped ahead of its own forecasts by agreeing to purchase from GE Capital an $807 million portfolio of 471 net-lease properties.

Nicholas Schorsch, CEO & chairman of ARCP

Barely days after announcing its intended $2.2 billion acquisition of CapLease Inc., American Realty Capital Properties, of New York, has jumped ahead of its own forecasts by agreeing to purchase from GE Capital an $807 million portfolio of 471 net-lease properties, ARCP announced Friday.

The group of properties, which is part of the formerly publicly traded Trustreet Properties Inc. portfolio, derives nearly two-thirds of its NOI from assets net leased to 10 national-brand restaurant operators: IHOP, Jack in the Box, Golden Corral, Burger King, Arby’s, Taco Bell, Applebee’s, Wendy’s, Logan’s Roadhouse and Denny’s.

ARCP expects to use currently available debt to consummate the transaction, which brings ARCP’s pro forma enterprise value of to about $6.9 billion, according to the company.

“This transaction allows us to deliver on our promise to acquire $1.1 billion of properties, consistent with our investment strategy, and do so earlier than expected in 2013 at a cap rate in excess of 7 percent,” Nicholas Schorsch, CEO & chairman of ARCP, said in a release. “This acquisition solidifies the Company’s position as the fastest growing single tenant net lease REIT.”

Along with about $355 million in acquisitions already closed this year, the purchase from GE Capital will let ARCP “exceed its previously announced $1.1 billion of 2013 forecasted purchases by the end of the second quarter of 2013, five months earlier than expected,” according to CFO Brian Block.

In all, ARCP’s announced 2013 acquisitions reportedly will give it a portfolio of 1,264 net lease properties, totaling more than 30.0 million rentable square feet and 69 percent investment grade, in all one of the largest net lease portfolios among public REITs.

The CapLease and GE Capital deals will also substantially broaden ARCP’s tenant base. The CapLease acquisition boosted ARCP from 55 tenants to 92, and the GE Capital portfolio will add 137 tenants.

The two most recent transactions follow the unsuccessful end of ARCP’s aggressive, persistent pursuit of Cole Credit Property Trust III. Still, ARCP has a solid batting average in acquisitions. In December, it announced plans to buy for $2 billion American Realty Capital Trust III Inc., another net-lease REIT and one whose original sponsor, like that of ARCP itself, was American Realty Capital.

Last June, ARCP closed on a purchase of 21 net lease properties, whose tenants ranged from four federal agencies to 16 Dollar General stores. And in a $12.2 million transaction the previous month, ARCP became the owner of six BTS FedEx Freight distribution facilities.