CCPT III Rejects Latest ARCP Offer; ARCP Fires Back

American Realty Capital Properties has quickly fired back at Cole Credit Property Trust III's rejection of its last two proposals to acquire Cole in a nearly $10 billion takeover.

Saying it is not in the best interests of the firm or its stockholders, Cole Credit Property Trust III has turned down the last two proposals from American Realty Capital Properties to acquire it in a nearly $10 billion takeover.

CCPT III, which is moving ahead with plans to acquire its sponsor, Cole Holdings, Inc., stated that once again ARCP was undervaluing the firm. It also said the proposals were unfunded, highly speculative, lacked credibility, and involved “an unsustainable and excessive amount of leverage.”

Within hours, ARCP came back with a response for CCPT III – we’re not giving up. “The CCPT III Special Committee has failed in its duty as fiduciaries for the stockholders of CCPT III,” ARCP stated in a press release issued late Friday afternoon. ARCP said it is willing to “consider all options” to acquire CCPT III, “including taking our offer directly to the stockholders. CCPT III’s stockholders deserve to know why they are being deprived of the benefits of a fully banked offer.”

ARCP once again criticized the Special Committee of the Board of Directors to lack of communication. “There has been absolutely no constructive engagement on the part of CCPT III’s Special Committee to understand, evaluate and compare our proposal to the related party internalization of Cole Holdings.” ARCP further stated that CCPT III shareholders deserved to know why the Special Committee had not “countered our proposal or expressed any changes, modifications or enhancements to the terms of our offer.

CCPT III’s decision was made public Friday, just two days after saying it was reviewing the offers from the New York-based REIT. ARCP, seeking to create the largest publicly traded REIT in the net lease sector, has made three unsolicited bids to acquire CCPT III, a Phoenix-based non-traded REIT that owns approximately 1,000 net-lease properties with more than 40 million square feet. ARCP’s portfolio comprises approximately 16.4 million square feet in about 700 net lease properties.

After ARCP’s March 20 offer for about $9 billion was rejected by CCPT III and its Special Committee, ARCP came back March 27 with a second bid that included the merged CCPT III/Cole Holdings entity and offered at least $13.50 per share in stock or $12.50 per share in cash. The deal also included cash, stock and assumed debt for a total of about $9.7 billion. The original bid was for $12 a share and didn’t include Cole Holdings. On Tuesday, April 2, ARCP increased the cash portion of the $9.7 billion takeover bid from 20 percent to 60 percent.

ARCP has maintained all along that its proposals were better for CCPT III shareholders than CCPT III’s planned merger with Cole Holdings, its sponsor and a real estate management firm that manages more than $12 billion in assets. The planned merger does not require shareholder approval. CCPT III has said it would go public and seek listing on the NYSE once the merger goes through.

ARCP is already publicly traded. Chairman and CEO Nicholas Schorsch said earlier this week that ARCP’s offer “provides for greater certainty of price, constructed with a minimum priced bid, and certainty of execution, as a seasoned company whose share currency currently trades on the NASDAQ.

CCPT III said today its proposed acquisition of Cole Holdings was expected to yield “substantial financial benefits” to the firm and its stockholders.

“With a market-leading, diverse asset portfolio and strengthened FFO, CCPT III is well positioned to deliver enhanced dividend growth, supported, in part, by the expected accretion and anticipated cash flow growth resulting from the acquisition of an institutional-quality investment management business, which will generate revenue by managing other real estate vehicles,” CCPT III stated in today’s release.

CCPT III said once the REIT was listed on the NYSE, “stockholders will have even greater access to liquidity with the flexibility to sell or retain shares based on public market value.”

After ARCP accused the REIT of not taking their offers seriously and not communicating with them, CCPT III defended its team and noted dates and times when discussions it described as lengthy took place between a member of the Special Committee and/or its financial and legal advisors. CCPT III today stated that its Special Committee has met more than 60 times over the last five months to consider the planned acquisition of Cole Holdings and more recently the three ARCP proposals.