CCPT III Responds to ARCP’s Newset Offer

After receiving a third unsolicited takeover bid from American Realty Capital Properties, Cole Credit Property Trust III today said its Special Committee was reviewing the latest proposal that would increase the cash portion of ARCP’s $9.7 billion proposal from 20 percent to 60 percent.

After receiving a third unsolicited takeover bid from American Realty Capital Properties, Cole Credit Property Trust III today said its Special Committee was reviewing the latest proposal that would increase the cash portion of ARCP’s $9.7 billion proposal from 20 percent to 60 percent.

But CCPT III, a Phoenix-based REIT that invests in net lease properties, also restated its previously announced plan to acquire Cole Holdings Corp., its sponsor and a real estate management firm that manages more than $12 billion in assets. It also took ARCP to task for claiming that CCPT III and its Special Committee were not communicating with them about the bids and offered dates that conversations, described as lengthy, took place with either a committee member or CCPT’s advisors.

CCPT’s brief press release was issued one day after ARCP, a New York-based REIT that is seeking to create the largest publicly traded REIT in the net lease sector with the acquisition, sent a letter to the Special Committee with another offer to buy all of CCPT III’s outstanding stock. ARCP is still planning to offer at least $13.50 per share in stock or $12.50 per share in cash as well cash, stock and assumed debt, but is now increasing the cash portion. ARCP first made a bid for CCPT III on March 20 with an offer that would have paid at least $12 a share for a deal worth about $9 billion and did not include Cole Holdings. The proposal, made Sept. 27, was for the merged CCPT III and Cole Holdings company.

ARCP also issued a press release Tuesday with the letter blasting CCPT III and the Special Committee and expressing frustration at what it called “lack of any real engagement,” to discuss the proposals despite its promise to stockholders that it would do so. It questioned whether the committee was more in interested in the “consummation of an insider deal that prioritizes and monetarily benefits Cole Holdings and its management over the interests of, and at the expense of, CCPT III’s stockholders.”

CCPT III’s merger with Cole Holdings does not require shareholder approval. It plans to go public and be listed on the NYSE once the merger is completed.

ARCP continues its claim that its bid is better for CCPT III shareholders.

“ARCP’s offer provides far 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,” the REIT stated in its press release. “Moreover, ARCP’s proposal will include an increased dividend payout and a public stock listing to achieve greater liquidity and superior access to capital markets with far lower execution risk.”

Other than the comments relating to discussions about the proposal from ARCP, CCPT III did not respond to any other ARCP claims.

In its statement, CCPT III noted, “The Special Committee is disappointed that it must once again set the record straight with respect to ARCP’s assertion that ARCP was unable to engage or communicate with CCPT III’s Special Committee and its advisors.”

The firm noted that the chairman of the Special Committee, “as a representative of the Special Committee personally held a lengthy conference call with ARCP’s Chairman on Friday, March 29, 2013. The Special Committee’s financial advisors spoke with ARCP’s advisors at length following that call, and again with ARCP and its advisors on Easter Sunday, March 31, 2013, and with ARCP’s advisors three times on Monday, April 1, 2013, in addition to a number of prior conversations and communications. The Special Committee’s legal counsel also had a discussion with ARCP’s counsel about the March 27 proposal.”

CCPT III’s financial advisors are Goldman, Sachs & Co. and Lazard. Wachtell, Lipton, Rosen & Katz and Venable L.L.P. are serving as legal advisors to the Special Committee and Morris, Manning & Martin, L.L.P. serves as legal advisors to CCPT III.

Barclays Capital Inc. and RCS Capital, a division of Realty Capital Services, L.L.C., are ARCP’s financial advisors and Proskauer Rose L.L.P. and Weil, Gotshal & Manges L.L.P. serve as legal advisors to ARCP.

ARCP did not respond to Commercial Property Executive’s request today for comment on the CCPT III press release. In the April 2 letter to the Special Committee and Board of Directors, ARCP Chairman and CEO Nicholas S. Schorsch said there was one conversation with Leonard Wood of the Special Committee but stated that the other members had not engaged with ARCP directly regarding the offer. He noted that on Sunday, March 31, ARCP provided “a complete reconciliation of our earnings projections” to the financial advisors at Lazard and Goldman Sachs.

He added that the financial advisors said they would contact ARCP on Monday, April 1, but that ARCP “never heard back from them regarding the proposal despite our repeated attempts to contact them.”