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Cole Credit Property Trust III, Inc. Affirms Commitment To Acquire Cole Holdings

Stocks in this article: ARCP

PHOENIX, March 21, 2013 /PRNewswire/ -- The Special Committee of the Board of Directors of Cole Credit Property Trust III, Inc. ("CCPT III") today affirmed its commitment to the previously announced definitive merger agreement pursuant to which CCPT III will acquire Cole Holdings Corporation ("Cole Holdings"), a full-scale real estate investment management firm that currently manages over $12 billion of real estate assets for over 160,000 individual investors represented by more than 13,000 financial advisors. Additionally, the Special Committee has reviewed the unsolicited proposal from American Realty Capital Properties, Inc. (NASDAQ: ARCP) to acquire CCPT III, and has determined that the proposed sale of CCPT III to ARCP at this time would not be in the best interests of CCPT III and its stockholders.

As previously announced, upon the completion of the acquisition of Cole Holdings, CCPT III will change its name to Cole Real Estate Investments, Inc. and will pursue a listing on the New York Stock Exchange ("NYSE"). The transaction will provide CCPT III with a proven management team and a full-scale real estate investment management platform with over 350 employees, as well as a portfolio of more than 2,000 properties with over 76 million square feet of corporate real estate under management. The transaction is expected to be immediately accretive to CCPT III's funds from operations ("FFO") and to support an increase in the company's annualized dividend rate to $0.70 per share upon closing. Upon a listing on the NYSE, Cole Real Estate Investments will be well positioned to achieve inclusion in a variety of indices over time, such as the Russell 1000, Russell Midcap and MSCI U.S. REIT Indices.  

Further, the proposed transaction will provide important benefits to CCPT III stockholders, including:

  • Proven Real Estate Management Platform: Cole Holdings will provide Cole Real Estate Investments with a leading real estate investment management platform that features both traditional and fee-based real estate investment products. 
  • Management Continuity Provides for Seamless Integration: Cole Real Estate Investments will continue to benefit from the knowledge and operational efficiencies resulting from seamless integration of and self-management by the same real estate management platform that has acquired and managed the industry-leading real estate assets of CCPT III since its inception.
  • Accretive Transaction Providing an Increased Dividend: Cole Real Estate Investments 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.    
  • Liquidity: Assuming listing on the NYSE as planned, which is expected to occur in June 2013, stockholders will have even greater access to liquidity with the flexibility to sell or retain shares based on public market value. 
  • Greater Capital Markets Access: With the acquisition of Cole Holdings, Cole Real Estate Investments will have the opportunity not only to continue raising capital from retail distribution channels, but also to increase its access to institutional investors and related capital sources.  Additionally, given the size, scale and strong financial metrics of the CCPT III assets, the company is expected to attract significant institutional sponsorship and Wall Street analyst coverage.
  • New Fee Income and Elimination of Management Fee Expense: Following the business combination, Cole Real Estate Investments will benefit from its new income stream of fees earned by Cole Holdings from the management of other real estate vehicles, including Cole Credit Property Trust IV, Inc., Cole Corporate Income Trust, Inc. and Cole Real Estate Income Strategy (Daily NAV), Inc., as well as the efficiencies resulting from the elimination of its external management fees.

On March 18, 2013, the transaction was granted early termination by the U.S. Federal Trade Commission under the mandatory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. CCPT III's acquisition of Cole Holdings is expected to close in the second quarter of 2013. CCPT III will seek stockholder approval to amend its charter to eliminate provisions applicable to non-listed companies and to more closely reflect the charters of its publicly traded peers at its annual meeting to be held in June 2013. Cole Real Estate Investments intends to list its common shares on the NYSE promptly after the charter is amended.

Goldman, Sachs & Co. and Lazard serve as financial advisors, and Wachtell, Lipton, Rosen & Katz and Venable LLP serve as legal advisors to the Special Committee of the Board of Directors of CCPT III. Morris, Manning & Martin, LLP serves as legal advisor to CCPT III.

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