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The Deal: American Realty Gains on $3.1 Billion Portfolio Expansion

NEW YORK (TheStreet) - American Realty Capital Properties (ARCP) rose in New York after the real estate investment trust said it would acquire American Realty Capital Trust IV in a $3.1 billion deal that will its portfolio of single-tenant retail properties.

New York-based American Realty Capital said that buying ARCT IV, which is a non-traded real estate investment trust managed by the buyer's executives, would give it a portfolio of 2,579 single-tenant properties spread across 48 states and net-leased to 470 tenants in 29 industries. The combination would generate about $527 million in rent annually, of which more than half will be from investment-grade tenants.

American Realty has been very active this year. The company since May has announced deals to acquire CapLease Inc. for $2.2 billion and two portfolios of retail properties from GE Capital Corp. for a combined $807 million. ARCT IV days later said it would buy a separate $1.45 billion GE Capital portfolio.

The REIT also earlier this year made an unsolicited $9.7 billion cash, stock and debt offer to acquire Cole Credit Property Trust III Inc. of Phoenix, an overture the target rejected.

American Realty CEO Nicholas S. Schorsch noted in a statement that when all of the pending deals close, the company will have increased its enterprise value from $250 million in September 2011 to $10 billion, ranking as the second-largest net-lease REIT.

"With this acquisition we continue to further diversify our asset and tenant base and increase our projected 2014 [adjusted funds from operations] per share," Schorsch said.

Terms of this latest deal call for American Realty to offer 2.05 of its share, or $30 in cash, for shares of ARCT IV. The deal has been approved by independent directors of both companies but is subject to shareholder approval, and is expected to close by the end of the third quarter.

Paul Ingrassia of Citigroup Global Markets Inc. teamed with Richard Silfen, Darrick Mix, Doug Howard and Chester Lee of Duane Morris LLP and Venable LLP's Sharon Kroupa and Chris Pate to represent American Realty Capital.

ARCT IV received financial advice from Jeff Horowitz, Tim Olson and Srvan Emany of Bank of America Merrill Lynch. It received legal counsel from Michael Aiello, Matt Gilroy, Megan Pendleton and Joanna Jia of Weil, Gotshal & Manges LLP and J.W. "Topper" Webb of Miles & Stockbridge PC.

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