Additionally, ARCP and its associated non-traded REIT affiliates will extend dominance in the broker dealer and financial advisory community. Cole Real Estate already derives substantial revenue from its investment banking model and by merging with ARCP, the combined companies will enjoy enormous scale and a monopolistic advantage in the $18 billion (estimated sales in 2013 as reported by Stanger) non-traded REIT sector.
Cole CEO Marc Nemer explains: "Our valued broker dealer and financial advisor relationships will continue to be served by the same distinguished professionals following completion of the merger. Our internal broker dealer, real estate team and the fine people at Cole who service our distribution partners will continue to raise capital and manage assets, just as they have done in the past."
This announcement today is a huge indicator that the triple net lease sector is no longer a fringe asset class that can be ignored by real estate focused investors. As the industry continues to mature, continued contraction in pricing toward other asset classes in the public REIT space is expected. There is no other REIT sector growing faster than the triple net REIT sector and this merger with Cole validates the strength of the durably attractive asset class as well as the dominating size and scale of the merged companies, now referred to as "category killers".
To sum up the proposed mega-merger, Randy Williamson, Managing Director of Eastdil Secured, a real estate investment banking company, explains: "The platform building orchestrated by Nick Schorsch and the ARC team has been impressive and is unprecedented in the REIT space. Chris Cole's continued interest in the combined company is a strong statement of support for the transaction. Upon completion of the announced mergers and acquisitions, the combined company will have all the attributes of a best-in-class net lease REIT including significant scale ($21 billion), a high quality, diverse portfolio and a growth oriented capital structure."ARCP raised its 2014 adjusted funds from operations pro forma guidance to a range between $1.13 and $1.19 per share. The company's dividend per share will increase to $1.00 upon deal closing. ARCP shares are trading at $13.35 with a current dividend yield of 6.82%. At the time of publication the author held positions in O, ARCP, CSG, STAG, UMH, HTA, VTR, ROIC, DLR and GPT. Follow @swan_investor
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