American Realty Capital Properties (ARCP) said Tuesday that it has agreed to buy related real estate investment trust American Realty Capital Trust IV (ARCT) in a stock and cash deal worth roughly $3.1 billion.
Duane Morris is acting as special legal counsel to ARCP in connection with the transaction, and Weil, Gotshal & Manges has taken that role for ARCT. Proskauer Rose, which functions as corporate counsel to the two REITs, is advising both in connection with the matter.
The two entities are managed by American Realty Capital, a New York–based advisory firm that controls nontraded REITs. For ARCP the deal is the latest in a string of acquisitions via which it has expanded its holdings in the net lease real estate sector while growing its enterprise value from $250 million as of September 2011 to roughly $10 billion once this and other recent deals are completed. Once the ARCT transaction closes—an event that is expected to occur by the end of this year's third quarter, pending a July 2 vote by both companies' shareholders—ARCP will manage 2,579 properties spread across 48 states and Puerto Rico.
Under the terms of the agreement announced Tuesday, ARCT shareholders will have the option of selling each share in that company for either $30 in cash or 2.05 shares of ARCP stock.
ARCP's other recent acquisitions include its $2.2 billion purchase of fellow REIT CapLease in May. ARCP also made an unsuccessful $9 billion bid earlier this year to buy Cole Credit Property Trust III. That offer was withdrawn after Cole decided to buy its own management company. ARCT, meanwhile, recently completed a deal that saw it acquire a $1.45 billion portfolio of retail properties owned by GE Capital. ARCP also bought another related REIT managed by American Realty Capital in December, acquiring American Realty Capital Trust III for roughly $1.6 billion, according to Bloomberg.
Duane Morris capital markets practice head Richard Silfen is leading a team from the firm advising ARCP, while real estate practice cochair Chester Lee is leading on real estate matters. Corporate partners Darrick Mix, Doug Howard, and Marc Kushner are also advising, along with real estate partners Marianne Adriatico and Amy Huskins, real estate special counsel Joseph Mascia, and environmental law partner Seth Cooley. Associates on the deal are Christopher Bender, Peter Byrne, and Tausha Wagner, while paralegals Susan Bodie and Carol Jacoby also worked on the matter.
Duane Morris also represented ARCP in connection with its purchase of American Realty Capital Trust III at the end of last year. As with this week's purchase of ARCT, Weil advised American Realty Capital Trust III in that deal, and Proskauer acted as corporate counsel to both parties.
Weil corporate chair Michael Aiello is leading the team's firm advising ARCT on its sale to ARCP, along with M&A partner Matthew Gilroy and associates Joanna Jia and Megan Pendleton. Weil's previous experience representing ARCT includes teaming with Proskauer on the REIT's failed attempt to take over Cole Credit earlier this year.
(In a second deal announced Tuesday, Weil advised private equity firm Avista Capital Partners on its acquisition of overdenture manufacturer Zest Anchors from fellow private equity firm The Jordan Company for an undisclosed amount. Mayer Brown is advising Zest in that transaction.)
In addition to its work on the failed Cole Credit bid and the sale of American Realty Capital Trust III, Proskauer's history with the two REITS includes advising ARCP on its purchase of CapLease in May and ARCT's deal with GE Capital that same month.
This time around, Proskauer partner Peter Fass, cohead of the firm's real estate capital markets group, is leading a team advising both ARCP and ARCT. The other Proskauer lawyers working on the matter include M&A partner Daniel Ganitsky, tax partner Leslie Loffman, and special tax counsel Timothy Donovan. The associates from the firm who are working on the deal are Rajesh Bandla, Adela Cho, Michael Ellis, Julie Kim, Martha Rose, and Leon Volchyok.