Nowreally, How will ARCP come up with the cash for the 20% cash pay out for COLE? Is that like $1.9 Billion give or take?
rrlrrl . How does one get into a non-public reit....as you mentioned you have arct 4...are you happy with the returns? Was the goal to have arct 4 go public under the common? Thx
alex, I read the same...will probably buy more tomorrow. if ARCP is included in the S&P500, then the fund need to buy it too. Yup there's some life here.
Considering that Realty Income has 3,681 properties, it remains the closest competitor in terms of scale -- and, although National Retail Properties is roughly half the size, with 1,838 properties, it boasts a better lease term of 12 years. At the outset of the merger, American Realty Capital Properties and Cole Real Estate Investments will create an organization that is poised to be the industry leader, and that will only grow with time as the merger is completed, allowing it to be more competitive by growth through new relationships while ,at the same time, it invest in old ones.
While the strategic rationale behind the deal is compelling -- the financial side of things is where things get even more interesting. As a result of the acquisition, American Realty Capital Properties announced it was upping its adjusted fund from operations (AFFO) 25%, from $0.91-$0.95 per share, to $1.13-$1.19. In addition, it would increase its dividend by a little more than 6%, to $1.00 per share.
However, the truly interesting thing in this deal is the reduced leverage that the new company will be faced with. Thanks to increased cash flow and earnings (the strategic side of things), the company will see its net debt to EBITDA decline from 9.1 times, to 7.7 times, by the end of 2014. That means that the company will likely have less need for debt financing, and its cost of serving that debt will go down. In addition, the company highlights that "ARCP's investment grade rating allows for significantly lower cost of financing," which directly corresponds to the company's bottom line.
Net-lease REITs have been particularly affected by the rising interest rate environment and, as you can see in the chart below, they have been truly affected as rates have risen since May. If the company is, in turn, able to become less reliant on this debt financing, and perhaps even get better terms on that financing, it could lead to greater compounded returns from the strategic benefits outlined above that will go straight to shareholders. Although the net-lease REIT industry is a competitive one, this deal could be one that is for the best for all parties involved.
Embracing a $21 Billion Real Estate Deal
by Patrick Morris, The Motley Fool Oct 24th 2013 7:00PM
Updated Oct 24th 2013 7:02PM
Yesterday, American Realty Capital Properties announced it was acquiring Cole Real Estate Investments in a transaction valued at $11.2 billion. As a result of the deal, the merger would create a REIT that will have an enterprise value of more than $21.5 billion -- which will be 64% greater than its nearest competitor.
The two companies each operated in the net-lease space -- where Realty Income Corporation and National Retail Properties are major players. These net-lease REITs own free-standing buildings that are then leased out to corporate tenants (like CVS or McDonalds), who pay for all of the property expenses in addition to the rent. Often, these are long-term leases that can be highly lucrative for the companies that own the properties.
As it relates to the strategic reasons for the acquisition, the companies highlighted that this transaction will increase both the competitiveness and scale of the companies. It will also lead to greater diversification of the lease portfolio (ARCP had single-tenant properties, while Cole had multi-tenant ones), and it could also result in inclusion in the S&P 500 and a greater number of institutional investors.
The first point is an essential one because the net-lease REIT industry has seen major consolidation in recent months, and competitors like Realty Income have been actively acquiring companies, as well. The new American Realty Capital Properties will now have 3,732 properties with more than 600 tenants, and it will be 99% occupied with an average lease of 11 years.
I owned Cap Automotive for years and the stock did very well...in fact the REIT did very well and was bought out. I am glad Kay is running the shop! ARCP is an under dog and a look back in several years will show ARCO was a bargin IMHO.
What does this mean: "extension of contingent review provision" ?
Form 8-K for IRON MOUNTAIN INC
Regulation FD Disclosure
Item 7.01. Regulation FD Disclosure.
As previously announced in June 2012, the Board of Directors of Iron Mountain Incorporated (the "Company") unanimously approved a plan (the "Conversion Plan") for the Company to pursue conversion to a real estate investment trust ("REIT") under the U.S. Internal Revenue Code of 1986, as amended (the "Code"). The Company is in the process of implementing the Conversion Plan, pursuant to which the Company would elect REIT status no earlier than its taxable year beginning January 1, 2014.
As part of the Conversion Plan, the Company submitted requests for private letter rulings relating to its conversion to a REIT (collectively, "PLRs" and each a "PLR") to the U.S. Internal Revenue Service (the "IRS"). The PLR requests have multiple components, and the Company's conversion to a REIT will require favorable rulings from the IRS on a number of technical tax issues, including the characterization of the Company's racking structures as real estate (the "Racking Structure Request").
In June 2013, the Company disclosed that it had been informed by the IRS that the IRS had convened an internal working group to study the legal standards the IRS uses to define "real estate" for purposes of the REIT provisions of the Code and what changes or refinements, if any, should be made to those legal standards. The Company also disclosed that it believed that the IRS was unlikely to provide a definitive response to the Company's pending PLR requests, including the Racking Structure Request, until the working group concluded its study.
On November 14, 2013, the IRS informed the Company that the IRS will resume issuing rulings regarding the definition of "real estate" for purposes of the REIT provisions of the Code. The Company believes that the IRS is continuing to evaluate the Company's PLR requests, including the Racking Structure Request. At this time, the Company is not able to predict when the IRS will provide definitive responses to the Racking Structure Request or any additional outstanding PLR requests, and the Company does not intend to provide additional interim updates with respect to any of the specific Company PLR requests or, generally, the Company's progression through the IRS's PLR process.
The Company continues to move forward with other aspects of the Conversion Plan, including legal restructuring initiatives, the implementation of enterprise reporting system upgrades and testing of REIT-critical systems. The Company continues to work on the Conversion Plan to ensure readiness to elect REIT status beginning January 1, 2014; however, the Company can provide no assurance that it will be able to elect REIT status as of January 1, 2014, or at all.
I think more like 2:1 split. Same amount of capital but more folks would rather pay $70 bucks a share than $140. Yes, I know 2 shares at $70 is the same as 1 share at $140. I still rather have the split.