Realty Income Corp. of Escondido has agreed to acquire New York-based investment firm American Realty Capital Trust Inc. in a transaction valued at approximately $2.95 billion.
The deal, expected to close by year’s end or early 2013, will make Realty Income the nation’s 18th largest real estate investment trust based on a total pro forma equity market capitalization of $7.6 billion, according to a statement from both companies.
The companies have signed an agreement under which Realty Income will acquire all of the outstanding shares of American Realty Capital Trust. The boards of both firms have approved the deal, and it will next be voted on by shareholders.
“This acquisition comprehensively advances Realty Income’s strategic objectives of increasing its revenue generated by investment grade tenants and further diversifying its portfolio outside of the retail industry,” Realty Income CEO Tom A. Lewis said in the statement.
American Realty Capital Trust Chairman Nicholas S. Schorsch cited Realty Income’s “extraordinary record of continuous dividend payments and dividend growth together with very strong overall performance.”
To finance the acquisition, Realty Income will issue $1.9 billion of its common stock to American Realty Capital Trust shareholders. The Escondido REIT will also assume approximately $526 million of debt, and said it plans to immediately repay approximately $574 million in debt and transaction expenses.
On the close of the transaction, American Realty Capital Trust shareholders are expected to own approximately 25.6 percent of Realty Income’s shares, the statement said.
Realty Income Chief Investment Officer John P. Case said the acquisition will add 501 properties to the company’s portfolio, taking it to more than 3,250 properties owned under long-term leases to major corporate tenants.
Realty Income, which invests in retail, industrial and related commercial properties, trades under the symbol O on the New York Stock Exchange.
American Realty Capital Trust invests in single-tenant, freestanding commercial properties and trades under the symbol ARCT on the Nasdaq.