American Realty Capital Trust Sold to Realty Income for $3B

Realty Income announced an agreement this week to acquire all of the outstanding shares of American Realty Capital Trust in a transaction valued at approximately $3.0 billion. The Board of Directors of both companies have unanimously approved the agreement and the transaction is expected to close during the fourth quarter of 2012 or early in the first quarter of 2013. The acquisition will be financed by Realty Income directly issuing $1.9 billion of its common stock to American Realty Capital Trust shareholders, the assumption of roughly $526 million in debt, and the repayment of approximately $574 million in outstanding debt and expenses.

Approximately 75% of the rental revenue Realty Income will add in this transaction will be generated by investment-grade tenants including: FedEx, Walgreens, CVS, the GSA, Dollar General, Express Scripts, PNC Bank, and Whirlpool, reported CoStar. The addition of these tenants to Realty lncome's existing portfolio increases the company's revenue generated by investment-grade tenants from approximately 19% to 34% of pro forma total revenue.

Tom Lewis, CEO of Realty Income, said, "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." Nicholas Schorsch, Chairman of American Realty Capital Trust, said, "We are very pleased to announce this transaction between ARCT and Realty Income. Realty Income has an extraordinary record of continuous dividend payments and dividend growth together with very strong overall performance."

According to a Washington Post article, the buyout will give Realty Income 501 additional properties, giving it more than 3,250 properties owned under long-term leases to major commercial and retail tenants. Realty Income says that none of New York-based American Realty’s employees will remain with it after the transaction is complete.

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