Scottsdale-based Spirit Realty Capital Inc. (NYSE: SRC) and Phoenix-based Cole Credit Property Trust II told shareholders on Tuesday they are planning to merge and create a new real estate investment trust worth a combined enterprise value of $7.1 billion, Reuters reports today.
The deal will make the merged company one of the largest publicly traded triple-net-lease REITs in the country. Triple net leases are when building tenants — typically retailers, restaurants and grocers — pay property taxes and insurance and maintenance costs on top of rent, the article said.
The merger was disclosed on Tuesday when the two REITs filed 8-Ks with the U.S. Securities and Exchange Commission. The REITs then issued a joint statement that day saying the combined company will oversee more than 2,000 properties in 48 states, almost doubling Spirit Realty’s existing portfolio.
The merger is expected to close in the third quarter of 2013 but still is contingent on shareholder approval of both entities. Spirit Realty said its two largest shareholders — Macquarie and TPG-Axon, who together own about 15 percent of the company — have indicated in writing that they will vote in favor of the move, according to the filings.
Under terms of the deal, each Spirit share would be exchanged for 1.9 shares of Cole valued at about $17.95, the filings said. The merged company would be managed by and operated under the Spirit Realty name, but Cole Credit would maintain majority ownership at 56 percent.
The Wall Street Journal characterized the merger as unusual because it combines a publicly traded REIT with a non-traded REIT.
