Payoff in nontraded REIT deal

Cole Credit Property Trust II hooks up with Spirit Realty Capital;

Jan 22, 2013 @ 3:26 pm

By Bruce Kelly

Another sizable nontraded real estate investment trust will provide some liquidity to its investors, this time through a merger with a large traded REIT.

Management at Cole Credit Property Trust II, with $3.7 billion in real estate assets, said on Tuesday the property trust will merge with Spirit Realty Capital, a listed REIT with $3.4 billion in assets that trades under the symbol SRC. The new REIT will retain the Spirit Realty Capital name, and the merger is expected to close in the third quarter.

Investors in the Cole REIT should expect to see a total return of 20% to 42%, including dividends, depending on when investors purchased their shares. The merger gives full liquidity to investors with no lock up period, according to company executives.

According to a presentation to investors, the implied value of Cole Credit Property Trust II is $9.36, based on the Spirit REIT's closing price on January 18 of $17.82 per share.

The companies expect no disruption of dividends to investors during the merger.

There will be no internalization fee or transaction fees paid to Cole as part of the deal, according to the investor presentation. Nontraded REITs have been broadly criticized for charging such fees at the times of “liquidity event” such as being listed on an exchange or a merger. Several large nontraded REITs have undergone such liquidity events in the past year.

Both the Cole and Spirit REITs are known as “triple net lease” REITs, meaning that the renter pays for upkeep and insurance on the property.

Cole Credit Property Trust II worked through the peaks and troughs of the real estate bubble. It was registered with the Securities and Exchange Commission in 2004 and began buying commercial property the following year.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

What's the first thing advisers should do when they get home from a conference?

After attending a financial services conference, advisers can be overwhelmed by options, choices and tools. What's the first thing they should do when they get back to their office?

Latest news & opinion

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

8 apps advisers love for getting stuff done

Smartphone apps that advisers are using in 2018 to run their business more efficiently.

Galvin's DOL fiduciary rule enforcement triggers industry plea for court decision

Plaintiffs warned the Fifth Circuit that Massachusetts' move against Scottrade signaled that the partially implemented regulation can raise costs for financial firms.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.

Is Fidelity competing with retirement plan advisers?

As the Boston-based mutual fund giant expands the products and services it brings to the retirement market, some financial advisers say the firm is encroaching on their turf.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print