Schorsch in $2.3B deal with Inland

Nick Schorsch is exiting the net-lease real estate investing business with a bang. Three real estate investment trusts that he controls said Friday that they have reached agreements to acquire close to $2.3 billion in net-lease real estate assets, including debt, from nontraded-REIT rival Inland American Real Estate Trust Inc. Inland American is the largest nontraded REIT in the industry, with $10.8 billion in total assets, but has struggled with its share valuation since the credit crisis. The transaction will require multiple closings and is scheduled to be completed in the first half of next year. Mr. Schorsch last month said that he was bidding adieu to net-lease real estate deals. Such real estate, in which the tenant pays for most of the costs associated with the properties, is one of the sectors most sensitive to rising interest rates. Three separate REITs under the American Realty Capital umbrella are buying the net-lease assets from Inland American. They are: American Realty Capital Properties Inc., a listed REIT; American Realty Capital Trust V Inc., a nonlisted REIT; and American Realty Capital Healthcare Trust Inc., another nonlisted REIT.

Unique position

American Realty Capital's diversified stable of REIT offerings put it in a unique position to buy such a sizable chunk of Inland American, Mr. Schorsch said. “This is all of Inland's net-lease assets,” he said. “They wanted to reposition Inland American, and we were there to work with them,” he said. “We're uniquely positioned. Inland found a buyer, and our platform is universal enough so they were able to get it done with one trade.” The transaction could be good news for Inland American investors. Over the next nine months, Inland American expects to see up to $1 billion in net proceeds from the transaction, the company said in a statement. The company intends to use those proceeds to acquire real estate assets in the three sectors on which it will focus: multitenant retail, student housing at universities and lodging. Inland American is also exploring the possibility of a share repurchase, the company said.