Merger Creates Largest US Restaurant REIT

ORLANDO-CNL Restaurant Properties and US Restaurant Properties are joining forces to form the largest US restaurant REIT with combined total assets of $2.5 billion. Year-to-date, the companies have closed $225 million of net-leased transactions, most of which came on the CNLRP side.

According to Robert Stetson, CEO of USRP, the merger grew from several talks between himself and Curtis McWilliams, president and CEO of CNLRP, addressing a void in the restaurant industry. Both sides held a joint conference call yesterday to discuss the issue. “We studied the needs of the major chains and looked at their balance sheets and realized there were some big deals out there for the player with the right platform and all the capabilities you need to execute. When this transaction is completed that’s us,” Stetson said.

Under the terms of the transaction, CNLRP will merge with and into USRP; concurrent with that, USRP agreed to acquire by merger 18 CNL Income Funds. These income funds bring about 500 triple net leased restaurant properties. Total consideration for the income funds assuming all of them are purchased is approximately $540 million, of which 80% of the consideration will be cash, Stetson explained.