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The pending transaction, valued at $3.4 billion, calls for Flag Funds to merge into Capital Auto while leaving the locally based automotive retail real estate finance firm as the sole surviving REIT. Flag Fund will take over ownership of Capital Auto's common shares--which will be purchased in cash amounts of $38.75 each--and assume an existing debt, and series A and series B cumulative redeemable preferred shares.

Capital Auto brings to the table real estate investments totaling more than $2.5 billion, according to the REIT's financial results report for the third quarter of this year. The investments are predominantly comprised of interests in 347 properties, 75% of which are located in major metropolitan areas across 32 states. Additionally, the report notes that Capital Auto's total long-term mortgage and unsecured debt totaled $1.1 billion at the end of the quarter and the total draws outstanding under the company's credit facility were $118 million.