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The pending transaction, valued at $3.4 billion, calls for Flag Funds to merge into Capital Auto while leaving the McLean, VA-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.