NEW YORK CITY-After a six-month due-diligence review, W.P. Carey & Co. LLC merged Corporate Property Associates 14 Inc. (CPA:14) with a subsidiary of Corporate Property Associates 16 Global Inc. (CPA:16) on Tuesday. A spokesman for WP Carey tells GlobeSt.com that the merger gives an opportunity for shareholders to “show liquidity for the investors,” providing them with a choice to cash out or reinvest in other non-traded REITs.
Under the terms of the merger, the company announced in a statement that CPA:14’s total merger consideration was $11.50 per share, providing original investors with an average annual return of 8.96% at liquidation. CPA:14 shareholders were given the option to receive either $10.50 in cash or 1.1932 shares of CPA:16 common stock as a merger consideration, according to a statement from WP Carey.
Serving as an advisor to the CPA series of funds, WP Carey converted all the CPA:14 shares it owned into shares of CPA:16, and then purchased 13.75 million additional shares of CPA:16 for $121 million. “At the end of the day, it creates liquidity for folks,” says a source familiar with the deal. “The CPA:16 shareholders get an extra portfolio they can buy into. For the CPA:14 shareholders, it is an opportunity for them to decide if they want to cash out or stay into a larger more diversified pool.”
And immediately prior to the merger, WP Carey and another publicly-held non-traded REIT, CPA:17 Global, acquired the interests of six properties from CPA:14 for approximately $89.5 million, consisting of office, industrial, retail and warehouse facilities located internationally throughout the US and Germany, a spokesman for WP Carey says. In total, interests were acquired for an office facility in San Diego; an office/retail complex in Plainfield, NJ; 37 retail stores throughout Germany; and 69 U-Haul rental facilities throughout the US. “The merger symbolizes the consistent investment performance that diversified portfolios of properties leased to creditworthy tenants can provide throughout volatile economic cycles,” the spokesman says.
The transaction is WP Carey’s 13th successful liquidation since 1998 to go “full-cycle to liquidity,” says CEO and president Trevor P. Bond at WP Carey in a statement. “We are pleased that we were able to successfully complete this merger, which we believe will be beneficial to the shareholders of both CPA:14 and CPA:16,” Bond says, noting that the investment firm has provided shareholders with an average annual return of 11.4% during the 13 transactions. “Our consistent track record of providing investors with rising income and capital appreciation over varied economic cycles is what differentiates us as an investment manager."
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