NEW YORK CITY—The $1.5-billion merger of two non-traded REITs that formerly were part of the American Realty Capital lineup closed Friday, as American Finance Trust Inc. joined forces with American Realty Capital—Retail Centers of America Inc. The stock-and-cash merger, which was approved earlier his week by shareholders of both companies, creates a retail-focused REIT that owns 494 properties totaling 20.8 million square feet, comprised of single-tenant net lease, power center and lifestyle center assets, with an enterprise value of approximately $3.9 billion.
“The next chapter for AFIN begins now,” says Michael Weil, CEO and president of AFIN. “This transaction brings size and scale to our portfolio, diversifies assets by type, tenant and geographical location, and better positions AFIN for liquidity options.”
The merged company bears the AFIN name. Weil and the other members of the pre-merger AFIN management team are leading the merged entity, with the addition of RCA's Kase Abusharkh as CIO of the multi-tenant portfolio.
Pursuant to the terms of the merger agreement, Leslie D. Michelson and Edward G. Rendell, formerly independent directors for RCA, were appointed to AFIN's board of directors, effective immediately. Their appointments bring the number of independent directors to five on AFIN's now six-member board.
When the deal was first announced this past September, AFIN and RCA said the combination of the two portfolios would broaden the new company's retail tenant base and reduce AFIN's top 10 tenant concentration to 48% from 75% on an annualized straight-line rent basis as of this past June 30. Post-merger, AFIN will have lower leverage with manageable near-term debt maturities and ample near-term liquidity, the company says, as well as a strong balance sheet for continued growth and acquisitions.
A few weeks prior to the AFIN/RCA merger announcement, two other former ARC REITs said they would join forces, with Global Net Lease Inc. and American Realty Capital Global Trust II Inc. entering a merger valued at $647.9 million. The deal closed in late December of 2016, creating a net lease REIT with a pro-forma enterprise value of approximately $3.1 billion
“The next chapter for AFIN begins now,” says Michael Weil, CEO and president of AFIN. “This transaction brings size and scale to our portfolio, diversifies assets by type, tenant and geographical location, and better positions AFIN for liquidity options.”
The merged company bears the AFIN name. Weil and the other members of the pre-merger AFIN management team are leading the merged entity, with the addition of RCA's Kase Abusharkh as CIO of the multi-tenant portfolio.
Pursuant to the terms of the merger agreement, Leslie D. Michelson and Edward G. Rendell, formerly independent directors for RCA, were appointed to AFIN's board of directors, effective immediately. Their appointments bring the number of independent directors to five on AFIN's now six-member board.
When the deal was first announced this past September, AFIN and RCA said the combination of the two portfolios would broaden the new company's retail tenant base and reduce AFIN's top 10 tenant concentration to 48% from 75% on an annualized straight-line rent basis as of this past June 30. Post-merger, AFIN will have lower leverage with manageable near-term debt maturities and ample near-term liquidity, the company says, as well as a strong balance sheet for continued growth and acquisitions.
A few weeks prior to the AFIN/RCA merger announcement, two other former ARC REITs said they would join forces, with Global Net Lease Inc. and American Realty Capital Global Trust II Inc. entering a merger valued at $647.9 million. The deal closed in late December of 2016, creating a net lease REIT with a pro-forma enterprise value of approximately $3.1 billion
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
