American Realty To Sell Cole Capital To RCS Capital For $700 Mln

(RTTNews) - American Realty Capital Properties, Inc. (ARCP) Wednesday said it will sell its private capital management business, Cole Capital to RCS Capital Corp. (RCAP) for at least $700 million. Through this acquisition, ARCP expects to significantly reduce its general and administrative costs while maintaining a long-term steady stream of fee income from its role as sub-advisor to the managed funds. In the light of this transaction, ARCP revised its full-year FFO guidance. Under the agreement, ARCP will receive $200 million in cash, 8.3 million shares of RCAP's Class A common stock for $0.001 per share and $300 million of unsecured debt with a laddered interest rate increasing from 7.5 percent to 10.5 percent at certain time intervals until maturity in December 2021. Also ARCP will be entitled to an earn-out of up to an additional $130 million based upon Cole Capital's 2015 EBITDA. David Kay, chief executive of ARCP, commented: "This transaction significantly simplifies our business model, provides us a long-term economic stake in the growth and success of Cole Capital's investment programs and should enhance and accelerate the capitalization of these programs, thus improving the visibility of our fee stream while eliminating considerable overhead and volatility."

The company expects to use the sale proceeds to repay certain outstanding indebtedness. The transaction is expected to be complete in the fourth quarter of 2014. Against this backdrop, ARCP revised its annual AFFO guidance, to a range of $1.06 per share to $1.08 per share. Further, the company said it expects AFFO guidance for 2015, in a range of $1.11 per share to $1.14 per share.