Wednesday, January 23, 2013

Cole's Big Deal

I feel like Lloyd Bridges character in Airport!, I picked the wrong day to be out of the office.  Yesterday while I was at a meeting and traveling, away from a non-mobile phone internet connection, Cole Credit Property Trust II (CCPT II) announced that it is merging with NYSE-listed, Scottsdale-based Spirit Realty Capital, Inc. (SRC).  The merger valued CCPT II at a price of $9.36 per share, or an exchange value of approximately 1.9 CCPT II shares for each Spirit share.  According to the CCPT's filing documentation, there are no internalization fees or transaction fees payable to Cole as a result of the merger.

Spirit's stock shot up after the announcement, and by the end of trading yesterday the market was valuing CCPT II at $10.00 per share, or the price investors originally paid.  Spirit's stock is continuing to rise today.

Summaries of the transaction are below:

Wall Street Journal



CCPT II investors will receive Spirit shares when the merger closes, and there is no lock-up or deferred liquidation.  CCPT II investors will have full liquidity when the merger closes, which is expected to occur sometime in the third quarter.  Before the deal closes the best way to check the value of the transaction for CCPT II shareholders is to multiple the price of Spirit's shares by .525.

Plenty could happen between now and when the deal closes later this year.  But today, it's hard to see this transaction as anything but positive news for investors. 


Alex R. said...

I know the Cole III has been in the news last week, but is there any info for a small time (25K) investor in CCPT II? Cole puts my assets at (33.5K) with them now.

I know that when you wrote this post a little over a month ago it was all good far...

Just wondering what I might be looking at for take home cash when I can get out of this REIT...

Rational Realist said...

CCPT II is separate from CCPT III. From what I know the CCPT II / Spirit merger is expected to close some time in late June.