Sunday, January 26, 2014

American Realty Capital Properties Wraps Up $1 Billion Recap

Deutsche Bank and Cantor Real Estate are marketing a new commercial mortgage backed securities (CMBS) offering that will complete the final leg of a $980 million recapitalization of American Realty Capital Properties’ (ARCP) recently acquired net lease properties.

DBCCRE 2014-ARCP is a CMBS single borrower transaction that is collateralized by a $620 million first mortgage, 10-year, fixed rate loan originated by Cantor Commercial Real Estate Lending and German American Capital Corp.

ARCP purchased all of the assets backing the new CMBS offering over the last 20 months using equity and existing unsecured credit facilities.

The loan is secured by the fee and leasehold interests in 82 single-tenant retail (37.3% of allocated loan amount), office (35.6%), and industrial (27.1%) properties comprising approximately 7.2 million square feet.

The properties in the collateral pool are in 30 states and Puerto Rico, with three states representing more than 10.0% of the pool: Illinois (15.7%), Florida (11.0%), and Massachusetts (10.2%).

Six properties totaling 44.4% of total portfolio value are either headquarters office locations or industrial properties located in the same market as the tenant’s headquarters. These six properties represent 69.3% of the total office and industrial portfolio value.

CVS Caremark represents 18.3% of the aggregate trust balance serving as a tenant for 31 of the retail properties within the portfolio. It has a weighted average remaining lease term of 23 years.

The second largest tenant, Aon Corp. represents 14.9% of the aggregate trust balance. The tenant occupies a suburban office building in Lincolnshire, IL, pursuant to lease that extends one year beyond the loan term.

The third largest tenant, Bi-Lo, LLC (Winn Dixie) represents 10.2% of the aggregate trust balance. Bi-Lo occupies a warehouse/distribution facility in Jacksonville, FL, pursuant to a lease that extends nine years beyond the loan term.

This past October, ARCP announced it would merge with Cole Real Estate Investments Inc.
in an $11.2 billion deal, creating the world’s largest net lease REIT. The combined company will be comprised of more than 3,700 properties with a market capitalization of approximately $21.5 billion.

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