Cole Credit Property Trust IV Changes Course, to Sell 454 Properties for $1.25 Billion
August 4, 2019
Cole Credit Property Trust IV, Inc., now renamed CIM Real Estate Finance Trust, Inc. (the “Company”) intends to pursue a more diversified investment strategy across the capital structure, ultimately as a mortgage real estate investment trust (“REIT”), by balancing the Company’s existing core of necessity commercial real estate assets leased to creditworthy tenants under long-term net leases with a portfolio of commercial mortgage loans and other credit investments in which the Company’s sponsor and its affiliates have expertise. In order to execute on this strategy, over the next 12-24 months the Company intends, subject to market conditions, to sell a substantial portion of its anchored shopping centers and certain single-tenant properties and redeploy the proceeds from those sales into the origination, participation in, and acquisition of commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities (“CMBS”), corporate credit investments, and other commercial real estate investments.
Pursuant to the Company’s strategy, on September 3, 2019, certain subsidiaries (collectively, the “Seller”) of the Company entered into an Agreement of Purchase and Sale (the “Purchase and Sale Agreement”) with Realty Income Corporation (NYSE: O) (the “Purchaser”), a company not affiliated with the Seller, to sell to the Purchaser 454 single-tenant properties, for which the Seller will receive, in the aggregate, approximately $1.25 billion in total consideration at closing. The consideration will be paid mainly in cash, subject to the Purchaser’s option to seek the assumption of certain existing debt, of which it currently anticipates to assume $131 million.
The Company anticipates paying a disposition fee based on the contract sales price of the properties to the Company’s affiliated advisor, CIM Real Estate Finance Management, LLC (the “Advisor”) pursuant to the Company’s Management Agreement with the Advisor. The Company anticipates closing the majority of the transaction during the fourth quarter of 2019, and as the loan assumptions noted above occur subsequent closings are expected to be completed by the end of the second quarter of 2020. The Company can give no assurance that the closing will occur within this timeframe, or at all.
Following the final close of the transaction, the Company’s portfolio is expected to consist of 503 tenant concepts encompassing approximately 20.1 million gross rentable square feet of commercial space across 43 states. Those assets are 93.9% leased with a weighted average lease term of 8.5 years and represent 33 industry sectors.
The Company anticipates repayment of certain debt and redeploying the net sale proceeds into the origination, participation in, and acquisition of commercial mortgage loans and other commercial real estate debt investments, CMBS, corporate credit investments, and other commercial real estate investments pursuant to the Company’s strategy to ultimately transition to a mortgage REIT.
Source: SEC
