Corporate Property Associates 17 – Global Incorporated Completes Merger with W.P. Carey
November 1, 2018 | James Sprow | Blue Vault
On October 31, 2018, the merger of Corporate Property Associates 17 – Global Incorporated (“CPA:17”) and CPA17 Merger Sub LLC, a merger subsidiary of W. P. Carey Inc. (“W. P. Carey”), became effective and, subject to the terms and conditions of the Agreement and Plan of Merger, dated as of June 17, 2018, each share of CPA:17 common stock issued and outstanding immediately prior to the Effective Time (as defined in the Merger Agreement) was converted into the right to receive 0.160 shares of W. P. Carey common stock. Fractional shares were converted into cash. Neither W. P. Carey nor any of its subsidiaries received any merger consideration for shares of CPA:17 common stock owned by them.
Prior to the consummation of the Merger, certain affiliates of W. P. Carey provided advisory services to CPA:17 pursuant to the (i) Amended and Restated Advisory Agreement, dated as of January 1, 2015, among CPA:17, CPA:17 Limited Partnership and Carey Asset Management Corp., and (ii) Amended and Restated Asset Management Agreement, dated as of May 13, 2015, among CPA:17, CPA:17 Limited Partnership and W. P. Carey & Co. B. V. (collectively, as amended, the “Advisory Agreements”). The Advisory Agreements were automatically terminated upon the closing of the Merger.
Additionally, on October 31, 2018, subsequent to the effectiveness of the Merger, W. P. Carey fully repaid CPA:17’s obligations under CPA:17’s senior unsecured revolving credit facility and delayed-draw term loan facility (collectively, the “Senior Credit Facility”) and terminated the Senior Credit Facility.
The common stock of W.P. Carey (“WPC”) closed at $66.01 on October 31 and opened trading at $63.57 on November 1. Using the merger consideration of 0.160 shares of W.P. Carey common stock per common share of CPA:17, the CPA:17 shareholders could sell their shares for $10.17 at the opening on November 1. Within the first minute of trading on the NYSE, over 479,000 shares of WPC traded on November 1, exceeding the average daily volume of 395,000. As of June 30, CPA:17 had 352,910,073 common shares outstanding.
CPA:17’s initial public offering was declared effective in November 2007 with common shares offered at $10.00 per share. Distributions commenced at the annualized rate of 5.46% (based upon the $10.00 offering price) and rose each year to a 6.50% rate in 2012, remaining at 6.50% until the merger. Early investors would have experienced an estimated average annualized rate of return of just less than 6.50%, based upon the distribution rates and the $10.17 liquidating price per share. Investors who utilized the REIT’s distribution reinvestment plan were able to reinvest distributions at $9.50 per share, which would increase their average annualized rate of return.
Sources: SEC, Blue Vault
Learn more about W. P. Carey on the Blue Vault Sponsor Focus page
Best Due Diligence meeting in the industry. No sales pitches, senior level decision makers, meaningful discussions and the Broker Dealer networking sessions were especially useful. Thanks to Blue Vault for raising the bar!