W. P. Carey to Purchase Corporate Property Associates 17 – Global Nontraded REIT
June 18, 2018 | James Sprow | Blue Vault
On June 17, 2018, Corporate Property Associates 17 – Global Incorporated (“CPA®:17”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with W. P. Carey Inc., the ultimate parent of the external advisor of CPA®:17 (“W. P. Carey”).
Subject to the terms and conditions of the Merger Agreement, each CPA®:17 stockholder of record as of the Effective Time (as defined in the Merger Agreement) will receive, for each share of CPA®:17 common stock, 0.160 shares (the “Exchange Ratio”) of W. P. Carey common stock. All CPA17® Stockholders entitled to receive fractional shares will receive cash in lieu of fractional shares. On June 15, 2018, the common stock of W.P. Carey (“WPC”) closed at $67.03, for an estimated value of the merger consideration of $10.72 per share. The most recent estimated net asset value per share, as of December 31, 2017, was $10.04. According to Blue Vault, the nontraded REIT has been making cash distributions at the rate of 6.50% base upon the original offering price of $10.00 per share.
W. P. Carey said the transaction is expected to further simplify its business, add a high-quality diversified portfolio of net-lease assets in line with its existing portfolio, increase its size, scale and market prominence significantly and enhance its overall credit profile while maintaining its BBB and Baa2 ratings.
Jason Fox, W. P. Carey's CEO, said in a news release, "This transaction simplifies our business and effectively transforms W. P. Carey into a pure-play net lease REIT with earnings derived almost entirely from higher-multiple lease revenues."
The REIT’s portfolio as of March 31, 2018, consisted of 411 net-leased properties, 37 self-storage properties, and one hotel. The net leased properties were over 99.7% occupied at March 31, 2018.
The Exchange Ratio was determined as a result of negotiations between the board of directors of W. P. Carey and a special committee of independent directors of the board of directors of CPA®:17, with the assistance of separate financial and legal advisors.
The Merger Agreement contains customary representations, warranties and covenants of CPA®:17 and W. P. Carey, including, among others, covenants (i) to conduct their respective businesses in the ordinary course during the period between the execution of the Merger Agreement and consummation of the Merger and (ii) not to engage in certain kinds of transactions during such period.
During the period beginning on June 18, 2018 and continuing until 11:59 p.m. (New York City time) on July 18, 2018 (the “Solicitation Period End Date”), CPA®:17 may initiate, solicit and encourage competing transactions from third parties, including by furnishing non-public information, and participate in discussions with third parties with respect to competing transactions. From and after the Solicitation Period End Date, CPA®:17 will be subject to customary “no-shop” restrictions on its ability to solicit competing transactions from third parties and to provide non-public information to and engage in discussions with third parties regarding competing transactions, except that in certain circumstances CPA®:17 may continue to engage in the aforementioned activities with certain third parties that made a proposal for a competing transaction before the Solicitation Period End Date or with third parties that made an unsolicited proposal thereafter if the CPA17 Special Committee determines in good faith that such proposal would result in, or is reasonably likely to result in, a Superior Competing Transaction (as defined in the Merger Agreement).
The consummation of the Merger is subject to various conditions, including approval of the Merger by the stockholders of both W.P. Carey and CPA 17. The deal, subject to the approval of W. P. Carey and Corporate Property Associates shareholders, is slated to close on or around December 31.
Stay tuned for more information about this transaction from Blue Vault.
Sources: SEC 8-K; Blue Vault
Learn more about W. P. Carey on the Blue Vault Sponsor Focus page.
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