NEW YORK (AP) -- American Realty Capital is buying another real estate investment trust, American Realty Capital Trust III, in a cash-and-stock deal as it seeks to diversify and cut costs.
Each share of privately held American Realty Capital Trust III will be converted into the right to receive either 0.95 of a share of American Realty Capital Properties Inc. or $12 in cash. The exchange ratio is currently equal to $12.26 per share, based on American Realty Capital Properties' Friday closing price of $12.90 per share.
The companies said Monday that the combined company has an enterprise value of $3 billion and will have a portfolio of more than 800 properties.
Michael Weil, president and chief operating officer of American Realty Capital Trust III, said that the combined company will have increased diversification by tenant, industry and geography.
Brian Block, executive vice president and chief financial officer of American Realty Capital Partners, said that adjusted funds from operations for 2013 will be 93 cents per share and $1.08 per share in 2014.
Funds from operations, which adds charges including amortization and depreciation back to net income, is considered a measure of core operations for a real estate investment trust.
The boards of both companies have approved the deal, which still needs approval from shareholders.
The acquisition is expected to close during the second quarter.