American Realty Capital Properties Inc, the largest single-tenant real estate owner in the US, is set to sell the bulk of its shopping centers to Blackstone Group for $1.98bn.
The deal is set to be completed within 30 days. The company stated that the proceeds are to be used for the purchase of Red Lobster’s real estate package.
David Kay, the president of the company, stated that the sale of real estate will allow the company to buy 500 of the best Red Lobster stores. This can be done at a yield rate 1% lower than the cash return of 7.9% of the restaurants.
The company’s shares declined 4.5% to $12.29 after an earlier decline of 5.4%. The decline may be due to the company offering 100m common shares which may raise around $1.4bn. The equity is required as funding for the range of deals since the start of the year.
American Realty had planned a spin-off of the properties it sold to Blackstone. Blackstone however is paying more than they would have made with the first option. This allows funding for the purchase of assets.
Blackstone, the largest global private-equity real estate fund, raised $825m in an initial public bid.
23 MAY 2014, USA
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