425

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

March 20, 2013 (March 18, 2013)
Date of Report (date of earliest event reported)

_________________________

AMERICAN REALTY CAPITAL PROPERTIES, INC.

(Exact name of Registrant as specified in its charter)

_________________________

Maryland	001-35263	45-2482685
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

405 Park Avenue
New York, New York 10022
(Address of principal executive offices, including zip code)

(212) 415-6500
(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)
_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

ý Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

American Realty Capital Properties Offers to Purchase Cole Credit Property Trust III for $9 Billion, Creating the Largest, Highest Quality Publicly Traded Net Lease REIT

This Current Report on Form 8-K details a proposal made on March 19, 2013 by the board of directors of American Realty Capital Properties, Inc. (“ARCP”) to the board of directors of Cole Credit Property Trust III, Inc. (“CCPT III”) to acquire all the outstanding shares of common stock of CCPT III.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Upsize of the Credit Facility

As previously reported in ARCP’s Current Report on Form 8-K/A filed with the Securities and Exchange Commission (“SEC”) on March 8, 2013, on February 28, 2013, ARCP (as successor by merger to American Realty Capital Trust III, Inc. (“ARCT III”)) assumed the obligations of ARCT III, as parent guarantor, and ARC Properties Operating Partnership, L.P., ARCP’s operating partnership (the “Operating Partnership”) (as successor by merger to American Realty Capital Operating Partnership III, L.P., ARCT III’s operating partnership (“ARCT III’s OP”)), assumed the obligations of ARCT III’s OP, as borrower, under an $875.0 million credit facility (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “Administrative Agent”), and the other agents and lenders party thereto, from time to time. The Credit Agreement includes an “accordion feature” allowing the borrower, subject to certain conditions, to increase the aggregate commitments under the Credit Agreement. As previously reported, on February 28, 2013 ARCP exercised the accordion feature and increased the aggregate commitments under the Credit Agreement to $1.0 billion.

On March 18, 2013, ARCP entered into the First Amendment to the Credit Agreement (the “Amendment”) with the Administrative Agent and the lenders party to the Credit Agreement. The Amendment modified the accordion feature of the Credit Agreement to allow the Operating Partnership, subject to certain conditions, to increase the aggregate commitments under the Credit Agreement, on or after the effective date of the Amendment, by $1.5 billion. If the accordion feature is exercised in full, the aggregate commitments (comprised of revolving, term loan and delayed draw commitments) under the Credit Agreement would equal $2.5 billion, subject to borrowing base availability.

The Credit Agreement contains customary representations, warranties and borrowing conditions. Other than the amended terms described above, the material terms of the Credit Agreement remain unchanged.

The description of the Credit Agreement in this Current Report on Form 8-K is a summary and is qualified in its entirety by the terms of the Credit Agreement which was filed with the SEC on February 28, 2013 as Exhibit 10.43 to ARCP’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended and supplemented from time to time.

Item 7.01. Regulation FD Disclosure.

In connection with the Proposal (as defined and described below) made by ARCP to the board of directors of CCPT III, ARCP prepared a presentation for the purpose of describing the Proposal and its benefits to CCPT III’s stockholders. A copy of the presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K. Such presentation shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information contained in this Item 7.01, including Exhibit 99.2, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.

Item 8.01. Other Events.

ARCP’s Offer to Acquire CCPT III

As mentioned in the Explanatory Note to this Current Report on Form 8-K, on March 19, 2013, ARCP submitted a proposal to the board of directors of CCPT III to acquire all the outstanding shares of common stock of CCPT III (the “Proposal”). Under the Proposal, which has been unanimously approved by ARCP’s board of directors, ARCP would acquire all the outstanding shares of common stock of CCPT III in exchange for, at the election of each holder of shares of CCPT III common stock, with respect to each such share of CCPT III common stock, (i) $12.00 per CCPT III share in cash or (ii) 0.80 of a share of ARCP common stock for each share of CCPT III common stock, with a guarantee that the value of the share consideration will not be less than $12.00 per share. The Proposal provides that up to $1.15 billion (or approximately 20% of the outstanding shares of CCPT III common stock) be paid in cash and the balance in ARCP common stock. ARCP would be willing to consider increasing the maximum consideration to be paid in cash to 40% of the outstanding shares of CCPT III common stock, so long as CCPT III stockholders preserve their tax-free exchange safe harbor. ARCP also announced the Proposal via press release on March 20, 2013.

The foregoing description of the Proposal does not purport to be complete and is qualified in its entirety by reference to ARCP’s letter to the board of directors of CCPT III regarding the Proposal, dated March 19, 2013, and the press release announcing the Proposal, dated March 20, 2013, which are attached as Exhibits 99.1 and 99.3 to this Current Report on Form 8-K, and are incorporated by reference herein.

Additional Commitments Under the Credit Agreement

On March 19, 2013, ARCP obtained additional commitments (collectively, the “Additional Commitments”) under the Credit Agreement in an aggregate amount of up to $650.0 million. Each Additional Commitment is subject to customary closing conditions. If drawn, ARCP expects that the Additional Commitments will be used, in part, to fund the transactions contemplated by the Proposal.

ARCP announced the Amendment and the Additional Commitments via press release on March 20, 2013. A copy of the press release announcing the Amendment and the Additional Commitments is attached as Exhibit 99.4 to this Current Report on Form 8-K and is incorporated by reference herein.

Additional Information about the Proposed Transaction and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This Current Report on Form 8-K, including Exhibits 99.1, 99.2 and 99.3, relates to a business combination transaction with CCPT III proposed by ARCP, which may become the subject of a registration statement filed with the SEC. This material is not a substitute for the proxy statement/prospectus ARCP would file with the SEC regarding the proposed transaction if such a negotiated transaction with CCPT III is reached or for any other document which ARCP may file with the SEC and send to ARCP’s or CCPT III’s stockholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF ARCP AND CCPT III ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Such documents would be available free of charge through the website maintained by the SEC at www.sec.gov or by directing a request to the ARCP Investor Relations Department, 405 Park Avenue, New York, New York 10022. Copies of such documents filed by ARCP with the SEC also will be available free of charge on ARCP’s website at www.arcpreit.com.

ARCP, AR Capital, LLC and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies from ARCP’s and CCPT III’s stockholders in respect of the proposed transaction. Information regarding ARCP’s directors and executive officers can be found in ARCP’s definitive proxy statement filed with the SEC on May 4, 2012, as modified by ARCP’s current reports on Form 8-K filed with the SEC on October 17, 2012 and March 6, 2013. Additional information regarding the interests of such potential participants will be included in any proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed transaction if and when they become available.

All information in this communication concerning CCPT III, including its business, operations and financial results was obtained from public sources.  While ARCP has no knowledge that any such information is inaccurate or incomplete, ARCP has not had the opportunity to verify any of that information.

Forward-Looking Statements

Information set forth in this Current Report on Form 8-K (including information included or incorporated by reference herein) contains “forward-looking statements” (as defined in Section 21E of the Exchange Act), which reflect ARCP’s expectations regarding future events. The forward-looking statements involve a number of risks, uncertainties and other factors, many of which are outside ARCP’s control, that could cause actual results to differ materially from those contained in the forward-looking statements. Such risks and uncertainties relating to the proposed transaction include, but are not limited to, CCPT III’s failure to accept ARCP’s proposal and enter into definitive agreements to effect the transaction, whether and when the proposed transaction will be consummated, the new combined company’s plans, market and other expectations, objectives, intentions, as well as any expectations or projections with respect to the combined company, including regarding future dividends and market valuations, and other statements that are not historical facts.

The following additional factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the ability to obtain regulatory and stockholder approvals for the transaction; market volatility; unexpected costs or unexpected liabilities that may arise from the transaction, whether or not consummated; the inability to retain key personnel; ARCP’s ability to achieve the cost-savings and synergies contemplated by the proposed transaction within the expected time frame; ARCP’s ability to promptly and effectively integrate the businesses of CCPT III and ARCP; disruption from the proposed transaction making it more difficult to maintain relationships with tenants; the business plans of the tenants of the respective parties; continuation or deterioration of current market conditions; and future regulatory or legislative actions that could adversely affect the companies. Additional factors that may affect future results will be contained in ARCP’s filings with the SEC from time to time. ARCP disclaims any obligation to update and revise statements contained in these materials based on new information or otherwise.

Item 9.01.    Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Letter to the Board of Directors of Cole Credit Property Trust III, Inc., dated March 19, 2013
99.2	Presentation regarding the Proposal, dated March 19, 2013
99.3	Press Release Announcing the Proposal, dated March 20, 2013
99.4	Press Release Announcing the Amendment and the Additional Commitments, dated March 20, 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	AMERICAN REALTY CAPITAL PROPERTIES, INC.
Date: March 20, 2013	By:	/s/ Nicholas S. Schorsch
	Name:	Nicholas S. Schorsch
	Title:	Chief Executive Officer and Chairman of the Board of Directors

EX-99.1

 

March 19, 2013

BY EMAIL AND FEDEX

Board of Directors
Cole Credit Property Trust III, Inc.
2325 East Camelback Road, Suite 1100
Phoenix, AZ 85016

To the Board of Directors of Cole Credit Property Trust III, Inc. (“CCPT III”):

I am writing on behalf of the Board of Directors of American Realty Capital Properties, Inc. (NASDAQ: ARCP) (“ARCP”) to make a proposal to acquire all of the outstanding shares of CCPT III common stock.

As you are aware, prior to the announcement of CCPT III’s proposed acquisition of Cole Holdings Corporation (“Cole Holdings”), we communicated to your financial advisor our interest in a potential acquisition of CCPT III. We were surprised to not have received any response.

We believe our offer for CCPT III, outlined below (the “Proposal”), represents a strength-for-strength merger of complimentary portfolios that would provide CCPT III stockholders with certainty of value while benefiting both CCPT III and ARCP stockholders through the creation of the largest, highest quality publicly traded REIT in the net lease sector.

ARCP offers to purchase CCPT III at a price of not less than $5.7 billion of equity value or $12.00 per share, representing a minimum 20% premium above the original offering price.

We believe our Proposal (outlined below) will provide a higher level of consideration delivered sooner and with greater certainty to CCPT III stockholders as compared to the internalization transaction currently contemplated. We believe our Proposal is in the best interests of CCPT III stockholders and is superior to that internalization transaction. The internalization transaction would internalize CCPT III’s external advisor and affiliated broker-dealer, Cole Holdings, at an estimated cost to CCPT III’s stockholders in excess of $120 million in a combination of cash and stock (the “Internalization Transaction”). In the event the Internalization Transaction is consummated, ARCP would need to reconsider its Proposal, and potentially reduce its proposed valuation.

Our Proposal, calling for not less than $12.00 per share, implies a minimum equity value for CCPT III of approximately $5.7 billion (assuming 478.0 million shares of CCPT III common stock outstanding acquired at $12.00 per share). The cash component of our Proposal is fully funded by cash on hand and borrowing capacity under ARCP’s existing line of credit.

Cole Credit Property Trust III, Inc.
March 19, 2013
Page 2

Our Proposal represents at least a 20% premium to the original CCPT III offering price of $10.00 per share and provides CCPT III stockholders an option to elect cash or publicly traded ARCP common stock in a tax-free stock for stock exchange (subject to proration). Exhibit A to this letter describes the combined company and the significant opportunity for CCPT III stockholders to become stockholders of the combined company, which would become the largest publicly traded REIT in the net lease sector.

The terms of ARCP’s Proposal are outlined immediately below.

· CCPT III stockholders receive at least $12.00 per share of value: ARCP is prepared to acquire 100% of the outstanding common stock of CCPT III for either: (i) $12.00 per share in cash or (ii) 0.80 of a share of ARCP common stock for each share of CCPT III common stock, with a guarantee that the value of the share consideration will not be less than $12.00 per share. We are proposing that $1.15 billion (or approximately 20% of the outstanding shares of CCPT III common stock) will be paid in cash and the balance will be paid in ARCP shares. ARCP would be willing to consider increasing the maximum consideration to be paid in cash to 40% of the outstanding shares of CCPT III common stock, so long as CCPT III stockholders preserve the tax-free exchange safe harbor discussed below.

· ARCP’s annual dividend to increase to 93 cents per share: ARCP is announcing its 7^th consecutive quarterly dividend increase to take effect upon closing of the transaction to an annual dividend of 93 cents per share.

· CCPT III stockholders who take ARCP stock will benefit from dividend increase: CCPT III stockholders who elect stock consideration will receive an equivalent dividend of 74.4 cents per share (93 cents x .80), a 15% increase (9.4 cents per share increase) over CCPT III’s current 65 cent per share dividend.

· Because our Proposal ultimately provides for a fixed exchange ratio, CCPT III stockholders receive potential appreciation in ARCP shares: Because our Proposal provides for a fixed exchange ratio (that is, 0.80 of a share of ARCP common stock), the value of the stock consideration received by CCPT III stockholders who elect to receive ARCP shares may increase with the value of the ARCP share price.

· CCPT III stockholders are not “locked up”: All CCPT III shares converted into ARCP shares will be immediately tradable on NASDAQ; stockholders will not be “locked up.” Significant market support is anticipated from numerous index inclusions at and subsequent to closing.

· CCPT III stockholders who take ARCP stock benefit from a tax-free exchange safe harbor: The stock-for-stock option is designed to provide CCPT III stockholders with a tax-free exchange for those who elect to receive stock consideration.

Cole Credit Property Trust III, Inc.
March 19, 2013
Page 3

· There are operating synergies post merger, immediately benefiting all shareholders. ARCP estimates general and administrative expense (G&A) savings will exceed $30 million annually. The majority of the real estate assets owned by CCPT III are net leased properties similar to ARCP’s existing property portfolio. This should result in a seamless integration requiring minimal additional resources or increased expenses.

· Cole Holdings receives $111 million for its incentive fee: Cole Holdings will receive its subordinated management incentive fee pursuant to the terms of CCPT III’s existing advisory agreement of approximately $111 million (based on $12.00 per share and a hurdle price of $10.45 per share, as disclosed in the Internalization Transaction), payable concurrently with the closing of the transaction in a combination of cash and ARCP common stock, in a manner to be determined by the Boards of Directors of ARCP and CCPT III.

We have expended considerable time and effort developing our Proposal, which is based on CCPT III’s most recent Form 10-Q and other publicly available SEC filings, and we believe, based on the information we have reviewed, that the price is full and fair.

Our Proposal has the unanimous support of the ARCP Board of Directors, and we are prepared to devote all necessary resources to this transaction. Our Proposal includes customary conditions, including: (1) completion of confirmatory due diligence by ARCP on CCPT III; (2) execution of a definitive merger agreement; and (3) receipt of stockholder approvals (for the issuance of shares of ARCP common stock, as required by NASDAQ).

We have engaged Barclays Capital Inc. and RCS Capital, a division of Realty Capital Securities, LLC, as our financial advisors and Proskauer Rose LLP and Weil, Gotshal & Manges LLP as our legal advisors. Our team and advisors are ready to meet with you immediately to discuss this Proposal.

We believe our Proposal is superior when compared to the Internalization Transaction.

We believe our Proposal will result in significant benefits to CCPT III stockholders when compared to the Internalization Transaction, including:

· Our Proposal provides CCPT III stockholders immediate liquidity and greater certainty of value and successful execution. Our Proposal provides immediate liquidity, certainty of value and stronger long-term growth potential for CCPT III stockholders. Additionally, we believe no regulatory approval is required, unlike the FINRA approval required in the Internalization Transaction.

· Our Proposal creates the largest, highest quality publicly traded REIT in the net lease sector.

o Largest net lease REIT in sector by total capitalization and square footage;

Cole Credit Property Trust III, Inc.
March 19, 2013
Page 4

o Diversified asset base including 1,706 properties with over 400 tenants;

o Diversified income stream with less than 33% of annualized gross rents from the ten largest tenants;

o Superior portfolio with best in class investment grade tenancy: 60% overall investment grade tenancy and 74% of top ten tenants;

o Longest weighted average lease duration in the net lease sector of 12.4 years; and

o Highly qualified management team with more than 51 years collective experience operating publicly traded REITs.

· Our Proposal results in an increase to pro forma 2013 and 2014 AFFO. Our Proposal results in an increase to combined ARCP and CCPT III pro forma 2013 and 2014 AFFO, resulting in part from a significant reduction in operating costs, namely elimination of CCPT III asset management fees and a pronounced reduction of G&A expenses.

· Our Proposal results in an increase in dividends per share. CCPT III stockholders will enjoy an increase in the annualized CCPT III dividend per share of more than 9 cents, or approximately 15%, from 65 to 74 cents per share.

· Our Proposal is fully financed. Our Proposal is fully financed, eliminating execution risk and valuation ambiguity, while furnishing CCPT III stockholders immediate liquidity at closing. We have received commitments to upsize our existing credit facility by $1.65 billion, with an accordion feature to further increase the facility to an aggregate of $2.5 billion.

· Our Proposal results in increased liquidity. Our Proposal results in increased liquidity from index inclusions, including MSCI (RMZ), Russell 2000, S&P 400 and potentially S&P 500.

· Our Proposal includes an experienced management team. Our Proposal includes an experienced management team that has been responsible for more than $9 billion of liquidity events in the past 15 months, and has experience in managing public companies with total enterprise value in excess of $20 billion.

· Our Proposal affords immediate access to the public capital markets. ARCP benefits from a demonstrated access to the public capital markets, including ARCP’s existing well-known seasoned issuer (WKSI) shelf registration.

· Our Proposal enhances the attributes of the combined companies, adheres to industry “best practices,” and avoids combining unrelated businesses that could detract from stockholder value. ARCP has a focused and proven business strategy that avoids the pitfalls in the Internalization Transaction, which includes the acquisition and operation of Cole Holding’s non-real estate related business lines such as a broker-dealer.

Cole Credit Property Trust III, Inc.
March 19, 2013
Page 5

We believe that these transaction benefits are very compelling for CCPT III stockholders, as well as ARCP stockholders, and make our Proposal more attractive than the proposed Internalization Transaction.

Internalization Transaction Fails to Maximize Stockholder Value

We believe that the Internalization Transaction raises significant conflict issues – it only delivers certainty of value to Cole Holdings with no guarantee that CCPT III stockholders will benefit in any way. This result is in clear contrast to market norms, including recent high-performing and market-supported comparables, such as the announced merger between Cole Credit Property Trust II, Inc. (“CCPT II”) and Spirit Realty Capital, Inc. (NYSE: SFC), the successful merger of American Realty Capital Trust III, Inc. with ARCP, and American Realty Capital Trust, Inc.’s merger with Realty Income Corp. Why aren’t CCPT III stockholders being afforded the same benefits as the CCPT II stockholders?

Noted below are the significant shortcomings of the Internalization Transaction presently proposed. These same disadvantages have already been identified by CCPT III stockholders, independent broker dealers, due diligence officers and industry commentators. The disadvantages include:

· Unseasoned Management Team: The CCPT III and Cole Holdings senior management teams have either no or very limited prior experience running a publicly listed company.

· Non-Qualifying REIT Income: Based on the significant consideration being paid to Cole Holdings as a result of the Internalization Transaction, one could assume CCPT III will be a REIT with material non-qualifying income for REIT qualification test purposes.

· FINRA Approval Required: There is no certainty that FINRA will approve CCPT III’s acquisition of Cole Holding’s broker dealer unit without restrictions or conditions that could adversely impact the transaction.

· Undue Complexity: Complexities arising from the operation of non-real estate related businesses, including a registered broker dealer, could detract from the combined company’s business strategy and its potential valuation.

· No Stockholder Vote: There is no prior record of non-traded REITs merging with their affiliated advisors for a fee without a stockholder vote.

· Greater Potential for Poor Stock Price Performance: There is a history of poor stock performance and below average total stockholder returns from non-listed REITs that have completed listings, resulting primarily from a lack of institutional sponsorship and buy-side support, imposed trading restrictions on common stock owned by legacy, non-traded stockholders and limited operating, portfolio and balance sheet transparency and sell-side research coverage.

Cole Credit Property Trust III, Inc.
March 19, 2013
Page 6

· Multiple Unaddressed Risks: CCPT III has failed adequately to address, explain and quantify the risks of achieving a listing, including:

o Market risk – the risk that changes in the macro-economic or global geo-political climate could result in market dislocations, potentially delaying (possibly indefinitely) the planned stock market listing of CCPT III or potentially reducing the listing price of shares of CCPT III common stock;

o Trading / liquidity risk – CCPT III has failed to affirm that shares of CCPT III common stock will be listed and fully tradable without restriction at the time of listing; if CCPT III were to impose restrictions on trading, these restrictions would impair the liquidity for CCPT III stockholders; and

o Lack of market support – prior successful listing transactions have included a market support mechanism, typically in the form of an issuer self-tender offer, that provides trading liquidity and reduces trading volatility in the days following a listing. CCPT III has not provided CCPT III stockholders assurance that any such market support will be provided or, if market support is provided, at what price level such support might be offered, and whether the dollar value of such support will be sufficient given the size of CCPT III’s equity capitalization.

In a period of increasing market volatility and market sensitivity to macroeconomic global events, a merger with a successful public company provides CCPT III stockholders with far greater price and timing certainty than the Internalization Transaction. The Internalization Transaction compensates Cole Holdings first while CCPT III stockholders wait to see if, when and at what price their liquidity may arrive.

Internalization Transaction is contrary to industry norms.

As leaders in the direct investment non-traded REIT industry, the management of ARCP strongly opposes the imposition of the internalization fees that are the crux of the Internalization Transaction. Internalization fees serve to misalign the interests of REIT stockholders and the owners of the advisor, enrich the advisor at the expense of stockholders without regard to investment performance, and are generally a “black eye” for the non-traded REIT industry.

In particular, the Internalization Transaction fails to protect the interests of CCPT III stockholders in the following ways:

· Cole Holdings interests are not aligned with those of CCPT III shareholders. Cole Holdings is paid a very substantial sum, without regard to performance, before the CCPT III stockholders are paid. CCPT III stockholders are compensating Cole Holdings, prior to CCPT III stockholders receiving visibility on the value of their common stock or accompanying liquidity, and with no assurance of future liquidity or profitability.

Cole Credit Property Trust III, Inc.
March 19, 2013
Page 7

· Lack of transparency makes financial fairness of transaction difficult to judge. The lack of transparency of the current assets, financial condition, business prospects, and relative operating cash flow contribution of Cole Holdings and CCPT III deprives CCPT III stockholders’ of the ability to analyze the relative value of these firms and the consideration being paid to Cole Holdings.

Perhaps most unsettling, the independent directors of CCPT III may have denied the CCPT III stockholders a voice in the Internalization Transaction, as well as the opportunity to understand the merits and valuation of the Internalization Transaction, by structuring the Internalization Transaction to avoid the requirement of an affirmative vote by CCPT III stockholders. Regardless of the legal requirement for such a vote, every preceding internalization in the non-traded REIT industry in which an internalization fee was paid provided stockholders with the right to consider and vote in connection with such high cost, privately negotiated related party transactions. For these reasons, all recently completed non-traded REIT liquidity events, including those of American Realty Capital Trust, Inc., Healthcare Trust of America, Inc., CCPT II and American Realty Capital Trust III, Inc., have excluded any internalization fees.

Conclusion

We believe CCPT III’s failure to adhere to generally accepted industry best practices that prohibit internalization fees is a serious threat to the viability of Cole Holding’s future operations, which, if the Internalization Transaction is consummated, would be a core value driver of CCPT III. Cole Holding’s future income and long-term viability is dependent upon executing selling agreements with independent broker dealers and the support of these firms in the offering of securities sponsored by and distributed through Cole Holdings affiliates. If independent broker dealers respond to the Internalization Transaction by refusing to sell securities offered by Cole Holdings, the income, profits and value of Cole Holdings, and the value of CCPT III, would be significantly impaired by the consummation of the Internalization Transaction.

We believe our Proposal is superior to the Internalization Transaction currently proposed and in the best interests of CCPT III stockholders. As a result, we would ask and expect the CCPT III board of directors to engage in a full review of our Proposal. We hope that you will decide to enter into a constructive dialogue with us in this regard. It remains our strong preference to work together to reach a mutually agreeable transaction; however, we are prepared to consider all alternatives to complete this transaction should we fail to hear back from you promptly.

Cole Credit Property Trust III, Inc.
March 19, 2013
Page 8

We are prepared to immediately meet and commence discussions with you and your advisors to move forward with our Proposal. We are confident that, if we work together, we can quickly consummate a transaction that is in the best interests of the stockholders of both of our companies.

Sincerely,

/s/ Nicholas S. Schorsch                    

Nicholas S. Schorsch
Chairman and CEO
American Realty Capital Properties, Inc.

Exhibit A

EX-99.2

 

American Realty Capital Properties Acquicition of Cole Credit Property Trust III in a $9 Billion Transaction Acquisition will produce Largest REIT in Net Lease Sector, Increased Earnings and Dividends. CCPT III Stockholders will benefit from Premium Valuation, Certainty of Closing, Immediate Liquidity and Tax-Free Exchange. March 19, 2013

 

Additional Information about the Proposed Transaction and Where to Find It This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication relates to a business combination transaction with Cole Credit Property Trust III, Inc. (“CCPT III”) proposed may become the subject of a registration statement This material is not a substitute for the proxy statement/prospectus ARCP would file with the SEC regarding the proposed transaction if such a negotiated transaction with CCPT III is reached or for any other document which ARCP may file with the SEC and send to ARCP’s or transaction. INVESTORS AND SECURITY HOLDERS OF ARCP AND CCPT III ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Such documents would be available free of charge through the website maintained by the SEC at www.sec.gov or by directing a request to the ARCP Investor Relations Department, 405 Park Avenue, New York, New York 10022. Copies of such documents filed by ARCP with the SEC also will be available www.arcpreit.com free of charge. ARCP, AR Capital, LLC and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies from transaction. Information regarding ARCP’s directors statement filed with the SEC on May 4, -K filed with the2012, as SEC on October 17, 2012 and March 6, 2013. Additional information regarding the interests of such potential participants will be included in any proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed transaction if and when they become available. All information in this communication concerning CCPT III, including its business, operations and financial results was obtained from public sources. While ARCP has no knowledge that any such information is inaccurate or incomplete, ARCP has not had the opportunity to verify any of that information.

  

Forward-Looking Statements Information set forth in this communication (including information included or incorporated by reference herein) contains -looking statements” “forward of the Securities Exchange Act (as defined ofin 1934), which reflect ARCP’s expectations -looking statements involve aregarding number of risks, uncertainties and other factors, actual results to differ materially from those contained in the forward-looking statements. Such risks and uncertainties relating to the proposed transaction ARCP’s proposal and enter into definitive proposed transaction will be consummated, the expectations, objectives, intentions, as well as any expectations or projections with respect to the combined company, including regarding future dividends and market valuations, and other statements that are not historical facts. The following additional factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the ability to obtain regulatory and stockholder approvals for the transaction; market volatility; unexpected costs or unexpected liabilities that may arise from the transaction, whether or not consummated; the inability -savingsto and synergies contemplated by the proposed promptly and effectively integrate the businesses of CCPT III and ARCP; disruption from the proposed transaction making it more difficult to maintain relationships with tenants; the business plans of the tenants of the respective parties; continuation or deterioration of current market conditions; and future regulatory or legislative actions that could adversely affect the companies. Additional factors that may affect future results will be contained in ARCP’s filings with the obligation to update and revise statements contained in these materials based on new information or otherwise.

 

ARCP is Offering to Purchase All of the Outstanding Shares of CCPT III on the following basis: • CCPT III Stockholder Consideration: (i) $12.00 per share in cash, or (ii) 0.80 of a share of ARCP common stock for each share of CCPT III common stock, with a floor of $12.00 per ARCP share.(1) • Floor, No Cap: Proposal guarantees an exchange value of not less than $12.00 for ARCP shares, but there is no limit on the potential upside. For example, should ARCP shares rise above $15.00 per share, CCPT III stockholders will benefit from additional value improvement. • Dividend Increase: ARCP’s annual dividend will increase to $0.93 per share upon closing. CCPT III stockholders who elect ARCP stock will receive an annualized dividend of $0.744 per share, ($0.93 x .80), a 15% increase (9.4 cents per0.65 annualized share) dividend per share. • Cole Holdings Consideration: Cole Holdings will be paid $111 million as a subordinated management incentive fee pursuant to the terms of CCPT III’s existing advisory agreement. (2) ARCP’s $12.00 per share offer represents a $956 million premium over CCPT III stockholders’ cost of $10.00 per share. (1) We are proposing that $1.15 billion (or approximately 20% of the outstanding shares of CCPT III common stock) will be paid in cash and the balance will be paid in ARCP shares. (2) Based on a floor of $12.00 per share and a hurdle price of $10.45 per share, as disclosed in the announced merger agreement.

 

CCPT III Stockholders receive Significant Transaction Benefits. • No Lock-Up: All CCPT III shares converted into ARCP shares will be immediately tradable on NASDAQ; stockholders are not “locked up.” Significant market support is anticipated from numerous index inclusions at and subsequent to closing. • Tax-Free Exchange: The stock-for-stock option is designed to provide CCPT III stockholders with a tax-free exchange for those who elect to receive stock consideration. • Operating Synergies and Integration: ARCP estimates general and administrative expense (G&A) savings will exceed $30 million annually. The majority of the real estate assets owned by CCPT III are net leased properties similar to ARCP’s existing property portfolio. This should result in a seamless integration requiring minimal additional resources or increased expenses. ARCP’s proposal provides CCPT III stockholders with certainty of value and execution, increased dividends, immediate liquidity, and a tax-free exchange.

 

ARCP Stockholders Post Merger receive Significant Benefits. • Largest Net Lease REIT: Combination will result in largest publicly traded net lease REIT by property square footage and market capitalization, resulting in expected MSCI, Russell and S&P index inclusions, increased share liquidity and enhanced access to capital. • Highest Quality Net Lease Property Portfolio: Combined property portfolio will have the largest enterprise value, highest investment grade tenant %, longest weighted average remaining lease term, highest occupancy, and lowest average property age of public net lease REITs. • Increased Tenant Diversification: Concentration of top ten tenants reduced significantly from approximately 62% to less than 33%. • Immediate Accretion to AFFO per Share(1): Reduction in operating expenses results in immediate increase to ARCP earnings, more than 10% accretive to ARCP’s AFFO per share. · Dividend Growth: Increased AFFO per share allows for annualized dividend increase of $0.02 per share to $0.93 per share. (1) Based on 2013 guidance issued on February 28, 2013.

 

ARCP Post Merger will Increase its Dividend for the 7^th Consecutive Quarter.⁽¹⁾ Annualized Dividend(2) $0.940 $0.930 $0.930 $0.920 $0.910 $0.910 $0.900 $0.900 $0.895 $0.890 Per Share $0.890 $0.885 $0.880 $0.880 $0.875 $0.875 $0.870 $0.860 $0.850 $0.840 Q'3 2011 Q'4 2011 Q'1 2012 Q'2 2012 Q'3 2012 Q'4 2012 Q'1 2013 Q'2 2013 ARCP Post Merger (1) Pending the close of the proposed transaction. (2) Dividends based on dividend rate at the end of each period.

 

ARCP will become the Leading Public Traded Net Lease REIT.⁽¹⁾ Post Merger Properties 1,706 Investment Grade(2) (by NOI) 60% Occupancy 99% Enterprise Value(3) $14.8 billion Total Square Feet 59.5 million Average Remaining Lease Term 12.4 years (1) All CCPT III data based on publicly available SEC filings, including its Quarterly Report on Form 10-Q for the period ended 9/30/12, its Current Report on Form 8-K filed 3/6/13, as well as estimated data. (2) Includes investment grade tenants affiliated with investment grade entities as determined by a major rating agency. For purposes of this presentation, we have attributed the ratings of the affiliated parent company. (3) Implied enterprise value at the close of the proposed transaction.

 

ARCP will become the Largest, Highest Quality Public Traded Net Lease REIT. Enterprise Value (millions) $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 ARCP Post Merger O SRC WPC NNN $14,778 $12,270 $7,300 $6,974 $5,919 % Investment Grade(1) 70% 60% 50% 40% 30% 20% 10% 0% ARCP Post Merger O SRC WPC NNN 60% 34% 34% 19% 6% Square Footage (millions) 70 60 50 40 30 20 10 0 ARCP Post Merger O SRC WPC NNN 59.5 54.3 53.4 38.5 19.2 Wtd. Avg. Lease Duration Years 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 ARCP Post Merger O SRC WPC NNN 12.4 12.0 11.2 10.6 8.9 Note: All CCPT III data based on publicly available SEC filings, including its Quarterly Report on Form 10-Q for the period ended 9/30/12, its Current Report on Form 8-K filed 3/6/13, as well as estimated data. (1) Includes investment grade tenants affiliated with investment grade entities as determined by a major rating agency. For purposes of this presentation, we have attributed the ratings of the affiliated parent company.

 

ARCP will become the Dominant Public Traded Net Lease REIT. Enterprise Value (millions) $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 ARCP ARCP Post Merger $3,905 $14,778 # of Properties 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 ARCP ARCP Post Merger 692 1,706 Weighted Average Lease Term Years $12.6 $12.4 $12.2 $12.0 $11.8 $11.6 $11.4 $11.2 $11.0 ARCP ARCP Post Merger 11.5 12.4 Square Footage (millions) 70 60 50 40 30 20 10 0 ARCP ARCP Post Merger 16.4 59.5 Note: All CCPT III data based on publicly available SEC filings, including its Quarterly Report on Form 10-Q for the period ended 9/30/12, its Current Report on Form 8-K filed 3/6/13, as well as estimated data.

 

Top 10 Tenant Concentration will become 32.9%; Portfolio Diversification will be Increased to over 400 Tenants. ARCP Top 10 Tenants CCPT III Top 10 Tenants Combined Top 10 Tenants Tenant % of Portfolio Tenant % of Portfolio Tenant % of Portfolio 11.4% 6.9% 7.3% 10.6% 5.0% 3.9% 9.4% 4.7% 3.7% 7.8% 3.5% 3.1% 6.7% 3.1% 2.9% 4.1% 3.0% 2.9% 3.6% 2.6% 2.6% 2.9% 2.5 % 2.3% 2.7% 2.0% 2.3% 2.6% 2.0% 1.9% Total 61.8% Total 35.3% Total 32.9% Top 10 Tenants Will be 74% Investment Grade.(1) Note: All CCPT III data based on publicly available SEC filings, including its Quarterly Report on Form 10-Q for the period ended 9/30/12, its Current Report on Form 8-K filed 3/6/13, as well as estimated data. (1) Includes investment grade tenants affiliated with investment grade entities as determined by a major rating agency. For purposes of this presentation, we have attributed the ratings of the affiliated parent company.

 

Recent Well-Conceived Liquidity Events in the Direct Investment Sector Have Resulted in Substantial Value Creation. ARCT Listing⁽¹⁾ (No Internalization Fee) HTA Listing(1) (No Internalization Fee) ARCP-ARCT III Merger(1) (No Internalization Fee) SRC-CCPT II Merger(2) (No Internalization Fee) % 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 (5.00) 3/1/2012 5/1/2012 7/1/2012 9/1/2012 11/1/2012 1/1/2013 ARCT 30.48% RMS 14.99% % 30.00 25.00 20.00 15.00 10.00 5.00 0.00 (5.00) (10.00) 6/6/2012 7/21/2012 9/4/2012 10/19/2012 12/3/2012 1/17/2013 3/3/2013 HTA 25.23% RMS 13.63% % 10.00 8.00 6.00 4.00 2.00 0.00 (2.00) 2/28/2013 3/3/2013 3/6/2013 3/9/2013 3/12/2013 ARCP 7.90% RMS 1.78% % 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1/8/2013 2/1/2013 2/15/2013 3/1/2013 3/15/2013 (1) Calculated as total return % since liquidity event to market close on 3/14/2013. (2) Calculated as total return % since announced merger to market close on 3/14/2013.

 

If ARCP Post Merger trades to its Peer Group Average, its Implied Share Price would be $17.78. ARCP Post Peer Group Merger(3) O SRC WPC NNN Avg. # of Properties 1,706 3,528 2,012 423 1,622 1,896 Wtd Avg Lease Term (yrs.) 12.4 11.2 10.6 8.9 12.0 10.7 Occupancy 99.3% 97.6% 98.8% 98.7% 97.9% 98.3% Square Footage (mm) 59.5 53.4 54.3 38.5 19.2 41.4% Investment Grade(1) 60% 34% 19% 34% 6% 23% Dividend Yield 5.2% 4.9% 6.4% 4.8% 4.5% 5.2% Price/AFFO 17.1x(4) 19.2x 13.2x 17.8x 18.2x 17.1x Equity Market Cap (mm) $8,812 $8,777 $3,810 $4,688 $4,054 $5,332 Enterprise Value (mm) $14,778 $12,270 $7,300 $6,974 $5,919 $8,116 Implied/Share Price(2) $17.78 $44.74 $19.60 $68.45 $35.00 - The ARCP proposal implies a minimum equity value for CCPT III of $5.7 billion. - The cash component of the ARCP Proposal is fully funded by cash on hand and borrowing capacity on ARCP’s existing credit facility. Note: All CCPT III data based on publicly available SEC filings, including its Quarterly Report on Form 10-Q for the period ended 9/30/12, its Current Report on Form 8-K filed 3/6/13, as well as estimated data. Peer data based on public filings, investor presentations and SNL Financial. (1) Includes investment grade tenants affiliated with investment grade entities as determined by a major rating agency. For purposes of this presentation, we have attributed the ratings of the affiliated parent company. (2) As of market close on 3/15/2013, except for ARCP Post Merger. (3) Implied metrics upon the close of the proposed transaction. (4) Based on peer group average.

 

Funds from Operations and Adjusted Funds from Operations ARCP considers FFO and AFFO, which is FFO as adjusted to exclude acquisition-related fees and expenses, amortization of above-market lease assets and liabilities, amortization of deferred financing costs, straight-line rent, non-cash mark-to-market adjustments, amortization of restricted stock, non-cash compensation and non-recurring gains and losses useful indicators of the performance of a REIT. Because FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs in ARCP's peer groups. Accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Additionally, ARCP believes that AFFO, by excluding acquisition-related fees and expenses, amortization of above-market lease assets and liabilities, amortization of deferred financing costs, straight-line rent, non-cash mark-to-market adjustments, amortization of restricted stock, non-cash compensation and non-recurring gains and losses, provides information consistent with management’s analyses of the operating performance presenting useful information that assists investors and analysts to better assess the sustainability of its operating performance. Further, ARCP believes AFFO is useful in comparing the sustainability of its operating performance with the sustainability of the operating performance of other real estate companies, including exchange-traded and non-traded REITs. As a result, ARCP believes that the use of FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of its performance relative to its peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. FFO and AFFO are not in accordance with, or a substitute for, measures prepared in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, FFO and AFFO are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures, such as FFO and AFFO, have limitations in that they do not reflect all of the amounts associated with ARCP's results of operations that would be reflected in measures determined in accordance with GAAP. These measures should only be used to evaluate ARCP's performance in conjunction with corresponding GAAP measures.

EX-99.3

 

FOR IMMEDIATE RELEASE

American Realty Capital Properties Offers to Purchase Cole Credit Property Trust III for
$9 Billion, Creating the Largest, Highest Quality Publicly Traded Net Lease REIT

Offer Values CCPT III at a 20% Premium, Includes a 15% Dividend Increase and Provides CCPT III
Stockholders with Immediate Liquidity, Certainty of Execution and Stronger Growth Potential and a
Minimum of $12 per Share.

New York, New York, March 20, 2013 – American Realty Capital Properties, Inc. (“ARCP”) (NASDAQ: ARCP) announced today that on March 19, 2013, it sent to the Board of Directors of Cole Credit Property Trust III, Inc. (“CCPT III”) an offer to acquire 100% of the outstanding common stock of CCPT III for at least $12 per share, or $5.7 billion, in cash and stock. The transaction, valued at more than $9 billion including assumption of debt, would create the largest and highest quality publicly traded REIT in the net lease sector.

The fully financed proposal offers CCPT III stockholders:

· Consideration: (i) $12.00 per share in cash or (ii) 0.80 shares of ARCP common stock for each share of CCPT III common stock, with a guarantee that the value of the stock consideration will not be less than $12.00 per share. This offer represents at least a 20% premium to the original CCPT III offer price of $10.00 per share.

· Dividend Increase: An increase of ARCP’s dividend to 93 cents per share upon closing, meaning all CCPT III stockholders who elect stock consideration will receive an equivalent dividend of 74.4 cents per share (93 cents x 0.80), a 15% increase (9.4 cents per share) over CCPT III’s current 65 cents per share dividend.

· Integration and Operating Synergies: ARCP currently estimates that general and administrative (G&A) savings will be not less than $30 million annually. The majority of CCPT III’s real estate assets are net lease properties similar to ARCP’s existing portfolio, resulting in seamless integration and minimal additional resources or ongoing expense requirements.

ARCP’s offer is designed to provide CCPT III’s stockholders with a tax-free exchange and instant liquidity, as there will be no lockup and all ARCP shares will be immediately tradable on NASDAQ with significant market support and numerous index inclusions at or subsequent to closing. The offer also provides CCPT III shareholders certainty of execution, timing and value. The cash component of ARCP’s proposal is fully funded by cash on hand and borrowing capacity under ARCP’s existing line of credit.

The full text of the proposal letter to CCPT III’s Board of Directors is included below:

March 19, 2013

BY EMAIL AND FEDEX

Board of Directors
Cole Credit Property Trust III, Inc.
2325 East Camelback Road, Suite 1100
Phoenix, AZ 85016

To the Board of Directors of Cole Credit Property Trust III, Inc. (“CCPT III”):

I am writing on behalf of the Board of Directors of American Realty Capital Properties, Inc. (NASDAQ: ARCP) (“ARCP”) to make a proposal to acquire all of the outstanding shares of CCPT III common stock.

As you are aware, prior to the announcement of CCPT III’s proposed acquisition of Cole Holdings Corporation (“Cole Holdings”), we communicated to your financial advisor our interest in a potential acquisition of CCPT III. We were surprised to not have received any response.

We believe our offer for CCPT III, outlined below (the “Proposal”), represents a strength-for-strength merger of complimentary portfolios that would provide CCPT III stockholders with certainty of value while benefiting both CCPT III and ARCP stockholders through the creation of the largest, highest quality publicly traded REIT in the net lease sector.

ARCP offers to purchase CCPT III at a price of not less than $5.7 billion of equity value or $12.00 per share, representing a minimum 20% premium above the original offering price.

We believe our Proposal (outlined below) will provide a higher level of consideration delivered sooner and with greater certainty to CCPT III stockholders as compared to the internalization transaction currently contemplated. We believe our Proposal is in the best interests of CCPT III stockholders and is superior to that internalization transaction. The internalization transaction would internalize CCPT III’s external advisor and affiliated broker-dealer, Cole Holdings, at an estimated cost to CCPT III’s stockholders in excess of $120 million in a combination of cash and stock (the “Internalization Transaction”). In the event the Internalization Transaction is consummated, ARCP would need to reconsider its Proposal, and potentially reduce its proposed valuation.

Our Proposal, calling for not less than $12.00 per share, implies a minimum equity value for CCPT III of approximately $5.7 billion (assuming 478.0 million shares of CCPT III common stock outstanding acquired at $12.00 per share). The cash component of our Proposal is fully funded by cash on hand and borrowing capacity under ARCP’s existing line of credit.

Our Proposal represents at least a 20% premium to the original CCPT III offering price of $10.00 per share and provides CCPT III stockholders an option to elect cash or publicly traded ARCP common stock in a tax-free stock for stock exchange (subject to proration). Exhibit A to this letter describes the combined company and the significant opportunity for CCPT III stockholders to become stockholders of the combined company, which would become the largest publicly traded REIT in the net lease sector.

The terms of ARCP’s Proposal are outlined immediately below.

· CCPT III stockholders receive at least $12.00 per share of value: ARCP is prepared to acquire 100% of the outstanding common stock of CCPT III for either: (i) $12.00 per share in cash or (ii) 0.80 of a share of ARCP common stock for each share of CCPT III common stock, with a guarantee that the value of the share consideration will not be less than $12.00 per share. We are proposing that $1.15 billion (or approximately 20% of the outstanding shares of CCPT III common stock) will be paid in cash and the balance will be paid in ARCP shares. ARCP would be willing to consider increasing the maximum consideration to be paid in cash to 40% of the outstanding shares of CCPT III common stock, so long as CCPT III stockholders preserve the tax-free exchange safe harbor discussed below.

· ARCP’s annual dividend to increase to 93 cents per share: ARCP is announcing its 7^th consecutive quarterly dividend increase to take effect upon closing of the transaction to an annual dividend of 93 cents per share.

· CCPT III stockholders who take ARCP stock will benefit from dividend increase: CCPT III stockholders who elect stock consideration will receive an equivalent dividend of 74.4 cents per share (93 cents x .80), a 15% increase (9.4 cents per share increase) over CCPT III’s current 65 cent per share dividend.

· Because our Proposal ultimately provides for a fixed exchange ratio, CCPT III stockholders receive potential appreciation in ARCP shares: Because our Proposal provides for a fixed exchange ratio (that is, 0.80 of a share of ARCP common stock), the value of the stock consideration received by CCPT III stockholders who elect to receive ARCP shares may increase with the value of the ARCP share price.

· CCPT III stockholders are not “locked up”: All CCPT III shares converted into ARCP shares will be immediately tradable on NASDAQ; stockholders will not be “locked up.” Significant market support is anticipated from numerous index inclusions at and subsequent to closing.

· CCPT III stockholders who take ARCP stock benefit from a tax-free exchange safe harbor: The stock-for-stock option is designed to provide CCPT III stockholders with a tax-free exchange for those who elect to receive stock consideration.

· There are operating synergies post merger, immediately benefiting all shareholders. ARCP estimates general and administrative expense (G&A) savings will exceed $30 million annually. The majority of the real estate assets owned by CCPT III are net leased properties similar to ARCP’s existing property portfolio. This should result in a seamless integration requiring minimal additional resources or increased expenses.

· Cole Holdings receives $111 million for its incentive fee: Cole Holdings will receive its subordinated management incentive fee pursuant to the terms of CCPT III’s existing advisory agreement of approximately $111 million (based on $12.00 per share and a hurdle price of $10.45 per share, as disclosed in the Internalization Transaction), payable concurrently with the closing of the transaction in a combination of cash and ARCP common stock, in a manner to be determined by the Boards of Directors of ARCP and CCPT III.

We have expended considerable time and effort developing our Proposal, which is based on CCPT III’s most recent Form 10-Q and other publicly available SEC filings, and we believe, based on the information we have reviewed, that the price is full and fair.

Our Proposal has the unanimous support of the ARCP Board of Directors, and we are prepared to devote all necessary resources to this transaction. Our Proposal includes customary conditions, including: (1) completion of confirmatory due diligence by ARCP on CCPT III; (2) execution of a definitive merger agreement; and (3) receipt of stockholder approvals (for the issuance of shares of ARCP common stock, as required by NASDAQ).

We have engaged Barclays Capital Inc. and RCS Capital, a division of Realty Capital Securities, LLC, as our financial advisors and Proskauer Rose LLP and Weil, Gotshal & Manges LLP as our legal advisors. Our team and advisors are ready to meet with you immediately to discuss this Proposal.

We believe our Proposal is superior when compared to the Internalization Transaction.

We believe our Proposal will result in significant benefits to CCPT III stockholders when compared to the Internalization Transaction, including:

· Our Proposal provides CCPT III stockholders immediate liquidity and greater certainty of value and successful execution. Our Proposal provides immediate liquidity, certainty of value and stronger long-term growth potential for CCPT III stockholders. Additionally, we believe no regulatory approval is required, unlike the FINRA approval required in the Internalization Transaction.

· Our Proposal creates the largest, highest quality publicly traded REIT in the net lease sector.

o Largest net lease REIT in sector by total capitalization and square footage;

o Diversified asset base including 1,706 properties with over 400 tenants;

o Diversified income stream with less than 33% of annualized gross rents from the ten largest tenants;

o Superior portfolio with best in class investment grade tenancy: 60% overall investment grade tenancy and 74% of top ten tenants;

o Longest weighted average lease duration in the net lease sector of 12.4 years; and

o Highly qualified management team with more than 51 years collective experience operating publicly traded REITs.

· Our Proposal results in an increase to pro forma 2013 and 2014 AFFO. Our Proposal results in an increase to combined ARCP and CCPT III pro forma 2013 and 2014 AFFO, resulting in part from a significant reduction in operating costs, namely elimination of CCPT III asset management fees and a pronounced reduction of G&A expenses.

· Our Proposal results in an increase in dividends per share. CCPT III stockholders will enjoy an increase in the annualized CCPT III dividend per share of more than 9 cents, or approximately 15%, from 65 to 74 cents per share.

· Our Proposal is fully financed. Our Proposal is fully financed, eliminating execution risk and valuation ambiguity, while furnishing CCPT III stockholders immediate liquidity at closing. We have received commitments to upsize our existing credit facility by $1.65 billion, with an accordion feature to further increase the facility to an aggregate of $2.5 billion.

· Our Proposal results in increased liquidity. Our Proposal results in increased liquidity from index inclusions, including MSCI (RMZ), Russell 2000, S&P 400 and potentially S&P 500.

· Our Proposal includes an experienced management team. Our Proposal includes an experienced management team that has been responsible for more than $9 billion of liquidity events in the past 15 months, and has experience in managing public companies with total enterprise value in excess of $20 billion.

· Our Proposal affords immediate access to the public capital markets. ARCP benefits from a demonstrated access to the public capital markets, including ARCP’s existing well-known seasoned issuer (WKSI) shelf registration.

· Our Proposal enhances the attributes of the combined companies, adheres to industry “best practices,” and avoids combining unrelated businesses that could detract from stockholder value. ARCP has a focused and proven business strategy that avoids the pitfalls in the Internalization Transaction, which includes the acquisition and operation of Cole Holding’s non-real estate related business lines such as a broker-dealer.

We believe that these transaction benefits are very compelling for CCPT III stockholders, as well as ARCP stockholders, and make our Proposal more attractive than the proposed Internalization Transaction.

Internalization Transaction Fails to Maximize Stockholder Value

We believe that the Internalization Transaction raises significant conflict issues – it only delivers certainty of value to Cole Holdings with no guarantee that CCPT III stockholders will benefit in any way. This result is in clear contrast to market norms, including recent high-performing and market-supported comparables, such as the announced merger between Cole Credit Property Trust II, Inc. (“CCPT II”) and Spirit Realty Capital, Inc. (NYSE: SFC), the successful merger of American Realty Capital Trust III, Inc. with ARCP, and American Realty Capital Trust, Inc.’s merger with Realty Income Corp. Why aren’t CCPT III stockholders being afforded the same benefits as the CCPT II stockholders?

Noted below are the significant shortcomings of the Internalization Transaction presently proposed. These same disadvantages have already been identified by CCPT III stockholders, independent broker dealers, due diligence officers and industry commentators. The disadvantages include:

· Unseasoned Management Team: The CCPT III and Cole Holdings senior management teams have either no or very limited prior experience running a publicly listed company.

· Non-Qualifying REIT Income: Based on the significant consideration being paid to Cole Holdings as a result of the Internalization Transaction, one could assume CCPT III will be a REIT with material non-qualifying income for REIT qualification test purposes.

· FINRA Approval Required: There is no certainty that FINRA will approve CCPT III’s acquisition of Cole Holding’s broker dealer unit without restrictions or conditions that could adversely impact the transaction.

· Undue Complexity: Complexities arising from the operation of non-real estate related businesses, including a registered broker dealer, could detract from the combined company’s business strategy and its potential valuation.

· No Stockholder Vote: There is no prior record of non-traded REITs merging with their affiliated advisors for a fee without a stockholder vote.

· Greater Potential for Poor Stock Price Performance: There is a history of poor stock performance and below average total stockholder returns from non-listed REITs that have completed listings, resulting primarily from a lack of institutional sponsorship and buy-side support, imposed trading restrictions on common stock owned by legacy, non-traded stockholders and limited operating, portfolio and balance sheet transparency and sell-side research coverage.

· Multiple Unaddressed Risks: CCPT III has failed adequately to address, explain and quantify the risks of achieving a listing, including:

o Market risk – the risk that changes in the macro-economic or global geo-political climate could result in market dislocations, potentially delaying (possibly indefinitely) the planned stock market listing of CCPT III or potentially reducing the listing price of shares of CCPT III common stock;

o Trading / liquidity risk – CCPT III has failed to affirm that shares of CCPT III common stock will be listed and fully tradable without restriction at the time of listing; if CCPT III were to impose restrictions on trading, these restrictions would impair the liquidity for CCPT III stockholders; and

o Lack of market support – prior successful listing transactions have included a market support mechanism, typically in the form of an issuer self-tender offer, that provides trading liquidity and reduces trading volatility in the days following a listing. CCPT III has not provided CCPT III stockholders assurance that any such market support will be provided or, if market support is provided, at what price level such support might be offered, and whether the dollar value of such support will be sufficient given the size of CCPT III’s equity capitalization.

In a period of increasing market volatility and market sensitivity to macroeconomic global events, a merger with a successful public company provides CCPT III stockholders with far greater price and timing certainty than the Internalization Transaction. The Internalization Transaction compensates Cole Holdings first while CCPT III stockholders wait to see if, when and at what price their liquidity may arrive.

Internalization Transaction is contrary to industry norms.

As leaders in the direct investment non-traded REIT industry, the management of ARCP strongly opposes the imposition of the internalization fees that are the crux of the Internalization Transaction. Internalization fees serve to misalign the interests of REIT stockholders and the owners of the advisor, enrich the advisor at the expense of stockholders without regard to investment performance, and are generally a “black eye” for the non-traded REIT industry.

In particular, the Internalization Transaction fails to protect the interests of CCPT III stockholders in the following ways:

· Cole Holdings interests are not aligned with those of CCPT III shareholders. Cole Holdings is paid a very substantial sum, without regard to performance, before the CCPT III stockholders are paid. CCPT III stockholders are compensating Cole Holdings, prior to CCPT III stockholders receiving visibility on the value of their common stock or accompanying liquidity, and with no assurance of future liquidity or profitability.

· Lack of transparency makes financial fairness of transaction difficult to judge. The lack of transparency of the current assets, financial condition, business prospects, and relative operating cash flow contribution of Cole Holdings and CCPT III deprives CCPT III stockholders’ of the ability to analyze the relative value of these firms and the consideration being paid to Cole Holdings.

Perhaps most unsettling, the independent directors of CCPT III may have denied the CCPT III stockholders a voice in the Internalization Transaction, as well as the opportunity to understand the merits and valuation of the Internalization Transaction, by structuring the Internalization Transaction to avoid the requirement of an affirmative vote by CCPT III stockholders. Regardless of the legal requirement for such a vote, every preceding internalization in the non-traded REIT industry in which an internalization fee was paid provided stockholders with the right to consider and vote in connection with such high cost, privately negotiated related party transactions. For these reasons, all recently completed non-traded REIT liquidity events, including those of American Realty Capital Trust, Inc., Healthcare Trust of America, Inc., CCPT II and American Realty Capital Trust III, Inc., have excluded any internalization fees.

Conclusion

We believe CCPT III’s failure to adhere to generally accepted industry best practices that prohibit internalization fees is a serious threat to the viability of Cole Holding’s future operations, which, if the Internalization Transaction is consummated, would be a core value driver of CCPT III. Cole Holding’s future income and long-term viability is dependent upon executing selling agreements with independent broker dealers and the support of these firms in the offering of securities sponsored by and distributed through Cole Holdings affiliates. If independent broker dealers respond to the Internalization Transaction by refusing to sell securities offered by Cole Holdings, the income, profits and value of Cole Holdings, and the value of CCPT III, would be significantly impaired by the consummation of the Internalization Transaction.

We believe our Proposal is superior to the Internalization Transaction currently proposed and in the best interests of CCPT III stockholders. As a result, we would ask and expect the CCPT III board of directors to engage in a full review of our Proposal. We hope that you will decide to enter into a constructive dialogue with us in this regard. It remains our strong preference to work together to reach a mutually agreeable transaction; however, we are prepared to consider all alternatives to complete this transaction should we fail to hear back from you promptly.

We are prepared to immediately meet and commence discussions with you and your advisors to move forward with our Proposal. We are confident that, if we work together, we can quickly consummate a transaction that is in the best interests of the stockholders of both of our companies.

Sincerely,

/s/ Nicholas S. Schorsch                   

Nicholas S. Schorsch
Chairman and CEO
American Realty Capital Properties, Inc.

Transaction Advisors

Barclays Capital Inc. and RCS Capital, a division of Realty Capital Securities, LLC, are acting as ARCP’s financial advisors and Proskauer Rose LLP and Weil, Gotshal & Manges LLP as its legal advisors.

About ARCP

ARCP is a publicly traded Maryland corporation listed on The NASDAQ Global Select Market that qualified as a real estate investment trust for U.S. federal income tax purposes for the taxable year ended December 31, 2011, focused on acquiring and owning single tenant freestanding commercial properties subject to net leases with high credit quality tenants. Additional information about ARCP can be found on its website at www.arcpreit.com.

Additional Information about the Proposed Transaction and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication relates to a business combination transaction with CCPT III proposed by ARCP, which may become the subject of a registration statement filed with the Securities and Exchange Commission (“SEC”). This material is not a substitute for the proxy statement/prospectus ARCP would file with the SEC regarding the proposed transaction if such a negotiated transaction with CCPT III is reached or for any other document which ARCP may file with the SEC and send to ARCP’s or CCPT III’s stockholders in connection with the proposed transaction. INVESTORS AND SECURITIY HOLDERS OF ARCP AND CCPT III ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.  Such documents would be available free of charge through the website maintained by the SEC at www.sec.gov or by directing a request to the ARCP Investor Relations Department, 405 Park Avenue, New York, New York 10022. Copies of such documents filed by ARCP with the SEC also will be available free of charge on ARCP’s website at www.arcpreit.com.

Participants in Solicitation

ARCP, AR Capital, LLC and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies from ARCP’s and CCPT III’s stockholders in respect of the proposed transaction. Information regarding ARCP’s directors and executive officers can be found in ARCP’s definitive proxy statement filed with the SEC on May 4, 2012, as modified by ARCP’s current reports on Form 8-K filed with the SEC on October 17, 2012 and March 6, 2013. Additional information regarding the interests of such potential participants will be included in any proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed transaction if and when they become available.

All information in this communication concerning CCPT III, including its business, operations and financial results was obtained from public sources.  While ARCP has no knowledge that any such information is inaccurate or incomplete, ARCP has not had the opportunity to verify any of that information.

Forward-Looking Statements

Information set forth in this communication (including information included or incorporated by reference herein) contains “forward-looking statements” (as defined in Section 21E of the Securities Exchange Act of 1934), which reflect ARCP’s expectations regarding future events. The forward-looking statements involve a number of risks, uncertainties and other factors, many of which are outside ARCP’s control, that could cause actual results to differ materially from those contained in the forward-looking statements. Such risks and uncertainties relating to the proposed transaction include, but are not limited to, CCPT III’s failure to accept ARCP’s proposal and enter into definitive agreements to effect the transaction, whether and when the proposed transaction will be consummated, the new combined company’s plans, market and other expectations, objectives, intentions, as well as any expectations or projections with respect to the combined company, including regarding future dividends and market valuations, and other statements that are not historical facts.

The following additional factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the ability to obtain regulatory and stockholder approvals for the transaction; market volatility; unexpected costs or unexpected liabilities that may arise from the transaction, whether or not consummated; the inability to retain key personnel; ARCP’s ability to achieve the cost-savings and synergies contemplated by the proposed transaction within the expected time frame; ARCP’s ability to promptly and effectively integrate the businesses of CCPT III and ARCP; disruption from the proposed transaction making it more difficult to maintain relationships with tenants; the business plans of the tenants of the respective parties; continuation or deterioration of current market conditions; and future regulatory or legislative actions that could adversely affect the companies. Additional factors that may affect future results will be contained in ARCP’s filings with the SEC from time to time. ARCP disclaims any obligation to update and revise statements contained in these materials based on new information or otherwise.

Contacts

Tom Johnson / Ian Campbell	Brian S. Block, EVP & CFO
Abernathy MacGregor	American Realty Capital Properties, Inc.
tbj@abmac.com / idc@abmac.com	bblock@arlcap.com
Ph: 212-371-5999 / 213-630-6550	Ph: 212-415-6500
Anthony J. DeFazio
Diccicco Battista Communications
tdefazio@dbcworks.com
Ph: 484-342-3600

EX-99.4

CONTACTS
From: Anthony J. DeFazio	For: Brian S. Block, EVP & CFO
Diccicco Battista Communications	American Realty Capital Properties, Inc.
tdefazio@dbcworks.com	bblock@arlcap.com
Ph: 484-342-3600	Ph: 212-415-6500

FOR IMMEDIATE RELEASE

American Realty Capital Properties Announces $650 Million of Additional Commitments to its Existing
Credit Facility and an Increased Accordion Option Allowing for Maximum Borrowings Under the Credit
Facility Up To $2.5 Billion

New York, New York, March 20, 2013 - American Realty Capital Properties, Inc. (“ARCP” or the “Company”) (NASDAQ: “ARCP”) announced today that it has received additional commitments totaling $650.0 million to its existing credit facility. The additional commitments increase the total amount available to the Company to $1.65 billion, subject to customary conditions.

The Company also announced that the accordion feature of its credit facility has been increased to allow the Company, with additional commitments, to borrow up to $2.5 billion.

“We appreciate the continued support of our lending group, as we continue to grow our investment portfolio and see further pipeline opportunities in the market,” commented Nicholas S. Schorsch, Chairman and Chief Executive Officer of ARCP. Mr. Schorsch added, “The additional borrowing capacity provides us with increased flexibility for executing our growth plans, as well as very favorable cost of debt.”

Important Notice

ARCP is a publicly traded Maryland corporation listed on The NASDAQ Global Select Market that qualified as a real estate investment trust for U.S. federal income tax purposes for the taxable year ended December 31, 2011, focused on acquiring and owning single tenant freestanding commercial properties subject to net leases with high credit quality tenants. Additional information about the Company can be found on its website at www.arcpreit.com.

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause the outcome to be materially different. In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words.

For more information about this announcement, please contact Tony DeFazio at 484-342-3600 or tdefazio@dbcworks.com.