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
Date of Report (Date of earliest event reported): November 26, 2013 (November 25, 2013)
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 or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
405 Park Avenue, 15th Floor, New York, New York 10022 |
(Address, including zip code, of Principal Executive Offices) |
(212) 415-6500 |
Registrant's telephone number, including area code: |
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:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
EXPLANATORY NOTE
On July 1, 2013, as previously disclosed, American Realty Capital Properties, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “ARCT IV Merger Agreement”) with American Realty Capital Trust, IV, Inc. (“ARCT IV”), which provides for a merger of ARCT IV into a subsidiary of the Company (the “ARCT IV Merger”). The Company has filed a Registration Statement on Form S-4 and amendments thereto relating to the ARCT IV Merger (the “ARCT IV S-4”).
Additionally, on October 22, 2013, as previously disclosed, the Company entered into an Agreement and Plan of Merger (the “Cole Merger Agreement”) with Cole Real Estate Investments, Inc. (“Cole”), which provides for the merger of Cole into a subsidiary of the Company (the “Cole Merger”). The Company has filed a Registration Statement on Form S-4 and relating to the Cole Merger (the “Cole S-4”).
One of the purposes of this Current Report on Form 8-K is, in addition to providing the information in Item 8.01 hereto, to file under the Securities Exchange Act of 1934, as amended, certain material information relating to the ARCT IV Merger and the Cole Merger. Such information is provided below and in Exhibits 99.1 – 99.2 attached hereto (which are incorporated by reference herein), and consists of (i) certain risk factors relating to the ARCT IV Merger and the Cole Merger and (ii) certain business information about the parties to the ARCT IV Merger Agreement and the Cole Merger Agreement. The information included in Exhibits 99.1 and 99.2 has been previously been filed previously as part of the ARCT IV S-4 and the Cole S-4, and is being filed herewith so that it can be incorporated by reference in registration statements on Form S-3 filed under the Securities Act of 1933, as amended. This Current Report on Form 8-K is also being filed for the purpose of providing an updated list of the Company’s subsidiaries, which is included in Exhibit 21 hereto.
Item 8.01. Other Events.
Entry into Equity Distribution Agreement in Respect of WKSI ATM Program
Consistent with the Company’s implementation of its previously announced long-term financing strategy, the Company’s board of directors approved the creation of a new “at-the-market” offering program designed to provide flexibility in the implementation of the Company’s future equity financing strategy while diversifying its existing banking relationships. Accordingly, on November 25, 2013, the Company and ARC Properties Operating Partnership, L.P. entered into an equity distribution agreement (the “Agreement”) with Barclays Capital Inc., Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Capital One Securities, Inc., Ladenburg Thalmann & Co. Inc. and JMP Securities, LLC (each an “Agent” and collectively, the “Agents”). Under the terms of the Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate offering price of up to $500,000,000 (the “Shares”) through the Agents, each Agent acting as the Company’s agent for the offer and sale of the Shares.
Each Agent will be entitled to compensation equal to 2% of the gross proceeds from the sale of the Shares sold through it under the Agreement. Under the terms of the Agreement, the Company also may sell Shares to any Agent as principal for its own account. Sales of the Shares, if any, will be made in any method permitted by law deemed to be an ‘‘at the market’’ offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, by means of ordinary brokers’ transactions at prices prevailing at the time of sale or at prices related to such prevailing market prices or as otherwise agreed with the Agents, including sales made directly on The NASDAQ Global Select Market, or sales made through a market maker other than on an exchange.
The Agents are not required to sell any specific number or dollar amount of the Shares, but as instructed by the Company will make all sales using commercially reasonable efforts consistent with normal sales and trading practices, as the Company’s agent and subject to the terms of the Agreement. The offering of the Shares pursuant to the Agreement will terminate upon the earlier of (1) the sale of the Shares having an aggregate offering price of $500,000,000 and (2) the earlier termination of the Agreement by either the Company or the Agents upon 10 days prior notice, or by the Agents upon the occurrence of certain customary events. The Shares sold pursuant to the Agreement will be sold through only one Agent on any given day.
Realty Capital Securities, LLC, a FINRA-registered broker-dealer that is affiliated with the Company and its sponsor, will receive an advisory fee from the Company in an aggregate amount of $150,000 in connection with structuring and advisory services it has provided in connection with the offer and sale of the Shares.
The Shares will be issued pursuant to the Company's Registration Statement on Form S-3 (File No. 333- 187240). The Company intends to file a prospectus supplement, on November 26, 2013, to the prospectus, with the Securities and Exchange Commission in connection with the offer and sale of the Shares.
The Company is currently engaged in, and expects in the future to engage in, investment banking, brokerage, lending and other dealings with one or more of the Agents and their affiliates in the ordinary course of business and to pay customary fees and commissions for their services on those transactions.
As previously mentioned, the Company expects to be able to offer and sell Shares in the future and from time to time and may use the net proceeds from any sales under its new “at-the-market” offering program to fund previously announced property and strategic acquisitions, as well as to fund other general corporate purposes.
The foregoing summary description of the Agreement is not complete and is qualified in its entirety by reference to the Agreements, a copy of which is attached hereto as Exhibit 1.1 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Description | |||
1.1 | Equity
Distribution Agreement, dated November 25, 2013, between American Realty Capital Properties, Inc., ARC Properties Operating
Partnership, L.P., Barclays Capital Inc., Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., Credit Suisse
Securities (USA) LLC, Capital One Securities, Inc., Ladenburg Thalmann & Co. Inc. and JMP Securities,
LLC. | |||
5.1 | Opinion of Venable LLP regarding the legality of the shares of common stock being issued. | |||
8.1 | Opinion of Proskauer Rose LLP regarding certain tax matters. | |||
21 | List of Subsidiaries. | |||
23.1 | Consent of Venable LLP to the filing of Exhibit 5.1 herewith (included in its opinion filed as Exhibit 5.1). | |||
23.2 | Consent of Proskauer Rose LLP to the filing of Exhibit 8.1 herewith (included in its opinion filed as Exhibit 8.1). | |||
99.1 | Risk Factors. | |||
99.2 | Information about the Company. | |||
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. | ||
November 26, 2013 | By: | /s/ Nicholas S. Schorsch |
Name: | Nicholas S. Schorsch | |
Title: | Chief Executive Officer and | |
Chairman of the Board of Directors |
American Realty Capital Properties, Inc.
Up to $500,000,000 of shares of Common Stock
($0.01 par value per share)
Equity Distribution Agreement
November 25, 2013
Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019
Capital One Securities, Inc.
201 St. Charles Ave., Suite 1830
New Orleans, LA 70170
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, New York 10010
JMP Securities LLC
600 Montgomery Street, Suite 1100
San Francisco, CA 94111
Ladenburg Thalmann & Co. Inc.
570 Lexington Avenue, 12th Floor
New York, New York 10022
Morgan Stanley & Co. LLC
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
American Realty Capital Properties, Inc., a Maryland corporation (the “Company”), and ARC Properties Operating Partnership, L.P., a Delaware limited partnership of which the Company is the sole general partner (the “Operating Partnership”), each confirms its respective agreements (this “Agreement”) with the several distribution agents named above (each, a “Distribution Agent,” and collectively, the “Distribution Agents”) (provided that, the Company may add one or more additional Distribution Agents upon the written agreement of such additional Distribution Agent agreeing to be bound by the terms hereof (which agreement shall be acknowledged in writing by the Company) upon the occurrence of any of the following: (i) the date that is the earlier of (x) one year after the expiration or termination of the Amended and Restated Engagement Letter dated November 13, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the "Engagement Letter") if the Merger (as defined in the Engagement Letter) is consummated with the proceeds of any Bridge Loans under the Commitment Letter (as defined in the Engagement Letter) and (y) the date that the Bridge Loans are repaid in full with the proceeds of any Permanent Debt for which the Managers (as defined in the Engagement Letter) party to the Engagement Letter acted in the capacities set forth in the Engagement Letter; (ii) the date that is three months after the expiration or termination of the Engagement Letter if the Merger is consummated without the funding of any Bridge Loans under the Commitment Letter; or (iii) the date that is one year after the termination or expiration of the Engagement Letter upon the public announcement of the abandonment or termination of the definitive documentation for the Merger (unless the proceeds of the Placement Shares are used for any purpose other than financing the Merger, or in lieu of the Merger, any similar transaction occurring where the Company or any of its affiliates, directly or indirectly, acquires Cole Real Estate Investments, Inc. ("Cole") or any material portion of Cole, in which case it is the date of such termination or expiration); provided that, nothing set forth herein or in any other document or agreement relating hereto shall amend, modify or waive the Company's obligations under the second paragraph of Section 5 of the Engagement Letter) as follows:
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1. Issuance and Sale of Shares. The Company and the Operating Partnership agree that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, the Company may issue and sell through the Distribution Agents, acting as agent and/or principal, shares (the “Placement Shares”) of the Company’s common stock, $0.01 par value per share (the “Common Stock”), having an aggregate offering price of up to $500,000,000 of Placement Shares (the “Maximum Amount”). Notwithstanding anything to the contrary contained herein, the parties hereto agree that compliance with the limitation set forth in this Section 1 regarding the aggregate offering price of the Placement Shares issued and sold under this Agreement shall be the sole responsibility of the Company, and that the Distribution Agents shall not have any obligation in connection with such compliance, provided that the Distribution Agents strictly follow the trading instructions provided pursuant to any Placement Notice (as defined below), including, without limitation, not selling in excess of the number of Placement Shares specified in any Placement Notice. The issuance and sale of Placement Shares through the Distribution Agents shall be effected pursuant to the Registration Statement (as defined below) filed by the Company automatically deemed effective by the Securities and Exchange Commission (the “Commission”), although nothing in this Agreement shall be construed as requiring the Company to use the Registration Statement to issue Common Stock. The obligations of Distribution Agents under this Agreement shall be several, and not joint.
The Company has filed, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (collectively, the “Securities Act”), with the Commission a registration statement on Form S-3 (File No. 333-187240), including a base prospectus, relating to certain securities, including the Placement Shares to be issued from time to time by the Company, and which incorporates by reference documents that the Company has filed or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”). The Company has prepared a prospectus supplement to the base prospectus included as part of such registration statement specifically relating to the Placement Shares (the “Prospectus Supplement”). The Company will furnish to the Distribution Agents, for use by the Distribution Agents, copies of the prospectus included as part of such registration statement, as supplemented by the Prospectus Supplement, relating to the Placement Shares. Except where the context otherwise requires, such registration statement, on each date and time that such registration statement and any post-effective amendment thereto became or becomes effective, including all documents filed as part thereof or incorporated by reference therein, and including any information contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act or deemed to be a part of such registration statement pursuant to Rule 430B or 462(b) of the Securities Act, as well as any comparable successor or other registration statement filed by the Company for the sale of shares of its Common Stock, including the Placement Shares, collectively are herein called the “Registration Statement.” The base prospectus, including all documents incorporated or deemed to be incorporated by reference therein, included in the Registration Statement, as it may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or Prospectus Supplement has most recently been filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act, together with the then issued Issuer Free Writing Prospectus(es) (as defined herein), is herein called the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated or deemed to be incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein (the “Incorporated Documents”). For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval System or, if applicable, the Interactive Data Electronic Applications System (collectively, “EDGAR”).
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2. Placements.
(a) Each time that the Company wishes to issue and sell the Placement Shares hereunder (each, a “Placement”), it will notify a Distribution Agent by email notice (or other method mutually agreed to in writing by the parties) (a “Placement Notice”) containing the parameters in accordance with which it desires the Placement Shares to be sold, which shall at a minimum include the number of Placement Shares to be issued, the time period during which sales are requested to be made, any limitation on the number of Placement Shares that may be sold in any one Trading Day (as defined in Section 3), and any minimum price below which sales may not be made. A form of Placement Notice, which contains such minimum required sales parameters, is attached hereto as Exhibit 1. A Placement Notice shall originate from any of the individuals from the Company set forth on Schedule 1 (with a copy to the Chief Executive Officer of the Company), and shall be sent to the representative(s) of the applicable Distribution Agent set forth on Schedule 1, as amended from time to time. If the applicable Distribution Agent wishes to accept such proposed terms included in the Placement Notice (which it may decline to do for any reason in its sole discretion) or, following discussion with the Company, the applicable Distribution Agent wishes to accept amended terms, such Distribution Agent will, prior to 4:30 p.m. (New York City Time) on the business day following the business day on which such Placement Notice is delivered to such Distribution Agent, issue to the Company a notice by email (or other method mutually agreed to in writing by the parties) addressed to all of the individuals from the Company and such Distribution Agent set forth on Schedule 1 attached hereto setting forth the terms that such Distribution Agent is willing to accept. Where the terms provided in the Placement Notice are amended as provided for in the immediately preceding sentence, such terms will not be binding on the Company or the applicable Distribution Agent until the Company delivers to such Distribution Agent an acceptance by email (or other method mutually agreed to in writing by the parties) of all of the terms of such Placement Notice, as amended (the “Acceptance”), which email shall be addressed to all of the individuals from the Company and such Distribution Agent as set forth on Schedule 1 attached hereto. The Placement Notice (as amended by the corresponding Acceptance, if applicable) shall be effective upon receipt by the Company of the applicable Distribution Agent’s acceptance of the terms of the Placement Notice or upon receipt by the applicable Distribution Agent of the Company’s Acceptance, as the case may be, unless and until (i) in accordance with the notice requirements set forth in Section 4, such Distribution Agent declines to accept the terms contained therein for any reason, in its sole discretion, (ii) the entire amount of the Placement Shares has been sold, (iii) in accordance with the notice requirements set forth in Section 4, the Company or such Distribution Agent suspends or terminates the Placement Notice, (iv) the Company issues a subsequent Placement Notice with parameters superseding those in the earlier dated Placement Notice or (v) this Agreement has been terminated under the provisions of Section 11. The amount of any discount, commission or other compensation to be paid by the Company to any Distribution Agent, in connection with the sale of the Placement Shares shall be determined in accordance with the terms set forth on Schedule 2 attached hereto. It is expressly acknowledged and agreed that neither the Company nor any Distribution Agent will have any obligation whatsoever with respect to a Placement or any Placement Shares unless and until the Company delivers a Placement Notice to such Distribution Agent and either (i) such Distribution Agent accepts the terms of such Placement Notice or (ii) where the terms of such Placement Notice are amended, the Company accepts such amended terms by means of an Acceptance pursuant to the terms set forth above, and then only upon the terms specified in the Placement Notice (as amended by the corresponding Acceptance, if applicable) and herein. In the event of a conflict between the terms of this Agreement and the terms of a Placement Notice (as amended by the corresponding Acceptance, if applicable), the terms of the Placement Notice (as amended by the corresponding Acceptance, if applicable) will control. Notwithstanding the foregoing, in the event the Company engages the applicable Distribution Agent for a sale of Placement Shares that would constitute a “distribution,” within the meaning of Rule 100 of Regulation M under the Exchange Act, the Company and such Distribution Agent will agree to compensation that is customary for such Distribution Agent with respect to such transactions.
(b) Notwithstanding any other provision of this Agreement, the Company shall not offer, sell or deliver, or request the offer or sale of, any Placement Shares and, by notice to each applicable Distribution Agent given by telephone (confirmed promptly by email), shall cancel any instructions for the offer or sale of any Placement Shares, and no Distribution Agent shall be obligated to offer or sell any Placement Shares, (i) during any period in which the Company’s insider trading policy, as it exists on the date of this Agreement, would prohibit the purchases or sales of the Company’s Common Stock by its officers or directors, (ii) during any other period in which the Company is, or could be deemed to be, in possession of material non-public information or (iii) except as provided in Section 2(c) below, at any time from and including the date (each, an “Announcement Date”) on which the Company shall issue a press release containing, or shall otherwise publicly announce, its earnings, revenues or other results of operations (each, an “Earnings Announcement”) through and including the time that is 24 hours after the time that the Company files (a “Filing Time”) a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K that includes consolidated financial statements as of and for the same period or periods, as the case may be, covered by such Earnings Announcement.
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(c) If the Company wishes to offer, sell or deliver Placement Shares at any time during the period from and including an Announcement Date through and including the time that is 24 hours after the corresponding Filing Time, the Company shall (i) prepare and deliver to the applicable Distribution Agent a Current Report on Form 8-K which shall include substantially the same financial and related information as was set forth in the relevant Earnings Announcement (other than any earnings projections, similar forward-looking data and officers’ quotations) (each, an “Earnings 8-K”), in form and substance reasonably satisfactory to such Distribution Agent, and obtain the consent of such Distribution Agent to the filing thereof (such consent not to be unreasonably withheld), (ii) afford such Distribution Agent the opportunity to conduct a due diligence review in accordance with Section 7(k) hereof and (iii) file such Earnings 8-K with the Commission, then the provisions of clause (iii) of Section 2(b) shall not be applicable for the period from and after the time at which the foregoing conditions shall have been satisfied (or, if later, the time that is 24 hours after the time that the relevant Earnings Announcement was first publicly released) through and including the time that is 24 hours after the Filing Time of the relevant Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be. For purposes of clarity, the parties hereto agree that this Section 2(c) shall in no way affect or limit the operation of the provisions of clauses (i) and (ii) of Section 2(b), which shall have independent application.
(d) In the event of a conflict between the terms of this Agreement and the terms of a Placement Notice, the terms of such Placement Notice will control.
3. Sale of Placement Shares by the Distribution Agents. Subject to the terms and conditions herein set forth, upon the Company’s issuance of a Placement Notice to a Distribution Agent, and unless the sale of the Placement Shares described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, such Distribution Agent, for the period specified in the Placement Notice, will use its commercially reasonable efforts consistent with its customary trading and sales practices and applicable state and federal laws, rules and regulations and the rules, regulations and policies of The NASDAQ Global Select Market (“Nasdaq”) to sell such Placement Shares up to the amount allocated to such Distribution Agent, and otherwise in accordance with the terms of such Placement Notice. The applicable Distribution Agent, acting under a Placement Notice, will provide written confirmation to the Company (including by email correspondence to all the individuals from the Company set forth on Schedule 1), no later than the opening of the Trading Day (as defined below) immediately following the Trading Day on which sales of Placement Shares have been made hereunder setting forth the number of Placement Shares sold on such day, the compensation payable by the Company to such Distribution Agent pursuant to Section 2 with respect to such sales, and the Net Proceeds (as defined below) payable to the Company. Except to the extent prohibited by the Placement Notice, a Distribution Agent may sell Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, including, without limitation, sales made directly on Nasdaq, on any other existing trading market for the Common Stock or to or through a market maker. With the prior written consent of the Company and to the extent not prohibited by the Placement Notice (as amended by the corresponding Acceptance, if applicable), a Distribution Agent may also sell Placement Shares by any other method permitted by law, including in privately negotiated transactions. During the term of this Agreement and notwithstanding anything to the contrary herein, each Distribution Agent agrees that in no event will it or any Agent Affiliate (as defined in Section 9(a), below) engage in any market making, bidding, stabilization or other trading activity with regard to the Common Stock if such activity would be prohibited under Regulation M or other anti-manipulation rules under the Securities Act. For the purposes hereof, “Trading Day” means any day on which shares of the Common Stock are purchased and sold on the principal market on which the Common Stock is listed or quoted.
4. Suspension of Sales. The Company or any Distribution Agent acting pursuant to a Placement Notice, as applicable, may, upon notice to the other applicable party with respect to such Placement Notice in writing (including by email correspondence if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or email correspondence), suspend all or part of the sale of Placement Shares; provided, however, in either case, that such suspension shall not affect or impair the other party’s obligations with respect to any Placement Shares sold hereunder prior to the receipt of such suspension notice. Each of the parties agrees that no such suspension notice under this Section 4 shall be effective against any other party unless it is delivered to all the individuals of the applicable party named on Schedule 1 hereto, as such schedule may be amended from time to time for the applicable party.
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5. Representations and Warranties of the Company and the Operating Partnership. The Company and the Operating Partnership, jointly and severally, represent and warrant to each Distribution Agent that as of each Applicable Time (as defined below):
(a) Compliance with Registration Requirements. The Registration Statement has been filed with the Commission under the Securities Act and declared effective by the Commission under the Securities Act. The Company has complied with all requests of the Commission for additional or supplemental information. No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the Company’s knowledge, are contemplated or threatened by the Commission. The Company satisfied all applicable requirements for the use of Form S-3 under the Securities Act when the Registration Statement was filed. The Commission has not issued an order preventing or suspending the use of the base prospectus, any Issuer Free Writing Prospectus (as defined below) or the Prospectus relating to the proposed offering of the Placement Shares and no proceedings for such purpose have been instituted or are pending or, to the Company’s knowledge, are contemplated or threatened by the Commission. The Prospectus delivered to each Distribution Agent for use in connection with the offering of Placement Shares was, at the time of such delivery, identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. As filed, the Registration Statement complies in all material respects with the requirements of the Securities Act.
(i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Registration Statement or the Prospectus or any amendment or supplement thereto (or, if an amendment with respect to any such document was filed, when such amendment was filed) complied, or will comply when so filed, in all material respects with the Securities Act or Exchange Act and the applicable rules and regulations of the Commission thereunder, as applicable, and no such document when it was filed (or, if an amendment with respect to any such document was filed, when such amendment was filed), contained, or will contain when it is so filed, an untrue statement of a material fact or omitted, or will omit, to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made not misleading, (ii) each part of the Registration Statement and each amendment thereto at each respective time the Registration Statement and each amendment thereto became effective, at each deemed effective date pursuant to Rule 430B(f)(2) of the Securities Act and as of each Settlement Date (as defined below), as the case may be, did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement as of the date hereof does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iv) the Registration Statement and each amendment thereto, at each respective time the Registration Statement and each amendment thereto became effective, at each deemed effective date pursuant to Rule 430B(f)(2) of the Securities Act and as of each Settlement Date, as the case may be, and as of the date hereof, and the Prospectus, when filed, complied and will comply in all material respects with the Securities Act, (v) each Issuer Free Writing Prospectus relating to the Placement Shares, if any, when considered together with the Prospectus and any amendments and supplements thereto, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (vi) as of its date, the date hereof, the Applicable Time, and each Settlement Date, the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(b) Offering Materials Furnished to Distribution Agents. The Company has delivered to each Distribution Agent a complete copy of the Registration Statement and of each opinion, consent and certificate of experts filed as a part thereof, and conformed copies of the Registration Statement (without exhibits) and the Prospectus, as amended or supplemented, and any Issuer Free Writing Prospectus reviewed and consented to by each Distribution Agent, in such quantities and at such places as such Distribution Agent has reasonably requested.
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(c) Prospectus. Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus or any such amendment or supplement was issued, as of the date hereof and at each Applicable Time, as the case may be, included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing sentence does not apply to statements in or omissions from the Prospectus or any amendments or supplements thereto based upon and in conformity with written information furnished to the Company by the Distribution Agents specifically for use therein. “Applicable Time” means the date of this Agreement, each Representation Date (as defined in Section 7(m) hereof), the date on which a Placement Notice is given, any date on which Placement Shares are sold hereunder, and such other times as agreed to by the Company and a Distribution Agent.
(d) Distribution of Materials; Free Writing Prospectuses. The Company is not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 and 433 under the Securities Act. The Company has not, directly or indirectly, distributed and will not distribute any prospectus or other offering material in connection with the offering and sale of the Placement Shares other than the Prospectus and other materials, if any, permitted under the Securities Act to be distributed. Each “issuer free writing prospectus” as defined in Rule 433 of the Securities Act, relating to the Placement Shares (“Issuer Free Writing Prospectus”) that (i) is required to be filed with the Commission by the Company, (ii) is a “road show” that is a “written communication” within the meaning of Rule 433(d)(8)(i) of the Securities Act whether or not required to be filed with the Commission or (iii) is exempt from filing pursuant to Rule 433(d)(5)(i) of the Securities Act, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) of the Securities Act, as of its issue date and as of each Applicable Time, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any incorporated document deemed to be a part thereof that has not been superseded or modified. The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by any Distribution Agent specifically for use therein. The Company has satisfied or will satisfy the conditions in Rule 433 of the Securities Act so as not to be required to file with the Commission any electronic road show. The Company has not prepared, used or referred to, and will not, without the applicable Distribution Agent’s prior written consent, prepare, use or refer to, any Issuer Free Writing Prospectus in connection with a Placement.
(e) The Equity Distribution Agreement. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company and the Operating Partnership, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles regardless of whether considered in a proceeding in equity or at law.
(f) Authorization of the Placement Shares. The Placement Shares have been duly authorized for issuance and sale pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and the issuance and sale of the Placement Shares is not subject to any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase the Placement Shares.
(g) Interactive Data. The interactive data in eXtensible Business Reporting Language incorporated by reference in the Placement Notice, Prospectus Supplement and the Prospectus fairly presents the information called for in all material respects and has been prepared in all material respects in accordance with the Commission’s rules and guidelines applicable thereto.
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(h) No Material Adverse Change. Except as otherwise disclosed in the Prospectus, subsequent to the date of the most recent financial statements of the Company included or incorporated by reference in the Registration Statement and the Prospectus: (i) there is has not been any material change in the capital stock, long-term debt, notes payable or current portion of long-term debt of the Company or any of its subsidiaries; (ii) there has been no material adverse change, or any development that could be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, results of operations, properties, business affairs or business prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries (including without limitation the Operating Partnership), considered as one entity (any such change is called a “Material Adverse Change”); (iii) the Company and its subsidiaries (including without limitation the Operating Partnership), considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; (iv) there has been no dividend or distribution of any kind declared, paid or made by the Company (other than regular monthly cash dividends consistent with past practice) or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock; and (v) neither the Company nor any of its subsidiaries has sustained any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or any action, order or decree of any court or arbitrator or governmental or regulatory authority, except in each case as otherwise disclosed in the Registration Statement and the Prospectus, and except as would not, individually or in the aggregate, be expected to result in a Material Adverse Change.
(i) Independent Accountants.
(i) Grant Thornton LLP, who has expressed their opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) filed with the Commission as a part of the Registration Statement and included in the Prospectus are (x) independent public or certified public accountants with respect to the Company, American Realty Capital Trust IV, Inc., the 120 properties acquired or contracted to be acquired by the Company from Fortress Investment Group LLC (or its affiliates), and the 33 properties acquired or contracted to be acquired by the Company from Inland American Real Estate Trust, Inc. (or its affiliates), as required by the Securities Act and the Exchange Act as required by the Securities Act and the Exchange Act and (y) in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X.
(ii) McGladrey LLP, who has expressed their opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) filed with the Commission as a part of the Registration Statement and included in the Prospectus are (x) independent public or certified public accountants with respect to the Company and CapLease, Inc., as required by the Securities Act and the Exchange Act and (y) in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X.
(iii) Deloitte & Touche LLP, who has expressed their opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) filed with the Commission as a part of the Registration Statement and included in the Prospectus are (x) independent public or certified public accountants with respect to the Company and Cole Real Estate Investments, Inc., as required by the Securities Act and the Exchange Act and (y) in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X.
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(j) Preparation of the Financial Statements. The financial statements of the Company filed with the Commission as a part of the Registration Statement and included in the Prospectus, as well as the financial statements of each of American Realty Capital Trust IV, Inc., CapLease, Inc. and Cole Real Estate Investments, Inc. included in the reports filed by the Company and incorporated by reference in the R Prospectus, present fairly in all material respects the financial position of the Company and its subsidiaries (including, without limitation, the Operating Partnership), American Realty Capital Trust IV, Inc., CapLease, Inc. and Cole Real Estate Investments, Inc., as the case may be, as of and at the dates indicated and the results of their operations and cash flows for the periods specified(subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments). The statement of revenues and certain expenses of the portfolio of 471 properties (the “GE Capital Portfolio”) that the Company agreed to acquire from affiliates of GE Capital Corp. (of which 447 properties were actually acquired) included in the reports filed by the Company and incorporated by reference into the Prospectus, present fairly in all material respects such revenues and certain expenses (subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments). The financial statements have been prepared in conformity with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods involved, except (i) as may be expressly stated in the related notes thereto and (ii) the financial statements relating to the GE Capital Portfolio are subject to the limitations set forth in Rule 3-14 of Regulation S-X. No other financial statements or supporting schedules are required to be included in the Registration Statement or the Prospectus. Any historical financial data set forth in the Prospectus fairly presents the information set forth therein on a basis consistent with that of the audited financial statements contained in the Registration Statement and the Prospectus. Any pro forma consolidated financial statements of the Company and its subsidiaries and the related notes thereto set forth in the Prospectus and in the Registration Statement present fairly the information contained therein, have been prepared in accordance with Article 11 of Regulation S-X with respect to pro forma financial statements and have been properly presented on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. No person who has been suspended or barred from being associated with a registered public accounting firm, or who has failed to comply with any sanction pursuant to Rule 5300 promulgated by the Public Company Accounting Oversight Board (including the rules and regulations promulgated by such entity, the “PCAOB”), has participated in or otherwise aided in the preparation of, or audited, the financial statements, supporting schedules or other financial data filed with the Commission as a part of the Registration Statement and included in the Prospectus (it being agreed that the foregoing representation is made only to the Company’s knowledge with respect to any person that is not a director, officer or employee of the Company or any of its subsidiaries). All disclosures contained in the Registration Statement, the Prospectus or any Prospectus Supplement, or incorporated by reference therein, regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable.
(k) Company’s Accounting System. The Company and each of its subsidiaries maintain a system of internal accounting controls that comply with the requirements of the Exchange Act and are sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. There has not been and is no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and since the Company’s formation, there has been no change in the Company’s internal control over financial reporting that has materially affected, or could materially affect, the Company’s internal control over financial reporting.
(l) Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company and its subsidiaries has been duly incorporated or organized, as the case may be, and is validly existing as a corporation, partnership or limited liability company, as applicable, in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority (corporate or other) to own, lease and operate its properties and to conduct its business as described in the Prospectus and, in the case of the Company, to enter into and perform its obligations under this Agreement. Each of the Company and each subsidiary is duly qualified as a foreign corporation, partnership or limited liability company, as applicable, to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, result in a Material Adverse Change. All of the issued and outstanding capital stock or other equity or ownership interests of each subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and, except as set forth in the Prospectus, are owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or adverse claim. As of the date hereof, except as set forth in Schedule 3 hereto, the Company does not own or control, directly or indirectly, any corporation, association or other entity other than (i) the subsidiaries listed in Exhibit 21 to the Company’s Annual Report on Form 10-K (filed by the Company with the Commission on February 28, 2013 (“Exhibit 21”)and (ii) such other entities omitted from Exhibit 21 which, when such omitted entities are considered in the aggregate as a single subsidiary, would not constitute a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X.
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(m) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectus (other than for subsequent issuances, if any, pursuant to employee benefit plans described in the Prospectus or upon the exercise of outstanding options described in the Prospectus). The capital stock of the Company conforms in all material respects to the description thereof contained in the Prospectus. All of the issued and outstanding capital stock of the Company has been duly authorized and validly issued and is fully paid and nonassessable. None of the outstanding capital stock of the Company was issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those accurately described in the Prospectus. The description of the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the Prospectus accurately and fairly presents in all material respects the information required to be shown with respect to such plans, arrangements, options and rights.
(n) Stock Exchange Listing. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on Nasdaq, and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Placement Shares under the Exchange Act or delisting the Common Stock from Nasdaq, nor has the Company received any notification that the Commission or Nasdaq is contemplating terminating such registration or listing.
(o) Non-Contravention of Laws and Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any of its subsidiaries is (i) in breach or violation of (A) its charter or by-laws, partnership agreement or operating agreement or similar organizational document, as applicable, (B) any applicable federal, state, local or foreign law, regulation or rule, except as would not, individually or in the aggregate, result in a Material Adverse Change, or (C) any applicable rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, the rules and regulations of Nasdaq) or (ii) in default (or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound (including, without limitation, any credit agreement, indenture, pledge agreement, security agreement or other instrument or agreement evidencing, guaranteeing, securing or relating to indebtedness of the Company or any of its subsidiaries), or to which any of the property or assets of the Company or any of its subsidiaries is subject (each, an “Existing Instrument”), except for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change. The Company’s execution, delivery and performance of this Agreement, consummation of the transactions contemplated hereby and by the Prospectus and the issuance and sale of the Placement Shares (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the charter or by-laws, partnership agreement or operating agreement or similar organizational document of the Company or any subsidiary, as applicable, (ii) will not conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument and (iii) will not result in any violation of any federal, state, local or foreign law, regulation or rule, administrative or court decree or any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including, without limitation, the rules and regulations of Nasdaq) applicable to the Company or any subsidiary, except in the case of clause (ii), for those conflicts, breaches, defaults or Debt Repayment Triggering Events that would not, individually or in the aggregate, result in a Material Adverse Change. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for the Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Prospectus, except such as have been obtained or made by the Company and are in full force and effect under the Securities Act, applicable state securities or blue sky laws, Nasdaq and the Financial Industry Regulatory Authority, Inc. (“FINRA”). As used herein, a “Debt Repayment Triggering Event” means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.
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(p) No Material Actions or Proceedings. Except as disclosed in the Prospectus, there are no legal or governmental actions, suits or proceedings pending or, to the Company’s knowledge, threatened (i) against or affecting the Company or any of its subsidiaries (including without limitation the Operating Partnership), (ii) which have as the subject thereof any officer or director of, or property owned or leased by, the Company or any of its subsidiaries (including without limitation the Operating Partnership) or (iii) relating to environmental or discrimination matters, where in any such case (A) (i) there is a reasonable possibility that such action, suit or proceeding might be determined adversely to the Company, such subsidiary or such officer or director, and (ii) any such action, suit or proceeding, if so determined adversely, would be expected to result in a Material Adverse Change or adversely affect the consummation of the transactions contemplated by this Agreement or (B) any such action, suit or proceeding is or would be material in the context of the sale of Placement Shares. No material labor dispute with the employees of the Company or any of its subsidiaries (including without limitation the Operating Partnership) exists or, to the Company’s knowledge, is threatened or imminent.
(q) Intellectual Property Rights. The Company and its subsidiaries own or possess sufficient trademarks, trade names, patent rights, copyrights, domain names, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct their businesses as now conducted. Neither the Company nor any of its subsidiaries has received any notice of infringement or conflict with asserted Intellectual Property Rights of others. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Prospectus and are not described therein. None of the technology employed by the Company or any of its subsidiaries has been obtained or is being used by the Company or any of its subsidiaries in violation of any contractual obligation binding on the Company or any of its subsidiaries or any of its or its subsidiaries’ officers, directors or employees or otherwise in violation of the rights of any persons, except for such violations that would not, individually or in the aggregate, be expected to result in a Material Adverse Change.
(r) All Necessary Permits, etc. The Company and each subsidiary possess such valid and current certificates, authorizations, licenses or permits issued by the appropriate state, local, federal or foreign regulatory agencies or bodies necessary to conduct their respective businesses, except where the failure so to possess would not individually or in the aggregate, be expected to result in a Material Adverse Change, and neither the Company nor any subsidiary has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization, license or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would be expected to result in a Material Adverse Change.
(s) Title to Properties. Except as disclosed in the Registration Statement, the Company and each of its subsidiaries has good and marketable title to all of the real and personal property and other assets reflected as owned in the financial statements referred to in Section 5(j) above (or elsewhere in the Prospectus), in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, adverse claims and other defects, except such as do not materially and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such property by the Company or such subsidiary. Except as disclosed in the Registration Statement, none of the real property so owned by the Company or any of its subsidiaries (the “Real Property”) is subject to any options or rights of first refusal to purchase all or part of such real property or any interest therein. The real property, improvements, equipment and personal property held under lease by the Company or any subsidiary are held under valid and enforceable leases, with such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property by the Company or such subsidiary.
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(t) No Violation of Laws Pertaining to Real Properties. None of the Company nor any of its subsidiaries knows of any violation of any municipal, state or federal law, rule or regulation (including those pertaining to environmental matters) concerning any of the Real Property or any parts thereof, except for such violations which would not, individually or in the aggregate, materially and adversely affect the value of any such Real Property or the use or proposed use of any such Real Property by the Company, its subsidiaries or any tenant operators. No written notice of any condemnation of or zoning change affecting the Real Properties or any parts thereof has been received, or, to the knowledge of the Company, threatened, that if consummated would, individually or in the aggregate, be expected to result in a Material Adverse Change. Each of the Real Properties complies with all applicable zoning laws, ordinances, regulations, development agreements, reciprocal easement agreements and deed restrictions or other covenants in all material respects and, if and to the extent there is a failure to comply, such failure does not materially and adversely affect the value, use or proposed use of any of the Real Properties and will not result in a forfeiture or reversion of title.
(u) Tax Law Compliance. The Company and its subsidiaries have filed all necessary federal, state and foreign income and franchise tax returns and have paid all taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them. The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 5(j) above in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company or any of its subsidiaries has not been finally determined. No subsidiary of the Company that is a limited partnership or limited liability company has made an election under Section 7701 of the Internal Revenue Code of 1986, as amended (the “Code”), to change its default classification for federal income tax purposes.
(v) Company Not an “Investment Company”. The Company is not, and will not be, either after receipt of payment for the Placement Shares or after the application of the proceeds therefrom as described under “Use of Proceeds” in the Prospectus, an “investment company” within the meaning of Investment Company Act of 1940, as amended.
(w) Insurance. Each of the Company and its subsidiaries are insured with policies in such amounts and with such deductibles and covering such risks as it reasonably deems adequate for its business, and the real property owned by the Company and its subsidiaries is appropriately insured by institutions it reasonably believes to be financially sound. The Company has no reason to believe that it or any subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change.
(x) No Price Stabilization or Manipulation; Compliance with Regulation M. Neither the Company nor any of its subsidiaries nor any of their respective directors, officers, affiliates or controlling persons has taken, directly or indirectly, any action designed to or that might cause or result in stabilization or manipulation of the price of the Common Stock or any other “reference security” (as defined in Rule 100 of Regulation M under the Exchange Act (“Regulation M”)) whether to facilitate the sale or resale of the Placement Shares or otherwise, and has taken no action which would directly or indirectly violate Regulation M.
(y) Related Party Transactions. There are no business relationships or related-party transactions involving the Company or any of its subsidiaries or any other person required to be described in the Prospectus which have not been described as required in all material respects. Neither the Company nor any of its subsidiaries has extended or maintained credit, arranged for the extension of credit, or renewed any extension of credit, in the form of a personal loan, to or for any director or executive officer (or equivalent thereof) of the Company and/or such subsidiary except for such extensions of credit as are permitted by Section 13(k) of the Exchange Act.
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(z) FINRA Matters. All of the information provided to the Distribution Agents or to counsel for the Distribution Agents by the Company, its officers and directors in connection with letters, filings or other supplemental information provided to FINRA pursuant to FINRA Rule 5110, 5121 or 5190 is true, complete and correct in all material respects.
(aa) Statistical and Market-Related Data. The statistical, demographic and market-related data included in the Registration Statement and the Prospectus are based on or derived from sources that (i) the Company has no reason to believe are unreliable or inaccurate or (ii) represent the Company’s good faith estimates that are made on the basis of data derived from such sources.
(bb) No Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any employee or agent of the Company or any subsidiary, has made any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law or of the character required to be disclosed in the Registration Statement and the Prospectus.
(cc) Disclosure Controls and Procedures; Deficiencies in or Changes to Internal Control Over Financial Reporting. The Company and its subsidiaries (including, without limitation, the Operating Partnership) have established and maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), which (i) are designed to ensure that material information relating to the Company, including its consolidated subsidiaries (including, without limitation, the Operating Partnership), is made known to the Company’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; (ii) have been evaluated by management of the Company for effectiveness as of the end of the Company’s most recent fiscal quarter; and (iii) are effective in all material respects to perform the functions for which they were established. The Company is not aware of (i) any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are likely to adversely affect the Company’s ability to record, process, summarize and report financial information or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. The Company is not aware of any change in its internal control over financial reporting that has occurred during its most recent fiscal quarter that has materially affected, or is likely to materially affect, the Company’s internal control over financial reporting.
(dd) Compliance with Sarbanes-Oxley Act. The Company is in compliance with, and there has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply, in all material respects, the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (collectively, “SOX”), including Section 402 related to loans and Sections 302 and 906 related to certifications.
(ee) Compliance with Environmental Laws. Except as would not, individually or in the aggregate, result in a Material Adverse Change, (i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (ii) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, and (iii) there are no pending or, to the Company’s knowledge, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries.
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(ff) ERISA Compliance. Except as otherwise disclosed in the Prospectus, the Company and its subsidiaries and any “employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (collectively, “ERISA”)) established or maintained by the Company, its subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance with ERISA, except as would not, individually or in the aggregate, result in a Material Adverse Change. “ERISA Affiliate” means, with respect to the Company or a subsidiary, any member of any group of organizations described in Sections 414(b),(c),(m) or (o) of the Code of which the Company or such subsidiary is a member. No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee pension benefit plan” (as defined under ERISA) established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates. No “employee pension benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates, if such “employee pension benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to incur any liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee pension benefit plan,” or (ii) Sections 412, 4971 or 4975 of the Code or (iii) Section 4980B of the Code as a result of a failure to comply with such section. Except as would not, individually or in the aggregate, result in a Material Adverse Change, each “employee pension benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.
(gg) Brokers. Except as otherwise disclosed in the Prospectus, there is no broker, finder or other party that is entitled to receive from the Company any brokerage or finder’s fee or other fee or commission as a result of any transactions contemplated by this Agreement.
(hh) Dividend Restrictions. Except as otherwise disclosed in the Prospectus, no subsidiary of the Company is prohibited or restricted, directly or indirectly, from paying dividends to the Company, or from making any other distribution with respect to such subsidiary’s equity securities or from repaying to the Company or any other subsidiary of the Company any amounts that may from time to time become due under any loans or advances to such subsidiary from the Company or from transferring any property or assets to the Company or to any other subsidiary, except as may be prohibited or restricted by law.
(ii) Foreign Corrupt Practices Act. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person acting on behalf of the Company or any of its subsidiaries is aware of or has taken any action, directly or indirectly, that has resulted or would result in a violation of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and the Company and its subsidiaries and, to the knowledge of the Company, the Company’s affiliates have conducted their respective businesses in compliance with the FCPA.
(jj) Money Laundering Laws. The operations of the Company and its subsidiaries are, and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
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(kk) REIT Status. The Company is organized as and operates in conformity with the requirements for qualification and taxation as a “real estate investment trust” (a “REIT”) under Sections 856 through 860 of the Code; and the method of operation for the Company and its subsidiaries as described in the Prospectus will enable the Company to continue to meet the requirements for qualification and taxation as a REIT under the Code.
(ll) OFAC. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or person acting on behalf of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
(mm) Registration Rights. Except as disclosed in the Registration Statement or the Prospectus, there are no persons with registration rights or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act.
(nn) Lending Relationship. Except as otherwise disclosed in the Prospectus, the Company (i) does not have any material lending or other relationship with any bank or lending affiliate of any Distribution Agent and (ii) does not intend to use any of the proceeds from the sale of Placement Shares hereunder to repay any outstanding debt owed to any affiliate of any Distribution Agent.
(oo) Accuracy of Exhibits. There are no contracts or documents which are required to be described in the Registration Statement or to be filed as exhibits thereto which have not been so described and filed as required.
(pp) Trading. Subject to compliance with applicable securities laws, the Company consents to each Distribution Agent trading in the Common Stock for such Distribution Agent’s own account and for the account of its clients at the same time as sales of Placement Shares occur pursuant to this Agreement.
(qq) Operating Partnership.
(i) The Operating Partnership is a limited partnership duly formed and validly existing under the laws of the State of Delaware, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.
(ii) This Agreement is duly and validly authorized, executed and delivered by or on behalf of the Operating Partnership and constitutes a valid and binding agreement of the Operating Partnership enforceable in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of the United States, any state or any political subdivision thereof which affect creditors’ rights generally or by equitable principles relating to the availability of remedies or except to the extent that the enforceability of the indemnity and contribution provisions contained in this Agreement may be limited under applicable securities laws).
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(iii) The execution and delivery of this Agreement and the performance hereunder by the Operating Partnership does not and will not conflict with, or result in a breach of any of the terms and provisions of, or constitute a default under: (i) the Operating Partnership’s or any of its subsidiaries’ agreement of limited partnership, or other organizational documents; (ii) any indenture, mortgage, stockholders’ agreement, voting trust, note, lease or other agreement or instrument to which the Operating Partnership or any of its subsidiaries is a party or by which the Operating Partnership or any of its subsidiaries or any of their properties is bound except, for purposes of this clause (ii) only, for such conflicts, breaches or defaults that could not have or result in, individually or in the aggregate, (A) a material adverse effect on the condition, financial or otherwise, earnings, business affairs or business prospects of the Operating Partnership, or (B) a Material Adverse Change; or (iii) any statute, rule or regulation or order of any court or other governmental agency or body having jurisdiction over the Operating Partnership or any of its properties. No consent, approval, authorization or order of any court or other governmental agency or body has been obtained nor is required for the performance of this Agreement by the Operating Partnership. The Operating Partnership is not in violation of its agreement of limited partnership or other organizational documents.
(iv) There is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Operating Partnership, threatened against or affecting the Operating Partnership.
(v) The Operating Partnership possesses such certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now operated by it, other than those which the failure to possess or own would not have or result in, individually or in the aggregate, (A) a material adverse effect on the condition, financial or otherwise, earnings, business affairs or business prospects of the Operating Partnership or (B) a Material Adverse Change, and the Operating Partnership has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit.
Any certificate signed by any officer of the Company or any of its subsidiaries and delivered to a Distribution Agent or to counsel for the Distribution Agents shall be deemed a representation and warranty by the Company to each Distribution Agent as to the matters covered thereby.
The Company acknowledges that the Distribution Agents and, for purposes of the opinions to be delivered pursuant to Section 6 hereof, counsel to the Company and counsel to the Distribution Agents, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
6. Sale and Delivery; Settlement.
(a) Sale of Placement Shares. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, upon any Distribution Agent’s acceptance of the terms of a Placement Notice, and unless the sale of the Placement Shares described therein has been declined, suspended or otherwise terminated in accordance with the terms of this Agreement, such Distribution Agent, for the period specified in the Placement Notice, will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such Placement Shares up to the amount allocated to such Distribution Agent, and otherwise in accordance with the terms of such Placement Notice. Each of the Company and the Operating Partnership acknowledges and agrees that (i) there can be no assurance that the Distribution Agents will be successful in selling Placement Shares, (ii) no Distribution Agent will incur any liability or obligation to the Company or any other person or entity if it does not sell Placement Shares for any reason other than a failure by such Distribution Agent to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such Placement Shares as required under this Agreement and (iii) no Distribution Agent shall be under any obligation to purchase Placement Shares on a principal basis pursuant to this Agreement, except as otherwise agreed to by such Distribution Agent in a Placement Notice (as amended by the corresponding Acceptance, if applicable).
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(b) Settlement of Placement Shares. Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement Shares will occur on the third (3rd) Trading Day (or such earlier day as is industry practice for regular-way trading) following the date on which such sales are made (each, a “Settlement Date” and the first such settlement date, the “First Delivery Date”). The amount of proceeds to be delivered to the Company on a Settlement Date against receipt of the Placement Shares sold pursuant to each Placement Notice (the “Net Proceeds”) will be equal to the aggregate sales price received by the applicable Distribution Agent at which such Placement Shares were sold, after deduction for (i) such Distribution Agent’s commission, discount or other compensation for such sales payable by the Company pursuant to Section 2 hereof, (ii) any other amounts due and payable by the Company to such Distribution Agent hereunder pursuant to Section 7(g) (Expenses) hereof and (iii) any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales.
(c) Delivery of Placement Shares. On or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Placement Shares being sold by crediting the account of the applicable Distribution Agent or the account of its designee (provided such Distribution Agent shall have given the Company written notice of such designee prior to the Settlement Date) at The Depository Trust Company (“DTC”) through its Deposit and Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradable, transferable, registered shares in good deliverable form. On each Settlement Date, the applicable Distribution Agent acting under a Placement Notice will deliver the related Net Proceeds in same-day funds to an account designated by the Company on, or prior to, the Settlement Date. The Company agrees that if the Company, or its transfer agent (if applicable), defaults in its obligation to deliver Placement Shares on a Settlement Date, the Company will, in addition to and in no way limiting the rights and obligations set forth in Section 9(a) (Indemnification and Contribution), (i) hold the applicable Distribution Agent harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and (ii) pay to such Distribution Agent any commission, discount, or other compensation to which it would otherwise have been entitled absent such default.
(d) Denominations; Registration. The Placement Shares shall be in such denominations and registered in such names as the applicable Distribution Agent may request in writing at least one full business day before each Settlement Date. The Company shall deliver the Placement Shares through the facilities of the DTC unless the applicable Distribution Agent shall otherwise instruct in writing.
(e) Limitations on Offering Size. Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares if, after giving effect to the sale of such Placement Shares, the aggregate gross sales proceeds sold pursuant to this Agreement would exceed the lesser of (A) together with all sales of Placement Shares under this Agreement, the Maximum Amount, (B) the amount available for offer and sale under the currently effective Registration Statement and (C) the amount authorized from time to time to be issued and sold under this Agreement by the Company’s board of directors, a duly authorized committee thereof or a duly authorized executive committee, and notified to the applicable Distribution Agent in writing. Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares at a price lower than the minimum price authorized from time to time by the Company’s board of directors, duly authorized committee thereof or a duly authorized executive committee, and notified to the applicable Distribution Agent in writing.
(f) Limitations on the Distribution Agents. The Company agrees that any offer to sell, any solicitation of an ofer to buy or any sales of Placement Shares shall only be effected by or through any one particular Distribution Agent on any single given day, but in no event more than one, and the Company shall in no event request that any two or more Distribution Agents sell Placement Shares on the same day.
(g) Limitations on Placement Notices. The Company shall not deliver a Placement Notice to any Distribution Agent at any time (i) during which there is an outstanding Placement Notice pursuant to which Placement Shares are being offered for sale or (ii) following the expiration of the time period specified in a Placement Notice during which sales were requested to be made but prior to the Settlement Date with respect to the pending sale of the Placement Shares pursuant to such Placement Notice; provided, however, that the foregoing limitation shall not apply to a Placement Notice that the Company is delivering to a Distribution Agent when such Distribution Agent is acting pursuant to the Placement Notice referred to in clauses (i) and (ii) of this Section 6(g).
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7. Covenants of the Company and the Operating Partnership. The Company and the Operating Partnership covenant and agree with each Distribution Agent that:
(a) Registration Statement Amendments. After the date of this Agreement and during any period in which a Prospectus relating to any Placement Shares is required to be delivered by a Distribution Agent under the Securities Act with respect to a pending sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will notify such Distribution Agent promptly of the time when any subsequent amendment to the Registration Statement, other than documents incorporated by reference, has been filed with the Commission and/or has become effective or any subsequent supplement to the Prospectus has been filed and any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or for additional information related to the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus.
(b) Notice of Commission Stop Orders. The Company will advise each Distribution Agent, promptly after it receives notice or obtains knowledge thereof, of the issuance or threatened issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any other order preventing or suspending the use of the Prospectus, of the suspension of the qualification of the Placement Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose or any examination pursuant to Section 8(e) of the Securities Act concerning the Registration Statement, or if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the offering of the Placement Shares; and the Company will reasonably promptly use its commercially reasonable efforts to prevent the issuance of any stop or other order or to obtain its withdrawal if such a stop or other order should be issued.
(c) Delivery of Prospectus; Subsequent Changes. During any period in which a Prospectus relating to the Placement Shares is required to be delivered by a Distribution Agent under the Securities Act with respect to a pending sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will comply with all requirements imposed upon it by the Securities Act, as from time to time in force, and to file on or before their respective due dates all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange Act. If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act, the Company will reasonably promptly notify the applicable Distribution Agent to suspend the offering of Placement Shares during such period and the Company will reasonably promptly amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance.
(d) Listing of Placement Shares. During any period in which the Prospectus relating to the Placement Shares is required to be delivered by a Distribution Agent under the Securities Act with respect to a pending sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will use its commercially reasonable efforts to cause the Placement Shares to be listed on Nasdaq (or the Company’s then principal trading market for its Common Stock).
(e) Delivery of Registration Statement and Prospectus. The Company will furnish to each Distribution Agent and its counsel (at the expense of the Company) copies of the Registration Statement and the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statement or Prospectus that are filed with the Commission during any period in which a Prospectus relating to the Placement Shares is required to be delivered under the Securities Act. The copies of the Registration Statement and the Prospectus and any supplements or amendments thereto furnished to each Distribution Agent will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. Notwithstanding the foregoing, the Company will not be required to furnish any document (other than the Prospectus) to any Distribution Agent to the extent such document is available on EDGAR.
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(f) Earnings Statement. The Company will make generally available to its security holders as soon as reasonably practicable, but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement covering a 12-month period that satisfies the provisions of Section 11(a) and Rule 158 of the Securities Act. “Earnings statement” and “make generally available” will have the meanings contained in Rule 158 under the Securities Act.
(g) Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, in accordance with the provisions of Section 11 hereunder, will pay all expenses incident to the performance of the Company’s obligations hereunder, which the parties acknowledge include expenses relating to: (i) the preparation, printing and filing of the Registration Statement and each amendment and supplement thereto, of each Prospectus and of each amendment and supplement thereto, and of this Agreement, (ii) the preparation, issuance and delivery of the Placement Shares, (iii) the printing and delivery by the Distribution Agents of copies of the Prospectus and any amendments and supplements thereto, (iv) the fees and expenses incurred in connection with the listing or qualification of the Placement Shares for trading on the Exchange, and (v) the filing fees and expenses (including the Company’s counsel and accountants fees), if any, related to the filing and clearance of the transactions and related documentation with the Commission and FINRA. The Company will pay to the Distribution Agents upon execution of this Agreement all reasonable and customary expenses incurred by the Distribution Agents through the date hereof and incident to the negotiation and performance of the obligations of the Distribution Agents hereunder (“Reimbursable Expenses”), including the reasonable fees and disbursements of one primary counsel to the Distribution Agents, consultant fees, travel and lodging expenses and any other fees and expenses incurred by the Distribution Agents in connection with this Agreement and the transactions contemplated hereby and thereby, in all cases not to exceed (i) $85,000 in connection with the preparation and negotiation of this Agreement, the preparation and filing of the Prospectus Supplement relating to the Placement Shares and the preparation, negotiation, delivery and/or filing of any other related document, and (ii) $10,000 for fees of counsel to the Distribution Agents related to the filing and clearance of the transactions and related documentation with FINRA (collectively, the “Expense Cap”). Reimbursable Expenses (including expenses incurred in connection with each settlement/closing under Section 6 hereof) incurred by the Distribution Agents following the date hereof shall be invoiced to the Company in reasonable detail by the Distribution Agents and paid by the Company at the earlier of the then next settlement/closing under Section 6 hereof and ten (10) days after the delivery of such invoice to the Company; provided that all such post-signing reimbursements shall count toward and be subject to the Expense Cap. With respect to fees and disbursements of counsel to the Distribution Agents in connection with the offering, purchase, sale and delivery of Placement Shares under each Placement Notice, the Distribution Agents will each pay such amounts to counsel in accordance with each Distribution Agent’s pro rata share of compensation received from the Company under this Agreement.
(h) Use of Proceeds. The Company will use the Net Proceeds as described in the Prospectus in the section entitled “Use of Proceeds.”
(i) Notice of Other Sales. During either the pendency of any Placement Notice given hereunder, or any period in which the Prospectus relating to the Placement Shares is required to be delivered by a Distribution Agent, the Company shall provide such Distribution Agent with at least two (2) business days’ prior notice before it offers to sell, contracts to sell, sells, grants any option to sell or otherwise disposes of any shares of Common Stock (other than Placement Shares offered pursuant to the provisions of this Agreement) or securities convertible into or exchangeable for Common Stock, warrants or any rights to purchase or acquire Common Stock; provided, that such notice shall not be required in connection with the (i) issuance, grant or sale of Common Stock, options to purchase shares of Common Stock or Common Stock issuable upon the exercise of options or other equity awards pursuant to any employee or director stock option or benefits plan or stock ownership plan or issuances permitted by FINRA, (ii) the issuance or sale of Common Stock pursuant to any dividend reinvestment plan that the Company may adopt from time to time or (iii) the issuance of Common Stock upon the exercise of any currently outstanding warrants, options or other rights in effect or outstanding and disclosed in filings by the Company available on EDGAR.
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(j) Change of Circumstances. The Company will, at any time during the pendency of a Placement Notice, advise the applicable Distribution Agent reasonably promptly after it shall have received notice or obtained knowledge thereof, of any information or fact that would alter or affect in any material respect any opinion, certificate, letter or other document required to be provided to such Distribution Agent pursuant to this Agreement.
(k) Due Diligence Cooperation. The Company will cooperate with any reasonable due diligence review conducted by the Distribution Agents or their counsel, representatives or agents in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior corporate officers, during regular business hours and at the Company’s principal offices, as the Distribution Agents may reasonably request.
(l) Required Filings Relating to Placement of Placement Shares. The Company agrees that on such dates as the Securities Act shall require, the Company will (i) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under the Securities Act, which prospectus supplement will set forth, within the relevant period, the amount of Placement Shares sold through the Distribution Agents, the Net Proceeds to the Company and the compensation payable by the Company to the Distribution Agents with respect to such Placement Shares, and (ii) deliver such number of copies of each such prospectus supplement to each exchange or market on which such sales were effected as may be required by the rules or regulations of such exchange or market.
(m) Representation Dates; Certificate. On or prior to the date that the first Placement Shares are sold pursuant to the terms of this Agreement, each time Placement Shares are delivered to any Distribution Agent as principal on a Settlement Date and: (1) each time the Company: (i) files the Prospectus relating to the Placement Shares or amends or supplements (other than a prospectus supplement relating solely to an offering of securities other than the Placement Shares), the Registration Statement or the Prospectus relating to the Placement Shares by means of a post-effective amendment, sticker, or supplement but not by means of incorporation of documents by reference into the Registration Statement or the Prospectus relating to the Placement Shares; (ii) files an annual report on Form 10-K under the Exchange Act (including any Form 10-K/A containing amended financial information or a material amendment to the previously filed Form 10-K); (iii) files its quarterly reports on Form 10-Q under the Exchange Act; or (iv) files a current report on Form 8-K containing amended financial information (other than information “furnished” pursuant to Items 2.02 or 7.01 of Form 8-K) under the Exchange Act; and (2) at any other time reasonably requested by the Distribution Agent named in a then-pending Placement Notice (each date of filing of one or more of the documents referred to in clauses (1)(i) through (iv) and any time of request pursuant to this Section 7(m)(2) shall be a “Representation Date”), the Company and the Operating Partnership shall furnish such Distribution Agent with a certificate, in the form attached hereto as Exhibit 7(m) within three (3) Trading Days of any Representation Date. The requirement to provide a certificate under this Section 7(m) shall be waived for any Representation Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date; provided, however, that such waiver shall not apply for any Representation Date on which the Company files its annual report on Form 10-K. Notwithstanding the foregoing, if the Company subsequently decides to sell Placement Shares following a Representation Date when the Company relied on such waiver and did not provide the applicable Distribution Agent with a certificate under this Section 7(m), then before the Company delivers the Placement Notice or such Distribution Agent sells any Placement Shares, the Company shall provide such Distribution Agent with a certificate, in the form attached hereto as Exhibit 7(m), dated the date of the Placement Notice.
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(n) Legal Opinion of Company Counsel. On the date the first Placement Notice is given hereunder, the Company shall cause to be furnished to the applicable Distribution Agent:
(i) a written opinion and a supplemental “negative assurances” letter, each dated as of the date of such Placement Notice, of Proskauer Rose LLP (“Company Counsel”), in the form of Exhibit 7(n)(i) and 7(n)(ii) hereto.
(ii) a written opinion with respect to certain tax matters in connection with the issuance and sale of Common Stock, dated as of the date of such Placement Notice, of Company Counsel, in the form of Exhibit 7(n)(iii) hereto.
(iii) a written opinion, dated as of the date of such Placement Notice, of Venable LLP (“Maryland Counsel”), in the form of Exhibit 7(n)(iv) hereto;
Within three Trading Days of each subsequent Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause to be furnished to the applicable Distribution Agent the written opinions and negative assurance letter of Company Counsel and Maryland Counsel in the foregoing forms; provided, however, that in lieu of such opinions and negative assurance letter, Company Counsel and Maryland Counsel last furnishing such opinion to any Distribution Agent may furnish to the current applicable Distribution Agent a letter substantially to the effect that such Distribution Agent may rely on such prior opinion to the same extent as though addressed to such Distribution Agent and dated the date of such letter authorizing reliance.
(o) Comfort Letter. On the date the first Placement Notice is given hereunder, the Company shall cause each of Grant Thornton LLP, McGladrey LLP and Deloitte & Touche LLP (and/or any other independent accountants whose report is included in the Registration Statement or the Prospectus), to furnish the applicable Distribution Agent with a letter (the “Initial Comfort Letter”), dated as of the date of such Placement Notice, in form and substance satisfactory to such Distribution Agent (i) confirming that they are an independent registered public accounting firm within the meaning of the Securities Act, the Exchange Act, and the PCAOB, and (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants’ “comfort letters” to underwriters in connection with registered public offerings. Within three Trading Days of each subsequent Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause such auditors to provide a supplemental comfort letter to the applicable Distribution Agent which shall state that such auditors have followed such procedures as they deem necessary to determine that no changes or modifications to the Initial Comfort Letter are necessary except as set forth in such supplemental letter, together with a customary “circle up” of the relevant sections of the Form 10-Q, Form 10-K or other documents filed by the Company with the Commission that contain updated or changed information of the type for which the auditors customarily give comfort.
(p) Filings with Nasdaq. The Company will timely file with Nasdaq (and/or the Company’s then principal trading market for its Common Stock) all material documents and notices required by Nasdaq (or such other principal trading market) of companies that have or will issue securities that are traded on Nasdaq (or such other principal trading market).
(q) Securities Act and Exchange Act. The Company will use its commercially reasonable efforts to comply with all requirements imposed upon it by the Securities Act and the Exchange Act as from time to time in force, so far as necessary to permit the continuance of sales of, or dealings in, the Placement Shares as contemplated by the provisions hereof and the Prospectus.
(r) No Offer to Sell. Other than a free writing prospectus (as defined in Rule 405 under the Securities Act) approved in advance in writing by the Company and each applicable Distribution Agent in its capacity as principal or agent hereunder, none of the Distribution Agents nor the Company (including its agents and representatives) will, directly or indirectly, make, use, prepare, authorize, approve or refer to any free writing prospectus relating to the Placement Shares to be sold by the Distribution Agents as principal or agent hereunder. The Company will comply with the requirements of Rule 433 of the Securities Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping.
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(s) Sarbanes-Oxley Act. The Company will maintain and keep accurate books and records reflecting its assets and maintain internal accounting controls in a manner designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and including those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the Company’s consolidated financial statements in accordance with generally accepted accounting principles, (iii) that receipts and expenditures of the Company are being made only in accordance with management’s and the Company’s directors’ authorization, and (iv) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its financial statements. The Company will maintain such controls and other procedures, including, without limitation, those required by Sections 302 and 906 of SOX, and the applicable regulations thereunder that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure and to ensure that material information relating to the Company is made known to them, particularly during the period in which such periodic reports are being prepared.
(t) Transfer Agent. The Company shall maintain, at its expense, a registrar and transfer agent for the Common Stock.
(u) Disclosure of Sales. The Company will disclose in its quarterly reports on Form 10-Q and in its annual report on Form 10-K the number of Placement Shares sold through the Distribution Agents during the period covered in the report.
(v) Market Stabilization. The Company will not, and will use its commercially reasonable efforts to cause its officers, directors and affiliates not to, (i) take, directly or indirectly, any action designed to stabilize or manipulate the price of any security of the Company, or which may cause or result in, or which might in the future reasonably be expected to cause or result in, the stabilization or manipulation of the price of any security of the Company, to facilitate the sale or resale of any of the Placement Shares, (ii) sell, bid for, purchase or pay anyone any compensation for soliciting purchases of the Placement Shares during the pendency of any Placement Notice or (iii) pay or agree to pay to any person any compensation for soliciting any order to purchase any other securities of the Company during the pendency of any Placement Notice; provided, however, that upon consent of each Distribution Agent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company may bid for and purchase Common Stock in accordance with Rule 10b-18 under the Exchange Act.
(w) Listing. During any period in which the Prospectus relating to the Placement Shares is required to be delivered by a Distribution Agent under the Securities Act with respect to a pending sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will use its commercially reasonable efforts to cause the Placement Shares to be listed on Nasdaq (or such other principal trading market for the Company’s Common Stock).
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(x) Available Shares. The Company will ensure that there are at all times sufficient shares of Common Stock to provide for the issuance, free of any preemptive rights, out of its authorized but unissued shares of Common Stock, of the Maximum Amount.
8. Conditions to the Distribution Agents’ Obligations. The obligations of the applicable Distribution Agents hereunder with respect to a Placement Notice will be subject to the continuing accuracy and completeness of the representations and warranties made by the Company and the Operating Partnership herein, to the due performance by the Company and the Operating Partnership of its respective obligations hereunder, and to the continuing satisfaction (or waiver by such Distribution Agent in its sole discretion) of the following additional conditions:
(a) Due Diligence. Prior to the delivery of the first Placement Notice by the Company, the Distribution Agents shall have completed their due diligence review of the Company and the results thereof were satisfactory to the Distribution Agents in their reasonable judgment.
(b) Registration Statement Effective. The Registration Statement shall have become effective and shall be available for the sale of all Placement Shares contemplated to be issued by any Placement Notice.
(c) No Material Notices. None of the following events shall have occurred and be continuing: (i) receipt by the Company of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement, the response to which would require any post-effective amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose or (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus or any material document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related Prospectus or documents so that, in the case of the Registration Statement, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, that in the case of the Prospectus, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(d) Material Changes. Except as contemplated in the Prospectus, or disclosed in the Company’s reports filed with the Commission, there shall not have been, on a consolidated basis, any Material Adverse Change.
(e) Legal Opinion of Company Counsel. The applicable Distribution Agent shall have received the opinion of Company Counsel required to be delivered pursuant to Section 7(n) on or before the date on which such delivery of such opinion is required pursuant to Section 7(n).
(f) Comfort Letter. The applicable Distribution Agent shall have received the Initial Comfort Letter and any update letters required to be delivered pursuant to Section 7(o) on or before the date on which such delivery of such opinion is required pursuant to Section 7(o).
(g) Representation Certificate. The applicable Distribution Agent shall have received the certificate required to be delivered pursuant to Section 7(m) on or before the date on which delivery of such certificate is required pursuant to Section 7(m).
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(h) No Exchange Suspension or FINRA Objection. Trading in the Common Stock shall not have been suspended on Nasdaq. FINRA shall not have objected to the fairness or reasonableness of the terms or arrangements under this Agreement.
(i) Other Materials. On each date on which the Company is required to deliver a certificate pursuant to Section 7(m), the Company shall have furnished to the applicable Distribution Agent such appropriate further information, certificates and documents as such applicable Distribution Agent may reasonably request. All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof. The Company will furnish the applicable Distribution Agent with such conformed copies of such opinions, certificates, letters and other documents as such applicable Distribution Agent shall reasonably request.
(j) Securities Act Filings Made. All filings with the Commission required by Rule 424 under the Securities Act to have been filed prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 424.
(k) Approval for Listing. The Placement Shares shall have been approved for listing on the Exchange, subject only to notice of issuance.
(l) Termination of Agreement. If any condition specified in this Section 8 shall not have been fulfilled when and as required to be fulfilled, the applicable Placement Notice may be terminated by the applicable Distribution Agent by notice to the Company and such termination shall be without liability of any party to any other party. Notice of such cancellation shall be given in writing and addressed to each of the individuals of the Company set forth on Schedule 2.
(m) No Termination Event. There shall not have occurred any event or condition that would permit the Distribution Agents to terminate this Agreement pursuant to Section 11.
(n) Legal Opinion of Counsel for the Distribution Agents. On the date the first Placement Notice is given hereunder, the Distribution Agent named in such Placement Notice shall have received such written opinion or opinions of McGuireWoods LLP, as counsel (“Agent Counsel”), dated as of such date, with respect to such matters as such Distribution Agent may reasonably request, and Agent Counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters. Within three Trading Days of each subsequent Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(m) for which no waiver is applicable, such Distribution Agent shall have received such written opinion(s) of Agent Counsel; provided, however, that in lieu of such opinion(s), Agent Counsel may furnish to such Distribution Agent a letter substantially to the effect that such persons may rely on such prior opinion(s) if the prior opinion(s) was addressed to such Distribution Agent.
9. Indemnification and Contribution.
(a) Indemnification of Distribution Agents. The Company and the Operating Partnership agree to indemnify and hold harmless each Distribution Agent, and each of its respective officers, employees and agents, and each person, if any, who controls such Distribution Agent within the meaning of the Securities Act or the Exchange Act (an “Agent Affiliate”) against any loss, claim, damage, liability or expense, as incurred, to which such Distribution Agent or its officers, employees, agents or controlling persons may become subject, under the Securities Act, the Exchange Act, other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon (A) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430A and 430B under the Securities Act, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading; or (B) any untrue statement or alleged untrue statement of a material fact contained in any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (C) any act or failure to act or any alleged act or failure to act by any Distribution Agent in connection with, or relating in any manner to, the Placement Shares or the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (A) or (B) above; and to reimburse each Distribution Agent and each of its respective officers, employees, agents and controlling persons for any and all expenses (including the fees and disbursements of counsel) as such expenses are reasonably incurred by such Distribution Agent or its officers, employees, agents or controlling persons in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information relating to any Distribution Agent furnished to the Company by the Distribution Agents expressly for use in the Registration Statement, Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement thereto). The indemnity agreement set forth in this Section 9(a)(i) shall be in addition to any liabilities that the Company and the Operating Partnership may otherwise have.
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(b) Indemnification of the Company, the Operating Partnership, and their respective Directors and Officers. Each Distribution Agent, severally and not jointly, agrees to indemnify and hold harmless the Company, the Operating Partnership, each of and their respective directors, each of their respective officers who signed the Registration Statement and each person, if any, who controls the Company or the Operating Partnership within the meaning of the Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as incurred, to which the Company or the Operating Partnership, or any such director, officer or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of each affected Distribution Agent), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus (or such amendment or supplement thereto), or arises out of or is based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement thereto), in reliance upon and in conformity with written information relating to any Distribution Agent furnished to the Company by the Distribution Agents expressly for use therein; and to reimburse the Company, the Operating Partnership, or any such director, officer or controlling person for any legal and other expense reasonably incurred by the Company, the Operating Partnership, or any such director, officer or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The indemnity agreement set forth in this Section 9(a)(ii) shall be in addition to any liabilities that each Distribution Agent may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party’s election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (A) the indemnified party shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the fees and expenses of more than one separate counsel (together with local counsel), representing the indemnified parties who are parties to such action), which counsel (together with any local counsel) for the indemnified parties shall be selected by the Distribution Agents (in the case of counsel for the indemnified parties referred to in Section 9(a) above) or by the Company (in the case of counsel for the indemnified parties referred to in Section 9(b) above)), (B) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (C) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party and shall be paid as they are incurred.
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(d) Settlements. The indemnifying party under this Section 9 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 9(c) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (A) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (B) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (x) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (y) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
(e) Contribution. If the indemnification provided for in Section 9(a) or (b) is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (A) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Operating Partnership, on the one hand, and the Distribution Agents, on the other hand, from the offering of the Placement Shares pursuant to this Agreement or (B) if the allocation provided by clause (A) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (A) above but also the relative fault of the Company and the Operating Partnership, on the one hand, and the Distribution Agents, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Operating Partnership, on the one hand, and the Distribution Agents, on the other hand, in connection with the offering of the Placement Shares pursuant to this Agreement shall be deemed to be in the same respective proportions as the total gross proceeds from the offering of the Placement Shares pursuant to this Agreement (before deducting expenses) received by the Company and the Operating Partnership, and the total commissions received by the Distribution Agents, in each case as pursuant to this Agreement bear to the aggregate public offering price of the Placement Shares pursuant to this Agreement. The relative fault of the Company and the Operating Partnership, on the one hand, and the Distribution Agents, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company and the Operating Partnership, on the one hand, or the Distribution Agents, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 9(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 9(a)(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 9(e); provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 9(c) for purposes of indemnification. The Company, the Operating Partnership and each Distribution Agent agree that it would not be just and equitable if contribution pursuant to this Section 9(e) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 9(e). Notwithstanding the provisions of this Section 9(e), no Distribution Agent shall be required to contribute any amount in excess of the commissions received by such Distribution Agent under this Agreement. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
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For purposes of this Section 9(e), each officer, employee and agent of each Distribution Agent and each person, if any, who controls such Distribution Agent within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such Distribution Agent, and each director of the Company and the Operating Partnership, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company or the Operating Partnership with the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company and the Operating Partnership.
10. Representations and Agreements to Survive Delivery. All representations and warranties of the Company and the Operating Partnership herein or in certificates delivered pursuant hereto shall survive, as of their respective dates, regardless of (i) any investigation made by or on behalf of the Distribution Agents, any controlling persons, or the Company (or any of their respective officers, directors or controlling persons), (ii) delivery and acceptance of the Placement Shares and payment therefore or (iii) any termination of this Agreement.
11. Termination.
(a) Termination; General. The Distribution Agents may terminate this Agreement, by notice to the Company, as hereinafter specified at any time (1) if there has been, since the time of execution of this Agreement or since the date as of which information is given in the Prospectus, any Material Adverse Change, (2) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Distribution Agents, impracticable or inadvisable to market the Placement Shares or to enforce contracts for the sale of the Placement Shares, (3) if trading in the Placement Shares has been suspended or limited by the Commission or Nasdaq, or if trading generally on Nasdaq has been suspended or limited, (4) if any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market shall have occurred and be continuing, (5) if a major disruption of securities settlements or clearance services in the United States shall have occurred and be continuing or (6) if a banking moratorium has been declared by either U.S. Federal or New York authorities.
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(b) Termination by the Company. Subject to Section 11(e), the Company shall have the right to terminate this Agreement by giving ten (10) days prior notice to the Distribution Agents.
(c) Termination by the Distribution Agents. In addition to the rights set forth in Section 11(a), subject to Section 11(e), the Distribution Agents shall have the right to terminate this Agreement by giving ten (10) days prior notice to the Company.
(d) Automatic Termination. Unless earlier terminated pursuant to this Section 11, this Agreement shall automatically terminate upon the issuance and sale of the Maximum Amount of Placement Shares through the Distribution Agents pursuant to this Agreement.
(e) Effectiveness of Termination. Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided, however, that such termination shall not be effective until the close of business on the date specified in such notice by the Distribution Agents or the Company, as the case may be. If such termination shall occur prior to the Settlement Date for any sale of Placement Shares, such Placement Shares shall settle in accordance with the provisions of this Agreement.
(f) Survival. Notwithstanding anything herein to the contrary, the provisions of Sections 5 (as of the respective dates of the representations and warranties), 7(g), 9, 10 (as of the respective dates of the representations and warranties), 16, 17 and 19 hereof and the obligation herein to pay any discount, commission or other compensation accrued, but unpaid, shall survive any expiration or termination of this Agreement.
12. Notices. Except as otherwise provided in this Agreement, all notices or other communications required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing, unless otherwise specified in this Agreement, and if
sent to a Distribution Agent, to the applicable address listed on the first page hereof or with respect to Distribution Agents added subsequent to the date hereof in accordance with Section 1, to the applicable address provided by such Distribution Agent,
with a copy (which shall not constitute notice), in the case of any notice pursuant to Section 9(b), to:
Director of Litigation
Office of the General Counsel
Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019 (Fax: 212-520-0421),
with a copy (which shall not constitute notice) to:
McGuireWoods LLP
1345 Avenue of the Americas, 7th floor
New York, New York 10105
Facsimile: (212) 715-2307
Attention: Stephen E. Older,
sent to the Company, to:
American Realty Capital Properties, Inc.
405 Park Avenue
New York, NY 10022
Fax No.: (212) 421-5799
Attention: Edward M. Weil, Jr.,
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with copies (which shall not constitute notices) to:
Proskauer Rose LLP
Eleven Times Square
New York, NY 10036
Fax: 212-969-2900
Attention: Peter M. Fass, Esq.,
sent to the Operating Partnership, to:
ARC Properties Operating Partnership, L.P.
405 Park Avenue
New York, NY 10022
Fax No.: (212) 421-5799
Attention: Edward M. Weil, Jr.,
with copies (which shall not constitute notice) to:
Proskauer Rose LLP
Eleven Times Square
New York, NY 10036
Fax: 212-969-2900
Attention: Peter M. Fass, Esq.
Each party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose. Each such notice or other communication shall be deemed given (i) when delivered personally or by verifiable facsimile transmission (with an original to follow) on or before 4:30 p.m., New York City time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid). For purposes of this Agreement, “Business Day” shall mean any day on which the Exchange and commercial banks in the City of New York are open for business.
13. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company, the Operating Partnership and each Distribution Agent and each of their respective successors, permitted assigns and the affiliates, controlling persons, officers and directors referred to in Section 9 hereof. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. No party may assign its rights or obligations under this Agreement without the prior written consent of the other parties hereto.
14. Adjustments for Stock Splits. The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted to take into account any stock split, stock dividend or similar event effected with respect to the Placement Shares.
15. Entire Agreement; Amendment; Severability. This Agreement (including all schedules and exhibits attached hereto and Placement Notices issued pursuant hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof; provided, that nothing herein shall be deemed to terminate or modify any existing obligations arising under the underwriting agreements entered into by the Company, the Operating Partnership and each Distribution Agent prior to the date hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company, the Operating Partnership and each Distribution Agent. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement.
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16. Applicable Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the principles of conflicts of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection with any transaction contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof (certified or registered mail, return receipt requested) to such party at the address in effect for notices to it under this agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
17. WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE OPERATING PARTNERSHIP AND EACH DISTRIBUTION AGENT HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by facsimile transmission.
19. Absence of Fiduciary Relationship. Each of the Company and the Operating Partnership acknowledges and agrees that:
(a) The Distribution Agents are acting solely as agent and/or principal in connection with the public offering of the Placement Shares and in connection with each transaction contemplated by this Agreement and the process leading to such transactions, and no fiduciary or advisory relationship among the Company, the Operating Partnership or any of their respective affiliates, shareholders (or other equity holders), creditors or employees or any other party, on the one hand, and the Distribution Agents, on the other hand, has been or will be created in respect of any of the transactions contemplated by this Agreement, irrespective of whether any Distribution Agent has advised or is advising the Company and/or the Operating Partnership on other matters, and no Distribution Agent has any obligation to the Company or the Operating Partnership with respect to the transactions contemplated by this Agreement except the obligations expressly set forth in this Agreement;
(b) the Company and the Operating Partnership are each capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement;
(c) the Company and the Operating Partnership has been advised that each Distribution Agent and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that no Distribution Agent has any obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship;
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(d) the Company and the Operating Partnership each disclaims any intention to impose fiduciary obligations on any Distribution Agent by virtue of the engagement contemplated by this Agreement;
(e) No Distribution Agent has provided any legal, accounting, regulatory or tax advice with respect to the transactions contemplated by this Agreement and the Company and the Operating Partnership have each consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate; and
(f) the Company and the Operating Partnership each waives, to the fullest extent permitted by law, any claims it may have against each Distribution Agent for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that no Distribution Agent shall have any liability (whether direct or indirect) to the Company or the Operating Partnership in respect to such fiduciary claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company or the Operating Partnership, including shareholders, partners, employees or creditors of the Company or the Operating Partnership.
[Remainder of Page Intentionally Blank]
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If the foregoing correctly sets forth the understanding between the Company, the Operating Partnership and the Distribution Agents, please so indicate in the space provided below for that purpose, whereupon this Agreement shall constitute a binding agreement between the parties.
Very truly yours,
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AMERICAN REALTY CAPITAL PROPERTIES, INC.
By: /s/ Nicholas S. Schorsch Name: Nicholas S. Schorsch Title: Chief Executive Officer |
ARC PROPERTIES OPERATING PARTNERSHIP, L.P.
By: American Realty Capital Properties, Inc., its general partner
By: /s/ Nicholas S. Schorsch Name: Nicholas S. Schorsch Title: Chief Executive Officer |
[Signature Page 1 of 2 to Equity Distribution Agreement] |
AGREED AND ACCEPTED BY: | |
BARCLAYS CAPITAL INC.
By: /s/ Victoria Hale Name: Victoria Hale Title: Vice President |
CAPITAL ONE SECURITIES, INC.
By: /s/ Pierre E. Connor III Name: Pierre E. Connor III Title: President & CEO |
CITIGROUP GLOBAL MARKETS INC.
By: /s/ Auren Kule Name: Auren Kule Title: Director |
CREDIT SUISSE SECURITIES (USA) LLC
By: /s/ Peter Scott Name: Peter Scott Title: Director |
JMP SECURITIES LLC
By: /s/ Kent Ledbetter Name: Kent Ledbetter Title: Director of Investment Banking |
LADENBURG THALMANN & CO. INC.
By: /s/ Steve Kaplan Name: Steve Kaplan Title: Head of Capital Markets |
MORGAN STANLEY & CO. LLC
By: /s/ Kenneth Plott
Name: Kenneth Plott
Title: Managing Director
[Signature Page 2 of 2 to Equity Distribution Agreement] |
Schedule 1
Placement Notice Authorized Personnel
(See Attached)
Sch 2-1 |
Schedule 2
With respect to each Placement Notice and any Placement Shares sold pursuant thereto, the applicable Distribution Agent shall be paid compensation equal to 2% of the gross proceeds from the sale of Placement Shares sold pursuant to such Placement Notice.
Sch 3-1 |
Exhibit 1
FORM OF PLACEMENT NOTICE
Ex 1-1 |
Exhibit 7(m)
Ex 7(m)-1 |
Exhibit 7(n)(i)
[Form of Company Counsel Opinion]
(See attached)
Ex 7(n)(i)-1 |
Exhibit 7(n)(ii)
[Form of Negative Assurances Letter]
(See attached)
Ex 7(n)(ii)-1 |
Exhibit 7(n)(iii)
[Form of Tax Opinion]
(See Attached)
Ex 7(n)(iii)-1 |
Exhibit 7(n)(iv)
[Form of Maryland Counsel Opinion]
(See Attached)
Ex 7(n)(iv)-1 |
[LETTER HEAD OF VENABLE LLP]
November 26, 2013
American Realty Capital Properties, Inc.
405 Park Avenue
New York, New York 10022
Re: Registration Statement on Form S-3 (File No. 333-187240)
Ladies and Gentlemen:
We have served as Maryland counsel to American Realty Capital Properties, Inc., a Maryland corporation (the “Company”), in connection with certain matters of Maryland law arising out of the registration of up to $500,000,000 aggregate offering price of shares (the “Shares”) of common stock, par value $0.01 per share (the “Common Stock”), of the Company, covered by the above-referenced Registration Statement, and all amendments thereto (the “Registration Statement”), filed by the Company with the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”). The Shares are to be issued pursuant to the Prospectus Supplement and the Distribution Agreements (each as defined herein) in one or more transactions deemed to be “at the market” offerings (each, an “Offering” and, collectively, the “Offerings”) under Rule 415 of the 1933 Act.
In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (hereinafter collectively referred to as the “Documents”):
1. The Registration Statement;
2. The Prospectus, dated March 13, 2013, as supplemented by a Prospectus Supplement, dated November 26, 2013 (the “Prospectus Supplement”), filed with the Commission pursuant to Rule 424(b) of the General Rules and Regulations promulgated under the 1933 Act;
3. The charter of the Company (the “Charter”), certified by the State Department of Assessments and Taxation of Maryland (the “SDAT”);
4. The Bylaws of the Company, certified as of the date hereof by an officer of the Company;
American Realty Capital Properties, Inc.
November 26, 2013
Page 2
5. A certificate of the SDAT as to the good standing of the Company, dated as of a recent date;
6. Resolutions adopted by the Board of Directors of the Company (the “Board”) relating to, among other matters, (a) the authorization of the sale, issuance and registration of the Shares and the execution and delivery of the Distribution Agreements and (b) the delegation to a Trading Authorization Committee of the Board (the “Committee”) of the power to determine, subject to certain parameters, the number of Shares and the offering price of each Share to be sold in each Offering (the “Resolutions”), certified as of the date hereof by an officer of the Company;
7. The Equity Distribution Agreement, dated November 25, 2013 (the “Distribution Agreement”), by and among the Company, ARC Properties Operating Partnership, L.P., a Delaware limited partnership, and the several other distribution agents named in therein;
8. A certificate executed by an officer of the Company, dated as of the date hereof; and
9. Such other documents and matters as we have deemed necessary or appropriate to express the opinion set forth below, subject to the assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed the following:
1. Each individual executing any of the Documents, whether on behalf of such individual or any other person, is legally competent to do so.
2. Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
3. Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party’s obligations set forth therein are legal, valid and binding and are enforceable in accordance with all stated terms.
4. All Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted to us as certified or photostatic copies conform to the original
American Realty Capital Properties, Inc.
November 26, 2013
Page 3
documents. All signatures on all such Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties, statements and information contained in the Documents are true and complete. There has been no oral or written modification of or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise.
5. The Shares will not be issued in violation of any restriction or limitation contained in Section 4.07 of Article 4 of the Charter.
6. Upon the issuance of any of the Shares, the total number of shares of Common Stock issued and outstanding will not exceed the total number of shares of Common Stock that the Company is then authorized to issue under the Charter.
Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT.
2. The issuance of the Shares has been duly authorized and, when and to the extent issued against payment therefor in accordance with the Registration Statement, the Prospectus Supplement, the Distribution Agreement, the Resolutions and any other resolutions relating to the Shares adopted by the Board or the Committee, the Shares will be validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the laws of the State of Maryland and we do not express any opinion herein concerning any other law. We express no opinion as to compliance with any federal or state securities laws, including the securities laws of the State of Maryland, or as to federal or state laws regarding fraudulent transfers. To the extent that any matter as to which our opinion is expressed herein would be governed by any jurisdiction other than the State of Maryland, we do not express any opinion on such matter. The opinion expressed herein is subject to the effect of judicial decisions which may permit the introduction of parol evidence to modify the terms or the interpretation of agreements.
The opinion expressed herein is limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.
American Realty Capital Properties, Inc.
November 26, 2013
Page 4
This opinion is being furnished to you for submission to the Commission as an exhibit to the Company’s Current Report on Form 8-K relating to the Offerings (the “Current Report”), which is incorporated by reference in the Registration Statement. We hereby consent to the filing of this opinion as an exhibit to the Current Report and the said incorporation by reference and to the use of the name of our firm therein. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the 1933 Act.
Very
truly yours,
/s/ Venable LLP
[PROSKAUER LETTERHEAD]
November 26, 2013
American Realty Capital Properties, Inc.
405 Park Avenue
New York, New York 10022
Re: Opinion of Proskauer Rose LLP as to Tax Matters
Ladies and Gentlemen:
We have acted as counsel to American Realty Capital Properties, Inc., a Maryland corporation (the “Company”), with respect to certain tax matters in connection with the issuance, offering and sale by the Company pursuant to the Equity Distribution Agreement dated November 25, 2013 (the “Agreement”), among the Company, ARC Properties Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”), and Barclays Capital Inc., Capital One Securities, Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, JMP Securities LLC, Ladenburg Thalmann & Co. Inc. and Morgan Stanley & Co. LLC of common stock of the Company, par value $0.01 per share (the “Stock”), having an aggregate offering price of up to $500,000,000. The issuance and sale of the Stock are discussed in the final prospectus, dated March 13, 2013 (the “Base Prospectus”), initially filed as part of a registration statement on Form S-3, Registration No. 333-187240, with the Securities and Exchange Commission (the “Commission”) on March 14, 2013 pursuant to the Securities Act of 1933, as amended (the “1933 Act”) and the rules and regulations promulgated under the 1933 Act (the “1933 Act Regulations”), as amended through the date hereof, and as supplemented by the prospectus supplement, dated November 26, 2013, relating to the Stock (the “Prospectus Supplement”). As used herein, the term “Prospectus” shall mean, collectively, the Base Prospectus and the Prospectus Supplement, in the forms filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations and the term “Registration Statement” shall mean, collectively, the registration statement referred to in the previous sentence including, except as otherwise specified herein, the Prospectus. In connection with the issuance and sale of the Stock, we have been asked to provide an opinion regarding (i) the classification of the Company as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”);1 (ii) the accuracy and fairness of the discussions in the Prospectus under the captions “Material U.S. Federal Income Tax Considerations” and “Supplemental Material U.S. Federal Income Tax Considerations” and (iii) the treatment of the Operating Partnership as a partnership for U.S. federal income tax purposes.
The opinions set forth in this letter are based on relevant provisions of the Code, Treasury Regulations issued thereunder (including Proposed and Temporary Regulations), and interpretations of the foregoing as expressed in court decisions, administrative determinations, and the legislative history as of the date hereof. These provisions and interpretations are subject to differing interpretations or change at any time, which may or may not be retroactive in effect, and which might result in modifications of our opinions. In this regard, an opinion of counsel with respect to an issue represents counsel’s best judgment as to the outcome on the merits with respect to such issue, is not binding on the Internal Revenue Service (“IRS”) or the courts, and is not a guarantee that the IRS will not assert a contrary position with respect to an issue, or that a court will not sustain such a position if asserted by the IRS.
In rendering our opinions, we have made such factual and legal examinations, including an examination of such statutes, regulations, records, certificates and other documents as we have considered necessary or appropriate, including, but not limited to, the following: (1) the Registration Statement (including exhibits thereto); (2) the Articles of Amendment and Restatement of the Company, as amended through the date hereof; and (3) the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated February 28, 2013, and any amendments thereto through the date hereof. The opinions set forth in this letter also are based on certain written factual representations and covenants made by an officer of the Company, in the Company’s own capacity and in its capacity as the general partner of the Operating Partnership, in a letter to us of even date herewith (the “Officer’s Certificate”) relating to, among other things, those factual matters as are germane to the determination that the Company and the Operating Partnership, and the entities in which they hold direct or indirect interests, have been and will be formed, owned and operated in such a manner that the Company has and will continue to satisfy the requirements for qualification as a REIT under the Code (collectively, the Officer’s Certificate, and the documents described in the immediately preceding sentence are referred to herein as the “Transaction Documents”).
________________________
1 Unless otherwise stated, all section references herein are to the Code.
American Realty Capital Properties, Inc.
November 26, 2013
Page 2
In our review, we have assumed, with your consent, that all of the factual representations, covenants and statements set forth in the Transaction Documents are true and correct, and all of the obligations imposed by any such documents on the parties thereto have been and will be performed or satisfied in accordance with their terms. Moreover, we have assumed that the Company and the Operating Partnership each will be operated in the manner described in the relevant Transaction Documents. We have, consequently, assumed and relied on your representations that the information presented in the Transaction Documents (including, without limitation, the Officer’s Certificate and the exhibits thereto) accurately and completely describe all material facts relevant to our opinion. We have not undertaken any independent inquiry into, or verification of, these facts for the purpose of rendering this opinion. While we have reviewed all representations made to us to determine their reasonableness, we have no assurance that they are or will ultimately prove to be accurate. No facts have come to our attention, however, that would cause us to question the accuracy or completeness of such facts or Transaction Documents in a material way. Our opinion is conditioned on the continuing accuracy and completeness of such representations, covenants and statements. Any material change or inaccuracy in the facts referred to, set forth, or assumed herein or in the Transaction Documents may affect our conclusions set forth herein.
We also have assumed the legal capacity of all natural persons, the genuineness of all signatures, the proper execution of all documents, the authenticity of all documents submitted to us as originals, the conformity to originals of documents submitted to us as copies, and the authenticity of the originals from which any copies were made. Where documents have been provided to us in draft form, we have assumed that the final executed versions of such documents will not differ materially from such drafts.
With respect to matters of Maryland law, we have relied upon the opinion of Venable LLP, counsel for the Company, dated November 25, 2013, that the Company is a validly organized and duly incorporated corporation under the laws of the State of Maryland.
Based upon, and subject to the foregoing and the discussion below, we are of the opinion that:
(i) | commencing with the Company’s taxable year ended on December 31, 2011, the Company has been organized in conformity with requirements for qualification as a REIT under the Code, and the Company’s actual method of operation through the date hereof has enabled it to meet and, assuming the Company’s election to be treated as a REIT is not either revoked or intentionally terminated, the Company’s proposed method of operation will enable it to continue to meet, the requirements for qualification and taxation as a REIT under the Code; |
(ii) | the discussions in the Prospectus under the captions “Material U.S. Federal Income Tax Considerations” and “Supplemental Material U.S. Federal Income Tax Considerations,” to the extent they constitute matters of law, summaries of legal matters or legal conclusions, are fair and accurate summaries of the U.S. federal income tax considerations that are likely to be material to a holder of the Company’s Stock; and |
American Realty Capital Properties, Inc.
November 26, 2013
Page 3
(iii) | the Operating Partnership has been and will be taxed as a partnership and not an association or publicly traded partnership (within the meaning of Section 7704) subject to tax as a corporation, for U.S. federal income tax purposes beginning with its first taxable year. |
We express no opinion on any issue relating to the Company, the Operating Partnership or the discussions in the Registration Statement under the captions “Material U.S. Federal Income Tax Considerations” and “Supplemental Material U.S. Federal Income Tax Considerations” other than as expressly stated above.
The Company’s qualification and taxation as a REIT will depend upon the Company’s ability to meet on a continuing basis, through actual annual operating and other results, the various requirements under the Code as described in the Registration Statement with regard to, among other things, the sources of its gross income, the composition of its assets, the level of its distributions to stockholders, and the diversity of its stock ownership. Proskauer Rose LLP will not review the Company’s compliance with these requirements on a continuing basis. Accordingly, no assurance can be given that the actual results of the operations of the Company and the Operating Partnership, the sources of their income, the nature of their assets, the level of the Company’s distributions to stockholders and the diversity of its stock ownership for any given taxable year will satisfy the requirements under the Code for the Company’s qualification and taxation as a REIT.
This opinion letter is rendered to you for your use in connection with the Registration Statement and Prospectus and may be relied upon by you and your stockholders. Except as provided in the next paragraph, this opinion letter may not be distributed, quoted in whole or in part or otherwise reproduced in any document, filed with any governmental agency, or relied upon by any other person for any other purpose (other than as required by law) without our express written consent.
We consent to the use of our name under the captions “Material U.S. Federal Income Tax Considerations” and “Legal Matters” in the Prospectus and to the use of these opinions for filing as Exhibit 8.1 to the Company’s Current Report on Form 8-K filed on the date hereof and the Registration Statement. In giving this consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of the 1933 Act, or the 1933 Act Regulations.
Sincerely yours,
/s/ Proskauer Rose LLP
Subsidiaries of American Realty Capital Properties, Inc.
Name | Jurisdiction of Formation/Incorporation | |
ARC Properties Operating Partnership LP | Delaware | |
ARCP TRS Corp. | Delaware | |
ARC Income Properties LLC | Delaware | |
ARC Income Properties III, LLC | Delaware | |
American Realty Capital Partners, LLC | Delaware | |
CRE JV Mixed Five CT Branch Holdings LLC | Delaware | |
CRE JV Mixed Five DE Branch Holdings LLC | Delaware | |
CRE JV Mixed Five IL 2 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five IL 3 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five IL 4 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five IL 5 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five MI 1 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five MI 2 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five MI 3 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five MI 4 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five MI 5 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five MI 6 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five MI 7 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five NH Branch Holdings LLC | Delaware | |
CRE JV Mixed Five NY 1 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five NY 2 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five NY 3 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five NY 4 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five NY 5 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five OH 1 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five OH 2 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five OH 3 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five OH 4 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five OH 5 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five OH 6 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five OH 7 Branch Holdings LLC | Delaware | |
CRE JV Mixed Five PA Branch Holdings LLC | Delaware | |
CRE JV Mixed Five VT Branch Holdings LLC | Delaware | |
ARC HDCOLSC001, LLC | Delaware | |
ARCP DGBLVAR001, LLC | Delaware | |
ARCP DGCRLAR001, LLC | Delaware | |
ARCP DGGRFAR001, LLC | Delaware | |
ARCP DGJNBIL001, LLC | Delaware | |
ARCP DGAPCMO001, LLC | Delaware | |
ARCP DGASGMO001, LLC | Delaware | |
ARCP DGASDMO001, LLC | Delaware | |
ARCP DGBRNMO001, LLC | Delaware | |
ARCP DGBLFMO001, LLC | Delaware | |
ARCP DGCVLMO001, LLC | Delaware | |
ARCP DGCTNMO001, LLC | Delaware | |
ARCP DGDMDMO001, LLC | Delaware | |
ARCP DGESNMO001, LLC | Delaware | |
ARCP DGHLVMO001, LLC | Delaware | |
ARCP DGLSNMO001, LLC | Delaware | |
ARCP DGLBNMO001, LLC | Delaware | |
ARCP DGPMRMO001, LLC | Delaware | |
ARCP DGQLNMO001, LLC | Delaware | |
ARCP DGSTLMO001, LLC | Delaware | |
ARCP DGSFDMO001, LLC | Delaware | |
ARCP DGCMROK001, LLC | Delaware | |
ARCP AACROMI001, LLC | Delaware | |
ARCP AACLTMI001, LLC | Delaware | |
ARCP AAFNTMI001, LLC | Delaware | |
ARCP AALVNMI001, LLC | Delaware | |
ARCP AASSMMI001, LLC | Delaware | |
ARCP AAOCTNY001, LLC | Delaware | |
ARCP AAYLNMI001, LLC | Delaware | |
ARCP WGMRBSC001, LLC | Delaware | |
ARCP GSFRENY001, LLC | Delaware | |
ARCP WGEPTMI001, LLC | Delaware | |
ARCP JDDPTIA01, LLC | Delaware | |
ARC FECCTOH001, LLC | Delaware | |
ARC FEEVLIN001, LLC | Delaware | |
ARC FEKKEIL001, LLC | Delaware | |
ARC FELDNKY002, LLC | Delaware | |
ARC FEMTVIL001, LLC | Delaware | |
ARC FEMTPPA001, LLC | Delaware | |
ARCP GSPLTNY01, LLC | Delaware | |
ARC GSMOBAL001, LLC | Delaware | |
ARCP TSRGCTX01, LLC | Delaware | |
ARCP GSWARPA001, LLC | Delaware | |
ARCP DGAFTAR01, LLC | Delaware | |
ARCP DGFPNAR01, LLC | Delaware | |
ARCP DGPCYFL01., LLC | Delaware | |
ARCP DGCNYKS01, LLC | Delaware | |
ARCP DGCVRMO01, LLC | Delaware | |
ARCP DGCCDMO01, LLC | Delaware | |
ARCP DGGFDMO01, LLC | Delaware | |
ARCP DGHVLMO01, LLC | Delaware | |
ARCP DGOGVMO01, LLC | Delaware | |
ARCP DGPMRMO01, LLC | Delaware | |
ARCP DGSNTMO01, LLC | Delaware | |
ARCP DGSNCMO01, LLC | Delaware | |
ARCP DGSJSMO01, LLC | Delaware | |
ARCP DGWSGMO01, LLC | Delaware | |
ARCP DGWNAMO01, LLC | Delaware | |
ARCP DGNWTOK01, LLC | Delaware | |
ARC GSGLOVA001, LLC | Delaware | |
ARCP MBDLSTX01, LLC | Delaware | |
ARC RBCSRNJ001, LLC | Delaware | |
ARC CVAPAGA001, LLC | Delaware | |
ARC CVVDAGA001, LLC | Delaware | |
ARC CVNVLTN001, LLC | Delaware | |
ARC IMCLBOH001, LLC | Delaware | |
ARC FDBKNIN001, LLC | Delaware | |
ARC AAATNTX001, LLC | Delaware | |
ARC FDLNXGA001, LLC | Delaware | |
ARC FECCOCA001, LLC | Delaware | |
ARC FMWSWNC001, LLC | Delaware | |
ARC WGWRNMI001, LLC | Delaware | |
ARC FDDRTMI002, LLC | Delaware | |
ARC AABDNKY001, LLC | Delaware | |
ARC AABNBKY001, LLC | Delaware | |
ARC AAHNBKY001, LLC | Delaware | |
ARC AALFDKY001, LLC | Delaware | |
ARC WGTRYMI001, LLC | Delaware | |
ARC AADTNAL001, LLC | Delaware | |
ARC AAEPSAL001, LLC | Delaware | |
ARC AAABYGA001, LLC | Delaware | |
ARC AACROGA001, LLC | Delaware | |
ARC AAHZHGA001, LLC | Delaware | |
ARC AAHVLGA001, LLC | Delaware | |
ARC AAPRYGA001, LLC | Delaware | |
ARC AATVLGA001, LLC | Delaware | |
ARC SBTPAFL001, LLC | Delaware | |
ARC AASPDOH001, LLC | Delaware | |
ARC WGCGOIL001, LLC | Delaware | |
ARC FDCMONM001, LLC | Delaware | |
ARC FMBSRLA001, LLC | Delaware | |
ARC WGCGOIL002, LLC | Delaware | |
ARC PFCNLGA001, LLC | Delaware | |
ARC WGPORAZ001, LLC | Delaware | |
ARC CVHRWMI001, LLC | Delaware | |
ARC CVGPTMI001, LLC | Delaware | |
ARC CVSBGGA001, LLC | Delaware | |
ARC CVGVLSC001, LLC | Delaware | |
ARC FMDLSTX001, LLC | Delaware | |
ARC FEBTTMT001 LLC | Delaware | |
ARC3 AAHUSTX002, LLC | Delaware | |
ARC3 AAHUSTX001, LLC | Delaware | |
ARC3 WGSTNNY001, LLC | Delaware | |
ARC3 WGMPWNJ001 LLC | Delaware | |
ARC3 WGCLACA001 LLC | Delaware | |
ARC3 DGRDLAL001 LLC | Delaware | |
ARC3 DGMLOFL001 LLC | Delaware | |
ARC3 DGMVLMO001 LLC | Delaware | |
ARC3 DGFSTOH001 LLC | Delaware | |
ARC3 DGNMSOH001 LLC | Delaware | |
ARC3 DGPYNOH001 LLC | Delaware | |
ARC3 DGPLCOH001 LLC | Delaware | |
ARC3 DGPTTTX001 LLC | Delaware | |
ARC3 DGPGSTX001 LLC | Delaware | |
ARC3 DGRGCTX001 LLC | Delaware | |
ARC3 DGRMATX001 LLC | Delaware | |
ARC3 DGAVSMO001, LLC | Delaware | |
ARC3 DGCWYMO001, LLC | Delaware | |
ARC3 DGKGCMO001, LLC | Delaware | |
ARC3 DGLKGMO001, LLC | Delaware | |
ARC3 DGSBRMO001, LLC | Delaware | |
ARC3 WGSTVMI001, LLC | Delaware | |
ARC3 DGTRTAL001, LLC | Delaware | |
ARC3 GSCOCFL001, LLC | Delaware | |
ARC3 DGMNVIN001, LLC | Delaware | |
ARC3 DGLKCLA001, LLC | Delaware | |
ARC3 DGWMRLA001, LL | Delaware | |
ARC3 FECMCCO01, LLC | Delaware | |
ARC3 FEBMTNH001, LLC | Delaware | |
ARC3 FEBVLTN001, LLC | Delaware | |
ARC3 FDFTYND001, LLC | Delaware | |
ARC3 FDNTNND001, LLC | Delaware | |
ARC3 FDRLAND001, LLC | Delaware | |
ARC3 FDMADNE001, LLC | Delaware | |
ARC3 FDSTWOK001, LLC | Delaware | |
ARC3 FDMTNSD001, LLC | Delaware | |
ARC3 FDFLATX001, LLC | Delaware | |
ARC3 DGTLSAL001, LLC | Delaware | |
ARC3 DGGDRFL001, LLC | Delaware | |
ARC3 DGGFDOH001, LLC | Delaware | |
ARC3 DGSCRMO001, LLC | Delaware | |
ARC3 DGPTCTN001, LLC | Delaware | |
ARC3 DGLFDTX001, LLC | Delaware | |
ARC3 DGMLNWI001, LLC | Delaware | |
ARC3 DGMNGWI001, LLC | Delaware | |
ARC3 DGSNSWI001, LLC | Delaware | |
ARC3 DGEDWMS001, LLC | Delaware | |
ARC3 DGGVLMS001, LLC | Delaware | |
ARC3 DGWGVMS001, LLC | Delaware | |
ARC3 GSCRGCO001, LLC | Delaware | |
ARC3 ESBKYMO001, LLC | Delaware | |
ARC3 TSATNNJ001, LLC | Delaware | |
ARC3 DGCDTLA01, LLC | Delaware | |
ARC3 DGGDRLA01, LLC | Delaware | |
ARC3 DGMGMLA01, LLC | Delaware | |
ARC3 DGMHNLA01, LLC | Delaware | |
ARC3 DGRWDLA01, LLC | Delaware | |
ARC3 DGFYTNC01, LLC | Delaware | |
ARC3 DGOIBNC01, LLC | Delaware | |
ARC3 DGVASNC01, LLC | Delaware | |
ARC3 DGCFDVA01, LLC | Delaware | |
ARC3 DGDVLVA01, LLC | Delaware | |
ARC3 DGHWLVA01, LLC | Delaware | |
ARC3 DGHSGVA001, LLC | Delaware | |
ARC3 DGHTNIA01, LLC | Delaware | |
ARC3 DGLMLIA01, LLC | Delaware | |
ARC3 DGMTLMO01, LLC | Delaware | |
ARC3 DGABTTX01, LLC | Delaware | |
ARC3 WGWTKAL01, LLC | Delaware | |
ARC3 WGFFTKY01, LLC | Delaware | |
ARC3 WGSPTLA01, LLC | Delaware | |
ARC3 WGGWDMS01, LLC | Delaware | |
ARC3 WGBYNOH01, LLC | Delaware | |
ARC3 WGASNSC01, LLC | Delaware | |
ARC3 FEGNVNC001, LLC | Delaware | |
ARC3 FETULOK001, LLC | Delaware | |
ARC3 DGSKNMO01, LLC | Delaware | |
ARC3 DGVNAMO01, LLC | Delaware | |
ARC3 FDKNSTX01, LLC | Delaware | |
ARC3 GSGRAID01, LLC | Delaware | |
ARC3 GSSTUFL001, LLC | Delaware | |
ARC3 DGAMTIL01, LLC | Delaware | |
ARC3 DGBKLMO01, LLC | Delaware | |
ARC AAGWDSC001, LLC | Delaware | |
ARC3 DGCADMI01, LLC | Delaware | |
ARC3 DGCTNMI01, LLC | Delaware | |
ARC DGDRDMI001, LLC | Delaware | |
ARC DGFLTMI001, LLC | Delaware | |
ARC3 FEKKMIN01, LLC | Delaware | |
ARC CVFKNIN001, LLC | Delaware | |
ARC AAABNIN001, LLC | Delaware | |
ARC3 FDBLXMS01, LLC | Delaware | |
ARC3 FDCRRMS01, LLC | Delaware | |
ARC3 FDGPTMS01, LLC | Delaware | |
ARC3 FDHLKMS01, LLC | Delaware | |
ARC FDCMTLA001, LLC | Delaware | |
ARC FDTFWLA001, LLC | Delaware | |
ARC FDSTLMO001, LLC | Delaware | |
ARC FDDVLMS001, LLC | Delaware | |
ARC FDOLNMS001, LLC | Delaware | |
ARC FDWNNMS001, LLC | Delaware | |
ARC FDCWLTX001, LLC | Delaware | |
ARC FDELKTX001, LLC | Delaware | |
ARC3 DGORNMO01, LLC | Delaware | |
ARC3 FEORTNY001,LLC | Delaware | |
ARC DGBMNAR001, LLC | Delaware | |
ARC DGSRTLA001, LLC | Delaware | |
ARC DGMHDMS001, LLC | Delaware | |
ARC DGSSOMS001, LLC | Delaware | |
ARC AAWRNOH001, LLC | Delaware | |
ARC SSPMTMA001, LLC | Delaware | |
ARC3 DGCMOTX001, LLC | Delaware | |
ARC3 DGGVLTX001, LLC | Delaware | |
ARC RMWFDKS001, LLC | Delaware | |
ARC DGBHMAL001, LLC | Delaware | |
ARC DGCCLAL001, LLC | Delaware | |
ARC DGGDLAL001, LLC | Delaware | |
ARC DGMLNAL001, LLC | Delaware | |
ARC DGNCYKY001, LLC | Delaware | |
ARC DGJVLLA001, LLC | Delaware | |
ARC DGNIRLA001, LLC | Delaware | |
ARC DGPTNLA001, LLC | Delaware | |
ARC DGZCYLA001, LLC | Delaware | |
ARC DGMDLMI001, LLC | Delaware | |
ARC DGBTNMO001, LLC | Delaware | |
ARC DGJNSMO001, LLC | Delaware | |
ARC DGKSCMO001, LLC | Delaware | |
ARC DGPFCMO001, LLC | Delaware | |
ARC DGPBGMO001, LLC | Delaware | |
ARC DGSFLMO001, LLC | Delaware | |
ARC DGLDVOH001, LLC | Delaware | |
ARC DGLVLOH001, LLC | Delaware | |
ARC DGNCLOH001, LLC | Delaware | |
ARC DGDKNTX001, LLC | Delaware | |
ARC DGSLBTX001, LLC | Delaware | |
ARC DGBVLVA001, LLC | Delaware | |
ARC CBEHNCT001, LLC | Delaware | |
ARC CBWMNDE001, LLC | Delaware | |
ARC CBWMNDE002, LLC | Delaware | |
ARC CBCTCIL001, LLC | Delaware | |
ARC CBCCGIL001, LLC | Delaware | |
ARC CBOFSIL001, LLC | Delaware | |
ARC CBDCRMA001, LLC | Delaware | |
ARC CBTBYMA001, LLC | Delaware | |
ARC CBWBMMA001, LLC | Delaware | |
ARC CBOSPNH001, LLC | Delaware | |
ARC CBPLMNH001, LLC | Delaware | |
ARC CBMLNNJ001, LLC | Delaware | |
ARC CBBFDOH001, LLC | Delaware | |
ARC CBPMAOH001, LLC | Delaware | |
ARC CBCLEPA001, LLC | Delaware | |
ARC CBGCYPA001, LLC | Delaware | |
ARC CBGCYPA002, LLC | Delaware | |
ARC CBHBGPA001, LLC | Delaware | |
ARC CBKZNPA001, LLC | Delaware | |
ARC CBLCRPA001, LLC | Delaware | |
ARC CBLTZPA001, LLC | Delaware | |
ARC CBMHLPA001, LLC | Delaware | |
ARC CBNSNPA001, LLC | Delaware | |
ARC CBPDAPA001, LLC | Delaware | |
ARC CBSPGPA001, LLC | Delaware | |
ARC CBSVNPA001, LLC | Delaware | |
ARC CBSCGPA001, LLC | Delaware | |
ARC CBVRNPA001, LLC | Delaware | |
ARC CBWGVPA001, LLC | Delaware | |
ARC CBYRKPA001, LLC | Delaware | |
ARC3 DGNHNMO01, LLC | Delaware | |
ARC3 DGOZKMO01, LLC | Delaware | |
ARC3 DGADYTX01, LLC | Delaware | |
ARC TKDBNOH001, LLC | Delaware | |
ARC CKPNXAZ002, LLC | Delaware | |
ARC FDRGYCO001, LLC | Delaware | |
ARC FDHTNNV001, LLC | Delaware | |
ARC FDLLKNV001, LLC | Delaware | |
ARC FDWLSNV001, LLC | Delaware | |
ARC GSFTWTX001, LLC | Delaware | |
ARC GSSPRMO001, LLC | Delaware | |
ARC GMGVAIL001, LLC | Delaware | |
ARC WGLVSNV001, LLC | Delaware | |
ARC NTMRWGA001, LLC | Delaware | |
ARC BOLLSNM001, LLC | Delaware | |
ARC FMPRUIN001, LLC | Delaware | |
ARC FMCARMI001, LLC | Delaware | |
ARC FMJSNMI001, LLC | Delaware | |
ARC FMKMLOH001, LLC | Delaware | |
ARC3 DGNCZMS001, LLC | Delaware | |
ARC TSNGNMI001, LLC | Delaware | |
ARC FEYMAAZ001, LLC | Delaware | |
ARC FEHZDKY001, LLC | Delaware | |
ARC FEGRDMI001, LLC | Delaware | |
ARC FERVLMN001, LLC | Delaware | |
ARC FEBYNTX001, LLC | Delaware | |
ARC AAWBYNJ001, LLC | Delaware | |
ARC AACPNSC001, LLC | Delaware | |
ARC WGETNOH001, LLC | Delaware | |
ARC WGESYSC001, LLC | Delaware | |
ARC WGGVLSC001, LLC | Delaware | |
ARC WGNCNSC001, LLC | Delaware | |
ARC AACFDSC001, LLC | Delaware | |
ARC GSSPRAZ001, LLC | Delaware | |
ARC DGHKYMS001, LLC | Delaware | |
ARC DGSWLMS001, LLC | Delaware | |
ARC DGSGRMS001, LLC | Delaware | |
ARC AAPSDTX001, LLC | Delaware | |
ARC DGBGRMI001, LLC | Delaware | |
ARC DGEJNMI001, LLC | Delaware | |
ARC DGGYDMI001, LLC | Delaware | |
ARC FEHBTTN001, LLC | Delaware | |
ARC DGDYLTN001, LLC | Delaware | |
ARC DGMCRTN001, LLC | Delaware | |
ARC DGMVLTN001, LLC | Delaware | |
ARC FMARAIL001, LLC | Delaware | |
ARC FDMTRNM001, LLC | Delaware | |
ARC DGRCYMN01, LLC | Delaware | |
ARC DGBYNTX001, LLC | Delaware | |
ARC DGEDFTX001, LLC | Delaware | |
ARC DGKYLTX001, LLC | Delaware | |
ARC DGLRDTX001, LLC | Delaware | |
ARC DGSNTTX001, LLC | Delaware | |
ARC DGAUSTX001, LLC | Delaware | |
ARC DGCVSLA001, LLC | Delaware | |
ARC DGSRGLA001, LLC | Delaware | |
ARC AAINZKY001, LLC | Delaware | |
ARC AAGFSNC001, LLC | Delaware | |
ARC AALWDNJ001, LLC | Delaware | |
ARC AAFLNOH001, LLC | Delaware | |
ARC AAOKCOK001, LLC | Delaware | |
ARC BJWDRGA001, LLC | Delaware | |
ARC BJBNENC001, LLC | Delaware | |
ARC BJDBNNC001, LLC | Delaware | |
ARC BJITLNC001, LLC | Delaware | |
ARC BJMGNNC001, LLC | Delaware | |
ARC BJRRDNC001, LLC | Delaware | |
ARC BJSPTNC001, LLC | Delaware | |
ARC BJCPNSC001, LLC | Delaware | |
ARC BJCTNSC001, LLC | Delaware | |
ARC STORROH002, LLC | Delaware | |
ARC STORROH003, LLC | Delaware | |
ARC STORROH001, LLC | Delaware | |
ARC FDTLSOK001, LLC | Delaware | |
ARC WGLNPMI001, LLC | Delaware | |
ARC WGANDIN001, LLC | Delaware | |
ARC WMDVLVA001 | Delaware | |
ARC FMCGOIL001 LLC | Delaware | |
ARC FMWGNIL001 LLC | Delaware | |
ARC ORONAAL001, LLC | Delaware | |
ARC TSGRYLA001, LLC | Delaware | |
ARC CVFLDPA001, LLC | Delaware | |
ARC WSOLBMS001, LLC | Delaware | |
ARC DGHKYNC001, LLC | Delaware | |
ARC DGTYNNC001, LLC | Delaware | |
ARC BBSTNCA001, LLC | Delaware | |
ARC AAHUSTX003, LLC | Delaware | |
ARC CVLVGNV001, LLC | Delaware | |
ARC DGCRTIA001, LLC | Delaware | |
ARC DGERVIA001, LLC | Delaware | |
ARC DGNSAIA001,LLC | Delaware | |
ARC DGOTWIA001, LLC | Delaware | |
ARC DGJKVIL001,LLC | Delaware | |
ARC DGLXNIL001, LLC | Delaware | |
ARC DGMRNIL001, LLC | Delaware | |
ARC DGMTMIL001, LLC | Delaware | |
ARC DGMLRMN001, LLC | Delaware | |
ARC DGOLVMN001, LLC | Delaware | |
ARC DGSPGMN001, LLC | Delaware | |
ARC DGVCTTX001, LLC | Delaware | |
ARC DGVRGMN001, LLC | Delaware | |
ARC DGCDWMO001, LLC | Delaware | |
ARC DGCRVMO001, LLC | Delaware | |
ARC DGEDNMO001, LLC | Delaware | |
ARC DGGWRMO001,LLC | Delaware | |
ARC DGHKPMO001, LLC | Delaware | |
ARC DGLBNMO001, LLC | Delaware | |
ARC DGLBNMO002, LLC | Delaware | |
ARC DGMBHMO001, LLC | Delaware | |
ARC DGMRVMO001, LLC | Delaware | |
ARC DGMRHMO001, LLC | Delaware | |
ARC DGOSCMO001, LLC | Delaware | |
ARC DGOZKMO001, LLC | Delaware | |
ARC DGRBVMO001, LLC | Delaware | |
ARC DGRMTMO001,LLC | Delaware | |
ARC DGSDLMO001, LLC | Delaware | |
ARC DGSKNMO001, LLC | Delaware | |
ARC DGFMTNM001,LLC | Delaware | |
ARC DGBLSTX001, LLC | Delaware | |
ARC DGBYNTX003, LLC | Delaware | |
ARC DGCYLTX001, LLC | Delaware | |
ARC DGCPCTX002, LLC | Delaware | |
ARC DGDNATX001, LLC | Delaware | |
ARC DGDNATX002, LLC | Delaware | |
ARC DGEBGTX001, LLC | Delaware | |
ARC DGMPRTX001, LLC | Delaware | |
ARC DGNBFTX001,LLC | Delaware | |
ARC DGDNATX003, LLC | Delaware | |
ARC DGTRYTX001, LLC | Delaware | |
ARC DGWCOTX001, LLC | Delaware | |
ARC DGWLCTX001, LLC | Delaware | |
ARC CKMTZGA001, LLC | Delaware | |
ARC DGCVTMI001, LLC | Delaware | |
ARC DGFLTMI002, LLC | Delaware | |
ARC DGIRRMI001, LLC | Delaware | |
ARC DGNGEMI001, LLC | Delaware | |
ARC DGRSCMI001, LLC | Delaware | |
ARC DGABNKS001, LLC | Delaware | |
ARC DGCFLKS001, LLC | Delaware | |
ARC DGEREKS001, LLC | Delaware | |
ARC DGGNCKS001, LLC | Delaware | |
ARC DGHPRKS001, LLC | Delaware | |
ARC DGHBTKS001, LLC | Delaware | |
ARC DGKMNKS001, LLC | Delaware | |
ARC DGMLGKS001, LLC | Delaware | |
ARC DGMNPKS001, LLC | Delaware | |
ARC DGPMNKS001, LLC | Delaware | |
ARC DGSDNKS001, LLC | Delaware | |
ARC DGSCSKS001, LLC | Delaware | |
ARC DGCLROK001, LLC | Delaware | |
ARC DGHHNOK001, LLC | Delaware | |
ARC DGLXNOK001, LLC | Delaware | |
ARC DGMADOK001, LLC | Delaware | |
ARC DGMVLOK001, LLC | Delaware | |
ARC DGRSSOK001, LLC | Delaware | |
ARC DGBYNTX002, LLC | Delaware | |
ARC DGGWRTX001, LLC | Delaware | |
ARC DGLMQTX001, LLC | Delaware | |
ARC DGLBKTX001, LLC | Delaware | |
ARC DGMPTTX001, LLC | Delaware | |
ARC DGTLRTX001, LLC | Delaware | |
ARC DGCTGIL001, LLC | Delaware | |
ARC DGSTLMO001, LLC | Delaware | |
ARC DGSTLMO002, LLC | Delaware | |
ARC FDCLVOH003, LLC | Delaware | |
ARC FDCLVOH001, LLC | Delaware | |
ARC FDSTLMO003, LLC | Delaware | |
ARC FDSTLMO002, LLC | Delaware | |
ARC FDSTLMO004, LLC | Delaware | |
ARC DGJKNMS001, LLC | Delaware | |
ARC DGMDNMS002, LLC | Delaware | |
ARC DGMDNMS001, LLC | Delaware | |
ARC FDARCID001, LLC | Delaware | |
ARC FDKBYID001, LLC | Delaware | |
ARC FDSSGNV001, LLC | Delaware | |
ARC FDKMRWY001, LLC | Delaware | |
ARC3 FEPBGWV001, LLC | Delaware | |
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ARC FDGPTMS002, LLC | Delaware | |
ARC FDHBGMS001, LLC | Delaware | |
ARC KLMGYAL001, LLC | Delaware | |
ARC KLPHCAL001, LLC | Delaware | |
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ARC KLORLFL002, LLC | Delaware | |
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ARC KLPLCFL001, LLC | Delaware | |
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ARC KLABYGA001, LLC | Delaware | |
ARC KLATLGA001, LLC | Delaware | |
ARC KLAUGGA001, LLC | Delaware | |
ARC KLCBSGA001, LLC | Delaware | |
ARC KLATLGA002, LLC | Delaware | |
ARC KLMCNGA001, LLC | Delaware | |
ARC KLMDGGA001, LLC | Delaware | |
ARC KLSNVGA001, LLC | Delaware | |
ARC KLGFPMS001, LLC | Delaware | |
ARC KLJAKMS001, LLC | Delaware | |
ARC KJJAKMS002, LLC | Delaware | |
ARC KLPRLMS001, LLC | Delaware | |
ARC KLCTNTN001, LLC | Delaware | |
ARC KLKNXTN001, LLC | Delaware | |
ARC KLEPTGA001, LLC | Delaware | |
ARC MFNDLTX001, LLC | Delaware | |
ARC PRRCRNY001, LLC | Delaware | |
ARC CKAKNOH001, LLC | Delaware | |
ARC3 FEQNCIL01, LLC | Delaware | |
ARC FEOMKWA001, LLC | Delaware | |
ARC3 FEEWCWA001, LLC | Delaware | |
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ARC CBDRRCT001, LLC | Delaware | |
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ARC CBHMNCT001, LLC | Delaware | |
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ARC CBMDNMA002, LLC | Delaware | |
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ARC CBMDFMA001, LLC | Delaware | |
ARC CBNBDMA001, LLC | Delaware | |
ARC CBRNDMA 001, LLC | Delaware | |
ARC CBSVLMA001, LLC | Delaware | |
ARC CBWTNMA001, LLC | Delaware | |
ARC CBWTPMA001, LLC | Delaware | |
ARC CBMCRNH001, LLC | Delaware | |
ARC CBALPPA001, LLC | Delaware | |
ARC CBBRFPA001, LLC | Delaware | |
ARC CBDLSPA001, LLC | Delaware | |
ARC CBGSDPA001, LLC | Delaware | |
ARC CBHTNPA001, LLC | Delaware | |
ARC CBHSTPA001, LLC | Delaware | |
ARC CBLCRPA002, LLC | Delaware | |
ARC CBMBGPA001, LLC | Delaware | |
ARC CBMTLPA001, LLC | Delaware | |
ARC CBPBGPA001, LLC | Delaware | |
ARC CBPBGPA002, LLC | Delaware | |
ARC CBTMPPA001, LLC | Delaware | |
ARC CBTCKPA001, LLC | Delaware | |
ARC CBWHNPA001, LLC | Delaware | |
ARC CBCVNRI001, LLC | Delaware | |
ARC CBJTNRI001, LLC | Delaware | |
ARC CBNPRRI001, LLC | Delaware | |
ARC CBWKFRI001, LLC | Delaware | |
ARC CBWRNRI001, LLC | Delaware | |
ARC KGPGDAR001, LLC | Delaware | |
ARC KGSWDAR001. LLC | Delaware | |
ARC KGTGAND001, LLC | Delaware | |
ARC MFRLHNC001, LLC | Delaware | |
ARC MFWSNNC001, LLC | Delaware | |
ARC WGMEMTN001, LLC | Delaware | |
ARC ORLMIWY001, LLC | Delaware | |
ARC GMFTWIN001, LLC | Delaware | |
ARC FDAVGTX001, LLC | Delaware | |
ARC NTSTLMO001, LLC | Delaware | |
ARC RALVLOH001, LLC | Delaware | |
ARC MFCBSIN001, LLC | Delaware | |
ARC CVRTRNY001, LLC | Delaware | |
ARC WGCDVTN001, LLC | Delaware | |
ARC CBBSNGA001, LLC | Delaware | |
ARC CBBMNGA001, LLC | Delaware | |
ARC CBMBNNC001, LLC | Delaware | |
ARC CBEPRVA001, LLC | Delaware | |
ARC CBWSKVA001, LLC | Delaware | |
ARC RAMAROH001, LLC | Delaware | |
ARC RALMAOH001, LLC | Delaware | |
ARC WGCTPMI001, LLC | Delaware | |
ARC FDKLNMS001, LLC | Delaware | |
ARC ACLSHIL001, LLC | Delaware | |
ARC SESSAFL001, LLC | Delaware | |
ARC KGBTVAR001, LLC | Delaware | |
ARC KGLWLAR001, LLC | Delaware | |
ARC KGRGSAR001, LLC | Delaware | |
ARC KGOTMIA001, LLC | Delaware | |
ARC TRSEAWA001, LLC | Delaware | |
ARC GEAUBAL001, LLC | Delaware | |
ARC DGDYLLA001, LLC | Delaware | |
ARC RMWFDKS002, LLC | Delaware | |
ARC AATVLPA001, LLC | Delaware | |
ARC AASWRTN001, LLC | Delaware | |
ARC BJBSCNC001, LLC | Delaware | |
ARC BJMKCSC001, LLC | Delaware | |
ARC BJWTBSC001, LLC | Delaware | |
ARC TSPYMNH001 , LLC | Delaware | |
ARC CVMCBPA001, LLC | Delaware | |
ARC RAJFVIN001, LLC | Delaware | |
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ARC RALXNKY001 LLC | Delaware | |
ARC RAPRSKY001 , LLC | Delaware | |
ARC RASVLKY001, LLC | Delaware | |
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ARC RAHTNWV001, LLC | Delaware | |
ARC DGMNDAR001, LLC | Delaware | |
ARC DGWSTAR001, LLC | Delaware | |
ARC MFFNCSC001, LLC | Delaware | |
ARC FDCHOTX001, LLC | Delaware | |
ARC FDOKTTX001, LLC | Delaware | |
ARC CBSTNCT002, LLC | Delaware | |
ARC CBLWSDE001, LLC | Delaware | |
ARC CBSDSMA001, LLC | Delaware | |
ARC CBSFDMA001, LLC | Delaware | |
ARC CBWBNMA001, LLC | Delaware | |
ARC CBKNENH001, LLC | Delaware | |
ARC CBMCRNH002, LLC | Delaware | |
ARC CBSLMNH001, LLC | Delaware | |
ARC CBFLNOH001, LLC | Delaware | |
ARC CBPMAOH002, LLC | Delaware | |
ARC CBSRLOH001, LLC | Delaware | |
ARC CBATAPA001, LLC | Delaware | |
ARC CBALYPA001, LLC | Delaware | |
ARC CBDLBPA001, LLC | Delaware | |
ARC CBDXHPA001, LLC | Delaware | |
ARC CBEREPA001, LLC | Delaware | |
ARC CBKSNPA001, LLC | Delaware | |
ARC CBLTBPA001, LLC | Delaware | |
ARC CBLBLPA001, LLC | Delaware | |
ARC CBMRSPA001, LLC | Delaware | |
ARC CBMCRPA001, LLC | Delaware | |
ARC CBMFDPA001, LLC | Delaware | |
ARC CBMTPPA001, LLC | Delaware | |
ARC CBOMTPA001, LLC | Delaware | |
ARC CBPDAPA003, LLC | Delaware | |
ARC CBPBGPA011, LLC | Delaware | |
ARC CBPBGPA007, LLC | Delaware | |
ARC CBPBGPA009, LLC | Delaware | |
ARC CBPBGPA006, LLC | Delaware | |
ARC CBTRNPA001, LLC | Delaware | |
ARC CBUDYPA001, LLC | Delaware | |
ARC CBMBYVT001, LLC | Delaware | |
ARC HBRHLNC001, LLC | Delaware | |
ARC WGCLBMS001, LLC | Delaware | |
ARC KGFTNCO001, LLC | Delaware | |
ARC KGMMTCO001, LLC | Delaware | |
ARC KGCYNWY001, LLC | Delaware | |
ARC SEGCTVA001, LLC | Delaware | |
ARC SEHPNVA002, LLC | Delaware | |
ARC SEHPNVA001, LLC | Delaware | |
ARC AACLRAL001, LLC | Delaware | |
ARC KGMCTIA001, LLC | Delaware | |
ARC AASMSWV001, LLC | Delaware | |
ARC ASFVLAR001, LLC | Delaware | |
ARC DDAPKMI001, LLC | Delaware | |
ARC PSMGYAL001, LLC | Delaware | |
ARC PSCLTNC002, LLC | Delaware | |
ARC PSCLTNC004, LLC | Delaware | |
ARC PSCLTNC001, LLC | Delaware | |
ARC PSCLTNC003, LLC | Delaware | |
ARC PSCNRNC001, LLC | Delaware | |
ARC PSCLSNC001, LLC | Delaware | |
ARC PSLTNNC001, LLC | Delaware | |
ARC PSMTSNC001, LLC | Delaware | |
ARC PSTVLNC001, LLC | Delaware | |
ARC PSFMLSC001, LLC | Delaware | |
ARC DDBVLTX001, LLC | Delaware | |
ARC WGTLQOK001, LLC | Delaware | |
ARC AMAHBCA001, LLC | Delaware | |
ARC WGACWGA002, LLC | Delaware | |
ARC ACAWBWI001, LLC | Delaware | |
ARC CVSPGPA001, LLC | Delaware | |
ARC ASDTNGA001, LLC | Delaware | |
ARC KFCPTCA001, LLC | Delaware | |
ARC BWNCNOH001, LLC | Delaware | |
ARC MFBSEID001, LLC | Delaware | |
ARC FEWVRNV001, LLC | Delaware | |
ARC FEWCANV001, LLC | Delaware | |
ARC AABHMAL002, LLC | Delaware | |
ARC AABHMAL001, LLC | Delaware | |
ARC AAFTWIN002, LLC | Delaware | |
ARC AAFTWIN001, LLC | Delaware | |
ARC AACMBPA001, LLC | Delaware | |
ARC BJGWDSC001, LLC | Delaware | |
ARC WGABOPR001, LLC | Delaware | |
ARC WGLPSPR001, LLC | Delaware | |
ARC AAKNAWI001, LLL | Delaware | |
ARC FELWLAR001, LLC | Delaware | |
ARC TDFMTME001, LLC | Delaware | |
ARC WGPHXAZ001, LLC | Delaware | |
ARC DDOSCAR001, LLC | Delaware | |
ARC KHHWLMI001, LLC | Delaware | |
ARC KGMGEOK001, LLC | Delaware | |
ARC KGWKEIA001, LLC | Delaware | |
ARC QBFNTMI001, LLC | Delaware | |
ARC QBGBCMI001, LLC | Delaware | |
ARC WGDBNMI001, LLC | Delaware | |
ARC WGLVNMI001, LLC | Delaware | |
ARC HVVMNSD001, LLC | Delaware | |
ARC CVSCDFL001, LLC | Delaware | |
ARC AABBVKY001, LLC | Delaware | |
ARC AALBYKY001, LLC | Delaware | |
ARC AAMSEMI001, LLC | Delaware | |
ARC TSOCTAL001, LLC | Delaware | |
ARC VSEPKIL001, LLC | Delaware | |
ARC AASNAKS001, LLC | Delaware | |
ARC WGLVSNV002, LLC | Delaware | |
ARC AZCGOIL001, LLC | Delaware | |
ARC FMABLNC001, LLC | Delaware | |
ARC FMAGRNC001, LLC | Delaware | |
ARC FMABONC001, LLC | Delaware | |
ARC FMTVLNC001, LLC | Delaware | |
ARC FDDRTMI003, LLC | Delaware | |
ARC AARYNLA001, LLC | Delaware | |
ARC TBHGHMA001, LLC | Delaware | |
ARC WGAKNOH001, LLC | Delaware | |
ARC FEPHRMI001, LLC | Delaware | |
ARC AASLGPA001, LLC | Delaware | |
ARC FDMLBFL001, LLC | Delaware | |
ARC FDOMDFL001, LLC | Delaware | |
ARC AACLNIN001, LLC | Delaware | |
ARC KBSRPNY001, LLC | Delaware | |
ARC AAETNOH001, LLC | Delaware | |
ARC AAVWTOH001, LLC | Delaware | |
CNL Funding 2000-A, LLC | Delaware | |
CNL Net Lease Funding 2001, LLC | Delaware | |
CNL Net Lease Funding 2003, LLC | Delaware | |
Net Lease Funding 2005, LLC | Delaware | |
ARCP CNL Net Lease Funding 2001 GP, LLC | Delaware | |
ARCP Net Lease Funding 2005 GP, LLC | Delaware | |
ARCP CNL Funding 2000-A GP, LLC | Delaware | |
ARCP USRP Funding 2001-A GP, LLC | Delaware | |
ARC HRPSUTX001 GP, LLC | Delaware | |
ARC HRPWOTX001 GP, LLC | Delaware | |
USRP Funding 2001, LP | Delaware | |
ARC AAEDNNC001, LLC | Delaware | |
ARC MMWKAWI001, LLC | Delaware | |
ARC FDHRSTN001, LLC | Delaware | |
ARC DGBTVAR001, LLC | Delaware | |
ARC DGBTVAR002, LLC | Delaware | |
ARC DGBBEAR001, LLC | Delaware | |
ARC DGBLYAR001, LLC | Delaware | |
ARC DGDSAAR001, LLC | Delaware | |
ARC DGDMSAR001, LLC | Delaware | |
ARC DGGVLAR001, LLC | Delaware | |
ARC DGHGNAR001, LLC | Delaware | |
ARC DGLKVAR001, LLC | Delaware | |
ARC DGLPOAR001, LLC | Delaware | |
ARC DGLTRAR001, LLC | Delaware | |
ARC DGMVLAR001, LLC | Delaware | |
ARC DGMGHAR001, LLC | Delaware | |
ARC DGQTMAR001, LLC | Delaware | |
ARC DGSRYAR001, LLC | Delaware | |
ARC DGTKMAR001, LLC | Delaware | |
ARC DGWTHAR001, LLC | Delaware | |
ARC WGOTEKS001, LLC | Delaware | |
ARC FEMBNFL001, LLC | Delaware | |
ARC FDPLNTX001, LLC | Delaware | |
ARC DDSTPNC001, LLC | Delaware | |
ARC WGBTMMD001, LLC | Delaware | |
ARC MFRKHSC001, LLC | Delaware | |
ARC AAFTAWI001, LLC | Delaware | |
ARC FDGBGKS001, LLC | Delaware | |
ARC FDLBTNC001, LLC | Delaware | |
ARC FDJSNMI001, LLC | Delaware | |
ARC HRPSUTX001, LP | Delaware | |
ARC HRPELKY001, LLC | Delaware | |
ARC HRPWOTX001, LP | Delaware | |
RC HRPWARI001, LLC | Delaware | |
ARC WGORLFL001, LLC | Delaware | |
ARC DBPPROP001, LLC | Delaware | |
Tiger Acquisition, LLC | Delaware | |
Safari Acquisition, LLC | Delaware | |
Thunder Acquisition, LLC | Delaware | |
Clark Acquisition, LLC | Delaware | |
ARC CBHBHNJ001, LLC | Delaware | |
ARC WSOLBMN001, LLC | Delaware | |
ARC DGMTGMN001, LLC | Delaware |
Exhibit 99.1
RISK FACTORS
Risk Factors Relating to our Recent and Pending Mergers with CapLease, ARCT IV and Cole and Other Recent Transactions
The exchange ratios in the ARCT IV Merger are fixed and will not be adjusted in the event of any change in either our common stock price or ARCT IV’s stock price.
Upon the consummation of our pending merger with ARCT IV, or the ARCT IV Merger, each share of ARCT IV common stock will be converted into the right to receive:
· | $9.00 in cash; |
· | 0.5190 shares of our common stock; and |
· | 0.5937 shares of our Series F Cumulative Redeemable Preferred Stock, or the Series F Preferred Stock. |
The exchange ratios were fixed in the merger agreement relating to the ARCT IV Merger, as amended, or the ARCT IV Merger Agreement, and will not be adjusted for changes in the market price of our common stock or the value of ARCT IV common stock. Changes in the price of our common stock prior to the ARCT IV Merger could affect the market value of the merger consideration that ARCT IV stockholders will receive at the effective time of the ARCT IV Merger. Stock price changes may result from a variety of factors (many of which are beyond our control), including the following factors:
· | market reaction to the announcement of the revised terms of the ARCT IV Merger or the prospects of the combined company; |
· | changes in market assessments of the business, operations, financial position and prospects of either company; |
· | market assessments of the likelihood that the ARCT IV Merger will be completed; |
· | interest rates, general market and economic conditions and other factors generally affecting the value of triple net lease payments or the price of our common stock and ARCT IV’s common stock; |
· | federal, state and local legislation, governmental regulation and legal developments in the businesses in which ARCT IV and we operate; and |
· | other factors beyond our control or ARCT IV’s control, including those described or referred to elsewhere in this “Risk Factors” section. |
The price of our common stock at the consummation of the ARCT IV Merger may vary from its price on the date the first amendment to the ARCT IV Merger Agreement was executed, which is when the terms of the merger consideration were revised, on the date hereof and on the date of the special meeting of ARCT IV. As a result, the market value of the merger consideration represented by the stock exchange ratio also may vary. For example, based on the range of closing prices of our common stock during the period from October 4, 2013, the last trading day before public announcement of the revised terms of the ARCT IV Merger, through November 22, 2013, the latest practicable date before the date of this Current Report on Form 8-K, the exchange ratio of 0.5190 shares of our common stock represented a market value ranging from a low of $6.35 to a high of $7.09.
If the price of our common stock increases between the date the first amendment to the ARCT IV Merger Agreement was signed and the effective time of the ARCT IV Merger, ARCT IV stockholders will receive shares of our common stock that have a market value upon completion of the ARCT IV Merger that is greater than the market value of such shares calculated pursuant to the stock exchange ratio when the first amendment to the ARCT IV Merger Agreement was signed. Therefore, while the number of shares of our common stock to be issued per share of ARCT IV common stock is fixed, our stockholders cannot be sure of the market value of the consideration that will be paid to ARCT IV stockholders electing to receive our common stock upon completion of the ARCT IV Merger.
In addition, although there is currently no active trading market for ARCT IV common stock, the value of ARCT IV common stock at the consummation of the ARCT IV Merger may vary from its value on the date the first amendment to the ARCT IV Merger Agreement was executed, on the date hereof and on the date of the special meeting of ARCT IV. As a result of this or other factors, the value of the merger consideration paid to holders of ARCT IV common stock could be more or less than $30.43, which represents the nominal value of the merger consideration payable as of the date the first amendment to the ARCT IV Merger Agreement was signed.
The exchange ratio in the Cole Merger is fixed and will not be adjusted in the event of any change in either our common stock price or Cole’s stock price.
Upon the consummation of our pending merger with Cole, or the Cole Merger, each share of Cole common stock will be converted into the right to receive, at the election of the holder of such share of Cole common stock, (a) 1.0929 shares of our common stock, with cash paid in lieu of fractional shares, or (b) cash equal to $13.82 (subject to proration in accordance with the merger agreement relating to the Cole Merger, or the Cole Merger Agreement). The exchange ratio was fixed in the Cole Merger Agreement and will not be adjusted for changes in the market price of our common stock or the value of Cole common stock. Changes in the price of our common stock and Cole common stock prior to the Cole Merger will affect the market value of the merger consideration that Cole stockholders electing to receive shares of our common stock will receive at the effective time of the Cole Merger and the market value of the Cole common stock received by us. Stock price changes may result from a variety of factors (many of which are beyond our control), including the following factors:
· | market reaction to the announcement of the Cole Merger and the prospects of the combined company; |
· | changes in the respective businesses, operations, assets, liabilities and prospects of the company and Cole; |
· | changes in market assessments of the business, operations, financial position and prospects of either company; |
· | market assessments of the likelihood that the Cole Merger will be completed; |
· | interest rates, general market and economic conditions and other factors generally affecting the value of triple net lease payments or the price of our common stock and Cole’s common stock; |
· | federal, state and local legislation, governmental regulation and legal developments in the businesses in which we and Cole operate; and |
· | other factors beyond our control or Cole’s control, including those described or referred to elsewhere in this “Risk Factors” section. |
The price of our common stock and Cole common stock at the consummation of the Cole Merger may vary from their prices on the date the Cole Merger Agreement was executed and on the date hereof. As a result, the market value of the merger consideration represented by the stock exchange ratio will also vary. For example, based on the range of closing prices of our common stock during the period from October 22, 2013, the last trading day before public announcement of the Cole Merger, through November 20, 2013, the latest practicable date before the date of this Current Report on Form 8-K, the exchange ratio of 1.0929 shares of our common stock represented a market value ranging from a low of $13.66 to a high of $15.24.
2 |
If the price of our common stock increases between the date the Cole Merger Agreement was signed and the effective time of the Cole Merger, Cole stockholders electing to receive our common stock will receive shares of our common stock that have a market value upon completion of the Cole Merger that is greater than the market value of such shares calculated pursuant to the stock exchange ratio when the Cole Merger Agreement was signed. Therefore, while the number of shares of our common stock to be issued per share of Cole common stock (for which a stock election is made) is fixed, our stockholders cannot be sure of the market value of the consideration that will be paid to Cole stockholders electing to receive our common stock upon the completion of the Cole Merger.
In addition, the value of Cole common stock at the consummation of the Cole Merger may decrease from its value on the date the Cole Merger Agreement was executed and on the date hereof. As a result, the market value of Cole common stock could be less than $13.82, which represents the merger consideration payable if a Cole stockholder elects to receive cash (subject to any proration in accordance with the Cole Merger Agreement), or the value of Cole common stock on such dates.
Each of the ARCT IV and Cole Mergers and the transactions related thereto are subject to approval by the common stockholders of ARCT IV and Cole, and the Cole Merger and the transactions related thereto are subject to approval by our stockholders.
In order for the ARCT IV Merger to be completed, ARCT IV stockholders must approve the ARCT IV Merger and the other transactions contemplated by the ARCT IV Merger Agreement, which requires the affirmative vote of the holders of at least a majority of the outstanding shares of ARCT IV common stock entitled to vote on such proposal at the ARCT IV special meeting. If such required vote is not obtained by March 31, 2014 (subject to the right of each of us and ARCT IV to extend such date by up to 60 days), the ARCT IV Merger may not be consummated.
In order for the Cole Merger to be completed, Cole stockholders must approve the Cole Merger and the other transactions contemplated by the Cole Merger Agreement, which requires the affirmative vote of the holders of not less than a majority of the outstanding shares of Cole common stock entitled to vote on such proposal at the Cole special meeting. In addition, while a vote of our stockholders is not required to approve the Cole Merger, the approval of our stockholders is required under applicable NASDAQ rules in order for us to be authorized to issue the shares of our common stock to Cole stockholders as part of the Cole Merger consideration. Approval of the issuance of shares of our common stock to Cole stockholders under NASDAQ rules requires approval of at least a majority of the total votes cast, provided that the total votes cast represent at least a majority of the outstanding shares of our common stock entitled to vote on such proposal. If either or both of these required votes is not obtained by June 30, 2014 (subject to the right of each of the company and Cole to extend such date for up to four (4) successive thirty (30) day periods in order to obtain certain lender consents), the Cole Merger may not be consummated.
The failure to achieve expected benefits and unanticipated costs relating to each of the ARCT IV Merger and the Cole Merger could reduce our financial performance.
If either of the ARCT IV Merger or the Cole Merger does not occur, we may incur payment obligations to ARCT IV or Cole, as applicable.
If either of the ARCT IV Merger Agreement or the Cole Merger Agreement is terminated under certain circumstances, we may be obligated to pay the other party expense reimbursements or fees. For example, in the event that ARCT IV stockholders do not approve the ARCT IV Merger Agreement and ARCT IV has not received a competing acquisition proposal, we may be obligated to pay ARCT IV $5.0 million in expense reimbursements. The Cole Merger Agreement provides that if the Cole Merger Agreement is terminated under certain circumstances, we may be obligated to pay Cole $10.0 million in expense reimbursements. Additionally, under certain circumstance we may be obligated to pay Cole a reverse break-up fee of $110.0 million and, under other circumstances, we may be obligated to pay Cole a reverse break-up fee of $5.0 million.
3 |
Failure to consummate the ARCT IV Merger and the Cole Merger could negatively impact our future business and financial results.
If either of the ARCT IV and Cole Mergers are not consummated, our ongoing businesses could be adversely affected and we will be subject to several risks, including the following:
· | our having to pay certain costs, including unanticipated costs, relating to the ARCT IV and Cole Mergers, such as legal, accounting, financial advisory, filing, printing and mailing fees; |
· | our being required, under certain circumstances, to pay to ARCT IV $5.0 million in expense reimbursements or to Cole $110.0 million in fees and in other circumstances to pay Cole a fee of $5.0 million; and |
· | the diversion of management focus and resources from operational matters and other strategic opportunities while working to implement the ARCT IV and Cole Mergers. |
If the ARCT IV Merger and the Cole Merger are not consummated, we will not achieve the expected benefits thereof and will be subject to the risks described thereof and will be subject to the risks described above, which could materially adversely affect our business, financial results and stock price.
The ARCT IV Merger Agreement and the Cole Merger Agreement each contains provisions that grant the board of directors of ARCT IV, or Cole, as applicable, with a general ability to terminate the ARCT IV Merger Agreement or the Cole Merger Agreement, as applicable, based on the exercise of the directors’ duties.
ARCT IV and Cole may terminate the ARCT IV Merger Agreement and the Cole Merger Agreement, respectively, subject to the terms thereof, if the applicable board of directors determines in good faith, after consultation with outside legal counsel, that failure to change its recommendation with respect to the ARCT IV Merger or the Cole Merger, respectively (and to terminate the related merger agreement), would be inconsistent with such directors’ duties under applicable law. If either of such Mergers is not completed, our ongoing business could be adversely affected and we will be subject to several risks, including the risks described elsewhere in this “Risk Factors” section.
There may be unexpected delays in the consummation of the ARCT IV and Cole Mergers, which could impact our ability to timely achieve the benefits associated with the ARCT IV and Cole Mergers.
The ARCT IV Merger is expected to close during the fourth quarter of 2013, assuming that all of the conditions in the ARCT IV Merger Agreement are satisfied or waived. The ARCT IV Merger Agreement provides that either we or ARCT IV may terminate the ARCT IV Merger Agreement if the ARCT IV Merger has not occurred by March 31, 2014 (subject to the right of each of the company and ARCT IV to extend this date by a period of up to 60 days). Additionally, the Cole Merger is expected to close during the first quarter of 2014, assuming that all of the conditions in the Cole Merger Agreement are satisfied or waived. The Cole Merger Agreement provides that either we or Cole may terminate the Cole Merger Agreement if the Cole Merger has not occurred by June 30, 2014 (subject to the right of each of the company and Cole to extend this date for up to four (4) successive thirty (30) day periods in order to obtain certain lender consents). Certain events may delay the consummation of the ARCT IV Merger and the Cole Merger. Some of the events that could delay the consummation of the ARCT IV Merger and the Cole Merger include difficulties in obtaining the approval of stockholders, or satisfying the other closing conditions to which each Merger is subject. Additionally, the closing of the Cole Merger is conditioned on consummation of the ARCT IV Merger. Accordingly, if the consummation of the ARCT IV Merger is delayed, the consummation of the Cole Merger may also be delayed.
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Each of the ARCT IV Merger and the Cole Merger is subject to a number of conditions which, if not satisfied or waived, would adversely impact our ability to complete such Mergers.
The ARCT IV Merger, which is expected to close during the fourth quarter of 2013, is subject to certain closing conditions, including, among other things (a) the effectiveness of a registration statement on Form S-4 containing a proxy statement/prospectus, pursuant to which shares of our common stock and Series F Preferred Stock will be issued, (b) the approval of the ARCT IV Merger by at least a majority of all the votes entitled to be cast on the matter by the holders of all of ARCT IV’s outstanding shares of common stock at the ARCT IV special meeting, (c) the accuracy of the other parties’ representations and warranties and compliance with covenants, subject in each case to materiality standards, and (d) approval by our board of directors of an annual distribution rate of $0.94 per share of our common stock (which our board of directors has approved in connection with the closing of the CapLease Merger).
Additionally, the Cole Merger, which is expected to close during the first quarter of 2014, is subject to certain closing conditions, including, among other things (a) the effectiveness of a registration statement on Form S-4 containing a joint proxy statement/prospectus, pursuant to which shares of our common stock will be issued, (b) the approval of the Cole Merger by not less than a majority of all the votes entitled to be cast on the matter by the holders of all of Cole’s outstanding shares of common stock at the Cole special meeting, (c) the approval of the issuance of our common stock to the Cole stockholders by the holders of at least a majority of the votes cast by our stockholders (provided the total number of votes cast constitutes a quorum), (d) the receipt of certain mortgage lender consents, (e) the consummation of the ARCT IV Merger, (f) the accuracy of the other parties’ representations and warranties and compliance with covenants, subject in each case to materiality standards, (g) the consummation of certain steps relating to the transformation to self-management, (h) approval of FINRA of the Continuing Membership Application of Cole Capital Corporation, Cole’s broker-dealer subsidiary and (i) delivery of certain tax opinions.
There can be no assurance these conditions will be satisfied or waived, if permitted or the occurrence of any effect, event, development or change will not transpire. Therefore, there can be no assurance with respect to the timing of the consummation of the ARCT IV Merger and the Cole Merger or whether the ARCT IV Merger or the Cole Merger will be completed at all.
Your ownership position in the company will be diluted in connection with the ARCT IV Merger, the Cole Merger and the conversion of our Series D Cumulative Convertible Preferred Stock.
In connection with the ARCT IV Merger, we expect to issue approximately 36.9 million shares of our common stock to the holders of ARCT IV common stock, based on the number of shares of ARCT IV common stock outstanding on ARCT IV’s record date. In connection with the Cole Merger, we expect to issue a maximum of approximately 513 million shares of our common stock to the holders of Cole common stock, assuming 100% of the merger consideration is our common stock, based on the number of shares of Cole common stock outstanding on October 22, 2013, the last trading day before public announcement of the Cole Merger.
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Following the consummation of the ARCT IV Merger and Cole Merger, ARCT IV stockholders and Cole stockholders are expected to hold approximately 69% of the combined company’s common stock outstanding based on the number of our shares of common stock outstanding on November 20, 2013, the number of shares of common stock of ARCT IV outstanding on its record date, the number of shares of common stock of Cole outstanding on October 22, 2013, the last trading day before public announcement of the Cole Merger, and excludes any additional shares that may be issued prior to the effective time of each of the ARCT IV Merger and the Cole Merger.
Additionally, if holders of shares of Series D Cumulative Convertible Preferred Stock elect to convert such shares into shares of common stock, we may be required to issue up to approximately 21.8 million additional shares of common stock upon the conversion of the Series D Cumulative Convertible Preferred Stock, assuming a common stock price of $13.59 per share.
The conversion of shares of Series D Cumulative Convertible Preferred Stock into shares of Series E Cumulative Preferred Stock would result in the issuance of additional shares that have a dividend preference and liquidation preference over shares of our common stock, which would be exacerbated if the fair market value of such Series E Cumulative Preferred Stock falls below the Conversion Price (as defined in the articles supplementary for the Series D Cumulative Convertible Preferred Stock).
Holders of Series D Cumulative Convertible Preferred Stock, which was issued promptly following the closing of the CapLease Merger on November 5, 2013, may elect to convert such stock into shares of Series E Cumulative Preferred Stock, which series will be designated by us at the time of such election. Under the terms of the articles supplementary for the Series D Cumulative Convertible Preferred Stock, shares of Series D Cumulative Convertible Preferred Stock may be converted into an equal number of shares of Series E Cumulative Preferred Stock so long as the fair market value of such shares of Series E Cumulative Convertible Stock (as determined by a nationally recognized investment bank or valuation firm selected by the stockholder electing to convert such shares and reasonably satisfactory to us) remain above the Conversion Price (as defined in the articles supplementary for the Series D Cumulative Convertible Preferred Stock). If such fair market value drops below such Conversion Price, we must issue to each converting stockholder a number of additional shares such that the aggregate fair market value of such shares of Series E Cumulative Preferred Stock being issued equals the Conversion Price, resulting in the issuance of additional shares which have a dividend preference and liquidation preference over shares of our common stock.
An adverse judgment in a lawsuit challenging the CapLease Merger, ARCT IV Merger or the Cole Merger, if commenced, could result in the incurrence of liabilities for us or may prevent the ARCT IV Merger or the Cole Merger from becoming effective or from becoming effective within the expected timeframe.
A number of lawsuits by CapLease’s stockholders have been filed challenging the CapLease Merger, some of which name us and the Operating Partnership as defendants. Additionally, a lawsuit was commenced on behalf of holders of a series of CapLease’s Preferred Stock in connection with the CapLease Merger alleging that the conversion of such Preferred Stock pursuant to the terms of the CapLease Merger Agreement was prohibited by the Articles Supplementary classifying and designating such Preferred Stock. Stockholders of ARCT IV may file one or more lawsuits challenging the ARCT IV Merger, which may name us or our Operating Partnership as defendants. Additionally, stockholders of Cole may file one or more lawsuits challenging the Cole Merger, which may name us or our Operating Partnership as defendants. To date, ten such lawsuits have been filed. Two putative class actions have been filed in in the U.S. District Court of Arizona, captioned as: (i) Wunsch v. Cole Real Estate Investment, Inc., et al. and (ii) Sobon v. Cole Real Estate Investments, Inc., et al. Eight other putative stockholder class action lawsuits have been filed in the Circuit Court for Baltimore City, Maryland, captioned as: (i) Operman v. Cole Real Estate Investments, Inc., et al.; (ii) Branham v. Cole Real Estate Investments, Inc., et al.; (iii) Wilfong v. Cole Real Estate Investments, Inc., et al.; (iv) Polage v. Cole Real Estate Investments, Inc., et al.; (v) Flynn v. Cole Real Estate Investments, Inc., et al.; (vi) Corwin v. Cole Real Estate Investments, Inc., et al.; (vii) Green v. Cole Real Estate Investments, Inc., et al.; and (viii) Morgan v. Cole Real Estate Investments, Inc., et al. All of these lawsuits name ARCP, Cole and the board of directors of Cole as defendants. All of the named plaintiffs claim to be Cole stockholders and purport to represent all holders of Cole’s stock. Each complaint generally alleges that the individual defendants breached fiduciary duties owed to plaintiff and the other public stockholders of Cole, and that certain entity defendants aided and abetted those breaches. In addition, the Operman, Corwin and Green lawsuits claim that the individual defendants breached their duty of candor to shareholders and the Branham, Polage and Flynn lawsuits assert claims derivatively against the individual defendants for their alleged breach of fiduciary duties owed to Cole. The Polage lawsuit also asserts derivative claims for waste of corporate assets and unjust enrichment. The Sobon lawsuit claims violations of federal securities laws by ARCP, Cole and the board of directors of Cole. Among other remedies, the complaints seek injunctive relief prohibiting the defendants from completing the proposed Cole Merger or, in the event that an injunction is not awarded, money damages, costs and attorneys’ fees.
On November 12, 2013, counsel in the Operman, Wilfong, and Corwin lawsuits filed a motion for consolidation of those actions with the Polage and Branham actions. On November 8, 2013, counsel for Polage filed a motion for expedited proceedings; on November 21, 2013, counsel for Operman, Wilfong, and Corwin also filed a motion for expedited proceedings. All of these motions are still pending.
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We cannot assure you as to the outcome of these lawsuits, including the costs associated with defending these claims or any other liabilities that may be incurred in connection with the litigation or settlement of these claims. If plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the ARCT IV Merger or the Cole Merger on the agreed-upon terms, such an injunction may prevent the completion of the ARCT IV Merger or the Cole Merger in the expected time frame, or may prevent it from being completed altogether.
Whether or not any plaintiffs’ claims are successful, this type of litigation is often expensive and diverts management’s attention and resources, which could adversely affect the operation of our business and ARCT IV’s or Cole’s businesses, as applicable.
We could incur liability as a result of a lawsuit to which Cole is subject in connection with the merger between Cole and Cole Holdings Corp., pursuant to which Cole became self-managed.
Two putative class action and derivative lawsuits were commenced asserting derivative and class causes of action for breach of fiduciary duty, abuse of control, corporate waste, unjust enrichment, aiding and abetting, breach of fiduciary duty and other claims relating to the merger between a wholly owned subsidiary of Cole Credit Property III, Inc. (now Cole) and Cole Holdings Corp., pursuant to which Cole became self-managed. The court in one of the lawsuits has granted defendants’ motion to dismiss with prejudice, but that dismissal could be appealed by the plaintiffs.
Whether or not any plaintiffs’ claims are successful, this type of litigation is often expensive and diverts management’s attention and resources, which could adversely affect the operation of Cole’s business prior to the Cole Merger and our business after the Cole Merger.
We acquired assets in the CapLease Merger that do not fit within our target assets, some of which we may seek to divest following closing or which may subject us to additional risks.
In connection with the CapLease Merger, we acquired assets consisting of, as of September 30, 2013, three properties that are currently, or will shortly be, vacant, $59.8 million in commercial mortgage-backed securities, at fair value, and $23.8 million in amortized cost of first mortgage loans secured by net leased single tenant properties, none of which fit within our target assets. Following the closing of the CapLease Merger, we transferred such assets to a direct or indirect subsidiary wholly-owned by the Operating Partnership and the properties are classified as “held for sale.” We are seeking to divest of such assets, which can take the form of a sale, spin-off or other disposition, to maximize value from such assets. There can be no assurance that we will be able to divest of any or all of such assets or, even if we are able to do so, we may have to take a loss from the price we paid for such assets. In either case, our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to make distributions to our stockholders may be materially and adversely affected.
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In addition, prior to the consummation of the CapLease Merger, CapLease had begun, and we expect to continue, making new investments through a build-to-suit program, whereby CapLease engaged experienced developers as partners and agreed to fund and construct commercial real estate projects on a build-to-suit basis for large corporate tenants. Such projects involve certain risks associated with the development, including the following:
· | Completion of the project in a timely and workmanlike manner will be dependent upon the efforts of various parties outside of our control, such as our developer partner and the general contractor and any subcontractors. Construction could be delayed if these parties fail to perform their obligations or for a variety of other reasons outside of our control, which could subject us to losses for failure to timely deliver the completed project to the tenant or result in a termination of the underlying lease. |
· | Unanticipated environmental conditions at the property could also delay completion of the project or force us to abandon the project if we determine that remediation of the conditions would be too expensive. |
· | Construction costs may exceed original estimates, which could adversely impact our expected return from the investment. |
We are acquiring assets in the Cole Merger that do not fit within our target assets, which may subject us to additional risks.
We are acquiring in the Cole Merger certain business and assets that do not fit within our target assets. For example, Cole is engaged in sponsoring non-traded real estate investment trusts and selling interests in non-traded real estate investment trusts through a broker-dealer subsidiary. Cole also holds interests in mortgage loans, bridge loans and commercial mortgage-backed securities, or CMBS. These businesses and assets subject us to additional risks.
Risks Relating to Sponsoring Non-Traded REITs and Being a Broker-Dealer
Cole’s broker-dealer, which is a wholesale broker-dealer registered with the SEC and a member firm of FINRA, is subject to various risk and uncertainties that are common in the securities industry. Such risks and uncertainties include:
· | the volatility of financial markets; |
· | extensive governmental regulation; |
· | litigation; and |
· | intense competition. |
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In addition, Cole’s broker-dealer is subject to risks that are particular to its function as a wholesale broker-dealer and sponsoring non-traded REITs. For example, the broker-dealer provides substantial promotional support to broker-dealers selling a particular offering, including by providing sales literature, forums, webinars, press releases and other mass forms of communication. Due to Cole’s acting as a sponsor of non-traded REITs and the volume of materials that Cole’s wholesale broker-dealer may provide throughout the course of an offering, much of which may be scrutinized by regulators, Cole and Cole’s wholesale broker-dealer may be exposed to significant liability under federal and state securities laws. Additionally, Cole’s broker-dealer may be subject to fines and suspension from the SEC and FINRA.
Sponsorship of non-traded REITs also involves risks relating to the possibility that such programs will not receive capital at the levels and timing that are anticipated and that sufficient capital will not be raised to repay investments of cash in, and loans to, such non-traded REITS needed to meet up-front costs, the initial breaking of escrow and the acquisition of properties will not be made, as well as risks relating to competition from other sponsors of other similar programs.
The securities industry is, and following our merger with Cole our broker-dealer business will be, subject to extensive regulation by the SEC, state securities regulators and other governmental regulatory authorities. Cole’s broker-dealer business is regulated by industry self-regulatory organizations, including FINRA. Broker-dealers are subject to regulations which cover all aspects of the securities business, including sales methods and supervision, trading practices among broker-dealers, use and safekeeping of customers’ funds and securities, capital structure of securities firms, record keeping and the conduct of directors, officers and employees. Broker-dealers are also subject to net capital requirements, which require them to maintain a minimum level of net capital. The failure to comply with these regulations could subject us to penalties or sanctions. The failure to comply with the net capital requirements or other requirement of the SEC or FINRA could subject us to sanctions imposed by the SEC or FINRA.
Risks Relating to Mortgage Loans, Bridge Loans, Real Estate-Related Securities and CMBS
In addition, Cole’s interests in mortgage loans, mezzanine loans, real estate-related securities and CMBS will subject us to risks relating to mortgage loans, bridge loans, real estate-related securities and CMBS.
Investing in mortgage or mezzanine loans involves risk of defaults on those loans caused by many conditions beyond our control, including local and other economic conditions affecting real estate values, interest rate changes, rezoning, and failure by the borrower to maintain the property. If there are defaults under these loans, we may not be able to repossess and sell quickly any properties securing such loans. An action to foreclose on a property securing a loan is regulated by state statutes and regulations and is subject to many of the delays and expenses of any lawsuit brought in connection with the foreclosure if the defendant raises defenses or counterclaims. In addition, investments in mezzanine loans involve a higher degree of risk than long-term senior mortgage loans secured by income-producing real property because the investment may become unsecured as a result of foreclosure on the underlying real property by the senior lender.
Investments in real estate-related securities involve special risks relating to the particular issuer of the securities, including the financial condition and business outlook of the issuer. Issuers of real estate-related equity securities generally invest in real estate or real estate-related assets and are subject to the inherent risks associated with real estate-related investments, including risks relating to rising interest rates. Real estate-related securities are often unsecured and also may be subordinated to other obligations of the issuer. These risks may adversely affect the value of outstanding real estate-related securities and the ability of the issuers thereof to repay principal and interest or make distribution payments.
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CMBS are securities that evidence interests in, or are secured by, a single commercial mortgage loan or a pool of commercial mortgage loans. Accordingly, these securities are subject to all of the risks of the underlying mortgage loans. In a rising interest rate environment, the value of CMBS may be adversely affected when payments on underlying mortgages do not occur as anticipated, resulting in the extension of the security’s effective maturity and the related increase in interest rate sensitivity of a longer-term instrument. The value of CMBS may also change due to shifts in the market’s perception of issuers and regulatory or tax changes adversely affecting the mortgage securities market as a whole. In addition, CMBS are subject to the credit risk associated with the performance of the underlying mortgage properties. CMBS are issued by investment banks, not financial institutions, and are not insured or guaranteed by the U.S. government.
CMBS are also subject to several risks created through the securitization process. Subordinate CMBS are paid interest only to the extent that there are funds available to make payments. To the extent the collateral pool includes delinquent loans, there is a risk that interest payments on subordinate CMBS will not be fully paid. Subordinate CMBS are also subject to greater credit risk than those CMBS that are more highly rated.
Risks Relating to Cole’s Acquisition of Properties Under Development
As part of its business, Cole has entered into purchase and sale arrangements with sellers or developers of suitable properties under development or construction. In such cases, Cole is obligated to purchase the property at the completion of construction, provided that the construction conforms to definitive plans, specifications, and costs approved by Cole in advance. We intend to continue this business following completion of the Cole Merger.
As a result, Cole is, and following completion of the Cole Merger, we will be, subject to risks of potential development and construction delays and resultant increased costs and risks. If we engage in development or construction projects, we will be subject to uncertainties associated with rezoning for development, environmental concerns of governmental entities or community groups, and the builders’ ability to build in conformity with plans, specifications, budgeted costs and timetables. If a builder fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance. A builder’s performance may also be affected or delayed by conditions beyond the builder’s control. Delays in completion of construction could also give tenants the right to terminate preconstruction leases. We may incur additional risks if we make periodic progress payments or other advances to builders before they complete construction. These and other such factors can result in increased costs of a project or loss of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects. We also will rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time we acquire the property. If these projections are inaccurate, we may pay too much for a property, and our return on our investment could suffer.
If we contract with a development company for newly developed properties, we anticipate that we will be obligated to pay a substantial earnest money deposit at the time of contracting to acquire such properties. In the case of properties to be developed by a development company, we anticipate that we will be required to close the purchase of the property upon completion of the development of the property. At the time of contracting and the payment of the earnest money deposit, the development company typically will not have acquired title to any real property, and there is a risk that our earnest money deposit made to the development company may not be fully refunded.
We expect to incur substantial expenses related to the Mergers.
We expect to incur substantial expenses in connection with consummating each of the CapLease Merger, the ARCT IV Merger and the Cole Merger, or the Mergers, and integrating the business, operations, networks, systems, technologies, policies and procedures we are acquiring with our own, including unanticipated costs and assumption of liabilities. There are several systems that must be integrated, including accounting and finance and asset management. While we have assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of our integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. As a result, the transaction and integration expenses associated with the Mergers could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses following the completion of the Mergers.
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The market price of our common stock may decline as a result of the Mergers.
The market price of our common stock may decline as a result of the Mergers if we do not achieve the perceived benefits of the Mergers as rapidly or to the extent anticipated by financial or industry analysts, or the effect of the Mergers on our financial results is not consistent with the expectations of financial or industry analysts. In addition, in light of the consummation of the CapLease Merger and in the event the other Mergers are consummated, our stockholders will own interests in a company operating an expanded business with a different mix of properties, risks and liabilities. Current stockholders may not wish to continue to invest in us in light of the consummation of the CapLease Merger or if the ARCT IV Merger or the Cole Merger is consummated, or for other reasons may wish to dispose of some or all of their shares of our common stock. If, in light of the consummation of the Mergers there is selling pressure on our common stock that exceeds demand at the market price, the price of our common stock could decline.
Counterparties to certain significant agreements with us, ARCT IV and/or Cole may have consent rights in connection with the Mergers.
We are, and each of ARCT IV and Cole is, party to certain agreements that give the counterparty certain rights, including consent rights, in connection with “change in control” transactions. Under certain of these agreements, the ARCT IV Merger or the Cole Merger, as applicable, may constitute a “change in control” and, therefore, the counterparty may assert its rights in connection with either Merger. Any such counterparty may request modifications of its agreements as a condition to granting a waiver or consent under those agreements and there can be no assurance that such counterparties will not exercise their rights under the agreements, including termination rights where available. In addition, the failure to obtain consent under one agreement may be a default under other agreements and, thereby, trigger rights of the counterparties to such other agreements, including termination rights where available.
We may incur adverse tax consequences if CapLease, ARCT IV or Cole has failed or fails to qualify as a REIT for U.S. federal income tax purposes.
If CapLease, ARCT IV or Cole has failed or fails to qualify as a REIT for U.S. federal income tax purposes, and following the consummation of the CapLease Merger, or if the ARCT IV Merger or the Cole Merger is completed, as applicable, we may inherit significant tax liabilities and could lose our REIT status should disqualifying activities continue after the CapLease Merger, ARCT IV Merger or the Cole Merger, as applicable.
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We expect to pay for a portion of the cash consideration and other costs of the ARCT IV Merger and the Cole Merger and the other Recent and Pending Transactions through new financing and draws on our existing credit facility. However, the related commitments of our new financing may expire prior to the consummation of the ARCT IV Merger or the Cole Merger and we may not be able to draw under our existing credit facility, in which case we will need to replace the funding that will be used to finance such portion of the costs of the ARCT IV Merger and the Cole Merger.
We may elect to pay a portion of the cash consideration and other costs of the ARCT IV Merger and the Cole Merger and may elect to pay a portion of the costs of the acquisition of the Fortress Portfolio and the Inland Portfolio (each as defined under “– We may be unable to integrate the recently acquired GE Capital Portfolio (as defined below) and other pending acquisitions into our existing portfolio or CapLease’s, ARCT IV’s and Cole’s businesses with our business successfully and realize the anticipated synergies and related benefits of the Mergers and the other Recent and Pending Transactions and acquisition of the GE Capital Portfolio or do so within the anticipated timeframe”) through financing under our $1.7 billion credit facility (under which we have undrawn commitments of $75.2 million and which contains an “accordion” feature to allow us, under certain circumstances, to increase the commitments thereunder by $800.0 million), borrowings under which are subject to borrowing base availability. The ARCT IV Merger, Cole Merger, CapLease Merger and the acquisition of the Fortress Portfolio and the Inland Portfolio are collectively referred to herein as the “Recent and Pending Transactions.”
The funding of the existing commitments under the credit facility are subject to customary conditions, including (a) the bring-down of our representations and warranties, (b) no default existing or resulting from such funding and the use of proceeds thereof, (c) timely notice by us and (d) borrowing base availability. If additional commitments are obtained in connection with our exercise of the “accordion” feature under the credit facility, such commitments likely will be subject to customary conditions, which may include, without limitation, (1) the completion of due diligence review of our and our subsidiaries’ assets, liabilities and properties, and, to the extent such commitments will be utilized to fund a portion of merger consideration in respect of the ARCT IV Merger or the Cole Merger, ARCT IV and its subsidiaries or Cole and its subsidiaries, as applicable, (2) the absence of any change, occurrence or development that has had, or could reasonably be expected to result in, (x) a material adverse change in, or a material adverse effect on, our and our subsidiaries’ operations, business, assets, properties or liabilities, and, to the extent such commitments will be utilized to fund a portion of the merger consideration in respect of the ARCT IV Merger or the Cole Merger, ARCT IV and its subsidiaries or Cole and its subsidiaries, as applicable, or (y) a material impairment of the rights and remedies of the credit facility lenders and agents under the credit agreement for the credit facility, and (3) to the extent any portion of such additional commitments are anticipated to be syndicated by the lenders providing such additional commitments, the absence of any material adverse change or material disruption in the loan syndication, financial, banking or capital markets that has impaired or could reasonably be expected to impair the syndication of such additional commitments.
We have also received commitments from Barclays Bank PLC, or Barclays, Citigroup, Credit Suisse, Morgan Stanley and Capital One, which we refer to together as the Commitment Parties, to provide (i) up to $2.175 billion in senior secured term loans, or the Barclays Term Loan Facility (which contains an ‘‘accordion’’ feature to allow us, under certain circumstances, to increase commitments thereunder by up to $350.0 million), and (ii) up to $575.0 million in senior unsecured bridge loans, or the Barclays Bridge Facility and, together with the Barclays Term Loan Facility, collectively, the Barclays Facility. We will use the Barclays Facility (or unsecured notes issued in lieu of drawings under the Barclays Bridge Facility, which unsecured notes, if issued, will reduce the commitment of the Commitment Parties under the Barclays Bridge Facility) to fund a portion of the consideration to be paid pursuant to the Cole Merger, to refinance existing indebtedness of Cole and to pay related fees and expenses. The commitment of the Commitment Parties is subject to certain conditions, including the absence of a material adverse effect with respect to Cole, the negotiation of definitive documentation, pro forma compliance with financial covenants and other customary closing conditions. There can be no assurance that these conditions will be satisfied or that the Barclays Facility will close. In addition, the commitments received from the Commitment Parties terminate upon the occurrence of certain customary events, and, in any event, on April 22, 2014, which date may be extended by an additional three months in the event that the requisite approval of our stockholders or the requisite consents in respect of our and our subsidiaries’ existing indebtedness, in each case, for the Cole Merger, has not been obtained prior to such date. To the extent that the Cole Merger has not been consummated on or prior to such date, there is no guarantee that the Commitment Parties will extend their commitments.
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We have also received separate commitments from lenders for mortgage facilities and a commitment for an asset-backed facility, which are subject to conditions including due diligence review and negotiation and execution of definitive agreements. We may fund a portion of the cash consideration and other expenses in connection with the Cole Merger and the other Recent and Pending Transactions with such financing or by issuing other long-term debt, as to which we do not have a commitment or agreement.
There can be no assurance that we will receive the fundings under our existing credit facility, the asset-backed facilities, the mortgage facilities or the Barclays Facility described above, that we will be successful in obtaining other long-term debt financing, that we will finance the ARCT IV Merger, the Cole Merger and the other Recent and Pending Transactions as anticipated or that we will not subsequently enter into alternative financing arrangements, including debt or equity financing or the potential sales of properties to third parties, to fund all or a portion of the cash consideration and other costs of the ARCT IV Merger and the Cole Merger. If the funding transactions are not consummated, we will need to finance a portion of the cash consideration and other costs of the Mergers by other means, which may result in our incurring increased interest and fees, and being subject to different terms and conditions, on any such replacement financing. The interest rate, fees payable and terms and conditions generally, on any such replacement financing will depend on prevailing market conditions at the time. If we are unable to obtain adequate funding for the cash consideration and other costs of the ARCT IV Merger and the Cole Merger and the other Recent and Pending Transactions, we will be unable to consummate the ARCT IV Merger, the Cole Merger and the other Recent and Pending Transactions.
Our anticipated level of indebtedness increased upon completion of the CapLease Merger and will increase upon completion of the ARCT IV Merger and the Cole Merger and will increase the related risks we now face.
In connection with the Mergers, we have incurred and will incur additional indebtedness and have acquired and may acquire certain properties of CapLease, ARCT IV and Cole subject to mortgage indebtedness. As a result, we will be subject to increased risks associated with such debt financing, including an increased risk that the combined company’s cash flow could be insufficient to meet required payments on its debt. As of September 30, 2013, we had indebtedness of $1.7 billion. Taking into account our existing indebtedness, the incurrence of additional indebtedness in connection with the Mergers, and the expected acquisition of properties subject to indebtedness in the Mergers, our pro forma consolidated indebtedness as of September 30, 2013, after giving effect to the Mergers, would be up to approximately $10.1 billion. The risks of our increased indebtedness are described under ‘‘ – We are subject to risks associated with debt and capital stock financing.”
We have a history of operating losses and cannot assure you that we will achieve profitability.
Since our inception in 2010, we have experienced net losses (calculated in accordance with accounting principles generally accepted in the United States of America) each fiscal year and, as of September 30, 2013, had an accumulated deficit of $480.8 million. The extent of our future operating losses and the timing of when we will achieve profitability are uncertain, and depends on the demand for, and value of, our portfolio of properties and we may never achieve or sustain profitability.
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We are subject to risks associated with debt and capital stock financing.
In addition to the indebtedness incurred and assumed in the CapLease Merger and the indebtedness expected to be incurred in connection with the other Recent and Pending Transactions, we intend to incur additional indebtedness in the future, including borrowings under our existing $1.7 billion credit facility (under which, at November 15, 2013, we have undrawn commitments of $75.2 million and which contains an ‘‘accordion’’ feature to allow us, under certain circumstances, to increase the commitments thereunder by $800.0 million). At November 15, 2013, we had approximately $1.6 billion of outstanding borrowings under our existing credit facility. In addition, as described under “—We expect to pay for a portion of the cash consideration and other costs of the ARCT IV Merger and the Cole Merger and the other Recent and Pending Transactions through new financing and draws on our existing credit facility. However, the related commitments of our new financing may expire prior to the consummation of the ARCT IV Merger or the Cole Merger and we may not be able to draw under our existing credit facility or our new financing, in which case we will need to replace the funding that will be used to finance such portion of the costs of the ARCT IV Merger and the Cole Merger,” we may incur indebtedness under the Barclays Facility in an aggregate amount up to $2.75 billion (subject to an ‘‘accordion’’ feature with respect to the Barclays Term Loan Facility, in certain circumstances). To the extent that new indebtedness is added to our current debt levels, including, if incurred, the Barclays Facility, the related risks that we now face would increase. As a result, we are and will be subject to risks associated with debt financing, including the risk that our cash flow could be insufficient to meet required payments on our debt. We also face the risk that we may be unable to refinance or repay our debt as it comes due.
Our existing credit facility contains, and the Barclays Facility, if incurred, will contain, various customary covenants, including financial maintenance covenants with respect to maximum consolidated leverage ratio, maximum secured recourse indebtedness, minimum fixed charge coverage, minimum borrowing base interest coverage, maximum secured leverage, minimum tangible net worth and maximum variable rate indebtedness. In addition, our existing credit facility contains (and if incurred, the Barclays Facility will contain) certain customary negative covenants that restrict the ability of the Operating Partnership to incur secured indebtedness, and the ability of the Operating Partnership’s subsidiaries that are party to the credit facility to incur indebtedness. Any failure to comply with these financial maintenance covenants and negative covenants would constitute a default under our existing credit facility, and, if incurred, under the Barclays Facility, and would prevent further borrowings from either facility.
In connection with each of the CapLease Merger, ARCT IV Merger and Cole Merger, we have acquired or expect to acquire properties subject to $1.0 billion, $2.1 billion and $2.7 billion, respectively, in mortgage indebtedness. Much of the mortgage indebtedness has required or require the payment of assumption fees at the closing of the applicable Merger and has required or will require applicable lender or servicer consents. In particular, we closed the CapLease Merger without obtaining mortgage consents from lenders (or their servicers) holding approximately $80.5 million in mortgage indebtedness secured by properties owned by CapLease. However, at the time of the closing of the CapLease Merger, we entered into 30-day forbearance agreements with each of the lenders (or their servicers) holding such mortgage indebtedness that would prohibit such mortgage lenders from declaring an event of default or accelerating such mortgage loans during such 30-day period. To the extent such mortgage consents are not obtained, we will be required to refinance such mortgage loans at the closing (or, in the case of the mortgage loans acquired in the CapLease Merger, upon the expiration of the applicable forbearance agreements) or risk the loss of the properties secured by such loans to foreclosure and, to the extent consents have not been obtained relating to mortgage indebtedness that will be held by us or one of our “significant subsidiaries” (i.e., a subsidiary generally holding in excess of 10% of our total assets) that exceed $15.0 million in outstanding principal amount and mortgage indebtedness exceeding $15.0 million is accelerated or the failure to obtain the consents creates liability under a non-recourse current guarantee assumed by the Operating Partnership in an amount in excess of $15.0 million, such events will result in a cross-default under the indenture relating to our $310.0 million convertible notes. Any default under the indenture relating to our convertible notes would result in a cross default under our credit facility. Further, any refinancing of any mortgage loans that come due as a result of the occurrence of any of the Mergers may be subject to prepayment penalties or make whole payments, some of which may be significant in amount. There can be no assurance we will be able to refinance any of such mortgage indebtedness on favorable terms or at all. Any failure to obtain such consents or refinance such mortgages could have a material adverse effect on our financial condition and operating results.
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Our substantial indebtedness and any constraints on credit could also have other important consequences, including:
· | Increasing our vulnerability to general adverse economic and industry conditions; |
· | Limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements; |
· | Requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures and general corporate requirements; |
· | Limiting our flexibility in planning for, or reacting to, changes in our business and industry; and |
· | Putting us at a disadvantage compared to our competitors with less indebtedness. |
If we default under a loan (including any default in respect of the financial maintenance and negative covenants contained in our credit facility and if incurred, the Barclays Facility), we may automatically be in default under any other loan that has cross-default provisions (including, if incurred, the Barclays Facility), and further borrowings under our existing credit facility will be prohibited, under our credit facility or such other loans may be accelerated, and to the extent our credit facility or such other loans are secured, directly or indirectly by any properties or assets, lenders under our credit facility or such other loans may foreclose on the collateral securing such indebtedness as a result. In addition, increases in interest rates may impede our operating performance and put us at a competitive disadvantage. Further, payments of required debt service or amounts due at maturity, or creation of additional reserves under loan agreements, could adversely affect our financial condition and ability to pay distributions.
Our existing credit facility contains provisions that could limit our ability to pay certain restricted payments, including, dividends and other distributions in respect of our capital stock.
Our credit facility imposes limitations on our ability to make certain restricted payments. Payment of such dividends and other distributions in respect of our capital stock would constitute a restricted payment under our credit facility. The credit agreement for our existing credit facility provides that, in order to make such a restricted payment, there must not be a continuing default under the credit facility at the time of payment or a default resulting from such payment and the amount of such payment, when added with all other restricted payments, cannot exceed (i) 110% of our funds from operations, or FFO, for fiscal year 2013, (ii) 105% of our FFO for fiscal year 2014 (assuming such payment is made on or after January 1, 2014 and on or prior to December 31, 2014) and (iii) 95% of our FFO at any time thereafter.
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When dividends or other distributions to holders of our capital stock become payable, we may be unable to satisfy the conditions required to make such a restricted payment under our credit facility and, therefore, may be unable to fund such an obligation from borrowings under such credit facility or at all without the approval of the lenders thereunder. If we make such a restricted payment, our ability to make other restricted payments will be further constrained.
Increases in interest rates would increase our debt service costs, may adversely affect any future refinancing of our debt and our ability to incur additional debt, and could adversely affect our financial condition, cash flow and results of operations.
Certain of our borrowings bear interest at variable rates, and we may incur additional debt in the future. Increases in interest rates would result in higher interest expenses on our existing unhedged variable rate debt, and increase the costs of refinancing existing debt or incurring new debt. Additionally, increases in interest rates may result in a decrease in the value of our real estate and decrease the market price of our common stock and could accordingly adversely affect our financial condition, cash flow and results of operations.
Risk Factors Following the Mergers and other Recent and Pending Transactions and our Operations Generally
We may be unable to integrate the recently acquired GE Capital Portfolio (as defined below) and other pending acquisitions into our existing portfolio or CapLease’s, ARCT IV’s and Cole’s businesses with our business successfully and realize the anticipated synergies and related benefits of the Mergers and the other Recent and Pending Transactions and acquisition of the GE Capital Portfolio or do so within the anticipated timeframe.
Our consummation of each Merger involves the combination of companies that, prior to the consummation thereof, operated as independent companies. Additionally, we recently acquired from certain affiliates of GE Capital Corp, or GE Capital, 447 properties, or the GE Capital Portfolio. In addition, we have also entered into an agreement to acquire a portfolio of 33 properties from Inland American Real Estate Trust, Inc., of which five properties were acquired on September 24, 2013, or the Inland Portfolio, and an agreement to acquire a portfolio of 120 properties from funds managed by Fortress Investment Group LLC, of which 41 properties were acquired on October 1, 2013, or the Fortress Portfolio. We may be required to devote significant management attention and resources to integrating our business practices and operations with those of CapLease, ARCT IV and Cole and the acquired GE Capital Portfolio as well as the Inland and Fortress Portfolios. Potential difficulties we may encounter in the integration process include the following:
· | the inability to successfully combine our business with CapLease’s, ARCT IV’s or Cole’s business or the GE Capital Portfolio as well as the Inland and Fortress Portfolios into our own portfolio, in each case in a manner that permits the combined company to achieve the anticipated cost savings, which would result in the anticipated benefits of the Mergers and the acquisition of the GE Capital Portfolio as well as the Inland and Fortress Portfolios not being realized in the timeframe anticipated or at all; |
· | the complexities associated with managing the combined business out of several different locations and integrating personnel from the companies; |
· | the additional complexities of combining companies with different histories, cultures, potential regulatory restrictions, markets and tenant bases; |
· | the failure to retain our key employees or those of any of ARCT IV, CapLease or Cole; |
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· | the inability to divest certain CapLease assets not fundamental to our business; |
· | potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the combinations; and |
· | performance shortfalls as a result of the diversion of management’s attention caused by completing the Mergers and acquisition of the GE Capital Portfolio as well as the Inland and Fortress Portfolios and integrating operations. |
For all these reasons, you should be aware that it is possible that the integration process following the Mergers and the other Recent and Pending Transactions or acquisition of the GE Capital Portfolio could result in the distraction of the combined company’s management, the disruption of the combined company’s ongoing business or inconsistencies in the combined company’s services, standards, controls, procedures and policies, any of which could adversely affect the ability of the combined company to maintain relationships with tenants, vendors and employees or to achieve the anticipated benefits of such transactions, or could otherwise adversely affect the business and financial results of the combined company.
The ARCT IV Advisor will only provide support for a limited period of time under the ARCT IV Advisory Agreement.
The Amended and Restated Advisory Agreement, dated as of November 12, 2012, by and among ARCT IV, American Realty Capital Advisors IV, LLC, or the ARCT IV Advisor, and American Realty Operating Partnership IV, L.P., or ARCT IV OP, referred to as the ARCT IV Advisory Agreement, which requires the ARCT IV Advisor to provide certain services to ARCT IV, including asset management, advisory services, and other essential services, has been terminated and will expire 60 days following the consummation of the ARCT IV Merger, which we anticipate will occur during the fourth quarter of 2013. To the extent the employees and infrastructure of the combined company cannot adequately provide any such services to the combined company after the expiration of the advisory agreement, the operations and the market price of the combined company’s common stock would be adversely affected.
The future results of the combined company will suffer if the combined company does not effectively manage its expanded portfolio and operations following the Mergers.
Following the Mergers, the combined company will have an expanded portfolio and operations and likely will continue to expand its operations through additional acquisitions and other strategic transactions, some of which may involve complex challenges. The future success of the combined company will depend, in part, upon its ability to manage its expansion opportunities, integrate new operations into its existing business in an efficient and timely manner, successfully monitor its operations, costs, regulatory compliance and service quality, and maintain other necessary internal controls. The combined company cannot assure you that its expansion or acquisition opportunities will be successful, or that the combined company will realize its expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.
The property portfolio of the combined company after the Mergers has a high concentration of properties in Texas. The combined company’s properties may be adversely affected by economic cycles and risks inherent to the state of Texas.
Of our combined property portfolio following the Mergers, over 13% of total rental revenue will come from properties located in Texas. Any adverse situation that disproportionately affects Texas, may have a magnified adverse effect on the portfolio of the combined company. Real estate markets are subject to economic downturns, as they have been in the past, and the combined company cannot predict how economic conditions will impact this market in both the short and long term. Declines in the economy or a decline in the real estate market in the state of Texas could hurt our financial performance and the value of our properties. Factors that may negatively affect economic conditions in Texas include:
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· | business layoffs or downsizing; |
· | industry slowdowns; |
· | relocations of businesses; |
· | changing demographics; |
· | increased telecommuting and use of alternative work places; |
· | infrastructure quality; |
· | any oversupply of, or reduced demand for, real estate; |
· | concessions or reduced rental rates under new leases for properties where tenants defaulted; and |
· | increased insurance premiums. |
We cannot assure you that we will be able to continue paying distributions at the current rate.
We plan to continue our current monthly distribution practices following the Mergers and have approved increases in our annualized distribution rates following the consummation of the CapLease Merger to $0.94, commencing with our December 2013 distribution and following the consummation of the Cole Merger to $1.00. However, our stockholders may not receive the same distributions following the Mergers for various reasons, including the following:
· | as a result of the Mergers and the issuance of shares of our common and preferred stock in connection with the Mergers, the total amount of cash required for us to pay distributions at our current rate will increase; |
· | we may not have enough cash to pay such distributions due to changes in our cash requirements, capital spending plans, cash flow or financial position; |
· | decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of our board of directors, which reserves the right to change our dividend practices at any time and for any reason; |
· | we may desire to retain cash to maintain or improve our credit ratings; and |
· | the amount of distributions that our subsidiaries may distribute to us may be subject to restrictions imposed by state law, restrictions that may be imposed by state regulators and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur. |
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Our stockholders have no contractual or other legal right to distributions or dividends that have not been declared.
Risk Factors Relating to Our Becoming Self-Managed
Our net income per share and FFO per share in the near term may decrease as a result of our becoming self-managed.
We are required to be self-managed no later than the time the Cole Merger becomes effective. While we will no longer bear the external costs of the various fees and expenses paid to ARC Properties Advisors, LLC, or our Manager, subsequent to becoming self-managed, net income per share and FFO per share in the near term may decrease as a result of our becoming self-managed, due to increased expenses related to being self-managed, including expenses for compensation and benefits of our officers and other employees, which previously were paid by our Manager. Therefore, the exact amount of savings to us from becoming self-managed cannot reasonably be estimated. If the expenses we assume as a result of our becoming self-managed are higher than we anticipate, our net income per share and FFO per share may be lower as a result of our becoming self-managed than it otherwise would have been, potentially causing our net income per share and FFO per share to decrease.
In connection with our becoming self-managed, we will become exposed to risks to which we have not historically been exposed.
In connection with our becoming self-managed, we may be exposed to risks to which we have not historically been exposed. Excluding the effect of the eliminated asset management and other fees previously paid to our Manager and its affiliates, our direct overhead, on a consolidated basis, will increase as a result of our becoming self-managed. Prior to our becoming self-managed, the responsibility for such overhead was borne by our Manager.
Prior to our becoming self-managed, we did not have separate facilities, communications and information systems nor directly employ very many employees. As a result of our becoming self-managed, we now will lease office space, have our own communications and information systems and directly employ a staff. Our business is highly dependent on communications and information systems. Any failure or interruption of our systems could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay distributions to our stockholders. Additionally, as a direct employer, we will be subject to those potential liabilities that are commonly faced by employers, such as workers disability and compensation claims, potential labor disputes and other employee-related liabilities and grievances, and we will bear the costs of the establishment and maintenance of such plans.
Furthermore, pursuant to the Mergers, we will also be combining the facilities and personnel of the companies acquired pursuant to Mergers. In particular, as a result of the Cole Merger, we will significantly increase the number of employees of the Company, including the addition of employees who will become senior officers of the Company, and significantly increase the facilities at which the business of the Company operates. We will face potential difficulties in effecting our self-management and integrating these businesses, including those described under “ – We may be unable to integrate the recently acquired GE Capital Portfolio (as defined below) into our existing portfolio or CapLease’s, ARCT IV’s and Cole’s businesses with our business successfully and realize the anticipated synergies and related benefits of the Mergers and the other Recent and Pending Transactions and acquisition of the GE Capital Portfolio or do so within the anticipated timeframe” and “ – The future results of the combined company will suffer if the combined company does not effectively manage its expanded portfolio and operations following the Merger.”
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Exhibit 99.2
THE COMPANIES
American Realty Capital Properties, Inc., Safari Acquisition, LLC, Thunder Acquisition, LLC, and Clark Acquisition, LLC
American Realty Capital Properties, Inc., or ARCP, is a Maryland corporation incorporated in December 2010 that qualified as a REIT for U.S. federal income tax purposes commencing with its initial taxable year ended December 31, 2011. In July 2011, ARCP commenced an initial public offering on a “reasonable best efforts” basis, which closed on September 6, 2011. ARCP common stock began trading on The NASDAQ Capital Market under the symbol “ARCP” on September 7, 2011. On February 28, 2013, ARCP common stock was transferred to The NASDAQ Global Select Market, or the NASDAQ.
ARCP acquires, owns and operates single-tenant, freestanding commercial real estate properties. ARCP has acquired properties with a combination of long-term and medium-term leases and intends to continue to acquire properties with approximately 70% long-term leases and 30% medium-term leases, with an average remaining lease term of 10 to 12 years. ARCP considers properties that are leased on a “medium-term” basis to mean properties originally leased long-term (ten years or longer) that currently have a primary remaining lease duration of generally three to eight years, on average. ARCP expects this investment strategy to develop growth potential from below market leases. Additionally, ARCP owns a portfolio that uniquely combines a portfolio of properties with stable income from high credit quality tenants, with properties that have substantial growth opportunities.
Substantially all of ARCP’s business is conducted through its operating partnership, ARC Properties Operating Partnership, L.P., of which ARCP is the sole general partner.
As of September 30, 2013, ARCP owned 1,219 properties (excluding one vacant property classified as held for sale) consisting of 20.4 million square feet, 100% leased with a weighted average remaining lease term of 9.5 years. In constructing its portfolio, ARCP is committed to diversification (industry, tenant and geography). As of September 30, 2013, rental revenues derived from investment grade tenants and tenants affiliated with investment grade entities as determined by a major rating agency approximated 59% (the rating of each parent company has been attributed to its wholly owned subsidiary for purposes of this disclosure). ARCP’s strategy encompasses receiving the majority of its revenue from investment grade tenants as ARCP further acquires properties and enters into (or assumes) medium-term lease and long-term lease arrangements. The foregoing excludes properties owned by CapLease (as defined and described below), which was acquired by ARCP pursuant to a merger on November 5, 2013. If the properties owned by CapLease were included, ARCP would have owned 1,287 properties, consisting of 33.5 million square feet, which are 99% leased with a weighted average remaining lease term of 8.1 years, with 66.7% of rental revenues derived from investment grade tenants and tenants affiliated with investment grade entities as determined by a major credit agency.
ARCP’s principal executive offices are located at 405 Park Avenue, 15th Floor, New York, New York 10022, and its telephone number is (212) 415-6500.
The entity into which CapLease merged, Safari Acquisition, LLC, or the CapLease Merger Sub, is a Delaware limited liability company and a direct wholly owned subsidiary of ARCP that was formed for the purpose of acquiring CapLease pursuant to the merger agreement with CapLease.
The entity into which ARCT IV (as defined and described below) will merge, Thunder Acquisition, LLC, or the ARCT IV Merger Sub, is a Delaware limited liability company and a direct wholly owned subsidiary of ARCP that was formed for the purpose of acquiring ARCT IV pursuant to the merger agreement with ARCT IV.
The entity into which Cole (as defined and described below) will merge, Clark Acquisition, LLC, or the Cole Merger Sub, is a Delaware limited liability company and a direct wholly owned subsidiary of ARCP that was formed for the purpose of acquiring Cole pursuant to the merger agreement with Cole.
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American Realty Capital Trust IV, Inc.
American Realty Capital Trust IV, Inc., or ARCT IV, is a Maryland corporation incorporated in February 2012 that qualified as a REIT for U.S. federal income tax purposes commencing with its initial taxable year ended December 31, 2012. ARCT IV is a non-traded REIT. ARCT IV was formed to acquire a diversified portfolio of commercial real estate, which consists primarily of freestanding single tenant properties net leased to investment grade and other credit worthy tenants. In June 2012, ARCT IV commenced an initial public offering on a “reasonable best efforts” basis to sell up to 60.0 million shares of common stock, excluding 10.0 million shares issuable pursuant to a distribution reinvestment plan, offered at a price of $25.00 per share, subject to certain volume and other discounts, which we refer to as the ARCT IV IPO. In September 2012, ARCT IV commenced real estate operations. As of November 15, 2013, ARCT IV had issued 70.2 million shares of ARCT IV common stock in connection with the ARCT IV IPO and had issued 0.9 million shares of ARCT IV common stock under its distribution reinvestment plan. As of November 15, 2013, ARCT IV had 71.1 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to ARCT IV’s distribution reinvestment plan and 1.2 million shares issuable in exchange for outstanding operating partnership units.
Substantially all of ARCT IV’s business is conducted through the ARCT IV OP, of which ARCT IV is the sole general partner.
As of September 30, 2013, ARCT IV owned 1,203 properties comprised of 9.2 million square feet, which were 100% leased with a weighted average remaining lease term of 11.5 years. In constructing the portfolio, ARCT IV has been committed to diversification by industry, tenant and geography.
ARCT IV’s principal executive offices are located at 405 Park Avenue, 15th Floor, New York, New York 10022, and its telephone number is (212) 415-6500.
ARCT IV and ARCP each were sponsored directly by ARC Capital, LLC, or ARC. The ARCT IV Advisor is a Delaware limited liability company indirectly wholly owned by ARC. ARC Properties Advisors, LLC, which we refer to as the ARCP Manager, is a Delaware limited liability company wholly owned by ARC and is ARCP’s external manager. ARC and its affiliates, including the ARCT IV Advisor and ARCP Manager, provide investment, management and advisory services, as well as certain acquisition and debt capital services to ARCT IV and ARCP, as applicable. ARCT IV and ARCP pay management fees and certain other fees to, and reimburse certain expenses of, the ARCT IV Advisor and ARCP Manager, respectively. Affiliates of ARC also provide similar services for American Realty Capital New York Recovery REIT, Inc., Phillips Edison — ARC Shopping Center REIT Inc., American Realty Capital — Retail Centers of America, Inc., American Realty Capital Healthcare Trust, Inc., American Realty Capital Daily Net Asset Value Trust, Inc., ARC Realty Finance Trust, Inc., American Realty Capital Global Trust, Inc., American Realty Capital Healthcare Trust II, Inc., American Realty Capital Trust V, Inc., Phillips Edison — ARC Grocery Center REIT II, Inc. and American Realty Capital Hospitality Trust, Inc., as well as Business Development Corporation of America, a business development company. Certain of the ARC-sponsored REITs have investment strategies substantially similar to those of ARCT IV, ARCP and the combined company.
CapLease, Inc.
CapLease, Inc., or CapLease, was a REIT that primarily acquired, owned and managed a diversified portfolio of single tenant commercial real estate properties subject to long-term leases to high credit quality tenants. CapLease focused on properties that are subject to a lease that requires the tenant to pay all or substantially all property operating expenses, such as utilities, real estate taxes, insurance and routine maintenance. ARCP acquired CapLease on November 5, 2013. CapLease made an election to qualify, and believes it operated so as to qualify, as a REIT commencing with its taxable year ended December 31, 2004. In addition to its portfolio of owned properties, CapLease had a modest portfolio of first mortgage loans and other debt investments on single tenant properties.
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CapLease conducted its business through a variety of subsidiaries. CapLease owned most of its owned properties through its predecessor and operating partnership, Caplease, LP. CapLease was the indirect sole general partner of, and owned approximately 96.8% of the common equity of, CapLease, LP prior to the merger.
As of September 30, 2013, CapLease owned 68 properties comprised of 13.1 million square feet, which were 96.8% leased with a weighted average remaining lease term of approximately 5.9 years.
CapLease’s principal executive offices were located at 1065 Avenue of the Americas, New York, New York 10018, and its telephone number was (212) 217-6300.
Cole Real Estate Investments, Inc.
Cole Real Estate Investments, Inc., or Cole, (formerly known as Cole Credit Property Trust III, Inc., or CCPT III is a Maryland corporation incorporated in January 2008 that elected to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2009. Cole operates through two business segments, Real Estate Investment, or REI, and Private Capital Management, or PCM. Substantially all of Cole’s REI segment is conducted through Cole REIT III Operating Partnership, LP (“CCPT III OP”), a Delaware limited partnership. Substantially all of Cole’s PCM segment is conducted through Cole Capital Advisors, Inc., or CCA, an Arizona corporation. CCA is treated as a taxable REIT subsidiary, or TRS, under Section 856 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
On June 20, 2013, Cole listed its common stock on the New York Stock Exchange under the ticker symbol “COLE”. As of September 30, 2013, Cole had issued approximately 499.9 million shares of its common stock in public offerings made from January 2009 until April 2013, for aggregate gross proceeds of $5.0 billion (including shares sold pursuant to its distribution reinvestment program), before share redemptions pursuant to Cole’s share redemption program of $174.7 million and offering costs, selling commissions and dealer management fees of $463.2 million. In addition, Cole purchased $250.0 million of shares of its common stock pursuant to a tender offer and redeemed an aggregate of $0.4 million of fractional shares.
As of September 30, 2013, Cole owned 1,026 properties, comprising 44.8 million rentable square feet of single and multi-tenant retail and commercial space, which are leased to national and regional credit worthy tenants under long-term triple net leases or double net leases, located in 48 states, which include properties owned through consolidated joint ventures. As of September 30, 2013, the rentable space at these properties was 99% leased, with a weighted average remaining lease term of 11.9 years. As of September 30, 2013, rental revenues derived from investment-grade quality tenants and tenants affiliated with investment grade entities as determined by a major rating agency approximated 59% (the rating of each parent company has been attributed to its wholly owned subsidiary for purposes of this disclosure). As of September 30, 2013, Cole also owned 21 commercial mortgage-backed securities, three notes receivable and, through unconsolidated joint ventures, had interests in 12 properties comprising 2.3 million rentable square feet of commercial and retail space.
Cole acquires and operates a diverse portfolio of core commercial real estate investments primarily consisting of necessity retail properties located throughout the United States, including U.S. protectorates.
Cole’s principal executive offices are located at 2325 East Camelback Road, Suite 1100, Phoenix, Arizona 85016, and its telephone number is (602) 778-8700.
Fortress Portfolio
On July 24, 2013, ARC and another related entity, on behalf of ARCP and certain other entities sponsored directly or indirectly by ARC, entered into a purchase and sale agreement with subsidiaries of Fortress Investment Group LLC, or Fortress, for the purchase and sale of 196 properties owned by Fortress for an aggregate contract purchase price of approximately $972.5 million, subject to adjustments set forth in the purchase and sale agreement and exclusive of closing costs, which was allocated to ARCP based on the pro-rata fair value of the properties acquired by ARCP relative to the fair value of all 196 properties to be acquired from Fortress. Of the 196 properties, 120 properties are expected to be acquired by ARCP from Fortress, or the Fortress Portfolio, for a purchase price of approximately $601.2 million, subject to adjustments set forth in the purchase and sale agreement and exclusive of closing costs. The Fortress Portfolio is comprised of 6.1 million square feet, and is 100% leased with a weighted average remaining lease term of approximately 12.6 years and is currently leased to 17 distinct tenants. The leases are generally triple net. On October 1, 2013, ARCP closed on 41 of the 120 properties for a total purchase price of $200.3 million, exclusive of closing costs. The remaining properties are expected to close in the fourth quarter of 2013.
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Inland Portfolio
On August 8, 2013 the ARCP Manager entered into a purchase and sale agreement with Inland American Real Estate Trust, Inc., or Inland, for the purchase and sale of the equity interests of 67 companies owned by Inland for an aggregate contract purchase price of approximately $2.3 billion, subject to adjustments set forth in the purchase and sale agreement and exclusive of closing costs. Of the 67 companies, the equity interests of 10 companies, or the Inland Portfolio, will be acquired by ARCP from Inland for a purchase price of approximately $501.0 million, subject to adjustments set forth in the purchase and sale agreement and exclusive of closing costs, which was allocated to ARCP based on the pro-rata fair value of the Inland Portfolio relative to the fair value of all 67 companies to be acquired by ARCP and other entities sponsored directly or indirectly by the ARC from Inland. The Inland Portfolio includes 33 properties, comprised of approximately 7.0 million square feet and is 96.2% leased, with a weighted average remaining lease term of approximately 4.4 years. The properties are currently leased to 26 distinct tenants. The leases are generally triple net. As of September 30, 2013, ARCP has closed on five of the 33 properties for a total purchase price of $56.4 million, exclusive of closing costs. The remaining properties are expected to close in the fourth quarter of 2013.
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Property Portfolio Information
At September 30, 2013, ARCP owned a diversified portfolio:
· | of 1,219 properties, excluding one vacant property classified as held for sale; |
· | with an occupancy rate of 100%; |
· | leased to 183 different retail and other commercial enterprises doing business in 32 separate industries; |
· | located in 48 states and Puerto Rico; |
· | with approximately 20.4 million square feet of leasable space; and |
· | with an average leasable space per property of approximately 16,700 square feet. |
The properties owned by ARCP include 447 net lease properties, or the GE Portfolio, acquired by ARCP on June 27, 2013 from certain affiliates of GE Capital Corp., or GE Capital.. The 447 properties are subject to 409 property operating leases and 38 direct financing leases. The GE Capital Portfolio contains approximately 2.0 million rentable square feet and consists of 444 restaurants (including three other revenue generating assets) and three retail properties. The purchase price for the GE Capital Portfolio was approximately $774 million exclusive of closing costs.
At September 30, 2013, ARCT IV owned a diversified portfolio:
· | of 1,203 properties; |
· | with an occupancy rate of 100%; |
· | leased to 276 different retail and other commercial enterprises doing business in 25 separate industries; |
· | located in 46 states and the District of Columbia; |
· | with approximately 9.2 million square feet of leasable space; and |
· | with an average leasable space per property of approximately 7,600 square feet. |
The properties owned by ARCT IV include 924 net lease properties acquired by ARCT IV from certain affiliates of GE Capital. The 924 properties are subject to 912 property operating leases and 12 direct financing leases. The portfolio contains approximately 3.4 million rentable square feet and consists primarily of quick service, family dining, and casual dining restaurants.
At September 30, 2013, CapLease owned a diversified portfolio:
· | of 68 properties; |
· | with an occupancy rate of 96.8%; |
· | leased to 48 different retail and other commercial enterprises doing business in 23 separate industries; |
· | located in 26 states and Puerto Rico; |
· | with approximately 13.1 million square feet of leasable space; and |
· | with an average leasable space per property of approximately 193,300 square feet. |
At September 30, 2013, Fortress Portfolio consisted of a diversified portfolio:
· | of 120 properties; |
· | with an occupancy rate of 100%; |
· | leased to 17 different retail and other commercial enterprises doing business in 7 separate industries; |
· | located in 30 states; |
· | with approximately 6.1 million square feet of leasable space; and |
· | with an average leasable space per property of approximately 51,000 square feet. |
5 |
At September 30, 2013, Inland Portfolio consisted of a diversified portfolio:
· | of 28 properties; |
· | with an occupancy rate of 96.2%; |
· | leased to 25 different retail and other commercial enterprises doing business in 14 separate industries; |
· | located in 14 states; |
· | with approximately 6.3 million square feet of leasable space; and |
· | with an average leasable space per property of approximately 208,500 square feet. |
At September 30, 2013, Cole owned a diversified portfolio:
· | of 1,026 properties; |
· | with an occupancy rate of 99%; |
· | leased to 642 different retail and other commercial enterprises doing business in 46 separate industries; |
· | located in 48 states; |
· | with approximately 44.8 million square feet of leasable space; and |
· | with an average leasable space per property of approximately 43,700 square feet. |
Combined Property Portfolio
As of September 30, 2013, ARCP after giving effect to the closing of the CapLease Merger and assuming the ARCT IV Merger and Cole Merger are consummated and assuming the closing of the Inland and Fortress acquisitions, on a pro forma basis, owned a portfolio with the following characteristics:
· | 3,664 properties, excluding one vacant property classified as held for sale; |
· | with an occupancy rate of 99%; |
· | leased to 1,071 different retail and other commercial enterprises doing business in 71 separate industries; |
· | located in 49 states, the District of Columbia, and Puerto Rico; |
· | with approximately 99.9 million square feet of leasable space; and |
· | with an average leasable space per property of approximately 27,200 square feet |
There were no tenants whose annualized rental income on a straight-line basis represent greater than 10% of the total annualized rental income on a straight-line basis for the pro forma portfolio properties of ARCP.
All of the following property portfolio information is provided to illustrate the pro forma combined property portfolio of ARCP, ARCT IV, CapLease, Fortress, Inland and Cole post-merger. This information includes an illustration of the combined portfolio by industry, property type and geography, as well as a combined lease expiration schedule. The ARCP information represents quarterly information for the 1,219 properties owned at September 30, 2013. The ARCT IV information represents quarterly information for the 1,203 properties owned at September 30, 2013. The CapLease information represents quarterly information for the 68 properties owned at September 30, 2013. The Fortress information represents the 120 properties to be acquired under the ARCP purchase agreement with Fortress at September 30, 2013. The Inland information represents the 28 properties remaining to be acquired under the ARCP purchase agreement with Inland at September 30, 2013. The Cole information represents quarterly information for the 1,026 properties owned at September 30, 2013.
6 |
Industry Diversification
The following table sets forth a certain information regarding the property portfolios classified according to the business of the respective tenants, expressed as a percentage of total annualized rental income on a straight-line basis:
Percentage of Annualized Rental Income (1)
Industry | ARCP | ARCT IV | CapLease | Fortress | Inland | Cole | Combined Total | |||||||||||||||||||||
3rd Party Logistics | 0.55 | % | - | - | - | 3.94 | % | - | 0.24 | % | ||||||||||||||||||
Advertising | - | 0.04 | % | - | - | - | - | 0.01 | % | |||||||||||||||||||
Aerospace | 1.06 | % | 3.92 | % | - | - | - | - | 0.71 | % | ||||||||||||||||||
Agricultural Products & Services | 0.64 | % | - | - | - | - | 0.08 | % | 0.16 | % | ||||||||||||||||||
Alcohol Distribution | - | - | - | - | 1.27 | % | - | 0.04 | % | |||||||||||||||||||
Animal Supplies | - | - | - | - | - | 3.96 | % | 1.94 | % | |||||||||||||||||||
Auto Manufacturer | - | - | 2.30 | % | 0.00 | % | - | - | 0.27 | % | ||||||||||||||||||
Auto Retail | 2.45 | % | 0.09 | % | 2.61 | % | 38.50 | % | - | 2.02 | % | 3.10 | % | |||||||||||||||
Auto Services | 0.30 | % | 0.36 | % | - | - | - | 0.05 | % | 0.13 | % | |||||||||||||||||
Bolts, Nuts, Screws, Rivets & Washers | - | - | - | - | 2.06 | % | - | 0.07 | % | |||||||||||||||||||
Casual Dining | 6.90 | % | 19.34 | % | - | 17.88 | % | - | 4.17 | % | 6.48 | % | ||||||||||||||||
Childcare and development | - | - | - | - | - | 0.05 | % | 0.02 | % | |||||||||||||||||||
Consulting | - | - | 3.51 | % | - | - | - | 0.41 | % | |||||||||||||||||||
Consumer Goods | 0.27 | % | - | - | - | - | - | 0.05 | % | |||||||||||||||||||
Consumer Products | 9.32 | % | 2.39 | % | 8.24 | % | - | - | 1.86 | % | 4.03 | % | ||||||||||||||||
Discount Retail | 10.26 | % | 6.26 | % | - | - | - | 2.58 | % | 4.09 | % | |||||||||||||||||
Distribution | - | - | - | - | 1.28 | % | - | 0.04 | % | |||||||||||||||||||
Diversified Industrial | 0.45 | % | - | 10.16 | % | 3.20 | % | 8.46 | % | - | 1.67 | % | ||||||||||||||||
Education | - | - | - | 0.47 | % | - | 2.70 | % | 1.34 | % | ||||||||||||||||||
Family Dining | 6.86 | % | 8.59 | % | - | - | - | 3.75 | % | 4.29 | % | |||||||||||||||||
Financial Services | 0.54 | % | 0.05 | % | 4.93 | % | - | - | 2.32 | % | 1.83 | % | ||||||||||||||||
Fitness | 0.47 | % | - | - | - | 0.38 | % | 2.86 | % | 1.51 | % | |||||||||||||||||
Freight | 6.85 | % | 3.11 | % | 1.27 | % | - | - | 0.62 | % | 2.20 | % | ||||||||||||||||
Furniture Rental & Leasing | - | - | - | - | - | 0.83 | % | 0.41 | % | |||||||||||||||||||
Gas/Convenience | 2.74 | % | 0.72 | % | - | - | - | 2.79 | % | 2.00 | % | |||||||||||||||||
Government Services | 2.47 | % | - | 12.82 | % | - | - | 0.80 | % | 2.39 | % | |||||||||||||||||
Haircare Services | - | 0.01 | % | - | - | - | - | 0.00 | % | |||||||||||||||||||
Healthcare | 5.59 | % | 2.32 | % | 3.88 | % | - | - | 4.33 | % | 3.98 | % | ||||||||||||||||
Heavy Equipment | 1.00 | % | - | - | - | - | - | 0.20 | % | |||||||||||||||||||
Home Maintenance | 0.96 | % | 0.54 | % | 4.21 | % | - | - | 3.44 | % | 2.44 | % | ||||||||||||||||
Hotel | - | - | 2.06 | % | - | - | - | 0.24 | % | |||||||||||||||||||
Information and communications | - | - | - | - | - | 0.12 | % | 0.06 | % | |||||||||||||||||||
Insurance | 4.57 | % | 0.03 | % | 13.46 | % | - | 2.74 | % | 1.95 | % | 3.54 | % | |||||||||||||||
Jewelry | - | - | 3.65 | % | - | - | - | 0.43 | % | |||||||||||||||||||
Manufacturing | - | - | - | - | 16.44 | % | 1.46 | % | 1.26 | % | ||||||||||||||||||
Marine Products | 0.12 | % | - | - | - | - | 0.23 | % | 0.13 | % | ||||||||||||||||||
Media | - | - | 1.89 | % | - | - | - | 0.22 | % | |||||||||||||||||||
Motor Cycle | - | 0.56 | % | - | - | - | - | 0.07 | % | |||||||||||||||||||
Movie Theater | - | - | - | - | 2.12 | % | - | 0.07 | % | |||||||||||||||||||
Office Products | - | - | - | - | - | 0.89 | % | 0.44 | % | |||||||||||||||||||
Oil/Gas | - | - | 2.99 | % | - | - | 1.50 | % | 1.09 | % | ||||||||||||||||||
Packaging | 0.63 | % | - | - | - | - | - | 0.12 | % | |||||||||||||||||||
Parking | - | 0.00 | % | - | - | - | - | 0.00 | % | |||||||||||||||||||
Personal services | - | - | - | - | - | 0.70 | % | 0.34 | % | |||||||||||||||||||
Pharmacy | 8.92 | % | 1.64 | % | 0.78 | % | 33.87 | % | - | 8.82 | % | 7.54 | % | |||||||||||||||
Printing Services | - | 0.06 | % | - | - | - | - | 0.01 | % | |||||||||||||||||||
Professional Services | - | - | 0.49 | % | - | - | 2.32 | % | 1.20 | % | ||||||||||||||||||
Publishing | - | - | 1.12 | % | - | 10.26 | % | - | 0.47 | % | ||||||||||||||||||
Quick Service Restaurant | 11.30 | % | 31.90 | % | - | 1.07 | % | - | 1.80 | % | 7.22 | % | ||||||||||||||||
Retail - Department Stores | 1.97 | % | 2.30 | % | 4.34 | % | - | - | 5.13 | % | 3.71 | % | ||||||||||||||||
Retail - Discount | - | - | - | - | - | 2.37 | % | 1.16 | % | |||||||||||||||||||
Retail - Electronics and appliances | - | - | - | - | - | 0.06 | % | 0.03 | % | |||||||||||||||||||
Retail - Grocery | - | - | - | - | - | 1.35 | % | 0.66 | % | |||||||||||||||||||
Retail - Hobby/books/music | - | - | - | - | - | 1.16 | % | 0.57 | % | |||||||||||||||||||
Retail - Home furnishings | - | - | - | - | - | 0.37 | % | 0.18 | % | |||||||||||||||||||
Retail - Internet | - | - | - | - | - | 2.36 | % | 1.16 | % | |||||||||||||||||||
Retail - Office supply stores | - | - | - | - | - | 0.28 | % | 0.14 | % | |||||||||||||||||||
Retail - Pet supply stores | - | - | - | - | - | 0.44 | % | 0.22 | % | |||||||||||||||||||
Retail - Sporting Goods | 0.62 | % | - | - | - | 1.35 | % | 2.28 | % | 1.28 | % | |||||||||||||||||
Retail - Variety | - | - | - | - | - | 2.86 | % | 1.40 | % | |||||||||||||||||||
Retail - Wholesale | 0.37 | % | - | - | - | - | 4.10 | % | 2.08 | % | ||||||||||||||||||
Retail Banking | 9.58 | % | 8.40 | % | 1.50 | % | 5.01 | % | - | 0.96 | % | 3.78 | % | |||||||||||||||
Specialty Retail | 1.14 | % | 2.07 | % | 0.70 | % | - | - | 6.98 | % | 4.00 | % | ||||||||||||||||
Storage Facility | 0.19 | % | - | - | - | - | - | 0.04 | % | |||||||||||||||||||
Supermarket | 0.50 | % | 5.26 | % | 4.66 | % | - | - | 6.75 | % | 4.64 | % | ||||||||||||||||
Technology | - | - | - | - | 5.87 | % | - | 0.19 | % | |||||||||||||||||||
Telecommunications | - | 0.04 | % | 4.54 | % | - | 41.88 | % | 3.55 | % | 3.66 | % | ||||||||||||||||
Transportation | - | - | - | - | 1.95 | % | - | 0.06 | % | |||||||||||||||||||
Travel Centers | 0.41 | % | - | - | - | - | - | 0.08 | % | |||||||||||||||||||
Various | - | - | 3.89 | % | - | - | - | 0.46 | % | |||||||||||||||||||
Total | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % |
7 |
Property Type Diversification
The following table sets forth a certain property type information regarding the property portfolios (dollars in thousands):
ARCP | ||||||||||||||||
Property Type | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Retail | 1,133 | 8,021,932 | $ | 149,604 | 63.31 | % | ||||||||||
Office | 39 | 2,339,472 | 36,955 | 15.64 | % | |||||||||||
Distribution | 47 | 10,038,453 | 49,737 | 21.05 | % | |||||||||||
Total | 1,219 | 20,399,857 | $ | 236,296 | 100.00 | % |
ARCT IV
Property Type | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Retail | 1,171 | 6,061,548 | $ | 131,673 | 85.51 | % | ||||||||||
Office | 21 | 169,796 | 3,597 | 2.34 | % | |||||||||||
Distribution | 5 | 2,931,669 | 18,644 | 12.11 | % | |||||||||||
Parking Lot | 1 | 8,400 | 1 | 0.00 | % | |||||||||||
Billboard | 5 | - | 61 | 0.04 | % | |||||||||||
Total | 1,203 | 9,171,413 | $ | 153,976 | 100.00 | % |
CapLease | ||||||||||||||||
Property Type | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Retail | 16 | 1,172,481 | $ | 13,720 | 9.65 | % | ||||||||||
Office | 40 | 6,222,267 | 100,865 | 70.95 | % | |||||||||||
Distribution | 11 | 5,645,138 | 26,863 | 18.89 | % | |||||||||||
Industrial | 1 | 107,520 | 728 | 0.51 | % | |||||||||||
Total | 68 | 13,147,406 | $ | 142,176 | 100.00 | % |
Fortress Portfolio | ||||||||||||||||
Property Type | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Retail | 107 | 1,181,840 | $ | 21,585 | 52.96 | % | ||||||||||
Office | 2 | 27,924 | 775 | 1.90 | % | |||||||||||
Distribution | 11 | 4,905,659 | 18,399 | 45.14 | % | |||||||||||
Total | 120 | 6,115,423 | $ | 40,759 | 100.00 | % |
Inland Portfolio | ||||||||||||||||
Property Type | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Retail | 4 | 365,099 | $ | 2,646 | 6.69 | % | ||||||||||
Office | 6 | 1,993,466 | 22,447 | 56.72 | % | |||||||||||
Distribution | 14 | 3,657,828 | 14,483 | 36.59 | % | |||||||||||
Vacant | 4 | 239,547 | - | 0.00 | % | |||||||||||
Total | 28 | 6,255,940 | $ | 39,576 | 100.00 | % |
8 |
Cole
Property Type | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Retail | 894 | 18,098,000 | $ | 273,365 | 46.27 | % | ||||||||||
Office | 34 | 5,937,000 | 122,722 | 20.77 | % | |||||||||||
Industrial | 21 | 9,299,000 | 44,081 | 7.46 | % | |||||||||||
Multi-Tenant Retail | 77 | 11,465,000 | 150,733 | 25.50 | % | |||||||||||
Total | 1,026 | 44,799,000 | $ | 590,901 | 100.00 | % |
Combined
Property Type | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Retail | 3,325 | 34,898,902 | $ | 592,592 | 49.23 | % | ||||||||||
Office | 142 | 16,689,925 | 287,362 | 23.87 | % | |||||||||||
Distribution | 88 | 27,178,747 | 128,126 | 10.65 | % | |||||||||||
Parking Lot | 1 | 8,400 | 1 | 0.00 | % | |||||||||||
Billboard | 5 | - | 61 | 0.01 | % | |||||||||||
Vacant | 4 | 239,547 | - | 0.00 | % | |||||||||||
Industrial | 22 | 9,406,520 | 44,809 | 3.72 | % | |||||||||||
Multi-Tenant Retail | 77 | 11,465,000 | 150,733 | 12.52 | % | |||||||||||
Total | 3,664 | 99,887,041 | $ | 1,203,684 | 100.00 | % |
9 |
Geographic Diversification
The following table sets forth a certain state-by-state information regarding the property portfolios (dollars in thousands):
ARCP | ||||||||||||||||
State/Possession | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Alabama | 43 | 578,951 | $ | 8,122 | 3.44 | % | ||||||||||
Arizona | 8 | 74,227 | 1,613 | 0.68 | % | |||||||||||
Arkansas | 35 | 386,630 | 4,393 | 1.86 | % | |||||||||||
California | 16 | 1,450,328 | 12,488 | 5.28 | % | |||||||||||
Colorado | 13 | 238,886 | 4,673 | 1.98 | % | |||||||||||
Connecticut | 10 | 37,126 | 1,184 | 0.50 | % | |||||||||||
Delaware | 4 | 12,369 | 286 | 0.12 | % | |||||||||||
Florida | 38 | 227,787 | 5,792 | 2.45 | % | |||||||||||
Georgia | 64 | 403,579 | 8,896 | 3.77 | % | |||||||||||
Idaho | 8 | 71,565 | 1,552 | 0.66 | % | |||||||||||
Illinois | 42 | 1,486,911 | 19,123 | 8.09 | % | |||||||||||
Indiana | 28 | 1,762,150 | 8,288 | 3.51 | % | |||||||||||
Iowa | 19 | 671,074 | 4,810 | 2.04 | % | |||||||||||
Kansas | 24 | 1,328,245 | 5,121 | 2.17 | % | |||||||||||
Kentucky | 28 | 663,260 | 5,929 | 2.51 | % | |||||||||||
Louisiana | 28 | 221,238 | 2,871 | 1.21 | % | |||||||||||
Maine | 2 | 146,430 | 2,819 | 1.19 | % | |||||||||||
Maryland | 3 | 25,110 | 744 | 0.31 | % | |||||||||||
Massachusetts | 18 | 435,195 | 6,157 | 2.61 | % | |||||||||||
Michigan | 79 | 685,759 | 12,740 | 5.39 | % | |||||||||||
Minnesota | 11 | 200,487 | 1,693 | 0.72 | % | |||||||||||
Mississippi | 36 | 1,380,764 | 8,327 | 3.52 | % | |||||||||||
Missouri | 86 | 942,859 | 11,019 | 4.66 | % | |||||||||||
Montana | 5 | 55,377 | 856 | 0.36 | % | |||||||||||
Nebraska | 3 | 25,355 | 409 | 0.17 | % | |||||||||||
Nevada | 12 | 100,660 | 2,414 | 1.02 | % | |||||||||||
New Hampshire | 10 | 65,328 | 1,349 | 0.57 | % | |||||||||||
New Jersey | 9 | 90,531 | 2,748 | 1.16 | % | |||||||||||
New Mexico | 10 | 54,475 | 870 | 0.37 | % | |||||||||||
New York | 25 | 326,461 | 7,522 | 3.18 | % | |||||||||||
North Carolina | 57 | 1,146,449 | 11,163 | 4.72 | % | |||||||||||
North Dakota | 4 | 31,318 | 572 | 0.24 | % | |||||||||||
Ohio | 63 | 1,197,640 | 10,754 | 4.55 | % | |||||||||||
Oklahoma | 23 | 375,143 | 3,070 | 1.30 | % | |||||||||||
Oregon | 6 | 25,143 | 652 | 0.28 | % | |||||||||||
Pennsylvania | 69 | 365,231 | 8,697 | 3.68 | % | |||||||||||
Rhode Island | 7 | 136,188 | 2,416 | 1.02 | % | |||||||||||
South Carolina | 31 | 655,029 | 7,056 | 2.99 | % | |||||||||||
South Dakota | 2 | 49,641 | 415 | 0.18 | % | |||||||||||
Tennessee | 49 | 371,959 | 6,589 | 2.79 | % | |||||||||||
Texas | 130 | 1,187,775 | 17,620 | 7.46 | % | |||||||||||
Utah | 3 | 14,009 | 415 | 0.18 | % | |||||||||||
Vermont | 4 | 15,432 | 335 | 0.14 | % | |||||||||||
Virginia | 25 | 150,269 | 3,395 | 1.44 | % | |||||||||||
Washington | 5 | 219,700 | 3,139 | 1.33 | % | |||||||||||
West Virginia | 9 | 57,079 | 1,434 | 0.61 | % | |||||||||||
Wisconsin | 9 | 198,127 | 2,085 | 0.88 | % | |||||||||||
Wyoming | 4 | 23,558 | 577 | 0.24 | % | |||||||||||
Puerto Rico | 2 | 31,050 | 1,104 | 0.47 | % | |||||||||||
Total | 1,219 | 20,399,857 | $ | 236,296 | 100.00 | % |
10 |
ARCT IV | ||||||||||||||||
State/Possession | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Alabama | 53 | 198,417 | $ | 7,650 | 4.97 | % | ||||||||||
Alaska | 1 | 2,805 | - | 0.00 | % | |||||||||||
Arizona | 20 | 77,375 | 2,193 | 1.42 | % | |||||||||||
Arkansas | 36 | 120,183 | 740 | 0.48 | % | |||||||||||
California | 13 | 67,360 | 1,760 | 1.14 | % | |||||||||||
Colorado | 13 | 79,444 | 912 | 0.59 | % | |||||||||||
Connecticut | 4 | 10,351 | 193 | 0.13 | % | |||||||||||
Florida | 106 | 1,634,386 | 23,147 | 15.03 | % | |||||||||||
Georgia | 64 | 256,343 | 6,065 | 3.94 | % | |||||||||||
Idaho | 6 | 30,288 | 1,911 | 1.24 | % | |||||||||||
Illinois | 54 | 234,929 | 6,067 | 3.95 | % | |||||||||||
Indiana | 38 | 537,246 | 10,282 | 6.68 | % | |||||||||||
Iowa | 13 | 153,282 | 1,669 | 1.08 | % | |||||||||||
Kansas | 8 | 59,883 | 1,005 | 0.65 | % | |||||||||||
Kentucky | 21 | 96,476 | 2,593 | 1.68 | % | |||||||||||
Louisiana | 27 | 84,170 | 2,856 | 1.85 | % | |||||||||||
Maine | 3 | 151,684 | 1,082 | 0.70 | % | |||||||||||
Maryland | 10 | 33,034 | 1,886 | 1.22 | % | |||||||||||
Massachusetts | 7 | 590,962 | 4,469 | 2.90 | % | |||||||||||
Michigan | 41 | 224,670 | 3,785 | 2.46 | % | |||||||||||
Minnesota | 11 | 81,968 | 807 | 0.52 | % | |||||||||||
Mississippi | 15 | 42,900 | 1,715 | 1.11 | % | |||||||||||
Missouri | 25 | 145,173 | 2,153 | 1.40 | % | |||||||||||
Nebraska | 7 | 27,464 | 535 | 0.35 | % | |||||||||||
Nevada | 2 | 16,083 | 203 | 0.13 | % | |||||||||||
New Hampshire | 2 | 13,319 | 257 | 0.17 | % | |||||||||||
New Jersey | 3 | 7,606 | 307 | 0.20 | % | |||||||||||
New Mexico | 13 | 63,644 | 2,281 | 1.48 | % | |||||||||||
New York | 28 | 112,822 | 3,001 | 1.95 | % | |||||||||||
North Carolina | 50 | 261,615 | 6,322 | 4.11 | % | |||||||||||
North Dakota | 1 | 7,930 | 480 | 0.31 | % | |||||||||||
Ohio | 78 | 1,608,855 | 10,764 | 6.99 | % | |||||||||||
Oklahoma | 12 | 72,398 | 1,194 | 0.78 | % | |||||||||||
Oregon | 6 | 29,534 | - | 0.00 | % | |||||||||||
Pennsylvania | 36 | 390,113 | 6,942 | 4.51 | % | |||||||||||
Rhode Island | 6 | 25,454 | 829 | 0.54 | % | |||||||||||
South Carolina | 45 | 153,815 | 3,401 | 2.21 | % | |||||||||||
South Dakota | 3 | 34,773 | 364 | 0.24 | % | |||||||||||
Tennessee | 40 | 121,782 | 3,329 | 2.16 | % | |||||||||||
Texas | 156 | 846,808 | 16,046 | 10.42 | % | |||||||||||
Utah | 3 | 9,518 | 275 | 0.18 | % | |||||||||||
Virginia | 39 | 135,344 | 3,263 | 2.12 | % | |||||||||||
Washington | 7 | 30,733 | 2,383 | 1.55 | % | |||||||||||
West Virginia | 23 | 106,676 | 1,971 | 1.28 | % | |||||||||||
Wisconsin | 49 | 151,086 | 4,388 | 2.85 | % | |||||||||||
Wyoming | 4 | 27,502 | 457 | 0.30 | % | |||||||||||
District of Columbia | 1 | 3,210 | 44 | 0.03 | % | |||||||||||
Total | 1,203 | 9,171,413 | $ | 153,976 | 100.00 | % |
11 |
CapLease | ||||||||||||||||
State/Possession | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Alabama | 2 | 131,894 | $ | 4,097 | 2.88 | % | ||||||||||
California | 5 | 1,388,786 | 12,468 | 8.77 | % | |||||||||||
Colorado | 3 | 420,471 | 7,664 | 5.39 | % | |||||||||||
Florida | 1 | 307,275 | 2,121 | 1.49 | % | |||||||||||
Georgia | 4 | 264,165 | 2,027 | 1.43 | % | |||||||||||
Illinois | 2 | 543,750 | 8,635 | 6.08 | % | |||||||||||
Indiana | 3 | 1,696,719 | 4,079 | 2.87 | % | |||||||||||
Kansas | 2 | 266,644 | 4,521 | 3.18 | % | |||||||||||
Kentucky | 6 | 446,274 | 2,874 | 2.02 | % | |||||||||||
Louisiana | 1 | 133,841 | 2,314 | 1.63 | % | |||||||||||
Maryland | 2 | 430,967 | 9,652 | 6.79 | % | |||||||||||
Massachusetts | 1 | 88,420 | 758 | 0.53 | % | |||||||||||
Michigan | 1 | 196,057 | 1,812 | 1.28 | % | |||||||||||
Nebraska | 2 | 426,399 | 5,537 | 3.89 | % | |||||||||||
New Jersey | 2 | 517,215 | 9,056 | 6.37 | % | |||||||||||
New York | 1 | 98,184 | 1,312 | 0.92 | % | |||||||||||
North Carolina | 1 | 191,681 | 2,093 | 1.47 | % | |||||||||||
Ohio | 1 | 111,776 | 984 | 0.69 | % | |||||||||||
Oklahoma | 1 | 328,545 | 4,250 | 2.99 | % | |||||||||||
Pennsylvania | 5 | 2,341,034 | 16,150 | 11.36 | % | |||||||||||
South Carolina | 1 | - | - | 0.00 | % | |||||||||||
Tennessee | 3 | 193,983 | 2,454 | 1.73 | % | |||||||||||
Texas | 11 | 1,598,049 | 22,333 | 15.71 | % | |||||||||||
Virginia | 4 | 658,728 | 8,819 | 6.20 | % | |||||||||||
Washington | 1 | 155,200 | 2,834 | 1.99 | % | |||||||||||
Wisconsin | 1 | 154,849 | 2,031 | 1.43 | % | |||||||||||
Puerto Rico | 1 | 56,500 | 1,301 | 0.91 | % | |||||||||||
Total | 68 | 13,147,406 | $ | 142,176 | 100.00 | % |
12 |
Fortress Portfolio | ||||||||||||||||
State/Possession | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Alabama | 2 | 20,403 | $ | 319 | 0.78 | % | ||||||||||
Arizona | 3 | 34,725 | 807 | 1.98 | % | |||||||||||
Arkansas | 1 | 9,921 | 188 | 0.46 | % | |||||||||||
California | 21 | 232,323 | 4,376 | 10.74 | % | |||||||||||
Colorado | 4 | 280,770 | 1,642 | 4.03 | % | |||||||||||
Connecticut | 1 | 12,900 | 545 | 1.34 | % | |||||||||||
Delaware | 2 | 21,438 | 444 | 1.09 | % | |||||||||||
Florida | 7 | 34,132 | 917 | 2.25 | % | |||||||||||
Georgia | 3 | 1,290,631 | 4,173 | 10.24 | % | |||||||||||
Illinois | 3 | 1,027,669 | 3,586 | 8.80 | % | |||||||||||
Louisiana | 4 | 52,900 | 1,451 | 3.56 | % | |||||||||||
Maine | 4 | 44,720 | 697 | 1.71 | % | |||||||||||
Maryland | 1 | 10,825 | 188 | 0.46 | % | |||||||||||
Massachusetts | 2 | 24,983 | 991 | 2.43 | % | |||||||||||
Mississippi | 1 | 2,271 | 136 | 0.33 | % | |||||||||||
Missouri | 2 | 23,691 | 468 | 1.15 | % | |||||||||||
New Hampshire | 2 | 22,360 | 310 | 0.76 | % | |||||||||||
New Jersey | 3 | 27,100 | 607 | 1.49 | % | |||||||||||
New Mexico | 3 | 42,024 | 1,127 | 2.77 | % | |||||||||||
North Carolina | 4 | 27,847 | 664 | 1.63 | % | |||||||||||
Ohio | 8 | 687,537 | 2,843 | 6.98 | % | |||||||||||
Oklahoma | 1 | 13,225 | 218 | 0.53 | % | |||||||||||
Oregon | 1 | 20,207 | 218 | 0.53 | % | |||||||||||
Pennsylvania | 14 | 1,126,202 | 5,742 | 14.09 | % | |||||||||||
South Carolina | 2 | 19,842 | 376 | 0.92 | % | |||||||||||
Tennessee | 2 | 26,450 | 509 | 1.25 | % | |||||||||||
Texas | 10 | 880,043 | 5,091 | 12.49 | % | |||||||||||
Virginia | 5 | 63,706 | 1,526 | 3.74 | % | |||||||||||
Washington | 1 | 10,000 | 188 | 0.46 | % | |||||||||||
West Virginia | 3 | 24,578 | 412 | 1.01 | % | |||||||||||
Total | 120 | 6,115,423 | $ | 40,759 | 100.00 | % |
13 |
Inland Portfolio | ||||||||||||||||
State/Possession | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
California | 1 | 72,347 | $ | 1,764 | 4.46 | % | ||||||||||
Georgia | 1 | 46,000 | 838 | 2.12 | % | |||||||||||
Illinois | 8 | 1,083,586 | 6,743 | 17.04 | % | |||||||||||
Indiana | 1 | 1,091,435 | 4,061 | 10.26 | % | |||||||||||
Iowa | 1 | 126,900 | 264 | 0.67 | % | |||||||||||
Maryland | 1 | 120,000 | 2,239 | 5.66 | % | |||||||||||
Michigan | 1 | 423,230 | 1,295 | 3.27 | % | |||||||||||
Missouri | 1 | 1,461,274 | 16,572 | 41.87 | % | |||||||||||
North Carolina | 2 | 507,774 | 1,060 | 2.68 | % | |||||||||||
Ohio | 1 | 86,000 | - | 0.00 | % | |||||||||||
Pennsylvania | 1 | 178,600 | 613 | 1.55 | % | |||||||||||
Texas | 3 | 366,344 | 1,557 | 3.93 | % | |||||||||||
Virginia | 1 | 7,488 | - | 0.00 | % | |||||||||||
Wisconsin | 5 | 684,962 | 2,570 | 6.49 | % | |||||||||||
Total | 28 | 6,255,940 | $ | 39,576 | 100.00 | % |
14 |
Cole
State | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Alabama | 27 | 1,286,000 | $ | 16,401 | 2.78 | % | ||||||||||
Alaska | 2 | 92,000 | 1,615 | 0.27 | % | |||||||||||
Arizona | 41 | 2,975,000 | 49,047 | 8.30 | % | |||||||||||
Arkansas | 16 | 335,000 | 3,652 | 0.62 | % | |||||||||||
California | 22 | 2,905,000 | 40,689 | 6.89 | % | |||||||||||
Colorado | 15 | 803,000 | 9,123 | 1.54 | % | |||||||||||
Connecticut | 1 | 70,000 | 2,511 | 0.42 | % | |||||||||||
Delaware | 2 | 35,000 | 624 | 0.11 | % | |||||||||||
Florida | 81 | 3,287,000 | 39,697 | 6.72 | % | |||||||||||
Georgia | 43 | 3,293,000 | 47,030 | 7.96 | % | |||||||||||
Idaho | 2 | 24,000 | 498 | 0.08 | % | |||||||||||
Illinois | 46 | 1,550,000 | 30,864 | 5.22 | % | |||||||||||
Indiana | 44 | 531,000 | 10,017 | 1.70 | % | |||||||||||
Iowa | 14 | 475,000 | 4,787 | 0.81 | % | |||||||||||
Kansas | 7 | 205,000 | 2,602 | 0.44 | % | |||||||||||
Kentucky | 17 | 139,000 | 3,535 | 0.60 | % | |||||||||||
Louisiana | 31 | 866,000 | 9,032 | 1.53 | % | |||||||||||
Maine | 14 | 282,000 | 3,325 | 0.56 | % | |||||||||||
Maryland | 6 | 366,000 | 7,346 | 1.25 | % | |||||||||||
Massachusetts | 10 | 1,222,000 | 14,332 | 2.43 | % | |||||||||||
Michigan | 43 | 1,691,000 | 21,943 | 3.71 | % | |||||||||||
Minnesota | 7 | 111,000 | 2,379 | 0.40 | % | |||||||||||
Mississippi | 11 | 258,000 | 2,899 | 0.49 | % | |||||||||||
Missouri | 26 | 428,000 | 6,316 | 1.07 | % | |||||||||||
Montana | 1 | 16,000 | 261 | 0.04 | % | |||||||||||
Nebraska | 5 | 225,000 | 3,739 | 0.63 | % | |||||||||||
Nevada | 17 | 699,000 | 7,428 | 1.26 | % | |||||||||||
New Hampshire | 4 | 126,000 | 2,023 | 0.34 | % | |||||||||||
New Jersey | 14 | 891,000 | 20,450 | 3.46 | % | |||||||||||
New Mexico | 18 | 685,000 | 7,739 | 1.31 | % | |||||||||||
New York | 7 | 651,000 | 9,979 | 1.69 | % | |||||||||||
North Carolina | 34 | 1,549,000 | 13,728 | 2.32 | % | |||||||||||
North Dakota | 1 | 70,000 | 926 | 0.16 | % | |||||||||||
Ohio | 72 | 1,718,000 | 18,214 | 3.08 | % | |||||||||||
Oklahoma | 21 | 446,000 | 7,774 | 1.32 | % | |||||||||||
Oregon | 2 | 229,000 | 2,897 | 0.49 | % | |||||||||||
Pennsylvania | 15 | 1,046,000 | 8,035 | 1.36 | % | |||||||||||
Rhode Island | 1 | 52,000 | 1,010 | 0.17 | % | |||||||||||
South Carolina | 27 | 2,148,000 | 16,885 | 2.86 | % | |||||||||||
South Dakota | 2 | 22,000 | 491 | 0.08 | % | |||||||||||
Tennessee | 19 | 2,676,000 | 16,063 | 2.72 | % | |||||||||||
Texas | 187 | 6,484,000 | 96,812 | 16.38 | % | |||||||||||
Utah | 2 | 63,000 | 496 | 0.08 | % | |||||||||||
Vermont | 3 | 7,000 | 134 | 0.02 | % | |||||||||||
Virginia | 23 | 1,335,000 | 18,407 | 3.12 | % | |||||||||||
Washington | 6 | 40,000 | 939 | 0.16 | % | |||||||||||
West Virginia | 1 | 11,000 | 302 | 0.05 | % | |||||||||||
Wisconsin | 16 | 381,000 | 5,905 | 1.00 | % | |||||||||||
Total | 1,026 | 44,799,000 | $ | 590,901 | 100.00 | % |
15 |
Combined
State | Number of Properties | Approximate Leaseable Square Feet | Annualized Rental Income (1) | Percentage of Rental Revenue | ||||||||||||
Alabama | 127 | 2,215,665 | $ | 36,589 | 3.04 | % | ||||||||||
Alaska | 3 | 94,805 | 1,615 | 0.13 | % | |||||||||||
Arizona | 72 | 3,161,327 | 53,660 | 4.46 | % | |||||||||||
Arkansas | 88 | 851,734 | 8,973 | 0.75 | % | |||||||||||
California | 78 | 6,116,144 | 73,546 | 6.11 | % | |||||||||||
Colorado | 48 | 1,822,571 | 24,014 | 2.00 | % | |||||||||||
Connecticut | 16 | 130,377 | 4,433 | 0.37 | % | |||||||||||
Delaware | 8 | 68,807 | 1,354 | 0.11 | % | |||||||||||
Florida | 233 | 5,490,580 | 71,674 | 5.95 | % | |||||||||||
Georgia | 179 | 5,553,718 | 69,029 | 5.73 | % | |||||||||||
Idaho | 16 | 125,853 | 3,961 | 0.33 | % | |||||||||||
Illinois | 155 | 5,926,845 | 75,018 | 6.23 | % | |||||||||||
Indiana | 114 | 5,618,550 | 36,727 | 3.05 | % | |||||||||||
Iowa | 47 | 1,426,256 | 11,529 | 0.96 | % | |||||||||||
Kansas | 41 | 1,859,772 | 13,248 | 1.10 | % | |||||||||||
Kentucky | 72 | 1,345,010 | 14,932 | 1.24 | % | |||||||||||
Louisiana | 91 | 1,358,149 | 18,524 | 1.54 | % | |||||||||||
Maine | 23 | 624,834 | 7,923 | 0.66 | % | |||||||||||
Maryland | 23 | 985,936 | 22,055 | 1.83 | % | |||||||||||
Massachusetts | 38 | 2,361,560 | 26,707 | 2.22 | % | |||||||||||
Michigan | 165 | 3,220,716 | 41,575 | 3.45 | % | |||||||||||
Minnesota | 29 | 393,455 | 4,879 | 0.41 | % | |||||||||||
Mississippi | 63 | 1,683,935 | 13,076 | 1.09 | % | |||||||||||
Missouri | 140 | 3,000,997 | 36,528 | 3.03 | % | |||||||||||
Montana | 6 | 71,377 | 1,117 | 0.09 | % | |||||||||||
Nebraska | 17 | 704,218 | 10,220 | 0.85 | % | |||||||||||
Nevada | 31 | 815,743 | 10,045 | 0.84 | % | |||||||||||
New Hampshire | 18 | 227,007 | 3,939 | 0.33 | % | |||||||||||
New Jersey | 31 | 1,533,452 | 33,167 | 2.76 | % | |||||||||||
New Mexico | 44 | 845,143 | 12,017 | 1.00 | % | |||||||||||
New York | 61 | 1,188,467 | 21,815 | 1.81 | % | |||||||||||
North Carolina | 148 | 3,684,366 | 35,029 | 2.91 | % | |||||||||||
North Dakota | 6 | 109,248 | 1,977 | 0.16 | % | |||||||||||
Ohio | 223 | 5,409,808 | 43,559 | 3.62 | % | |||||||||||
Oklahoma | 58 | 1,235,311 | 16,507 | 1.37 | % | |||||||||||
Oregon | 15 | 303,884 | 3,767 | 0.31 | % | |||||||||||
Pennsylvania | 140 | 5,447,180 | 46,180 | 3.84 | % | |||||||||||
Rhode Island | 14 | 213,642 | 4,255 | 0.35 | % | |||||||||||
South Carolina | 106 | 2,976,686 | 27,718 | 2.30 | % | |||||||||||
South Dakota | 7 | 106,414 | 1,271 | 0.11 | % | |||||||||||
Tennessee | 113 | 3,390,174 | 28,944 | 2.40 | % | |||||||||||
Texas | 497 | 11,361,021 | 159,459 | 13.25 | % | |||||||||||
Utah | 8 | 86,527 | 1,186 | 0.10 | % | |||||||||||
Vermont | 7 | 22,432 | 469 | 0.04 | % | |||||||||||
Virginia | 97 | 2,350,535 | 35,411 | 2.94 | % | |||||||||||
Washington | 20 | 455,633 | 9,482 | 0.79 | % | |||||||||||
West Virginia | 36 | 199,333 | 4,120 | 0.34 | % | |||||||||||
Wisconsin | 80 | 1,570,024 | 16,979 | 1.41 | % | |||||||||||
Wyoming | 8 | 51,060 | 1,035 | 0.09 | % | |||||||||||
Puerto Rico | 3 | 87,550 | 2,403 | 0.20 | % | |||||||||||
District of Columbia | 1 | 3,210 | 44 | 0.00 | % | |||||||||||
Total | 3,664 | 99,887,041 | $ | 1,203,684 | 100.00 | % |
16 |
Lease Expirations
The following table sets forth certain information regarding the property portfolio and the timing of the lease term expirations (excluding rights to extend a lease at the option of the tenant) on net leased, single-tenant properties (for properties under direct financing leases, average annual rent amounts represent cash rent on these properties) (dollars in thousands):
ARCP Operating Leases | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | 4 | $ | 187 | 0.08 | % | 11,283 | ||||||||||
2014 | 35 | 6,066 | 2.61 | % | 310,480 | |||||||||||
2015 | 46 | 7,191 | 3.10 | % | 822,071 | |||||||||||
2016 | 56 | 6,493 | 2.80 | % | 282,097 | |||||||||||
2017 | 95 | 12,236 | 5.27 | % | 891,254 | |||||||||||
2018 | 113 | 18,919 | 8.15 | % | 1,300,205 | |||||||||||
2019 | 66 | 9,873 | 4.26 | % | 449,793 | |||||||||||
2020 | 79 | 8,892 | 3.83 | % | 486,265 | |||||||||||
2021 | 64 | 13,729 | 5.92 | % | 933,406 | |||||||||||
2022 | 126 | 24,287 | 10.47 | % | 4,088,678 | |||||||||||
2023 | 64 | 25,173 | 10.85 | % | 2,676,651 | |||||||||||
Total | 748 | $ | 133,046 | 57.35 | % | 12,252,183 |
ARCP Direct Financing Leases | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | - | $ | - | 0.00 | % | - | ||||||||||
2014 | 1 | 72 | 1.68 | % | 2,463 | |||||||||||
2015 | 2 | 174 | 4.06 | % | 6,698 | |||||||||||
2016 | - | - | 0.00 | % | - | |||||||||||
2017 | 5 | 881 | 20.54 | % | 22,815 | |||||||||||
2018 | 8 | 706 | 16.46 | % | 28,177 | |||||||||||
2019 | 6 | 677 | 15.78 | % | 18,280 | |||||||||||
2020 | - | - | 0.00 | % | - | |||||||||||
2021 | 1 | 122 | 2.84 | % | 2,995 | |||||||||||
2022 | 1 | 100 | 2.33 | % | 4,747 | |||||||||||
2023 | 8 | 832 | 19.39 | % | 37,662 | |||||||||||
Total | 32 | $ | 3,564 | 83.08 | % | 123,837 |
ARCT IV Operating Leases | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | 24 | $ | 736 | 0.48 | % | 60,318 | ||||||||||
2014 | 43 | 3,371 | 2.21 | % | 158,344 | |||||||||||
2015 | 67 | 2,332 | 1.53 | % | 208,505 | |||||||||||
2016 | 51 | 3,079 | 2.02 | % | 171,888 | |||||||||||
2017 | 110 | 11,826 | 7.75 | % | 502,070 | |||||||||||
2018 | 55 | 3,615 | 2.37 | % | 195,662 | |||||||||||
2019 | 32 | 2,675 | 1.75 | % | 115,635 | |||||||||||
2020 | 42 | 3,487 | 2.29 | % | 157,401 | |||||||||||
2021 | 31 | 2,306 | 1.51 | % | 100,249 | |||||||||||
2022 | 36 | 11,861 | 7.78 | % | 1,450,642 | |||||||||||
2023 | 46 | 5,945 | 3.90 | % | 548,771 | |||||||||||
Total | 537 | $ | 51,233 | 33.59 | % | 3,669,485 |
17 |
ARCT IV Direct Financing Leases | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | - | $ | - | 0.00 | % | - | ||||||||||
2014 | 4 | 447 | 31.02 | % | 11,297 | |||||||||||
2015 | 1 | 123 | 8.54 | % | 3,208 | |||||||||||
2016 | 1 | 112 | 7.77 | % | 2,309 | |||||||||||
2017 | - | - | 0.00 | % | - | |||||||||||
2018 | 1 | 198 | 13.74 | % | 4,572 | |||||||||||
2019 | 2 | 256 | 17.77 | % | 8,332 | |||||||||||
2020 | - | - | 0.00 | % | - | |||||||||||
2021 | - | - | 0.00 | % | - | |||||||||||
2022 | - | - | 0.00 | % | - | |||||||||||
2023 | - | - | 0.00 | % | - | |||||||||||
Total | 9 | $ | 1,136 | 78.83 | % | 29,718 |
CapLease | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | 1 | $ | 6,723 | 4.73 | % | 207,055 | ||||||||||
2014 | 4 | 3,279 | 2.31 | % | 988,089 | |||||||||||
2015 | 5 | 10,999 | 7.74 | % | 865,703 | |||||||||||
2016 | 10 | 17,527 | 12.33 | % | 1,312,058 | |||||||||||
2017 | 8 | 22,569 | 15.87 | % | 2,856,984 | |||||||||||
2018 | 3 | 4,305 | 3.03 | % | 227,672 | |||||||||||
2019 | 4 | 9,374 | 6.59 | % | 422,210 | |||||||||||
2020 | 8 | 16,952 | 11.92 | % | 1,049,555 | |||||||||||
2021 | 19 | 23,848 | 16.77 | % | 3,293,772 | |||||||||||
2022 | 2 | 6,837 | 4.81 | % | 368,813 | |||||||||||
2023 | 2 | 4,091 | 2.88 | % | 134,979 | |||||||||||
Total | 66 | $ | 126,504 | 88.98 | % | 11,726,890 | ||||||||||
Fortress | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | - | $ | - | 0.00 | % | - | ||||||||||
2014 | - | - | 0.00 | % | - | |||||||||||
2015 | - | - | 0.00 | % | - | |||||||||||
2016 | 1 | 71 | 0.17 | % | 2,207 | |||||||||||
2017 | - | - | 0.00 | % | - | |||||||||||
2018 | 6 | 795 | 1.95 | % | 46,163 | |||||||||||
2019 | 14 | 3,846 | 9.44 | % | 292,441 | |||||||||||
2020 | 3 | 513 | 1.26 | % | 128,086 | |||||||||||
2021 | 11 | 16,242 | 39.85 | % | 4,722,622 | |||||||||||
2022 | 11 | 1,647 | 4.04 | % | 105,278 | |||||||||||
2023 | 6 | 854 | 2.10 | % | 48,169 | |||||||||||
Total | 52 | $ | 23,968 | 58.81 | % | 5,344,966 | ||||||||||
18 |
Inland | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | - | $ | - | 0.00 | % | - | ||||||||||
2014 | 1 | 433 | 1.09 | % | 23,218 | |||||||||||
2015 | 4 | 4,067 | 10.28 | % | 802,501 | |||||||||||
2016 | 4 | 5,273 | 13.32 | % | 1,377,801 | |||||||||||
2017 | 3 | 19,706 | 49.79 | % | 1,860,374 | |||||||||||
2018 | 1 | 628 | 1.59 | % | 175,052 | |||||||||||
2019 | 1 | 60 | 0.15 | % | 43,500 | |||||||||||
2020 | - | - | 0.00 | % | - | |||||||||||
2021 | 4 | 4,413 | 11.15 | % | 718,652 | |||||||||||
2022 | 4 | 3,393 | 8.57 | % | 588,658 | |||||||||||
2023 | 1 | 838 | 2.12 | % | 46,000 | |||||||||||
Total | 23 | $ | 38,811 | 98.07 | % | 5,635,756 | ||||||||||
Cole | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | 19 | $ | 757 | 0.13 | % | 61,000 | ||||||||||
2014 | 65 | 4,698 | 0.80 | % | 244,000 | |||||||||||
2015 | 88 | 6,996 | 1.18 | % | 418,000 | |||||||||||
2016 | 130 | 15,943 | 2.70 | % | 1,171,000 | |||||||||||
2017 | 142 | 14,638 | 2.48 | % | 1,023,000 | |||||||||||
2018 | 192 | 30,978 | 5.24 | % | 2,295,000 | |||||||||||
2019 | 108 | 28,327 | 4.79 | % | 2,354,000 | |||||||||||
2020 | 57 | 14,786 | 2.50 | % | 1,157,000 | |||||||||||
2021 | 78 | 36,415 | 6.16 | % | 2,949,000 | |||||||||||
2022 | 74 | 24,205 | 4.10 | % | 2,829,000 | |||||||||||
2023 | 88 | 40,926 | 6.93 | % | 2,610,000 | |||||||||||
Total | 1,041 | $ | 218,669 | 37.01 | % | 17,111,000 | ||||||||||
Combined | ||||||||||||||||
Period of Expiration | Number of Leases Expiring | Average Annual Rent | Percentage of Average Annual Rent (1) | Leased Square Feet | ||||||||||||
October 1, 2013 through December 31, 2013 | 48 | $ | 8,403 | 0.70 | % | 339,656 | ||||||||||
2014 | 153 | 18,366 | 1.53 | % | 1,737,891 | |||||||||||
2015 | 213 | 31,882 | 2.65 | % | 3,126,686 | |||||||||||
2016 | 253 | 48,498 | 4.03 | % | 4,319,360 | |||||||||||
2017 | 363 | 81,856 | 6.80 | % | 7,156,497 | |||||||||||
2018 | 379 | 60,144 | 5.00 | % | 4,272,503 | |||||||||||
2019 | 233 | 55,088 | 4.58 | % | 3,704,191 | |||||||||||
2020 | 189 | 44,630 | 3.71 | % | 2,978,307 | |||||||||||
2021 | 208 | 97,075 | 8.06 | % | 12,720,696 | |||||||||||
2022 | 254 | 72,330 | 6.01 | % | 9,435,816 | |||||||||||
2023 | 215 | 78,659 | 6.53 | % | 6,102,232 | |||||||||||
Total | 2,508 | $ | 596,931 | 49.59 | % | 55,893,835 | ||||||||||
(1) |
Annualized rental income as of September 30, 2013 for each portfolio and combined on a straight-line basis. 38 ARCP properties and 12 ARCT IV properties have leases that are accounted for as direct financing leases. Amounts reflected is the cash rent per the term of the leases. Annual rental income is based on the acquisition date of the respective company and amounts will be recalculated upon the merger date based on the remaining lease terms as of that date. |
19 |