American Realty Capital Properties Inc. agreed to sell its Cole Capital private-capital management business to RCS Capital Corp. for at least $700 million to focus on its single-tenant real estate business.
American Realty could earn as much as $130 million more from the transaction depending on Cole Capital’s 2015 profit, the New York-based company said today in a statement. As part of the agreement, American Realty will act as an adviser to Cole Capital’s non-traded real estate investment trust, sharing fees with RCS Capital.
“This transaction significantly simplifies our business model and provides us a long-term economic stake in the growth and success of Cole Capital’s investment programs,” American Realty Chief Executive Officer David Kay said in the statement. The move will eliminate “considerable overhead and volatility,” he said.
American Realty, headed by Chairman Nicholas Schorsch, has been buying and selling assets to concentrate on single-tenant buildings leased to businesses such as drugstores and fast-food restaurants.
The Cole Capital purchase will consist of $200 million of cash, the assumption of $300 million of American Realty debt and $200 million of RCS Capital common stock, the buyer said in a separate statement. The cash portion will be used to pay down debt, American Realty said.
The transaction will contribute 51 cents a share to RCS Capital’s projected adjusted net income for 2015, the company said in its statement. Cole Capital includes broker-dealer transactions, wholesale distribution and a non-traded real estate investment trust, it said.
Kay was named CEO yesterday, taking over from Schorsch, who will remain chairman.