American Realty Capital announced this week that it is selling Cole Capital, the private capital business of American Realty Capital Properties (ARCP), to RCS Capital Corp. (RCAP) for at least $700 million. 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, according to a Bloomberg report. As part of the transaction, ARCP will also be entitled to an earn-out of up to an additional $130 million based upon Cole Capital's 2015 EBITDA. The companies have also entered into a strategic arrangement by which ARCP will act as sub-advisor to Cole Capital's non-traded real estate investment trusts and acquire and property manage net lease real estate assets.
"The acquisition of Cole Capital is strategically and financially important to RCAP," said Michael Weil, RCAP's Chief Executive Officer. "We believe the combination of the two companies will achieve several significant strategic objectives in a single transaction, including growing our outstanding wholesale team's management and field ranks and materially expanding our investment management business segment by nearly 400%. "
"We are also excited about the exclusive relationship with ARC Global II where we will utilize our core strength of sourcing, underwriting and acquiring net lease real estate for the U.S. portion of the fund," added David Kay, Chief Executive Officer of ARCP. "We are now able to stay true to our pure play net lease strategy while we continue our competitive advantage utilizing non-traded REITs as a source of capital and scale. We are extremely excited to partner with RCAP and ARC Global II and look forward to a long-standing relationship in the net lease space."
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