Cole Credit Property Trust III Inc. to Acquire Cole Holdings Corp.

Cole Credit Property Trust III Inc. to Acquire Cole Holdings Corp.

Cole Credit Property Trust III Inc. (CCPT III) announced that it has executed a definitive merger agreement to acquire Cole Holdings Corp., a real estate investment management firm with more than $12 billion of assets under management. Upon completion of the deal, CCPT III will change its name to Cole Real Estate Investments Inc. and will pursue a listing on the New York Stock Exchange.

CCPT III is currently one of the largest REITs focused on the net lease sector, and following a listing, Cole Real Estate Investments would become the second largest publicly]traded REIT in the net lease space. The acquisition of Cole Holdings provides CCPT III with a full]scale real estate investment management platform, including more than 350 employees, and a portfolio of more than 2,000 properties.

In addition, the acquisition better positions CCPT III to pursue a listing on the NYSE. The transaction is expected to be immediately accretive to CCPT IIIfs funds from operations and to support an increase in the companyfs annualized dividend rate to $0.70 per share upon closing.

As consideration for the acquisition of a premier real estate investment manager, CCPT III will make upfront payments of $20 million in cash, subject to adjustment, and 10,711,225 shares of CCPT III common stock, plus the following contingent amounts: (a) 2,142,245 shares of CCPT III common stock after a listing on the NYSE; and (b) additional shares of CCPT III common stock potentially payable in 2017 as an gearn]outh contingent upon the acquired businessf demonstrated financial success, including generating EBITDA above a minimum threshold and CCPT IIIfs stock performance relative to its peer group.

The upfront stock consideration and the stock consideration upon listing are subject to a three]year lockup, with approximately one]third of the shares paid at closing released each year. The stock consideration payable in 2017 is subject to a lock]up until Dec. 31, 2017. Additional shares of CCPT III common stock may be payable based on CCPT IIIfs market value over the 30]day period beginning six months after CCPT IIIfs listing, pursuant to the current advisory agreement, but Cole Holdings has agreed, as part of this transaction, to a 25 percent reduction from the amount payable under the current advisory agreement, if any.

The transaction is expected to close in the second quarter of 2013.

gWe are pleased to be able to announce this exciting transaction, which provides our stockholders the benefits of owning a leading real estate investment management firm with meaningful growth potential, while also increasing funds from operations and potentially enhancing stockholder liquidity,h said Leonard Wood, chairman of the special committee of the CCPT III board of directors, in a statement. gBy adding the same fully]integrated management platform that has been responsible for building and acquiring CCPT IIIfs asset portfolio, stockholders will benefit from the continuity of the proven investment team that has successfully assembled and managed one of the largest REITs focused on the net]lease sector. Furthermore, CCPT III will be able to increase its dividend payout and intends to now pursue the listing of its common stock to achieve greater liquidity and superior access to the capital markets.h

According to a statement by Marc Nemer, president and CEO of Cole Holdings, gCreating a new paradigm in real estate asset management that can provide financial advisors and investors with sound investment strategies and innovative investment vehicles requires a confluence of several positive factors. With the powerful combination announced today, we believe that our goal of being the premier, trusted brand in real estate, and most capable partner in delivering best]in]class long]term results to our clients, is even more attainable. Furthermore, having greater access to diversified capital sources and income streams strengthens our position as we expand into new client bases and offer even more product innovation.h

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