As filed with the Securities and
Exchange Commission on February 3, 2010
Registration
No. 333-145949
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
POST-EFFECTIVE AMENDMENT NO. 7
TO
FORM S-11
FOR REGISTRATION UNDER THE SECURITIES
ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE
COMPANIES
AMERICAN REALTY CAPITAL TRUST,
INC.
(Exact Name of Registrant as Specified
in Its Governing Instruments)
106 York Road
Jenkintown, Pennsylvania
19046
(215) 887-2189
(Address, Including Zip Code and
Telephone Number, Including Area Code, of Registrant's Principal Executive
Offices)
Nicholas S. Schorsch
AMERICAN REALTY CAPITAL TRUST,
INC.
106 York Road
Jenkintown, Pennsylvania
19046
(215) 887-2189
(Name and Address, Including Zip Code
and Telephone Number, Including Area Code, of Agent for
Service)
With a Copy
to:
Peter M. Fass, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York
10036-8299
(212) 969-3000
Approximate Date of
Commencement of Proposed Sale to Public: As soon as practicable after the
registration statement becomes effective.
If any of the securities being
registered on this form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, check the following box
þ
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: o
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: o
If delivery of the prospectus is
expected to be made pursuant to Rule 434, check, the following box: o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one)
|
Large accelerated
filer
|
o
|
Accelerated
filer
|
o
|
|||||
|
Non-accelerated
filer
|
þ
|
(Do not check if a smaller
reporting company)
|
Smaller reporting
company
|
o
|
||||
This Post-Effective Amendment No. 7
consists of the following:
|
·
|
Supplement No. 3, dated February
3, 2010, included herewith, which will be delivered as an unattached
document along with the Prospectus.
|
|
|
·
|
Registrant’s final form of
Prospectus, dated November 10, 2009, previously filed pursuant to Rule
424(b)(3) on November 13,
2009.
|
|
·
|
Part II, included
herewith.
|
|
·
|
Signatures, included
herewith.
|
AMERICAN REALTY CAPITAL TRUST,
INC.
SUPPLEMENT NO. 3 DATED February 3,
2010
TO THE PROSPECTUS DATED November 10,
2009
This prospectus supplement (this
“Supplement No. 3”) is part of the prospectus of American Realty Capital Trust,
Inc. (the “REIT” or the “Company” ), dated November 10, 2009 (the
“Prospectus”), and should be read in conjunction with the Prospectus. This
Supplement No. 3 supplements, modifies or supersedes certain information
contained in our Prospectus. This Supplement No. 3 consolidates, supersedes and
replaces all prior Supplements and must be read in conjunction with our
Prospectus. Unless otherwise indicated, the information contained herein is
current as of the filing date of the prospectus supplement in which the Company
initially disclosed such information. This Supplement No. 3 will be delivered
with the Prospectus.
The purpose of this Supplement No. 3 is
to consolidate the information contained in all previous supplements to the
Prospectus and to update the financial information of the
REIT.
TABLE OF CONTENTS
|
Supplement No.
3
Page No.
|
Prospectus
Page No.
|
||
|
Summary Risk
Factors
|
1
|
N/A
|
|
|
Status of the
Offering
|
1
|
N/A
|
|
|
Shares Currently
Outstanding
|
1
|
N/A
|
|
|
Selected Financial
Data
|
2
|
N/A
|
|
|
Real Estate Investments
Summary
|
2-4
|
87-104
|
|
|
Status of
Distributions
|
4-5
|
10,
148-150
|
|
|
Status of Fees Paid and
Deferred
|
6
|
4,
36-37
|
|
|
Real Estate
Investments
|
6-11
|
87-104
|
|
|
Potential Property
Investments
|
11-13
|
104-106
|
|
|
Dealer
Manager
|
13
|
51-52
|
|
|
Certain Relationships and Related
Transactions
|
13
|
53-54
|
|
|
Section 1031 Exchange
Program
|
13
|
84-85
|
|
|
Incorporation of Certain
Information by Reference
|
13
|
171
|
Summary Risk Factors
We have qualified as a REIT for the tax
year ended December 31, 2009.
Status of the
Offering
We commenced our initial public offering
of 150,000,000 shares of common stock on January 25, 2008. As of January 26,
2010, we had issued 15,581,689 shares of common stock, including 339,077 shares
issued in connection with an acquisition in March 2008. Total gross proceeds
from these issuances were $153,601,869. As of January 26, 2010, the aggregate
value of all share issuances and subscriptions outstanding was $155,707,415
based on a per share value of $10.00 (or $9.50 per share for shares issued under
the DRIP). We will offer these shares until January 25, 2011,
provided that the offering will be terminated if all of the shares are sold
before then.
Shares Currently
Outstanding
As of January 26, 2010, there were
approximately 134.6 million shares of our common stock outstanding,
excluding shares available under the distribution reinvestment
plan.
1
Selected Financial
Data
The selected financial data presented
below has been derived from our consolidated financial statements as of
September 30, 2009 and December 31, 2008:
|
Balance Sheet
Data:
|
Nine Months
Ended
September 30,
2009
(Unaudited) |
Year Ended
December 31,
2008
|
||||||
|
Total real estate investments,
net
|
$
|
232,551,523
|
$
|
161,714,182
|
||||
|
Cash
|
8,697,197
|
886,868
|
||||||
|
Restricted
cash
|
38,025
|
47,937
|
||||||
|
Prepaid expenses and other
assets
|
5,693,979
|
2,293,464
|
||||||
|
Total
assets
|
246,980,724
|
164,942,451
|
||||||
|
Mortgage notes
payable
|
137,309,568
|
112,741,810
|
||||||
|
Short-term bridge
equity funds
|
15,878,495
|
30,925,959
|
||||||
|
Long-term notes
payable
|
13,000,000
|
1,089,500
|
||||||
|
Investor contributions held in
escrow
|
---
|
30,824
|
||||||
|
Total
liabilities
|
181,188,748
|
163,183,128
|
||||||
|
Total stockholders’
equity
|
65,791,976
|
1,759,323
|
||||||
|
Total liabilities and
stockholders’ equity
|
246,980,724
|
164,942,451
|
||||||
|
Operating
Data:
|
||||||||
|
Rental
income
|
9,636,008
|
5,546,363
|
||||||
| Asset management fees to affiliate |
70,000
|
--
|
||||||
|
Property management fees to
affiliate
|
--
|
4,230
|
||||||
|
Operating
income
|
3,375,048
|
2,105,615
|
||||||
|
Interest
expense
|
(7,292,251
|
)
|
(4,773,593
|
)
|
||||
|
Net
loss
|
(3,495,616
|
)
|
(4,282,784
|
)
|
||||
|
Cash Flow
Data:
|
||||||||
|
Net cash (used in) provided by
operating activities
|
(3,516,989
|
)
|
4,012,739
|
|||||
|
Net cash used in investing
activities
|
(76,321,062
|
)
|
(97,456,132
|
)
|
||||
|
Net cash provided by financing
activities
|
87,648,380
|
94,330,261
|
||||||
Real Estate Investments
Summary
The following summary of real estate
investments as of the date of this Supplement No. 3 is to supplement the section
of our Prospectus captioned “Real Property Investments” on pages 87-104 of the Prospectus.
The REIT acquired the following real
estate investments:
|
·
|
a FedEx Cross-Dock facility in
Snowshoe, Pennsylvania (the “FedEx Property”) as its
initial investment on March 5,
2008;
|
|
·
|
15 Harleysville National Bank and
Trust Company (“Harleysville National Bank”) bank branch properties in
various Pennsylvania locations (the “Harleysville
Properties”) on March 12,
2008;
|
|
·
|
18 Rockland Trust Company (the
“Rockland Properties”) bank branch properties in various Massachusetts locations on May 2,
2008;
|
|
·
|
2 National City Bank branches (now
leased to PNC Bank, National Association) in Florida (the “National City Properties”)
from affiliated parties on September 16, 2008 and October 23,
2008;
|
|
·
|
6 Rite Aid properties in various
locations in Pennsylvania and Ohio (the “Rite Aid Properties”) from
affiliated parties on September 29,
2008;
|
|
·
|
50 PNC Bank, National Association
bank branches in various locations in Pennsylvania, New Jersey and Ohio
(the “PNC Properties”) on November 25,
2008;
|
|
·
|
a Fed Ex Freight Facility (the
“Fed Ex Freight Facility”) located in Houston, TX on July 8,
2009;
|
|
·
|
a Walgreens location (the
“Walgreens Property”) located in Sealy, TX on July 17,
2009;
|
|
·
|
10 newly-constructed retail stores
from CVS Caremark (“CVS”) located in 9 states - Illinois, South Carolina,
Texas, Georgia, Michigan, New York, Arizona, North Carolina and California
on September 18, 2009 (“CVS Pharmacy Portfolio
I”);
|
|
·
|
15 newly-constructed retail stores
from CVS located in 11 states – Alabama, Arizona, California,
Florida, Georgia, Indiana, Maine, Minnesota, Missouri, North Carolina and
Nevada on November 19, 2009 (“CVS Pharmacy Portfolio
II”);
|
|
·
|
a
leasehold interest in a build-to-suit Home Depot Distribution Facility
from the developer, located in Topeka, Kansas on December 11, 2009;
|
|
·
|
6 recently constructed Bridgestone
retail stores from a developer in various locations in Oklahoma and Florida (the “Bridgestone Properties”) on
various closings in December 2009 (5 locations) and January 2010 (1
location);
|
|
·
|
an
Advanced Auto location (the “Advanced Auto Property”) located in
Plainfield, MI on December 30, 2009;
and
|
|
·
|
2 Fresenius Medical Care
Distribution Facilities (the “Fresenius Properties”) located in Apple
Valley, CA and Shasta Lake, CA from the developer on January 29,
2010.
|
2
The amount of the Year 1 yield based
upon the contract purchase price of the acquired properties as compared to the
Year 1 total rent is approximately 7.64%, which excludes contractual rent
increases occurring in future years.
|
Current
|
Base
Rent
|
|||||||||||||||||||||
|
Purchase
|
Mortgage
|
Interest
|
Portfolio-Level
|
Rent
|
Increase
|
|||||||||||||||||
|
Price (1)
|
Debt
|
Rate (2)
|
Leverage
|
Year 1
|
Year 2
|
(Year 2)
(3)
|
||||||||||||||||
|
Federal Express Distribution Center (PA)
|
$ |
10,207,674
|
$ |
6,965,000
|
6.29%
|
68.2%
|
$ |
702,828
|
$ |
702,828
|
3.78% and 3.65% in years 6 and 11,
respectively
|
|||||||||||
|
Harleysville National Bank
Portfolio
|
41,675,721
|
31,000,000
|
6.59%
|
74.4%
|
3,003,838
|
3,063,912
|
—
|
|||||||||||||||
|
Rockland Trust Company
Portfolio
|
33,117,419
|
23,649,499
|
4.92%
|
71.4%
|
2,305,816
|
2,340,403
|
1.5%
annually
|
|||||||||||||||
|
PNC Bank (formerly National City
Bank)
|
6,853,419
|
4,412,196
|
4.89%
|
64.4%
|
466,465
|
466,465
|
10% after 5
years
|
|||||||||||||||
|
Rite Aid
Portfolio
|
18,839,392
|
12,808,265
|
6.97%
|
68.0%
|
1,404,226
|
1,404,226
|
—
|
|||||||||||||||
|
PNC Bank
Portfolio
|
44,813,074
|
32,931,336
|
5.25%
|
73.5%
|
2,960,000
|
2,960,000
|
10% after 5
years
|
|||||||||||||||
|
Fed Ex Freight Facility (TX)
(5)
|
31,691,989
|
16,250,000
|
5.95%
|
51.3%
|
2,580,315
|
2,580,315
|
1% increase in years 5 and
9
|
|||||||||||||||
|
Walgreens
Location
|
3,817,733
|
1,550,000
|
6.55%
|
40.6%
|
310,000
|
310,000
|
—
|
|||||||||||||||
|
CVS Pharmacy Portfolio
I
|
40,684,721
|
23,709,980
|
6.87%
|
58.3%
|
3,387,195
|
3,387,195
|
5% increase every 5
years
|
|||||||||||||||
|
CVS Pharmacy Portfolio
II
|
59,787,962
|
33,068,100
|
6.55%
(6)
|
55.3%
|
4,983,670
|
4,983,670
|
5% increase every 5
years
|
|||||||||||||||
|
Home Depot Distribution
Facility
|
23,531,680
|
13,716,160
|
6.25%/6.50%(7)
|
58.3%
|
1,805,961
|
1,839,070
|
2%
annually
|
|||||||||||||||
|
Bridgestone Firestone
Portfolio
|
15,043,322
|
—
|
—
|
—
|
1,269,591
|
1,269,591
|
6.25% every 5
years
|
|||||||||||||||
|
Advanced Auto
Location
|
1,730,235
|
—
|
—
|
—
|
160,000
|
160,000
|
—
|
|||||||||||||||
|
Fresenius
Portfolio
|
12,589,087
|
6,090,000
|
6.63%
|
48.4%
|
1,023,400
|
1,023,400
|
Approximately 10% in years 2 and
7
|
|||||||||||||||
|
Total
Portfolio
|
$ |
344,347,428
|
$ |
206,150,536
|
6.13%
|
59.9%
|
$ |
26,363,301
|
$ |
26,491,071
|
||||||||||||
|
Investment Grade Tenants (based on
Rent - S&P BBB- or better)
|
90.1%
|
|||||||||||||||||||||
|
Average Remaining Lease Term
(years) (4)
|
16.8
|
|||||||||||||||||||||
|
(1) - Purchase Price includes
capitalized closing costs and acquisition fees paid to American Realty
Capital Advisors, LLC, as applicable.
|
|
(2) - Interest rate includes the
effect of in-place hedges.
|
|
(3) - Increase does not take into
account lease escalations that commence in future years or
adjustments based on the Consumer Price Index.
|
|
(4) - As of December 31, 2009 -
Primary lease term only (excluding renewal option
periods).
|
|
(5) - Company entered into a
one-year bridge equity facility for approximately $15.9 million which was
repaid with proceeds from a mortgage note secured in January
2010.
|
|
(6) - Weighted average rate as of
December 31, 2009 - interest rate on fee simple properties is 6.50%;
interest rate on leasehold properties is 6.65%.
|
|
(7) - The loan has a four-year term,
with the first three years considered the initial term at an interest rate
of 6.25%, and a one year extension at an interest rate of
6.50%.
|
3
The following is a summary of
lease expirations for the next ten years:
|
Year
|
Expiring
Revenues
|
Expiring
Leases (1) |
Square
Feet
|
% of
Gross Rev
|
||||||||||||
|
2009
|
$
–
|
–
|
–
|
–
|
||||||||||||
|
2010
|
–
|
–
|
–
|
–
|
||||||||||||
|
2011
|
–
|
–
|
–
|
–
|
||||||||||||
|
2012
|
–
|
–
|
–
|
–
|
||||||||||||
|
2013
|
–
|
–
|
–
|
–
|
||||||||||||
|
2014
|
–
|
–
|
–
|
–
|
||||||||||||
|
2015
|
–
|
–
|
–
|
–
|
||||||||||||
|
2016
|
242,000
|
2
|
21,476
|
0.9%
|
||||||||||||
|
2017
|
179,000
|
1
|
12,613
|
0.6%
|
||||||||||||
|
2018
|
4,910,000
|
59
|
384,201
|
17.6%
|
||||||||||||
|
$5,331,000
|
62
|
418,290
|
19.1%
|
|||||||||||||
|
(1)
|
The 62 leases listed above are
with the following tenants: Fed Ex, Rockland Trust Company, PNC
Bank and Rite Aid.
|
Status of
Distributions
The following
information supplements the section of our
Prospectus captioned “Distribution
Policy and Distributions” on pages 10 and 148 of the
Prospectus.
On February 25, 2008, our Board of
Directors declared a distribution for each monthly period commencing 30 days
subsequent to acquiring our initial portfolio of real estate
investments. Our daily dividend commenced accruing on
April 5, 2008.
On November 5, 2008, the Board of
Directors approved an increase in its annual cash distribution from $.65 to
$.67, paid monthly. Based on a $10.00 share price, this 20 basis point increase,
effective January 2, 2009, results in an annualized distribution rate of
6.7%.
On
October 5, 2009, the Board of Directors approved a special distribution of $0.05
per share payable to shareholders of record on December 31, 2009, in addition to
the current 6.7% annualized distribution rate paid monthly. This
special distribution was paid on January,
19, 2010.
On
January 27, 2010, the Board of Directors approved an increase in its annual cash
distribution from $.67 to $.70, paid monthly. Based on a $10.00 share price,
this 30 basis point increase, effective April 1, 2010, will result in an
annualized distribution rate of 7.0%.
To date, all of the Company’s distributions
have been paid with funds generated from operations. There can be no assurance
that this will continue to be the case going forward.
4
The following table summarizes the
Company’s historical and prospective distribution rate, reflecting the special
distribution and increase to the annual rate effective April 1, 2010 noted
above:
|
Annualized
|
|||||||
|
Distribution
|
Number
of
|
||||||
|
Period
|
Rate
|
Months
|
|||||
|
May
2008 (1)
|
to
|
December
2008
|
6.5%
|
8
|
|||
|
January
2009
|
to
|
March
2010
|
6.7%
|
15
|
|||
|
Special
Distribution - January 2010 (2)
|
0.5%
|
-
|
|||||
|
7.2%
|
(2)
|
||||||
|
April
2010
|
to
|
---
|
7.0%
|
-
|
|||
|
(1)
initial distribution was paid in May 2008.
|
|||||||
|
(2)
payable to shareholder's of record as of December 31, 2009, resulting in a
minimum distribution rate of 7.2% for an investor who owned a common share
of the Company for the full year ended December 31,
2009.
|
|||||||
The
Company determined distributions paid to shareholders in 2009 will be reported
as nondividend distributions on
Form 1099 for the applicable period. Accordingly, such
distributions are generally not subject to ordinary income tax in the related
period. This tax characterization is consistent with distributions
paid to shareholders in 2008.
The
portion of the distribution that is not subject to tax immediately is considered
a return of capital for tax purposes and will reduce the tax basis of a
shareholder's investment. This defers a portion of applicable taxes until the
investment is sold or the Company is liquidated, at which time the shareholder
will be taxed at capital gains rates. However, because each investor’s tax
considerations are different, the Company recommends that investors consult with
their tax advisor.
The following is a chart of monthly
distributions declared and paid since the commencement of the
offering:
|
Total
|
Cash
|
DRIP
|
||||||||||
|
April,
2008
|
$
|
–
|
$
|
–
|
$
|
–
|
||||||
|
May,
2008
|
30,260
|
22,007
|
8,253
|
|||||||||
|
June,
2008
|
49,637
|
35,283
|
14,354
|
|||||||||
|
July,
2008
|
55,043
|
34,788
|
20,255
|
|||||||||
|
August,
2008
|
57,583
|
36,519
|
21,064
|
|||||||||
|
September,
2008
|
61,396
|
39,361
|
22,035
|
|||||||||
|
October,
2008
|
61,425
|
41,078
|
20,347
|
|||||||||
|
November,
2008
|
65,496
|
43,646
|
21,850
|
|||||||||
|
December,
2008
|
64,444
|
42,877
|
21,567
|
|||||||||
|
January,
2009
|
69,263
|
46,227
|
23,036
|
|||||||||
|
February,
2009
|
76,027
|
50,214
|
25,813
|
|||||||||
|
March, 2009
|
74,915
|
49,020
|
25,895
|
|||||||||
|
April,
2009
|
101,281
|
64,375
|
36,906
|
|||||||||
|
May, 2009
|
128,867
|
78,604
|
50,263
|
|||||||||
|
June,
2009
|
180,039
|
106,741
|
73,298
|
|||||||||
|
July, 2009
|
217,325
|
127,399
|
89,926
|
|||||||||
|
August,
2009
|
290,230
|
177,620
|
112,610
|
|||||||||
|
September,
2009
|
375,926
|
220,165
|
155,761
|
|||||||||
|
October
2009
|
455,051
|
264,729
|
190,322
|
|||||||||
|
November
2009
|
563,471
|
328,555
|
234,916
|
|||||||||
|
December
2009
|
643,125
|
374,714
|
268,411
|
|||||||||
|
January 2010
(1)
|
1,498,413
|
855,282
|
643,131
|
(1) Includes the special distribution paid on January 19, 2010 to
shareholders of record as of December 31, 2009.
The Company, Board of Directors and
Advisor share a similar philosophy with respect to paying the dividend. The
dividend should principally be derived from cash flows generated from real
estate operations. Specifically, funds from operations should equal or exceed
distributions in a given period. If needed, the Advisor generally expects
to waive its asset management fee and forego entitled reimbursements to ensure
the full coverage of the Company’s distributions. The fees and reimbursement
that are waived are not deferrals and accordingly, will not be paid by the
Company.
5
Status of Fees Paid and
Deferred
The following information is to be added
to the section of our Prospectus captioned “Estimated Use of Proceeds” section
on pages 4-5 and 36-37 of the Prospectus.
From January 1, 2008
through December 31, 2008, the Company reimbursed the Advisor $0 for
organizational and offering expenses and incurred the following
fees:
|
·
|
acquisition fees of
$1,507,369 paid to the Advisor
|
|
|
·
|
finance coordination fees of
$1,131,015 paid to the Advisor
|
|
|
·
|
property management fees of $4,230
paid to the Property Manager
|
From January 1, 2009 through
December 31, 2009, the Company reimbursed the
Advisor $5,617,286 for organizational and offering expenses
and incurred the
following fees:
|
·
|
acquisition fees of $1,690,714 paid to the
Advisor
|
|
|
·
|
finance coordination fees of
$879,626 paid to the
Advisor
|
|
|
·
|
property management fees of $0
paid to the Property Manager
|
From January 1, 2010 through January 26, 2010, the Company reimbursed the Advisor
$300,000 for organizational and offering expenses
and incurred the following
fees:
|
·
|
acquisition fees of $147,616 paid to the
Advisor
|
|
|
·
|
finance coordination fees of
$60,900 paid to the
Advisor
|
|
|
·
|
asset management fees of $145,000
paid to the Advisor
|
Amounts paid to the advisor include
approximately $3,607,000 of offering cost incurred by the
affiliated Advisor and Dealer Manager that exceeds 1.5% of gross offering
proceeds earned cumulatively through January 26, 2009. Any organizational or
offering expenses that exceeds 1.5% of gross offering proceeds over the term of
the offering will be the Advisor’s
obligation.
The Company pays the Advisor an
annualized asset management fee of 1.0% based on the aggregate contract purchase
price of all properties. Through December 31, 2009, the Company paid $145,000 to the Advisor and will determine if
such fees will be waived in subsequent periods on a quarter-to-quarter
basis. Such waived fees
cumulatively through January 26, 2009 equal approximately $2,775,000. If the Advisor had not
agreed to waive the asset management fee, we would not have had sufficient cash
to fund our distributions. Had this been the case, additional
borrowings would have been incurred to fund our monthly
distributions.
Real Estate
Investments
The following information is to be added
to supplement the section of our Prospectus captioned “Real Property
Investments” on pages 87-104 of the Prospectus.
CVS
Pharmacy Portfolio II
On
November 3, 2009, the REIT’s Board of Directors approved the acquisition of the
CVS Properties II. On November 19, 2009, the Company acquired a portfolio
of fifteen newly-constructed retail stores (the “CVS Properties II”) directly
from CVS Pharmacy, Inc. The CVS Properties II contain an aggregate of
approximately 199,000 square feet, located in 11 states – Alabama, Arizona,
California, Florida, Georgia, Indiana, Maine, Minnesota, Missouri, North
Carolina and Nevada. The aggregate purchase price is approximately
$60.0 million, inclusive of all closing costs and
fees.
The
purchase price is comprised of a combination of proceeds from the sale of the
Company’s common shares and proceeds received from a five-year non-recourse,
fixed-rate first mortgage loan totaling approximately $33.1
million. The fixed interest rate is 6.55% for the term of the
loan
.
|
Address
|
City
|
State
|
Total
Purchase
Price
|
Compensation
to
Advisor and
Affiliate (1)
|
||||||
|
5211
Neal Trail Dr.
|
Walkertown
|
NC
|
$
|
3,705,204
|
||||||
|
612
N. Main St.
|
Creedmoor
|
NC
|
3,380,699
|
|||||||
|
1888
Ogletree Rd.
|
Auburn
|
AL
|
4,224,431
|
|||||||
|
4145
NW 53rd Ave.
|
Gainesville
|
FL
|
5,968,893
|
|||||||
|
50
Duval Station Rd.
|
Jacksonville
|
FL
|
4,429,342
|
|||||||
|
505
County Road 1100 N
|
Chesterton
|
IN
|
5,925,600
|
|||||||
|
601
Howard Simmons Rd.
|
East
Ellijay
|
GA
|
3,825,510
|
|||||||
|
300
S. Commercial
|
Harrisonville
|
MO
|
3,757,909
|
|||||||
|
151
Village Walk Dr.
|
Holly
Springs
|
NC
|
3,806,651
|
|||||||
|
384
Elm St.
|
Biddeford
|
ME
|
3,615,565
|
|||||||
|
7996
Brooklyn Blvd.
|
Brooklyn
Park
|
MN
|
2,706,251
|
|||||||
|
1905
Marth Berry Blvd.
|
Rome
|
GA
|
3,033,849
|
|||||||
|
1081
Steamboat Pkwy.
|
Reno
|
NV
|
3,036,074
|
|||||||
|
180
N Dobson Rd.
|
Chandler
|
AZ
|
3,883,302
|
|||||||
|
9256
E. Slauson Ave.
|
Pico
Rivera
|
CA
|
4,488,682
|
|||||||
|
Total
|
$
|
59,787,962
|
$
|
910,823
|
||||||
(1)
Compensation to advisor and affiliate includes acquisition fees and financing
coordination fees.
6
The CVS
Properties II are net leased to CVS Pharmacy, Inc., pursuant to which CVS
Pharmacy, Inc. will be required to pay all operating expenses and capital
expenditures in addition to base rent, simultaneously with the acquisition of
the properties. The weighted average primary lease term under this net lease
arrangement is approximately 24.7 years, having commenced simultaneous with
closing, and provides for two fixed-rent options of five years each, plus eight
fair market value options of five years each. The average annual base rent on a
straight-line basis over the initial lease term is approximately $5.4 million.
Annual rent is approximately $5.0 million for the first year of the initial
lease term, and annual rent will increase by 5% every five years.
|
Address
|
City
|
State
|
Total
Square
Feet
Leased
|
Rent
Per
Square
Foot
|
Year
1
Rent
|
Initial
Lease
Term
(Years)
|
||||||||||||
|
5211
Neal Trail Dr.
|
Walkertown
|
NC
|
12,900
|
$
|
37.72
|
$
|
486,621
|
25
|
||||||||||
|
612
N. Main St.
|
Creedmoor
|
NC
|
12,900
|
27.91
|
360,000
|
25
|
||||||||||||
|
1888
Ogletree Rd.
|
Auburn
|
AL
|
11,945
|
23.10
|
275,894
|
25
|
||||||||||||
|
4145
NW 53rd Ave.
|
Gainesville
|
FL
|
13,225
|
36.78
|
486,371
|
25
|
||||||||||||
|
50
Duval Station Rd.
|
Jacksonville
|
FL
|
13,225
|
23.19
|
306,725
|
25
|
||||||||||||
|
505
County Road 1100 N
|
Chesterton
|
IN
|
13,225
|
23.53
|
311,160
|
25
|
||||||||||||
|
601
Howard Simmons Rd.
|
East
Ellijay
|
GA
|
13,225
|
22.89
|
302,760
|
25
|
||||||||||||
|
300
S. Commercial
|
Harrisonville
|
MO
|
13,225
|
23.60
|
312,086
|
25
|
||||||||||||
|
151
Village Walk Dr.
|
Holly
Springs
|
NC
|
12,900
|
26.70
|
344,457
|
25
|
||||||||||||
|
384
Elm St.
|
Biddeford
|
ME
|
13,013
|
17.93
|
233,306
|
25
|
||||||||||||
|
7996
Brooklyn Blvd.
|
Brooklyn
Park
|
MN
|
13,625
|
19.25
|
262,300
|
25
|
||||||||||||
|
1905
Marth Berry Blvd.
|
Rome
|
GA
|
13,225
|
23.70
|
313,494
|
20
|
||||||||||||
|
1081
Steamboat Pkwy.
|
Reno
|
NV
|
15,887
|
24.55
|
389,979
|
24
|
||||||||||||
|
180
N Dobson Rd.
|
Chandler
|
AZ
|
13,013
|
25.87
|
336,617
|
24
|
||||||||||||
|
9256
E. Slauson Ave.
|
Pico
Rivera
|
CA
|
13,013
|
20.13
|
261,900
|
25
|
||||||||||||
|
|
|
|
|
|||||||||||||||
|
Total
|
198,546
|
$
|
25.10
|
$
|
4,983,670
|
24.7
|
||||||||||||
|
Mortgage
Debt Amount
|
Rate
|
Term
|
||||
|
$33,068,100
|
6.55%(1)
|
five
years
|
(1)
Weighted average rate - interest rate on fee simple properties is
6.50%; interest rate on leasehold properties is 6.65%.
The net
leases are guaranteed by CVS Caremark Corporation (“CVS”), a pharmacy services
company, which provides prescriptions and related healthcare services in the
United States. CVS operates through two segments, Pharmacy Services and Retail
Pharmacy. The Pharmacy Service segment provides a range of prescription benefit
management services, including mail order pharmacy services, specialty pharmacy
services, plan design and administration, formulary management, and claims
processing. This segment serves primarily employers, insurance companies,
unions, government employee groups, managed care organizations and other
sponsors of health benefit plans, and individuals. As of December 31, 2008, the
Pharmacy Services segment operated 58 retail specialty pharmacy stores, 19
specialty mail order pharmacies, and 7 mail service pharmacies located in 26
states of the United States, Puerto Rico, and the District of Columbia. The
Retail Pharmacy Segment sells prescription drugs, over-the-counter drugs, beauty
products and cosmetics, photo finishing, seasonal merchandise, greeting cards,
and convenience foods through its pharmacy retail stores, and online. This
segment also provides health care services. As of December 31, 2008, this
segment operated 6,923 retail drugstores located in 41 states and the District
of Columbia; and 560 retail health care clinics in 27 states. CVS was founded in
1892 and is headquartered in Woonsocket, Rhode Island. CVS stock is
listed on the New York Stock Exchange (NYSE: “CVS”), and has a credit rating of
BBB+ by Standard & Poor’s.
7
CVS
currently files its financial statements in reports filed with the Securities
and Exchange Commission, and the following summary financial data regarding CVS
are taken from such filings:
|
(Amounts
in millions)
|
Nine
Months
Ended
|
For
the Fiscal Year Ended
|
||||||||||||||
|
September
30, 2009
|
Dec.
31, 2008
|
Dec.
29, 2007
|
Dec.
30, 2006
|
|||||||||||||
|
Consolidated
Statements of Operations
|
||||||||||||||||
|
Net
revenues
|
$
|
72,906.9
|
$
|
87,471.9
|
$
|
76,329.5
|
$
|
43,821.4
|
||||||||
|
Gross
profit
|
14,811.9
|
18,290.4
|
16,107.7
|
11,742.2
|
||||||||||||
|
Net
earnings
|
2,646.2
|
3,212.1
|
2,637.0
|
1,368.9
|
||||||||||||
|
As
of
|
As
of the Fiscal Year Ended
|
|||||||||||||||
|
September
30, 2009
|
Dec.
31, 2008
|
Dec.
29, 2007
|
Dec.
30, 2006
|
|||||||||||||
|
Consolidated
Balance Sheets
|
||||||||||||||||
|
Total
assets
|
$
|
61,879.3
|
$
|
60,959.9
|
$
|
54,721.9
|
$
|
20,574.1
|
||||||||
|
Long-term
debt
|
8,756.2
|
8,057.2
|
8,349.7
|
2,870.4
|
||||||||||||
|
Shareholders’
equity
|
35,674.9
|
34,574.4
|
31,321.9
|
9,917.6
|
||||||||||||
Home Depot
Distribution Facility – Topeka, Kansas
On August
25, 2009, the REIT’s Board of
Directors approved the acquisition of the Home Depot Facility. On December 11,
2009, the Company acquired a leasehold interest in a build-to-suit Home Depot
Distribution Facility that will service Home Depot stores in the Kansas City
region (the “Home Depot Facility”). The Home Depot Facility is a
“Rapid Deployment Center” of approximately 465,600 square feet located in
Topeka, KS. The aggregate purchase price is approximately $23.5 million,
inclusive of all closing costs and fees. The primary lease term under
this net lease arrangement is twenty years, having commenced simultaneous with
closing, and provides for two extensions of successive five-year
terms. The average annual base rent over the initial lease term is
approximately $2.2 million.
The
purchase price is comprised of a combination of proceeds from the sale of common
shares and proceeds received from a four-year non-recourse, fixed-rate first
mortgage loan totaling approximately $13.7 million. The first three
years of the loan are considered the initial term with a fixed interest rate of
6.25%, and the loan includes a one-year extension option at an interest rate of
6.50%.
|
Address
|
City
|
State
|
Total
Purchase Price
|
Compensation
to Advisor and Affiliate (1) |
||||||
|
5200
SW Wenger Street
|
Topeka
|
KS
|
$
|
23,531,680
|
$
|
365,763
|
||||
(1)
Compensation to advisor and affiliate includes acquisition fees and
financing arrangement fees.
The Home
Depot Facility is net leased to Home Depot U.S.A., Inc. (“Home Depot”) pursuant
to which Home Depot will be required to pay all operating expenses and capital
expenditures in addition to base rent, simultaneously with the acquisition of
the properties, and have a primary lease term of 20 years. Annual rent is
approximately $1.8 million for the first year of the initial lease term, which
increases 2% annually.
|
Address
|
City
|
State
|
Total
Square Feet Leased
|
Rent
Per Square Foot
|
Year
1 Rent
|
Initial
Lease Term (Years)
|
||||||||||||
|
5200
SW Wenger Street
|
Topeka
|
KS
|
465,600
|
$
|
3.88
|
$
|
1,805,961
|
20
|
||||||||||
The
Company has secured first mortgage indebtedness from the seller of the Home
Depot Facility, HD Topeka, LLC. The following table outlines the terms of the
debt financing incurred in connection with acquisition of the Home Depot
Facility. The loan will be secured by a mortgage on the Home Depot
Facility.
|
Mortgage
Debt Amount
|
Rate
|
Maturity
Date
|
||
|
$13,716,160
|
6.25%(1)
|
January
2013(1)
|
(1) The
loan has a four-year term, with the first three years considered the initial
term, and a one year extension
8
Home
Depot (NYSE: HD), together with its subsidiaries, operates as a home improvement
retail company. As of the fiscal year ended February 1, 2009, Home Depot had
$41.2 billion in assets, $71.3 billion in annual revenue with $2.3 billion in
annual net income. Home Depot operates 2,233 retail stores worldwide. Home Depot
was founded in 1978 and is based in Atlanta, Georgia. The company’s Home Depot
stores sell building materials, home improvement supplies, and lawn and garden
products to do-it-yourself customers, do-it-for-me (“D-I-F-M”) customers, home
improvement contractors, trades people, and building maintenance professionals.
Its stores also offer various installation services for D-I-F-M customers. These
installation programs include products such as carpeting, flooring, cabinets,
countertops and water heaters. In addition, the company provides professional
installation of various products that are sold through its in-home sales
programs, such as generators and heating and central air systems. Home Depot is
rated BBB+ by S&P.
Home
Depot files its financial statements with the Securities and Exchange
Commission. The following financial information is taken from such
filings.
|
(Amounts
in millions)
|
Nine
Months
Ended
|
For
the Fiscal Year Ended
|
||||||||||||||
|
Nov.
1, 2009
|
Feb.
1, 2009
|
Feb.
3, 2008
|
Jan.
28, 2007
|
|||||||||||||
|
Consolidated
Statements of Operations
|
||||||||||||||||
|
Net
sales
|
$
|
51,607
|
$
|
71,288
|
$
|
77,349
|
$
|
79,022
|
||||||||
|
Gross
profit
|
17,399
|
23,990
|
25,997
|
26,546
|
||||||||||||
|
Net
earnings
|
2,319
|
2,260
|
4,395
|
5,761
|
||||||||||||
|
As
of
|
As
of the Fiscal Year Ended
|
|||||||||||||||
|
Nov.
1, 2009
|
Feb.
1, 2009
|
Feb.
3, 2008
|
Jan.
28, 2007
|
|||||||||||||
|
Consolidated
Balance Sheets
|
||||||||||||||||
|
Total
assets
|
$
|
43,050
|
$
|
41,164
|
$
|
44,324
|
$
|
52,263
|
||||||||
|
Long-term
debt
|
8,656
|
9,667
|
11,383
|
11,643
|
||||||||||||
|
Shareholders’
equity
|
19,380
|
17,777
|
17,714
|
25,030
|
||||||||||||
Bridgestone
Portfolio
On
November 3, 2009, the REIT’s Board of
Directors approved the acquisition of the Bridestone properties. The REIT
acquired a portfolio of six recently-constructed Morgan Tire and Auto (“MTA”)
stores in December 2009 and January 2010 (the “Bridgestone
Properties”). MTA is a wholly owned subsidiary of the Bridgestone
Corporation. MTA operates the stores as Hibdon Tires Plus. Bridgestone Retail
Operations, LLC, as further described below, guarantees the leases. The
portfolio consists of six build-to-suit, freestanding, fee-simple properties.
The purchase price for the Bridgestone Properties is approximately $15.0
million including closing costs and fees paid to the advisor. The purchase
price was paid with proceeds from the sale of common shares. The
Bridgestone Properties are located in Oklahoma and Florida, with an aggregate of
57,236 of square feet. The current sole tenant of the properties is MTA and will
remain the sole tenant on a double-net lease basis. Bridgestone Retail
Operations, LLC, which is a wholly owned subsidiary of Bridgestone Americas,
Inc., will guarantee the property leases.
|
Address
|
City
|
State
|
Purchase
Price
|
Approximate
Compensation
to
Advisor
and
Affiliates
|
|
560
Shedeck Parkway
|
Yukon
|
OK
|
$2,517,019
|
$147,625
|
|
1032
W. Danforth Road
|
Edmond
|
OK
|
2,533,728
|
|
|
7816
South Olympia Avenue
|
Tulsa
|
OK
|
2,628,549
|
|
|
Highway
I-69 & 96th
Street
|
Owasso
|
OK
|
2,432,567
|
|
|
13405
N. Pennsylvania Ave
|
Oklahoma
City
|
OK
|
2,355,038
|
|
|
1781
Blanding Blvd.
|
Middleburg
|
FL
|
2,576,421
|
|
|
Total
|
$15,043,322
|
The
Bridgestone Properties are double-net leased to MTA, pursuant to which the
landlord is responsible for maintaining the property’s roof and structure, and
the tenant is required to pay all other expenses associated with the property in
addition to base rent, simultaneously with the acquisition of the properties.
The Bridgestone Properties’ original lease at commencement was 15 years with an
average of 13.4 years currently remaining. The double-net leases
contain contractual rental escalations of 6.25% every five years, with the
landlord responsible for roof and structure. Annual rent is approximately $1.3
million for the first year of the initial lease term, and annual rent will
increase by 6.25% every five years. The lease provides for four renewal options
at five years each.
9
|
Address
|
City
|
State
|
Total
Square
Feet
Leased
|
Rent
Per
Square
Foot
|
Year
1
Rent
|
Lease
Term
Remaining
(Years)
|
||||||||||||
|
560
Shedeck Parkway
|
Yukon
|
OK
|
10,118
|
$
|
21.00
|
$
|
212,460
|
12.8
|
||||||||||
|
1032
W. Danforth Road
|
Edmond
|
OK
|
10,118
|
21.14
|
213,882
|
13.6
|
||||||||||||
|
7816
South Olympia Avenue
|
Tulsa
|
OK
|
10,118
|
21.92
|
221,736
|
13.4
|
||||||||||||
|
Highway
I-69 & 96th
Street
|
Owasso
|
OK
|
9,723
|
21.12
|
205,311
|
13.1
|
||||||||||||
|
13405
N. Pennsylvania Ave
|
Oklahoma
City
|
OK
|
9,116
|
21.80
|
198,743
|
13.9
|
||||||||||||
|
1781
Blanding Blvd.
|
Middleburg
|
FL
|
8,143
|
26.71
|
217,459
|
13.6
|
||||||||||||
|
Total/
Lease Term Remaining Average
|
57,336
|
$
|
21.99
|
$
|
1,269,591
|
13.4
|
||||||||||||
Bridgestone
Retail Operations, LLC, the lease guarantor, is a wholly owned subsidiary of
Bridgestone Americas, Inc. It consists of more than 2,200 company-owned vehicle
service and tire locations across the United States, including Firestone
Complete Auto Care, Tires Plus, ExpertTire and Wheel Works store
locations. Bridgestone Corp. reports earnings on a consolidated basis
and does not provide stand-alone financials on its subsidiaries. For
the fiscal year ended December 31, 2008, Bridgestone Corp. posted net sales of
$35.5 billion. Bridgestone Corporation is rated “BBB+” by S&P and
“A3” by Moody’s.
Advanced Auto
Property
The REIT
acquired an advance auto store in December 2009. The 7,000 square foot facility
in Plainfield, MI. was purchased for approximately $1.7 million and was paid for
from the proceeds from the sale of common shares. The remaining lease term on
the facility is 11.9 years, with an annual rent of approximately
$160,000.
Fresenius
Medical Distribution Portfolio
On
January 27, 2010, the REIT’s Board of
Directors approved the acquisition of the Fresenius Properties. On January 29,
2010, the Company acquired two build-to-suit distribution facilities from
Fresenius Medical Care North America a wholly owned subsidiary of Fresenius
Medical Care AG & Co. KGaA to be leased by their wholly owned subsidiary
Fresenius USA Manufacturing, Inc. The distribution facilities are each
approximately 70,000 square feet, and are located in Apple Valley, CA and Shasta
Lake, CA. The aggregate purchase price was approximately $12.6
million, inclusive of all closing costs and fees.
|
Address
|
City
|
State
|
Purchase
Price
|
Approximate
Compensation
to
Advisor
and
Affiliates
(1)
|
|
Navajo
Rd and Lafayette Street
|
Apple
Valley
|
CA
|
$6,611,592
|
$182,733
|
|
3415
Bronze Court
|
Shasta
lake
|
CA
|
6,427495
|
|
|
Total
|
$12,589,087
|
(1)
Compensation to Advisor and affiliate includes acquisition fees and
financing arrangement fees.
The
primary lease term under this double net lease arrangement whereby the landlord
is responsible for roof and structure, is 15 years, with a remaining lease term
of approximately 12.5 years, and provides for contractual rent escalations of
10% every 5 years. The lease will also provide for two 5 year renewal
options. The average annual base rent on a straight-line basis over the initial
lease term is approximately $1.2 million. The leases will be guaranteed by
Fresenius National Medical Care Holdings, Inc. (a wholly owned subsidiary of
Fresenius Medical Care AG & Co. KGaA) which has a senior unsubordinated
rating of BB+ by Standard & Poor’s.
|
Address
|
City
|
State
|
Total
Square
Feet
Leased
|
Rent
Per
Square
Foot
|
Year
1
Rent
|
Lease
Term
Remaining
(Years) |
||||||||||||
|
Navajo
Rd and Lafayette Street
|
Apple
Valley
|
CA
|
70,000
|
$
|
7.15
|
$
|
500,500
|
12.4
|
||||||||||
|
3415
Bronze Court
|
Shasta
lake
|
CA
|
70,000
|
7.47
|
522,900
|
12.6
|
||||||||||||
|
Total/
Lease Term Remaining Average
|
140,000
|
$
|
7.31
|
$
|
1,023,400
|
12.5
|
||||||||||||
10
The
purchase price is comprised of a combination of approximately $6.1 million
of proceeds received from a first mortgage loan and proceeds from the sale of
common shares.
|
Mortgage
Debt Amount
|
Rate
|
Maturity
Date
|
||
|
$6,090,000
|
6.25%
|
January
31, 2015
|
Fresenius
Medical Services is a kidney dialysis company, operating in both the field of
dialysis products and the field of dialysis services operating more than 1,700
outpatient dialysis clinics in the United States. The Renal Therapies Group is
responsible for the manufacture and distribution of a variety of dialysis
products and equipment, including dialysis machines, dialyzers and other
dialysis related supplies.
Fresenius
Medical Care AG & Co. KGaA (NYSE: FMS) is the world's largest integrated
provider of products and services for individuals with chronic kidney failure, a
condition that affects more than 1.77 million individuals worldwide. Through its
network of 2,509 dialysis clinics in North America, Europe, Latin America and
Asia/Pacific and Africa, Fresenius Medical Care provides dialysis treatment to
approximately 193,000 patients around the globe. Fresenius Medical Care is also
the world's largest provider of dialysis products such as hemodialysis machines,
dialyzers and related disposable products. In the United States, it also
performs clinical laboratory testing and provides inpatient dialysis services
and other services under contract to hospitals. During the year ended
December 31, 2008, it provided 27.9 million dialysis treatments. Fresenius
Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New
York Stock Exchange (FMS, FMS/P).
.
|
(Amounts
in millions)
|
Six
Months
Ended
|
Year
Ended
|
||||||||||||||
|
June
30, 2009
|
Dec.
31, 2008
|
Dec.
31, 2007
|
Dec.
31, 2006
|
|||||||||||||
|
Statement
of Operations
|
||||||||||||||||
|
Net
revenue
|
$ | 5,750 | $ | 10,612 | $ | 9,720 | $ | 8,499 | ||||||||
|
Net
income
|
450 | 818 | 717 | 537 | ||||||||||||
|
As
of
|
As
of
|
|||||||||||||||
|
June
30, 2009
|
Dec.
31, 2008
|
Dec.
31, 2007
|
Dec.
31, 2006
|
|||||||||||||
|
Balance
Sheets
|
||||||||||||||||
|
Total
assets
|
$ | 15,700 | $ | 14,920 | $ | 14,170 | $ | 13,045 | ||||||||
|
Shareholders’
equity
|
6,500 | 5,962 | 5,575 | 4,870 | ||||||||||||
Potential
Property Investments
The
acquisition of each such property is subject to a number of conditions. A
significant condition to acquiring any one of these potential acquisitions is
our ability to raise sufficient proceeds in this offering to pay a portion of
the purchase price. An additional condition to acquiring these properties will
be our securing debt financing to pay the balance of the purchase price. Such
financing may not be available on acceptable terms or at all.
Our
evaluation of a property as a potential acquisition, including the appropriate
purchase price, will include our consideration of a property condition report;
unit-level store performance; property location, visibility and access; age of
the property, physical condition and curb appeal; neighboring property uses;
local market conditions, including vacancy rates; area demographics, including
trade area population and average household income; neighborhood growth patterns
and economic conditions; and the presence of demand generators.
We will
decide whether to acquire properties generally based upon:
|
|
•
|
satisfaction
of the conditions to the acquisitions contained in the respective
contracts;
|
|
|
•
|
no
material adverse change occurring relating to the properties, the tenants
or in the local economic
conditions;
|
|
|
•
|
our
receipt of sufficient net proceeds from the offering of our common stock
to the public and financing proceeds to make these acquisitions;
and
|
|
|
•
|
our
receipt of satisfactory due diligence information including appraisals,
environmental reports and tenant and lease
information.
|
Our
advisor has identified the properties described below as potential suitable
investments for us. The acquisition of the properties is subject to a number of
conditions. A significant condition to acquiring the potential acquisition is
our ability to raise sufficient proceeds in this offering to pay all or a
portion of the purchase price.
11
Pending
Acquisitions
Reckit
Benkiser Warehouse Facility
The
Company intends to acquire a build-to-suit warehouse facility for Rickit
Benkiser (“RB”). The warehouse facility is approximately 574,000 square feet,
located in Tooele, UT, near Salt Lake City, UT. The aggregate
purchase price is approximately $32.0 million, inclusive of all closing costs
and fees. The primary lease term under this net lease arrangement is
12.7 years, with a remaining lease term of approximately 12 years, and provides
for annual rent escalations of 2% each year. The lease will also
provide for three 5 year renewal options. The average annual base rent on a
straight-line basis over the initial lease term is approximately $2.7
million.
The
purchase price is will be financed by approximately 50% mortgage financing and
50% from proceeds from the sale of common shares.
RB is a
world leader in household, health and personal care products. RB is a
multinational corporation with operations in over 60 countries, manufacturing
facilities in over 40 countries and sales of its products in over 180
countries. Today, RB is the global No. 1 or No. 2 in the majority of
its fast-growing categories, driven by an exceptional rate of
innovation.
RB has a
strong portfolio led by 17 global Powerbrands which are: Finish, Lysol, Dettol,
Vanish, Woolite, Calgon, Airwick, Harpic, Bang, Mortein, Veet, Nurofen,
Clearasil, Strepsils Gaviscon, Mucinex and French’s. The 17
Powerbrands account for over two thirds of RB’s net revenue. RB has an
investment grade rating of A+ by Standard and Poor’s.
RB is a
UK listed company and is part of the top 25 of the FTSE 100, with a market cap
exceeding £20bn.. The following financial information is taken information
published by the company.
|
(Amounts
in millions)(1)
|
Six
Months
Ended
|
Year
Ended
|
||||||||||||||
|
June
30, 2009
|
Dec.
31, 2008
|
Dec.
31, 2007
|
Dec.
31, 2006
|
|||||||||||||
|
Profit
and Loss Account
|
||||||||||||||||
|
Total
operating income
|
$ | 5,650 | $ | 12,214 | $ | 10,580 | $ | 9,149 | ||||||||
|
Operating
profit
|
1,223 | 2,791 | 2,468 | 1,677 | ||||||||||||
|
Retained
profit
|
406 | 1,259 | 1,161 | 689 | ||||||||||||
|
As
of
|
As
of
|
|||||||||||||||
|
June
30, 2009
|
Dec.
31, 2008
|
Dec.
31, 2007
|
Dec.
31, 2006
|
|||||||||||||
|
Balance
Sheets
|
||||||||||||||||
|
Total
assets
|
$ | 14,101 | $ | 13,423 | $ | 11,644 | $ | 11,236 | ||||||||
|
Long-term
debt
|
10 | 6 | 10 | 22 | ||||||||||||
|
Shareholders’
equity
|
5,313 | 4,815 | 4,733 | 3,655 | ||||||||||||
(1)
Amounts reflect a conversion from British Pounds to U.S. Dollars at a
conversion rate specific to each period presented.
The
Company intends to acquire 5 freestanding Jack in the Box restaurants. The
restaurants total approximately 12,000 square feet, and are located in Missouri,
Texas, Oregon and Washington. The aggregate purchase price is
approximately $10.2 million, inclusive of all closing costs and
fees. The primary lease term under this net lease arrangement is 20
years which will commence upon the purchase of the property and provides for
contractual rent escalations based on the lesser of accumulated Consumer Price
Index over the prior five year period or 10% every 5 years. The lease will also
provide for four 5 year renewal options. The average annual base rent
on a straight-line basis over the initial lease term is approximately $0.8
million, excluding future CPI adjustments, if any. The leases will be guaranteed
by Fresenius National Medical Care Holdings, Inc. (a wholly owned subsidiary of
Fresenius Medical Care AG & Co. KGaA) which has a senior unsubordinated
rating of BB+ by Standard & Poor’s.
The
purchase price is will be financed by approximately 56% mortgage financing and
44% from proceeds from the sale of common shares.
Jack in
the Box is among the nation's leading fast-food hamburger chains and was the
first major chain to develop and expand the concept of drive-thru dining and
emphasize on-the-go convenience. Most Jack in the Box restaurants have indoor
dining areas and are open 18-24 hours a day. Jack in the Box pioneered a number
of firsts in the quick-serve industry. It was the first major fast-food chain
that started as a drive-thru, and it was also the first to introduce menu items
that are now staples on most fast-food menu boards, including a breakfast
sandwich and portable salad. Today, Jack in the Box offers a broad selection of
distinctive, innovative products targeted at the fast-food consumer, including
hamburgers, specialty sandwiches, salads, low-carb meals, and ice cream
shakes.
12
Jack in
the Box, Inc. (NASDAQ: JACK) is an American fast-food restaurant founded in 1951
in San Diego, California, where it is still headquartered today. Jack
in the Box, Inc. operates and franchises Jack in the Box restaurants, one of the
nation’s largest hamburger chains primarily serving the West Coast of the United
States. Most of the restaurants are in California, followed by Texas,
Arizona, Washington, and Nevada. During the fiscal year ended
September 27, 2009 (fiscal 2009), Jack in the Box had 2,212 restaurants in 18
states, of which 1,190 were company-operated and the remaining 1,022 were
franchise-operated. Jack in the Box, Inc. has approximately 43,000
employees.
|
(Amounts
in millions)
|
Year
Ended
|
|||||||||||||||
|
Sept.
27, 2009
|
Sept.
28, 2008
|
Sept.
30, 2007
|
Oct.
1, 2006
|
|||||||||||||
|
Statement
of Operations
|
||||||||||||||||
|
Total revenue
|
$ | 2,471 | $ | 2,540 | $ | 2,513 | $ | 2,381 | ||||||||
|
Operating
income
|
231 | 216 | 217 | 177 | ||||||||||||
|
Net
income
|
118 | 119 | 126 | 107 | ||||||||||||
|
As
of
|
||||||||||||||||
|
Sept.
27, 2009
|
Sept.
28, 2008
|
Sept.
30, 2007
|
Oct.
1, 2006
|
|||||||||||||
|
Balance
Sheets
|
||||||||||||||||
|
Total
assets
|
$ | 1,456 | $ | 1,498 | $ | 1,375 | $ | 1,520 | ||||||||
|
Total
liabilities
|
931 | 1,041 | 965 | 810 | ||||||||||||
|
Shareholders’
equity
|
525 | 457 | 410 | 711 | ||||||||||||
Dealer Manager
The information is to supplement the
section of our Prospectus captioned “Dealer Manager” on pages 51-52 of the Prospectus.
Effective January 28, 2010, Bradford
Watt resigned as co-President of Realty Capital Securities,
LLC.
Certain Relationships and Related
Transactions.
The information is to supplement the
section of our Prospectus captioned “Dealer Manager” on pages 53-54 of the Prospectus.
Louisa
Quarto is the president and secretary of Realty Capital Securities, LLC.
Section 1031 Exchange
Program
The following information is to
supplement the section of our Prospectus captioned “Section 1031 Exchange
Program” on pages 84-85 of the Prospectus.
To date, cash payments of
$5,412,950 have been accepted by the Operating
Partnership.
Incorporation of Certain Information by
Reference
The following information is added to
supplement the section of our Prospectus captioned “Incorporation of Certain
Information by Reference” on page 171 of the Prospectus.
|
·
|
Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 2009, filed with the SEC on
November 16, 2009.
|
13
![[GRAPHIC MISSING]](logo_arcap.jpg){kind=logo}
AMERICAN REALTY CAPITAL
AMERICAN REALTY CAPITAL TRUST, INC.
Maximum Offering of 150,000,000 Shares of Common Stock
American Realty Capital Trust, Inc. is a Maryland corporation that qualifies as a real estate investment trust, or REIT. We will invest primarily in freestanding, single-tenant retail properties net leased to investment grade and other creditworthy tenants.
We are offering up to 150,000,000 shares of our common stock, $0.01 par value per share, in our primary offering for $10.00 per share, with discounts available for certain categories of purchasers. We also are offering up to 25,000,000 shares pursuant to our distribution reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95% of the estimated value of a share of our common stock. We will offer these shares until January 25, 2011 which is three years after the effective date of this offering. We reserve the right to reallocate the shares of our common stock we are offering between the primary offering and the distribution reinvestment plan. We are registering options to purchase 1,000,000 shares of common stock, as well as the 1,000,000 shares of common stock issuable upon exercise of such options pursuant to our stock option plan for our independent directors.
See “Risk Factors” for a description of some of the risks you should consider before buying shares of our common stock. These risks include the following:
| • | We may be considered a “blind pool” because we own a limited number of investments and have not identified most of the investments we will make with proceeds from this offering. You will be unable to evaluate the economic merit of our future investments before we make them and there may be a substantial delay in receiving a return, if any, on your investment. |
| • | There are substantial conflicts among us and our sponsor, advisor, dealer manager and property manager, such as the fact that our principal executive officers own a majority interest in our advisor, our dealer-manager and our property manager, and our advisor and other affiliated entities may compete with us and acquire properties suitable to our investment objectives. |
| • | No public market currently exists, and one may never exist, for shares of our common stock. If you are able to sell your shares, you would likely have to sell them at a substantial discount. |
| • | Until we generate operating cash flow sufficient to pay distributions to our stockholders, we may make distributions from the proceeds of this offering or from borrowings in anticipation of future cash flow, which may constitute a return of capital, reduce the amount of capital we ultimately invest in properties and negatively impact the value of your investment. Until we generate operating cash flow sufficient to pay distributions to stockholders, our Advisor may waive the reimbursement of certain expenses and payment of certain fees. |
| • | If we fail to qualify, or maintain the requirements, to be taxed as a REIT, it would reduce the amount of income available for distribution and limit our ability to make distributions to our stockholders. |
| • | You may not own more than 9.8% in value of the outstanding shares of our stock or more than 9.8% in value or number of shares (whichever is more restrictive) of any class or series of our outstanding shares of stock. |
| • | We may incur substantial debt, which could hinder our ability to pay distributions to our stockholders or could decrease the value of your investment in the event that income on, or the value of, the property securing the debt falls, but we will not incur debt to the extent it will restrict our ability to qualify as a REIT. |
| • | We are dependent on our advisor to select investments and conduct our operations. Adverse changes in the financial condition of our advisor or our relationship with our advisor could adversely affect us. |
| • | We will pay substantial fees and expenses to our advisor, its affiliates and participating broker-dealers, which payments increase the risk that you will not earn a profit on your investment. |
| • | This is a “best efforts” offering and we might not sell all of the shares being offered. |
| • | We are not yet a REIT and may be unable to qualify as a REIT. |
These are speculative securities and this investment involves a high degree of risk. You should purchase these securities only if you can afford a complete loss of your investment.
Neither the Securities and Exchange Commission, the Attorney General of the State of New York nor any other state securities regulator has approved or disapproved of our common stock, determined if this prospectus is truthful or complete or passed on or endorsed the merits of this offering. Any representation to the contrary is a criminal offense.
The use of projections in this offering is prohibited. Any representation to the contrary, and any predictions, written or oral, as to the amount or certainty of any future benefit or tax consequence that may flow from an investment in this program is not permitted. All proceeds from this offering are funds held in trust until subscriptions are accepted and funds are released.
 |
|
|
|
|
||||||||||||
| Price to Public | Selling Commissions | Dealer Manager Fee | Net Proceeds (Before Expenses) |
|||||||||||||
| Primary Offering |
||||||||||||||||
| Per Share | $ | 10.00 | $ | 0.70 | $ | 0.30 | $ | 9.00 | ||||||||
| Total Maximum | $ | 1,500,000,000 | $ | 105,000,000 | $ | 45,000,000 | $ | 1,350,000,000 | ||||||||
| Distribution Reinvestment Plan |
||||||||||||||||
| Per Share | $ | 9.50 | $ | — | $ | — | $ | 9.50 | ||||||||
| Total Maximum | $ | 237,500,000 | $ | — | $ | — | $ | 237,500,000 | ||||||||
The dealer manager of this offering, Realty Capital Securities, LLC, is a member firm of the Financial Industry Regulatory Authority (FINRA), is our affiliate and will offer the shares on a best efforts basis. The minimum investment amount generally is $1,000. See the “Plan of Distribution” section of this prospectus for a description of compensation that may be received by our dealer manger and other broker-dealers in this offering. As of July 1, 2009 we have sold the minimum of 4,500,000 shares of our common stock necessary to release all subscribers’ funds from escrow. All subscription payments have been released to us. As of October 20, 2009, we have sold 10,118,192 shares of our common stock.
November 10, 2009
SUITABILITY STANDARDS
An investment in our common stock involves significant risk and is only suitable for persons who have adequate financial means, desire a relatively long-term investment and who will not need immediate liquidity from their investment. Initially, we will not have a public market for our common stock, and we cannot assure you that one will develop, which means that it may be difficult for you to sell your shares. This investment is not suitable for persons who require immediate liquidity or guaranteed income, or who seek a short-term investment.
In consideration of these factors, we have established suitability standards for initial stockholders and subsequent purchasers of shares from our stockholders. These suitability standards require that a purchaser of shares have, excluding the value of a purchaser’s home, furnishings and automobiles, either:
| • | a net worth of at least $250,000; or |
| • | a gross annual income of at least $70,000 and a net worth of at least $70,000. |
The minimum purchase is 100 shares ($1,000), except in certain states as described below. Purchases in amounts above the $1,000 minimum and all subsequent purchases may be made in whole or fractional shares, again subject to the limitations described below for certain states. You may not transfer fewer shares than the minimum purchase requirement. In addition, you may not transfer, fractionalize or subdivide your shares so as to retain less than the number of shares required for the minimum purchase. In order to satisfy the minimum purchase requirements for retirement plans, unless otherwise prohibited by state law, a husband and wife may jointly contribute funds from their separate IRAs, and jointly meet suitability standards, provided that each such contribution is made in increments of $100.00 or ten (10) whole shares. You should note that an investment in shares of our company will not, in itself, create a retirement plan and that, in order to create a retirement plan, you must comply with all applicable provisions of the Internal Revenue Code.
The minimum purchase for Maine, New York, Tennessee and North Carolina residents is 250 shares ($2,500), except for IRAs which must purchase a minimum of 100 shares ($1,000). The minimum purchase for Minnesota residents is 250 shares ($2,500), except for IRAs and other qualified retirement plans which must purchase a minimum of 200 shares ($2,000). Following an initial subscription for at least the required minimum investment, any investor may make additional purchases in increments of at least 100 shares ($1,000), except for purchases made by residents of Maine and Minnesota, whose additional investments must meet their state’s minimum investment amount, and purchases of shares pursuant to our distribution reinvestment plan and automatic purchase plan, which may be in lesser amounts.
Several states have established suitability requirements that are more stringent than the standards that we have established and described above. Shares will be sold only to investors in these states who meet the special suitability standards set forth below:
| • | Kentucky — Investors must have either (a) a net worth of $250,000 or (b) a gross annual income of at least $70,000 and a net worth of at least $70,000, with the amount invested in this offering not to exceed 10% of the Kentucky investor’s liquid net worth. |
| • | Massachusetts, Ohio, Iowa, Pennsylvania and Oregon — Investors must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. The investor’s maximum investment in the issuer and its affiliates cannot exceed 10% of the Massachusetts, Ohio, Iowa, Pennsylvania or Oregon resident’s net worth. |
| • | Michigan — Investors must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. The maximum investment in the issuer and its affiliates cannot exceed 10% of the Michigan resident’s net worth. |
| • | Tennessee — In addition to the suitability requirements described above, investors’ maximum investment in our shares and our affiliates shall not exceed 10% of the resident’s net worth. |
i
| • | Kansas — In addition to the suitability requirements described above, it is recommended that investors should invest no more than 10% of their liquid net worth in our shares and securities of other real estate investment trusts. “Liquid net worth” is defined as that portion of net worth (total assets minus total liabilities) that is comprised of cash, cash equivalents and readily marketable securities. |
| • | Missouri — In addition to the suitability requirements described above, no more than ten percent (10%) of any one (1) Missouri investor's liquid net worth shall be invested in the securities registered by us for this offering with the Securities Division. |
| • | California — In addition to the suitability requirements described above, investors’ maximum investment in our shares will be limited to 10% of the investor's net worth (exclusive of home, home furnishings and automobile). |
| • | Alabama and Mississippi — In addition to the suitability standards above, shares will only be sold to Alabama and Mississippi residents that represent that they have a liquid net worth of at least 10 times the amount of their investment in this real estate investment program and other similar programs. |
In all states listed above, net worth is to be determined excluding the value of a purchaser’s home, furnishings and automobiles.
Each sponsor, participating broker-dealer, authorized representative or any other person selling shares on our behalf is required to:
| • | make every reasonable effort to determine that the purchase of shares is a suitable and appropriate investment for each investor based on information provided by such investor to the broker-dealer, including such investor’s age, investment objectives, income, net worth, financial situation and other investments held by such investor; and |
| • | maintain records for at least six years of the information used to determine that an investment in the shares is suitable and appropriate for each investor. |
In making this determination, your participating broker-dealer, authorized representative or other person selling shares on our behalf will, based on a review of the information provided by you in the subscription agreement (Appendix A), consider whether you:
| • | meet the minimum income and net worth standards established in your state; |
| • | can reasonably benefit from an investment in our common stock based on your overall investment objectives and portfolio structure; |
| • | are able to bear the economic risk of the investment based on your overall financial situation; and |
| • | have an apparent understanding of: |
| • | the fundamental risks of an investment in our common stock; |
| • | the risk that you may lose your entire investment; |
| • | the lack of liquidity of our common stock; |
| • | the restrictions on transferability of our common stock; |
| • | the background and qualifications of our advisor; and |
| • | the tax consequences of an investment in our common stock. |
In the case of sales to fiduciary accounts, the suitability standards must be met by the fiduciary account, by the person who directly or indirectly supplied the funds for the purchase of the shares or by the beneficiary of the account. Given the long-term nature of an investment in our shares, our investment objectives and the relative illiquidity of our shares, our suitability standards are intended to help ensure that shares of our common stock are an appropriate investment for those of you who become investors.
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In order to ensure adherence to the suitability standards above, requisite criteria must be met, as set forth in the Subscription Agreement in the form attached hereto as Appendix A. In addition, our advisor and dealer manager must make every reasonable effort to determine that the purchase of our shares (including the purchase of our shares through the automatic purchase plan) is a suitable and appropriate investment for an investor. In making this determination, our advisor and dealer manager will rely on relevant information provided by the investor, including information as to the investor’s age, investment objectives, investment experience, income, net worth, financial situation, other investments, and any other pertinent information. Executed Subscription Agreements will be maintained in our records for six years.
RESTRICTIONS IMPOSED BY THE USA PATRIOT ACT AND RELATED ACTS
In accordance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended (the USA PATRIOT Act), the units offered hereby may not be offered, sold, transferred or delivered, directly or indirectly, to any “Prohibited Partner,” which means anyone who is:
| • | a “designated national,” “specially designated national,” “specially designated terrorist,” “specially designated global terrorist,” “foreign terrorist organization,” or “blocked person” within the definitions set forth in the Foreign Assets Control Regulations of the U.S. Treasury Department; |
| • | acting on behalf of, or an entity owned or controlled by, any government against whom the U.S. maintains economic sanctions or embargoes under the Regulations of the U.S. Treasury Department; |
| • | within the scope of Executive Order 13224 — Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism, effective September 24, 2001; |
| • | subject to additional restrictions imposed by the following statutes or regulations and executive orders issued thereunder: the Trading with the Enemy Act, the Iraq Sanctions Act, the National Emergencies Act, the Antiterrorism and Effective Death Penalty Act of 1996, the International Emergency Economic Powers Act, the United Nations Participation Act, the International Security and Development Cooperation Act, the Nuclear Proliferation Prevention Act of 1994, the Foreign Narcotics Kingpin Designation Act, the Iran and Libya Sanctions Act of 1996, the Cuban Democracy Act, the Cuban Liberty and Democratic Solidarity Act and the Foreign Operations, Export Financing and Related Programs Appropriation Act or any other law of similar import as to any non-U.S. country, as each such act or law has been or may be amended, adjusted, modified or reviewed from time to time; or |
| • | designated or blocked, associated or involved in terrorism, or subject to restrictions under laws, regulations, or executive orders as may apply in the future similar to those set forth above. |
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AMERICAN REALTY CAPITAL TRUST, INC.
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