Vereit Inc (NYSE:VER) reported the signing of a purchase deal for the sale of Cole Capital, to an associate of CIM Group. Currently, Cole has over $7.6 billion in assets under management and runs five public non-listed REITs.
In connection with the deal, Vereit may get up to $200 million, comprised of cash paid worth $120 million at closing under the purchase deal and fees to be paid up to $80 million under a six-year services deal depending on Cole’s future revenues. The services deal will, among other things, need company to offer operational real estate support to Cole for around one year. Subject to customary closing conditions and regulatory approvals, the deal is anticipated to close at the close of Q4 2017 or during Q1 2018.
The strategic deal allows Vereit to simplify its business setup and emphasis on its real estate operating segment. It also allows CIM to buy one of the major retail distribution firms serving Registered Investment Advisors and Independent Broker-Dealers, which will match CIM’s current associations with wirehouse distribution channels and institutional investors.
Richard Ressler, the Co-Founder and Principal of CIM, expressed that CIM is buying expertise and what they consider are top performing funds in the net/finance lease segment. They consider that bringing net/finance lease offerings to firm’s product capabilities is matching to its Real Asset platforms and will be of benefit to all of company’s stakeholders.
Glenn Rufrano, the CEO of Vereit, expressed that deal enables them to simplify their core business model and emphasis on a diversified and bigger single-tenant real estate portfolio. Cole Capital will have a supporter in CIM with an institutional base and established distribution associations with wirehouses.
In the last trading session, the stock price of Vereit declined more than 1% to close the day at $8. The decline came at a share volume of 11.11 million compared to average share volume of 10.40 million.