VEREIT, Inc., a full-service real estate operating company, and CIM Group, an integrated, full-service real assets investment manager, announced the signing of a purchase agreement for the sale of Cole Capital, VEREIT’s investment management business, to an affiliate of CIM Group.
Currently, Cole has more than $7.6 billion in assets under management and manages five public non-listed real estate investment trusts: Cole Credit Property Trust IV, Inc., Cole Credit Property Trust V, Inc., Cole Real Estate Income Strategy (Daily NAV), Inc., Cole Office & Industrial REIT (CCIT II), Inc., and Cole Office & Industrial REIT (CCIT III), Inc.
In connection with the transaction, VEREIT may receive up to $200 million, comprised of $120 million cash paid at closing under the purchase agreement and up to $80 million in fees to be paid under a six-year services agreement based on Cole’s future revenues. The services agreement will, among other things, require VEREIT to provide operational real estate support to Cole for approximately one year. Subject to regulatory approvals and customary closing conditions, the transaction is expected to close at the end of the fourth quarter of 2017 or during the first quarter of 2018.
The strategic transaction enables VEREIT to simplify its business model and focus on its real estate operating business. It also enables CIM to acquire one of the market-leading retail distribution organizations serving Independent Broker-Dealers and Registered Investment Advisors, which will complement CIM’s existing relationships with institutional investors and wirehouse distribution channels.
“CIM is acquiring expertise and what we believe are best-in-class performing funds in the net/finance lease sector,” said CIM Co-Founder and Principal Richard Ressler. “We believe that adding net/finance lease offerings to CIM’s product capabilities is complementary to CIM’s Real Asset platforms and will benefit all of our stakeholders.”
“The transaction allows us to simplify our core business model and focus on our large, diversified single-tenant real estate portfolio,” said VEREIT Chief Executive Officer Glenn Rufrano. “Cole Capital will have a sponsor in CIM with an institutional foundation and established distribution relationships with wirehouses.”
Citigroup Global Markets Inc. acted as the exclusive financial advisor to VEREIT.