Select Income REIT To Buy Cole Corporate Income Trust For About $3.0 Bln

(RTTNews) - Select Income REIT (SIR) said Tuesday that its board has approved a definitive merger agreement to acquire all of the outstanding common stock of Cole Corporate Income Trust or CCIT for about $3.0 billion, payable in a combination of cash and SIR common shares plus the assumption of certain mortgage debt.

The merger is expected to close during the first quarter of 2015.

In the interim, both Select Income REIT and CCIT expect to continue to pay customary common stock dividends. SIR's Board of Trustees expects to increase SIR's regular quarterly common share distribution by $0.02 to $0.50 ($2.00 per share per year) upon the closing of the merger.

Select Income REIT will acquire CCIT's full property portfolio, which includes 64 office and industrial net lease properties as well as 23 healthcare properties, for a total consideration of about $3.0 billion including the assumption of about $298 million of mortgage debt and excluding transaction costs.

Subject to the terms and conditions of the merger agreement and proration, CCIT stockholders will receive either $10.50 in cash or SIR common shares at an exchange ratio of 0.36 of a SIR common share for each share of CCIT common stock held. Based on the closing price of SIR's common shares on August 29, 2014 and assuming 60% of CCIT stockholders elect cash consideration, the blended amount to be paid by SIR as merger consideration is approximately $10.32 per share of CCIT common stock.

As part of the transaction, SIR has entered an agreement to sell the 23 healthcare properties to Senior Housing Properties Trust (SNH) for approximately $539 million, which includes $509 million in net proceeds and assumed debt of approximately $30 million, immediately upon closing of the merger, resulting in a net purchase price to SIR of approximately $2.5 billion.