ARCP buying ARCT IV in $3.1B cash-and-stock deal

Tuesday, July 2nd, 2013 | Finance News

NEW YORK (AP) — American Realty Capital Properties Inc. is buying American Realty Capital Trust IV Inc. in a cash-and-stock deal valued at about $3.1 billion.

Shares of ARCP nearly doubled in premarket trading on Tuesday.

ARCP, a real estate investment trust, said that the deal — along with other recent transactions — will make it the second-biggest net lease REIT. After the transaction closes, ARCP will own 2,579 single tenant properties in 48 states and Puerto Rico.

Last month ARCT IV announced that it would pay $1.45 billion to GE Capital for properties leased mostly to restaurant chains like KFC, Burger King and Wendy's. The deal includes 986 net lease properties in 47 states.

In a separate deal, also in June, ARCP said that it would pay $807 million for 471 properties from GE Capital, which are mostly leased to operators of restaurants such as IHOP, Burger King and Wendy's.

In May, ARCP announced that it was buying fellow real estate investment trust CapLease in a deal the companies valued at about $2.2 billion.

In the ARCT IV transaction, each outstanding share of ARCT IV will be converted to the right to receive 2.05 shares of ARCP stock or $30 per share in cash.

Both companies' boards approved the deal, but it still needs approval from the companies' shareholders.

New York-based ARCP said that due in part to the acquisition, it is raising its 2014 adjusted funds from operations forecast to $1.19 to $1.25 per share. Its prior guidance was for 93 cents per share.

Funds from operations, or FFO, is a key measure of profitability for REITs that adds back items like amortization and depreciation to net income.

The buyout is expected to close by the third quarter's end.

ARCP's stock rose $13.53, or 91.4 percent, to $28.33 before the market open.

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Bank of England policymakers to press on with bank leverage rule

Tuesday, July 2nd, 2013 | Finance News

By Huw Jones and Christina Fincher

LONDON (Reuters) - Bank of England policymakers said on Tuesday they would press ahead quickly with a new curb on banks' risk exposure based on their leverage, despite industry lobbying against the plan.

Paul Tucker, the central bank's deputy governor for financial stability, told British lawmakers that the new rule should be introduced now.

Some bankers have complained that demands they build up capital levels runs counter to calls from the government and the Bank of England that they lend more in order to boost the country's slow economic recovery.

Andrew Bailey, another BoE deputy governor who is in charge of prudential regulation, also said he wanted the rule in place as soon as possible and that BoE staff were looking at plans submitted by banks for how they could implement it.

"We have made clear that we will go through these with the public, with the institutions during the course of this month. And we will publish. We will make clear what the outcome of that is," Bailey told parliament's Treasury Committee.

Britain's Prudential Regulation Authority (PRA), which Bailey heads, said on June 20 that it would set a leverage ratio of 3 percent for UK banks, which would limit the amount they can lend relative to their capital.

The leverage ratio measures capital against total loans and some bankers argue the new plan would penalize low-risk, high-volume businesses like trade finance and mortgage lending.

The PRA has said that Barclays , one of Britain's biggest banks, has a leverage ratio of 2.5 percent after adjustments, for example.

Some bankers have said they were surprised by the decision to push for the new requirement now, nearly five years ahead of an internationally agreed deadline.

Barclays warned on Friday it may have to cut lending if it is forced to act quickly to meet the new financial target.

Mervyn King, a few days before he stepped down as governor of the Bank of England, last week accused British banks of lobbying senior politicians to undermine the push for more regulation.

Tucker said on Tuesday that lobbying by banks was "unacceptable."

Bailey, also asked by lawmakers about King's comments, said he had been reassured by the government that it considered the PRA to be independent as a bank supervisor.

"We are certainly aware that there are conversations that happened between the banks and officials and ministers," he said. "The thing that concerns me is that we are trying to build, frankly, a transparent process that has accountability in it."

Bailey said there had been "slippage" in the progress of British banks building up their capital buffers.

(Additional reporting by Li-mei Hoang and Adam Jourdan; writing by William Schomberg; Editing by Susan Fenton)

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Global shares directionless amid poor Europe data

Tuesday, July 2nd, 2013 | Finance News

PARIS (AP) — Global shares struggled to find direction Tuesday as indications Europe's economy is still in trouble competed with hopes that the U.S. central bank wasn't quite finished with its stimulus.

Industrial producer prices fell 0.3 percent in May in the 17 European Union countries that use the euro, Eurostat reported Tuesday. While that shows costs are falling, it also indicates manufacturing activity remains weak.

Meanwhile, Spain announced Tuesday that the number of people registered as unemployed dropped for a fourth consecutive month in June — but the country has a long way to go to bring its jobless rate down to normal levels. It currently stands at 27.2 percent.

A separate report on Monday showed the unemployment rate in the eurozone was at 12.1 percent in May, its highest level ever.

"While the European economy appears to be starting to show flickers of recovery particularly in Spain and Italy where the manufacturing sector appears to be showing signs of coming off life support, the unemployment picture remains disturbingly high," said Michael Hewson, a market analyst at CMC Markets UK.

By midday in Europe, France's CAC-40 was down 0.9 percent to 3,735 while the DAX in Germany was off 1.2 percent to 7,885. The FTSE index of British shares dropped 0.6 percent at 6,269.

By contrast, lackluster data in the U.S. comforted American and many Asian markets over the past day — since it indicated the U.S. Federal Reserve would move slowly to reduce its purchases of financial assets that have buoyed markets by pushing down interest rates.

On Monday, Wall Street rallied after an ISM manufacturing survey for the U.S. that showed a weak rebound in June thanks to new orders and higher production. The survey boosted stock markets as investors estimated it was strong enough to show the recovery is on track, but not so strong as to encourage the Fed to start ending its monetary stimulus program ahead of time.

U.S. markets were expected to open higher Tuesday. Dow and S&P futures were both up 0.2 percent, at 14,914 1,610.20 respectively.

Many Asian stocks rose earlier in the day. Tokyo's Nikkei 225, the region's heavyweight index, jumped 1.8 percent to 14,098.74. Australia's S&P/ASX 200 was up 2.6 percent at 4,834.00 after the country's central bank left interest rates unchanged and said the Australian dollar is likely to continue falling, easing pressure on exports.

In China, the Shanghai Composite Index reversed early losses to rise 0.6 percent to 2,006.56 after reports on Monday that Chinese manufacturing weakened in June amid a credit crunch. Hong Kong's Hang Seng fell 0.7 percent to 20,658.65, led by Chinese banks, which are facing central bank credit restrictions.

Meanwhile, benchmark oil for August delivery rose 16 cents to $98.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.43 to close at $97.99 a barrel on Monday.

The euro fell to $1.3030 from $1.3065 late Monday in New York.

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Associated Press writer Kay Johnson in Bangkok contributed to this report.

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