One of the main reasons behind ARCP’s surge in the past few months is its acquisition/merger with other real-estate investment trusts (REIT’s). In late February ARCP announced a merger with American Realty Capital Trust III, with the combination of the two marrying high quality net lease companies with complimentary strategies.The result of the merger is a company with a current market cap of nearly $2.5 billion. The increased size of ARCP has made it the 4th largest publicly traded REIT in the industry and one of the largest in the United States. On May 28th, the company announced its plan to purchase CapLease, another REIT with investment strategies that compliment ARCP. The total price of the buyout is estimated at $2.2 billion. Unfortunately, the announcement had a negative effect on ARCP’s share prices, which have fallen a full two points from $17.50 at the open on Tuesday down to a current level of $15.37. While prices have dropped over the past few days, ARCP is still performing admirably on the year and with its aggressive strategy to grow its asset base through the acquisitions of other REIT’s, the future looks bright.
I bought the ARCP July 17.5 Calls for $.15
Risk: $15 per 1 lot
Reward: Unlimited
Breakeven: $17.65
Greeks of this Trade:
Delta: Long
Gamma: Long
Theta: Short
Vega: Long