Spirit Realty Capital Inc (SRC.N) said it will merge with Cole Credit Property Trust II to create a commercial real estate firm with a combined enterprise value of $7.1 billion.
The combined company, which will own or have an interest in 2,012 properties in 48 states, would be the second largest publicly traded triple-net-lease real estate investment trust in the United States.
Triple net lease is a lease agreement where the tenant pays the property taxes, building insurance and maintenance in addition to rent. Such properties are usually rented out for commercial purposes to retailers, supermarkets and restaurants.
Spirit's shares jumped 7.4 percent to $19.14 on Tuesday on the New York Stock Exchange.
Cole Credit will be the majority owner of the new company with a 56 percent stake but the current Spirit management would run the company.
"The merger further diversifies us both geographically and by industry, reduces our tenant concentration, improves the overall credit quality of our portfolio and increases operating efficiency," Spirit Chief Executive Tom Nolan said in a statement on Tuesday.
The new company's top tenants would include Shopko, Walgreen Co WAG.N and CVS Caremark Corp (CVS.N).
The addition of Cole Credit's portfolio doubles the size of Spirit's portfolio.
Scottsdale, Arizona-based Spirit, backed by Macquarie Group (US) Holdings and hedge fund TPG-Axon, completed an initial public offering in September.
The deal is expected to slightly add to Spirit's funds from operations following closing.
Barclays advised Spirit Realty, while Morgan Stanley and UBS advised Cole Credit.
(Reporting by A. Ananthalakshmi in Bangalore; Editing by Maju Samuel)