Dealmakers of the Week: Proskauer's Fass and Lichtenfeld

, The Am Law Daily


Peter Fass and Steve Lichtenfeld
Peter Fass and Steven Lichtenfeld


Peter Fass, 76, and Steven Lichtenfeld, 56, coheads of Proskauer Rose's real estate capital markets group.


American Realty Capital Properties, a real estate investment trust (REIT) that has its headquarters in New York and is incorporated in Maryland.


American Realty has agreed to acquire Phoenix-based rival Cole Real Estate Investments in a cash and stock deal worth $11.2 billion, including assumed debt.


Under the terms of the deal, which was announced Wednesday, American Realty will pay Cole shareholders either 1.0929 of its own shares or $13.82 in cash for each Cole share. The stock offer values each Cole share at $14.59—a 13.8 percent premium, based on both companies' Tuesday closing prices. The deal is expected to close in the first half of 2014, pending the approval of regulators and both companies' shareholders. The board of American Realty Capital Trust IV (ARCT IV), a related company that American Realty bought for roughly $3.1 billion in July, has also given its approval to the deal as a condition of the agreement.

As The Am Law Daily previously reported, Cole received legal advice from attorneys at Wachtell, Lipton, Rosen & Katz as well as Morris, Manning & Martin and Venable. Sullivan & Cromwell advised Cole founder and chairman Christopher Cole and Weil, Gotshal & Manges represented ARCT IV.


The deal caps an eventful year for both REITs that included a previous, unsuccessful attempt by American Realty to take over Cole.

In March, American Realty approached Cole with an unsolicited takeover bid worth a total of $9 billion, including debt. Cole rebuffed the offer, opting instead to continue with its planned purchase of its own external manager, Cole Holdings Corporation, from Christopher Cole for roughly $127 million. American Realty withdrew its offer in April, which paved the way for Cole to proceed with plans for a public offering in June.

Meanwhile, American Realty bounced back from Cole's initial rejection by carrying out a string of transactions, including the $2.2 billion purchase of rival REIT CapLease in a deal worth $2.2 billion. Over the summer, the company also completed a $774 million agreement with GE Capital that saw American Realty acquire 447 properties leased mainly to restaurant chains such as Burger King, Denny's and Jack in the Box. And, in July, the company continued to add to its property portfolio by acquiring ARCT IV.

The deal finally struck by American Realty and Cole this week would create the country's largest REIT in the net lease sector—a company with an enterprise value of $21.5 billion and a combined portfolio that includes more than 3,700 properties. Most of the combined company's 600-plus properties are retail locations leased to major retailers such as Bed Bath & Beyond, FedEx and Walgreens.


American Realty's busy year has created a heavy workload for Proskauer, with the firm taking the reins for both of the company's Cole bids, as well as the acquisitions of ARCT IV, CapLease and the GE Capital properties, among other matters.

Fass says the firm has been representing the American Realty family of REITS since 2008, when the company first entered the nontraded REIT sector, and has worked on nearly all of American Realty's public, nontraded transactions since then. Proskauer also advised on the formation of American Realty Capital Properties via its 2011 initial public offering, which raised $70 million. Just a little over two years after the REIT's formation, American Realty is poised to be an industry leader with an enterprise value of more than $21 billion. "It's quite a ride we've had," says Fass.


In the months following Cole's rejection of American Realty's initial bid, Fass says he was never privy to whether the latter intended to return with a follow-up offer—despite staying in constant contact with the client as a result of the onslaught of transactional work.

That said, Fass admits he couldn't help but note Cole's own transactional developments and their impact on the company's value: "I followed what the price of [Cole's] stock was. I knew we offered $13.59 [in March] and it hadn't gotten there yet, but that's the market."

By the time American Realty finally called Proskauer to say it was ready to make another run at Cole, both companies had undergone dramatic changes. Because of the secrecy that typically surround any major transaction—especially considering the two companies' recent history—time was of the essence when it came to putting the deal together. "The turnaround came very quickly," Fass says. "We weren't working on it for a very long time. From start to finish, I guess we did it in about three weeks, the whole thing."

Though the Proskauer team had started down the road toward an American Realty-Cole tie-up earlier in the year, Fass says in no way was the firm able to just pick up where it left off in April. Because the previous takeover bid never got much further than the original unsolicited offer, the firm's work had not really progressed past the early-stage public filings required for that initial proposal.

Meanwhile, in addition to the obvious changes to the deal value, and to the two companies themselves, the structure of American Realty's updated offer was also different. The current agreement offers a higher proportion of stock to cash than the initial proposal did. The difference, Fass says, is that the deal now offers a greater tax break for those Cole shareholders who decide to accept stock in the combined company rather than a cash buyout.

Says Fass: "It was pretty much [a matter of] trying to do it tax-free for those stockholders who wanted to stay around."

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