SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
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PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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CAPTEC NET LEASE REALTY, INC.
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(Name of Registrant as Specified in Its Charter)
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[PIZZA HUT LOGO] VOTE FOR
[OFFICE MAX(R) LOGO] THE
[BEST BUY(R) LOGO] MERGER
[BARNES AND NOBLE INC. LOGO]
[BENNIGAN'S LOGO] [CAPTEC NET LEASE REALTY, INC. LOGO]
CAPTEC NET LEASE REALTY, INC.
[TGI FRIDAYS LOGO] AND
[JARED LOGO] [COMMERCIAL NET LEASE REALTY INC. LOGO]
COMMERCIAL NET LEASE REALTY, INC.
[ECKERD(R) LOGO]
[BLOCKBUSTER LOGO]
[CAPTEC NET LEASE REALTY, INC. LOGO]
DEAR FELLOW CAPTEC STOCKHOLDER:
We recently mailed to you proxy materials for a Special Meeting of Captec
stockholders to be held on November 19, 2001, regarding our proposed merger with
Commercial Net Lease Realty, Inc. (CNLR). We urge you to read these materials
carefully, as the documents provide important and detailed information about the
merger.
YOUR BOARD OF DIRECTORS UNANIMOUSLY DETERMINED THAT OUR MERGER WITH CNLR IS IN
THE BEST INTERESTS OF CAPTEC AND ALL OF ITS STOCKHOLDERS.
CNLR IS THE RIGHT PARTNER FOR CAPTEC. We believe the merger provides an
excellent opportunity for the combined company to strengthen its position in the
increasingly competitive net lease real estate market. CNLR is an outstanding
company with a highly complementary portfolio of assets, a proven management
team and a track record of enhancing value for its stockholders. We expect that
the greater scale and financial resources of a combined CNLR-Captec will provide
Captec stockholders with a greater opportunity for growth and long-term value
than Captec could achieve on its own. Captec stockholders will benefit from
immediate cash consideration and the opportunity to participate in the upside
potential of a continued investment in a combined CNLR-Captec.
YOUR BOARD OF DIRECTORS SOUGHT THE HIGHEST VALUE FOR YOUR CAPTEC SHARES. Our
merger with CNLR results from a sale process that was designed to maximize the
value of your investment in Captec. A special committee of Captec's independent
directors, together with its outside financial advisor, UBS Warburg LLC,
undertook a thorough sale process in which more than 50 companies were invited
to participate.
YOUR VOTE IS IMPORTANT. Your vote is required to approve the merger. Captec's
management team and board of directors urge you to sign, date and return the
enclosed WHITE proxy card today to vote FOR approval of the merger with CNLR.
ON BEHALF OF CAPTEC'S BOARD OF DIRECTORS,
/s/ EDWARD G. PTASZEK
Edward G. Ptaszek, Secretary
COMMERCIAL NET LEASE REALTY, INC.
Commercial Net Lease Realty, Inc. (NYSE: NNN) is a real estate investment trust
formed in 1984. CNLR acquires, owns, manages and indirectly develops
high-quality, freestanding properties that are generally leased to major retail
businesses under long-term net leases. Tenants consist of major national and
regional retailers including Barnes & Noble, Bed Bath & Beyond, Best Buy,
Borders, Eckerd, Food 4 Less, OfficeMax, and The Sports Authority. CNLR
currently owns, either directly or through investments, 241 properties in 36
states with total gross leaseable area of approximately six million square feet.
CNLR has gained a reputation for providing innovative real estate solutions
nationwide. The company offers a complete array of real estate services
including acquisitions, property management, build-to-suit development and
brokerage/leasing services.
CONSISTENT DIVIDEND & FFO GROWTH
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1996 $1.18 $1.34
1997 $1.20 $1.42
1998 $1.23 $1.45
1999 $1.24 $1.51
2000 $1.245 $1.45
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DIVIDENDS/SHARE [=]
FFO (FUNDS FROM OPERATION)/SHARE [=]
CNLR has increased its dividend paid every year for ten or more years - a
distinction achieved by only 3% of the more than 10,000 publicly traded
companies in the United States.
SOLID FINANCIAL PERFORMANCE
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($MILLIONS) 1996 1997 1998 1999 2000
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TOTAL REVENUES $33.4 $50.1 $64.8 $76.5 $80.9
EBITDA 30.5 46.5 56.8 69.0 71.7
FUNDS FROM OPERATIONS 22.6 34.2 42.5 46.0 43.9
TOTAL ASSETS 371.0 537.0 685.6 749.8 761.6
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[X] VOTE FOR
SUPERIOR VALUE FOR CAPTEC STOCKHOLDERS
For each share of Captec stock owned, Captec stockholders will receive;
- $1.27 in cash
- 0.4575 shares of CNLR common stock
- 0.2103 shares of a new class of CNLR preferred stock
Based upon the closing price of CNLR common stock on June 29, 2001, the last
trading day prior to the merger announcement, and assuming a $25 value for the
preferred stock, Captec stockholders will receive cash and stock with a total
value of approximately $13.05 per Captec share. This represents a premium of
nearly 20% to Captec's closing stock price on September 27, 2000, the day prior
to the announcement of the board's intent to sell the company.
[X] VOTE FOR
FINANCIAL STRENGTH AND SECURITY
We are confident that Captec stockholders will benefit from the upside potential
of a continued investment in a combined CNLR-Captec.
- For each of the past 11 years, CNLR has paid increasing
dividends to its stockholders. And CNLR's common stock dividend,
currently $1.26 per share, is significantly more secure than
Captec's dividend.
- The proposed merger is expected to be immediately accretive to
CNLR's funds from operation (FFO).
- The nation's leading credit rating agencies, Standard & Poor's,
Moody's and Fitch, have already issued investment grade debt
ratings for CNLR.
[X] VOTE FOR
INCREASED SCALE AND GREATER DIVERSIFICATION
Our merger with CNLR will create one of the largest and most diversified public
REITs in the net lease sector. The combined CNLR-Captec will:
- Be one of the nation's largest owners of triple net leased,
freestanding retail properties with total assets of
approximately $1 billion.
- Have a larger market capitalization, higher average trading
volumes, increased liquidity and a lower cost of capital in
comparison to Captec as an independent company.
- Own a total gross leaseable area of approximately seven million
square feet - almost seven times Captec's current total gross
leaseable area.
- Boast broader geographic diversification with more than 377
properties in 40 states.
- Have greater customer diversity with 95 tenants in 27 different
retail lines of trade.
DIVERSIFIED PORTFOLIO
[DIVERSIFIED PORTFOLIO PIE CHART]
Heilig-Meyers/The RoomStore 2%
Steak & Ale/Bennigan's 3%
The Good Guys 4%
Home Place/Waccamaw 4%
Borders Books 4%
Academy 4%
Barnes & Noble 5%
Best Buy 6%
OfficeMax 6%
Eckerd 11%
Other Tenants 51%
*Percentage based upon combined annual revenues as of June 30, 2001.
QUESTIONS & ANSWERS
Q. WHAT AM I BEING ASKED TO VOTE FOR?
A. You are being asked to vote to approve a merger under which Captec will
be acquired by CNLR for a combination of cash and stock.
Q. WHY SHOULD I VOTE FOR THE MERGER?
A. Your board of directors unanimously recommends that you vote FOR
approval of the merger with CNLR on the WHITE proxy card. Your board
unanimously believes that all Captec stockholders will benefit from the
upside potential of a continued investment in a combined CNLR-Captec.
Q. WHAT WILL I RECEIVE IN THE MERGER?
A. For each share of Captec stock owned, Captec stockholders will receive;
- $1.27 per share in cash
- 0.4575 shares of CNLR common stock
- 0.2103 shares of a new class of CNLR preferred stock
Based upon the closing price of CNLR common stock on June 29, 2001, and
assuming a $25 value for the preferred stock, Captec stockholders will
receive cash and stock with a total value of approximately $13.05 per
Captec share.
Q. WHAT HAPPENS IF I DON'T VOTE?
A. In order to approve the merger, we must receive the affirmative votes of
the holders of a majority of the outstanding shares of Captec common
stock. Not voting or abstaining from voting has the same effect as a
vote against the merger.
Q. WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS?
A. We expect the common and preferred stock consideration to be tax-free
for U.S. federal income tax purposes. Stockholders may recognize a
taxable gain on the cash portion of the consideration. For additional
information, please review Captec's Proxy Statement-Prospectus and
consult your tax advisor.
Q. WHAT WILL BE THE DIVIDEND OF THE COMBINED COMPANY?
A. Historically, CNLR has made regular distributions to its stockholders
and expects to continue to do so in the future. The CNLR common stock
presently pays an annual dividend of $1.26 per share and the CNLR
preferred stock provides for an annual cumulative dividend of $2.25 per
share. Absent the merger, it is likely that Captec will have to reduce
its dividend.
Q. WHEN WILL THE MERGER BE COMPLETED?
A. It is anticipated that the merger will be completed during the fourth
quarter of 2001.
Q. WHAT DO I NEED TO DO NOW?
A. Sign, date and return your WHITE proxy card in the enclosed return
envelope as soon as possible. The Special Meeting is scheduled for
November 19, 2001. Please vote now so that your shares can be voted at
the stockholder meeting.
This communication contains certain "forward-looking statements" which
represent Captec's expectations or beliefs, including, but not limited to,
statements concerning industry performance and Captec's operations, performance,
financial condition, plans, growth and strategies. Any statements contained in
this communication that are not statements of historical fact may be deemed to
be forward-looking statements. Without limiting the generality of the foregoing,
words such as "may," "will," "expect," "anticipate," "intend," "could,"
"estimate" or "continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties,
certain of which are beyond Captec's control, and actual results may differ
materially depending on a variety of important factors, many of which are beyond
the control of Captec.
[X] VOTE FOR
- SUPERIOR VALUE FOR STOCKHOLDERS
- FINANCIAL STRENGTH AND SECURITY
- INCREASED SCALE AND GREATER DIVERSIFICATION
Captec's board of directors unanimously recommends that you vote FOR the
proposed merger. Please sign and date the WHITE proxy card and return it TODAY!
REMEMBER . . .
Not returning your proxy card or abstaining has the effect of a vote against the
merger.
FOR ANSWERS TO QUESTIONS OR IF YOU REQUIRE
ASSISTANCE IN EXECUTING OR DELIVERING YOUR PROXY,
PLEASE CALL OUR PROXY SOLICITOR, GEORGESON
SHAREHOLDER COMMUNICATIONS, AT:
[GEORGESON SHAREHOLDER LOGO]
TOLL FREE
1-800-223-2064
OUTSIDE THE U.S.
1-212-440-9800