ARCP Board Outlines Priorities, Announces Lender Deal

By Scott Baltic, Contributing Editor

William Stanley, ARCP

Maybe it was a way of trying to be low profile, or maybe it was only what it was, but last Wednesday, Christmas Eve, American Realty Capital Properties Inc. set out its board’s priorities and announced that it has concluded an evaluation of its portfolio properties.

ARCP also stated that it has obtained an additional consent and waiver from the lenders under its unsecured credit facility for an additional extension for reporting its third-quarter 2014 and full year 2014 financial statements.

The company has agreed in return to not pay a dividend on its common stock until the financial statements have been delivered. Once that has been taken care of, however, the REIT reportedly “intends to review its dividend policy and pay a common stock dividend in line with its industry peers.”

The initial priorities for moving the company forward include:

• Evaluating capital structure and allocation of capital to drive stockholder returns.

• Actively managing CRE assets in ARCP’s portfolio.

• Stabilizing and growing Cole Capital’s non-traded REIT business.

• Enhancing financial and operating information systems to be best in class.

• Reviewing and optimizing organizational structure and G&A expenses.

“The Board of Directors is focused on strengthening ARCP and generating cash flows to protect and grow investor capital. We are also evaluating the best strategies to stabilize and grow Cole Capital, an important business with strong prospects,” interim chairman & CEO William Stanley said in the announcement.

The ARCP board’s compensation committee has retained Korn Ferry and will try to conclude a search for a CEO and an independent, nonexecutive board chairman “as expeditiously as possible.”

Its hold on common-stock dividends notwithstanding, ARCP will on Jan. 15 pay a dividend to holders of its 6.70 percent Series F Cumulative Redeemable Preferred Stock, par value $0.01 per share, in respect of the period from Dec. 15, 2014, through Jan. 14, 2015.

ARCP’s portfolio review reportedly has confirmed the ownership status of the portfolio and that the properties’ respective tenants occupy them pursuant to valid leases. According to ARCP, “the review validated the high-quality, diverse composition of ARCP’s net-lease portfolio comprised of credit quality tenants in desirable locations across the United States.”

As of press time, ARCP had not replied to Commercial Property Executive’s request for further information.

ARCP, of course, has been beleaguered for weeks over allegations of improper financial statements and by the departures of, in addition to former CEO and executive chairman Nick Schorsch, the company’s chief financial and chief accounting officers. Most recently, the latter sued ARCP, Schorsch and others, alleging defamation.

Along the way, barely two weeks ago Moody’s downgraded ARCP’s senior unsecured debt, just as the REIT announced that it was “unwinding all of its relationships with entities in which Mr. Schorsch maintains an executive chairman or director-level role or is a significant stockholder.”