NEW YORK, Feb 15, 2012 (BUSINESS WIRE) —
American
Realty Capital Trust, Inc. (“ARCT” or the “Company”) announced today
that its board of directors has determined that it is in the best
interest of the Company and its stockholders to internalize the
management services currently provided by American Realty Capital
Advisors, LLC (the “Advisor”). We refer to this transaction as the
“Internalization.” As a result of the Internalization, the Company will
become a self-administered real estate investment trust, managed
full-time by William M. Kahane, one of the key executives who built the
Company and assembled its property portfolio, and his management team,
along with key personnel primarily responsible for the day-to-day
operations of the Company. Also in connection with the Internalization,
the Company has filed an application to list its common stock on The
NASDAQ Global Select Market (“NASDAQ”) under the symbol “ARCT.” The
Company anticipates that its common stock will be listed on NASDAQ on or
about March 1, 2012 (the “Listing”). The Company plans to consummate the
Internalization on the date the Listing occurs.
The Internalization is the result of a process begun in early 2011 by
the Company’s board of directors to evaluate possible strategic
alternatives designed to maximize stockholder value, including one or
more of the following: (1) listing the Company’s common stock on a
national exchange or other trading system and becoming self-administered
by termination of the respective agreements with the Advisor and American
Realty Capital Properties, LLC (the “Property Manager”); (2) a sale
of the portfolio; or (3) merger with a third party that is already
listed on a national exchange.
The Company believes that becoming self-administered and listing on
NASDAQ will create stockholder value for several important reasons.
First, due to the growth of the Company’s asset and revenue base over
the past three years, the Company believes that it will be
cost-effective for it to internalize the management functions presently
conducted by the Advisor and the Property Manager, reducing the
Company’s annual costs significantly. Upon completion of the
Internalization and the Listing, the Company will no longer incur fees
payable to the Advisor and the Property Manager for acquisitions, asset
management, property management or dispositions under the advisory
agreement and the property management agreement, respectively, which
will reduce expenses and increase funds from operations per share and
may provide an immediate increase in stockholder value and higher
investor returns.
Moreover, due to the deliberate planning and design of the ARCT
offering, there will be no internalization fee paid, maximizing value
for the Company’s investors.
The Company intends to continue payment of monthly distributions at an
annualized rate of $0.70 per share. The February 2012 distribution will
be paid by March 5, 2012 to shareholders of record on February 29, 2012.
The Company’s 2011 distribution was characterized as approximately 100%
return of capital for tax reporting purposes.
Internalization and Listing
To provide for an orderly transition upon Internalization and Listing,
the advisory agreement will terminate on the Listing date subject to a
60 day notice period. The Company may choose to extend the advisory
agreement for up to three months. While the advisory agreement entitles
the Advisor and its affiliates to certain acquisition, financing, asset
management, and other fees in connection with services provided to the
Company, the Company and the Advisor have mutually agreed that following
the Listing, the Advisor will not receive an internalization fee or a
disposition fee on the sale of a property, nor will there be any
acquisition fees. Additionally, the Company will acquire the Property
Manager for nominal consideration.
The Advisor or its affiliate will be entitled to a subordinated
incentive listing fee equal to 15% of the amount, if any, by which (a)
the average market value of the Company’s outstanding common stock for
the period 180 days to 210 days after Listing, plus distributions paid
by the Company prior to Listing, exceeds (b) the sum of the total amount
of capital raised from stockholders during the Company’s prior
continuous offering and the amount of cash flow necessary to generate a
6% annual cumulative, non-compounded return to such stockholders.
Completion of the Internalization and the Listing are subject to a
number of conditions. There can be no assurance that the Company will
internalize or that its shares of common stock will be listed on NASDAQ.
Post-Listing and Management Team
Following the completion of the Internalization and Listing, Mr. Kahane
will become Chief Executive Officer and President and Brian D. Jones,
currently head of investment banking for the Company’s sponsor, will
become Chief Financial Officer and Treasurer, and each will enter into
employment agreements with the Company. Nicholas S. Schorsch will remain
Chairman of the Board of the Company. Susan E. Manning, currently a
controller for various offerings organized by the Company’s sponsor,
will become Chief Accounting Officer and Secretary. Members of the
acquisition, asset management, marketing and accounting departments who
have been instrumental in building and managing the day-to-day affairs
of ARCT will also join Messrs. Kahane and Jones and Ms. Manning as
direct and exclusive employees of ARCT.
The composition of the board of directors will remain unchanged as a
result of the Internalization. To avoid any potential conflicts of
interest, Mr. Kahane and the Company’s independent directors will resign
their respective positions on any boards of other non-traded net lease
REITs organized by the Company’s sponsor.
Public Offering
The Company also announced today that it filed a registration statement
on Form S-11 with the Securities and Exchange Commission (“SEC”),
indicating its plan to offer for sale up to 6.6 million shares of its
common stock. The underwriters may also purchase up to an additional
990,000 shares of common stock from the Company at the public offering
price, less the underwriting discount, within 30 days from the date of
the prospectus solely to cover overallotments. The Company intends to
use the net proceeds from the offering to repay indebtedness under its
unsecured revolving credit facility with RBS Citizens, N.A., and for
general working capital purposes.
This announcement shall not constitute an offer to sell or the
solicitation of an offer to buy the securities planned to be offered
pursuant to the registration statement on Form S-11, nor shall there be
any offer or sale of these securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. A
registration statement relating to these securities has been filed with
the SEC but has not yet become effective. These securities may not be
sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. The offering will be made only
by means of a prospectus which is a part of such registration statement.
Copies of the preliminary prospectus for the offering, when available,
may be obtained on the SEC’s website at
www.sec.gov
or by contacting the Company at 405 Park Avenue, New York, New York
10022, Attention: Investor Relations.
Tender Offer
The Company also announced today that it intends to offer to purchase an
amount in value of its shares of common stock between $200 million and
$250 million from its stockholders (the “Tender Offer”), with the
ability to increase the offer to purchase by 2% at the discretion of the
Company. The Company believes the Tender Offer augments the options
available to stockholders in connection with the Listing, while also
being accretive to future funds from operations per share for
stockholders that do not sell their shares in the Tender Offer. In
accordance with the terms of the Tender Offer, the Company will select
the lowest price, not greater than $11.00 nor less than $10.50 per
share, that will allow the Company to purchase an amount in value of its
shares of common stock as set forth in the Tender Offer documents (which
will be between $200 million and $250 million), or a lower amount
depending upon the number of shares of common stock properly tendered
and not withdrawn. The Company intends to fund the Tender Offer with
cash on hand and funds available under the Company’s unsecured revolving
credit facility with RBS Citizens, N.A. The Tender Offer is scheduled to
commence on or about the Listing date and expire on the 20th
business day thereafter (unless the Company determines to extend the
offer). The commencement of the Tender Offer is contingent upon an
amendment to the credit facility. The Tender Offer will be subject to
certain conditions, including funding under the Company’s credit
facility (as amended).
Pre-Commencement Communications
This press release is for informational purposes only and is not an
offer to buy or the solicitation of an offer to sell any shares. The
full details of the modified “Dutch auction” Tender Offer, including
complete instructions on how to tender shares, will be included in the
offer to purchase, the letter of transmittal and related materials,
which will become available to stockholders promptly following
commencement of the offer. Stockholders should read carefully the offer
to purchase, the letter of transmittal and other related materials when
they are available because they will contain important information.
Stockholders may obtain free copies, when available, of the offer to
purchase and other related materials that will be filed by the Company
with the SEC at the Commission’s website at
www.sec.gov .
When available, stockholders also may obtain a copy of these documents,
free of charge, from the Company.
Forward-Looking Statements
This press release contains forward-looking statements that involve
substantial risks and uncertainties. Actual results or events could
differ materially from the plans, intentions and expectations disclosed
in the forward-looking statements ARCT makes. All statements, other than
statements of historical fact, included in this press release are
forward-looking statements, including but not limited to statements
regarding advisory expenses, stockholder liquidity and investment value
and returns. The words “anticipates,” “believes,” “expects,”
“estimates,” “projects,” “plans,” “intends,” “may,” “will,” “would,” and
similar expressions, which are intended to identify forward-looking
statements, although not all forward-looking statements contain these
identifying words. Factors that might cause such differences include,
but are not limited to: the risk that changes in economic circumstances,
business conditions and ARCT’s stock price may make the tender offer
and/or the public offering no longer advisable on the terms described
herein, if at all; the impact of current and future regulation; the
effects of competition; the ability to attract, develop and retain
executives and other qualified employees; changes in general economic or
market conditions; the possibility that the expected efficiencies and
cost savings associated with the Internalization will not be realized,
or will not be realized within the expected time period; and other
factors, many of which are beyond our control, including other factors
included in our reports filed with the SEC, particularly in the “Risk
Factors” section of ARCT’s registration statement on Form S-11 filed
with the SEC, as such Risk Factors may be updated from time to time in
subsequent reports. ARCT does not assume any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
To arrange interviews with ARCT executives, please contact Tony DeFazio
at 484-532-7783 or tony@defaziocommunications.com.
SOURCE: American Realty Capital Trust, Inc.
American Realty Capital Trust, Inc.
Brian S. Block, EVP CFO, 212-415-6500
bblock@arlcap.com
or
DeFazio Communications, LLC
Anthony J. DeFazio, 484-532-7783
tony@defaziocommunications.com
Copyright Business Wire 2012