AR Capital’s Realty Finance Trust Exploring Strategic Transactions
Realty Finance Trust Inc., a publicly registered, non-traded real estate investment trust, announced that the company’s board of directors formed a special committee to consider exploring a potential strategic transaction with a related party.
The company indicated that the committee may also explore other alternative transactions, including a possible sale or merger, listing its shares on a national exchange, or selling its assets. The committee has retained special legal counsel and is in the process of engaging a leading real estate investment banking group as financial advisor.
Industry reports indicate that AR Global, the successor business to AR Capital, is seeking to consolidate seven real estate investment trusts with nearly $10.5 billion in assets. In addition to Realty Finance Trust, American Realty Capital Healthcare Trust III and Healthcare Trust have been identified as potential targets of the rumored consolidation.
It was reported that two unnamed industry sources said that non-traded REIT American Finance Trust, (which is externally managed by AR Global under a 20-year contract), would acquire Healthcare Trust, Realty Finance Trust, American Realty Capital – Retail Centers of America, and American Realty Capital Healthcare Trust III, while publicly-traded Global Net Lease (NYSE: GNL) would acquire American Realty Capital Global Trust II.
Realty Finance Trust focuses on commercial real estate debt investments secured by income-producing properties and targets loans and securities – diversified by duration, geographic location, property type, ownership, and tenancy. The REIT commenced operations in November 2012 and raised $780.8 million in investor equity prior to terminating the offering in January 2016.
AR Capital-related companies have struggled to raise equity after an ARC-affiliate, American Realty Capital Properties, filed inaccurate financial reports in October 2014 which they left uncorrected. The firm eventually severed ties with the parent company and rebranded itself as Vereit (NYSE: VER).
After being hit with fraud charges by the state of Massachusetts relating to a proxy voter scandal, another affiliate, RCS Capital, paid a multimillion dollar fine and agreed to terminate its business. AR Capital terminated its offerings and stopped selling new investment products at the end of 2015.
