Cole Recovery Continues in the Second Quarter of 2016
Vereit (NYSE: VER), the publicly-traded real estate investment trust formerly known as American Realty Capital Properties Inc., released its earnings results for the second quarter of 2016. Cole Capital, the company’s non-traded REIT sponsor, increased its market share during the quarter, inching closer to recovering from the ARCP accounting scandal of 2014 that nearly took down the company.
On a conference call yesterday, Vereit CEO Glenn Rufrano discussed Cole’s financials, its sustained focus on increasing market share, and the effects of the new regulatory environment.
Cole sponsors four non-traded real estate investment trusts, including Cole Credit Property Trust V, Cole Office & Industrial REIT, and Cole Real Estate Income Strategy, which are currently open, and Cole Credit Property Trust IV, which is closed.
During the quarter, Cole Capital raised $174.1 million in capital on behalf of its non-traded REITs, including $35.5 million through their respective distribution reinvestment plans. This is an increase of 90.5 percent compared to the second quarter of 2015 when Cole’s REITs raised $91.4 million, including $33.1 million in DRIP proceeds.
Cole raised $138.7 million of new capital during the quarter and ranked third for non-listed REIT capital raised year-to-date through June. Quarter-over-quarter, new capital is down 4.1 percent.
Cole invested $211.2 million in 14 properties on behalf of its REITs in the second quarter, compared to $214.7 million in 21 properties at the same time last year. Last quarter, the company invested $102.1 million in 13 properties on behalf of its REITs.
On Wednesday’s earnings call, Rufrano noted that Cole is “absolutely focused” on its market share which increased from 10.3 percent in the first quarter of 2016 to 12.9 percent in the second quarter.
“As the [non-traded REIT] market dropped 40 percent in the first quarter, Cole was only down 4 percent,” said Rufrano. “And our market share is increasing and that’s what we are focusing on. In terms of where the market will go, Stanger would project that it will increase over time.”
He added, “The regulations that have put in place 1502 and DOL are clearly muting the market as it digests the results of those regulations. We applaud those regulations. I think it’s a good thing to have NAV and fiduciary rule. It will take time, so we’re comfortable with our position here and we’re happy that Cole is increasing market share.”
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