Vereit (NYSE: VER), the publicly traded real estate investment trust and parent company of Cole Capital, released its earnings results for the third quarter of 2017.
Cole currently sponsors and manages five publicly registered, non-traded REITs, three of which have ongoing public offerings: Cole Credit Property Trust V, Cole Office & Industrial REIT, and Cole Real Estate Income Strategy, a daily NAV REIT.
“We continue to make sure we strengthen that platform [Cole], and we’ve done a good job on that,” said Vereit CEO Glenn Rufrano. “We’ve strengthened it [Cole] this year by bringing Cetera on, and Advisory Group, as you know. That’s our focus.”
During the quarter, Cole Capital raised $66.4 million of new equity, an average of approximately $22 million per month. Since the beginning of the year, Cole has increased its market share of sales from 4.3 percent in Q1 to 8.3 percent in Q3. New equity for October was $24.2 million, an increase of 10 percent over the average monthly run rate last quarter. It has also continued to add selling agreements and advisers.
In response to a question about the future of Cole, Rufrano replied, “we fully expect that that business will grow over time. We’ve had some hiccups here because of the DOL in the marketplace, not Cole. Cole’s market share has been increasing.”
Rufrano continued, “the DOL has clearly hurt some of the money raise, but as we follow this, the SEC and DOL are finally getting together to discuss what that provision could or should be. We’re confident they will come to a conclusion and settle the issue of the fiduciary rule; not that it’s a bad rule, but it’s just that it’s ill defined. That will happen, in our view.”
Vereit is formerly known as American Realty Capital Properties Inc. but changed its name and severed ties to its founder, Nicholas Schorch, following an accounting scandal in October 2008. The company’s former CFO, Brian Block, was recently sentenced to 18 months in federal prison after being found guilty of intentionally reporting false numbers in quarterly filings with the Securities and Exchange Commission.
During the third quarter, Cole Capital raised $102.8 million of capital on behalf of its sponsored non-listed REITs, including $36.4 million through the Cole REITs’ distribution reinvestment plans, compared to $172.6 million, including $36.2 million of DRIP proceeds, in the third quarter of 2016.
Last month, Cole Capital raised $36 million of capital on behalf of the Cole REITs, including $11.8 million through DRIP.
Revenue reached $27.1 million during the third quarter, compared to $28.7 million in the second quarter of 2017 and $31 million year-over-year.
Net income was $2.8 million for the third quarter of 2017, compared to $4.5 million in the previous quarter and just $240,000 during the third quarter 2016.
Cole Capital invested $190 million in 19 properties on behalf of the Cole REITs in the third quarter of 2017, compared to $173.9 million in 13 properties in the third quarter of 2016.
Vereit, a full-service real estate operating company, manages $7.8 billion of gross real estate investments on behalf of the Cole Capital non-traded REITs.