Two ARC REITs Cancel Liquidity Events
American Finance Trust Inc. (formerly known as American Realty Capital Trust V) and Healthcare Trust Inc. (formerly known as American Realty Capital Healthcare Trust II), two publicly registered non-traded real estate investment trusts sponsored by AR Capital, announced that they have cancelled their previously announced plans to list their shares on a national stock exchange during the third quarter of 2015. The companies cited “current market conditions” as a reason for their respective decisions.
Other ARC-related entities have fared poorly on Wall Street since the financial reporting scandal regarding American Realty Capital Properties was discovered last October. ARCP has since severed all ties to AR Capital and changed its name to Vereit (NYSE: VER) in July 2015 to distance itself from the embattled company. ARCP/Vereit’s stock price slid from nearly $12.37 per share one year ago to $7.94 per share on Friday, a 36 percent decrease.
RCS Capital Corp (NYSE: RCAP), the dealer-manager of ARC non-traded products founded and managed by ARC, has seen its share price plummet from a high of nearly $40.00 to $1.14 per share on Friday. Other formerly non-traded REITs sponsored by ARC that have listed in the near term, such as New York REIT (NYSE: NYRT) and Global Net Lease (NYSE: GNL), have similarly, albeit less dramatically, struggled on Wall Street.
As previously reported by The DI Wire, Healthcare Trust intended to list under the symbol “HTI”, while American Finance Trust was expected to list under “AFIN.”
According to filings with the Securities and Exchange Commission, the boards and management teams of the respective companies determined that it was in their best interests not to pursue the listings at this time. The companies said that they will continue to monitor market conditions and other factors to reevaluate their decisions when the environment is more favorable. Additionally, American Finance Trust reported that it will not pursue its previously announced tender offer.
The companies also cited the expected closing of the merger between Apollo Global Management and AR Capital as a reason for not pursuing liquidity. The REITs both recommended that no further action be taken until the merger transaction is completed.
In light of these recent events, American Finance Trust will implement a new share repurchase plan, while Healthcare Trust will publish share values to comply with the new FINRA Regulatory Notice 15-02, unless the company lists before April 2016 when the new rules go into effect. Healthcare Trust closed its offering in November 2014, but will continue to offer DRIP shares at $23.75 each and will repurchase shares based on the offering price.
Healthcare Trust Inc. invests in senior housing and healthcare real estate in the United States. As of June 30, 2015, the company owned 143 properties totaling 7.1 million square feet located in 26 states. The company commenced its initial public offering in February 2013 and has raised $2.1 billion in investor equity since that time.
American Finance Trust Inc. invests in single-tenant commercial properties that are net leased to investment grade and creditworthy tenants. The company’s portfolio consists of 463 properties totaling 13.1 million square feet with an aggregate purchase price of $2.2 billion. The company began offering shares to investors in April 2013 and has raised $1.6 billion in equity.
