Vereit Reports Continued Improvement by Cole, No Immediate Plans to Sell

Vereit (NYSE: VER), the publicly-traded real estate investment trust formerly known as American Realty Capital Properties Inc., released its earnings results for the first quarter of 2016. Cole Capital, the company’s non-traded REIT sponsor, has been recovering since being rocked by the ARCP accounting scandal in late 2014. On a conference call, CEO Glenn Rufrano discussed Cole’s financials, the new regulatory environment and whether selling the platform is an option.

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, while Cole Credit Property Trust IV is closed.

During the quarter, Cole raised $179 million of capital on behalf of its sponsored non-traded REITs, including $34.4 million through the distribution reinvestment plans, compared to $61.9 million, including $32.1 million of DRIP proceeds, in the first quarter of 2015. In April, Cole raised $72.3 million of capital on behalf of its REITs, including $11.8 million through DRIP.

The firm increased new equity capital raise by 24 percent, quarter-over-quarter.

Cole invested $102.1 million in 13 properties on behalf of its REITs in the first quarter, compared to $225.8 million in 79 properties in the first quarter of 2015.

Prior to the ARCP accounting scandal, Rufrano noted that 20 percent of the larger broker-dealers sold 80 percent of Cole’s investment product. Although the company has not yet secured selling agreements with some of the larger firms, Cole is still working towards that end. “We are being patient,” he said.

He did mention, however, that monthly sales averages have been steadily growing since the first quarter of 2015, as a result of increasing the number of agents working for the firm and bringing on new broker-dealers.

“We are broadening the distribution for Cole which we think is beneficial for us and there’s a hope and expectation that if we get one or two of those major platforms it could really propel us,” Rufrano said.

Rufrano also discussed the new regulatory environment, with respect to the Department of Labor’s recently released fiduciary rule and FINRA 15-02. “Transparency is the absolute right thing to do. As you know we have NAVs on all our Cole REITs now,” he said. “From the deal standpoint, we also applaud the fiduciary rule. We think it’s just appropriate to deal with your investors as fiduciaries. It is certainly less dramatic than expected.”

When asked if selling Cole in the near future was in the cards, Rufrano said that while he was “really pleased” with Cole’s performance thus far, there is still room to improve.

“The best answer I have is we’re still in that period where we want to maximize the value of that asset under all circumstances for our shareholders.”

Last month, Moody’s Investors Service affirmed the Ba1 senior unsecured rating for Vereit and revised the rating outlook from negative to stable. In addition, on Wednesday, S&P Global Ratings affirmed the BB corporate credit rating for the company and revised the rating outlook from stable to positive.