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New REIT to Sell Shares with Plans to Raise $1.5B

September 11, 2007
By Barbra Murray, Contributing Editor, CPN

American Realty Capital Trust Inc., a newly formed company that will operate as a non-traded REIT, plans to kick off acquisition activities as a public company with a big purse of as much as $1.5 billion by selling as many as 150 million shares of common stock.

American Realty Capital, which filed documents for the IPO with the SEC yesterday, is being spearheaded by chairman & CEO Nicholas Schorsch, founder and former CEO of American Financial Realty Trust; Schorsch resigned from American Financial by mutual agreement with the board of trustees in August 2006. American Financial went public at one-year-old in 2003 and raised approximately $800 million, making it the second largest REIT IPO at the time. The REIT focused mainly on the acquisition of properties leased by financial institutions, and American Realty's focus will be similar but apparently, more broad.

"The focus of this REIT is 100 percent occupied, net-leased, single-tenant retail properties typically with leases for 10- to 25-year terms to investment grade or highly creditworthy tenants," Schorsch told CPN today. Included on the target list are pharmacies, convenience stores and other retail outlets such as FedEx centers. "We also have the ability for single-tenant office," Schorsch said. Most of the properties will be free-standing, and many of the purchases will involve sale-leaseback deals. The REIT, which will not develop any buildings, will seek assets across the country. "Our acquisitions will be geographically diverse, which allows for protection from downturns in a specific market," noted Schorsch.

In addition to offering as many as 150 million common shares at $10 per share, American Realty will offer, according to the SEC filing, "up to 25 million shares pursuant to our distribution reinvestment plan at a purchase price equal to the higher of $9.50 per share or 95 percent of the estimated value of a share of our common stock." Barring extensions, the shares will be offered for two years from the effective date of the offering.