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A: American Realty Capital New York Recovery REIT, Inc. is a newly organized Maryland corporation that intends to qualify as a real estate investment trust beginning in the taxable year ending December 31, 2010. We expect to use substantially all the net proceeds of this offering to acquire high-quality incomeproducing commercial real estate located in the New York metropolitan area (as defined by the U.S. Office of Management and Budget, the New York — Northern New Jersey— Long Island, New York— New Jersey — Pennsylvania Metropolitan Statistical Area, or the New York MSA), and in particular, New York City, with a focus on office and retail properties. In the current market environment, we believe it is possible to buy high-quality commercial real estate properties at a discount to replacement cost and with significant potential for appreciation. We do not plan to acquire undeveloped land, develop new real estate, or substantially re-develop existing real estate. We also do not intend to invest in assets located outside of the United States. Our real estate team is led by seasoned professionals who have institutional experience investing through various real estate cycles. Each of the six senior executives of our advisor has more than 20 years of real estate experience. We believe a number of factors differentiate us from other non-traded REITs, including our geographic focus, our lack of legacy issues, our opportunistic buy and sell strategy, and our institutional management team.
A: Our investment goals are as follows:
Our real estate team is led by seasoned professionals who have institutional experience investing through various real estate cycles. The six senior executives of our advisor have over 100 years of combined real estate experience and have acquired over $20 billion of real estate and real estate-related assets. We believe a number of factors differentiate us from other non-traded REITs, including our geographic focus, our lack or legazy issues, our opportunistic buy and sell strategy, and our institutional management team.
Nicholas S. Schorsch, our Chairman and Chief Executive Officer, also has been the chief executive officer of New York Recovery Properties, LLC, and New York Recovery Advisors, LLC since their formation. Mr. Schorsch also has been the Chairman and Chief Executive Officer of American Realty Capital Trust, Inc., or ARCT, and Chief Executive Officer of American Realty Capital Properties, LLC, since their formation. Prior to his current position with our company, from September 2006 to July 2007, Mr. Schorsch was Chief Executive Officer of an affiliate, American Realty Capital, LLC, or American Realty Capital, a real estate investment firm. Mr. Schorsch, founded and formerly served as President, CEO and Vice-Chairman of American Financial Realty Trust, or AFRT, since its inceptionas a REIT in September 2002 until August 2006. AFRT was a publicly traded REIT that invested exclusively in offices, operation centers, bank branches, and other operating real estate assets that are net leased to tenants in the financial service industry, such as banks and insurance companies. Through American Financial Resource Group, or AFRG, and its successor corporation, AFRT, Mr. Schorsch executed in excess fo 1,000 acquisitions, both in acquiring business and real estate property with transactional value of approximately $5 billion. In 2003, Mr. Schorsch received an Entrepreneur of the Year award from Ernst & Young. From 1995 to September 2002, Mr. Schorsch served as CEO and President of AFRG, AFRT's predescessor, a private equity firm founded for the purpose of acquiring operating companies and other assets in a number of industries. Prior to AFRG, Mr. Schorsch serves as President of a non-ferrous metal product manufacturing business, Thermal Reduction. He successfully built the business through mergers and acquisitions and ultimately sold his interests to Corrpro (NYSE) in 1994.
William M. Kahane, our President, Chief Operating Officer and Treasurer, has been active in the structuring and financial management of commercial real estate investments for over 25 years. Mr. Kahane also is President, Chief Operating Officer and Treasurer of New York Properties, LLC and New York Recovery Advisros, LLC. Mr Kahane also is the President, Chief Operating Officer and Treasurer of ARCT and holds the same titles for the ARCT property manager and ARCT advisor. Mr. Kahane began his career as a real estate lawyer practicing in the public and private sectors from 1974-1979. From 1981-1992, Mr. Kahane worked at Morgan Stanley & Co., specializing in real estate, becoming a Managing Director in 1989. In 1992, Mr. Kahane left Morgan Stanley to establish a real estate advisory and asset sales business known as Milestone Partners which continues to operate and of which Mr. Kahane is currently the Chairman. Mr. Kahane worked very closely with Mr. Schorsch while a trustee at AFRT (2003 to 2006), during which time Mr. Kahane served as Chairman of the Finance Committee of the Board of Trustees. Mr. Kahane has been a Managing Director of GF Capital Management & Advisors LLC, a New York-based merchant banking firm, where he has directed the firm's real estate investments since 2001. GF Capital offers comprehensive wealth management services through its subsidiary TAG Associates LLC, a leading multi-client family office and portfolio management services company with approximately $5 billion of assets under management. Mr. Kahane also was on the Board of Directors of Cateellus Development Corp., an NYSE growth-oriented real estate development company, where he served as Chairman.
Michael Happel, our Executive Vice President and Chief Investment Officer has over 20 years of experience investing in real estate, including office, retail, multifamily, industrial, and hotel properties, as well as real estate companies. Mr. Happel also is Executive Vice President and Chief Investment Officer of New York Recovery Properties, LLC and New York Recovery Advisors, LLC. From 1988-2002, he worked at Morgan Stanley & Co., specializing in real estate and becoming co-head of acquisitions for the Morgan Stanley Real Estate Funds, or MSREF, in 1994. While at MSREF, he was involved in acquiring over $10 billion of real estate and related assets in MSREF I and MSREF II. As stated in a report prepared by Wurts & Associates for the Fresno County Employees' Retirement Association for the period ending September 30, 2008, MSREF I generated approximately a 48% gross IRR for investors and MSREF II generated approximately 27% gross IRR for investors. In 2002, Mr. Happel left Morgan Stanley & Co. to join Westbrook Partners, a large real estate private equity firm with over $5 billion of real estate assets under management at the time. In 2004 he joined Atticus Capital, a multi-billion dollar hedge fund, as the head of the real estate with responsibility for investing primarily in REITs and other publicly traded real estate securities.
Peter M. Budko, our Executive Vice President and Chief Operating Officer, also is Executive Vice President of New York Recovery Advisors, LLC, New York Recovery Properties, LLC and Realty Capital Securities, LLC. Mr. Budko also is the Executive Vice President and Chief Investment Officer of ARCT, the ARCT property manager, the ARCT advisor and our dealer manager. Prior to his current position, from January 2007 to July 2007, Mr. Budko was Chief Operating Officer of an affiliated American Realty Capital real estate investment firm. Mr. Budko founded and formerly served as Managing Director and Group Head of the Structured Asset Finance Group, a division of Wachovia Capital Markets, LLC from 1997-2006. The Structured Asset Finance Group structures and invests in real estate that is net leased to corporate tenants. While at Wachovia, Mr. Budko acquired over $5 billion of net leased real estate assets. From 1987-1997, Mr. Budko worked in the Corporate Real Estate Finance Group at NationsBank Capital Market (predecessor to Bank of America Securities), becoming head of the group in 1990.
Brian S. Block, our Executive Vice President and Chief Financial Officer, also is Executive Vice President and Chief Financial Officer of American Realty Capital, LLC and New York Recovery Properties, LLC, Mr. Block also is Executive Vice President and Chief Financial Officer of ARCT, American Realty Capital, LLC and the ARCT property manager. Mr. Block is responsible for the accounting, finance and reporting fuctions at ARC. He has extensive experience in SEC reporting requirements, as well as REIT tax compliance matters. Mr. Block has been instrumental in developing ARC's infrastructure and positioning the organization for growth. Mr. Block began his career in public accounting at Ernst & Young and Arthur Andersen from 1994 to 2000. Subsequently, Mr. Block was the Chief Financial Officer of a venture capital-backed technology company for several years prior to joining AFRT in 2002. While at AFRT, Mr. Block served as Chief Accounting Officer from 2003 to 2007 and oversaw the financial, administrative and reporting functions of the organization. He is a certified public accountant and is a member of the AICPA and PICPA. Mr. Block serves on the REIT Committee of the Investment Program Association.
Michael Weil, our Executive Vice President and Secretary, is Executive Vice President and Secretary of New York Recovery Advisors, LLC and New York Recovery Properties, LLC. Mr. Weil also is Executive Vice President and Secretary of ARCT and Executive Vice President and Chief Financial Officer of the ARCT advisor and the ARCT property manager. He was formerly Senior Vice President of Sales and Leasing for AFRT (AFR, from April 2004 to October 2006), where he was responsible for the disposition and leasing activity for a 33 million square foot portfolio. Under the direction of Mr. Weil, his department was the sole contributor in the increase of occupancy and portfolio revenue through the sales of over 200 properties and the leasing of over 2.2 million square feet, averaging 325,000 square feet of newly executed leases per quarter. After working at AFR, from October 2006 to May 2007, Mr. Weil was managing director of Milestone Partners Limited.
A: Yes. We have sold 20,000 shares to New York Recovery Special Limited Partnership, LLC, the parent of our advisor, for an aggregate purchase price of $200,000.
In addition, in December 2009, we commenced a private offering to ‘‘accredited investors’’ as that term is defined in Regulation D as promulgated under the Securities Act of 1933, as amended, or the Securities Act, of up to $50,000,000 in shares of our 8% series A convertible preferred stock (or the preferred shares) subject to an option to increase the offering up to $100,000,000 in shares of our preferred stock, which we refer to as the ‘‘private offering.’’ The preferred shares are convertible in whole or in part into shares of our common stock after the first anniversary of the final closing of the private offering on a one-for-one basis. The purchase price for the preferred shares is the conversion price. The purchase price for the preferred shares is based upon the total investment made by each investor in the private offering as follows: (i) $9.00 per preferred share for investments less than $150,000; (ii) $8.75 per preferred share for investments greater than or equal to $150,000 but less than $200,000; and (iii) $8.50 per preferred share for investments greater than or equal to $200,000. This conversion price is at a discount from the public offering price of our common stock pursuant to this offering and will result in dilution of our stockholders’ interest in us. We intend to terminate the private offering on the earlier to occur of (x) the effective date of the registration statement with respect to the common shares offered hereby and (y) the date on which we elect, in our sole discretion, to terminate the private offering.
A: We currently own only one property. Because we have identified only one additional property to acquire, we are considered a blind pool. Because we only own one property, purchased on June 22, 2010, you do not need to be concerned about possible ‘‘legacy issues’’ related to assets acquired before the commencement of this offering. As specific investments become probable, we will supplement this prospectus to provide information regarding the probable investment to the extent it is material to an investment decision with respect to our common stock. We also will describe material changes to our portfolio, including the closing of property acquisitions, by means of a supplement to this prospectus.
A: At the time you purchase the shares, they will not be listed for trading on any national securities exchange or over-the-counter market. Until our shares are listed, if ever, you may not sell your shares unless the buyer meets the applicable suitability and minimum purchase standards and the sale does not violate state securities laws.
In order to provide stockholders with the benefit of some interim liquidity, our board of directors has adopted a share repurchase program that enables our stockholders to sell their shares back to us after you have held them for at least one year, subject to the significant conditions and limitations in our sharerepurchase program.
A: Yes, pursuant to our distribution reinvestment plan, stockholders may elect to have the distributions they receive from us reinvested, in whole or in part, in additional shares of our common stock. The purchase price per share under our distribution reinvestment plan will be the higher of 95% of the fair market value per share as determined by our board of directors and $9.50 per share.
A: When shares are offered to the public on a ‘‘best efforts’’ basis, the brokers participating in the offering are only required to use their best efforts to sell the shares and have no firm commitment or obligation to purchase any of the shares. Therefore, we may not sell all the shares that we are offering.
A: An investment in our shares may be appropriate for you if you meet the minimum suitability standards mentioned above, seek to diversify your personal portfolio with a finite-life, real estate-based investment, which among its benefits hedges against inflation and the volatility of the stock market, seek to receive current income, seek to preserve capital, wish to obtain the benefits of potential long-term capital appreciation, and are able to hold your investment for a time period consistent with our liquidity plans. Persons who require immediate liquidity or guaranteed income, or who seek a short-term investment, are not appropriate investors for us, as our shares will not meet those needs.
A: Yes. You may make an investment through your individual retirement account, or an IRA, a simplified employee pension, or a SEP, plan or other tax-deferred account. In making these investment decisions, you should consider, at a minimum, (a) whether the investment is in accordance with the documents and instruments governing your IRA, plan or other account, (b) whether the investment satisfies the fiduciary requirements associated with your IRA, plan or other account, (c) whether the investment will generate unrelated business taxable income, or a UBTI, to your IRA, plan or other account, (d) whether there is sufficient liquidity for such investment under your IRA, plan or other account, (e) the need to value the assets of your IRA, plan or other account annually or more frequently, and (f) whether the investment would constitute a prohibited transaction under applicable law.
A: Generally, you may buy shares pursuant to this prospectus if you have either (a) a net worth of at least $70,000 and a gross annual income of at least $70,000, or (b) a net worth of at least $250,000. For this purpose, net worth does not include your home, home furnishings and automobiles. Residents of certain states may have a different standard. You should carefully read the more detailed description under the section entitled ‘‘Investor Suitability Standards’’ immediately following the cover page of this prospectus. In addition, generally, you must invest at least $2,500. Investors who already own our shares can make additional purchases for less than the minimum investment. You should carefully read the more detailed description of the minimum investment requirements appearing under the section entitled ‘‘Investor Suitability Standards’’ immediately following the cover page of this prospectus.
A: We will provide you with periodic updates on the performance of your investment with us, including:
A: If you choose to purchase shares in this offering and you are not already a stockholder, you will need to complete and sign a subscription agreement, like the one contained in the prospectus as Appendix C, for a specific number of shares and pay for the shares at the time you subscribe.
A: The name, address and telephone number of our transfer agent is as follows:
DST Systems, Inc.
430 West 7th St
Kansas City, MO 64105-1407
Phone: (866) 771-2088
Fax: (877) 694-1113
To ensure that any account changes are made promptly and accurately, all changes including your address, ownership type and distribution mailing address should be directed to the transfer agent.
A: If you have more questions about the offering or if you would like additional copies of this prospectus, you should contact your registered representative or contact:
Realty Capital Securities, LLC
Three Copley Place
Suite 3300
Boston, MA 02116
877-373-2522
Attn: Investor Services
This material is neither an offer to sell nor a solicitation of an offer to buy any securities described herein. Such an offer can only be made by the prospectus, which contains complete information including risks. The use of this material is authorized only when accompanied or preceded by an American Realty Capital New York Recovery REIT, Inc. prospectus. This sales and advertising literature must be read in conjunction with the current prospectus in order to fully understand all of the implications and risks of the offering of securities to which it relates.
Realty Capital Securities, LLC (Member FINRA/SIPC), is the dealer-manager for all stated proprietary offerings, an affiliate. Realty Capital Securities, LLC, Three Copley Place, Suite 3300, Boston, MA 02116, T 877-373-2522
Investors should consider a fund's investment objectives, risks, charges and expenses before investing. This sales and advertising material is neither an offer to sell nor a solicitation of an offer to buy any securities. Such an offer can only be made by the Prospectus. This material must be read in conjunction with the current Prospectus for the respective offering in order to fully understand all of the implications and risks of the offering of securities to which it relates. A copy of the Prospectus must be made available to you in connection with this offering. You must meet suitability standards in order to buy any securities described herein. Refer to the details in the applicable Prospectus. The achievement of any or all goals of any offering that may be described herein is not guaranteed. Risks for these investment program offerings typically include: no public market currently exists, and one may never exist; there is no assurance that the value of the holdings will be sufficient to return any portion of the investors original capital invested in any offering of such securities; substantial fees and expenses are typically paid to an offerings advisor, its affiliates and participating broker dealers; assets acquired with leverage have risks including loss of value and limits on flexibility needed if there are changes in the business or industry. An investment in any of these investment programs should be made only after careful review of the related prospectus. All information contained in this material is qualified by the terms of applicable Prospectus.
Other than as specifically indicated on the respective page, properties depicted in the photographs are of assets held in either American Realty Capital's current offerings or past real estate investment programs sponsored by American Realty Capital.
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