Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Tuesday, 04 October 2011

American Realty Capital Eyes More Equity for Acquisition

Written by 
Rate this item
(0 votes)

Commercial Real Estate Direct Staff Report

American Realty Capital Properties Inc., which last month had raised $69.8 million through its initial public offering of common shares, is looking to raise additional capital in order to buy another 29 properties.

The New York REIT is sponsored by American Realty Capital Advisors, an investment manager led by Nicholas S. Schorsch and William M. Kahane. It formed American Realty Capital Properties in order to provide liquidity to some of its early investors. The REIT owns 63 properties with 768,730 square feet in 10 states that are leased to RBS Citizens, Citizen's Bank of Pennsylvania and Home Depot.

The REIT had used proceeds from its IPO, along with a $51.5 million draw against a $150 million credit facility provided by RBS Citizens, to retire $82.6 million of debt that had encumbered the properties it acquired.

It has lined up another 29 properties that would allow it to diversify its portfolio by tenant, industry and geography. Those properties, which total 256,070 sf, are leased to Advance Auto Parts, Dollar General and Walgreens and would be purchased for $20.8 million, or $81.23/sf.

That acquisition would increase the REIT's rental revenue to $10.7 million/year from $9.1 million/year, and would expand its footprint to 13 states.

The REIT is pursuing additional properties that are net leased to their tenants. It estimates that the country has $1.2 trillion of properties that are net leased to tenants in the 10 industry sectors it pursues. Investment-grade or other high credit-quality tenants occupy roughly a third of those. And of those, perhaps 30 percent have remaining lease terms of three to eight years, which American Realty Capital Properties prefers.

In a regulatory filing, the REIT said that economic turmoil has prompted many holders of net-leased properties to reduce their exposure to similar assets with leases that mature in the medium term. It added that few investors compete for such properties because of the potential risk.

As a result, it's able to buy those properties at prices that represent attractive yields. The $20.8 million price it is paying for the 29 properties represents a 9.15 percent capitalization rate.

And its expertise in the net-lease industry allows it to mitigate the risk posed by medium-term leases.

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.



weekly-call-to-action

“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • Industry moves and changes in “The Insider“

Additional Info

  • Syndicate to Realpoint: No
  • Subject: Institutional Investment (INS), REITS -general (REITS)
Read 89 times

Data Digest

 

CMBS Deliquency Volume

dqdataFP1

 

CMBS Special Servicing Volume

sschartfp

Top Bookrunners
Private-Label CMBS

1H2014

Investment Bank

#Deal

Bal $mln

Mkt
Shr%

Deutsche Bank

16.0

12,761.50

32.44

JPMorgan

6.10

4,856.29

12.35

Wells Fargo

8.11

4,790.00

12.18

Citigroup

4.33

3,750.65

9.54

Goldman Sachs

4.00

3,722.62

9.46

 

Moody’s/RCA CPPI

cppichartAFP

 

CMBS Pricing Matrix (Legacy AAA Spreads)

AAAspreadsFPa

 

Top Loan Contributors
Domestic, Private-Label CMBS - 1H2014

Lender

Vol $mln

Mkt
Shr%

Deutsche Bank

8,118.01

20.87

JPMorgan

4,486.83

11.53

CCRE

3,064.41

7.88

Citigroup

2,779.70

7.15

Goldman Sachs

2,604.85

6.70

 

 

 

TreppLoan-300px-250px

half-page-ad

warehouse-backstage