July 22, 2013

American Realty Capital REIT Cut by National Planning Corporation

business man holding his head with text asking questions about stock broker misconduct

The National Planning Corp.(NPC), a leading independent broker-dealer, said last week that it has suspended sales of American Realty Capital Trust V Inc., a fast-selling product that in June averaged sales of $10.8 million per day according to an article by Bruce Kelly of Investment News.

Last Monday, NPC said that its concerns over ARC V were related to another American Realty Capital REIT, American Realty Capital Trust IV Inc. That REIT in June was purchasing 986 properties from an affiliate of General Electric Capital Corp. for $1.45 billion. The vast majority of those properties are fast-food and casual-dining restaurants.

“Due to concerns with style drift, deviations from the prospectus and growing pains, which all have implications for [ARC V], NPC decided to suspend sales” of the REIT, according to an e-mail to NPC reps from the firm's products group. In the same e-mail, NPC said it was adding to its selling list another American Realty Capital REIT, the Phillips Edison–ARC Shopping Center REIT II Inc.
“Based upon the GE transaction, the portfolio for [ARC IV] does not match the [REIT's] stated strategy in terms of the average credit rating of the portfolio,” according to the e-mail. “Additionally, [ARC IV] appears to deviate from the marketed strategy in terms of the types of tenants and adding value through aggregation.”

The e-mail also cited concern over American Realty Capital's “fast growth into multiple areas.”

Kelly writes that last Friday, Securities America Inc. told its registered reps it was no longer offering ARC V, citing a risk of overconcentration.

If you have sustained investment losses due to your stock broker or financial advisor’s recommendations regarding non-traded REITs, private placements, or other illiquid, complex products, call for a free consultation on how to potentially recover your losses. To speak with an attorney call Soreide Law Group at 888-760-6552.

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