Last month, National Planning Corp. said that as a result of continuing due diligence 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 writes Bruce Kelly of InvestmentNews.
“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.”
Securities America Inc. also told its registered reps it was no longer offering ARC V, citing a risk of overconcentration.
American Realty Capital has dominated nontraded REIT sales the past few years.
On July 26th., Nick Schorsch, chief executive of REIT sponsor American Realty Capital, informed broker-dealers who sell his REITs that in two months, he plans to end sales of American Realty Capital Trust V Inc., the latest in a series of nontraded REITs that bought net-lease properties. And after ARC V, closes to sales Sept. 18, there will be not an ARC VI, Mr. Schorsch said.
“Net lease is great right now, but we don't know what's going to happen in 2014,” he said in an interview. American Realty Capital likely will take a break on creating and selling net-lease REITs for at least a year, and may wait as long as three years to bring a new net-lease offering to the market," he said.
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