Anchored by Target, Eastland Center in West Covina, CA would be the new REIT's largest property.

NEW YORK CITY—American Realty Capital Properties said Thursday it planned to spin off its multi-tenant shopping center portfolio into a separate, publicly traded REIT valued at more than $2.2. billion. The spinoff, ARCP president David Kay said during a conference call, would establish ARCP as a pure-play net lease entity and the newly created American Realty Capital Centers Inc. as a pure-play shopping center entity.

At present, the 69-property, 11-million-square-foot shopping center group is “imbedded” in a much larger net lease portfolio, Nicholas Schorsch, ARCP’s executive chairman and CEO, said Thursday. A spinoff, he explained, would unlock the value of those multi-tenant retail assets and leverage the expertise of ARCP’s shopping center team. An ARCP spokesman tells that the majority of both the multi-tenant retail portfolio and the team that runs it came into the ARCP fold as a result of the $11-billion merger with Cole Real Estate Investments, which closed with last month.

Lisa Beeson, ARCP’s COO, said on Thursday’s call that the team has proven its mettle with the acquisitions it made between 2010 and earlier this year that comprise the portfolio. The two largest properties are in California: the 814,000-square-foot Eastland Center in West Covina and the 786,000-square-foot Whittwood Town Center in Whittier, with occupancy levels of 98% and 99%, respectively.

Already spread across 26 states, the ARCenters portfolio stands to grow larger. With institutional investors and public companies controlling only about 5% of the “fragmented” pool of 100,000 US shopping center properties, there are plenty of acquisition opportunities, Beeson said. At present, the shopping center team is reviewing $1 billion of assets for possible acquisition.

Other than Schorsch, who would also serve as ARCenters’ chairman, no other ARCP employees or directors would be directors of ARCenters, ARCP says. ARCP’s operating partnership would retain 25% of ARCenters.

Kay said ARCP intended to file a Form 10 registration statement with the SEC during the second quarter, and complete the spin-off by quarter’s end. The newly organized company would trade on Nasdaq under the ARCM symbol.

BofA Merrill Lynch and RCS Capital are serving as exclusive financial advisors to ARCP.  Proskauer Rose is serving as legal advisor to ARCP in connection with the proposed spinoff.