SAN FRANCISCO—Is American Realty CapitalProperties growing too rapidly? Marcato CapitalManagement, one of the REIT's largest shareholders,appears to think so. Marcato on Monday sent a letter toLeslie Michelson, ARCP's lead independentdirector, citing concerns over what San Francisco-based Marcatosees as “value destroying activity.”

Marcato's letter, which was made public Tuesday over thesignature of Marcato founder and managing partner RichardMcGuire, expresses frustration at ARCP's recent equityissuance at $12 per share. “We found it disturbing that thecompany would issue equity after repeatedly stating publicly thatit had no intention to do so, and at a price that it has repeatedlyacknowledged undervalues the shares,” McGuire writes. “Managementcould not have been clearer about this point on recent conferencecalls.”

McGuire's letter says the net lease REIT's equity offering onthe heels of selling its multi-tenant retail portfolio to theBlackstone Group shows “a disregard for existing shareholders thatwe find very problematic.” The decision to then upsize thatoffering, from 100 million shares to 120 million, represented “anadditional slap in the face,” McGuire asserted.