SAN FRANCISCO—Is American Realty Capital Properties growing too rapidly? Marcato Capital Management, one of the REIT's largest shareholders, appears to think so. Marcato on Monday sent a letter to Leslie Michelson, ARCP's lead independent director, citing concerns over what San Francisco-based Marcato sees as “value destroying activity.”

Marcato's letter, which was made public Tuesday over the signature of Marcato founder and managing partner Richard McGuire, expresses frustration at ARCP's recent equity issuance at $12 per share.  “We found it disturbing that the company would issue equity after repeatedly stating publicly that it had no intention to do so, and at a price that it has repeatedly acknowledged undervalues the shares,” McGuire writes. “Management could not have been clearer about this point on recent conference calls.”

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

Further, McGuire writes, ARCP has amassed “too many transformative transactions too quickly.” The letter cites the REIT's back-to-back acquisitions of CapLease, American Realty Capital Trust IV and Cole, its $1.5 billion-purchase of more than 500 Red Lobster locations, the multi-tenant retail sale to Blackstone and $120-million stock issue.

All of these deals in a row, in Marcato's view, have made ARCP's financials “complicated and difficult to understand.” He recommends that instead, the company hit the pause button on large-scale transaction activity “and give investors a chance to see multiple quarters of clean financial results.”

A statement in response to McGuire's letter notes that ARCP “welcomes open communications with its stockholders and values their input toward the shared goal of enhancing value. Our board of directors and management team regularly review the company's strategic priorities and opportunities, including deleveraging, capital allocation, and assess a variety of strategic options. We are committed to driving value for all ARCP stockholders and will continue to take actions to achieve this important objective.”

With approximately 21.8 million shares, Marcato owns 2.4% of ARCP's common stock. Last week, Marcato urged Intercontinental Hotels Group, which reportedly had rejected an unsolicited takeover offer, to consider merging with another large hotel operator. Marcato owns 3.8% of IHG's stock.