ARCP Sees Big Gains in Q1 FFO, Revenues

NEW YORK CITY-American Realty Capital Properties' first-quarter merger with American Realty Capital Trust III Inc. is having the hoped-for effects on the combined company's balance sheet as well as its portfolio, chairman and CEO Nicholas Schorsch says in a release. ARCP's revenues and funds from operations both took a big leap forward, as well, compared to the fourth quarter of 2012.

The $3-billion merger with the non-traded ARCT III, first announced this past December, is “proving transformative from a portfolio standpoint, and providing significant additional portfolio diversification,” says Schorsch in the release. He cites the “extremely low leverage” in ARCP's current financial situation, while its unsecured credit facility affords buying power of “approximately $800 million at very attractive pricing.”

Further, the company's common stock currency has increased over 25% since the merger. “We intend to continue executing our highly accretive organic acquisition program on which our earnings guidance is constructed, while at the same time actively pursuing strategic opportunities to buy large-scale property portfolios and make additional corporate acquisitions in the net lease sector,” Schorsch says.

In terms of growth, the Q1 closing of the ARCP/ARCT III merger also meant the company went from a 2.4-million-square-foot portfolio at the end of Q4 '12 to 16.7 million as of March 31. Subsequent to the end of Q4, ARCP added 233,000 square feet across 20 properties, spending a total of $51.4 million to do so.

As of March 31, ARCP had acquired 48 properties, all 100% occupied, totaling more than 1.3 million square feet. The aggregate base purchase price of $262.3 million, at an average capitalization rate of 7.84%, represented approximately 25% of ARCP's target of $1 billion in acquisitions this year.

Quarterly revenues went from $5.7 million for the three months that ended Dec. 31 to $40.7 million, an increase of more than 600%, ARCP announced Monday. FFO and adjusted FFO totaled $24.5 million and $30.8 million for the first quarter of 2013, respectively, compared to $2.2 million and $3.4 million, respectively, in the previous quarter.