ARCP Restates Financials Dating Back to 2011

PHOENIX—American Realty Capital Properties‘ adjusted funds from operations were overstated for three full years beginning in 2011 and for the first half of 2014, the net lease REIT said Monday. The revised financial statements, which also revealed a bigger net loss for 2013 and the first quarter of last year than originally stated, were the product of an investigation by the company’s audit committee following last October’s revelation of accounting irregularities that ultimately led to the dismissal or resignations of senior management.

The audit committee’s investigation, conducted with the assistance of Weil, Gotshal & Manges LLP and Ernst & Young LLP, also found that equity awards to then-executive chairman Nicholas Schorsch and then-CFO Brian Block were larger than the REIT‘s compensation committee had approved. ARCP additionally said it has recovered about $8.5 million from payments it made to ARC Properties Advisors, LLC and certain of its affiliates that “were not sufficiently documented or otherwise warrant scrutiny.”