Friday, July 31, 2015

Nasdaq values Jenkintown landlord at $1.8 billion

Nick Schorsch's American Realty Capital Trust rings Nasdaq bell

Nasdaq values Jenkintown landlord at $1.8 billion


Nicholas Schorsch's AR Capital LLC, New York, marks the Nasdaq stock market listing for its Jenkintown-based American Realty Capital Trust with a ceremonial bell-ringing at Nasdaq's New York office today.

American Realty shares first listed March 1, four years after the trust started selling shares to investors for its portfolio of 485 fully-leased, stand-alone commerical properties in 43 states and Puerto Rico.

Major tenants include FedEx and the federal General Services Administration, Walgreens and CVS drugstores, and the Dollar General, Payless and PetSmart retail chains, among others. As a listed stock, "it's now an equity investment, not an 'alternative' investment, and we can borrow cheaper, and provide liquidity for our investors," Schorsch told me.

In Pennsylvania, American Realty owns, for example, PNC Bank branches in Philadelphia and Media, First Niagara Bank branches in the Lansdale area, a RiteAid in Carlisle, a Wawa in Allentown, a Pep Boys in North Wales, and a Wal-Mart near Pittsburgh.

The company employs around 70 at its offices in Jenkintown and Dresher. Schorsch, a native of Meadowbrook (and a Drexel graduate CORRECTION: Schorsch attended Drexel, and currently sits on its board, but he did Not graduate) who says he's bought over $5 billion worth of real estate in more than 1,000 deals, and other managers in the group are mostly based in New York.

The trust has paid a yearly dividend of 70 cents a share or around 6.5%, which some investors found welcome during the volatile stock market following the collapse of the real estate bubble in the mid-2000s. Shares began trading on Nasdaq on March 1 around $10.50 a share. The stock was trading this morning around $10.40. With 180 million shares now traded on Nasdaq, American Realty's stock market value totals more than $1.8 billion.

Last summer, AR floated another, smaller, more diversified portfolio, American Realty Capital Properties, including multi-unit properties, some with vacancies. The stock is currently worth around $84 milllion, or $11.40 a share, close to its offering price. Institutional investors in that company include BlackRock Fund Advisors and Fidelity Management, among others. Former PA Gov. Ed Rendell is a director; so is Dr. Walter P. Lomax, a Philadelphia investor who formerly operated the AmeriChoice HMO and prison and welfare medical service contractors.

Schorsch, chairman of the AR board, was formerly chief executive of the former, Philadelphia-based American Financial Realty Trust, which he founded with warehouse-properties investor William M. Kahane and Wall Street mortgage derivatives pioneer Lewis Ranieri in 2002.

After clashing with Ranieri over how to cope with falling real estate prices, Schorsch and Kahane resigned in 2006. Schorsch was replaced by former Fidelity Bank chief Harold "Hal" Pote. After Pote's death in 2007, Gramercy Capital Corp., one of Manhattan's largest office landlords, bought the trust at a recessionary discount to its former market value.

Schorsch and Kahane started what's now AR the next year, setting up a series of companies specializing in medical and other industry sectors to raise investor capital and market properties around the U.S.

"We have 8 other non-traded REITs in our platform raising capital right now," Schorsch said. "We look at three options: sell the company, sell the assets, or list the company as a public offering. It's a good time for real estate. People are looking for durable investments." (Updated) 

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PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

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