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AR Capital Suspends Capital Raising, $2.3B of Properties in Limbo


Alternative asset managing giant AR Capital has announced it will be suspending capital raising on a handful of offerings at the end of this year. 

One of the largest sponsors of non-traded REITs—raising almost $19B—AR blamed "regulatory and market uncertainty affecting capital raising." 

The news comes on the heels of a failed deal with Apollo Global Management, and an administrative complaint filed by the Enforcement Section of the Massachusetts Security Division against AR Capital entity Realty Capital Securities (RCS), alleging RCS had fake shareholder proxy votes regarding the Apollo deal, CoStar reports.

The decision will cut off fundraising for ARC REITs in the offering stage and one business development fund, putting the properties in limbo and making the REITs susceptible for default on pending deals.

The REITs likely to take the biggest hit are American Realty Capital Hospitality Trust, with $1.9B in properties; American Realty Capital Global Trust II, with $330M in properties; and American Realty Capital Healthcare Trust II, with $74M in properties.

American Realty Capital New York City REIT II and Business Development Corporation of America will also likely be affected, although neither have raised enough funds to break escrow and begin their investment programs.

The entities involved have said they're not sure when or if their offerings will resume, or that they'll be able to raise the capital they need from other sources. Failure to raise enough capital could have a negative effect on the value of investments in their common stock. [CoStar]