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ARCT chairman Nick Schorsch tends to duplicate business models that work, so when we heard on Thursday that Realty Income has agreed to buy American Realty Capital Trust for $2.9B, we wondered if more deals to come between the two. (Rinse and repeat: because nobody likes a REIT with dry split ends.)
Nick Schorsch at 405 Park Ave on Sept. 7, 2012
We sat down with ARCT chairman Nick Schorsch in his 405 Park Ave office Friday afternoon. But first some context on ARCT's kin: ARCT III (last reported at 235 properties and 6.7M SF, plus $357M of properties under contract, according to an Aug. 20 SEC filing) is on pace to close this week at $1.7B. That would make the 13 months it took to raise its target equity amount the shortest ever for a non-traded REIT. ARCT III's success owes in part to the strength of the original ARCT (501 properties, 15.7M SF). And ARCT IV is getting under way. American Realty Capital's net-lease REITs also go after similar properties (the second, ARC Daily NAV, is a little different): properties with low leverage, no vacancy (the beauty of sale-leasebacks), long lease terms, and investment-grade tenants.
Walgreens, Sealy, Tex.
Here's ARCT's Walgreens in Sealy, Texas. Nick tells us Realty Income is the only net-lease company with the size and low cost of capital that could offer such solid benefits to ARCT investors. ARCT stock is now tied to Realty Income's, which trades higher; indeed, as we sat down with him, the NASDAQ closed on ARCT's third consecutive day of all-time-high trading. Realty Income, he says, gains a portfolio with higher occupancy, longer lease terms, and more diversity among higher-grade tenants. The deal will close by Q1 '13.