{"id":5790,"date":"2015-04-20T00:00:00","date_gmt":"2015-04-20T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2015\/04\/securities_class_action_says_a"},"modified":"2022-03-22T14:10:19","modified_gmt":"2022-03-22T19:10:19","slug":"securities-class-action-says-a","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/securities-class-action-says-a\/","title":{"rendered":"Securities Class Action Says ARCP Made Over $900M From Acquisition Binge"},"content":{"rendered":"\n

According to the amended complaint of an investor class action securities case<\/a>, American Realty Capital Properties Inc. made over $900 million in commissions, fees and payments issued to company insiders after it started an acquisition binge to raise its share price and capital. The non-traded real estate investment trust purportedly started the buying frenzy, which lasted for three years, after completing its $69.8M IPO in 2011 and discovering that its share price was wallowing under the initial public offering price. The lead plaintiff in the case is the Teachers Insurance and Annuity Association of America, which is a retirement and annuities plan behemoth. <\/p>\n

The securities lawsuit contends that because the lower than desired price was holding up ARCP\u2019s ability to raise a significant amount of capital, the acquisition strategy allegedly involved artificially raising adjusted operation funds\u2014a key metric for investors when evaluating an REIT\u2019s performance. The plaintiffs believe that senior insiders at ARCP knew that the tactic was the only way to make the hefty fees. Over $917 million in payments went straight to ARCP insiders and the company\u2019s affiliates. <\/p>\n

Because of the acquisition binge, ARCP went from owning 63 properties and having $13 million in assets to owning over 4,400 properties and $21.3 billion in assets. The complaints claims that indirect and direct payments to ARCP insiders purportedly included $186.6 million subordinated distribution fees, and $333 million in fees and commissions. Some of the fees were allegedly triggered by ARCP\u2019s buying of non-traded REITs American Realty Capital Trust IV Inc. and American Realty Capital Trust II, both defendants in the case. Other payments included $21.6 million for sales purportedly made to ARCP for equipment, fixtures, and furniture, $63.4 million for strategic advisory services, and $17.7 million for financing coordinating fees. <\/p>\n

Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

According to the amended complaint of an investor class action securities case, American Realty Capital Properties Inc. made over $900 million in commissions, fees and payments issued to company insiders after it started an acquisition binge to raise its share price and capital. 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