UPDATE: Baird Equity Research Downgrades American Realty Capital Properties to Neutral, Lowers PT on Multiple Challenges Ahead

In a report published Monday, Baird Equity Research analyst Jonathan Pong downgraded the rating on American Realty Capital Properties ARCP from Outperform to Neutral, and lowered the price target from $17.00 to $15.00. In the report, Baird Equity Research noted, “Though initial rent coverage of the $1.5B Red Lobster sale-leaseback transaction appears healthy, skepticism over sustainability of that coverage adds another overhang to shares already pressured by equity needs. Potential sale (rather than spin-off) of the multi-tenant retail portfolio would be a compelling positive catalyst but likelihood is questionable given ARCP's desire to use ARCM as another consolidation platform. Increased funding uncertainties, worsening REIT-dedicated investor sentiment keeps us sidelined for now.” American Realty Capital Properties closed on Friday at $13.10.