ARCP 2014 Earnings Call & Presentation - Key Takeaways

On March 30, American Realty Capital Properties, Inc.

hosted a conference call to discuss the delayed release of its Q4 and FY 2014 results. Additionally, ARCP posted a 24 slide presentation of financial highlights and a review of where the business currently stands. By the end of the trading day on Monday, Mr. Market had an opportunity to digest the numbers and the process the information shared on the conference call. Tale Of The Tape

ARCP shares closed almost unchanged, down fractionally from Friday's close of $9.91 per share.  http://www.benzinga.com/analyst-ratings/analyst-color/15/03/5309754/stifel-resumes-coverage-net-lease-reit-arcp-new-affo-est Key Takeaways - Conference Call Interim CEO Bill Stanley indicated that ARCP will report its Q1 2015 results in May, and was now current regarding its SEC periodic financial filings. As of April 1, Glenn Rufrano will formally take over as CEO, and board members Leslie Michelson and Governor Edward Rendell were to step down from the ARCP board. During the call, Stanley laid out a "To-Do" list of priorities, including:  Recruit two new independent board members; notably Rufrano will also serve on the board, resulting in a seven-member board.  Complete the process to bring on board a new ARCP non-executive Chairman.  Rebuilding of Cole Capital broker-dealer business; noting the recent hire of Bill Miller to head the sales and national account teams.  Continue to implement internal controls.  Manage the impact of litigation and governmental investigations.  Work with new CEO Glenn Rufrano to create a new business plan.  Provide 2015 guidance based upon the new plan, which will be unveiled by Rufrano during an ARCP Investor Day presentation.  Reinstate a dividend "later in 2015" in line with peers to be paid quarterly. Key Takeaways - ARCP 2014 Earnings & Business Update

Management reported on the conference call that it had relied on a third-party analysis of Cole Capital in order to arrive at the $406.2 million of impairment charges. The five office properties owned by Cole Capital are "tenanted but not occupied" with between 2 to 3 years weighted average remaining on the leases. Additionally, the February 24 sale of the Apollo office building which houses the Cole Capital corporate headquarters in Phoenix, AZ for $183 million, is expected to result in a GAAP loss of $20 million in Q1 2015. ARCP - Net Lease Business Still Solid

Notably, ARCP's 7.4x net-debt to normalized EBITDA metric is significantly higher than sector peers, (see balance sheet slide 17 below). ARCP - Diversified Portfolio & Cole Capital Managed REITs

CCIT was sold to Select Income REIT on Jan. 29, 2015 and owned $2.7 billion of gross real estate assets. As a result, the current Cole AUM is now ~$6 billion. ARCP - Diversification Metrics

The ARCP acquisition of ~500 Red Lobster facilities in early 2014 increased portfolio concentration and reduced the overall portfolio credit profile. ARCP - Balance Sheet

One of the challenges facing incoming CEO Rufrano will be to de-lever the ARCP balance sheet.