Market Overview

Corvex Management Writes Open Letter to the Board of ARCP and to Candidates for Chairman and CEO


Corvex Management LP, which manages investment funds that collectively own
approximately 7.7% of the outstanding shares of American Realty Capital
Properties Inc. (NYSE: ARCP), today released a letter to the Board of Directors
of ARCP. The letter includes an open letter to any potential candidates for
ARCP's CEO or Chairman defining the principles necessary for these executives
to embrace in order for ARCP to reach its full potential and become an
industry-leading net lease REIT.

February 9, 2015

The Board of Directors
American Realty Capital Properties, Inc.
2325 E. Camelback Road, Suite 1100
Phoenix, Arizona 85016

Dear Members of the Board:

Corvex Management and its affiliated funds collectively own an aggregate of
over 70 million shares of ARCP, representing approximately $650 million of
ownership and 7.7% of the common stock, making us the Company's second largest

We have repeatedly stressed to you the importance of adding shareholder
representatives to the Board at a time when the most far reaching of decisions
of any company's existence are being made. We believe shareholder
representation is of utmost importance given the enormity of the change that
has occurred at ARCP and to ensure that what happened here simply never
happens again. It is rare that a company has the golden opportunity to
completely rebuild itself, and decisions regarding its structure, governance
and leadership are ones that shareholders will have to live with permanently
and must be weighed carefully.

As the Company's second largest stockholder, owners of approximately $650
million of stock (compared to $3 million of stock owned by the entire Board),
we are deeply disappointed that you have thus far rejected our request for
shareholder representation on the Board. However, we are unfortunately not
surprised as this is the same Board whose history of poor decision making
failed to prevent all of the severely damaging actions of the previous
management team.

Given your refusal to allow your second largest shareholder to participate in
addressing the pivotal decisions ARCP faces at this very moment – not the
least of which is communicating with and evaluating potential candidates for
Chief Executive Officer and Chairman of the Board – we are taking this
opportunity to write an open letter directly to any potential candidates for
CEO or Chairman to share our thoughts with fellow shareholders, and to
communicate to you what we expect in future leadership since your track record
in hiring CEOs (both of whom resigned under sub-optimal conditions, to say the
least) is, we believe, undeniably unacceptable. Importantly, we are writing
this letter to make it 100% clear to both the existing Board and any potential
Chairman/CEO candidates what we – and, we suspect, all shareholders – believe
should be the guiding principles and concrete next steps taken by ARCP as it
embarks on its "fresh start" as an industry-leading net lease REIT.
Fortunately, we have to believe any qualified candidate of high integrity
would endorse these bedrock principles. The principles described in this
letter set forth our expectations regarding the governance and direction of
the Company that should be implemented after the conclusion of the restatement
process, which we assume will be by March 2^nd, as you have previously

To Candidates for Chairman and Chief Executive Officer of ARCP:

First and foremost, we look forward to working with new leadership at our
company and to the opportunity for ARCP to realize its full potential as an
industry-leading net lease REIT with your guidance.

As you are most certainly aware, ARCP's shareholders have suffered through the
destruction of billions of dollars in shareholder value resulting from grossly
conflicted self-dealing, an alleged accounting fraud and general
mismanagement. We could write a long list looking backwards at all of the
misdeeds committed by this Company and overseen by this Board. However, our
focus is forward looking and we are wholly committed to helping ARCP do
everything in its power to have a fresh start, rebuild credibility and move
ahead in a manner that creates lasting value for all shareholders.

In light of all of the sordid chapters in ARCP's history, it is absolutely
crucial that what happens next for the Company is unassailable. New leadership
must be of the highest caliber and integrity. Moreover, management and Board
members must be chosen in a manner that has the utmost credibility to ensure
that they are fully aligned with the interest of all shareholders. And,
lastly, corporate governance needs to be "best in class" – with a clean slate
from which to start, there is simply no excuse for it to be anything less. To
truly move forward, ARCP cannot make any compromises on these fronts.

As such, we believe that any candidates for CEO or Chairman should be
committed to the following in order to bring about a fresh opportunity for
value creation at ARCP (which we are confident any high quality candidate
would eagerly embrace):

* Purge any remaining ties with past affiliated entities and leadership
* Commit to having a board of truly independent directors including
elimination of the current Board members from all positions with the
company. If a higher level of continuity is desired, then the retention of
Bruce Frank would be welcome (given his significant efforts regarding the
accounting restatement as well as his more recent arrival on the Board)
* Implement best-in-class corporate governance consistent with ISS and Glass
Lewis standards, including a firm commitment to no related party
transactions not approved by a vote of disinterested shareholders
* Immediately cease windfall payments to board members William Stanley and
Thomas Andruskevich, which fly in the face of modern corporate governance,
cause a horrible misalignment of incentives with shareholders and create
an environment ripe for quid pro quo relationships with incoming
* Hold the 2015 annual meeting as promptly as possible, so shareholders have
the opportunity to vote for the new board that you have helped to select

If a new CEO or Chairman embraces these principles, that person should be able
to garner the full support of ARCP shareholders.

With these critical ground rules established, ARCP's future leadership can
then focus on the business priorities at hand:

* Assemble a senior management team of the highest caliber and integrity
* Regain access to the capital markets and implement a capital structure
consistent with best-in-class triple net lease REITs
* Re-establish investment grade ratings with the key ratings agencies
* Re-establish a coherent long-term business plan
* Provide leadership to execute on the determined business plan with an
ability to appropriately guide and retain employees
* Stabilize and determine a long term strategy for Cole Capital that creates
value for all ARCP shareholders
* Establish a sustainable dividend policy

We believe that these principles are essential to putting ARCP on a solid path
to success. It would, of course, have been our preference to communicate and
implement these principles through a position on the Board. This remains the
case. However, we are mindful of the collective "skills" and "judgment" of
this Board, which obviously oversaw a disastrous history and tangled web of
misdeeds at ARCP – so, we are unfortunately not surprised that the Board has
so far rejected our request for Board participation. Moreover, the Board's
unhelpful "suggestion" that, in lieu of Board participation (which would have
enabled us to fully and knowledgeably participate in the rebuilding of ARCP),
an owner of approximately $650 million of stock should instead simply send a
list of candidates to the Company's executive recruiter is so completely
misguided that it leads us to wonder whether this Board truly appreciates,
even at this point, the harm that has been caused at ARCP and who is
answerable for that harm.

Despite the Board's failure to date to provide us a meaningful opportunity, as
fully informed Board members, to address the multitude of problems facing
ARCP, we stand ready to meet with, support and assist the new members of
management to ensure that ARCP adopts and fully implements the aforementioned
policies. Furthermore, we encourage candidates for CEO and Chairman of the
Board to reach out to us to discuss these matters. We imagine that any high
quality and secure leader would welcome the input of the Company's large
shareholders and seek their support for ARCP's fresh start.

We continue to believe that such collaboration is the surest way to create
value for all stakeholders. We look forward to working together to
collectively help ARCP capitalize on its fresh start and reach its full


Keith Meister
Corvex Management LP

Posted-In: News Press Releases


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