06/03/2014 | By Allen Kenney
Nicholas Schorsch, chairman and CEO of American Realty Capital Properties (NASDAQ: ARCP), joined REIT.com for a CEO Spotlight video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York.
American Realty Capital has had an active year on the transactions front in 2014. Earlier this year, the company raised its acquisitions target for 2014 from $3 billion to $4.5 billion. Schorsch discussed the motivation behind the aggressive increase.
“We’re really in a different phase of our life,” Schorsch said. “We’re now into a deliberate cycle in our business, and our self-originated acquisitions are now way ahead of expectation. The market has opened up. Our team has really integrated well.”
Schorsch said the company is now experiencing wider cap rates than before. Additionally, the firm’s size enables it to do a wider variety of transactions, according to Schorsch.
“We raised our guidance because we’re basically through it as of the end of June,” he said. American Realty Capital has also lengthened its average lease duration and de-levered its balance sheet this year, Schorsch noted.
Following American Realty Capital’s recent acquisition of seafood restaurant chain Red Lobster, Schorsch was asked about the possibility of the company seeking out more branded acquisitions. Schorsch pointed out that in the past, private-equity firms frequently made those types of deals, but they also have a higher cost of capital than publicly traded companies. Furthermore, smaller REITs can’t handle a large transaction along the lines of the Red Lobser purchase, according to Schorsch, because it leaves them vulnerable to over-concentration.