NEW YORK CITY-It has been a busy first quarter for publicly-traded REIT American Realty Capital Trust. After listing on the NASDAQ Capital Markets in March and filing an $87 million initial public offering earlier in the year, the company’s reinvention has led to a boost in revenues, net operating income and funds from operations—and the upward momentum is expect to continue.
“Our first quarter was all about execution, as you can see from the concrete progress we have been able to achieve,” said William M. Kahane, CEO of ARCT, in a company filing. “Our focus, since listing the company on the NASDAQ and internalizing our management team, has been on reducing our cost of capital so as to improve our earnings. We believe, based on our current results, that we have accomplished this.”
ARCT, which focuses on net-leased pharmacies, banks, restaurants and convenience stores in high-traffic locations to high credit quality tenants, saw its annualized FFO hit $123.6 million, or $0.78 per share, excluding acquisition activities, which was previously forecasted to be approximately $100 million in the next 12 months. The company has also reaffirmed its previously provided 2012 FFO and AFFO guidance of $0.79 to $0.82 per share, Kahane says.
The company reported revenues of $45.6 million, an increase of 118% from $20.9 million in Q1 2011. ARCT’s net operating income also saw an improvement, going from $20.6 million last year to $42.9 million in 2012, a jump of 108%.
As a result, ARCT has increased its investment grade portfolio percentage and an improved company credit rating. Moody’s upgraded the company to a Ba2 credit rating with a stable outlook from Ba3 after reducing its leverage levels. It completed the tender offer of 20.95 million shares of common stock on April 4, reducing total shares outstanding to approximately 158 million. The company also pre-paid $161.2 million of secured mortgage debt on April 17, resulting in a net annual reduction in interest expenses of $4.3 million.
At the end of Q1, ARCT owns 485 freestanding, single-tenant, net-leased properties, totaling 15.6 million square feet, compared to 318 properties at the same time last year. And more acquisitions are expected.
“Over the next several quarters we plan to focus on continuing to grow the company by harvesting our acquisition pipeline opportunities and further improving our balance sheet metrics to lift our credit ratings,” Kahane says.
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