NEW YORK CITY—American Realty Capital New York Recovery REIT has made two separate, but related, announcements concerning going public. After engaging Barclays Capital and RCS Capital—a division of Realty Capital Securities—as financial advisors, the REiT has decided to pursue a listing on the New York Stock Exchange, though it will change its name to the New York REIT. In addition, it plans to introduce a new REIT—New York City REIT—that will be an untraded entity.
The company intends to file an application to list its common stock on the Exchange under the symbol "NYRT" and expects its common stock to be listed during the second quarter 2014. Firm officials declined to comment on the rationale for the name change. American Realty Capital also announced it received $240 million of additional commitments to its financing facility: $100 million of commitments from each of Barclays Bank PLC and RBS Citizens, N.A. and $40 million of commitments from SunTrust Bank. This amount increases the company's aggregate borrowings available under its credit facility to $630 million.
NYRR is going public at this time to give its investors options, Michael Happel, CIO, tells GlobeSt.com. “One of the risks our investors took was that they were buying illiquid shares. Listing the company on the NYSE allows them to own shares in a company traded on the exchange that they can sell, or continue to own. It lets our shareholders participate in future growth, or to cash out.
Market conditions also prompted the move, as well as ARC's ambitions for the REIT, he adds. “It's a good time to list in the public markets. And if market conditions change, we're not obligated to list in the second quarter. For us, this is just the beginning of chapter two, we see great opportunity to grow the company into a major, publicly traded company. This gives us access though to public capital to drive future growth.”
But going public wasn't ARC's only option for growth, and still isn't, Happel notes. “We considered other opportunities, such as selling the company to a private market buyer. Frankly, our view is, we're always for sale if someone wants to pay the right price. But we see great opportunity to grow the company further because we're bullish on NYC. So this is the best way for us to maximize value.”
Meanwhile, for investors not interested in exchange-traded funds, there will be NYC REIT, according to Happel. “That REIT will be another vehicle where individual investors can invest. Some investors want to be in a traded REIT for the liquidity but a lot don't want that because they don't like the volatility of the stock market.”
That will be the primary difference in the REITs, but there will be another, he notes. “The public one has grown up into a billion dollar REIt so it will be ale to do bigger deals while the other one likely will focus on smaller deals.”
The second REIT is still up for review by the Securities and Exchange Commission but American Realty Capital expects to get approval soon.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
