This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

[video] REITs on the Street: Dividend Dynamo Alert

Stocks in this article: ARCPHDC

NEW YORK ( TheStreet) -- Just over two years ago, American Realty Capital Properties (ARCP) listed shares on Nasdaq. With only two tenants -- Home Depot (HD) and Citizens Bank (C) -- the triple-net REIT capitalized the company with 5,580,000 shares that resulted in around $70 million in equity ($12.50 per share at IPO).

Today ARCP shares were trading down by 4.1%, to close at $12.22, with a market cap of around $2.64 billion. The recent price decline likely stemmed from the company's announced agreement to issue Series D Cumulative Convertible Preferred Common Stock, par value 1 cent per share, at a 5.81% coupon and common stock, par value 1 cent per share, to institutional holders of Series C Convertible Preferred Stock. Although the market didn't favor the share issuance news, dividend investors should; ARCP's dividend yield is now an eye-popping 7.45%.

In addition, and more impressive, the New York-based REIT has grown its portfolio from just two tenants (in late 2011) to 52. Better yet, ARCP has announced plans to acquire CapLease (LSE) and American Realty Capital Trust IV (a non-traded REIT) and when these deals close (this quarter) the company will own more than 2,574 stand-alone properties with 457 different tenants.

It's clear to see that ARCP has evolved into a "super sized" REIT that is gobbling up more net-leased properties than most of its smaller peers. By year-end, ARCP should be a dominating force, with a market cap of more than $10 billion.

In the latest quarter, ARCP reported record operating results that included 19 cents per share in adjusted funds from operations ($32.8 million), or 23 cents per share in normalized AFFO. ARCP's second-quarter revenue was $45 million and net operating income was $37.9 million. On May 28, ARCP increased its annual dividend rate from 91 cents per share to 94 cents per share, contingent upon and effective with the earlier of the close of the ARCT IV merger and the CapLease merger.

ARCP currently pays one of the highest dividend yields, 7.45%. With the pending increase (to 94 cents per share), two weeks from now, ARCP will be building a powerful source of dividend repeatability.

Recently, I caught up with ARCP's co-founder and CEO, Nicholas Schorsch, to discuss his company's incredible growth and potential for increased competitive differentiation within the triple net REIT sector. In my exclusive interview, Schorsch provided some key strategies that have propelled American Realty Capital Properties into a formidable "sleep well at night" REIT.



At the time of publication, Thomas was long ARCP, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,674.57 +213.25 1.30%
S&P 500 1,945.34 +18.23 0.95%
NASDAQ 4,425.7290 +42.8820 0.98%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs