This Day On The Street
Continue to site right-arrow
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

NEW YORK ( TheStreet) -- Just over two years ago, American Realty Capital Properties (ARCP - Get Report) 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.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
ARCP $9.85 -0.51%
AAPL $123.46 -0.63%
FB $83.02 0.01%
GOOG $548.47 -1.20%
TSLA $183.80 -3.50%


DOW 17,687.24 +9.01 0.05%
S&P 500 2,059.10 +2.95 0.14%
NASDAQ 4,875.52 +12.1580 0.25%

Partners Compare Online Brokers

Free Reports

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