NEW YORK (TheStreet) -- American Realty Capital Properties (ARCP) fell Monday after Friday's announcement of a sale-leaseback deal with private equity firm Golden Gate Capital for the Red Lobster (DRI) restaurant chain.
Darden Restaurants announced it would sell Red Lobster to the San Francisco-based Golden Gate for $2.1 billion. Golden Gate then announced a sale-leaseback deal with ARCP to decrease its exposure to Red Lobster's real estate. The $1.5 billion deal is for more than 500 Red Lobster restaurants. Golden Gate will sell the land and buildings to ARCP and then lease them back.
Robert W. Baird downgraded the stock to "neutral" and reduced its price target to $15 from $17 in the wake of the deal. The firm cited higher credit risk following the transaction.
The stock was down 1.15% to $12.95 at 12:18 p.m.
Separately, TheStreet Ratings team rates AMERICAN RLTY CAP PPTY INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN RLTY CAP PPTY INC (ARCP) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."