(Bloomberg) -- American Realty Capital Properties Chief Executive Officer Nicholas Schorsch will step down as CEO in October and be replaced by President David Kay as part of governance changes at the largest single-tenant landlord.
The change was planned and Schorsch will remain on the board, he said in a letter to shareholders. Also, board members William Kahane and Edward Weil are resigning, leaving the company with five independent directors. Kay will dedicate a substantial portion of his time as CEO to investor communications, Schorsch said in the letter, filed today with the U.S. Securities and Exchange Commission.
American Realty Capital Properties has become the biggest U.S. owner of single-tenant properties in less than three years, overtaking Realty Income Corp. American Realty Capital focuses on buildings with only one tenant, such as pharmacies and restaurants. The companys shares are trading at less than their 2011 initial public offering price of $12.50.
We believe Mr. Kay will be more proactive in talking to investors and improve the companys financial transparency as he builds out his executive team, Simon Yarmak, an analyst at Stifel Nicolaus & Co., wrote in a report today. He has a hold rating on American Realty Capital.
The companys shares rose 2.4% to $12.47 at 12:34 p.m. in New York. American Realty Capital raised about $70 million in the IPO, and its market value as of yesterday was almost $11 billion.
The New York-based company said on its first-quarter earnings call that it planned to accelerate the CEO succession from its original plan, which was set to begin in early 2015, Yarmak said.
ACQUISITION SPREE
Activist investor Marcato Capital Management LP earlier this month asked American Realty Capital to curb its merger and acquisition spree, and complained that a recent stock sale hurt existing shareholders.
Management has pledged no more M&A activity this year, Yarmak said in his note today. Additionally, management has pledged no more equity will be raised this year.
As chairman and CEO of American Realty Capital Properties, Schorsch, 53, has completed at least 20 company, portfolio and building acquisitions since the shares began trading in September 2011, according to data compiled by Bloomberg.
Rather than focus on corporate mergers, we will concentrate on the deliberate execution of our organic acquisition strategy, Schorsch said in todays letter. This approach includes individual transactions, small portfolios and build-to-suits.
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