With this news, it now seems that the increase in restricted shares available to management that was detailed in the [url=http://rationalrealist.blogspot.com/2011/04/if-you-cant-beat-them-join-them-part-ii.html]Rational Realist[/url] earlier this week was quite pre-meditated, and the [url=http://www.reitwrecks.com/forum/viewtopic.php?f=24&t=141]ridiculously low performance threshold was very purposeful[/url].American Realty Capital Trust Inc. is ready to explore liquidity options in light of a pending July 25 close of its initial public offering. Since the IPO launch Jan. 25, 2008, the company has grossed $885.2 million. The REIT's adviser, American Realty Capital Advisors LLC, plans to start interviewing investment banking firms and other advisory firms to develop a strategic action list for its board, aimed at maximizing shareholder value. Source: [url=http://www.businesswire.com/news/home/20110408005749/en/American-Realty-Capital-Trust-Explores-Liquidity-Options]Business Wire[/url]
Most important, the windfall they apparently engineered could result in up to $40 million being skimmed from the sale proceeds by the time the public offering closes in July. Nobody should oppose lucrative management compensation packages in return for maximizing shareholder value, but this is $40 million that would have otherwise been paid to the REIT's true owners, and the performance bar for earning this jackpot is comical.
This is quite an about-face from 2010, when American Realty Capital waived its internalization fee citing a performance-oriented culture ("[url=http://www.businesswire.com/news/home/20100603006976/en/American-Realty-Capital-Advisors-Waives-REIT-Internalization]Aligning interests between management and shareholders means tying advisor pay to performance[/url]"). The fee waiver served its purpose well. In 2009, before the fee was waived, ARC REIT had raised just $132 million in gross proceeds, including proceeds from the DRIP. In 2010, after the fee was waived, ARC raised over $450 million in gross proceeds. Unfortunately, it turns out that waiving the internalization fee was just a cynical sales tactic, and this recent increase in the restricted stock grants is the mother of all clawbacks.
[url=http://www.reitwrecks.com/forum/viewtopic.php?f=24&t=141]I Run A Non-Traded REIT, And I Am a Rockstar[/url]
[url=http://reitwrecks.com/2009/05/non-traded-reits-are-designed-to-be.html]Non-Traded REITs Are Designed to be Sold, Not Bought[/url]