Newbie Question -- REIT Going Public (ARCT)

jbnails
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Newbie Question -- REIT Going Public (ARCT)

Post by jbnails » Wed Feb 22, 2012 11:41 am

I have IRA funds with American Realty Capital Trust REIT and have been very happy with the dividend checks I get each month. I understand they are now looking to be listed on NASDAQ in a few weeks.

How do I sell my shares?
Does ARCT buy me out at a set price?
Do I wait for the public to set the price and sell on the open market?

I do not understand the sequence of events, mechanism and / or trigger to sell my shares and am hoping someone here can shed some light or direct me to a location to answer the above questions.

Any help would be appreciated. Thanks in advance.

Joe

ipfreely
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Re: Newbie Question -- REIT Going Public (ARCT)

Post by ipfreely » Wed Feb 22, 2012 1:52 pm

I understand that it will be a Dutch auction. There is an institutional conference call today on the matter and when that is over, hopefully I will be able to shed a little bit more light on the topic. I heard to that investors wishing to tender will get around 10.50 per share, but its done pro ratta. I also heard that it will IPO at 11.50...Like I said, when I know more I will do a quick write up on it....Hope that blather helped. ;)

ipfreely
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Re: Newbie Question -- REIT Going Public (ARCT)

Post by ipfreely » Wed Feb 22, 2012 3:37 pm

Ok, just got off the call...There will be an investor conference call on Monday and Tuesday to go over the portfolio, Im sure, and the tender process. Institutionally, there will be two this week, tomorrow and Friday. Sounds like you can tender at 10.50 or wait for the IPO. You have 20 days after they list to make up your mind. They list early next week.

Dividends will continue as usual and tax deferment will remain the same.

There will be an inclusion trade (the shares get added to major indexes ~20-30% of the stock) in May for June, which theoretically will spike the price up. They will then do a secondary after that. So, there will be a secondary in 6 months.

DRIP programs will continue as usual as well.

Listen to the conference call and do your own DD!

Good luck! :mrgreen:

jbnails
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Re: Newbie Question -- REIT Going Public (ARCT)

Post by jbnails » Wed Feb 22, 2012 5:41 pm

Thanks. If I understand your post correctly, they will offer me 10.50 / sh or take a gamble and let the public set the price and trade on NASDAQ, correct?

ipfreely
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Re: Newbie Question -- REIT Going Public (ARCT)

Post by ipfreely » Thu Feb 23, 2012 7:03 am

Yes, thats pretty much it. You can offer a bid at 10.50, which it sounds like it will be accepted, or you can hit the NASDAQ. I guess it all comes down to what you want to get from the investment and how many shares you have. If it's a large position you could tender a percentage and take the gamble with the rest or just tender them all. About 70% of the shareholders will have a cap gain on the sale if they tender, so its possible you dont see as much volatility as you might expect. Not to mention, there are no other shares being offered besides the ones that already exist in customer accounts. Again, keeping the potential for major volatility lower than normal IMO. Check out the conference calls next week, where they will go over this stuff in much more detail.

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REIT Wrecks
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Re: Newbie Question -- REIT Going Public (ARCT)

Post by REIT Wrecks » Thu Feb 23, 2012 11:01 am

I should also point out, in the interest of fairness, that ARCT is doing exactly what it said it would do (listing on a national exchange and providing shareholders with liquidity), and in addition to waiving the internalization fee, there is a price support feature in the offering that helps put their money where their mouth is. All of this is good for investors and advisors, and it is consistent with ARCT's statements regarding strengthening their alignment of interests with shareholders. Alignment of interests has been a big focus of this blog, and not just with ARCT. This topic has provoked some very sharp-elbowed posts from your truly, so I need to (1) acknowledge that this is a great development for ARCT shareholders, and (2) congratulate ARCT management and Nick Schorsch.

In terms of the offering, note that there is a subordinated listing fee that provides management with significant financial incentives to maintain a share price of at least $9.78 six months out from the listing date. This should be relevant in terms of buy/sell decisions, volatility after the offering, etc. The self tender is a little odd, and obviously designed to provide even more price support, but if investors get a statement in April with no red ink and full liquidity, who cares. On the contrary, putting the high front-end loads and hokey definitions of FFO aside for the moment, if they can execute the offering and maintain the price at $10, it's a big success and will help set the standard for future NTR IPOs.

jbnails
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Re: Newbie Question -- REIT Going Public (ARCT)

Post by jbnails » Thu Feb 23, 2012 1:11 pm

WOW, thanks for the post. I've been lurcky here for many hours over the past day and was getting nervous with all the bashing of non-traded REITs. I've only been in this one since last May (10 months) and no matter what the market has been doing, the checks keep rolling in. Then when I realize things are changing, I searched all over for the "what happens next". This is the only site where knowledge were given.

I have a handful of what I call "real assest" investments in my IRA and a few of these are non-traded REIT (NorthStar is another). I like the idea of having some of my money not fluctuating with the daily market. While I understand there is always risk in almost any investment, my experience (or should I say my in-experience) is that each REIT is sending me money (in the annual 5 - 7 % range) every month, so I do not see much of a down side.

I guess any poor run / managed company will be a dog and with all the ACRT bashing, I was getting nervous and am just looking to get out at 0.50/sh + the last 10 months of checks.

Are most of the people here in the financial business?
As you can tell, while I enjoy personal finance, I am a newbie at REITs but not being burned with 4 of them in the past 10 months, I like them.

DHollands51
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Re: Newbie Question -- REIT Going Public (ARCT)

Post by DHollands51 » Fri Feb 24, 2012 8:14 am

To jbnails:

I wonder why you're posing these questions here and not to your financial broker/advisor that sold you this product? He got detailed info last week and has been invited to numerous conference calls to discuss the details. If he hasn't met/spoken with you already, he's not doing his job!

If you're happy with your monthly checks, you can do nothing and they will roll in unchanged. If you've been reinvesting, that will stop for the time being as there is not a reinvestment program in place for the publicly traded shares at this time. The tender offer runs for 20 business days after the IPO date, so there isn't a rush to file that ( there is no advantage to being early). If you want to sell your shares you'll need to ensure that they're in a brokerage account, and not just held at DST.

To REIT Wrecks:
I appreciated reading many of your posts when I was doing my due diligence on ARC. I concluded that there was a good chance they could do what they promised to, and unless the IPO is a disaster it appears they have. I agree with you that they are changing the playing field for the better!

jbnails
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Re: Newbie Question -- REIT Going Public (ARCT)

Post by jbnails » Sat Feb 25, 2012 9:43 pm

My adviser and I will be meeting this week. I wanted to get a third party look on this situation as I always try to educate myself before any meeting. I believe I now have a general understanding on how things will work. This is my first time seeing a REIT come to conclusion and these posts (and this site) is a tremendous help. While I have confidence in my adviser, there are two (2) things I take very serious in life .... my food and my money, so being prepared is critical for me.

Thank you all for the posts. I look forward to reading more here.

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Re: Newbie Question -- REIT Going Public (ARCT)

Post by REIT Wrecks » Fri Mar 02, 2012 12:32 am

jbnails and DHollands51: you were both very, very lucky, but congratulations just the same!

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