SUSIE GHARIB: Those worries were not on the minds of investors today
buying into American Realty Capital Trust (NASDAQ:ARCT). This is the biggest
REIT to go public in years, with a portfolio of 500 retail properties
across the country. And the stock surged almost 75 percent on the NASDAQ
today, closing at $10.49, up more than $4.50 from its opening price.
Joining us now, Nicholas Schorsch, he’s chairman of American Realty. Well,
congratulations on that terrific performance today.
NICHOLAS SCHORSCH, CHMN., AMERICAN REALTY CAPITAL TRUST: Thank you
very much. We’re really proud of what our company accomplished on the
GHARIB: Well, even though you did really great today, investors are
leery of investing in real estate, investing in REITS. Why should they
consider your stock?
SCHORSCH: Well, I think our stock specifically is focused as a triple
net lease REIT. It’s focused in the essential goods, the retail corners —
Walgreen (NYSE:WAG), Federal Express (NYSE:EXPR), CVS (NYSE:CVS), those
type of retail stores that the income comes to us without any exposure to
operating expenses. And because we’re primarily focused on investment
grade credits, we really drive safety, security and durability in the
income stream with a long haul because our average lease is about 13.5
GHARIB: But so your properties are retailers, like you said,
Walgreen’s, FedEx (NYSE:FDX). A lot of that depends on job growth. It
depends on attitudes towards consumer spending. If any of those sectors
weaken, what are the risks to your business?
SCHORSCH: Well, that’s really the point of the longer duration
leases. Because our leases are so long and our tenants are so strong,
primarily again investment grade credits, we see that as the economy
recovers and we expect it to be a gradual and continuous recovery, probably
over the next four to five years, our portfolio will get better. Buying it
in a post Lehman environment, all of our assets were bought in the last
four years. So we bought them after the market corrected and it really
gives us a chance to build something new and different in this industry,
which is a REIT with newly acquired assets. Our average property is only
about five years old, so real upside.
GHARIB: So how big do you expect the company to be in let’s say two
SCHORSCH: Well, right now we are about $2.5 billion of total
enterprise value. We anticipate reasonably that we should be able to grow
that sufficiently to get to about $3.9 to $3.5 billion over the next five
GHARIB: And what will we be saying about American Realty stock let’s
say two years from now? Closed at over $10 today.
SCHORSCH: Well, we believe that we should trade actually to a
superior trading price than many of the other companies that have been in
this sector for many years, primarily because the quality of the tenancy,
the newer locations, the moderate amenities on the properties and more
importantly, the investment grade focus with very little lease rollover in
our portfolio is going to drive our stock price significantly as we lower
our cost of capital as a public company.
GHARIB: We have just 30 seconds left. What kind of dividends can
investors expect from your company?
SCHORSCH: Currently our dividend is $0.70 a share and we expect to be
able to grow that over time as we increase earnings and acquire more
properties in this environment. It is a great time to be buying
GHARIB: All right. Well, good luck to you and thank you so much for
coming on our program.
SCHORSCH: Thank you very much.
GHARIB: And we’ve been speaking with Nicholas Schorsch. He’s
chairman of American Realty Capital Trust (NYSE:CT).