In a new filing with the U.S. Securities and Exchange Commission, Corvex Capital, managed by Keith Meister, has disclosed boosting its activist stake in American Realty Capital Properties Inc (NASDAQ:ARCP), and, at the same time, the fund has revealed an open letter sent to the board of directors and future chairman and chief executive officer of the company. The filing showed that Corvex holds 70.64 million shares of the company, up from 64.70 million shares the fund held previously, an increase of 5.96 million shares. The new stake represents 7.8% of the company’s outstanding common stock.
New York-based Corvex Management is a value-oriented investment firm with more than $6.5 billion in assets under management. Launched in March 2011 by Keith Meister, Corvex focuses on equity investments, special situations and distressed securities largely in North America. George Soros’s Soros Fund Management provided a seed capital of $250 million for Corvex. Prior to founding Corvex, Keith Meister was the right hand man of billionaire activist investor Carl Icahn. Mr. Meister is an activist investor just like Icahn.
In the letter, Mr. Meister addressed the board of directors of American Realty Capital Properties Inc (NASDAQ:ARCP) and the company’s future leadership. In it, Mr. Meister outlined some principles which he and his fund believes are necessary to help the company reach its full potential and become an industry-leading net lease REIT.
According to Mr. Meister, shareholder representation on the company’s board is very important. He expressed disappointment though not surprise that the company’s board rejected Corvex’s request for shareholder representation on the board.
“However, we are unfortunately not surprised as this is the same board whose history of poor decision making failed to prevent all of the severely damaging actions of the previous management team.
“ARCP’s shareholders have suffered through the destruction of billions of dollars in shareholder value resulting from grossly conflicted self-dealing, an alleged accounting fraud and general mismanagement. We are wholly committed to helping ARCP [American Realty Capital Properties Inc’s (NASDAQ:ARCP)] do everything in its power to have a fresh start, rebuild credibility and move ahead in a manner that creates lasting value for all shareholders,” Mr. Meister states.
Mr. Meister urges that new leadership must be of the highest caliber and integrity. He also states that American Realty Capital Properties Inc (NASDAQ:ARCP) should select management and board members in a manner that has the utmost credibility to ensure that they are fully aligned with the interests of all shareholders. Mr. Meister believes that the future CEO or chairman should be committed to purging any remaining ties with past affiliated entities and leadership, and there should be a board of truly independent directors. He also called for the elimination of all current board members.
According to the letter, the company’s future leadership needs to assemble a senior management team of the highest caliber, regain access to the capital markets, and implement a capital structure consistent with best-in-class triple net lease REITs. In addition, the new management will have to work to re-build investment grade ratings with the key ratings agencies. They should also stabilize and determine a long term strategy for Cole Capital, and build a sustainable dividend policy. Mr. Meister closes the letter by saying that he and his fund are looking forward to working together with the company’s management to help American Realty Capital Properties Inc. (NASDAQ:ARCP) reach its full potential.
New York-based American Realty Capital Properties Inc. (NASDAQ:ARCP) is an $8.4 billion self-managed commercial real estate investment trust (REIT) focused on investing in single tenant freestanding commercial properties subject to net leases with high credit quality tenants. Shares of the company on Tuesday are trading at $9.25. During the past year, the stock has lost 32.78% of its value.
Among the largest shareholders of American Realty Capital Properties Inc. (NASDAQ:ARCP) is Richard Mcguire’s Marcato Capital Management, which reported ownership of 22.11 million shares of the company as of the end of September 2014. HG Vora Capital Management, led by Parag Vora, disclosed holding 12.35 million shares of the company as of September 30, 2014.
Disclosure: none
