American Realty Capital Properties, Inc. (NASDAQ: ARCP) is an externally managed real estate company that owns and acquires single tenant free standing commercial real estate properties that are primarily net leased on a medium-term basis generally to investment grade tenants. The Company commenced operations in September 2011 in conjunction with the closing of its IPO. Prior to that date, ARCP did not hold any real estate properties or have any sources of income or any expenses; the only activity of the Company was limited to organizational activities.
As of September 30, 2012, the Company owned 124 freestanding, single tenant, 100% occupied net leased properties comprised of 2.2 million square feet (excluding one vacant property classified as held-for-sale). These properties are located in 24 states and include 14 tenants, operating in 10 distinct industries. American Realty Capital has a current dividend yield of 6.93% with monthly distributions.
Funds from operations (“FFO”) for the three months ended September 30, 2012, totaled $1.9 million, or $0.17 per share basic and $0.15 per share fully diluted. FFO for this period includes one-time net acquisition and transaction related expenses of $0.7 million. Excluding such one-time costs, core FFO is $2.6 million, or $0.24 per share basic and $0.20 per share fully diluted.
Adjusted funds from operations (“AFFO”) for the three months ended September 30, 2012, totaled $3.1 million, or $0.28 per share basic and$0.24 per share fully diluted. This represents a 15.0% increase in AFFO per share compared to the second quarter ended June 30, 2012.
For the nine months ended September 30, 2012, FFO totaled $2.7 million, or $0.31 per share basic and $0.28 per share fully diluted. FFO for this period includes one-time net acquisition and transaction related expenses of $3.0 million. Excluding such one-time costs, core FFO is$5.7 million, or $0.67 per share basic and $0.60 per share fully diluted.
AFFO for the nine months ended September 30, 2012 totaled $6.5 million, or $0.76 per share basic and $0.69 per share fully diluted.
“Our investment strategy is performing exactly as planned and we are witnessing an increasingly rich pipeline. We are systematically assembling a well-diversified portfolio of free standing, single tenant properties net leased to predominantly investment grade tenants at prices accretive to our dividend,” stated Nicholas S. Schorsch, Chairman and Chief Executive Officer of ARCP. “During 2012, we acquired approximately $100 million of investment properties at a weighted average capitalization rate of 9.5%. We recently announced $36 million of additional acquisitions expected to close during the balance of 2012 at equally attractive pricing. Our core earnings will be favorably affected by these acquisitions.”
On October 1, 2012, ARCP announced its fourth consecutive dividend increase. The Company’s board of directors authorized and the Company declared, on September 30, 2012, an increase in its annual dividend rate to $0.895 per share, beginning November 9, 2012. On November 15, 2012, the Company will pay the new annual dividend rate to stockholders of record on November 8, 2012.
This is following three prior dividend increases in March, June and September 2012. On February 27, 2012, the Company’s board of directors authorized and the Company declared an increase in its annual dividend rate from $0.875 to $0.880 per share. Accordingly, on March 15, 2012, the Company paid a dividend of $0.0733 per share to stockholders of record at the close of business on March 8, 2012.
Total dividends paid to common stockholders by the Company were $2.4 million for the three months ended September 30, 2012. For the nine months ended September 30, 2012, dividends totaled $5.6 million.
First Call analysts have a consensus “Strong Buy” recommendation with a 1.3 stock rating.