Corvex Boosts ARCP, Stock Jumps

There’s the accounting debacle, investigations and many a resignation, but the latest news from American Realty Capital Properties Inc., while gossip-worthy, is without scandal or negativity even.
Keith Meister, Corvex

Keith Meister, Corvex Management L.P.

There’s the accounting debacle, investigations and many a resignation, but the latest news from American Realty Capital Properties Inc., while gossip-worthy, is without scandal or negativity even. Corvex Management L.P., a hedge fund led by managing partner Keith Meister, recently reported in an SEC filing that it had acquired 7.1 percent of outstanding ARCP shares.

At 2 p.m. ET on Dec. 29, Corvex officially became beneficial owner of approximately 64,703,029 shares of ARCP. The stock includes roughly 7,925,000 owned shares and 56,778,029 original call options, purchased with working capital from the Corvex Funds for approximately $71 million and $158 million, respectively.

It’s a happy note for ARCP. In a statement released the same day of Corvex’s SEC filing, the REIT responded: “The ARCP Board of Directors is pleased that Corvex shares its belief that ARCP is an attractive investment. ARCP has had constructive conversations with Corvex and appreciates its support of the actions the Board has taken to date.”

The news had a positive impact on ARCP stock, which had plummeted mercilessly upon the Oct. 29 reveal regarding the REIT’s accounting errors–which were not exactly errors. But news of Corvex’s investment in the REIT provided a boost, bringing stock prices back from the $7-$8 range, up past the $9 mark.

It’s been a rough road for ARCP since late October. The accounting scandal has spawned not only a bevy of resignations–including those of Nick Schorsch, executive chairman, and company CEO David Kay–it has yielded a defamation lawsuit from its ousted former chief accounting officer, Lisa McAlister, as well as Moody’s Investors Service’s downgrading of its credit ratings to junk status.