Schorsch Steps Down at NYRT; Happel Steps Up
- Dec 31, 2014
Everyone saw it coming. Roughly two weeks after real estate industry bigwig Nicholas Schorsch–co-founder of $20 billion investment advisory firm AR Capital–resigned from his position as executive chairman of American Realty Capital Properties Inc. following revelation that the AR Capital-sponsored REIT had deliberately concealed accounting errors in financial statements,
Schorsch has relinquished his position as chairman of the board and CEO of AR Capital-sponsored New York REIT Inc.
NYRT president Michael Happel has been appointed to take Schorsch’s place as CEO, and William Kahane, fellow AR Capital co-founder, has been elected executive chairman of the board.
And there’s more. Schorsch has also just walked away from his position as director and executive chairman of the board of the retail investment-focused, AR Capital-sponsored RCS Capital Corp., where Mark Auerbach, lead independent director of the company, has been elected to step into his shoes.
And there’s even more. In addition to vacating the aforementioned posts, Schorsch will step down from his board positions at 11 other AR Capital sponsored non-traded REITs and direct investment programs. According to AR Capital, it all dovetails with the company’s best practices initiatives, which are being embraced as a means of enhancing its management structures and decreasing overlap among the boards of its sponsored programs. As noted in the press release, “These actions should greatly minimize distractions and immediately eliminate any perceived or potential conflicts created as a result of Mr. Schorsch’s involvement on the boards of AR Capital-sponsored programs or on the board of RCS Capital.”
Schorsch’s official stance is that timing plays a key role in the newly announced changes.
“Because of the solid, highly skilled management teams which we have built, this is the right time to make these changes,” he noted in a prepared statement. “Over the past five years, we have assembled some of the top talent in the industry who have been instrumental in the continuing success of these programs, and I am completely confident in our management teams and our independent directors. These changes are part of the natural evolution of our businesses given our size and continuing growth.”
It’s been a wild ride for AR Capital over the last couple of months. After ARCP’s accounting issues came to the fore in late October, news emerged that the Securities and Exchange Commission would investigate the REIT’s accounting practices. And earlier this month, Lisa McAlister, former chief accounting officer of ARCP, initiated a defamation lawsuit against the REIT, alleging that Schorsch–who, by the time of the lawsuit, had stepped down as CEO as part of a planned move–directed her to conceal the accounting errors and that she was fired from for blowing the whistle.