Comments on: Trades – Doubled Down on American Realty Capital Partners (ARCP)

By: writing2reality

writing2reality — Sat, 08 Nov 2014 19:41:41 +0000

Personally, I’m not too concerned about tax implications since I am invested through my IRA. However, I believe that the market overreacted a bit these past couple of weeks. When it dipped below $8, I would have considered buying more if I wasn’t over-allocated already. Even if they cut the dividend, it would have to be a slight cut given their payout requirements by the government. At $8 per share, you’d like still see close to double digit yields on the cut dividend. Since my cost basis is much higher, it would have more of an impact.

At the end of the day, it is a value proposition. Does the underlying real estate and the quality of the tenants demand a certain level of value? Does an overstatement of $0.03-04 per share have a 30% or more impact on that value? Probably not, but that is for each one of us to determine for ourselves.

Hope that answers your question.

By: Difu Wu

Difu Wu — Sat, 08 Nov 2014 19:34:51 +0000

What do you think of ARCP now, that it is trading around $8? Is it a better bargain, or don’t throw good money after bad?

I’m not so sure about the company’s prospects, and the high dividend is taxed as ordinary income, so much of it is lost to taxes. Not good.

By: writing2reality

writing2reality — Wed, 19 Feb 2014 03:44:05 +0000

Tons of moving parts indeed, but with the COLE merger being immediately accretive to dividends (special dividend and increase in January), I look forward to seeing where this REIT goes the next couple of years. Should be a nice long-term hold if management can stay the course and transition from an aggressive acquisition mentality.

Thanks for stopping by DM!

By: Dividend Mantra

Dividend Mantra — Wed, 19 Feb 2014 02:29:28 +0000

W2R,

I’ve likewise been incredibly pleased. Still a lot of moving parts here, and much to digest with the COLE merger, but, overall, I really like this REIT. Even with minimal growth you’re getting a pretty heavy return on the yield alone. Factoring in the robust growth and you’ve got a great REIT holding here if they can execute properly. Internal management should help with that and keep shareholder interests properly aligned.

Great move on the addition!

Best wishes.

By: writing2reality

writing2reality — Tue, 18 Feb 2014 18:42:42 +0000

Likewise, I am only going to DRIP from this point forward. I think they will slow the acquisitions at this point and focus on realizing some of the savings from consolidating the various trusts. This should provide for some additional FFO growth and will certainly tests management’s ability to transition from an acquisition mindset to one of asset management.

Thanks for stopping by JC!

By: writing2reality

writing2reality — Tue, 18 Feb 2014 18:41:11 +0000

I agree, I think there was some shady dealings in the double dip of buying out the individual private trusts shortly after they acquired the assets. I actually believe being internally managed is a big plus and should stabilize them over the next couple of years. Where they will really have to prove their meddle is in transitioning from acquisitions to asset management.

Yes, I believe they have previously alluded to a further increase to $1.06 per share sometime this summer. For a high-yielding REIT, that is quite the growth curve for a 12-month period. Once they are able to realize some of the financial benefits from consolidating the management of Cole and the other acquisitions, that should translate into further FFO growth.

At this point I too am done adding to this position with the exception of DRIPing the dividends. Thanks for stopping by and providing your own perspective PMU!

By: JC @ Passive-Income-Pursuit

JC @ Passive-Income-Pursuit — Tue, 18 Feb 2014 18:19:24 +0000

Right now I’m comfortable just reinvesting dividends into ARCP instead of making an additional purchase. Lots to like with the expected growth of the dividend but I hope that management slows down the acquisitions to get things settled down a bit. They made so many additions last year that it’s going to take some careful planning/work to make sure everything is done right.

By: pullingmyselfup

pullingmyselfup — Tue, 18 Feb 2014 17:39:49 +0000

I bought ARCP early last year and I am not fully pleased with management. I felt they were going for quantity of growth vs quality and I had hoped I had found an early stage Realty Income Corp (O).
In the end they were interested in racking up commissions in buying real estate for the private REITs, then double dipping and getting another commission for when ARCP bought out the private REITs. Now that they have gone internally managed? Honestly I expect Nicholas to retire in a couple years.

I believe they had mentioned planning for a $1.08 dividend rate by end of 2014 so we do have room.
I keep see-sawing between addmig more to ARCP or switching to O for my commerical retail REIT position.