American Realty Capital Properties (ARCP), the biggest U.S. owner of single-tenant buildings, sued investment partner RCS Capital Corp., alleging it wrongly terminated an agreement to buy a business.
RCS agreed to buy American Realty’s private-capital management business, Cole Capital, for at least $700 million then reneged on the deal, the real estate investment trust said in a complaint filed yesterday in Delaware Chancery Court in Wilmington.
“Under the circumstances, the independent members of the ARCP board of directors and ARCP had no choice but to file this litigation in order to preserve and protect the interests of ARCP’s shareholders under the purchase agreement,” the New York-based company said today in a statement.
American Realty lost almost a fifth of its market value on Oct. 29 after saying an accounting error was intentionally concealed. The company, owner of more than 4,000 properties such as banks, restaurants and drugstores, is facing an investigation by prosecutors and the Federal Bureau of Investigation, a person familiar with the matter said.
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The dispute sets up a battle between two companies that have the same chairman, Nicholas Schorsch. RCS may have scuttled the deal because the scandal at American Realty might spill over to Cole, tainting efforts to sell shares of Cole’s nontraded REITs, Paul Adornato, an analyst with BMO Capital Markets, said last week.
Jonathan Keehner, an RCS spokesman with Joele Frank, Wilkinson Brimmer Katcher, didn’t immediately reply to phone and e-mail messages seeking comment on the lawsuit.