Three top executives resigned from American Realty Capital Properties Inc. (ARCP), the U.S. real estate investment trust that has lost more than a quarter of its value since disclosing accounting errors.
Nicholas Schorsch, whose dealmaking made American Realty Capital Properties one of the biggest REITs in a matter of a few years, stepped down as executive chairman and a director of the New York-based company, according to a statement on Monday. Chief Executive Officer David Kay also resigned, as did Lisa Beeson, president and chief operating officer. William Stanley will act as CEO and chairman until permanent replacements are named. The changes are effective immediately.
American Realty Capital Properties, or ARCP, fell 27 percent through last week after reporting on Oct. 29 that it found accounting errors that were intentionally concealed, leading to the resignations of its chief financial officer and chief accounting officer. Today’s departures leave a void at the company, according to Kevin Gannon, president of Robert A. Stanger & Co., an investment bank that focuses on nontraded REITs. Kay, who became CEO in October, said as recently as Nov. 14 that he wasn’t planning to quit.
“The first concern you have is there’s a leadership inside the company now,” Gannon said in a telephone interview. “You’re missing a chairman, a CEO, a COO and a president. They didn’t give a reason for why they resigned, and that’s an oddity.”
ARCP fell 6.5 percent to $8.41 at 11:48 a.m. New York time Monday. The stock has lost about 35 percent this year.
Schorsch, who controls an empire of real estate companies through his closely held firm AR Capital, was co-founder of ARCP and also its CEO until Kay took over under a planned succession in October. He stepped down as chairman and director of ARCP on Friday, according to a regulatory filing. Kay and Beeson quit Monday.
“The actions taken today will stabilize the company and are necessary to strengthen future leadership and strategy, improve governance, and complete a separation from Nick Schorsch and his affiliates,” Stanley said in the statement from ARCP. “These actions build on ARCP’s significant real estate assets and asset management capabilities, and will further restore investor confidence in ARCP.”
While the investigation into the accounting errors is continuing, “we understand that to date there has not been any conclusion of unlawful conduct” by Schorsch, William Kahane, co-founder of AR Capital, said in a separate statement Monday.