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RCS Capital Boosts Sales 4% in December

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RCS Capital (RCAP) says it boosted sales of nontraded investments in December after accounting errors at sister firm American Realty Capital Properties (ARCP) caused many broker-dealer clients and others to suspend sales starting in late October.

On Monday, the company announced that it raised $270 million in the month of December, up 4% from $260 million in November. “It is a bigger month than last,” said Kevin Gannon, president and managing director of Robert A. Stanger, which works in real estate investment banking, in an interview.

However, RCS Capital also said it had $9.7 billion in total equity raised in 2014, giving it average monthly equity of $808 million. Thus, equity raised in December was just 32% of its monthly average last year.

In the fourth quarter of 2014, the company says it raised $1.1 billion through 31 direct investment programs and mutual funds, representing a monthly average of about $367 million in equity.

RCS Capital says 123 of its previously suspended selling agreements had been reinstated and that its sales unit, Realty Capital Securities, ended 2014 with 87% of its active selling agreements in place.

“With 87% of active selling agreements already back in place and additional reinstatements anticipated, we expect overall capital raising to continue increasing steadily and return to a more normalized run rate in the first quarter of this year,” said RCS Capital CEO Michael Weil, in a press release.

“We are also pleased to see that the positive momentum in our wholesale business is matched by solid progress across our retail platform, with expected retail synergies of $57 million to $65 million in place as of January 1st, coupled with strong retail advisor retention rates and a robust recruiting pipeline,” Weil explained.

Other Issues

Nicholas Schorsch, the co-founder of AR Capital LLC, resigned from the boards of RCS Capital, New York REIT and 11 nontraded real estate investment trusts and direct investment programs sponsored by AR Capital in late December. Prior to these resignations, Schorsch had stepped down from the ARCP board.

Also late last month, Pomerantz LLP filed a class-action lawsuit against RCS Capital and some officers on behalf of individuals and entities who bought RCS Capital shares between Feb. 12 and Oct. 31, 2014.

Despite these and other issues, executives at RCAP remain upbeat about its prospects.

“We are pleased to see the continuing confidence and appreciation for our platform from the market as demonstrated by the nearly 1,500 total selling agreements we have in place, and we expect that most of our selling agreements will be reinstated throughout the first quarter,” said Realty Capital Securities CEO Bill Dwyer, in a statement.

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