RCS Capital Corp. (RCAP), a network of brokers that sell real estate investment trusts to individual investors, plunged after Apollo Global Management scaled back plans to invest in the company and another entity associated with Nicholas Schorsch.
RCS shares fell 46 percent to 50 cents at the close, their biggest decline since they began trading in June 2013 at $20.
Apollo and investment-management firm AR Capital mutually agreed on Monday to cancel a transaction in which a new company called AR Global Investments would have absorbed about $19 billion overseen by Schorsch, with Apollo holding a 60 percent stake in AR Global. As part of the termination of the deal, AR Capital is purchasing from Apollo $25 million of RCS Capital preferred stock for $25.6 million, according to a statement.
RCS will go ahead with the sale of its wholesale distribution business, including Realty Capital Securities and Strategic Capital, to Apollo for $6 million in cash, the companies said in a separate statement Monday.
“If Nick is a problem, Apollo owning 60 percent would have mitigated that problem in a big way,” said Kevin Gannon, chairman and chief executive officer of Robert A. Stanger & Co., a Shrewsbury, New Jersey-based investment bank that focuses on nontraded REITs. “Now, it’s back to ground zero. We’ll just have to see what his next move is.”