Thursday, October 30, 2014

Not Helping

There is plenty of information to analyze with American Realty Capital Properties' (ARCP) disclosure yesterday of accounting errors.  This afternoon, InvestmentNews published a reckless, red herring of an article that did not advance the analysis.  The article's headline states "National Planning Holdings puts kibosh on ARC nontraded REIT sales."  National Planning Holdings represents four broker dealers, but it was not until the fifth paragraph that the article disclosed those four broker dealers only have selling agreements with one ARC product, Phillips Edison - ARC Grocery Center REIT II.  With all the news surrounding ARCP's accounting issues, it's pathetic that a temporary suspension of one selling agreement is InvestmentNews' lead story.

National Planning Holdings has also prohibited its reps from soliciting trades for other AR Capital listed companies.  In its haste to publish this afternoon's story, InvestmentNews didn't even have time to look up one of the securities National Planning Holdings is barring, ARCPP, which is ARCP's preferred stock.  Irresponsible.

There were two news items today more relevant to ARCP than the suspension of selling agreements for one non-traded REIT.  It is being reported that the SEC is to open an inquiry into ARCP's accounting, and that ratings agencies S&P and Moody's are re-evaluating ARCP's credit ratings.  In the short-term, a cut in ARCP's credit rating could lead to higher borrowing costs.  Bloomberg attributed ARCP's stock decline today to this fear.  ARCP is currently rated Baa-3, one level above a junk rating, and its preferred stock has a rating of Ba1, the highest junk rating.

Come on InvestmentNews, you are better than this afternoon's fear mongering article.


Anonymous said...

Nick and Cliff are not going to be sending each other Christmas cards this year.

Anonymous said...

No further thoughts on this?

Anonymous said...

Spot on!