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Rufrano: Advisory Group and Cetera Re-Engage with Cole, ARCP-Related Suits Progressing

Vereit (NYSE: VER), the publicly-traded real estate investment trust formerly known as American Realty Capital Properties Inc. and parent company of Cole Capital, released its earnings results for the first quarter of 2017.

Cole currently sponsors and manages five publicly registered, non-traded REITs, three of which have ongoing public offerings: Cole Credit Property Trust V, Cole Office & Industrial REIT, and Cole Real Estate Income Strategy, a daily NAV REIT.

On the company’s Thursday earnings call, Vereit CEO Glenn Rufrano discussed Cole’s earnings, its new selling agreements, and provided a brief update on litigation stemming from the ARCP era.

“The progress we’ve made with the larger broker-dealers has been very helpful for us to establish in the brand value of Cole. We’re getting there. That progress means a lot to us,” said Rufrano. “We will make a decision relative to the value of Cole and how the public market sees it, it may be later on this year, it may be the beginning of next year. But what we care about is establishing and maintaining that value.”

In April, Advisory Group, one of Cole’s historically larger broker-dealer partners, approved Cole Credit Property Trust V and initiated sales efforts. Cetera began selling earlier this year and launched Cole Credit Property Trust V last month.

During the quarter, Cole Capital raised $102.7 million of capital on behalf of its sponsored non-listed REITs, including $36 million through the Cole REITs’ distribution reinvestment plans, compared to $179 million, including $34.4 million of DRIP proceeds, in the first quarter of 2016.

During the quarter, Cole Capital raised $66.7 million of new equity, an average of $22.2 million a month with a 25 percent monthly increase in March compared to February. Additionally, 18 new selling agreements were signed in the first quarter, representing more than 4,500 financial advisers.

In April 2017, Cole Capital raised $36.6 million of capital on behalf of the Cole REITs, including $11.9 million through DRIP.

Cole Capital invested $216.2 million in 21 properties on behalf of the Cole REITs in the first quarter of 2017, compared to $102.1 million in 13 properties in the first quarter of 2016.

The company acquired two properties in April for $14.6 million at an average cash cap rate of 6.7 percent. Acquisitions year-to-date through April 28, 2017, totaled $116.1 million. The average cash cap rate excluding the fee interest purchases was 7 percent.

The company sold five properties in April for $14.7 million at an average cash cap rate of 7.1 percent. Dispositions year-to-date through April 28, 2017, totaled $213.9 million at an average cash cap rate of 7.3 percent.

Regarding the litigation, between October 2014 and January 2015, the company and certain former officers, and current and former directors, were named as defendants in 10 securities class action complaints filed in the United States District Court for the Southern District of New York. The cases were later consolidated by the court. Plaintiffs in the consolidated class action filed a motion for class certification on March 15, 2017, and the defendants will file their responses by today. A conference is scheduled with the court on May 16.

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