Keith Meister’s hedge fund firm Corvex Management LP disclosed Monday that it has accumulated a 7.1% stake in beleaguered real-estate investment trust American Realty Capital Properties Inc. The hedge fund firm also disclosed that it had discussions with ARCP’s board to explore additions to the board of their representatives.
Corvex discloses ARCP stake in Schedule 13D
In their Schedule 13D disclosure on Monday, Corvex managing partner Keith Meister disclosed that they believe it would be “beneficial” to add their representatives to ARCP’s board of directors, particularly given the recent high level of personnel turnover at the company and the critical decisions the company is facing in the near term.
They also reported beneficial ownership of 64.7 million shares or 7.1% of ARCP’s outstanding common shares. They indicated that they have had discussion with the company’s board to explore the addition of some independent persons who might be suggested by them.
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In October, American Realty Capital Properties disclosed that its financial statements going back to Dec. 31, 2013 are no longer reliable based on the results of the investigation of its audit committee. Reacting to the disclosure, ARCP’s stock price plummeted by over 31% on the same day. The company said its audit committee found that its AFFO of adjusted funds from operations for the three months ended March 31 were overstated.
Corvex’s earlier successful battle
Following the disclosure of its accounting errors, American Realty Capital Properties witnessed the resignations of at least five top executives, including Mr. Schorsch, who served as chairman, and chief executive David S. Kay.
ARCP’s board of directors said in a statement Monday that it “is pleased that Corvex shares its belief that ARCP is an attractive investment” and confirmed that the real estate investment trust company is in discussions with Corvex. The statement said: “The Board will continue to prioritize transparency and an open dialogue with all stockholders, as well as the best path forward for the Company and its employees, as it seeks to stabilize and strengthen ARCP.”
As reported by ValueWalk, Corvex and Related Fund Management LLC also demanded real governance changes to the board of trustees of another real estate trust company, CommonWealth REIT. Corvex Management and Related Companies jointly controlled around 9.6% of the outstanding shares of CommonWealth REIT.
Subsequently, Corvex and Related Fund Management successfully ousted the board of CommonWealth REIT, now known as Equity Commonwealth, and replaced it with their own nominees, including Sam Zell.