As filed with the Securities and Exchange Commission on May 2, 2011
Registration No. 333-145949
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 2 TO
POST-EFFECTIVE AMENDMENT NO. 12 TO
FORM S-11
FOR REGISTRATION
UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES
AMERICAN REALTY CAPITAL TRUST, INC.
(Exact Name of Registrant as Specified in Its Governing Instruments)
106 York Road
Jenkintown, Pennsylvania 19046
(215) 887-2189
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant’s Principal Executive Offices)
Nicholas S. Schorsch
AMERICAN REALTY CAPITAL TRUST, INC.
106 York Road
Jenkintown, Pennsylvania 19046
(215) 887-2189
(Name and Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)
With a Copy to:
Peter M. Fass, Esq.
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036-8299
(212) 969-3000
Approximate Date of Commencement of Proposed Sale to Public: As soon as practicable after the registration statement becomes effective.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o
If delivery of the prospectus is expected to be made pursuant to Rule 434, check, the following box: o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)
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| Large accelerated filer o | Accelerated filer o | |
| Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company o |
This Post-Effective Amendment No. 12 consists of the following:
| • | Supplement No. 5, dated May 2, 2011. |
| • | Registrant’s final form of Prospectus dated December 13, 2010. |
| • | Part II, included herewith. |
| • | Signatures, included herewith. |
AMERICAN REALTY CAPITAL TRUST, INC.
SUPPLEMENT NO. 4 DATED MAY 2, 2011
TO THE PROSPECTUS DATED DECEMBER 13, 2011
This prospectus supplement (this “Supplement No. 5”) is part of the prospectus of American Realty Capital Trust, Inc. (“we,” “us,” “our,” the “REIT” or the “Company”), dated December 13, 2010 (the “Prospectus”), and should be read in conjunction with the Prospectus. This Supplement No. 5 supplements, modifies or supersedes certain information contained in our Prospectus. This Supplement No. 5 consolidates, supersedes and replaces all prior Supplements and must be read in conjunction with our Prospectus. Unless otherwise indicated, the information contained herein is current as of the filing date of the prospectus supplement in which the Company initially disclosed such information. This Supplement No. 5 will be delivered with the Prospectus.
The purpose of this Supplement No. 5 is to disclose, among other things, the following:
| • | operating information, including the status of the offering, shares currently available for sale, portfolio data including recent real estate investments and potential property investments, selected financial data, status of distributions, share repurchase program information and status of fees paid and deferred to our advisor, dealer manager and their affiliates; |
| • | updates to our criteria for investor suitability; |
| • | information regarding management and management compensation; |
| • | our investment in a joint venture with one of our affiliates; |
| • | recently completed acquisitions of real estate investments; and |
| • | updates regarding our prior performance. |
TABLE OF CONTENTS
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OPERATING INFORMATION
Status of Offering
We commenced our initial public offering of 150,000,000 shares of common stock on January 25, 2008. As of March 31, 2011, we had issued 87.9 million shares of common stock. Total gross proceeds from these issuances were $859.1 million. As of March 31, 2011, the aggregate value of all share issuances and subscriptions outstanding was $870.7 million based on a per share value of $10.00 (or $9.50 per share for shares issued under the DRIP).
On August 5, 2010, we filed a registration statement on Form S-11 with the U.S. Securities Exchange Commission, or the SEC, to register $325,000,000 of common stock for the follow on offering to our primary offering. Our primary offering was originally set to expire on January 25, 2011. However, as permitted by Rule 415 of the Securities Act of 1933, as amended, or the Securities Act, we will now continue our primary public offering until the earlier of July 25, 2011, or the date that the SEC declares the registration statement for the follow on offering effective.
Shares Currently Available for Sale
As of March 31, 2011, there were 63.1 million shares of our common stock available for sale, excluding shares available under the DRIP.
Real Property Investments
Real Estate Portfolio
As of March 31, 2011, we owned interests in 318 real estate properties acquired from third parties unaffiliated with us or our advisor. All properties are net leased commercial properties that are 100% leased to investment grade or other credit worthy tenants. The following is a summary of our real estate properties as of March 31, 2011 (dollars in thousands):
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| Property | Acquisition Date |
No. of Buildings |
Square Feet |
Ownership Percentage |
Remaining Lease Term(1) |
Base Purchase Price(2) |
Capitalization Rate(3) |
Annualized Rental Income(4) | ||||||||||||||||||||||||
| FedEx | Mar. 2008 | 1 | 55,440 | 51 | % | 7.7 | $ | 9,694 | 7.53 | % | $ | 730 | ||||||||||||||||||||
| First Niagara | Mar. 2008 | 15 | 177,774 | 100 | % | 11.8 | 40,976 | 7.48 | % | 3,064 | ||||||||||||||||||||||
| Rockland Trust | May 2008 | 18 | 121,057 | 100 | % | 10.3 | 32,188 | 7.86 | % | 2,530 | ||||||||||||||||||||||
| PNC Bank(5) | Sep. & Oct. 2008 |
2 | 8,403 | 59 | % | 17.9 | 6,664 | 8.21 | % | 547 | ||||||||||||||||||||||
| Rite Aid | Sep. 2008 | 6 | 74,919 | 100 | % | 12.3 | 18,576 | 7.79 | % | 1,447 | ||||||||||||||||||||||
| PNC | Nov. 2008 | 48 | 264,196 | 100 | % | 7.7 | 40,925 | 7.36 | % | 3,013 | ||||||||||||||||||||||
| FedEx II | Jul. 2009 | 1 | 152,640 | 100 | % | 12.6 | 31,692 | 8.84 | % | 2,803 | ||||||||||||||||||||||
| Walgreens | Jul. 2009 | 1 | 14,820 | 56 | % | 21.3 | 3,818 | 8.12 | % | 310 | ||||||||||||||||||||||
| CVS(6)(7) | Sep. 2009 Sep. 2010 |
10 | 131,105 | 86 | % | 22.9 | 44,371 | 8.37 | % | 3,713 | ||||||||||||||||||||||
| CVS II | Nov. 2009 | 15 | 198,729 | 100 | % | 23.3 | 59,788 | 8.48 | % | 5,071 | ||||||||||||||||||||||
| Home Depot | Dec. 2009 | 1 | 465,600 | 100 | % | 18.8 | 23,532 | 9.31 | % | 2,192 | ||||||||||||||||||||||
| BSFS | Dec. 2009 & Jan. 2010 |
6 | 57,336 | 100 | % | 13.2 | 15,041 | 9.24 | % | 1,390 | ||||||||||||||||||||||
| Advance Auto | Dec. 2009 | 1 | 7,000 | 100 | % | 10.7 | 1,730 | 9.25 | % | 160 | ||||||||||||||||||||||
| Fresenius | Jan. 2010 | 2 | 140,000 | 100 | % | 11.3 | 12,183 | 9.30 | % | 1,159 | ||||||||||||||||||||||
| Reckitt Benckiser | Feb. 2010 | 1 | 574,106 | 85 | % | 10.9 | 31,100 | 8.41 | % | 2,668 | ||||||||||||||||||||||
| Jack in the Box | Feb. 2010 & Apr. 2010 |
5 | 12,253 | 100 | % | 18.9 | 9,755 | 7.80 | % | 781 | ||||||||||||||||||||||
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| Property | Acquisition Date | No. of Buildings | Square Feet | Ownership Percentage | Remaining Lease Term(1) | Base Purchase Price(2) | Capitalization Rate(3) | Annualized Rental Income(4) | ||||||||||||||||||||||||
| BSFS II(8) | Feb. & Mar. 2010 |
12 | 93,599 | 74 | % | 12.8 | 25,902 | 8.70 | % | 2,299 | ||||||||||||||||||||||
| FedEx III | Apr. 2010 | 1 | 118,796 | 85 | % | 10.2 | 33,500 | 9.03 | % | 3,087 | ||||||||||||||||||||||
| Jared Jewelry | May 2010 | 3 | 19,534 | 90 | % | 17.9 | 5,342 | 12.44 | % | 679 | ||||||||||||||||||||||
| Walgreens II | May 2010 | 1 | 14,820 | 100 | % | 22.0 | 5,593 | 7.97 | % | 453 | ||||||||||||||||||||||
| IHOP | May 2010 | 1 | 5,172 | 100 | % | 15.0 | 2,398 | 8.22 | % | 201 | ||||||||||||||||||||||
| Advance Auto II | Jun. 2010 | 3 | 19,253 | 100 | % | 12.3 | 3,583 | 8.38 | % | 308 | ||||||||||||||||||||||
| Super Stop & Shop |
Jun. 2010 | 1 | 59,032 | 100 | % | 11.9 | 23,350 | 8.18 | % | 1,946 | ||||||||||||||||||||||
| IHOP II | Jun. 2010 | 1 | 4,139 | 100 | % | 11.0 | 2,255 | 8.87 | % | 204 | ||||||||||||||||||||||
| IHOP III | Jun. 2010 | 1 | 5,111 | 100 | % | 20.4 | 3,254 | 9.13 | % | 303 | ||||||||||||||||||||||
| Jared Jewelry II | Jun. 2010 | 1 | 6,157 | 100 | % | 15.9 | 1,589 | 12.78 | % | 209 | ||||||||||||||||||||||
| Jack in the Box II | Jun. 2010 | 6 | 14,975 | 100 | % | 19.3 | 11,150 | 7.83 | % | 892 | ||||||||||||||||||||||
| Walgreens III | Jun. 2010 | 1 | 13,386 | 100 | % | 23.1 | 4,968 | 7.61 | % | 385 | ||||||||||||||||||||||
| Dollar General | Jul. 2010 | 1 | 8,988 | 100 | % | 13.7 | 1,200 | 9.61 | % | 118 | ||||||||||||||||||||||
| Tractor Supply | Jul. & Aug. 2010 |
4 | 76,038 | 100 | % | 14.2 | 10,892 | 8.98 | % | 978 | ||||||||||||||||||||||
| Advance Auto III | Jul. 2010 | 3 | 19,752 | 100 | % | 12.4 | 4,287 | 8.35 | % | 358 | ||||||||||||||||||||||
| CSAA/CVS | Aug. 2010 | 1 | 15,214 | 100 | % | 21.9 | 4,859 | 7.24 | % | 352 | ||||||||||||||||||||||
| CSAA/First Fifth Bank(9) | Aug. 2010 | 2 | 8,252 | 100 | % | 17.0 | 6,199 | 8.39 | % | 520 | ||||||||||||||||||||||
| CSAA/Walgreens | Aug. 2010 | 5 | 84,263 | 100 | % | 21.8 | 26,864 | 7.30 | % | 1,961 | ||||||||||||||||||||||
| CSAA/Chase Bank(9) | Aug. 2010 | 2 | 8,030 | 100 | % | 26.1 | 6,496 | 9.30 | % | 604 | ||||||||||||||||||||||
| CSAA/Home Depot(9) | Sep. 2010 | 1 | 107,965 | 100 | % | 16.9 | 8,720 | 7.12 | % | 621 | ||||||||||||||||||||||
| IHOP IV | Sep. 2010 | 19 | 87,009 | 100 | % | 13.6 | 30,000 | 9.44 | % | 2,833 | ||||||||||||||||||||||
| O’Reilly Auto | Sep. 2010 | 1 | 9,500 | 100 | % | 8.9 | 2,450 | 8.73 | % | 214 | ||||||||||||||||||||||
| Walgreens IV | Sep. 2010 | 1 | 14,477 | 100 | % | 24.0 | 6,439 | 7.75 | % | 499 | ||||||||||||||||||||||
| Walgreens V | Sep. 2010 | 1 | 13,580 | 100 | % | 22.9 | 4,767 | 7.95 | % | 379 | ||||||||||||||||||||||
| Kum & Go | Sep. 2010 | 14 | 67,310 | 100 | % | 14.1 | 22,515 | 9.21 | % | 2,074 | ||||||||||||||||||||||
| FedEx IV | Sep. 2010 | 1 | 43,762 | 100 | % | 9.3 | 3,576 | 8.28 | % | 296 | ||||||||||||||||||||||
| AutoZone | Sep. 2010 | 4 | 28,880 | 100 | % | 15.4 | 10,228 | 8.40 | % | 859 | ||||||||||||||||||||||
| Brownshoe | Oct. 2010 | 1 | 351,723 | 91 | % | 18.1 | 23,849 | 9.89 | % | 2,358 | ||||||||||||||||||||||
| Payless | Oct. 2010 | 1 | 801,651 | 91 | % | 13.4 | 44,924 | 9.37 | % | 4,211 | ||||||||||||||||||||||
| Saint Joseph’s Mercy Medical | Oct. 2010 | 3 | 46,706 | 100 | % | 12.9 | 9,838 | 7.79 | % | 766 | ||||||||||||||||||||||
| Advance Auto IV | Nov. 2010 | 1 | 6,124 | 100 | % | 14.5 | 1,270 | 8.35 | % | 106 | ||||||||||||||||||||||
| Kum and Go II | Nov. 2010 | 2 | 8,008 | 100 | % | 19.7 | 2,895 | 9.50 | % | 275 | ||||||||||||||||||||||
| Tractor Supply II | Nov. 2010 | 3 | 57,368 | 100 | % | 14.9 | 7,491 | 9.09 | % | 681 | ||||||||||||||||||||||
| FedEx V | Nov. 2010 | 1 | 29,410 | 100 | % | 9.4 | 2,800 | 8.29 | % | 232 | ||||||||||||||||||||||
| Walgreens VI | Dec. 2010 | 7 | 102,930 | 100 | % | 23.2 | 40,071 | 7.00 | % | 2,805 | ||||||||||||||||||||||
| FedEx VI | Dec. 2010 | 1 | 142,160 | 100 | % | 12.7 | 28,600 | 7.92 | % | 2,264 | ||||||||||||||||||||||
| Dollar General II | Dec. 2010 | 1 | 9,100 | 100 | % | 14.3 | 1,281 | 8.98 | % | 115 | ||||||||||||||||||||||
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| Property | Acquisition Date | No. of Buildings | Square Feet | Ownership Percentage | Remaining Lease Term(1) | Base Purchase Price(2) | Capitalization Rate(3) | Annualized Rental Income(4) | ||||||||||||||||||||||||
| FedEx VII | Dec. 2010 | 1 | 101,350 | 100 | % | 13.4 | 18,800 | 7.41 | % | 1,393 | ||||||||||||||||||||||
| FedEx VIII | Dec. 2010 | 4 | 116,689 | 100 | % | 7.4 | 10,891 | 8.20 | % | 893 | ||||||||||||||||||||||
| BB&T | Dec. 2010 | 1 | 3,635 | 100 | % | 8.8 | 3,781 | 7.88 | % | 298 | ||||||||||||||||||||||
| Walgreens VII | Dec. 2010 | 1 | 14,490 | 100 | % | 12.1 | 2,950 | 8.85 | % | 261 | ||||||||||||||||||||||
| FedEx IX | Dec. 2010 | 1 | 64,556 | 100 | % | 9.2 | 6,012 | 8.28 | % | 498 | ||||||||||||||||||||||
| Dollar General III | Dec. 2010 | 3 | 27,128 | 100 | % | 14.6 | 2,867 | 8.72 | % | 250 | ||||||||||||||||||||||
| Tractor Supply III | Dec. 2010 | 1 | 18,860 | 100 | % | 14.0 | 4,825 | 8.87 | % | 428 | ||||||||||||||||||||||
| DaVita Dialysis | Dec. 2010 | 1 | 12,990 | 100 | % | 8.3 | 2,848 | 8.15 | % | 232 | ||||||||||||||||||||||
| Dollar General IV | Dec. 2010 | 1 | 9,167 | 100 | % | 14.3 | 1,236 | 8.98 | % | 111 | ||||||||||||||||||||||
| Lowe’s(9) | Jan. 2011 | 1 | 141,393 | 100 | % | 15.3 | 10,018 | 6.74 | % | 675 | ||||||||||||||||||||||
| Citizens | Jan. 2011 | 2 | 14,307 | 100 | % | 7.8 | 3,811 | 9.11 | % | 347 | ||||||||||||||||||||||
| QuickTrip | Jan. 2011 | 1 | 4,555 | 100 | % | 12.9 | 3,330 | 8.74 | % | 291 | ||||||||||||||||||||||
| Dillons | Jan. 2011 | 1 | 56,451 | 100 | % | 8.6 | 5,075 | 7.80 | % | 396 | ||||||||||||||||||||||
| Wawa | Jan. 2011 | 2 | 12,433 | 100 | % | 16.1 | 17,209 | 7.00 | % | 1,205 | ||||||||||||||||||||||
| Walgreen’s/Tim Hortons | Jan. 2011 | 9 | 122,963 | 100 | % | 23.8 | 54,569 | 6.90 | % | 3,742 | ||||||||||||||||||||||
| DaVita Dialysis II | Feb. 2011 | 4 | 23,154 | 100 | % | 11.2 | 8,013 | 8.90 | % | 713 | ||||||||||||||||||||||
| CVS III | Feb. 2011 | 1 | 13,338 | 100 | % | 25.9 | 5,199 | 7.25 | % | 377 | ||||||||||||||||||||||
| Citigroup | Feb. 2011 | 1 | 64,036 | 100 | % | 14.5 | 27,275 | 7.00 | % | 1,910 | ||||||||||||||||||||||
| Coats & Clark | Feb. 2011 | 1 | 401,512 | 100 | % | 9.8 | 9,523 | 9.84 | % | 937 | ||||||||||||||||||||||
| Walgreens VIII | Feb. 2011 | 1 | 13,569 | 100 | % | 22.6 | 5,460 | 7.34 | % | 401 | ||||||||||||||||||||||
| Express Scripts | Mar. 2011 | 2 | 416,141 | 100 | % | 8.2 | 51,281 | 9.02 | % | 4,623 | ||||||||||||||||||||||
| DaVita Dialysis III | Mar. 2011 | 1 | 18,185 | 100 | % | 12.2 | 6,565 | 7.72 | % | 507 | ||||||||||||||||||||||
| Dollar General V | Mar. 2011 | 6 | 55,363 | 100 | % | 14.8 | 5,195 | 8.84 | % | 459 | ||||||||||||||||||||||
| Wal-Mart | Mar. 2011 | 1 | 183,442 | 100 | % | 8.1 | 12,633 | 7.15 | % | 903 | ||||||||||||||||||||||
| Kohl’s | Mar. 2011 | 1 | 88,408 | 100 | % | 14.9 | 10,182 | 7.15 | % | 728 | ||||||||||||||||||||||
| Texas Instrument | Mar. 2011 | 1 | 125,000 | 100 | % | 9.7 | 32,000 | 7.88 | % | 2,522 | ||||||||||||||||||||||
| Sam’s Club(9) | Mar. 2011 | 1 | 141,583 | 100 | % | 14.4 | 12,602 | 6.75 | % | 851 | ||||||||||||||||||||||
| CVS IV | Mar. 2011 | 1 | 13,225 | 100 | % | 23.9 | 5,330 | 7.95 | % | 424 | ||||||||||||||||||||||
| Walgreens X | Mar. 2011 | 2 | 27,760 | 100 | % | 19.3 | 9,000 | 7.46 | % | 671 | ||||||||||||||||||||||
| CVS V | Mar. 2011 | 1 | 12,900 | 100 | % | 22.9 | 5,759 | 7.29 | % | 420 | ||||||||||||||||||||||
| Provident Bank | Mar. 2011 | 1 | 2,950 | 100 | % | 22.9 | 2,589 | 9.15 | % | 237 | ||||||||||||||||||||||
| Dillions II | Mar. 2011 | 1 | 63,858 | 100 | % | 10.5 | 6,420 | 7.49 | % | 481 | ||||||||||||||||||||||
| FedEx X | Mar. 2011 | 1 | 105,109 | 100 | % | 7.6 | 9,050 | 8.29 | % | 750 | ||||||||||||||||||||||
| 3M | Mar. 2011 | 1 | 650,760 | 100 | % | 10.1 | 44,800 | 7.35 | % | 3,295 | ||||||||||||||||||||||
| Bojangles | Mar. 2011 | 13 | 47,865 | 100 | % | 12.1 | 24,789 | 8.85 | % | 2,193 | ||||||||||||||||||||||
| Sub-total | 318 | 8,166,677 | 14.8 | 1,259,315 | 8.21 | % | 103,445 | |||||||||||||||||||||||||
| Investment in joint venture | Dec. 2010 | — | — | 7 | % | — | 12,000 | — | — | |||||||||||||||||||||||
| 318 | 8,166,677 | 14.8 | $ | 1,271,315 | 8.21 | % | $ | 103,445 | ||||||||||||||||||||||||
| Average annualized rental income per square foot | $ | 12.66 | ||||||||||||||||||||||||||||||
| (1) | Remaining lease term as of March 31, 2010, in years. If the portfolio has multiple locations with varying lease expirations, remaining lease term is calculated on a weighted-average basis. |
| (2) | Contract purchase price excluding acquisition related costs. |
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| (3) | Annualized rental income divided by base purchase price. |
| (4) | Annualized rental income for the property portfolio on a straight-line basis which includes the effect of tenant concessions such as free rental periods, as applicable. |
| (5) | Ownership percentage is 51% of one property and 65% of one property. |
| (6) | Ownership percentage of three properties is 51% and 100% of the remaining seven properties. |
| (7) | Ownership percentage of six properties is 51% and 100% of the remaining six properties. |
| (8) | Includes the September 2010 purchase of a parcel of land with a ground lease which contains a previously purchased CVS pharmacy. |
| (9) | Property is a parcel of land with a ground lease which contains a building that will be conveyed to the Company at the end of the ground lease. Square footage and number of buildings refers to the building that is constructed on the parcel of land owned by the Company. |
We believe that our real estate properties are suitable for their intended purpose and adequately covered by insurance. We do not intend to make significant renovations or improvements to our properties
Yield On Real Estate Investments
In the following table, the amount of the Year 1 yield based upon the contract purchase price of the acquired properties as compared to the Year 1 total rent is approximately 7.67%, which excludes contractual rent increases occurring in future years. The amounts in the following table are as of March 31, 2011. (dollars in thousands):
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| Purchase Price(1) | Current Mortgage Debt | Effective Interest Rate(2) | Portfolio- Level Leverage | Rent | Contractual Base Rent Increase (3) |
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| Year 1 | Year 2 | |||||||||||||||||||||||||||
| FedEx | $ | 9,694 | $ | 6,965 | 6.29 % | 68.2 % | $ | 703 | $ | 703 | 3.78% and 3.65% in years 6 and 11, respectively |
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| First Niagara | 40,976 | 30,809 | (6) | 6.59 % | 73.9 % | 3,064 | 3,064 | — | ||||||||||||||||||||
| Rockland | 32,188 | 23,047 | 4.92 % | 69.6 % | 2,306 | 2,340 | 1.5% annually | |||||||||||||||||||||
| PNC Bank | 6,664 | 4,318 | 4.58 % | 63.0 % | 466 | 466 | 10% after 5 years | |||||||||||||||||||||
| Rite Aid | 18,576 | 12,808 | 6.97 % | 68.0 % | 1,404 | 1,404 | — | |||||||||||||||||||||
| PNC | 40,925 | 31,329 | 5.25 % | 72.1 % | 2,960 | 2,960 | 10% after 5 years | |||||||||||||||||||||
| FedEx II | 31,692 | 16,040 | 6.03 % | 50.6 % | 2,580 | 2,580 | 1% increase in years 5 and 9 |
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| Walgreens | 3,818 | 1,550 | (7) | 6.64 % | 40.6 % | 310 | 310 | — | ||||||||||||||||||||
| CVS | 44,371 | 23,395 | (8) | 6.88 % | 52.7 % | 3,387 | 3,387 | 5% increase every 5 years | ||||||||||||||||||||
| CVS II | 59,788 | 32,638 | 6.64 % | 54.6 % | 4,984 | 4,984 | 5% increase every 5 years | |||||||||||||||||||||
| Home Depot | 23,532 | 12,150 | 6.03 % | 51.6 % | 1,806 | 1,839 | 2% increase annually | |||||||||||||||||||||
| BSFS | 15,041 | 3,784 | 6.61 % | 25.1 % | 1,048 | 1,048 | 6.25% every 5 years | |||||||||||||||||||||
| Advanced Auto | 1,730 | — | — | — | 160 | 160 | — | |||||||||||||||||||||
| Fresenius | 12,183 | 6,021 | 6.63 % | 49.4 % | 1,023 | 1,023 | Approximately 10% in years 2 and 7 |
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| Reckitt Benckiser | 31,100 | 14,836 | 6.23 % | 47.7 % | 2,279 | 2,434 | 2.0% annually | |||||||||||||||||||||
| Jack in the Box | 9,755 | 5,311 | 6.41 % | 54.4 % | 639 | 639 | — | |||||||||||||||||||||
| BSFS II | 25,902 | — | — | — | 2,150 | 2,150 | 6.25% every 5 years | |||||||||||||||||||||
| FedEx III | 33,500 | 15,000 | 5.57 % | 44.8 % | 2,761 | 2,880 | Increases every 30 months based on CPI, min 5% / max 10 |
% | ||||||||||||||||||||
| Jared Jewelry | 5,342 | — | — | — | 580 | 580 | 10% increase every 5 years | |||||||||||||||||||||
| Walgreens II | 5,593 | 3,000 | 5.58 % | 53.6 % | 453 | 453 | — | |||||||||||||||||||||
| IHOP | 2,398 | — | — | — | 192 | 192 | 5% increase every 5 years | |||||||||||||||||||||
| Advance Auto II | 3,583 | — | — | — | 308 | 308 | — | |||||||||||||||||||||
| Super Stop & Shop | 23,350 | 10,800 | 5.32 % | 46.3 % | 1,784 | 1,784 | Increases approx. 7.5% every 5 years |
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| Purchase Price(1) | Current Mortgage Debt | Effective Interest Rate(2) | Portfolio- Level Leverage | Rent | Contractual Base Rent Increase (3) |
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| Year 1 | Year 2 | |||||||||||||||||||||||||||
| IHOP II | 2,255 | — | — | — | 180 | 180 | 10% increase every 5 years |
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| Jared Jewelry II | 1,589 | — | — | — | 174 | 182 | 10% increase every 5 years | |||||||||||||||||||||
| Jack in the box II | 11,150 | — | — | — | 892 | 892 | Increase every five years based on CPI with max 10 |
% | ||||||||||||||||||||
| Walgreens III | 4,968 | — | — | — | 385 | 385 | — | |||||||||||||||||||||
| Dollar General | 1,200 | — | — | — | 118 | 118 | 10% increase every 5 years | |||||||||||||||||||||
| Tractor Supply | 10,892 | — | — | — | 885 | 885 | 10% increase every 5 years | |||||||||||||||||||||
| Advance Auto III | 4,287 | — | — | — | 358 | 358 | — | |||||||||||||||||||||
| CSAA/CVS | 4,859 | — | — | — | 352 | 352 | — | |||||||||||||||||||||
| CSAA/First Fifth Bank | 6,199 | — | — | — | 440 | 440 | 10% increase every 5 years | |||||||||||||||||||||
| CSAA/Walgreens | 26,864 | — | — | — | 1,948 | 1,948 | — | |||||||||||||||||||||
| CSAA/Chase Bank | 6,496 | — | — | — | 464 | 473 | 2.0% annually | |||||||||||||||||||||
| CSAA/Home Depot | 8,720 | 3,900 | 4.56 | % | 44.7 | % | 621 | 621 | — | |||||||||||||||||||
| IHOP IV | 30,000 | 12,450 | 5.32 | % | 41.5 | % | 2,448 | 2,516 | 10% increase every 5 years | |||||||||||||||||||
| O’Reilly Auto | 2,450 | — | — | — | 208 | 208 | Increases 5% in year 11 | |||||||||||||||||||||
| Walgreens IV | 6,439 | — | — | — | 499 | 499 | — | |||||||||||||||||||||
| Walgreens V | 4,767 | — | — | — | 379 | 379 | — | |||||||||||||||||||||
| Kum & Go | 22,515 | — | — | — | 1,890 | 1,890 | Increases 8% every 5 years | |||||||||||||||||||||
| FedEx IV | 3,576 | — | — | — | 289 | 289 | Increases 5% in year 6 | |||||||||||||||||||||
| AutoZone | 10,228 | — | — | — | 859 | 859 | — | |||||||||||||||||||||
| Brown Shoe | 23,849 | — | — | — | 2,003 | 2,003 | 10% increase every 5 years | |||||||||||||||||||||
| Payless | 44,924 | — | — | — | 3,774 | 3,774 | 10% increase every 5 years | |||||||||||||||||||||
| Saint Joseph’s Mercy Medical | 9,838 | — | — | — | 728 | 728 | 1.5% per year after first 5 years | |||||||||||||||||||||
| Advance Auto IV | 1,270 | — | — | — | 106 | 106 | — | |||||||||||||||||||||
| Kum and Go II | 2,895 | — | — | — | 246 | 246 | 7.5% increase every 5 years | |||||||||||||||||||||
| Tractor Supply II | 7,491 | — | — | — | 617 | 617 | 10% increase every 5 years | |||||||||||||||||||||
| Federal Express V | 2,800 | — | — | — | 226 | 226 | — | |||||||||||||||||||||
| Walgreens VI | 40,071 | 22,900 | 5.86 | % | 57.2 | % | 2,805 | 2,805 | — | |||||||||||||||||||
| Federal Express VI | 28,600 | — | — | — | 2,119 | 2,119 | 1.5% increase every year | |||||||||||||||||||||
| Dollar General II | 1,281 | — | — | — | 115 | 115 | — | |||||||||||||||||||||
| Federal Express VII | 18,800 | — | — | — | 1,393 | 1,393 | — | |||||||||||||||||||||
| Federal Express VIII | 10,891 | — | — | — | 893 | 893 | — | |||||||||||||||||||||
| BB&T | 3,781 | — | — | — | 265 | 273 | 3.0% increase every year | |||||||||||||||||||||
| Walgreens VII | 2,950 | — | — | — | 261 | 261 | — | |||||||||||||||||||||
| Federal Express IX | 6,012 | — | — | — | 486 | 486 | 5.0% increase in year 6 | |||||||||||||||||||||
| Dollar General III | 2,867 | — | — | — | 248 | 248 | 3.0% increase in year 11 | |||||||||||||||||||||
| Tractor Supply III | 4,825 | — | — | — | 387 | 387 | 10% increase every 5 years | |||||||||||||||||||||
| DaVita Dialysis | 2,848 | — | — | — | 232 | 232 | — | |||||||||||||||||||||
| Dollar General IV | 1,236 | — | — | — | 111 | 111 | — | |||||||||||||||||||||
| Lowe’s | 10,018 | — | — | — | 675 | 675 | — | |||||||||||||||||||||
| Citizens Bank | 3,811 | 3,011 | 6.39 | % | 79.0 | % | 344 | 329 | 2.5% increase every year, after 7% decrease in August 2011 |
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| QuickTrip | 3,330 | — | — | — | 291 | 291 | — | |||||||||||||||||||||
| Dillons | 5,075 | — | — | — | 396 | 396 | — | |||||||||||||||||||||
| Wawa | 17,209 | — | — | — | 1,205 | 1,205 | — | |||||||||||||||||||||
S-5
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| Purchase Price(1) | Current Mortgage Debt | Effective Interest Rate(2) | Portfolio- Level Leverage | Rent | Contractual Base Rent Increase (3) |
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| Year 1 | Year 2 | |||||||||||||||||||||||||||
| Walgreens TH | 54,569 | — | — | — | 3,737 | 3,737 | — | |||||||||||||||||||||
| Davita Dialysis II | 8,013 | — | — | — | 444 | 453 | 2.0% increase every year | |||||||||||||||||||||
| CVS III | 5,199 | — | — | — | 377 | 377 | — | |||||||||||||||||||||
| Citigroup | 27,275 | 13,800 | 5.66 | % | 56.6 | % | 1,836 | 1,836 | — | |||||||||||||||||||
| Coats & Clark | 9,523 | — | — | — | 763 | 892 | — | |||||||||||||||||||||
| Walgreen VIII | 5,460 | — | — | — | 401 | 401 | — | |||||||||||||||||||||
| Express Scripts | 51,281 | 28,710 | 4.66 | % | 56.0 | % | 4,378 | 4,434 | (17) | |||||||||||||||||||
| DaVita Dialysis III | 6,565 | — | — | — | 507 | 507 | Increases coincide with CPI |
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| Dollar General V | 5,195 | — | — | — | 455 | 455 | 3% increase in year 10 | |||||||||||||||||||||
| Wal-Mart | 12,633 | — | — | — | 903 | 903 | — | |||||||||||||||||||||
| Kohl’s | 10,182 | — | — | — | 728 | 728 | — | |||||||||||||||||||||
| Texas Instruments | 32,000 | — | — | — | 2,328 | 2,375 | 2% increase every year | |||||||||||||||||||||
| Sam’s Club | 12,602 | — | — | — | 851 | 851 | — | |||||||||||||||||||||
| CVS IV | 5,330 | — | — | — | 384 | 384 | 7.5% increase in years 10, 15 and 20 |
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| Walgreens X | 9,000 | — | — | — | 671 | 671 | — | |||||||||||||||||||||
| CVS V | 5,759 | — | — | — | 420 | 420 | — | |||||||||||||||||||||
| Provident Bank | 2,589 | — | — | — | 189 | 189 | 10% increase every 5 years | |||||||||||||||||||||
| Dillions II | 6,420 | — | — | — | 481 | 481 | — | |||||||||||||||||||||
| FedEx X | 9,050 | — | — | — | 750 | 750 | — | |||||||||||||||||||||
| 3M | 44,800 | 20,500 | 4.09 | % | 45.8 | % | 3,150 | 3,181 | 1% increase every year | |||||||||||||||||||
| Bojangles | 24,789 | — | — | — | 1,998 | 2,030 | 1.5% – 1.8% increases every year |
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| Multi-tenant mortgage I(9) | — | 6,550 | 5.58 | % | 50.3 | % | — | — | — | |||||||||||||||||||
| Multi-tenant mortgage II(10) | — | 19,600 | 4.36 | % | 44.1 | % | — | — | — | |||||||||||||||||||
| Multi-tenant mortgage III(11) | — | 24,700 | 4.51 | % | 64.4 | % | — | — | — | |||||||||||||||||||
| Multi-tenant mortgage IV(12) | — | 28,200 | 4.92 | % | 41.0 | % | — | — | — | |||||||||||||||||||
| Multi-tenant mortgage V(13) | — | 24,300 | 4.52 | % | 51.3 | % | — | — | — | |||||||||||||||||||
| Multi-tenant mortgage VI(14) | — | 51,600 | 4.93 | % | 62.3 | % | — | — | — | |||||||||||||||||||
| Multi-tenant mortgage VII(15) | — | 9,420 | 5.98 | % | 95.6 | % | — | — | — | |||||||||||||||||||
| Multi-tenant mortgage VIII(16) | — | 19,220 | 4.32 | % | 47.6 | % | — | — | — | |||||||||||||||||||
| Total Portfolio(4) | $ | 1,259,315 | $ | 542,662 | 5.44 | % | 43.0 | % | $ | 96,652 | $ | 97,397 | ||||||||||||||||
| Investment Grade Tenants (based on Rent – S&P BBB- or better) |
75.5 |
% | ||||||||||||||||||||||||||
| Average Remaining Lease Term (years)(5) | 14.8 |
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| (1) | Contract purchase price, excluding acquisition and transaction-related costs. Acquisition and transaction- related costs include legal costs, acquisition fees paid to the Advisor and closing costs on the property. |
| (2) | Interest rate includes the effect of in-place hedges, as applicable. |
S-6
| (3) | Increase does not take into account lease escalations that commence in future years or adjustments based on the Consumer Price Index. |
| (4) | Weighted average as of March 31, 2011. |
| (5) | As of March 31, 2011 — Primary lease term only (excluding renewal option periods). |
| (6) | The effective interest rate resets at the end of year five to the then current 5-year Treasury rate plus 2.25%, but in no event will be less than 6.5%. |
| (7) | In August 2014 The rate adjusts to the greater of 6.55% or the rate of 5 year U.S. Treasury obligations plus 3.50% |
| (8) | The interest rate can be adjusted at the option of the lender at the end of the fifth year. |
| (9) | Loan is collateralized by 1 Walgreens and 6 Advance Auto properties |
| (10) | Loan is collateralized by 1 CVS, 2 Fifth Third Banks, 5 Walgreens, and 2 Chase Bank properties |
| (11) | Loan is collateralized by 4 Tractor Supplies, 1 O’Reilly Automotive, 2 Walgreens, 1 FedEx, 4 AutoZones, and 3 Saint Joseph’s Mercy Medical properties. |
| (12) | Loan is collateralized by a Brownshoe and a Payless property. |
| (13) | Loan is collateralized by 2 FedEx properties |
| (14) | Loan is collateralized by 6 BSFS, 2 IHOPs, 4 Jack in the Box, 3 Dollar Generals, 1 CVS land parcel, 1 Advance Auto, 2 Tractor Supplies, 6 FedEx, 1 BB&T, 1 Walgreens, 1 DaVita Dialysis, 1 Lowe’s property |
| (15) | Loan is collateralized by 2 Walgreens properties |
| (16) | Loan is collateralized by 4 Walgreens properties |
| (17) | 2% increase in 2013, 4% increase in 2016 for one property and 2% increase every year for one property |
Significant Tenants and Lease Expirations
The following table sets forth information regarding the tenant occupying ten percent or more of the aggregate rentable square footage of our real estate investment portfolio, as of March 31, 2011:
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| Tenant Name | Nature of Business | Number of Properties Occupied by Tenant | Square Feet |
Square Feet as a % of Total Portfolio | Lease Expiration |
Average Remaining Lease Terms(1) | Renewal Options | Annual Rent(2) | Annual Rent per Square Foot | |||||||||||||||||||||||||||
| FedEx | Freight | 13 | 929,912 | 11.4 | % | Jun. 2018 – Jul. 2024 |
11.0 | 2 renewal options of 5 years |
$ | 12,946 | $ | 14.07 | ||||||||||||||||||||||||
| (1) | Remaining lease term in years as of March 31, 2011. If the portfolio has multiple locations with varying lease expirations, remaining lease term is calculated on a weighted-average basis. |
| (2) | Annual rent in thousands. |
The following table lists tenants whose rental income represented greater than 10% of consolidated income at March 31, 2011.
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| Tenant Name | % of Consolidated Net Income at March 31, 2011 | |||
| FedEx | 12.3 | % | ||
| Walgreens | 13.0 | % | ||
S-7
The following is a summary of lease expirations for the next ten years as of March 31, 2011 (dollars in thousands):
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| Year of Expiration | Number of Leases Expiring |
Annualized Base Rent |
Percent of Portfolio Annualized Base Rent Expiring |
Leased Rentable Sq. Ft. |
Percent of Portfolio Rentable Sq. Ft. Expiring |
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| 2011 | — | — | — | — | — | |||||||||||||||
| 2012 | — | — | — | — | — | |||||||||||||||
| 2013 | — | — | — | — | — | |||||||||||||||
| 2014 | 2 | $ | 160 | 0.2 | % | 9,841 | 0.1 | % | ||||||||||||
| 2015 | — | — | — | — | — | |||||||||||||||
| 2016 | 3 | 482 | 0.5 | % | 27,675 | 0.3 | % | |||||||||||||
| 2017 | 1 | 179 | 0.2 | % | 12,613 | 0.2 | % | |||||||||||||
| 2018 | 64 | 9,515 | 9.2 | % | 780,215 | 9.6 | % | |||||||||||||
| 2019 | 6 | 2,128 | 2.1 | % | 270,133 | 3.3 | % | |||||||||||||
| 2020 | 10 | 6,670 | 6.4 | % | 920,096 | 11.3 | % | |||||||||||||
| 2021 | 8 | 7,855 | 7.6 | % | 859,603 | 10.5 | % | |||||||||||||
| Total | 94 | $ | 26,989 | 26.2 | % | 2,880,176 | 35.3 | % | ||||||||||||
No material tenant credit issues have been identified at this time. As of March 31, 2011, we had no tenants with rent balances outstanding over 90 days.
Status of Distributions
On February 25, 2008, our Board of Directors declared a distribution for each monthly period commencing 30 days subsequent to acquiring our initial portfolio of real estate investments. Accordingly, our daily distributions commenced accruing on April 5, 2008. The REIT’s initial distribution payment was paid to shareholders on May 21, 2008 representing distributions accrued from April 5, 2008 through April 30, 2008. Subsequently, we modified the payment date to the 2nd day following each month-end to stockholders of record at the close of business each day during the applicable period. The distribution was calculated based on stockholders of record each day during the applicable period at a rate of $0.00178082191 per day, and equaled a daily amount that, if paid each day for a 365-day period, equaled a 6.5% annualized rate based on the share price of $10.00.
On November 5, 2008, the Board of Directors of American Realty Capital Trust, Inc. (the “Company”) approved an increase in its annual cash distribution from $.65 to $.67, paid monthly. Based on a $10.00 share price, this 20-basis point increase, effective January 2, 2009, will result in an annualized distribution rate of 6.7%. For the period from January 1, 2008 through October 20, 2009 distributions paid totaled $2,414,456,inclusive of $933,631 of common shares issued under the distribution reinvestment plan. We have continued to pay distributions to our shareholders each month since our initial distributions payment.
On October 5, 2009, the Board of Directors of the Company approved a special distribution of $0.05 per share payable to shareholders of record on December 31, 2009. This special distribution will be paid in January 2010, and shall be paid in addition to the current annualized distribution of $0.67 per share. In the event we do not have enough cash to make distributions in the future, we may borrow, use proceeds from this offering, issue additional securities or sell assets in order to fund distributions.
On January 27, 2010, the Board of Directors approved an increase in its annual cash distribution from $.67 to $.70, paid monthly. Based on a $10.00 share price, this 30 basis point increase, effective April 1, 2010, will result in an annualized distribution rate of 7.0%.
To date, the Company’s distributions have been paid with a combination of cash flows from operations and the proceeds from the sales of common stock. There can be no assurance that cash flows from operations will be sufficient to pay distributions in future periods.
The following table shows the sources for the payment of distributions for the year ended December 31, 2010.
S-8
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| Year Ended December 31, 2010 | ||||||||||||||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
| Distributions paid in cash | $ | 1,821 | $ | 2,119 | $ | 3,096 | $ | 4,375 | ||||||||
| Distributions reinvested | $ | 1,407 | $ | 1,726 | $ | 2,584 | $ | 3,601 | ||||||||
| Total distributions | $ | 3,228 | $ | 3,845 | $ | 5,680 | $ | 7,976 | ||||||||
| Source of distributions: |
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| Cash flows provided by (used in) operations (GAAP basis) | $ | 1,821 | $ | 2,119 | $ | 3,096 | $ | 4,375 | ||||||||
| Proceeds from issuance of common stock | $ | 1,407 | $ | 1,726 | $ | 2,584 | $ | 3,601 | ||||||||
| Total sources | $ | 3,228 | $ | 3,845 | $ | 5,680 | $ | 7,976 | ||||||||
The following table compares cumulative distributions declared and paid to net loss (in accordance with GAAP) for the period from August 17, 2007 (date of inception) through December 31, 2010 (in thousands):
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| For the Period from August 17, 2007 (date of inception) to December 31, 2010 | ||||||||
| Distributions paid: |
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| Cash | $ | 13,595 | ||||||
| DRIP | 10,755 | |||||||
| Total distributions paid | $ | 24,350 | ||||||
| Reconciliation of net loss: |
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| Rental income | $ | 65,283 | ||||||
| Acquisition and transaction related | (12,977 | ) | ||||||
| Depreciation and amortization | (33,025 | ) | ||||||
| Other operating expense | (3,830 | ) | ||||||
| Other income (expense) | (33,702 | ) | ||||||
| Net income (loss) attributable to non-controlling interests | (132 | ) | ||||||
| Net loss (in accordance with GAAP) (a) | $ | (18,383 | ) | |||||
| (a) | Net loss as defined by GAAP includes the non-cash impact of depreciation and amortization expense as well as costs incurred relating to acquisitions and related transactions subsequent to January 1, 2009. |
The following table summarizes the Company’s historical and prospective distribution rate, reflecting the special distribution and increase to the annual rate effective April 1, 2010 noted above:
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| Period | Annualized Distribution Rate |
Number of Months |
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| May 2008(1) to December 2008 | 6.5 | % | 8 | |||||
| January 2009 to March 2010 | 6.7 | % | 15 | |||||
| Special Distribution – January 2010(2) | 0.5 | % | — | |||||
| 7.2 | %(2) | |||||||
| April 2010 to – March 31, 2010 | 7.0 | % | 12 | |||||
| (1) | initial distribution was paid in May 2008. |
| (2) | payable to shareholders of record as of December 31, 2009, resulting in a minimum distribution rate of 7.2% for an investor who owned a common share of the Company for the full year ended December 31, 2009. |
S-9
The Company determined distributions paid to shareholders in 2010 to be reported as nondividend distributions on Form 1099 for the applicable period. Accordingly, such distributions are generally not subject to ordinary income tax in the related period. This tax characterization is consistent with distributions paid to shareholders in 2009. The tax characterization of the Company’s distributions is determined on an annual basis.
The portion of the distribution that is not subject to tax in a respective tax year is considered a return of capital for tax purposes and will reduce the tax basis of a shareholder’s investment. This defers a portion of applicable taxes until the investment is sold or the Company is liquidated, at which time the shareholder will be taxed at capital gains rates. However, because each investor’s tax considerations are different, the Company recommends that investors consult with their tax advisor.
S-10
The following is a chart of monthly distributions declared and paid since the commencement of the offering:
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| Total | Cash | Distribution Reinvestment Plan |
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| 2008: |
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| April | $ | — | $ | — | $ | — | ||||||
| May | 30,262 | 22,008 | 8,254 | |||||||||
| June | 49,638 | 35,283 | 14,355 | |||||||||
| July | 55,042 | 34,788 | 20,254 | |||||||||
| August | 57,584 | 36,519 | 21,065 | |||||||||
| September | 61,395 | 39,361 | 22,034 | |||||||||
| October | 61,425 | 41,078 | 20,347 | |||||||||
| November | 65,496 | 43,646 | 21,850 | |||||||||
| December | 64,442 | 42,876 | 21,566 | |||||||||
| $ | 445,284 | $ | 295,559 | $ | 149,725 | |||||||
| 2009: |
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| January | $ | 69,263 | 46,227 | $ | 23,036 | |||||||
| February | 76,027 | 50,214 | 25,813 | |||||||||
| March | 74,915 | 49,020 | 25,895 | |||||||||
| April | 101,282 | 64,375 | 36,907 | |||||||||
| May | 128,867 | 78,604 | 50,263 | |||||||||
| June | 180,039 | 106,741 | 73,298 | |||||||||
| July | 217,325 | 127,399 | 89,926 | |||||||||
| August | 290,230 | 177,620 | 112,610 | |||||||||
| September | 375,926 | 220,165 | 155,761 | |||||||||
| October | 455,051 | 264,729 | 190,322 | |||||||||
| November | 563,472 | 328,555 | 234,917 | |||||||||
| December | 643,125 | 374,715 | 268,410 | |||||||||
| $ | 3,175,522 | $ | 1,888,364 | $ | 1,287,158 | |||||||
| 2010: |
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| January(1) | $ | 1,498,413 | $ | 855,282 | $ | 643,131 | ||||||
| February | 866,051 | 485,025 | 381,026 | |||||||||
| March | 863,896 | 480,674 | 383,222 | |||||||||
| April | 1,085,719 | 600,607 | 485,112 | |||||||||
| May | 1,262,558 | 695,838 | 566,720 | |||||||||
| June | 1,496,076 | 821,779 | 674,296 | |||||||||
| July | 1,637,264 | 894,427 | 742,837 | |||||||||
| August | 1,895,554 | 1,028,264 | 867,290 | |||||||||
| September | 2,148,405 | 1,174,295 | 974,110 | |||||||||
| October | 2,331,205 | 1,277,288 | 1,053,916 | |||||||||
| November | 2,691,086 | 1,474,293 | 1,216,792 | |||||||||
| December | 2,953,206 | 1,623,096 | 1,330,110 | |||||||||
| $ | 20,729,432 | $ | 11,410,869 | $ | 9,318,563 | |||||||
| 2011: |
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| January | $ | 3,431,046 | $ | 1,900,661 | $ | 1,530,385 | ||||||
| February | 3,828,246 | 2,139,346 | 1,688,900 | |||||||||
| March | 3,869,945 | 2,184,887 | 1,685,058 | |||||||||
| $ | 11,129,237 | $ | 6,224,894 | $ | 4,904,343 | |||||||
| Distributions | $ | 35,479,475 | $ | 19,819,686 | $ | 15,659,789 | ||||||
| (1) | Includes the special distribution paid on January 19, 2010 to shareholders of record as of December 31, 2009. |
The Company, Board of Directors and Advisor share a similar philosophy with respect to paying the dividend. The dividend should principally be derived from cash flows generated from real estate operations. Specifically, funds from operations should equal or exceed distributions in a given period. If needed, the
S-11
Advisor generally expects to waive its asset management fee and forego entitled reimbursements to ensure the full coverage of the Company’s distributions. The fees and reimbursement that are waived are not deferrals and accordingly, will not be paid by the Company.
Share Repurchase Program
As of December 31, 2010, we received requests cumulatively to date to redeem 302,528 common shares pursuant to our Share Redemption Plan. We approved the redemption of 100% of the redemption requests as of December 31, 2010, at an average price per share of $9.788. We funded share redemptions from the cumulative proceeds of the sale of our common shares pursuant to our Dividend Reinvestment Plan.
The Company will honor repurchase requests in connection with the death or disability of a stockholder so long as the Company remains a non-traded REIT. The Company will limit the purchases that it may make pursuant to the Share Redemption Plan in any calendar year to 5.0% of the weighted average number of shares outstanding during the prior year, ratably by calendar quarter. Any changes to these policies will require a majority vote of the Company’s stockholders.
Status of Fees Paid and Deferred
The following table sets forth the fees and expenses paid through December 31, 2010 (amounts in thousands).
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| Total Fees Paid |
Total Fees Deferred |
Total Fees Forgiven per Year |
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| January 1, 2008 to December 31, 2008 |
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| Organizational and Offering Expenses | $ | 2,289 | $ | — | $ | 200 | ||||||
| Acquisition Fees | $ | 1,507 | $ | — | $ | — | ||||||
| Finance Coordination Fees | $ | 1,131 | $ | — | $ | — | ||||||
| Property Management Fees | $ | — | $ | — | $ | 100 | ||||||
| Asset Management Fees | $ | — | $ | — | $ | 733 | ||||||
| January 1, 2009 to December 31, 2009 |
||||||||||||
| Organizational and Offering Expenses | $ | 7,202 | $ | — | $ | 3,800 | ||||||
| Acquisition Fees | $ | 1,690 | $ | — | $ | — | ||||||
| Finance Coordination Fees | $ | 880 | $ | — | $ | — | ||||||
| Property Management Fees | $ | — | $ | — | $ | 300 | ||||||
| Asset Management Fees | $ | 145 | $ | — | $ | 1,779 | ||||||
| January 1, 2010 to December 31, 2010 |
||||||||||||
| Organizational and Offering Expenses | $ | 10,665 | $ | — | $ | — | ||||||
| Acquisition Fees | $ | 5,462 | $ | — | $ | — | ||||||
| Finance Coordination Fees | $ | 2,679 | $ | — | $ | — | ||||||
| Property Management Fees | $ | — | $ | — | $ | 833 | ||||||
| Asset Management Fees | $ | 1,350 | $ | — | $ | 4,010 | ||||||
Amounts paid to the advisor include approximately of $10,728 million offering costs incurred by the affiliated advisor and dealer manager that exceeds 1.5% of gross offering proceeds earned cumulatively through September 30, 2010. Any organizational or offering expenses that exceed 1.5% of gross offering proceeds over the term of the offering will be the advisor’s obligation.
We pay the advisor an annualized asset management fee of up to 1.0% based on the aggregate contract purchase price of all properties. For as long as the Company remains a non-traded REIT, the aggregate value of the asset management fees paid by the Company over the life of the offering plus the value of all restricted shares issued by the Company pursuant to its employee and director incentive restricted share plan cannot exceed 1% of the contract purchase price of all the properties based on assets held by the Company on the measurement date, adjusted for appropriate closing dates for individual property acquisitions. For purposes of this calculation, the value of the restricted stock granted to the advisor and its employees will be the value of the Company’s common stock, par value $0.01 per share, on the date of such grant. As of December 31, 2010, we paid $4.4 million to the Advisor who will determine if such fees will be partially waived in subsequent periods on a quarter-to-quarter basis.
S-12
Information Regarding Dilution
In connection with this ongoing offering of shares of our common stock, we are providing information about our net tangible book value per share. Our net tangible book value per share is a mechanical calculation using amounts from our audited balance sheet, and is calculated as (1) total book value of our assets less the net value of intangible assets (2) minus total liabilities less the net value of intangible liabilities, (3) divided by the total number of shares of common stock outstanding. It assumes that the value of real estate, and real estate related assets and liabilities diminish predictably over time as shown through the depreciation and amortization of real estate investments. Real estate values have historically risen or fallen with market conditions. Net tangible book value is used generally as a conservative measure of net worth that we do not believe reflects our estimated value per share. It is not intended to reflect the value of our assets upon an orderly liquidation of the company in accordance with our investment objectives. Our net tangible book value reflects dilution in the value of our common stock from the issue price as a result of (i) operating losses, which reflect accumulated depreciation and amortization of real estate investments, (ii) the funding of distributions from sources other than our cash flow from operations, and (iii) fees paid in connection with our public offering, including commissions, dealer manager fees and other offering costs. As of December 31, 2010, our net tangible book value per share was $6.62. The offering price of shares under our primary offering (ignoring purchase price discounts for certain categories of purchasers) at December 31, 2010 was $10.00.
Our offering price was not established on an independent basis and bears no relationship to the net value of our assets. Further, even without depreciation in the value of our assets, the other factors described above with respect to the dilution in the value of our common stock are likely to cause our offering price to be higher than the amount you would receive per share if we were to liquidate at this time.
S-13
PROSPECTUS UPDATES
Suitability Standards
The following disclosure is to be added as the second paragraph of the section of the Prospectus entitled “Suitability Standards” on page (i).
FINRA Rule 2310(b)(3)(D) requires that we disclose the liquidity of prior public programs sponsored by American Realty Capital, our sponsor. American Realty Capital has sponsored the following other public programs: American Realty Capital Trust II, Inc., American Realty Capital Trust III, Inc., American Realty Capital New York Recovery REIT, Inc., American Realty Capital Healthcare Trust, Inc., American Realty Capital — Retail Centers of America, Inc., Phillips Edison — ARC Shopping Center REIT, Inc., ARC-Northcliffe Income Properties, Inc., American Realty Capital Properties, Inc. and Business Development Corporation of America. Although the prospectus for each of these public programs states a date or time period by which it may be liquidated, each of American Realty Capital Trust II, Inc., ARC-Northcliffe Properties, Inc. and American Realty Capital Properties, Inc. are currently in registration with the SEC and American Realty Capital New York Recovery REIT, Inc., Phillips-Edison ARC Shopping Center, Inc., American Realty Capital Healthcare Trust, Inc. American Realty Capital Trust III, Inc., American Realty Capital-Retail Centers of America, Inc. and Business Development Corporation of America are in their offering and acquisition stages. None of these public programs have reached the stated date or time period by which they may be liquidated.
The fourth bullet point under of the section of the Prospectus entitled “Suitability Standards” on page (ii) is revised to remove the requirement that Mississippi residents represent they have a net worth of at least 10 times the amount of their investment in the offering and other similar programs, as follows:
| • | Alabama — In addition to the suitability standards above, shares will only be sold to Alabama residents that represent that they have a liquid net worth of at least 10 times the amount of their investment in this real estate investment program and other similar programs. |
S-14
Questions and Answers about this Offering
The following language replaces the first question and response under the heading “Questions and Answers about this Offering” beginning on page (viii) of the Prospectus.
| Q: | Who is American Realty Capital Trust, Inc.? |
| A: | We are the first REIT sponsored by American Realty Capital. We are a Maryland corporation organized on August 17, 2007 which qualified as a REIT beginning with the taxable year ended December 31, 2008. Since such time, American Realty Capital has sponsored eight other publicly offered REITS which include American Realty Capital New York Recovery REIT, Inc., or Recovery REIT, a Maryland corporation organized on October 6, 2009, Phillips Edison — ARC Shopping Center REIT, Inc., or PEARC, a Maryland corporation organized on October 13, 2009, American Realty Capital — Retail Centers of America, Inc., or ARC RCA, a Maryland corporation organized on July 29, 2010, American Realty Capital Healthcare Trust, Inc., or |