Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer x
(Do
not check if a smaller reporting company)
|
Smaller
reporting company o
|
Title
of Each Class of
Securities
to be Registered
|
Amounts
to be
Registered
|
Proposed
Offering
Price
Per Unit
|
Proposed
Aggregate
Offering
Price
|
Amount
of
Registration
Fee
|
||||
Primary
Offering
|
||||||||
Common
Stock, par value $0.01 per share
|
32,500,000
|
$10.00
|
$325,000,000.00
|
$23,172.50
|
||||
Distribution
Reinvestment Plan
|
||||||||
Common
Stock, par value $0.01 per share
|
2,631,578
|
$9.50
|
$25,000,000.00
|
$1,782.50
|
||||
Total
|
35,131,578
|
$350,000,000.00
|
$24,955.00
|
The
information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. The
prospectus is not an offer to sell the securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is
not permitted.
|
SUBJECT
TO COMPLETION, AUGUST
5, 2010
AMERICAN
REALTY CAPITAL
AMERICAN
REALTY CAPITAL TRUST, INC.
|
![]() |
|
·
|
As
of July 27, 2010 we have made 169 geographically diverse acquisitions but
have not identified specific properties to acquire with the net proceeds
we will receive from this follow-on offering. You will be unable to
evaluate the economic merit of our future investments before we make them
and there may be a substantial delay in receiving a return, if any, on
your investment.
|
|
·
|
There
are substantial conflicts among us and our sponsor, advisor, dealer
manager and property manager, such as the fact that our principal
executive officers own a majority interest in our advisor, our
dealer-manager and our property manager, and our advisor and other
affiliated entities may compete with us and acquire properties suitable to
our investment objectives.
|
|
·
|
No
public market currently exists, and one may never exist, for shares of our
common stock. If you are able to sell your shares, you would likely
have to sell them at a substantial
discount.
|
|
·
|
Distributions
payable to our stockholders may, without limitation, include distributions
from the proceeds of this offering or from borrowings in anticipation of
future cash flow, which may constitute a return of capital, reduce the
amount of capital we ultimately invest in properties and negatively impact
the value of your investment.
|
|
·
|
If
we do not remain qualified to be taxed as a REIT, it would reduce the
amount of income available for distribution and limit our ability to make
distributions to our stockholders.
|
|
·
|
You
may not own more than 9.8% in value of the aggregate of our outstanding
shares of stock and not more than 9.8% (in value or in number of shares,
whichever is more restrictive) of any class or series of shares of our
stock.
|
|
·
|
We
may incur substantial debt, which could hinder our ability to pay
distributions to our stockholders or could decrease the value of your
investment in the event that income on, or the value of, the property
securing the debt falls, but we will not incur debt to the extent it will
restrict our ability to qualify as a
REIT.
|
|
·
|
We
are dependent on our advisor to select investments and conduct our
operations. Adverse changes in the financial condition of our
advisor or our relationship with our advisor could adversely affect
us.
|
|
·
|
We
will pay substantial fees and expenses to our advisor, its affiliates and
participating broker-dealers, which payments increase the risk that you
will not earn a profit on your
investment.
|
|
·
|
This
is a “best efforts” offering and we might not sell all of the shares being
offered.
|
Price to Public
|
Selling
Commissions
|
Dealer Manager
Fee
|
Net Proceeds
(Before Expenses)
|
|||||||||||||
Follow-On
Primary Offering
|
||||||||||||||||
Per
Share
|
$ | 10.00 | $ | 0.70 | $ | 0.30 | $ | 9.00 | ||||||||
Total
Maximum
|
$ | 350,000,000 | $ | 24,500,000 | $ | 10,500,000 | $ | 35,000,000 |
|
·
|
a
net worth of at least $250,000; or
|
|
·
|
a
gross annual income of at least $70,000 and a net worth of at least
$70,000.
|
|
·
|
Kentucky
— Investors must have either (a) a net worth of $250,000 or (b) a gross
annual income of at least $70,000 and a net worth of at least $70,000,
with the amount invested in this offering not to exceed 10% of the
Kentucky investor’s liquid net
worth.
|
|
·
|
Massachusetts,
Ohio, Iowa, Pennsylvania and Oregon — Investors must have either (a) a
minimum net worth of at least $250,000 or (b) an annual gross income of at
least $70,000 and a net worth of at least $70,000. The investor’s
maximum investment in the issuer and its affiliates cannot exceed 10% of
the Massachusetts, Ohio, Iowa, Pennsylvania or Oregon resident’s net
worth.
|
|
·
|
Michigan
— Investors must have either (a) a minimum net worth of at least $250,000
or (b) an annual gross income of at least $70,000 and a net worth of at
least $70,000. The maximum investment in the issuer and its
affiliates cannot exceed 10% of the Michigan resident’s net
worth.
|
|
·
|
Tennessee
— In addition to the suitability requirements described above, investors’
maximum investment in our shares and our affiliates shall not exceed 10%
of the resident’s net worth.
|
|
·
|
Kansas
— In addition to the suitability requirements described above, it is
recommended that investors should invest no more than 10% of their liquid
net worth in our shares and securities of other real estate investment
trusts. “Liquid net worth” is defined as that portion of net worth
(total assets minus total liabilities) that is comprised of cash, cash
equivalents and readily marketable
securities.
|
|
·
|
Missouri
— In addition to the suitability requirements described above, no more
than ten percent (10%) of any one (1) Missouri investor’s liquid net worth
shall be invested in the securities registered by us for this offering
with the Securities Division.
|
|
·
|
California
— In addition to the suitability requirements described above, investors’
maximum investment in our shares will be limited to 10% of the investor’s
net worth (exclusive of home, home furnishings and
automobile).
|
|
·
|
Alabama
and Mississippi — In addition to the suitability standards above, shares
will only be sold to Alabama and Mississippi 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.
|
|
·
|
make
every reasonable effort to determine that the purchase of shares is a
suitable and appropriate investment for each investor based on information
provided by such investor to the broker-dealer, including such investor’s
age, investment objectives, income, net worth, financial situation and
other investments held by such investor;
and
|
|
·
|
maintain
records for at least six years of the information used to determine that
an investment in the shares is suitable and appropriate for each
investor.
|
|
·
|
meet
the minimum income and net worth standards established in your
state;
|
|
·
|
can
reasonably benefit from an investment in our common stock based on your
overall investment objectives and portfolio
structure;
|
|
·
|
are
able to bear the economic risk of the investment based on your overall
financial situation; and
|
|
·
|
have
an apparent understanding of:
|
|
·
|
the
fundamental risks of an investment in our common
stock;
|
|
·
|
the
risk that you may lose your entire
investment;
|
|
·
|
the
lack of liquidity of our common
stock;
|
|
·
|
the
restrictions on transferability of our common
stock;
|
|
·
|
the
background and qualifications of our advisor;
and
|
|
·
|
the
tax consequences of an investment in our common
stock.
|
|
·
|
a
“designated national,” “specially designated national,” “specially
designated terrorist,” “specially designated global terrorist,” “foreign
terrorist organization,” or “blocked person” within the definitions set
forth in the Foreign Assets Control Regulations of the U.S. Treasury
Department;
|
|
·
|
acting
on behalf of, or an entity owned or controlled by, any government against
whom the U.S. maintains economic sanctions or embargoes under the
Regulations of the U.S. Treasury
Department;
|
|
·
|
within
the scope of Executive Order 13224 — Blocking Property and Prohibiting
Transactions with Persons who Commit, Threaten to Commit, or Support
Terrorism, effective September 24,
2001;
|
|
·
|
subject
to additional restrictions imposed by the following statutes or
regulations and executive orders issued thereunder: the Trading with
the Enemy Act, the Iraq Sanctions Act, the National Emergencies Act, the
Antiterrorism and Effective Death Penalty Act of 1996, the International
Emergency Economic Powers Act, the United Nations Participation Act, the
International Security and Development Cooperation Act, the Nuclear
Proliferation Prevention Act of 1994, the Foreign Narcotics Kingpin
Designation Act, the Iran and Libya Sanctions Act of 1996, the Cuban
Democracy Act, the Cuban Liberty and Democratic Solidarity Act and the
Foreign Operations, Export Financing and Related Programs Appropriation
Act or any other law of similar import as to any non-U.S. country, as each
such act or law has been or may be amended, adjusted, modified or reviewed
from time to time; or
|
|
·
|
designated
or blocked, associated or involved in terrorism, or subject to
restrictions under laws, regulations, or executive orders as may apply in
the future similar to those set forth
above.
|
Page
|
|
Suitability
Standards
|
i
|
RESTRICTIONS
IMPOSED BY THE USA PATRIOT ACT AND RELATED ACTS
|
ii
|
QUESTIONS
AND ANSWERS ABOUT THIS OFFERING
|
vii
|
PROSPECTUS
SUMMARY
|
1
|
Status
of the Initial Offering
|
1
|
American
Realty Capital Trust, Inc.
|
1
|
REIT
Status
|
1
|
Advisor
|
1
|
Management
|
1
|
Operating
Partnership
|
2
|
Summary
Risk Factors
|
2
|
Description
of Investments
|
3
|
Estimated
Use of Proceeds of This Follow-On Offering
|
6
|
Investment
Objectives
|
6
|
Conflicts
of Interest
|
7
|
Prior
Offering
|
8
|
Terms
of The Offering
|
8
|
Compensation
to Advisor and its Affiliates
|
8
|
Status
of Fees Paid and Deferred
|
11
|
Distributions
|
12
|
Listing
or Liquidation
|
12
|
Distribution
Reinvestment Plan
|
12
|
Share
Repurchase Program
|
12
|
About
this Prospectus
|
14
|
RISK
FACTORS
|
15
|
Risks
Related to an Investment in American Realty Capital Trust,
Inc.
|
15
|
Risks
Related to Conflicts of Interest
|
17
|
Risks
Related to This Offering and Our Corporate Structure
|
20
|
General
Risks Related to Investments in Real Estate
|
24
|
Risks
Associated with Debt Financing
|
31
|
U.S.
Federal Income Tax Risks
|
33
|
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
37
|
ESTIMATED
USE OF PROCEEDS
|
38
|
MANAGEMENT
|
40
|
General
|
40
|
Committees
of the Board of Directors
|
41
|
Audit
Committee
|
41
|
Executive
Officers and Directors
|
41
|
Compensation
of Directors
|
44
|
Stock
Option Plan
|
45
|
Restricted
Share Plan
|
45
|
Compliance
with the American Jobs Creation Act
|
46
|
Limited
Liability and Indemnification of Directors, Officers, Employees and Other
Agents
|
46
|
The
Advisor
|
48
|
The
Advisory Agreement
|
48
|
Affiliated
Companies
|
50
|
Investment
Decisions
|
52
|
Certain
Relationships and Related Transactions
|
53
|
MANAGEMENT
COMPENSATION
|
55
|
STOCK
OWNERSHIP
|
61
|
CONFLICTS
OF INTEREST
|
62
|
Interests
in Other Real Estate Programs
|
62
|
Other
Activities of American Realty Capital Advisors, LLC and Its
Affiliates
|
62
|
Competition
in Acquiring, Leasing and Operating of Properties
|
63
|
Affiliated
Dealer Manager
|
63
|
Affiliated
Property Manager
|
63
|
Lack
of Separate Representation
|
63
|
Joint
Ventures with Affiliates of American Realty Capital Advisors,
LLC
|
63
|
Receipt
of Fees and Other Compensation by American Realty Capital Advisors, LLC
and Its Affiliates
|
63
|
Certain
Conflict Resolution Procedures
|
64
|
INVESTMENT
OBJECTIVES AND POLICIES
|
66
|
General
|
66
|
American
Realty Capital’s Business Plan
|
66
|
Acquisition
and Investment Policies
|
67
|
Making
Loans and Investments in Mortgages
|
79
|
Acquisition
of Properties from Affiliates
|
80
|
Section
1031 Exchange Program
|
81
|
Disposition
Policies
|
83
|
Investment
Limitations
|
83
|
Change
in Investment Objectives and Limitations
|
84
|
Investment
Company Act Considerations
|
84
|
Real
Property Investments
|
86
|
Potential
Property Investments
|
112
|
Other
Policies
|
112
|
PLAN
OF OPERATION
|
113
|
General
|
113
|
Liquidity
and Capital Resources
|
113
|
Results
of Operations
|
114
|
Inflation
|
114
|
SELECTED
FINANCIAL DATA
|
115
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATIONS
|
117
|
Overview
|
117
|
Recent
Market Conditions
|
118
|
Application
of Critical Accounting Policies
|
118
|
Liquidity
and Capital Resources
|
124
|
Election
as a REIT
|
125
|
Inflation
|
125
|
Related-Party
Transactions and Agreements
|
125
|
Conflicts
of Interest
|
125
|
Impact
of Recent Accounting Pronouncements
|
125
|
Off
Balance Sheet Arrangements
|
125
|
PRIOR
PERFORMANCE SUMMARY
|
126
|
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
|
129
|
ERISA
CONSIDERATIONS
|
143
|
General
|
143
|
Minimum
and Other Distribution Requirements — Plan Liquidity
|
144
|
Annual
or More Frequent Valuation Requirement
|
144
|
Fiduciary
Obligations — Prohibited Transactions
|
144
|
Plan
Assets—Definition
|
145
|
Plan
Assets — Registered Investment Company Exception
|
145
|
Publicly
Offered Securities Exemption
|
145
|
Plan
Assets — Operating Company Exception
|
145
|
Plan
Assets — Not Significant Investment Exception
|
146
|
Consequences
of Holding Plan Assets
|
146
|
Prohibited
Transactions
|
146
|
Prohibited
Transactions — Consequences
|
147
|
Reporting
|
147
|
DESCRIPTION
OF SHARES
|
148
|
Common
Stock
|
148
|
Preferred
Stock
|
148
|
Dilution
of Our Shares
|
149
|
Meetings
and Special Voting Requirements
|
149
|
Restrictions
on Ownership and Transfer
|
150
|
Automatic
Purchase Plan
|
151
|
Distribution
Policy and Distributions
|
151
|
Stockholder
Liability
|
155
|
Business
Combinations
|
155
|
Control
Share Acquisitions
|
156
|
Subtitle
8
|
156
|
Advance
Notice of Director Nominations and New Business
|
157
|
Share
Repurchase Program
|
157
|
Restrictions
on Roll-up Transactions
|
158
|
SUMMARY
OF OFFERING DISTRIBUTION REINVESTMENT PLAN
|
159 |
OUR
OPERATING PARTNERSHIP AGREEMENT
|
160
|
General
|
160
|
Capital
Contributions
|
160
|
Operations
|
160
|
Exchange
Rights
|
161
|
Amendments
to the Partnership Agreement
|
162
|
Termination
of the Partnership
|
162
|
Transferability
of Interests
|
162
|
PLAN
OF DISTRIBUTION
|
163
|
The
Offering
|
163
|
Realty
Capital Securities, LLC
|
163
|
Compensation
We Will Pay for the Sale of Our Shares
|
163
|
Shares
Purchased by Affiliates
|
164
|
Volume
Discounts
|
165
|
Subscription
Process
|
166
|
Status
of the Initial Offering
|
166
|
HOW
TO SUBSCRIBE
|
167
|
SUPPLEMENTAL
SALES MATERIAL
|
167
|
LEGAL
MATTERS
|
168
|
EXPERTS
|
168
|
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
|
169
|
WHERE
YOU CAN FIND MORE INFORMATION
|
170
|
APPENDIX
A: SUBSCRIPTION AGREEMENT
|
1
|
APPENDIX
B: PRIOR PERFORMANCE TABLES
|
1
|
ARC
Growth Partnership, LP
|
B-12
|
Q:
|
What
is a REIT?
|
A:
|
In
general, a real estate investment trust, or REIT, is a company
that:
|
|
·
|
makes
an election to be treated as a REIT for U.S. federal income tax
purposes;
|
|
·
|
pays
distributions to investors each year of at least 90% of its taxable income
(excluding net capital gain), determined without regard to the deduction
for dividends paid;
|
|
·
|
avoids
the “double taxation” treatment of income that generally results from
investments in a corporation because a REIT generally is not subject to
U.S. federal corporate income taxes and excise taxes on its net income,
provided certain tax requirements are satisfied; and combines the capital
of many investors to acquire, with the proceeds from our initial offering
and this follow-on offering, a large-scale diversified real estate
portfolio under professional
management.
|
Q:
|
How
do you differentiate yourself from your competitors who offer non-traded
public REIT shares or real estate limited partnership
units?
|
A:
|
We
focus on acquiring a diversified portfolio of freestanding, single-tenant
retail and commercial properties that are net leased to investment grade
and other creditworthy tenants. The net leases with our tenants
allow us to pass through all operating and capital expenses items directly
to our tenant. The tenant is billed directly for all expense items
and capital costs and the tenant pays such costs directly to the provider
without having to go through us. Multi-tenant retail and commercial
properties, unlike our net lease properties, are subject to much greater
volatility in operating results due to unexpected increases in operating
costs or unforeseen capital and repair expenses. Our leases allow us
to pass through these costs to the
tenant.
|
Q:
|
Generally,
what are the terms of your leases?
|
A:
|
We
seek to acquire properties that have leases with investment grade and
other creditworthy tenants. We expect that our leases generally will
be triple-net leases, which means that the tenant is responsible for all
costs and expenses related to the use and operation of the property,
including, but not limited to, the cost of maintenance, repairs, property
taxes and insurance, utilities and all other operating and capital
costs. In certain of these leases, we will be responsible for the
repair and/or replacement of specific structural and load bearing
components of a property, such as the roof or structure of the
building. We expect that our leases generally will have terms of ten
or more years, oftentimes with multiple renewal options. We may,
however, enter into leases that have a shorter
term.
|
Q:
|
How
will you determine creditworthiness of prospective tenants and select
potential investments?
|
A:
|
We
determine creditworthiness pursuant to various methods, including
reviewing financial data and other information about the tenant. In
addition, we may use an industry credit rating service to determine the
creditworthiness of potential tenants and any personal guarantor or
corporate guarantor of each potential tenant. We will compare the
reports produced by these services to the relevant financial and other
data collected from these parties before consummating a lease
transaction. Such relevant data from potential tenants and
guarantors include income and cash flow statements and balance sheets for
current and prior periods, net worth or cash flow of guarantors, and
business plans and other data we deem
relevant.
|
Q:
|
What
is the experience of your officers and directors both in real estate in
general and with net leased assets in
particular?
|
A:
|
Nicholas
S. Schorsch, our chairman and chief executive officer, founded and
formerly served as President, CEO and Vice-Chairman of American Financial
Realty Trust since its inception as a REIT in September 2002 until August
2006. American Financial Realty Trust is a publicly traded REIT
listed on the NYSE that invests exclusively in office, bank branches and
other operationally critical real estate assets that are net leased to
tenants in the financial service industry such as banks and insurance
companies. Through American Financial Resource Group and its
successor corporation, now American Financial Realty Trust, Mr. Schorsch
has executed in excess of 1,000 acquisitions, both in acquiring businesses
and real estate properties with transactional value of approximately $5
billion. In 2003, Mr. Schorsch received an Entrepreneur of the Year
award from Ernst & Young.
|
Q:
|
What
is your environmental review
policy?
|
A:
|
We
generally will not purchase any property unless and until we also obtain
what is generally referred to as a “Phase I” environmental site assessment
and are generally satisfied with the environmental status of the
property. However, we may purchase a property without obtaining such
assessment if our advisor determines it is not warranted. A Phase I
environmental site assessment basically consists of a visual survey of the
building and the property in an attempt to identify areas of potential
environmental concerns. In addition, a visual survey of neighboring
properties is conducted to assess surface conditions or activities that
may have an adverse environmental impact on the property.
Furthermore, local governmental agency personnel are contacted who perform
a regulatory agency file search in an attempt to determine any known
environmental concerns in the immediate vicinity of the property. A
Phase I environmental site assessment does not generally include any
sampling or testing of soil, ground water or building materials from the
property, and may not reveal all environmental hazards on a
property. We expect that in most cases we will request, but will not
always obtain, a representation from the seller that, to its knowledge,
the property is not contaminated with hazardous materials.
Additionally, many of our leases contain clauses that require a tenant to
reimburse and indemnify us for any environmental contamination occurring
at the property.
|
Q:
|
Do
you expect to enter into joint
ventures?
|
A:
|
Possibly.
We may enter into joint ventures on property types that meet our overall
investment strategy and return criteria that would otherwise not be
available to us because the current owners may be reluctant to sell a 100%
interest in their property. We may also enter into a joint venture
with a third party who has control over a particular investment
opportunity but does not have sufficient equity capital to complete the
transaction. We may enter into joint ventures with our affiliates or
with third parties. Generally, we will only enter into a joint
venture in which we will control the decisions of the joint venture.
If we do enter into joint ventures, we may assume liabilities related to
the joint venture that exceed the percentage of our investment in the
joint venture.
|
Q:
|
Will
distributions be taxable as ordinary
income?
|
A:
|
Yes
and no. Generally, distributions that you receive (not designated as
capital gains dividends), including distributions that are reinvested
pursuant to our distribution reinvestment plan, will be taxed as ordinary
income to the extent the distribution is from current or accumulated
earnings and profits. However, distributions that we designate as
capital gains dividends will generally be taxable as long-term capital
gain to the extent they do not exceed our actual net capital gain for the
taxable year. We expect that some portion of your distributions may not be
subject to tax in the year received because depreciation expense reduces
taxable income but does not reduce cash available for distribution.
The portion of your distribution (not designated as a capital gain
dividend or, for taxable years beginning before January 1, 2011, qualified
dividend income) that is in excess of our current and accumulated earnings
and profits is considered a return of capital for U.S. federal income tax
purposes and will reduce the tax basis of your investment. This
defers a portion of your tax until your investment is sold or we are
liquidated, at which time you will be taxed at capital gains rates.
However, because each investor’s tax considerations are different, we
recommend that you consult with your tax advisor. You also should
review the section of this prospectus entitled “Material U.S. Federal
Income Tax Considerations.”
|
Q:
|
How
does a best efforts offering work?
|
A:
|
When
shares are offered to the public on a “best efforts” basis, the brokers
participating in the offering are only required to use their best efforts
to sell the shares and have no firm commitment or obligation to purchase
any of the shares. Therefore, we may not sell all of the shares that
we are offering.
|
Q.
|
What
kind of offering is this?
|
A:
|
This
is a follow-on offering to our initial offering. Through our dealer
manager, we are offering a maximum of $350,000,000 in shares in our
primary offering on a “best efforts” basis for $10.00 per
share.
|
Q.
|
What
is a follow-on offering?
|
A:
|
Our
initial offering commenced on January 25, 2008 and will terminate on or
before January 25, 2011, unless such initial offering is extended to a
date no later than July 25, 2011. We will continue to sell shares of
our common stock pursuant to this second public offering, or “follow-on”
offering, according to the terms, fees and conditions described in this
prospectus.
|
Q.
|
How
long will this offering last?
|
A:
|
This
is a continuous offering that will end no later than August 5, 2012 two
years from the date of the prospectus, unless extended. If we extend
beyond August 5, 2012, we will supplement the prospectus
accordingly. We may also terminate this offering at any
time.
|
Q:
|
What
will you do with the money raised in this offering before you invest the
proceeds in real estate?
|
A:
|
Until
we invest the net proceeds of this offering in real estate, we may use a
portion of the proceeds to fund distributions and we may invest in
short-term, highly liquid or other authorized investments, such as money
market mutual funds, certificates of deposit, commercial paper,
interest-bearing government securities and other short-term
investments. We may not be able to invest the proceeds in real
estate promptly and such short-term investments will not earn as high of a
return as we expect to earn on our real estate
investments.
|
Q:
|
What
is an “UPREIT”?
|
A:
|
UPREIT
stands for “Umbrella Partnership Real Estate Investment Trust.” An UPREIT
is a REIT that holds substantially all of its properties through a
partnership in which the REIT holds an interest as a general partner
and/or a limited partner, approximately equal to the value of capital
raised by the REIT through sales of its capital stock. We use an
UPREIT structure because a sale of property directly to a REIT generally
is a taxable transaction to the selling property owner. In an UPREIT
structure, a seller of a property that desires to defer taxable gain on
the sale of its property may transfer the property to the UPREIT in
exchange for limited partnership units in the UPREIT and defer taxation of
gain until the seller later exchanges its UPREIT units on a one-for-one
basis for REIT shares. If the REIT shares are publicly traded, at
the time of the exchange of units for shares, the former property owner
will achieve liquidity for its investment. Using an UPREIT structure
may give us an advantage in acquiring desired properties from persons who
may not otherwise sell their properties because of certain unfavorable
U.S. federal income tax
consequences
|
Q:
|
Who
can buy shares?
|
A:
|
Generally,
you may buy shares pursuant to this prospectus provided that you have
either (a) a net worth of at least $70,000 and a gross annual income of at
least $70,000, or (b) a net worth of at least $250,000. For this
purpose, net worth does not include your home, home furnishings and
automobiles. Residents of certain states may have a different
standard. You should carefully read the more detailed description
under “Suitability Standards” immediately following the cover page of this
prospectus.
|
Q:
|
Who
should buy shares?
|
A:
|
An
investment in our shares may be appropriate for you if you meet the
minimum suitability standards mentioned above, seek to diversify your
personal portfolio with a finite-life real estate-based investment, which
among its benefits hedges against inflation and the volatility of the
stock market, seek to receive current income, seek to preserve capital,
wish to obtain the benefits of potential long-term capital appreciation,
and are able to hold your investment for a time period consistent with our
liquidity plans. Persons who require immediate liquidity or
guaranteed income, or who seek a short-term investment, are not
appropriate investors for us, as our shares will not meet those
needs.
|
Q:
|
May I make an investment
through my IRA, SEP or other tax-deferred
account?
|
A:
|
Yes.
You may make an investment through your individual retirement account
(“IRA”), a simplified employee pension (“SEP”) plan or other tax-deferred
account. In making these investment decisions, you should consider,
at a minimum, (a) whether the investment is in accordance with the
documents and instruments governing your IRA, plan or other account, (b)
whether the investment satisfies the fiduciary requirements associated
with your IRA, plan or other account, (c) whether the investment will
generate unrelated business taxable income (“UBTI”) to your IRA, plan or
other account, (d) whether there is sufficient liquidity for such
investment under your IRA, plan or other account, (e) the need to value
the assets of your IRA, plan or other account annually or more frequently,
and (f) whether the investment would constitute a prohibited transaction
under applicable law.
|
Q:
|
Is
there any minimum investment
required?
|
A:
|
Yes.
Generally, you must invest at least $1,000. Investors who already
own our shares can make additional purchases for less than the minimum
investment. You should carefully read the more detailed description
of the minimum investment requirements appearing under “Suitability
Standards” immediately following the cover page of this
prospectus.
|
Q:
|
What
type of reports on my investment will I
receive?
|
A:
|
We
will provide you with periodic updates on the performance of your
investment with us, including:
|
|
·
|
following
our commencement of distributions to stockholders, four quarterly or 12
monthly distribution reports;
|
|
·
|
three
quarterly financial reports only by written
request;
|
|
·
|
an
annual report;
|
|
·
|
an
annual Form 1099; if applicable and
|
|
·
|
supplements
to the prospectus during the offering period, via mailings or website
access.
|
|
·
|
U.S.
mail or other courier;
|
|
·
|
facsimile;
|
|
·
|
electronic
delivery; or
|
|
·
|
posting,
or providing a link, on our affiliated website, which is www.americanrealtycap.com.
|
Q:
|
When will I get my detailed tax
information?
|
A:
|
If
applicable your Form 1099 tax information will be placed in the mail by
January 31 of each year.
|
Q:
|
How
do I subscribe for shares?
|
A:
|
If
you choose to purchase shares in this offering and you are not already a
stockholder, you will need to complete and sign a subscription agreement,
like the one contained in this prospectus as Appendix A, for a specific
number of shares and pay for the shares at the time you
subscribe.
|
Q:
|
Who
is the transfer agent?
|
A:
|
The
name and address of our transfer agent
is:
|
Q:
|
Who
can help answer my questions?
|
A:
|
If
you have more questions about the offering or if you would like additional
copies of this prospectus, you should contact your registered
representative or contact:
|
|
·
|
Our
advisor and its affiliates will face conflicts of interest, including
significant conflicts among us and our advisor, since (a) our principal
executive officers own a majority interest in our advisor, our dealer
manager and our property manager, (b) our advisor and other affiliated
entities may compete with us and acquire properties suitable to our
investment objectives, and (c) our advisor’s compensation arrangements
with us and other American Realty Capital-sponsored programs may provide
incentives that are not aligned with the interests of our
stockholders.
|
|
·
|
This
may be considered a blind pool offering since we own a limited number of
properties and, other than as described in the “Investment Objectives and
Policies” section herein, we have not identified any specific additional
properties to acquire with the proceeds of this offering. As a
result, you will be unable to evaluate the economic merit of all of our
future investments prior to our making them and there may be a substantial
delay in receiving a return, if any, on your
investment.
|
|
·
|
Our
charter generally prohibits you from acquiring or owning, directly or
indirectly, more than 9.8% in value of the aggregate of our outstanding
shares of stock and not more than 9.8% (in value or in number of shares,
whichever is more restrictive) of any class or series of shares of our
stock and contains additional restrictions on the ownership and transfer
of our shares. Therefore, your ability to control the direction of
our company will be limited.
|
|
·
|
No
public market currently exists for shares of our common stock and one may
never exist. If you are able to sell your shares, you would likely
have to sell them at a substantial discount from their public offering
price.
|
|
·
|
This
is a best efforts offering and we might not sell all of the shares being
offered. If we raise substantially less than the maximum follow-on
offering, we may not be able to invest in a diverse portfolio of
properties, and the value of your investment may vary more widely with the
performance of specific properties. There is a greater risk that you
will lose money in your investment if we cannot diversify our portfolio of
investments by geographic location, tenant mix and property
type.
|
|
·
|
We
may incur substantial debt, which could hinder our ability to pay
distributions to our stockholders or could decrease the value of your
investment in the event that income on, or the value of, the property
securing the debt falls, but we will not incur debt to the extent it will
restrict our ability to qualify as a
REIT.
|
|
·
|
Until
the proceeds from this offering are invested and generating operating cash
flow sufficient to make distributions to our stockholders, we may pay all
or a substantial portion of our distributions from the proceeds of this
offering or from borrowings in anticipation of future cash flow, which may
constitute a return of your capital, reduce the amount of capital we
ultimately invest in properties, and negatively impact the value of your
investment.
|
|
·
|
If
we fail to continue to qualify as a REIT for U.S. federal income tax
purposes, our operations and ability to make distributions to our
stockholders would be adversely
affected.
|
|
·
|
We
are dependent on our advisor to select investments and conduct our
operations. Adverse changes in the financial condition of our
advisor or our relationship with our advisor could adversely affect
us.
|
|
·
|
We
will pay substantial fees and expenses to our advisor, its affiliates and
participating broker-dealers, which payments increase the risk that you
will not earn a profit on your
investment.
|
|
·
|
Our
board of directors has the authority to designate and issue one or more
classes or series of preferred stock without stockholder approval, with
rights and preferences senior to the rights of holders of common stock,
including rights to payment of distributions. If we issue any shares
of preferred stock, the amount of funds available for the payment of
distributions on the common stock could be reduced or
eliminated.
|
|
·
|
We
may be deemed to be an investment company under the Investment Company Act
of 1940 (the “Investment Company Act”) and thus subject to regulation
under the Investment Company Act.
|
|
·
|
Distribution and Warehouse
Facilities
|
|
·
|
a
FedEx Cross-Dock facility in Snowshoe, PA; a FedEx Freight Facility in
Houston, TX; and a FedEx Freight West, Inc. distribution facility in West
Sacramento, CA;
|
|
·
|
a
leasehold interest in a build-to-suit Home Depot Distribution Facility in
Topeka, KS;
|
|
·
|
2
Fresenius Medical Care Distribution Facilities located in Apple Valley, CA
and Shasta Lake, CA, respectively;
|
|
·
|
1
build-to-suit warehouse facility for Reckitt Benckiser located in Tooele,
UT, near Salt Lake City;
|
|
·
|
Banks
|
|
·
|
15
First Niagara (formerly Harleysville National Bank and Trust Company) bank
branch properties in various Pennsylvania
locations;
|
|
·
|
18
Rockland Trust Company bank branch properties in various Massachusetts
locations;
|
|
·
|
52
PNC Bank (including 2 formerly National City Bank) branches in Florida,
Pennsylvania, New Jersey and Ohio;
|
|
·
|
Drug
Stores
|
|
·
|
6
Rite Aid properties in various locations in Pennsylvania and
Ohio;
|
|
·
|
3
Walgreens locations located in Sealy, TX, Byram MS and LeRoy,
NY;
|
|
·
|
25
newly constructed retail stores from CVS Caremark located in 16 states —
Illinois, South Carolina, Texas, Georgia, Michigan, New York, Arizona,
North Carolina, California, Alabama, Florida, Indiana, Maine, Minnesota,
Missouri, and Nevada;
|
|
·
|
Automobile
Service
|
|
·
|
6
recently constructed Bridgestone retail stores in various locations in
Oklahoma and Florida;
|
|
·
|
4
Advanced Auto locations located in Michigan, Alabama and
Mississippi;
|
|
·
|
12
recently constructed Bridgestone Firestone auto-centers located in
Albuquerque, NM, Rockwell, TX, Weatherford, TX, League City, TX, Crowley,
TX, Allen, TX, Pearland, TX, Austin, TX, Grand Junction, CO, Benton, AR,
Wichita, KS and Baton Rouge, LA;
|
|
·
|
Restaurants
|
|
·
|
11
restaurants from Jack In the Box, Inc. located in Desloge, MO; The Dalles,
OR; Vancouver, WA, Corpus Christi, TX Houston, TX, South Houston,
TX; two properties in Victoria, TX; Beaumont, TX Ferris, TX and
Forney, TX.
|
|
·
|
3
built-to suit, free-standing restaurant for International House of
Pancakes located in Hilton Head, SC, Buford, GA and Cincinnati,
OH;
|
|
·
|
Retail
|
|
·
|
4
build-to-suit properties from Jared the Galleria of Jewelry located in
Amherst, NY, Lake Grove, NY and Watchung, NJ and Plymouth, Massachusetts;
and
|
|
·
|
1
Super Stop & Shop supermarket located in Nanuet,
NY.
|
|
·
|
1 build to suit free standing
retail property for Tractor Supply located in DuBois,
PA
|
|
·
|
1 build to suit free standing
retail property for Dollar General located in Jacksonville,
FL
|
March
31,
|
December
31,
|
|||||||||||||||
2010
|
|
2009
|
2008
|
2007
|
||||||||||||
Total
real estate investments, at cost
|
$ | 419,994 | $ | 338,556 | $ | 164,770 | $ | — | ||||||||
Total
assets
|
417,239 | 339,277 | 164,942 | 938 | ||||||||||||
Mortgage
notes payable
|
225,118 | 183,811 | 112,742 | — | ||||||||||||
Total
short-term equity
|
0 | 15,878 | 30,926 | — | ||||||||||||
Other
notes payable
|
13,000 | 13,000 | 1,090 | — | ||||||||||||
Intangible
lease obligation, net
|
9,006 | 9,085 | 9,400 | — | ||||||||||||
Total
liabilities
|
254,736 | 228,721 | 163,183 | 738 | ||||||||||||
Total
stockholders’ equity
|
162,503 | 110,556 | 1,759 | 200 |
Three
Months
Ended
March
31, 2010
|
Year
Ended
December
31,
2009
|
Year
Ended
December
31,
2008
|
For
the
Period from
August
17, 2007 (date of
inception)
to
December
31,
2007
|
|||||||||||||
Total
revenue
|
$ | 7,428 | $ | 14,964 | $ | 5,546 | $ | — | ||||||||
Expenses
|
||||||||||||||||
Property
management fees to affiliate
|
— | — | 4 | — | ||||||||||||
Asset
management fees to affiliate
|
— | 145 | — | — | ||||||||||||
Acquisition
and transaction related costs
|
341 | 506 | — | — | ||||||||||||
General
and administrative
|
224 | 507 | 380 | 1 | ||||||||||||
Depreciation
and amortization
|
3,785 | 8,315 | 3,056 | — | ||||||||||||
Total
operating expenses
|
4,350 | 9,473 | 3,440 | 1 | ||||||||||||
Operating
income (loss)
|
3,078 | 5,491 | 2,106 | (1 | ) | |||||||||||
Other
income (expenses)
|
||||||||||||||||
Interest
expense
|
(3,673 | ) | (10,353 | ) | (4,774 | ) | — | |||||||||
Interest
income
|
11 | 52 | 3 | — | ||||||||||||
Gains
on sales to noncontrolling interest holders, net
|
335 | — | — | — | ||||||||||||
Gains
(losses) on derivative instruments
|
(152 | ) | 495 | (1,618 | ) | — | ||||||||||
Total
other expenses
|
3,479 | (9,805 | ) | (6,389 | ) | — | ||||||||||
Net
loss
|
$ | (401 | ) | $ | (4,315 | ) | $ | (4,283 | ) | $ | (1 | ) | ||||
Other
data
|
||||||||||||||||
Modified
funds from
operations (1)
(2)
|
$ | 3,314 | $ | 3,460 | $ | 477 | $ | — | ||||||||
Cash
flows provided by (used in) operations
|
2,060 | (2,526 | ) | 4,013 | (200 | ) | ||||||||||
Cash
flows used in investing activities
|
(81,438 | ) | (173,786 | ) | (97,456 | ) | — | |||||||||
Cash
flows provided by financing activities
|
77,146 | 180,435 | 94,330 | 200 | ||||||||||||
Per
share data
|
||||||||||||||||
Net
loss per common share – basic and diluted
|
$ | (0.02 | ) | $ | (0.74 | ) | $ | (6.02 | ) | $ | — | |||||
Distributions
declared
|
$ | .70 | $ | .67 | $ | .65 | $ | — | ||||||||
Weighted-average
number of common shares outstanding, basic and diluted
|
17,845,489 | 5,768,761 | 711,524 | — |
(1)
|
We
consider funds from operations (“FFO”) and modified funds from operations
(“MFFO”) a useful indicator of the performance of a REIT. Because FFO
calculations exclude such factors as depreciation and amortization of real
estate assets and gains or losses from sales of operating real estate
assets (which can vary among owners of identical assets in similar
conditions based on historical cost accounting and useful-life estimates),
they facilitate comparisons of operating performance between periods and
between other REITs in our peer group. Accounting for real estate assets
in accordance with GAAP implicitly assumes that the value of real estate
assets diminishes predictability over time. Since real estate values have
historically risen or fallen with market conditions, many industry
investors and analysts have considered the presentation of operating
results for real estate companies that use historical cost accounting to
be insufficient by themselves. As a result, we believe that the use of FFO
and MFFO, together with the required GAAP presentations, provide a more
complete understanding of our performance relative to our peers and a more
informed and appropriate basis on which to make decisions involving
operating, financing, and investing activities. Other REITs may not define
FFO and MFFO in accordance with the current National Association of Real
Estate Investment Trust’s (“NAREIT”) definition (as we do) or may
interpret the current NAREIT definition differently than we do.
Consequently, our presentation of FFO and MFFO may not be comparable to
other similarly titled measures presented by other
REITs.
|
(2)
|
The
FFO and MFFO measurement is applicable for the nine months ended December
31, 2008.
|
Maximum Initial
Offering
(Not Including
Distribution
Reinvestment Plan)
|
Maximum Follow-
On Offering1 |
|||||||||||
Amount
|
Amount
|
Percent
|
||||||||||
Gross
Offering Proceeds
|
$ | 1,500,000,000 | $ | 325,000,000 | 100 | % | ||||||
Less
Public Offering Expenses:
|
||||||||||||
Selling
Commissions and Dealer Manager Fee
|
150,000,000 | 32,500,000 | 10.0 | % | ||||||||
Organization
and Offering Expenses
|
22,500,000 | 4,875,000 | 1.5 | % | ||||||||
Amount
Available for Investment
|
1,327,500,000 | 287,625,000 | 88.5 | % | ||||||||
Acquisition
and Development:
|
||||||||||||
Acquisition
and Advisory Fees
|
13,275,000 | 2,545,481 | 0.885 | % | ||||||||
Acquisition
Expenses
|
6,000,000 | 1,150,500 | 0.4 | % | ||||||||
Initial
Working Capital Reserve
|
1,500,000 | 325,000 | 0.1 | % | ||||||||
Amount
Invested in Properties
|
$ | 1,306,725,000 | $ | 283,604,019 | 87.115 | % |
|
·
|
to
provide current income for you through the payment of cash distributions;
and
|
|
·
|
to
preserve, protect and return your invested
capital.
|
|
·
|
The
management personnel of American Realty Capital Advisors, LLC, each of
whom may in the future make investment decisions for other American Realty
Capital-sponsored programs and direct investments, must determine which
investment opportunities to recommend to us or another American Realty
Capital-sponsored program or joint venture, and must determine how to
allocate resources among us and any other future American Realty
Capital-sponsored programs;
|
|
·
|
American
Realty Capital Advisors, LLC may structure the terms of joint ventures
between us and other American Realty Capital-sponsored
programs;
|
|
·
|
American
Realty Capital Advisors, LLC and its affiliates will have to allocate
their time between us and other real estate programs and activities in
which they may be involved in the future;
and
|
|
·
|
American
Realty Capital Advisors, LLC and its affiliates will receive fees in
connection with transactions involving the purchase, financing, management
and sale of our properties, and, because our advisor does not maintain a
significant equity interest in us and is entitled to receive substantial
minimum compensation regardless of performance, our advisor’s interests
are not wholly aligned with those of our
stockholders.
|
(1)
|
The
investors in this offering will own registered shares of common stock in
American Realty Capital Trust, Inc.
|
(2)
|
The
Individuals are our Sponsors, Nicholas S. Schorsch, William M. Kahane,
Peter M. Budko, Brian S. Block, and Edward M. Weil, Jr., whose ownership
in the affiliates is represented by direct and indirect
interests.
|
(3)
|
American
Realty Capital II, LLC currently owns 20,000 shares of our common
stock.
|
(4)
|
American
Realty Capital Trust, Inc. and American Realty Capital Operating
Partnership, L.P. have entered into a Dealer Manager Agreement with Realty
Capital Securities, LLC, which will serve as our dealer
manager.
|
(5)
|
American
Realty Capital Trust, Inc. and American Realty Capital Operating
Partnership, L.P. have entered into an Advisory Agreement with American
Realty Capital Advisors, LLC, which will serve as our
advisor.
|
(6)
|
American
Realty Capital Trust, Inc. and American Realty Capital Operating
Partnership, L.P. have entered into a Property Management Agreement with
American Realty Capital Properties, LLC, which serves as our property
manager.
|
(7)
|
American
Realty Capital Operating Partnership, L.P. owns the properties indirectly
through respective special purpose
entities.
|
Type of Compensation
|
Determination of Amount for Initial Offering
and Follow-On Offering
|
Amounts Paid in
Initial Offering
(as of June 30, 2010
|
Estimated Amount
for Maximum
Initial Offering
(150,000,000
shares)
|
Estimated
Maximum Amount
for Follow-On
Offering
(32,500,000 shares)
|
||||||||||
Selling
Commission
|
We
will pay to Realty Capital Securities, LLC 7% of gross proceeds of our
primary offering; Realty Capital Securities, LLC will reallow all selling
commissions to participating broker-dealers.
|
$ | 18,373,000 | $ | 105,000,000 | $ | 24,500,000 | |||||||
Dealer
Manager Fee
|
We
will pay to Realty Capital Securities, LLC 3% of gross proceeds of our
primary offering; Realty Capital Securities, LLC may reallow all or a
portion of its dealer manager fees to participating
broker-dealers.
|
$ | 8,441,000 | $ | 45,000,000 | $ | 10,500,000 | |||||||
Other
Organization and Offering Expenses
|
We
will reimburse American Realty Capital Advisors, LLC up to 1.5% of gross
offering proceeds for organization and offering
expenses.
|
$ | 14,027,000 | $ |
22,500,000
|
$ |
5,250,000
|
Type of Compensation
|
Determination of Amount for Initial Offering
and Follow-On Offering
|
Amounts Paid in
Initial Offering
(as of June 30, 2010
|
Estimated Amount
for Maximum
Initial Offering
(150,000,000
shares)
|
Estimated
Maximum Amount
for Follow-On
Offering
(32,500,000 shares)
|
|||||||||
Operational
Stage
|
|||||||||||||
Acquisition
Fees
|
We
will pay to American Realty Capital Advisors, LLC 1% of the contract
purchase price of each property acquired.
|
$4,982,000
|
$13,275,000
|
$3,500,000
|
|||||||||
Acquisition
Expenses
|
We
will reimburse American Realty Capital Advisors, LLC for acquisition
expenses (including personnel costs) incurred in acquiring property We
expect these fees to be approximately 0.5% of the purchase price of each
property. In no event will the total of all acquisition and advisory
fees and acquisition expenses payable with respect to a particular
investment exceed 4% of the contract purchase price.
|
$2,626,000
|
$6,000,000
|
$1,750,000
|
|||||||||
Asset
Management Fees
|
We
will pay American Realty Capital Advisors, LLC a yearly fee equal to 1% of
the contract purchase price of each property plus costs and expenses
incurred by the advisor in providing asset management services, payable
semiannually, based on assets held by us on the measurement date, adjusted
for appropriate closing dates for individual property
acquisitions.
|
$495,000
|
Not
determinable at this time. Because the fee is based on a fixed
percentage of aggregate asset value there is no maximum dollar amount of
this fee.
|
Not
determinable at this time. Because the fee is based on a fixed
percentage of aggregate asset value there is no maximum dollar amount of
this fee.
|
|||||||||
Property
Management and Leasing Fees
|
For
the management and leasing of our properties, we will pay to American
Realty Capital Properties, LLC, an affiliate of our advisor, a property
management fee (a) 2% of gross revenues from our single tenant properties
and (b) 4% of gross revenues from our multi-tenant properties, plus,
in each case, market-based leasing commissions applicable to the
geographic location of the property. We also will reimburse American
Realty Capital Properties, LLC’s costs of managing the properties.
American Realty Capital Properties, LLC or its affiliates may also receive
a fee for the initial leasing of newly constructed properties, which would
generally equal one month’s rent. In the unlikely event that
American Realty Capital Properties, LLC assists a tenant with tenant
improvements, a separate fee may be charged to, and payable by, us.
This fee will not exceed 5% of the cost of the tenant improvements.
The aggregate of all property management and leasing fees paid to our
affiliates plus all payments to third parties for such fees will not
exceed the amount that other nonaffiliated management and leasing
companies generally charge for similar services in the same geographic
location as determined by a survey of brokers and agents in such
area.
|
–
|
Not
determinable at this time. Because the fee is based on a fixed
percentage of gross revenue and/or market rates, there is no maximum
dollar amount of this fee.
|
Not
determinable at this time. Because the fee is based on a fixed
percentage of gross revenue and/or market rates, there is no maximum
dollar amount of this fee.
|
Type of Compensation
|
Determination of Amount for Initial Offering
and Follow-On Offering
|
Amounts Paid in
Initial Offering
(as of June 30, 2010
|
Estimated Amount
for Maximum
Initial Offering
(150,000,000
shares)
|
Estimated
Maximum Amount
for Follow-On
Offering
(32,500,000 shares)
|
||||
Operating
Expenses
|
We
will reimburse our advisor’s costs of providing administrative services,
subject to the limitation that we will not reimburse our advisor for any
amount by which our operating expenses (including the asset management
fee) at the end of the four preceding fiscal quarters exceeds the greater
of (a) 2% of average invested assets, or (b) 25% of net income other than
any additions to reserves for depreciation, bad debt or other similar
noncash reserves and excluding any gain from the sale of assets for that
period. Additionally, we will not reimburse our advisor for
personnel costs in connection with services for which the advisor receives
acquisition fees or real estate commissions.
|
–
|
Not
determinable at this time.
|
Not
determinable at this time.
|
||||
Financing
Coordination Fee
|
If
our advisor provides services in connection with the origination or
refinancing of any debt that we obtain, and use to acquire properties or
to make other permitted investments, or that is assumed, directly or
indirectly, in connection with the acquisition of properties, we will pay
the advisor a financing coordination fee equal to 1% of the amount
available and/or outstanding under such financing, subject to certain
limitations.
|
$2,778,000
|
Not
determinable at this time. Because the fee is based on a fixed
percentage of any debt financing there is no maximum dollar amount of this
fee.
|
Not
determinable at this time. Because the fee is based on a fixed
percentage of any debt financing there is no maximum dollar amount of this
fee.
|
||||
Liquidation/Listing
Stage
|
||||||||
Real
Estate Commissions
|
A
brokerage commission paid on the sale of property, not to exceed the
lesser of one-half of reasonable, customary and competitive real estate
commission or 3% of the contract price for property sold (inclusive of any
commission paid to outside brokers), in each case, payable to our advisor
if our advisor or its affiliates, as determined by a majority of the
independent directors, provided a substantial amount of services in
connection with the sale.
|
–
|
Not
determinable at this time. Because the commission is based on a
fixed percentage of the contract price for a sold property, there is no
maximum dollar amount of these commissions.
|
Not
determinable at this time. Because the commission is based on a
fixed percentage of the contract price for a sold property, there is no
maximum dollar amount of these commissions.
|
||||
Subordinated
Participation in Net Sale Proceeds (payable only if we are not listed on
an exchange)
|
15%
of remaining net sale proceeds after return of capital contributions plus
payment to investors of a 6% cumulative, non-compounded return on the
capital contributed by investors. We cannot assure you that we will
provide this 6% return, which we have disclosed solely as a measure for
our advisor’s and its affiliates’ incentive compensation. We will
not be entitled to the Subordinated Participation in Net Sale Proceeds
unless our investors have received a 6% cumulative non-compounded return
on their capital contributions.
|
–
|
Not
determinable at this time. There is no maximum amount of these
payments.
|
Not
determinable at this time. There is no maximum amount of these
payments.
|
Type of Compensation
|
Determination of Amount for Initial Offering
and Follow-On Offering
|
Amounts Paid in
Initial Offering
(as of June 30, 2010
|
Estimated Amount
for Maximum
Initial Offering
(150,000,000
shares)
|
Estimated
Maximum Amount
for Follow-On
Offering
(32,500,000 shares)
|
||||||
Subordinated
Incentive Listing Fee (payable only if we are listed on an exchange, which
we have no intention to do at this time)
|
15%
of the amount by which our adjusted market value plus distributions
exceeds the aggregate capital contributed by investors plus an amount
equal to an 6% cumulative, non-compounded annual return to
investors. We cannot assure you that we will provide this 6% return,
which we have disclosed solely as a measure for our advisor’s and its
affiliates’ incentive compensation. We will not be entitled to the
Subordinated Incentive Listing Fee unless our investors have received a 6%
cumulative non-compounded return on their capital
contributions.
|
–
|
Not
determinable at this time. There is no maximum amount of this
fee.
|
Not
determinable at this time. There is no maximum amount of this
fee.
|
Total Fees Paid
|
Total Fees Deferred
|
Total Fees Forgiven
|
||||||||||
January
1, 2008 to December 31, 2008
|
||||||||||||
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 July 1, 2010
|
||||||||||||
Organizational
and Offering Expenses
|
$ | 4,536 | – | – | ||||||||
Acquisition
Fees
|
$ | 1,785 | – | – | ||||||||
Finance
Coordination Fees
|
$ | 767 | – | – | ||||||||
Property
Management Fees
|
– | – | $ | 314 | ||||||||
Asset
Management Fees
|
$ | 350 | – | $ | 1,663 |
|
·
|
seek
stockholder approval of an extension or amendment of this listing
deadline; or
|
|
·
|
seek
stockholder approval of the liquidation of our
corporation.
|
|
·
|
identify
and acquire investments that further our investment
strategies;
|
|
·
|
increase
awareness of the American Realty Capital Trust, Inc. name within the
investment products market;
|
|
·
|
expand
and maintain our network of licensed securities brokers and other
agents;
|
|
·
|
attract,
integrate, motivate and retain qualified personnel to manage our
day-to-day operations;
|
|
·
|
respond
to competition for our targeted real estate properties and other
investments as well as for potential investors;
and
|
|
·
|
continue
to build and expand our operations structure to support our
business.
|
|
·
|
the
risk that a co-tenant may at any time have economic or business interests
or goals that are inconsistent with our business interests or
goals;
|
|
·
|
the
risk that a co-tenant may be in a position to take action contrary to our
instructions or requests or contrary to our policies or objectives;
or
|
|
·
|
the
possibility that a co-tenant might become insolvent or bankrupt, which may
be an event of default under mortgage loan financing documents, or allow
the bankruptcy court to reject the tenants-in-common agreement or
management agreement entered into by the co-tenants owning interests in
the property.
|
|
·
|
any
person who beneficially owns 10% or more of the voting power of the
corporation’s shares; or
|
|
·
|
an
affiliate or associate of the corporation who, at any time within the
two-year period prior to the date in question, was the beneficial owner of
10% or more of the voting power of the then outstanding voting stock of
the corporation.
|
|
·
|
80%
of the votes entitled to be cast by holders of outstanding shares of
voting stock of the corporation;
and
|
|
·
|
two-thirds
of the votes entitled to be cast by holders of voting stock of the
corporation other than shares held by the interested stockholder with whom
or with whose affiliate the business combination is to be effected or held
by an affiliate or associate of the interested
stockholder.
|
|
·
|
limitations
on capital structure;
|
|
·
|
restrictions
on specified investments;
|
|
·
|
prohibitions
on transactions with affiliates;
and
|
|
·
|
compliance
with reporting, record keeping, voting, proxy disclosure and other rules
and regulations that would significantly change our
operations.
|
|
·
|
the
election or removal of directors;
|
|
·
|
amendments
of our charter (including a change in our investment objectives), except
certain amendments that do not adversely affect the rights, preferences
and privileges of our stockholders;
|
|
·
|
our
liquidation or dissolution;
|
|
·
|
a
reorganization of our company, as provided in our charter;
and
|
|
·
|
mergers,
consolidations or sales or other dispositions of substantially all of our
assets, as provided in our charter.
|
|
·
|
changes
in general economic or local
conditions;
|
|
·
|
changes
in supply of or demand for similar or competing properties in an
area;
|
|
·
|
changes
in interest rates and availability of permanent mortgage funds that may
render the sale of a property difficult or
unattractive;
|
|
·
|
changes
in tax, real estate, environmental and zoning
laws;
|
|
·
|
changes
in insurance costs; and
|
|
·
|
periods
of high interest rates and tight money
supply.
|
|
·
|
poor
economic conditions may result in tenant defaults under
leases;
|
|
·
|
re-leasing
may require concessions or reduced rental rates under the new
leases;
|
|
·
|
constricted
access to credit may result in tenant defaults or non-renewals under
leases; and
|
|
·
|
increased
insurance premiums may reduce funds available for distribution or, to the
extent such increases are passed through to tenants, may lead to tenant
defaults. Increased insurance premiums may make it difficult to
increase rents to tenants on turnover, which may adversely affect our
ability to increase our returns.
|
|
·
|
our
development company affiliate fails to develop the
property;
|
|
·
|
all
or a specified portion of the pre-leased tenants fail to take possession
under their leases for any reason;
or
|
|
·
|
we
are unable to raise sufficient proceeds from our offering to pay the
purchase price at closing.
|
|
·
|
your
investment is consistent with your fiduciary obligations under ERISA and
the Internal Revenue Code;
|
|
·
|
your
investment is made in accordance with the documents and instruments
governing your plan or IRA, including your plan’s investment
policy;
|
|
·
|
your
investment satisfies the prudence and diversification requirements of
ERISA;
|
|
·
|
your
investment will not impair the liquidity of the plan or
IRA;
|
|
·
|
your
investment will not produce UBTI for the plan or
IRA;
|
|
·
|
you
will be able to value the assets of the plan annually in accordance with
ERISA or Code requirements; and
|
|
·
|
your
investment will not constitute a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Internal Revenue
Code.
|
Actual Initial
Offering Amount
(as of June 30, 2010)
|
Maximum Initial
Offering(1)
(Not Including
Distribution
Reinvestment Plan)
|
Maximum Follow-
On Offering(9)
|
||||||||||||||
Amount
|
Amount
|
Percent
|
||||||||||||||
Gross
Offering Proceeds
|
$ | 328,652,000 | $ | 1,500,000,000 | $ | 325,000,000 | 100 | % | ||||||||
Less
Public Offering Expenses:
|
||||||||||||||||
Selling
Commissions and Dealer Manager Fee(2)
|
$ | 26,814,000 | 150,000,000 | 32,500,000 | 10.0 | % | ||||||||||
Organization
and Offering Expenses(3)
|
$ | 14,027,000 | 22,500,000 | 4,875,000 | 1.5 | % | ||||||||||
Amount
Available for Investment(4)
|
$ | 287,811,000 | 287,625,000 | 287,625,000 | 88.5 | % | ||||||||||
Acquisition
and Development:
|