Nicholas S. Schorsch, who was ousted last year from the REIT he founded, American Financial Realty Trust, doesn't see the $1.5 billion initial public offering of his new REIT called American Realty Capital Trust Inc. as a comeback or a return from the dead.
"The last time I checked, I hadn't died yet," Schorsch told PhillyInc in an interview from his office in New York City.
Whether Wall Street finds his spunk inspiring remains to be seen. Shares of Real Estate Investment Trusts, or REITS, have gotten pounded this year amid worries about the meltdown in the subprime mortgage market. The concerns have also have reached the commercial area. CB Richard Elis Group Inc., the largest commercial real estate broker, was downgraded yesterday by Goldman Sachs Group Inc. because of worries about a slowdown.
But Schorsch, a former chief executive of the old First Fidelity Bancorp of Philadelphia, told us he is convinced that the time is "ideal" for his new REIT based in Jenkintown to go public.
"We have long-term leases with 100 percent occupancy," he said, adding that his company will focus on mid-range properties. "The market is good for the investor because it gives really stable returns."
His new American Capital Reality is focusing on single-tenant retail properties net-leased to investment grade or other credit worthy clients. These properties are a better investment than malls or office buildings because, his filing yesterday said, they "generally require less management and operating capital and have less recurring tenant turnover. ... In addition, since we intend to acquire properties that are geographically diverse, we expect to minimize the potential adverse impact of economic downturns in local markets."
As MarketWatch notes, analysts questioned Schorsch's strategy at his old firm of focusing on smaller commercial space instead of large marquee properties. Former American Financial Realty President William Kahane has also joined American Capital Realty. Harold W. Pote, who succeeded Schorsch at American Financial Realty, died in June while vacationing in Turkey. The Jenkintown company is conducting a search for a successor.