It's been a rough week for Nicholas Schorsch and his flagship real estate investment
trust, American Realty Capital Properties Inc., or ARCP, since the company
disclosed a $23 million accounting error, but he remains hopeful as he works to reassure advisers about the health of his empire.
“We started the healing process,” he said, speaking at Schwab's annual conference in Denver Wednesday. “It's going to take some time, and it's not something that I think is a wonderful thing.”
Mr. Schorsch also took time to tout the strength of the other side of his empire, RCS Capital Corp., or RCAP, which includes the Cetera network of broker-dealers, and emphasize that it was separate from the ARCP accounting errors.
At one point, RCAP shares were down more than 40%, although they rebounded 6% Wednesday after the company issued a statement,
clarifying that the companies are separate entities.
“Our stock has been beaten up a little lately because of matters related to ARCP,” he said. “But the company is very strong and very large and we believe in this distribution channel.”
His comments, which were made during a presentation on alternative investments to a room of around 70 advisers, come as several broker-dealers, including
LPL Financial and his own B-D, Cetera,
have restricted sales of some of ARCP's REITs.
Mr. Schorsch said he first became aware of the accounting issues at ARCP almost two weeks ago on Oct. 24 and that he has worked with the chief executive at ARCP, David Kay, to take quick action, including filing an 8-K and a report explaining the issues.
“There is an error. We brought it to light,” he said. “We didn't overreact. I think we acted appropriately.”
The next step was working with Mr. Kay to provide revised reports for the first two quarters of the year and then issue third quarter results. Mr. Schorsch said that could happen within a few weeks, but did not provide a specific timeframe.
“Whether that's three or six weeks, I don't have the answer,” he said. “But we're working hard to get that.”
Mr. Schorsch said he has tried to avoid reading the press reports in the aftermath.
“My wife and my dogs and my children were all mentioned in the paper as well as where I live. It's not pleasant,” he said. “But that's my job. It's my job to act.”
