Schorsch is taking REIT B-D public

Industry maverick planning another liquidity event
MAY 26, 2013
After shepherding a handful of nontraded real estate investment trusts to the public markets, American Realty Capital's Nicholas Schorsch now plans an initial public offering for his broker-dealer. The broker dealer, Realty Capital Securities LLC, will become part of RCS Capital Corp., a new venture launched by him that intends to sell 2.75 million shares of company stock, with an expected initial public offering price of $19 to $21 a share. After registering with the Securities and Exchange Commission in February, RCS Capital last week issued a prospectus outlining its IPO. American Realty Capital has been a leader in the nontraded-REIT industry in creating “liquidity events.” In such events, capital is returned to clients through a REIT merger or listing on an exchange. After the credit crisis, nontraded REITs were widely criticized for several shortcomings, including a lack of exit strategies for investors. But property trusts increasingly are staging liquidity events as investor appetite for listed REITs — and the dividends they throw off — remains strong. According to the prospectus, America Realty Capital has executed four liquidity events in the past year and a half, creating $2.7 billion in shareholder value in total cash and stock appreciation, including dividends. RCS' market capitalization is expected to be $535 million after the offering, based on a $20-a-share offering price. At that price, the offering would raise $55 million if the allotment of shares were sold completely. That is a modest amount but would allow Realty Capital Securities LLC, which provides wholesaling and investment banking duties to American Realty Capital's REITs, to expand its ability to sell other illiquid investments. Those nontraded REITs and business development companies would be created by sponsors looking for distribution into independent broker-dealers. Mr. Schorsch is executive chairman of the new company, which is expected to price next week, with a ticker symbol of RCAP on the NYSE. Because RCS Capital is in its quiet period, he wasn't available to comment. According to the prospectus, the company expects to pay an annualized dividend of 72 cents, payable quarterly starting in the third quarter. That is equivalent to a 3.6% dividend yield, again based on a $20 price.

Latest News

FINRA eyes fraud 'speed bump' rule doubling hold to 10 business days
FINRA eyes fraud 'speed bump' rule doubling hold to 10 business days

FINRA's proposed rule filing would create a new 10-day fraud delay and nearly triple the maximum hold period for exploited senior investors

MAI Capital pushes into Atlanta with Waypoint Wealth deal
MAI Capital pushes into Atlanta with Waypoint Wealth deal

Fueled by a recent shot in the arm from private equity firm Carlyle, MAI adds a $490 million Atlanta RIA as it keeps building out its national footprint.

Georgia advisor gets maximum – 20 years – for $400 million Ponzi
Georgia advisor gets maximum – 20 years – for $400 million Ponzi

“Todd Burkhalter organized what is likely the largest Ponzi scheme in Georgia history,” said one FBI official.

Carson taps Osaic recruiting veteran as independent channel expansion continues
Carson taps Osaic recruiting veteran as independent channel expansion continues

With experience from Goldman Sachs and TD Ameritrade, the RIA's newest SVP hire adds to a recent wave of executive departures from hybrid Osaic.

Mesirow acquires part of flexPATH in second retirement deal of 2026
Mesirow acquires part of flexPATH in second retirement deal of 2026

Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income