On Advice

REIT management gives no answers about disastrous share price

Listing of American Finance Trust Inc., the $1.6 billion REIT advised and managed by Nicholas Schorsch's AR Global, has erased almost $1 billion in equity value

Aug 9, 2018 @ 2:39 pm

By Bruce Kelly

The listing of American Finance Trust Inc., the $1.6 billion real estate investment trust advised and managed by Nicholas Schorsch's AR Global, has erased almost $1 billion of the company's equity value, according to a report last month by an investment bank.

Investors and financial advisers want answers. How will the company, known by its ticker symbol AFIN, deliver better results and an improved stock price for shareholders in the future?

The history of AFIN's share price is pretty ugly. Brokers sold AFIN five years ago at $25 per share when Mr. Schorsch and AR Global, then known as American Realty Capital, were selling billions of dollars of nontraded REITs per year through brokers and advisers who collected an eye-popping 7% commission in the process. Before it listed last month, AFIN published an estimated share value of $23.56. The company listed its shares on the Nasdaq on July 19, and Thursday it was trading at $14.96 per share.

Despite the 40% decline in the value of the company's shares, AFIN management chose not to address the question of the company's abysmal share price Thursday morning during a conference call to report second quarter financial results. In a highly unusual maneuver, AFIN management did not take direct questions from investors or analysts.

Instead, AFIN executives on the call asked each other questions, ones which they said had been asked by financial advisers and others.

And none of those questions focused on the company's share price.

"I'm truly pleased with the quality of our portfolio and the prospects for future growth," said the company's CEO Michael Weil during the call. "We took a major step in this direction with the listing of AFIN shares on the Nasdaq on July 19. I'm excited about the opportunities this listing brings to continue to grow the company and drive shareholder value.

"While day to day changes in stock price will occur, our focus will remain where it should be: on the operations of the company and the execution of our strategy," Mr. Weil said. "We look forward to continuing to tell the AFIN story to a growing audience."

Analysts would have pressed Mr. Weil for answers, noted Brad Thomas, an analyst who writes for Seeking Alpha and Forbes.

"It's a softball game," he said.

Michael Anderson, a lawyer for AR Global, AFIN's adviser and manager, did not return a call to comment.

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