A number of American Realty Capital nontraded real estate investment trusts and programs have signed up Big Four accounting firm KPMG as their new auditor.
On Jan. 22, Grant Thornton, the accountant for eight ARC nontraded REITs and a handful of other products,
resigned.
The ARC REITs disclosed Grant Thornton's resignation six days later in filings with the Securities and Exchange Commission.
The ARC REITs and programs that hired KPMG Monday as the new independent registered public accounting firm are: ARC New York City REIT Inc., Business Development Corp. of America, Business Development Corp. of America II, ARC Realty Finance Trust Inc., ARC Healthcare Trust II Inc., ARC Healthcare Trust III Inc., ARC Retail Centers of America Inc. and ARC Retail Centers of America II Inc. A listed REIT formerly sold by ARC, New York REIT Inc., also said Monday it had hired KPMG as its new independent accounting firm.
Two other ARC nontraded REITs, American Realty Capital Trust V Inc. and ARC Daily Net Asset Value Trust Inc., are in discussions with CohnReznick to replace Grant Thornton, said ARC spokesman Andrew Backman. Last week, Mr. Backman said ARC had previously announced that, as part of a best practices initiative, it “would seek to ensure that accounting services provided to each program were sufficiently differentiated as to minimize concentration in audit firms.”
Meanwhile, ARC announced the successful completion of the previously announced acquisition of American Realty Capital Healthcare Trust Inc. by Ventas Inc., a giant health care REIT. The stock and cash transaction was valued at $3.2 billion, or $13.12 per ARC Healthcare share.
Sold at $10 per share, ARC Healthcare was launched in 2010, closed its fundraising in April 2013 and then listed in April 2014.
“The consummation of this transaction, which represents over a 30% increase per share from the program's inception, further demonstrates our 'investor first' approach and our commitment to providing enhanced value for our dedicated, long-term shareholders,” said P. Sue Perrotty, independent director of the REIT, in a statement.
Ventas acquiring ARC Healthcare was a “homerun” for investors as well as Nicholas Schorsch, the REIT's embattled executive chairman, said Kevin Gannon, managing director or Robert A. Stanger & Co. Inc.
“That's a $13 deal,” Mr. Gannon said, adding that the decision by ARC Healthcare to take a fixed number of Ventas shares in exchange was particularly beneficial. The share price for Ventas has climbed 10.6% year to date, and was trading at $79.38 Tuesday afternoon.
At the end of October, Mr. Schorsch's nontraded REIT empire was upended when it was revealed that his flagship REIT, the publicly traded American Realty Capital Properties Inc.,
had a $23 million accounting error that was intentionally left uncorrected during the first half of 2014. Sales of ARC REITs slowed as broker-dealers began suspending the product.
Mr. Schorsch in December
resigned as chairman of ARCP as well as the broker-dealer holding company he controls, RCS Capital Corp. An RCAP subsidiary, Realty Capital Securities, is the wholesaling broker-dealer for the ARC REITs.
Grant Thornton did not give a specific reason for its resignation in any of the SEC filings. Instead, it stated that there were “no disagreements” between the specific REIT and Grant Thornton “on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedure,” according to the filings. There were also no “reportable events” that led to Grant Thornton's resignation, according to the filings.
