Morning Commentary: American Realty trades down on resignations; market mostly quiet

By Rebecca Melvin

New York, Dec. 15 – American Realty Capital Properties Inc.’s convertibles fell sharply early Monday after news that the company’s managing partner, Nicholas S. Schorsch, has resigned as executive chairman and director.

David Kay, the company’s chief executive since the end of September, and Lisa Beeson, a deputy to Schorsch, also stepped down from the New York-based real estate investment company.

The leg lower for the REIT convertibles follows on a sharp drop for that paper at the end of October after news of accounting errors and the resignations of its chief financial officer and chief accounting officer due to allegedly intentional accounting mistakes.

American Realty’s 3% convertibles due 2018 traded at 88.75, according to Trace data, which was down 3.625 points on the day.

American Realty’s 3.75% convertibles due 2020 traded down 4.125 points to 87.625.

Shares of the REIT were off 70 cents, or nearly 8%, at $8.29.

“They’ve come in,” a New York-based sellside source said of the convertibles, putting the drop at about 3 points on an absolute basis.

The bonds fell from the upper 90s to the lower 90s at the end of October and now to the upper 80s.

Elsewhere, the convertibles market was mostly quiet, sources said.

Some market players don’t intend to trade again this year, one trader said.

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