American Realty Capital Properties (ARCP) Completes Internal Investigation; Restates Certain Financials

American Realty Capital Properties (NASDAQ: ARCP) announced the completion of its restatement and filing of amendments to its 2013 Annual Report on Form 10-K and first and second quarter 2014 Quarterly Reports on Form 10-Q. Additionally, ARC Properties Operating Partnership, L.P. (the "Operating Partnership") has restated its previously issued financial statements. Furthermore, both the Company and the Operating Partnership have filed their Quarterly Reports on Form 10-Q for the third quarter of 2014.

As previously announced, the Audit Committee of ARCP's Board of Directors (the "Audit Committee"), with the assistance of its independent advisors Weil, Gotshal & Manges LLP and Ernst & Young LLP, conducted a thorough and independent investigation into accounting concerns and other matters brought to the Audit Committee's attention in September 2014.

Notably, the Audit Committee's investigation did not identify any material changes relating to ARCP's real estate ownership, rental revenue or fundamental business operations. Additionally, the Audit Committee investigation did not identify any changes to the financial statements or operations of the Cole Capital-sponsored non-traded REITs, nor did the matters reviewed by the Audit Committee relate to the operations of these REITs.

The Audit Committee investigation reported the following key findings:

• Net loss was understated for 2013 (including each quarter of 2013) and the second quarter of 2014. Net loss was overstated for the first quarter of 2014. AFFO was overstated for 2011, 2012, 2013 (including each fiscal quarter of 2013) and the first two quarters of 2014.
• The Audit Committee's investigation identified certain payments made by the Company to ARC Properties Advisors, LLC and certain of its affiliates that were not sufficiently documented or otherwise warrant scrutiny. The Company has recovered consideration valued at approximately $8.5 million in respect of certain such payments that the Company concluded were inappropriate.
• The investigation found that equity awards made to two former executives in connection with the Company's transition to self-management contained provisions that, as drafted, were more favorable to such executives than the Compensation Committee of the Company's Board of Directors had approved.
• The investigation found certain material weaknesses in the Company's internal controls over financial reporting and its disclosure controls and procedures.

"The restatement of our financial statements is an important milestone for ARCP and enables the Company to put this matter behind us," said William Stanley, interim Chairman and Chief Executive Officer of ARCP. "The Board moved swiftly to put in place new senior management, realign the Board committee compositions, appoint an interim Chief Executive Officer, and conduct an extensive review of the Company's financial statements, accounting policies, financial controls and corporate governance, with the assistance of the new management team. Importantly, the investigation did not identify any material changes relating to our real estate ownership, the validity of our leases or our fundamental business operations. With the restatement, we are moving swiftly to appoint a new Chief Executive Officer and independent Chairman of the Board, which we hope to announce in the near term, and will focus on bringing our financial controls and corporate governance to world-class standards as a leading net lease REIT."

Mr. Stanley reiterated the strength of the Cole Capital platform: "At Cole Capital, the team is turning its attention to normalizing relationships with its broker-dealer partners and clearing firms, as well as re-engaging its financial advisor network. We are optimistic that we can quickly build momentum and resume the normal course of business operations soon."

The restatements had the following effects:

• Previously reported net loss attributable to stockholders, and net loss per share will be increased while AFFO (net method) and AFFO per share will be decreased by approximately $16.8 million, $0.08 per share, $43.9 million and $0.20 per share, respectively, for the full year 2013, as compared to originally reported amounts.1
• Previously reported net loss attributable to the Company, net loss per share, AFFO (net method) and AFFO per share will be decreased by approximately $17.2 million, $0.03 per share, $38.5 million and $0.07 per share, respectively, for the three months ended March 31, 2014, as compared to originally reported amounts.1
• Previously reported net loss attributable to the Company and net loss per share will be increased while AFFO (gross method) and AFFO per share will be decreased by approximately $14.4 million, $0.02 per share, $19.3 million and $0.03 per share, respectively, for the three months ended June 30, 2014, as compared to originally reported amounts.

More detail related to the restatements and the reconciliation of net income and net loss to AFFO is available in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"). ARCP expects to report its fourth quarter and full year 2014 financial results in its 2014 Annual Report on Form 10-K for such periods on or prior to March 31, 2015.

ARCP will host an audio webcast later today, Monday, March 2, 2015, at 8:30 a.m. Eastern Time to discuss financial results and provide a business update. The public can access the live audio webcast via the ARCP website homepage: www.arcpreit.com. Participants should access the webcast 10-15 minutes early. A replay will be available via the ARCP Investor Relations website approximately one hour after the completion of the webcast.

1The foregoing amounts reflect the recasting of the Company's historical financial statements to present the effects of the Company's acquisition of ARCT IV, an entity previously deemed to be under common control with the Company, as if it had been completed at the beginning of the period presented, as previously disclosed in the Company's Current Report on Form 8-K, dated May 20, 2014.

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