Good morning everyone and welcome to the American Realty Capital Properties, first quarter 2013 earnings conference call. All participants will be in a listen-only mode. (Operator Instructions). At this time I’d like to turn the conference call over to Mr. Nicholas Schorsch, Chairman and Chief Executive Officer. Please go ahead.

Thank you operator and good morning everyone. Thank you for participating in American Realty Capital Properties, first quarter 2013 earnings call. With me today is Brian Block, our Chief Financial Officer. And before we being, as a reminder, we will make certain comments that may be considered forward-looking statements under federal securities law during this call. The company’s actual and future results may differ significantly from the matters discussed in any such forward-looking statements. We are excited to be here today and to review our first quarter earnings results and capital markets activities, as well as recent important events. I will briefly discuss ARCP’s first quarter highlights before turning the call over to Brian, to provide an update on ARCP’s operating results and current portfolio. I would like to start by reaffirming our previously published 2013 and 2014 earnings guidance. We continue to project that our earnings growth will be approximately 16% between 2013 and 2014. Our current pipeline of acquisitions and balance sheet strength suggest that ARCP is particularly well positioned for continued earnings growth. The successful merger with American Realty Capital Trust III has catapulted American Realty Capital Property into the top tier of net lease sector, increasing ARCP’s total enterprise value 10 fold to more than $3.5 billion. The combination proved transformative, both from a size and a diversification standpoint and it has made ARCP even more relevant in the net lease space. We intend to growth our asset base and AFFO per share through both the execution of our organic acquisition program on which our earnings guidance is constructed, as well as through the pursuit of opportunities to buy large property portfolios and make strategic corporate acquisitions in the net lease sector. ARCP saw a 600% increase in revenue for the first quarter of 2013 compared…

Great. Thanks Nicky and good morning to everybody on the call today. Lets first look at our financial results, as well as the outlook for the period ahead. As Nick mentioned, we reaffirmed our previously published 2013 and 2014 earnings guidance and note that our first quarter 2013 results were in line with our forecast and that earnings guidance previously published. Our quarterly results include certain combined consolidated financial information, resulting from our merger with ARCT Trust III. ARCT Properties and ARCT Trust III fall into the category under Generally Accepted Accounting Principals of the entities under common control. Accordingly, our reported results combined historical financial information of the merged three. For the quarter ended March 31, 2013, revenues were $40.2 million, compared to $5.7 million generated in the fourth quarter of 2012, an increase of over 600%. This significant increase is due to the acquisitions completed in the first quarter, including our merger with ARCT Trust III. This merger with ARCT Trust III was completed on February 28 and the integration of the required assets were completed by the end of the quarter. The speed of integration reflects the significant preparation done prior to closing, as well as the tireless efforts of our asset management and accounting teams, whom I would like to thank for all of their hard work. Organic growth during the first quarter resulted from acquiring 48 properties, all 100% occupied and priced of over $1.3 million square feet for an aggregate based purchase price of roughly $262 million, purchased at an average capitalization rate of 7.84%. The acquired properties were located in 10 states, occupied by 21 tenants, which further diversified our tenant mix. Our portfolio at March 31 generates annualized revenues of $165.4 million. In just the five weeks since quarter end, the acquisition…

Thank you Brian. As you just heard from Brian, we had a very positive quarter and continue to position our portfolio to take advantage of growth opportunities in the marketplace. These opportunities derive not simply from our organic growth strategy baked into our earnings guidance, but as well from a number of corporate acquisitions and large portfolio purchases, which we are actively evaluating currently. We could not be more pleased with our quarter results and we are excited in the near term prospects for the company in 2013. We will continue to deliver value to our shareholders; the recent merger with ARCT III increased market recognition and support of our already strong stock performance. We intend to build off of this positive momentum to grow our portfolio, buy accretive to our cost, grow earnings and increase the dividend. Further to this end we reasonably expect to have our common stock added to the MSCI REIT index later this month and the Russell 2000 index in June. The announcement for these index inclusions are May 15 and June 14 respectively, with the inclusion date being May 31 and June 28 respectively. In the net lease space size matters. We believe the quality of management and an exceptionally strong asset base, an accretive acquisition program and consistent demonstrated earnings growth translate into strong share price performance. These factors coupled with a strong and flexible balance sheet result in a low cost of equity and debt capital, thereby creating significant competitive advantage in the net lease space. It is our intention to drive growth without sacrificing quality of either assets or earnings. We continue to pursue our goal to be the best net lease REIT in the business. Thank you for your time today and I will now open up the call operator for questions. Thank you.

(Operator Instructions). And our first question comes from Mitch Germain from JMP Securities. Please go ahead with your question.

Good morning guys. Good quarter.

Thank you Mitch.

Thanks Mitch.

So you talked about $780 million of deals that you expect to close next two quarters I guess or this one and next one. What about the mix between long and mid duration with regards to how you want your portfolio to look over time.

That’s a great question. Now first of all, one of the things we’re looking for as you’ve seen in this quarter, we’ve put a slide up on the screen. We’re seeing new types of tenants and just this year we’ve added companies like Autozone, BJ’s, HighV (ph), Traiser (ph), Coles, the department store TD Bank, Ameriprise, these are all new credits to our system. So we’re looking for both new credits, more diversification by industry. We want to diversify the top 10 credits so that they are less than kind of 50% of our portfolio, which is what we believe to be best practices as far as diversification and then we want to maintain lease duration, that is kind of in that 10 year range, 10 plus years. We’re doing well with that and we’re still maintaining about 11.1. So our current mix and our mix is that we want to be about 70/30 in our portfolio, 70% long and 30% mid. We are still more long than we are mid, so we need to in the short term buy more of the mid duration leases than we do the long duration, because much of what we’ve already bought this year is in the long category and that is obviously a very strong and kind of fortress of our portfolio. But we also want to add in more and more to get us to that 30% blend of the mid duration leases Mitch, which will give us some more growth in the portfolio as we move towards 2016, ‘17, ’18, that we were getting some strong organic growth embedded in that portfolio through the releasing and the up-tick in those rents.

And what’s the cap rate spend mid and long duration?

We are currently seeing a cap rate spread of 150 basis points. Some cases it’s higher than that. So if you are looking at our mid duration, we are looking at typically about a 9 to 9.50 average cap rate. That would be on a straight-line basis and we are looking at on the long duration kind of in the mid 7’s to the highest 7’s.

Great. And when you talk to the brokers Nick, they obviously you are talking more about cap rate compression among the long duration investment grade. How do you maintain a 7% yield? What’s the real differentiator with regards to how you guys are sourcing deals maybe versus your competition?

Well that’s another important aspect of our business. As you know and maybe some of the listeners don’t know, we have a very, very robust acquisition team. We about 90 people full time in our real-estate acquisition growth, and as well as the closing group and they go through all the assets; underwriting, I mean all those full things. But many of our assets are sourced off markets. So we see a lot, particularly in the longer duration leases where there are structured sale lease backs and their developer forward sales and things of that sort, where we continue to see very strong and advantaged acquisitions. So our portfolio, construction is really a granular one. We work off of acquiring smaller assets, being a low cost provider for acquisition and acquisition services allows us to buy a $10 million portfolio or $20 million, which is typically below the radar. Many of the large funds and some of the other larger REITS that are looking of $102 million and $103 million portfolio. Now on the mid duration, which is Mitch many of those are sourced completely off market and we really don’t see much competition. There is also something else that’s going on. Besides the brokers tend to push their own positions that they want to see the market compressing, its really not compressing as much in the retail space and on the distribution side as many brokers would like to believe. The difference between bid asked has actually widened if you look at some of the recent reports. So they may be asking its 7.25 cap rate. If you looked at Boulder for example, their average first quarter for retail was 7.25 in the net leases space, long duration. But the average take was 31 basis points wide of the asked. So you are talking about a mid 7.5 cap rate, even for long high credit quality of net leases. But there are some big portfolios that tend to trade, $200 million, $300 million portfolios that tend to trade in the high sixes and we typically don’t chase those; that’s not our main sweet spot. Our main sweet spot is the granular aggregation of assets and we are seeing a massive amount of product. We are probably seeing a 15% to 20% up-tick in the amount of product coming to market, new names, new credits, corporations are still trying to reposition balance sheets and we are continuing to see great buying opportunity there. But on the mid duration space, we still see a lack on any competitions meaningful and cap rates have not moved over the last probably seven months. They may have moved out a little bit by year end, probably 15 basis points, but overall we’re probably right about where we were at the fourth quarter 2012.

And Mitch, this is Brian. One thing to add to that real quick, to level it off at what Nick said, this is very purposeful; this is our strategy. We enjoy buying one, two, three assets at the time, transactions in the $5 million to $10 million ballpark. That enables us to see at a very good pricing, coupled with our access to unsecured facilities in cash. We buy 100% cash, we may put it all on line afterwards, and that speed of execution and that granularity allows us to maintain the type of cap rates as we’ve seen today.

Great, and last question for the balance sheet, maybe Brian; five year debt versus a 11 year lease term. What’s the plan long term to may be better align the maturities and the length of stream.

Absolutely Mitch, great question. We are very mindful of that. We are looking at on a go forward basis to do more matched funding. What I mean by that is, after another quarter of so with ARCT Properties and ARCT Trust III emerged, as we continue to do organic growth and continue to demonstrate the execution, we’ll be looking to get investment grade rating. We will be looking to issue other types of debt, secured notes, etcetera, that’s tagging the maturities out in various pieces and those trench maybe seven, 10, 15 year pieces and we manage the capital stack. So the notion of only having five-year debt, knowing that we have only over 11 years remaining lease term doesn’t end well. We are very mindful of that and are actually putting plans in place today, speaking to lenders about lathering out those debt maturities.

Thank you.

Thanks Mitch.

Our next question comes from Bradley Teets from Bradley Teets Investment Services. Please go ahead with your question.

Good morning. Thank you for taking my call. I have a couple of questions for you. Do you have current information as to what percentage of share on the ship is institutional versus individuals?

Yes, and this information is not a 100% current, because a lot of the institutions have not filed, but we are currently estimating about 27% showing up on our sheets as instructional. We think its more like 45% actual, based on our information and the institutions that are coming in, but that will all change dramatically after the inclusion trades coming up into the indexes. We expect about 20% of our additional up-tick by instructional investors in the inclusion trade, which will put us right about where we expect to be, which is in the 60% range of institutional ownership and 40% retail ownership, which is pretty much where we were and where we expect to be post the June inclusions.

Okay, thank you. The second question is, after your successful incorporation of ARCT III into the fun family there, are you looking at any other, I’ll call it mergers, consolidation acquisition or are you happy with your size, the way it is and also because we backed away from the coal deal.

Well, all I can say is what I’ve said in the earnings call already, which is we continue to look at organic growth primarily through acquisitions that we discussed our pipeline 70% roughly long duration and about 30% mid duration. Obviously we did make a bid to buy and acquire another company. After we bought ARCT III we are continuing to look both at strategic portfolio acquisitions, which may need an asset acquisition, as well as other corporate transactions or strategic combinations with other companies that would be at a corporate level rather than at an asset level. We continue to look at all opportunities and we will to grow our company size, because we do believe size matters and we do believe that we’ll lower cost to capital. Size doesn’t matter just for size, size has to be accretive. So Bradley, to be extremely blunt, we are not going to do anything that isn’t accretive for our investors, as we didn’t with the coal transaction that was an accretive offer that we made and we continue to see that our shareholders need for growth and yield is our paramount concern and everything must be accretive to be bottom line, but embracing our size does lower our cost to capital. It improves our ability to get a higher rating from the rating agencies and it improves obviously our floatable shares. So that all helps when we look at what’s accretive and what’s not.

Thank you very much.

Thank you.

And our next question comes from Dan Donlan from Ladenburg Thalmann. Please go ahead with your questions.

Thank you and good morning.

Hi Dan.

Hi Dan.

Nick, just going back to the bigger question or the question on portfolio of acquisitions, you said that you might do something on the corporate level versus the asset level. Could you maybe explain that further or are you saying that you are going to work with maybe a large corporation that has a lot of real estate of balance sheet to do a sale leaseback or can you may be talk about that further.

Sure, absolutely. We are and we continue to, as you know our history, we continue to have access to many, many corporate clines in America that look for transactions that are constructed in the sale-leaseback strategy. We continue to look at large portfolio acquisitions from national corporate clients. As you know our focus on corporate tenant, we have no franchise credits in our portfolio at this time, but we do like to work with our corporate relationships and we do like to work on large corporate sale lease back. And that’s another reason Dan, that as we get larger it gives us capacity to do that without over concentrating any one asset class, because we wouldn’t want to be, even if we loved the U.S. government or CBS or anybody else, we wouldn’t want to be a 100% of our portfolio or even 50% of our portfolio with one credit. So we continue to pursue those type of opportunities. We also continue to pursue corporate acquisitions, such as we did with the coal transaction M&A.

Okay, understood. And then as it pertains to your guidance that you guys talked about potentially doing seven, 10 or 15 debt, are those plans to term out some of the short terming funding that you have? Is that concentrated in your guidance?

Well, our guidance does included at lease five-year paper on all of our debt. We had no fixed rate. I want to be clear, we have none or very little fixed rate exposure or maybe $20 million, $30 million of floating rate exposure. It’s all fixed rate exposure, so we believe in that. We do have some 10-year paper on our fixed rate debt and we are looking at other opportunities to do that and continue to match/fund new acquisitions with long duration debt, and that is incorporated into our acquisition and it is incorporated into our growth strategy for our cost of capital. We are seeing some very attractive corporate structures that are five, seven, 10 and even 12-year paper and we continue to see the availability of that in the market, but we also are looking at the idea. Obviously we filed a universal shelf, so that we could use that to issue corporate debt.

Okay. So then the $640 million of debt on your balance sheet, is that broken, is $550 million of that, is that the debt that you have, I think you swapped that out, is that right?

That’s correct, yes. But 245 fixed rate and then we also have, I think Brian about $50 million of it is in 10 year paper and then we have some other five year. We have almost no floating rate exposure at all.

Okay. And then Brian on the pro forma revenues that you guys listed on page eight of the 10-Q, it’s about $41.4 million versus the $40.2 million that you guys reported for the quarter. Is the difference between those two, is that just simply what you guys acquired in the month of March?

That’s correct. Okay, this is a booking added. When you are referring to the 10-Q, that booking as we acquired things as of the beginning of the period of a pro forma basis, versus buying it consistently throughout the period.

Okay, all right, and then as far as the G&A goes, so what is a good run rate if I take your $2 billion or so that you have, I think in real estate at cost, 50 basis points of that would be about $10 million I think annually. So quarterly run rate would be about 25; is that right or am I missing something there.

It’s going to be a little bit lower than that. I mean what we are looking at on a continuous bases, is clearly looking forward on cost. We had in connection with the ARCT Trust III merger as you know, we have internalized at no cost some of the accounting and asset property management folks, that costs a ballpark under $1 million in aggregate for the year. We no longer charge any acquisition or financing costs in connection with any type of transactions. So on a full run-rate basis, including the internalized staff, our models right now project it will be below 50 basis points. Clearly as evidenced in the first quarter there is some lumpiness, but when certain costs are coming in, but we are managing to 50 basis points or under with respect to the G&A cost.

Okay, and then obviously the topic of internalizing management, I know you guys have kept the G&A cost very, very low, but when do you think that that is something that you look at as a – I know you don’t want to put necessarily a certain size that you get to, but if we think about a large corporate merger or something of that degree, there’s a certain size where you think it maybe makes sense and/or if you do acquire a certain amount of assets, you start to bring down the basis points on that from a G&A standpoint.

That’s a great question Dan. The current structure is as you probably remember or maybe not, all the audience may not remember, our current structure declined to 40 basis points when we exceed our asset management fees, which is very different than what people have seen here do for in the industry. Our asset management fee is all inclusive. So that’s inclusive of all payroll, overhead, rent, everything that is – that includes all the operating G&A for the business, broker deal cost, all that is in that cost. But when we achieve 3 billion of assets, that number goes down automatically to 40 basis points, incrementally on all dollars over $3 billion each and every year. So our goal, and we do have something to prove is that in a net lease strategy like this, no different than a BDC or a mortgage REIT the cost can be controlled and lowered. Now obviously you’re right, we have the ability to internalize, we will internalize at some point. The idea was that we would get to a point where we over roughly $7 billion to $9 billion net range of total assets, so that we could actually drive some savings below the 40 basis points. It would be a mistake to internalize and then have our G&A go up, as you’ve seen with other companies and you could still see it with reality income or with N&N that their G&A kind of runs right around a 100 basis points of total assets. If we can demonstrate consistently and repeatedly that gross G&A, including asset management fees is kind of 60, 65 basis pints and then declining as we get larger, that’s where we internalize, drive the cost down and then go the next step to bring it down even further. So we kind of think mathematically its kind of between that $7 billion $9 billion, but I can’t say that the board wouldn’t consider it at $6 billion or $5.5 billion, because there was this thing we talked about every quarter, and it was obviously to us that when there is synergistic value and there is savings, then that’s the best road to take and internalize immediately.

Okay, that’s very, very helpful and sorry one last one. Going back to the acquisitions, if I heard you correctly, it seems that you guys are going to complete you think the 1.1 billion of acquisitions by the end of the third quarter. Did I hear that correctly and if so, do you guys obviously anticipate acquisitions coming in the fourth quarter above and beyond that?

Yes, the answer is yes and yes. You heard it correctly and we also intend to complete those acquisitions by the end of September. We could complete them earlier and then would allow us to have some significant upside to our acquisition model. We believe it’s important to achieve our goals and then over achieve our goals, but we don’t want to press our pipeline more than necessary. Our guidance has been pretty clear that we would expect to complete all those acquisitions at or very close to the end of the third quarter.

Okay, and then within that acquisition guidance is there any kind of portfolio deals or is it really baking in the $5 million to $10 million acquisitions that you guys discussed earlier?

No, there are no portfolio deals included in that. That’s our conventional kind of meat grinder, grind out the additional acquisitions one at a time. There’s going to be some portfolios that are $60 million, there’s going to be some that are $30 million, there’ll be some that are $14 million, but its going to be a combination of a granular aggregation of assets in our conventional way, everyday day, day in and day out and adding new credits. Because Dan, that’s the way you get the diversification, that’s how you go to 75 credits, that’s how you go to 100 credits or 120 credits, but the other stuff, just gravy.

Okay, thank you.

Our next question comes from Tom Redmond from Sigma Financial. Please go ahead with your question.

Yes, you mentioned and it goes along with his acquisition goal here. Do you see a problem in reaching those goals now that you’ve got some limitations with ARCT IV and it looks like ARCT V, based on the fact that you’re going to be switching back and forth?

No, that’s really not a limitation. That exited before, that’s not new and it’s not a limitation really. It’s just the fact that there’s a lot of portfolio that ARCT IV had. If you read that press release that we put out, to be very specific, ARCT IV has a limited amount of money and really what that was showing you was that there was going to be excess. So if you read that carefully, it shows that ARCT IV had already bought and committed to about $930 million of acquisitions. The acquisitions where the pipeline was about 1.7 billion and they only had that together combined to create about $2.6 billion of total pipeline, that’s already done and already in the pipe for our four. That means that there is going to a surplus of about $800 million coming out of ARCT IV that has to be offered to both ARCT V and ARCT Properties, which is going to be more of pipeline for us to choose, not less.

Good. So it’s not a problem at all?

No. The opposite; it’s a good thing.

Good, I appreciate it. Thank you.

No problem.

And our next question is a follow-up question from Mitch Germain from JMP Securities. Please go ahead with your question.

Sorry about that guys. I’m all good here. Thanks.

Okay. All right, well thank you operator. I see you’ve got no more questions in the harper, so I’ll wrap up for you. I just wanted to again thank everybody for joining us. This has been a very complicated quarter as far as everything we are doing and how we’ve done it. We’ve obviously executed with great precession. I got to thank our team and our acquisition group and our legal group that made this look very easy. The quarter was actually, and the acquisition of our Trust REIT went very, very smoothly, just to give you some color on it. We are very pleased with the costs that came in slightly below our project and the timing came in about a month and a half earlier. So all things went well and moving forward, that’s behind us and we can really start to focus more and more on the growth aspects of our business and continuing to drive our earnings diversification and our overall accretion of our acquisitions, and reconfiguring the balance sheet is the work from Brian. So it’s been a great quarter and we thank you all for joining us and if you have any follow-up please contract Heather at the company and we’ll be happy to talk to you in further. Thanks everybody. Have a great day. Thank you operator.

And lades and gentlemen, that concludes today’s conference call. We do thank you for attending. You may now disconnect your telephones lines.