Nicholas Schorsch

Nicholas S. Schorsch

Nicholas S Schorsch in 2014

Nicholas S Schorsch in 2014
Born (1961-03-02) March 2, 1961
Philadelphia, Pennsylvania, United States
Education Drexel University
Net worth Increase US$ 1.6 billion (August 2014)[1]
Spouse(s) Shelley Davis[2]

Nicholas Sloan “Nick” Schorsch (born March 2, 1961) is an American entrepreneur, investor and philanthropist. Schorsch is the Chairman, CEO, and co-founder of the investment services firm American Realty Capital.[3] He is often characterized as a pioneer in the alternative investment sector of the financial services industry, particularly due to his influence on the commercial real estate investment space. He has received a number of honors and public recognition for his impact on the industry, including the Ernst & Young Entrepreneur of the Year Award in 2003[4] and the Ernst & Young Entrepreneur of the Year Lifetime Achievement Award in 2011.[5] He is also regarded as one of the principal figures contributing to the increased appeal and accessibility of commercial real estate investments to individual investors.[6]

Early life

Schorsch was born in Philadelphia, Pennsylvania, to Irvin G. Schorsch, Jr. and Anita (née Ulick) Schorsch.[7] Schorsch went to work for his family’s scrap metal business at the age of 17 while attending Drexel University full-time, before taking over ownership of the business entirely. Within six years, Schorsch grew the business into a multimillion-dollar enterprise, eventually selling it for a profit of $50 million at age 23.[3] He next founded Thermal Reduction Corporation, a metal product manufacturing business. Over ten years he successfully built up this company through a series of mergers and acquisitions, eventually selling his interests to Corrpro in 1994.[3]

Early career

In 1995, he and his wife Shelley co-founded the Jenkintown-based American Financial Resource Group, which originally acquired operating companies in the printing, label and financial services sector. Within two years, the company diversified into the acquisition of commercial real estate properties. In 1998, Schorsch learned of a merger between CoreStates Financial Corporation, a bank with whom he did business, and First Union Corporation.[8] As a result of the pending merger, 106 of CoreStates’ bank branches were set to close. Upon hearing this, Schorsch immediately offered to buy every single (vacant) bank branch building. Schorsch recalled in a 2005 interview which appeared in the business section of The New York Times, “They [the bank] thought I was a crazy man.” However, the $22.3 million deal was successfully completed within 37 days, and within just 12 months, he had sold or leased 95% of the properties.[8]

In 2002, American Financial Resource Group became American Financial Realty Trust, or AFRT. Schorsch served as the company’s President, CEO, and Vice Chairman of the board of Trustees, listing it publicly on the New York Stock Exchange in 2003.[9] Shortly after, Schorsch was dubbed “The Bankers Landlord” by The Philadelphia Inquirer. In 2006, Schorsch left AFRT.[10]

AR Capital and American Realty Capital Trust

Schorsch moved to New York City in 2007 where he, along with William M. “Bill” Kahane, founded the investment services firm American Realty Capital, later renamed to AR Capital as the sponsor expanded into alternative investments vehicles other than commercial real estate.[11] Shortly thereafter, the AR Capital partnership expanded to include Michael Weil, President and Chief Operating Officer, Peter Budko, Executive Vice President and Chief Investment Officer, and Brian Block, Executive Vice President and Chief Financial Officer. AR Capital’s flagship investment program was named American Realty Capital Trust, Inc., or ARCT.[3] Similar to American Financial Realty Trust, ARCT would invest in single tenant commercial real estate properties leased to corporate businesses that provided other essential goods and services, such as Walgreens, CVS, Dollar General, Advanced Auto Parts and Federal Express.[12] In March 2012, American Realty Capital Trust, Inc. listed on the NASDAQ, providing liquidity for its shareholders.[13] Schorsch served as Chairman of the company from inception until January 2013, when it merged with Realty Income Corporation (NYSE: O).[14]

Realty Capital Securities

In 2008, the five partners of AR Capital used their own funds to create Realty Capital Securities, LLC, or RCS, a broker dealer seven times larger than any other broker-dealer operating in the industry at the time.[12] Furthermore, they launched not one, but a series of investment programs simultaneously, using the broker-dealer platform to raise capital for other sponsor companies in the industry.[15] This would save sponsors the time, cost and risk of building their own broker-dealer, as well as generate substantial profit for RCS.[15] In June 2013 Realty Capital Securities announced that it had reached another milestone, $10 billion of raised equity since inception.[16] This coincided with Realty Capital Securities garnering a 53% market share in the real estate managing broker-dealer sales, more than five times that of the next competitor.[16]

New York REIT

On April 15, 2014 New York Recovery REIT, Inc., one of Schorsch's non-traded REIT programs, became New York REIT (NYSE:NYRT), the first traded REIT to acquire real estate exclusively in New York City.[17] The portfolio consists of $2.7 billion worth of New York City properties,[17] notably a $1.45 billion 48.9% stake in One Worldwide Plaza, a mixed use residential and commercial complex.[18] Earlier in the year the fund managed to acquire an office building at 1440 Broadway, pushing into the Times Square sub-market,[17] as well as the leasehold interest in the Viceroy Hotel.[19]

ARC Healthcare Trust listing and sale

On April 7, 2014 Schorsch listed yet another of his companies, American Realty Capital Healthcare Trust, Inc., on the NASDAQ exchange at $10.00 per share (NASDAQ:HCT). In January 2015, this medical-related property portfolio was purchased by Ventas, Inc. (NYSE: VTR) in an approximately $2.6 billion transaction, or at $11.33 per HCT share.[20]

RCS Capital Corporation

In 2013, Schorsch, along with the AR Capital partnership, united their broker-dealer, investment banking, transfer agency and transaction management companies under one holding company named RCS Capital Corporation.[21] This was made available for public ownership in June 2013, when RCS Capital Corporation successfully closed its initial public offering and listed on the New York Stock Exchange (NYSE: RCAP).[22] Shortly after RCAP's IPO, Schorch announced the acquisition of First Allied Holdings, Inc., together with The Legend Group serving over 1,500 independent financial advisors.[23] On October 1, 2013, RCS Capital announced the acquisition of The Hatteras Funds Group[24][25] whose principal business is acting as sponsor, investment adviser and distributor of a family of mutual fund companies. On October 2, 2013, RCS Capital announced the acquisition of Investors Capital Holdings, Ltd.[26] an independent broker-dealer and investment advisory services firm – a four-time winner of Investment Advisor’s Broker-Dealer of the Year award.[27] On November 15, RCS Capital announced the acquisition of asset management and investment advisory services firm Summit Financial Services Group, Inc. On January 16, 2014 RCS Capital announced that it had agreed to purchase Cetera Financial Group and on January 17, 2014 announced its similar intention to acquire J.P. Turner & Company for $1.15 billion and $27 million, respectively. An article by Investment News cited that "If all his deals come to fruition...his network would have close to 9,200 registered representatives and financial advisers producing about $1.73 billion in total annual revenue, placing him in the top tier of independent broker-dealers."[28]

On April 29, 2014, RCAP announced that it had officially completed its acquisition of Cetera Financial Group.[29] On June 11, 2014, the company completed its acquisition of Summit Financial Services Group.[30] Two days later, on June 13, 2014, RCS Capital completed yet another of its previously announced Independent Broker-Dealer acquisitions, closing on J.P. Turner & Company.[31]

As reported by Yahoo Finance, the RCS Capital share price rose to over $30. per share in 2014 prior to reports of massive insider selling of RCAP. Later, a trade journal, "Investment News", in 2015 disclosed a report of the directors of various non traded REIT's affiliated with the firm had been cashing out of their insider shares using the 5% redemption privilege built into the terms of the offerings. By late 2015 RCAP shares were trading for pennies.

On December 30, 2014, RCS Capital announced that Nicholas S. Schorsch notified the RCS Capital Board of his decision to step down from his position as Director and Executive Chairman of the Board. According to a press release issued by AR Capital, Schorsch has made this decision in order to focus his attention on strategic initiatives and potential liquidity events of closed programs sponsored by AR Capital, and new strategies for the future suite of AR Capital investment programs.[32] Schorsch was succeeded by Mark Auerbach, RCS Capital's former Lead Independent Director, to the role of Chairman, effective immediately.[33]

Business approach

Schorsch has managed to influence the non-traded REIT industry in several ways, notably eliminating the "internalization fee" causing other sponsor companies to follow suit.[34] Through American Realty Capital’s Best Practice standards, Kahane and Schorsch made the focus on lowering fees a priority, contrary to industry convention.[35] They proceeded to eliminate payment of asset management fees during the construction of their investment programs. Payment is taken in the form of restricted stock that only vests when "100% of shareholder capital is returned plus payment to investors of an annual 6% cumulative, pre-tax, non-compounded return on the capital contributed by investors."[36] Schorsch is quoted as saying that the internalization fee "made no sense to investors. There's no logical reason they would pay."[37]

Personal life

Nicholas Schorsch is married to Shelley Davis Schorsch[38] and together they have five children. He is an avid collector of American muscle cars, high performance cars and foreign sports cars. He is also an art collector, favoring colonial American art and antiques, as well as Modern art.[39]

Philanthropy

Nicholas Schorsch, his wife Shelley and his family support the following academic institutions, charitable causes and charitable foundations:

References

  1. ↑ Forbes: The World's Billionaires - Nicholas Schorsch August 2014
  2. ↑ "Shelley Schorsch". Retrieved 12 January 2016.
  3. 1 2 3 4 "The Wall Street Transcript Nicholas S. Schorsch". Retrieved 7 January 2014.
  4. ↑ "Investment Program Association Biography of Nicholas S. Schorsch". Retrieved 6 January 2014.
  5. ↑ "American Realty Capital CEO Nicholas S. Schorsch Receives Ernst & Young Entrepreneur Of The Year® 2011 Lifetime Achievement Award in Greater Philadelphia". Retrieved 2 December 2013.
  6. ↑ "Sponsor Revamps Compensation". Retrieved 6 January 2014.
  7. ↑ Philly.com: "IRVIN G. SCHORSCH Jr." April 4, 2014
  8. 1 2 "To Make Money From a Bank, Buy the Bank's Buildings". Retrieved 16 January 2014.
  9. ↑ "American Financial CEO on REIT IPO". Retrieved 16 January 2014.
  10. ↑ "Banking REIT's founder ousted". Retrieved 16 January 2014.
  11. ↑ "REIT Sponsor Changes Name". Retrieved 20 January 2014.
  12. 1 2 "Talking Non-Traded REITs With Nick Schorsch of American Realty Capital". Retrieved 12 December 2013.
  13. ↑ "American Realty Capital Trust Joins NASDAQ". Retrieved 31 December 2013.
  14. ↑ "Realty Income Closes American Realty Capital Trust Acquisition". Retrieved 16 January 2014.
  15. 1 2 "American Realty Offers Broker-Dealer System to other Non-Traded REITs". Retrieved 17 January 2014.
  16. 1 2 "RCS Capital Corporation Announces Milestone $10 Billion Lifetime Direct Investment Equity Capital Raised". Retrieved 17 January 2014.
  17. 1 2 3 "New York REIT Gets Public Listing in Latest for Schorsch". Retrieved 21 April 2014.
  18. ↑ "Dark horse snares One Worldwide Plaza for $1.45B". Retrieved 21 April 2014.
  19. ↑ "American Realty Capital NYRR to Acquire 1440 Broadway". Retrieved 22 April 2014.
  20. ↑ "Ventas to Acquire American Realty Capital Healthcare REIT for $2.6 Billion in Stock and Cash". Retrieved June 23, 2014.
  21. ↑ "RCS Capital Corporation". Retrieved 20 January 2014.
  22. ↑ "RCS Capital IPO". Retrieved 20 January 2014.
  23. ↑ "First Allied Holdings Inc. to be Acquired by RCAP Holdings, LLC". Retrieved 20 January 2014.
  24. ↑ "RCS Capital Purchase of Hatteras SEC 8-K". Retrieved 20 January 2014.
  25. ↑ "Hatteras Funds". Retrieved 20 January 2014.
  26. ↑ "RCS Capital Investors Capital Announcement SEC 8-K". Retrieved 20 January 2014.
  27. ↑ "RCS Capital To Acquire Investors Capital Holdings". Retrieved 20 January 2014.
  28. ↑ "Schorsch Shows he's a major player in the independent broker-dealer industry". Retrieved 20 January 2014.
  29. ↑ "RCAP Completes Cetera Transaction". Retrieved June 23, 2014.
  30. ↑ "RCAP Completes Acquisition of Summit Brokerage". Retrieved June 23, 2014.
  31. ↑ "RCAP Completes Acquisition of J.P. Turner & Co.". Retrieved June 23, 2014.
  32. ↑ "AR Capital Announces Board of Director Changes in Its Sponsored Programs" (PDF). Retrieved January 2, 2015.
  33. ↑ "RCS Capital Announces Changes to Board of Directors". Retrieved January 2, 2015.
  34. ↑ "Nicholas Schorsch amasses companies tirelessly". Retrieved 29 January 2014.
  35. ↑ "Nontraded REITs Push for Industry Change on Fees". Retrieved 29 January 2014.
  36. ↑ "American Realty Capital Global Trust Is American Realty Capital's Sixth Fund to Eliminate the Payment of Asset Management Fees in Cash". Retrieved 29 January 2014.
  37. ↑ "Wells Real Estate nixes controversial charge". Retrieved 29 January 2014.
  38. ↑ Legacy.com: "Louis D. Davis Jr." August 24, 2008
  39. ↑ "Dedication to Preservation: One Couple's Mission". Retrieved 20 January 2014.
  40. ↑ "Gateway Board of Trustees". Retrieved 13 January 2014.
  41. ↑ "Drexel Board of Trustees". Retrieved 13 January 2014.
  42. ↑ "Hearts of Gold Board of Directors". Retrieved 13 January 2014.
  43. ↑ "Hearts of Gold's Arabian Nights Gala Raises Funds for NYC's Homeless Mothers & Children" (PDF). Retrieved 13 January 2014.
  44. ↑ "Mount Pleasant Renovation". Retrieved 13 January 2014.
  45. ↑ "Mount Pleasant Tours". Retrieved 13 January 2014.
  46. ↑ "Hewitt School Board of Trustees". Retrieved 13 January 2014.
  47. ↑ "Executive Networking". Retrieved 13 January 2014.
  48. ↑ "Executive Profile". Retrieved 13 January 2014.
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