S&P Downgrades ARCP (ARCP) to 'BB';Remains on CreditWatch Negative

Standard & Poor's Ratings Services today lowered its corporate credit rating on American Realty Capital Properties Inc. and its operating partnership, ARC Properties Operating Partnership L.P, to 'BB' from 'BBB-'. The ratings remain on CreditWatch with negative implications.

We lowered our issue-level rating on the REIT's $2.5 billion in aggregate senior unsecured notes to 'BB+' from 'BBB-', reflecting a '2' recovery rating, indicating our expectations for substantial (70% to 90%) recovery of principal in the event of a payment default.

"The downgrade reflects our view of the high level of uncertainty surrounding ARCP after the company's CEO and President/COO resigned unexpectedly and Lead Independent Director William Stanley's appointment as interim CEO. The track record of the recently installed executives and the board of directors in running and overseeing a public company is limited," said credit analyst Jaime Gitler.

Standard & Poor's will seek to resolve the CreditWatch placement within the next 90 days, but this will depend upon a better understanding of possible outcomes from the various audits and investigations. We will review any further agreements with its bank lending group, any potential disclosures upon the release of the board's investigation, any additional exposures from the completion of the forensic audit, and other management or governance changes that are being contemplated. Upon completion of our review, we could lower the corporate credit rating or we could leave the ratings unchanged.

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