Getting a multi-billion company back on the right track can be a long and complex process, but having the right leadership and strategies in place can make all the difference.

Case in point, Phoenix-based VEREIT where new leadership’s emphasis on four key pillars is producing positive indications that the real estate investment trust is again headed in the right direction after recouping from an accounting irregularity in 2014.


VEREIT ranks among the five most valuable Arizona-based companies in terms of stock-market capitalization with shares worth $8.5 billion.

Formerly doing business as American Realty Capital Partners, it faced numerous lawsuits after the 2014 accounting problem, which led to the departure of top-level executives and steep drops in the company’s stock prices.

After it restated financial reports for fiscal year 2013 and the first two quarters of 2014, Glenn Rufrano was hired as the new chief executive officer in April 2015 and promised a fresh start.

After immersing himself to understand the company’s needs and strengths, Rufrano took steps immediately to develop a business model aimed at addressing the company’s debt and portfolio, which included a name change and rebranding to VEREIT in July 2015.

Five-plus year employee, Kristy Lubeck, vice president of human resources for VEREIT, attributes the company’s comeback to a renewed commitment by Rufrano and the management team to work together in redefining the company’s culture, behavior and business approach.


“With these areas clearly defined,” she says, “it became a road map of how we could achieve our goals on a day to day basis, which in turn has helped foster a results driven and collaborative atmosphere.”

In August 2015, Rufrano announced VEREIT’s new business plan consisting of four key pillars that focus on enhancing the portfolio, supporting Cole Capital, achieving balance sheet investment-grade metrics and establishing a sustainable dividend.

Since the announcement, Rufrano, says the company has delivered on all four pillars and even exceeded original projections.

A company update on VEREIT released by Goldman Sachs’ Global Investment Research Division in August 2016 states, “VEREIT has already made dramatic improvements towards being an investable company.”

“VEREIT has already made great strides in terms of leverage, debt duration, tenant concentration and Cole Capital,” the report explains. “We believe 2017 will be a watershed year where VEREIT will complete the final steps needed in order to regain appeal to institutional REIT investors; we also believe that investors who invest ahead of this could be rewarded.”

In August, Goldman Sachs reiterated its “Buy rating” for VEREIT stock and raised its 12-month price target to $11.90 with 20-percent total return potential.

“As VEREIT prepares for growth,” Rufrano says, “the company is evolving into a capital provider for corporate America where we have the ability to monetize the real estate that houses their respective businesses, allowing them to reinvest back into their operations.”

Diversifying the portfolio 

As a full-service real estate operating company with the infrastructure to buy, sell, finance, property manage, asset manage and lease net lease properties, VEREIT owns and manages a 4,142-property real estate portfolio of retail, restaurants, office and industrial assets worth $15.6 billion, including 74 properties in Arizona and 41 on behalf of Cole Capital.

While Rufrano admits the company’s biggest strength is the diversification of its portfolio, he wanted to diversify it more and ensure its long-term stability as part of the new business plan.

“We [VEREIT] wanted to be 15-20 percent office, 15-20 percent industrial and 60-70 percent retail,” explains Rufrano. The company also didn’t want any single tenant to be worth more than five-percent of the company’s income or one geography to be more than 10 percent of its income.

Thus, VEREIT identified non-control owned joint ventures, flat lease assets, office assets and none core assets to sell, which included selling a portion of its Red Lobster portfolio that once made up 11-percent of VEREIT’s annual revenue.

The company sold $425 million worth of Red Lobster properties in 2015 and over $248 million in 2016, bringing the total percentage of revenue down to eight percent.

In total, $2.6 billion worth of assets were sold at an average cap rate of 6.85-percent over the last two years, says Rufrano, which is $400 million more than VEREIT’s original projections.

Upgrades to Cole Capital 

The second pillar of VEREIT’s road to recovery focused on the re-establishment of the value and brand of Cole Capital, the company’s investment management segment, which sponsors and manages five publicly registered REITs, three of which have ongoing public offerings.

Based on current industry market share, Rufrano says, “We believe we have certainly exceeded expectations.”

In 2015, the company made up 2.7-percent of total market share, but has increased exponentially since to nearly 11 percent by the end of 2016. In 2016, Cole increased its capital raise 56 percent to $629.7 million, including $142.6 million worth of dividend reinvestment plan proceeds, which is $265 million more than the year before.

The increase in capital raise was due to new broker-dealer relationships, as well as certain broker-dealers lifting the suspension of their selling agreements from the accounting scandal of 2014.

Since then, Cole Office & Industrial REIT (CCIT III) has secured 16 new selling agreements, and Cetera Financial Group recently resumed selling Cole products.

Improving the balance sheet 

The goal was to improve the balance sheet and get VEREIT back to an investment grade rating. In 2016, VEREIT experienced two capital events that were extremely important to achieving those goals.

First, it needed to find a way to pay off a $1.3 billion bond issue that was coming due in February 2017, which at the time made rating agencies very wary about the company’s ability to refinance.

Thus, in June 2016, VEREIT raised $1 billion in bonds and borrowed $300 million from a bank consortium that was then used to pay off debt. After what happened in 2014, there was doubt that the bond market would support VEREIT, but the company proved it would.

“We showed the rating agencies that we had access to the U.S. public bond market – the most liquid, largest pool of capital in the world,” explains Rufrano.

The second event occurred in August 2016 when VEREIT successfully raised an additional $700 million through public equity to pay down debt.

Rufrano explains, “The result of the refinancing of the bonds and paying down of the debt was that Standard & Poor’s gave us investment grade rating on our bonds last year and Fitch gave us an investment grade rating as a company.” Both received a BBB- rating.

This translates to better margins as a result of lower cost of funds, which coincides with better investment grade ratings, he adds.

Pay sustainable dividends 

REITs, by their very nature, must pay dividends to its income investors.

Thus, the fourth pillar focused on establishing an annualized dividend of $0.55 per year and prove its longevity. After cutting its dividends in 2015 as a result of the previous year’s accounting woes, VEREIT reinstated its dividends later in the year.

VEREIT currently pays its common stock shareholders an annual dividend of $0.55 per share.

“We’ve paid it consistently,” adds Rufrano. “The sustainability of that dividend has been substantiated.”

It takes a team

Looking back, Rufrano attributes the company’s recovery to the successful work of his peers. “It’s truly a team effort between all of us,” he says.

VEREIT’s new dream team is comprised of new executives brought in by Rufrano as well as senior members from different departments within VEREIT, which created a mix of longtime industry professionals with different core competencies that Rufrano says, “were complimentary to the business.”

By leveraging everyone’s unique talents and expertise, Lubeck says, “He created a best in class team and worked with them to focus our strengths and ensure that there is transparency and accountability on every level.”