Preferred and Common Stock and OP Units

Series D and Series E Preferred Stock and Preferred Units

On September 12, 2013, the General Partner’s board of directors unanimously approved the issuance of Series D Cumulative Convertible Preferred Stock (“Series D Preferred Stock”) and the issuance of Series E Cumulative Preferred Stock (“Series E Preferred Stock”). Concurrently, the Operating Partnership was approved to issue to the General Partner Series D Cumulative Convertible Preferred Units (“Series D Preferred Units”) and Series E Cumulative Preferred Units (“Series E Preferred Units”), if applicable.

On September 15, 2013, the General Partner entered into definitive purchase agreements pursuant to which it agreed to issue Series D Preferred Stock and common stock to certain institutional holders, necessitating that the Operating Partnership concurrently issue to the General Partner Series D Preferred Units and General Partner OP Units promptly following the close of the CapLease Merger. Pursuant to the definitive purchase agreements, the General Partner issued approximately 21.7 million shares of Series D Preferred Stock and 15.1 million shares of ARCP common stock for gross proceeds of $288.0 million and $186.0 million, respectively, on November 12, 2013. The Operating Partnership concurrently issued 21.7 million Series D Preferred Units and 15.1 million General Partner OP Units to the General Partner. The Series D Preferred Stock and Series D Preferred Units pay dividends at the rate of 5.81% per annum on their face amount of $13.59 per share (equivalent to $0.79 per share on an annualized basis). The Company redeemed all outstanding Series D Preferred Stock and Units on September 2, 2014 for $316.1 million in cash.

As the holders of Series D Preferred Stock were entitled to receive liquidation preferences that other equity holders were not entitled to, the Company classified the Series D Preferred Stock as temporary equity. At the date of issuance, the fair value of the Series D Preferred Stock was $269.3 million.

Prior to redemption, the General Partner had concluded that the conversion option qualified as a derivative and should be bifurcated from the host instrument. At issuance, the conversion option had a fair value of $18.7 million. As of December 31, 2013, the fair value of the conversion option was $16.7 million. The Company recorded a loss of $13.6 million upon redemption of the conversion option in gain (loss) on derivative instruments, net in the consolidated statements of operations for the year ended December 31, 2014.

As of December 31, 2014, there were no issued shares of Series D Preferred Stock and no authorized and issued shares of Series E Preferred Stock. Therefore, no equivalent units were issued and outstanding at the Operating Partnership.

Series F Preferred Stock and Series F Preferred Units

On October 6, 2013, in connection with the modification to the ARCT IV Merger, the General Partner’s board of directors unanimously approved the issuance of Series F Preferred Stock. Upon consummation of the ARCT IV Merger on January 3, 2014, 42.2 million shares of Series F Preferred Stock were issued to ARCT IV shareholders, resulting in the Operating Partnership concurrently issuing 42.2 million General Partner Series F Preferred Units to the General Partner, and 0.7 million Limited Partner Series F Preferred Units to the ARCT IV OP Unit holders. Subsequent to original issuance and through December 31, 2014, 0.6 million Limited Partner Series F Preferred Units were converted into an equivalent number of the General Partner’s Series F Preferred Stock. Concurrently, 0.6 million General Partner Series F Preferred Units were issued to the General Partner. As of December 31, 2014, there were 42.8 million shares of Series F Preferred Stock and 86.9 million Series F OP Units issued and outstanding.

The Series F Preferred Units contain the same terms as the Series F Preferred Stock. Therefore, the Series F Preferred Stock/Units will pay cumulative cash dividends at the rate of 6.70% per annum on their liquidation preference of $25.00 per share/unit (equivalent to $1.675 per share/unit on an annual basis). The Series F Preferred Stock is not redeemable by the Company before the fifth anniversary of the date on which such Series F Preferred Stock is issued (the “Initial Redemption Date”), except under circumstances intended to preserve the General Partner’s status as a REIT for federal and/or state income tax purposes and except upon the occurrence of a change of control. On and after the Initial Redemption Date, the Company may, at its option, redeem shares of the Series F Preferred Stock, in whole or from time to time in part, at a redemption price of $25.00 per share plus, subject to exceptions, any accrued and unpaid dividends thereon to the date fixed for redemption. The shares of Series F Preferred Stock have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company redeems or otherwise repurchases them or they become convertible and are converted into General Partner’s common stock or General Partner OP Units (or, if applicable, alternative consideration). The Series F Preferred Stock of the General Partner trades on the NASDAQ under the symbol “ARCPP.”

Increases in Authorized Common Stock

On December 9, 2013, the Company filed articles of amendment to its charter to increase the number of authorized shares of common stock to 1.5 billion shares.

Offerings

On August 1, 2012, the General Partner filed a $500.0 million universal shelf registration statement and a resale registration statement with the SEC. Each registration statement became effective on August 17, 2012. As of December 31, 2014, the General Partner had issued 2.1 million shares of common stock and no other securites under the universal shelf registration statement. Concurrently with the General Partner’s issuance of the 2.1 million shares of common stock referenced above, the Operating Partnership issued 2.1 million General Partner OP Units to the General Partner. The resale registration statement, as amended, registered the resale of up to 1,882,248 shares of ARCP’s common stock issued in connection with any future conversion of certain currently outstanding restricted shares, preferred stock or Limited Partner OP Units.

In January 2013, the General Partner commenced its “at the market” equity offering program (“ATM”) in which it could from time to time, offer and sell shares of its common stock having aggregate offering proceeds of up to $60.0 million. The shares would be issued pursuant to the General Partner’s universal shelf registration statement. For each share of common stock the General Partner sold under the ATM, the Operating Partnership would issue a corresponding General Partner OP Unit to the General Partner.

On March 14, 2013, the General Partner filed a universal automatic shelf registration statement that was automatically declared effective and achieved well-known seasoned issuer (“WKSI”) status. As a result of the delayed filing of certain of the General Partner’s periodic reports with the SEC, it is not currently eligible to register the offer and sale of securities using a Form S-3 shelf registration statement and, therefore, are not eligible to use such WKSI shelf registration statement or the $500.0 million universal shelf registration statement described above, and the General Partner will not become eligible until it has timely filed certain periodic reports required under the Securities Exchange Act of 1934, as amended, for 12 consecutive calendar months.

On May 28, 2014, the General Partner closed on a public offering of 138.0 million shares of ARCP common stock at a price of $12.00 per share. The net proceeds to ARCP were $1.6 billion after deducting underwriting discounts, commissions and offering-related expenses. Concurrently, the Operating Partnership issued the General Partner 138.0 million General Partner OP Units.

The following are the Company’s equity offerings of common stock and the gross proceeds of the equity offerings for each year since the Company’s initial public offering (dollars, in millions):



Type of offering	Closing Date	Number of Shares⁽¹⁾	Gross Proceeds
IPO	September 7, 2011	5,574,131	$	67.4
Follow-on offering	November 2, 2011	1,497,924	15.8
Underwriters’ over-allotment	November 7, 2011	74,979	0.8
Total - Year end December 31, 2011⁽²⁾		7,147,034	$	84.0

Follow-on offering	June 18, 2012	3,250,000	$	30.3
Underwriters’ over-allotment	July 9, 2012	487,500	4.6
Total - Year end December 31, 2012⁽³⁾		3,737,500	$	34.9



Type of offering	Closing Date	Number of Shares⁽¹⁾	Gross Proceeds
Registered follow on-offering	January 29, 2013	2,070,000	$	26.7
ATM	January 1 - September 30, 2013	553,300	8.9
Private placement offering	June 7, 2013	29,411,764	455.0
Private placement offering	November 12, 2013	15,126,498	186.0
Total - Year end December 31, 2013⁽⁴⁾		47,161,562	$	676.6

Public Offering	May 28, 2014	138,000,000	$	1,590.0
		138,000,000	$	1,590.0

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(1) Excludes 140.7 million shares of common stock that were issued to the stockholders of ARCT III’s common stock in conjunction with the ARCT III Merger.

(2) Excludes 9.8 million shares of common stock that were issued by ARCT III for gross proceeds of $102.2 million.

(3) Excludes 155.7 million and 5.4 million shares of common stock that were issued by ARCT III and ARCT IV, respectively, for gross proceeds of $1.6 billion and $255.0 million, respectively, prior to their acquisitions by ARCP.

(4)Excludes 31.0 million shares of common stock that were issued to ARCT IV stockholders in connection with the ARCT IV Merger.

Common Stock Dividends

In October 2011, the Company began paying common dividends on the 15th day of each month to stockholders/unitholders of record on the eighth day of such month. On October 23, 2013, the board of directors of ARCP authorized an annualized common dividend per share of $1.00, which became effective February 7, 2014. In connection with the amendments to the Credit Facility, the Company agreed to suspend payment of dividends on its common stock until it complied with certain financial statement delivery and other information requirements.



Dividend Increase Declaration Date	Annualized Dividend Per Share	Effective Date
September 7, 2011	$0.875	October 9, 2011
February 27, 2012	$0.880	March 9, 2012
March 16, 2012	$0.885	June 9, 2012
June 27, 2012	$0.890	September 9, 2012
September 30, 2012	$0.895	November 9, 2012
November 29, 2012	$0.900	February 9, 2013
March 17, 2013	$0.910	June 8, 2013
May 28, 2013	$0.940	December 8, 2013 ⁽¹⁾
October 23, 2013	$1.000	February 7, 2014 ⁽²⁾

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(1)	The dividend increase became effective at the closing of the CapLease Merger, which was consummated on November 5, 2013.


(2)	The dividend increase was contingent upon, and became effective with, the closing of the Cole Merger, which was consummated on February 7, 2014.

Common Stock Repurchases

On August 20, 2013, ARCP’s board of directors reauthorized its $250.0 million share repurchase program, which was originally authorized in February 2013. During the year ended December 31, 2014, ARCP did not repurchase any shares of common stock under the share repurchase program.

Under ARCP’s equity compensation plans, individuals have the option to have ARCP repurchase shares upon vesting in order to satisfy the minimum federal and state tax withholding obligations. During the year ended December 31, 2014, ARCP repurchased 551,664 of shares to satisfy the federal and state tax withholding on behalf of employees.