Equity

Common Stock and General Partner OP Units

The General Partner is authorized to issue up to 1.5 billion shares of Common Stock. As of December 31, 2015, the General Partner had approximately 904.9 million shares of Common Stock issued and outstanding.

Additionally, the Operating Partnership had approximately 904.9 million General Partner OP Units issued and outstanding as of December 31, 2015, corresponding to the General Partner’s outstanding shares of Common Stock.

Preferred Stock and Preferred OP Units

Series A and Series B Convertible Preferred Stock

During the year ended December 31, 2013, the Company converted all 545,454 outstanding shares of its Series A Convertible Preferred Stock and all 283,018 outstanding shares of Series B Convertible Preferred Stock into 829,629 shares of the Company’s common stock, which included dividends on the Series A Convertible Preferred Stock.

Convertible Obligation to Series C Convertible Preferred Stockholders

During the year ended December 31, 2013, the Company issued, through a private placement, 28.4 million shares of Series C Convertible Preferred Stock (the “Series C Stock”) for gross proceeds of $445.0 million. Due to an unconditional obligation to either redeem or convert the Series C Stock into a variable number of shares of common stock that is predominantly based on a fixed monetary amount, the preferred securities were classified as an obligation under U.S. GAAP and were presented in the consolidated balance sheets as a liability prior to their settlement in November 2013. During the year ended December 31, 2013, the Company converted the Series C Stock, in accordance with the terms of the original agreement, into 1.4 million shares of common stock with the remaining balance of Series C Stock settled in cash consideration of $441.4 million.

Contingent Valuation Rights

During the year ended December 31, 2013, the Company issued to certain stockholders of common stock and Series C Stock contingent value rights.

Changes in the fair value of the contingent valuation rights obligation subsequent to issuance date were recorded as a loss on derivatives in the consolidated statements of operations. For the year ended December 31, 2013, the Company recorded a loss on the contingent valuation rights obligation of $69.7 million, which represented the amount settled during 2013.

Series D Preferred Stock

During the year ended December 31, 2013, the Company entered into definitive purchase agreements pursuant to which it agreed to issue Convertible Preferred Stock (“Series D Preferred Stock”), par value $0.01 per share, and common stock, par value $0.01 per share, to certain institutional holders promptly following the close of the Company’s merger with CapLease, via a private placement. Pursuant to the definitive purchase agreements, the Company issued approximately 21.7 million shares of Series D Preferred and 15.1 million shares of common stock, for gross proceeds of $288.0 million and $186.0 million, respectively, on November 12, 2013. The Series D Preferred Stock paid dividends at the rate of 5.81% per annum on its 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.

Prior to the redemption, the Company concluded that the conversion option qualifies 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 had a fair value of $16.7 million. The Company recorded the change in fair value of $2.0 million in loss on derivative instruments in the consolidated statements of operations for the year ended December 31, 2013. The Company recorded a loss of $13.6 million upon redemption of the conversion option in loss on derivative instruments, net in the consolidated statements of operations for the year ended December 31, 2014.

Series F Preferred Stock

On January 3, 2014, in connection with the ARCT IV Merger, 42.2 million shares of Series F Preferred Stock were issued, resulting in the Operating Partnership concurrently issuing 42.2 million General Partner Series F preferred units (“General Partner Series F Preferred Units”) to the General Partner, and 700,000 Series F Preferred Units (“Limited Partner Series F Preferred Units”) to holders of each outstanding unit of American Realty Capital Operating Partnership IV, L.P. (the “ARCT IV Operating Partnership”) (each, an “ARCT IV OP Unit”). As of December 31, 2015, there were approximately 42.8 million shares of Series F Preferred Stock (and approximately 42.8 million corresponding General Partner Series F Preferred Units) and 86,874 Limited Partner Series F Preferred Units issued and outstanding.

The Series F Preferred Stock will pay cumulative cash dividends at the rate of 6.70% per annum on their liquidation preference of $25.00 per share (equivalent to $1.675 per share 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 was 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 General Partner 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 General Partner redeems or otherwise repurchases them or they become convertible and are converted into Common Stock (or, if applicable, alternative consideration). The Series F Preferred Stock traded on the NASDAQ under the symbol “ARCPP” through July 30, 2015. The Series F Preferred Stock began trading on the NYSE under the symbol “VER PRF” on July 31, 2015. The Series F Preferred Units contain the same terms as the Series F Preferred Stock.

For federal income tax purposes, distributions to stockholders are characterized as ordinary dividends, capital gain distributions, or nontaxable distributions. Nontaxable distributions will reduce U.S stockholders’ basis (but not below zero) in their shares. The following table shows the character of the Series F Preferred Stock distributions we paid on a percentage basis for the years ended December 31, 2015 and 2014:



	Year Ended December 31,
	2015		2014
Ordinary dividends	75.9	%	100.0	%
Nontaxable distributions	—	%	—	%
Capital gain distributions	24.1	%	—	%
Total	100	%	100	%

Limited Partner OP Units

As of December 31, 2015 and 2014, the Operating Partnership had approximately 23.8 million of Limited Partner OP Units outstanding.

On March 11, 2015, the Company received redemption requests totaling approximately 13.1 million OP Units ($126.7 million based on a redemption price of $9.65) from certain affiliates of the Former Manager. The Company believes it has potential claims against recipients of those OP Units and has engaged in discussions with affiliates of the Former Manager regarding the redemption requests. Pending any resolution, the Company does not currently intend to satisfy any of the redemption requests. In light of the potential claims, the OP did not pay distributions in respect of a substantial portion of the outstanding Limited Partner OP Units on October 15, 2015 and January 15, 2016, when the Common Stock dividend was otherwise paid.

Public Offerings

On May 28, 2014, the General Partner closed on a public offering of 138.0 million shares of Common Stock at a price of $12.00 per share. The net proceeds to the General Partner 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.

Common Stock Dividends

On December 23, 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. On March 30, 2015, the Company satisfied these financial statement and other information requirements. On August 5, 2015, the Company declared a quarterly dividend of $0.1375 per share of Common Stock for each of the third and fourth quarters of 2015 (representing an annualized dividend rate of $0.55 per share) which was paid on October 15, 2015 and January 15, 2016 to holders of record as of September 30, 2015 and December 31, 2015, respectively.

For federal income tax purposes, distributions to stockholders are characterized as ordinary dividends, capital gain distributions, or nontaxable distributions. Nontaxable distributions will reduce U.S stockholders’ basis (but not below zero) in their shares. The following table shows the character of the common stock distributions we paid on a percentage basis for the years ended December 31, 2015, 2014 and 2013:



	Year Ended December 31,
	2015		2014		2013
Ordinary dividends	75.9	%	6.0	%	22.3	%
Nontaxable distributions	—	%	94.0	%	77.7	%
Capital gain distributions	24.1	%	—	%	—	%
Total	100	%	100	%	100	%

Common Stock Repurchases

Under the General Partner’s Equity Plan (defined below), individuals have the option to have the General Partner repurchase shares vesting from awards made under the Equity Plan in order to satisfy the minimum federal and state tax withholding obligations. During the year ended December 31, 2015, the General Partner repurchased 268,414 shares to satisfy the federal and state tax withholding on behalf of employees.

Share Repurchase Programs

ARCT III’s and ARCT IV’s boards of directors had adopted Share Repurchase Programs (the “ARCT III SRP” and the “ARCT IV SRP”, respectively, and collectively, the “SRPs”) that enabled stockholders to offer their shares to ARCT III and ARCT IV, respectively, for repurchase in limited circumstances. The SRPs permitted investors to sell their shares back to ARCT III or ARCT IV, as applicable, after they had held them for at least one year, subject to the significant conditions and limitations described below.

When a stockholder requested repurchases and the repurchases were approved by ARCT III’s or ARCT IV’s board of directors, as applicable, it reclassified such obligation from equity to a liability based on the settlement value of the obligation. Upon the ARCT III Merger, the ARCT III SRP was terminated. Upon the ARCT IV Merger, the ARCT IV SRP was terminated. As of December 31, 2015, there were 87 cumulative repurchase requests and 188,075 cumulative shares repurchased at an average price per share of $10.46. During the years ended December 31, 2015 and 2014, the Company did not repurchase any shares of common stock under the SRP. During the year ended December 31, 2013, the Company had 11 repurchase requests and 4,956 shares repurchased at an average price per share of $24.98.

Upon the closing of the ARCT III Merger, on February 28, 2013, 29.2 million shares, or 16.5% of the then-outstanding shares of ARCT III’s common stock, were paid in cash at $12.00 per share, which was equivalent to 27.7 million shares of the Company’s common stock based on the ARCT III Exchange Ratio. In addition, 148.1 million shares of ARCT III’s common stock were converted to shares of the Company’s Common Stock at the ARCT III Exchange Ratio, resulting in an additional 140.7 million shares of the Company’s Common Stock outstanding after the exchange. On August 20, 2013, the Company’s board of directors reauthorized its $250.0 million share repurchase program, which was originally authorized in February 2013.