Business Context and Reporting Period
This Form 8-K is filed by American Realty Capital Global Trust, Inc. (the "Company") on July 5, 2013, reporting events occurring on July 2, 2013. The filing details the entry into a material definitive agreement regarding the restructuring of asset management fees and compensation for the Company's Advisor.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures. The document focuses exclusively on the terms of a new advisory agreement and the elimination of prior fee structures.
Material Changes Versus Prior Period
- Elimination of Cash/Stock Fees: Effective with the quarter ended March 31, 2013, the Company eliminated the payment of asset management fees in the form of cash or common stock to the Advisor.
- New Compensation Structure: The Company entered into a Second Amended and Restated Advisory Agreement on July 2, 2013. Under this agreement, the Advisor will receive performance-based restricted partnership units ("Class B units") of the Operating Partnership instead of traditional fees.
- Issuance of Units: In May 2013, the Board approved the issuance of 286 Class B units to the Advisor. No additional units have been approved as of the filing date.
Guidance, Outlook, and Management Commentary
The filing outlines specific conditions for the vesting and forfeiture of the new Class B units:
- Economic Hurdle: Units vest when the value of the Operating Partnership's assets plus distributions equals or exceeds total investor capital plus a 6% cumulative, pre-tax, non-compounded annual return.
- Performance Condition: Vesting also occurs upon termination of the agreement without cause, a listing, or another liquidity event, provided the Advisor is still serving.
- Forfeiture: Units are immediately forfeited if the agreement is terminated for any reason other than termination without cause.
- Distributions: The Advisor receives distributions on unvested Class B units equal to the rate received on the Company's common stock.
Important Facts for Investor Verification
- Verify the exact valuation of the Operating Partnership's assets to determine proximity to the 6% cumulative return hurdle required for unit vesting.
- Confirm the quarterly approval process for future Class B unit issuances by the Board of Directors.
- Review the Amended and Restated Agreement of Limited Partnership to understand the full rights and obligations associated with the Class B units.
- Monitor for any future filings regarding the termination of the Advisory Agreement, which would trigger immediate forfeiture of units.