(Bloomberg) The shakeup at the top of American Realty Capital Properties Inc. has left a void in leadership as the landlord tries to recover from accounting errors, leaving investors with more questions about the company’s future.

The stock slid 8.5 percent yesterday after Chairman Nicholas Schorsch and two other executives stepped down. While Schorsch’s departure was expected by some analysts, the exit of Chief Executive Officer David Kay—who took the job in October and said last month that he wouldn’t leave—and Chief Operating Officer Lisa Beeson was a surprise.

The moves added to turmoil at American Realty Capital Properties, or ARCP, after intentionally concealed accounting errors that led to the resignations of its finance and accounting chiefs in October. The New York-based company, the largest U.S. owner of single-tenant buildings such as restaurants and drugstores, is reviewing financial statements going back to last year. It has lost more than a third of its value since the Oct. 29 disclosures.

“We have no leadership and no financials—talk about having the maximum amount of uncertainty surrounding a publicly traded stock,” Paul Adornato, an analyst at BMO Capital Markets, said in a telephone interview. “This is pretty much at the top of the list in my 20-plus years in the industry in terms of uncertainty.”

William Stanley, a board member, has taken over as CEO and chairman until permanent replacements are found.

Strategy Change
“After evaluating the company’s current situations and the leadership needs of the business going forward, the independent members of the board felt strongly that the changes in strategy, leadership and governance needed to be made,” Stanley said on a conference call yesterday. He took no questions. Andy Merrill, a spokesman for the real estate investment trust, declined to comment beyond the statement.

Schorsch, who controls an empire of real estate companies through his closely held firm AR Capital, co-founded ARCP and was its CEO until Kay took over under a planned succession in October. Schorsch stepped down as chairman and director on Dec. 12, according to a regulatory filing. Kay and Beeson quit yesterday.

Schorsch, 53, will leave behind a compensation package of about $100 million, company filings show. He didn’t respond to an e-mail seeking comment. Kay’s voice mailbox was full and he didn’t respond to a text message or a phone message left at ARCP. Beeson didn’t respond to a telephone message or e-mail sent after business hours.

‘Complete Vacuum’
“It’s an unprecedented move,” said Kevin Gannon, president of Robert A. Stanger & Co., a Shrewsbury, New Jersey- based investment bank that focuses on nontraded REITs. “You have some pretty big players and now you’re void of that talent. Let’s not forget they just lost their CFO. You have a complete vacuum in the executive suite.”

Kay’s departure was a surprise given that he had talked about staying with the company, as was Beeson’s, said Robert Gadsden, a portfolio manager at Alpine Woods Capital Investors LLC in Purchase, New York. Kay said in a Nov. 14 conference call that he was with the REIT “for the long haul.”

“I don’t think anybody saw that coming,” Gadsden said.

Alpine, with about $4 billion under management, owned 894,300 shares of ARCP as of Sept. 30, according to data compiled by Bloomberg.

Added Confusion
The resignations represent an “about-face” for the REIT, which had expressed full confidence in the remaining management team, Anthony Paolone, an analyst at JPMorgan Chase & Co., wrote in a report yesterday.

“The public equity markets had settled on a consensus view that Nick Schorsch would go, financial statements would be filed, and David Kay would start to lay out a way forward for the company,” Paolone wrote. “Now, however, we think there will be some added confusion around whether there are further shoes to drop and what the timeline may be around clarity on strategy or leadership.”

Schorsch will focus his attention on the strategy, growth and management of AR Capital, the largest sponsor of nontraded REITs, according to a statement by that entity. That business has been roiled as some broker-dealers halt sales of AR Capital products while ARCP reviews its financials.

“In order to reduce complexity, enhance accountability, align interests and minimize conflicts of interest among related parties and affiliates, Nick has decided to step down from his positions at ARCP and certain related companies,” William Kahane, founding partner of AR Capital, said in a statement yesterday. “I know this has not been an easy decision for Nick, but he believes it is the correct one.”

While the investigation into the accounting errors is continuing, “we understand that to date there has not been any conclusion of unlawful conduct” by Schorsch, Kahane said in the statement.

Share Trading
ARCP fell 5.4 percent to $7.78 as of 10:08 a.m. in New York today.

RCS Capital Corp., an investment firm that sells AR Capital REITs, rose 5.1 percent to $10.99.

Yesterday, RCS tumbled 11 percent, bringing the loss since the ARCP accounting disclosures to 47 percent. Schorsch is chairman of RCS and its biggest shareholder.

After the accounting disclosure, RCS canceled a deal it had with ARCP to buy its Cole Capital business, which also sponsors nontraded REITs. ARCP sued RCS, claiming that RCS improperly reneged on the deal. Eventually RCS agreed to pay $60 million to settle the litigation.

Andrew Backman, managing director for investor relations at RCS, didn’t respond to an e-mail and phone message asking for comment on the changes at ARCP.

Acquisitions, Dividend
As chairman and CEO of ARCP, Schorsch was the public face of the company since it first sold shares to the public in September 2011 at $12.50 each. Schorsch’s appetite for acquisitions sometimes drew criticism from stockholders. In June, activist investor Marcato Capital Management LP asked ARCP to curb its deal making.

Since then, the company had slowed its acquisition pace. Growth for ARCP may be limited as its ability to raise money, in part through equity sales, may be hurt by questions surrounding the company for investors, Gadsden said. Investors need to get comfortable with the company again, and ARCP will also likely cut its dividend, he said.

“The first step is obviously a rigorous and full disclosure of what occurred,” Gadsden said of the accounting error and concealment. “That’s step one.”

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