Nicholas Schorsch
Nicholas Schorsch | |
|---|---|
| Born | Nicholas Sloan Schorsch March 2, 1961 Philadelphia, Pennsylvania, U.S. |
| Other names | Nick Schorsch |
| Occupation(s) | Businessman, investor, philanthropist |
| Years active | 1978–present |
| Known for | Chairman, CEO, and co-founder of VEREIT; founder of American Realty Capital Trust and AR Capital |
Nicholas Sloan "Nick" Schorsch (born March 2, 1961) is a prominent American businessman, investor, and philanthropist. He holds the positions of chairman, CEO, and co-founder at the investment services company VEREIT.
Early life
Schorsch was born in Philadelphia, Pennsylvania to Irvin G. Schorsch, Jr. and Anita (née Ulick) Schorsch. While studying at Drexel University, he began working in his family’s scrap metal enterprise at age 17. He successfully expanded the operation to generate multimillion-dollar revenues and sold the company for $50 million by the time he was 23.
Following this, Schorsch established Thermal Reduction Corporation, a metal fabrication business. He grew the company through strategic mergers and acquisitions before divesting his stake in 1994.
Early career
In 1995, together with his wife Shelley, Schorsch launched American Financial Resource Group based in Jenkintown. The firm initially acquired businesses in printing, labeling, and financial services. By 1997, the company diversified its portfolio by entering commercial real estate acquisitions. Anticipating the 1998 merger between CoreStates Financial Corporation and First Union Corporation—which would result in the closure of 106 bank branches—Schorsch rapidly purchased all the vacant branch properties for $22.3 million within just 37 days. Within one year, he had either sold or leased approximately 95% of these assets.
The company was rebranded as American Financial Realty Trust (AFRT) in 2002. Schorsch held roles as president, CEO, and vice chairman of the board of trustees. Under his leadership, AFRT went public on the New York Stock Exchange in 2003. During this period, The Philadelphia Inquirer dubbed him "The Bankers Landlord." Schorsch departed from AFRT in 2006.
AR Capital and American Realty Capital Trust
In 2007, Schorsch partnered with William M. "Bill" Kahane to create American Realty Capital, an investment services firm that later adopted the name AR Capital as it broadened its offerings beyond commercial real estate into alternative investments. The leadership team expanded to include Michael Weil as president and COO, Peter Budko as EVP and CIO, and Brian Block as EVP and CFO. AR Capital’s primary initiative, American Realty Capital Trust, Inc. (ARCT), concentrated on single-tenant commercial properties leased to major corporate tenants including Walgreens, CVS, Dollar General, and Federal Express. ARCT went public on NASDAQ in March 2012 to enhance shareholder liquidity. Schorsch remained chairman until January 2013 when ARCT merged with Realty Income Corporation (NYSE: O).
In 2010, Schorsch founded American Realty Capital Properties Inc. (ARCP), which was later renamed VEREIT. In October 2014, ARCP revealed a $23 million accounting discrepancy that caused its stock value to plummet by $3 billion. Following an audit committee investigation, CFO Brian Block was terminated; financial statements from the 2013 10-K filing and early 2014 reports were found unreliable. This incident sparked lawsuits accusing the company of overstating financial performance. Subsequently, Schorsch resigned as chairman in December 2014.
By September 2019, VEREIT reached a settlement agreement for class action lawsuits alleging securities violations amounting to $765.5 million. Schorsch and other key figures contributed $225 million toward resolving the claims. Former CFO Brian Block was later sentenced to an 18-month prison term related to these matters.
Realty Capital Securities
In 2008, the five founding partners of AR Capital pooled their own capital to create Realty Capital Securities, LLC (RCS), establishing a broker-dealer that was seven times larger than any other in the sector at that period. They initiated several investment programs concurrently, leveraging RCS's infrastructure to secure funding for numerous sponsor firms. This strategy eliminated the need for sponsors to develop their own broker-dealer, reducing time, expenses, and risks while generating significant earnings for RCS. By June 2013, Realty Capital Securities had amassed $10 billion in equity since its inception, commanding a 53% share of the real estate managing broker-dealer market—more than fivefold that of its nearest rival.
New York REIT
On April 15, 2014, New York Recovery REIT, Inc., one of Schorsch’s non-traded REITs, transitioned to New York REIT (NYSE: NYRT), becoming the first publicly traded REIT exclusively dedicated to real estate in New York City. Its holdings include $2.7 billion worth of NYC assets, notably a 48.9% interest valued at $1.45 billion in One Worldwide Plaza, a mixed-use residential and commercial property. Earlier that year, the fund also acquired an office building at 1440 Broadway within the Times Square sub-market and secured the leasehold rights for the Viceroy Hotel.
ARC Healthcare Trust listing and sale
On April 7, 2014, Schorsch successfully listed American Realty Capital Healthcare Trust, Inc. on NASDAQ at an initial price of $10.00 per share (NASDAQ: HCT). In January 2015, Ventas, Inc. (NYSE: VTR) completed a $2.6 billion acquisition of this portfolio of medical properties, valuing HCT shares at $11.33 each.
RCS Capital Corporation
In 2013, Schorsch and AR Capital unified their broker-dealer operations, investment banking services, transfer agency functions, and transaction management entities under RCS Capital Corporation. The company went public in June 2013 with a listing on the New York Stock Exchange (NYSE: RCAP). Shortly after its initial public offering, RCAP acquired First Allied Holdings, which supports over 1,500 independent financial advisors.
On October 1, 2013, RCAP purchased The Hatteras Funds Group, a mutual fund sponsor and advisory firm. The next day, it announced the acquisition of Investors Capital Holdings, Ltd., an acclaimed independent broker-dealer and advisory business. Then on November 15, RCAP acquired Summit Financial Services Group, specializing in asset management and advisory services.
By January 2014, RCAP agreed to acquire Cetera Financial Group for $1.15 billion along with J.P. Turner & Company for $27 million. These deals expanded RCAP’s network to nearly 9,200 registered representatives and financial advisors producing approximately $1.73 billion in annual revenue, placing it among the leading independent broker-dealers.
By mid-2014, RCAP finalized its acquisitions of Cetera (April 29), Summit Financial Services Group (June 11), and J.P. Turner & Company (June 13). Although its stock price climbed above $30 in early 2014, reports of considerable insider selling coupled with redemptions from associated non-traded REITs caused a sharp drop in RCAP’s share value by late 2015.
On December 30, 2014, Schorsch resigned as director and executive chairman of RCS Capital to concentrate on strategic projects and liquidity events related to AR Capital’s closed programs and new investment ventures. Mark Auerbach took over as chairman.
On January 4, 2016, trading of RCAP shares was suspended by the NYSE following the company’s announcement of a preliminary agreement to restructure its debt and intentions to file for Chapter 11 bankruptcy later that month.
Business approach
Schorsch played a transformative role in the non-traded REIT sector by removing the "internalization fee," a move that encouraged other industry leaders to adopt similar practices. Under the Best Practice guidelines established by American Realty Capital, Kahane and Schorsch emphasized fee reduction, challenging conventional industry standards. Instead of charging cash asset management fees during development phases, they introduced restricted stock that vests only after investors have recouped their entire capital plus a 6% annual cumulative, pre-tax, non-compounded return. Schorsch openly criticized the internalization fee as irrational from an investor’s perspective.
Accolades
Widely acknowledged as an innovator in alternative investment strategies, particularly within commercial real estate, Schorsch has received multiple prestigious awards. These include the Ernst & Young Entrepreneur of the Year Award in 2003 and a Lifetime Achievement Award in 2011. His efforts have notably increased both the attractiveness and accessibility of commercial real estate opportunities for individual investors.
Personal life
Nicholas Schorsch is married to Shelley Davis Schorsch, and together they have five children: Nicholas, Sloane, Tessa, Zoey, and Victoria. His personal interests include collecting American muscle cars, high-performance automobiles, foreign sports vehicles, as well as colonial American and contemporary art.
Philanthropy
Nicholas Schorsch and his family actively contribute to various educational and charitable organizations:
- The Gateway Middle School – Schorsch is a founding member and serves on the board of trustees since its inception in 2007. He and his wife regularly support its programs and fundraising efforts.
- Drexel University – As both an alumnus and board member, Schorsch engages in the university’s strategic initiatives.
- Hearts of Gold – Serving on the advisory board and having been honorary chair, Schorsch supports this group dedicated to assisting homeless mothers and children in New York City. He was honored with the Angel of the Year award in 2011.
- Historic Williamsburg, Mount Pleasant – In 2000, the Schorsches acquired and restored the 400-acre Mount Pleasant Plantation. They established the Mount Pleasant Foundation to safeguard its historical significance and opened their residence for tours relating to Thomas Jefferson’s legacy starting in 2012.
- The Hewitt School – Schorsch holds a position on the board of trustees at this independent K-12 girls’ school located in New York City.
- Sarah Lawrence College – Both Nicholas Jr. and Shelley are supporters of this institution; Shelley previously served as a trustee.
- Abington Friends School – Schorsch fulfilled the role of assistant clerk on this Pennsylvania school’s board of trustees.