Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Nov. 12, 2013 |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'RCS Capital Corp | ' |
Entity Central Index Key | '0001568832 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 26.5 |
Consolidated_Statements_of_Fin
Consolidated Statements of Financial Condition (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
ASSETS | ' | ' |
Cash and cash equivalents | $71,220,000 | $12,683,000 |
Available-for-sale securities | 8,596,000 | 0 |
Trading securities | 1,023,000 | 0 |
Selling commission and dealer manager fees | ' | ' |
Due from affiliates | 2,089,000 | 1,176,000 |
Due from non-affiliates | 948,000 | 179,000 |
Reimbursable expenses and investment banking fees | ' | ' |
Due from affiliates | 14,197,000 | 1,490,000 |
Due from non-affiliates | 575,000 | 61,000 |
Due from Parent | 740,000 | 0 |
Property and equipment, net | 371,000 | 113,000 |
Prepaid expenses and other assets | 2,599,000 | 509,000 |
Total assets | 102,358,000 | 16,211,000 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Accounts payable | 1,416,000 | 1,303,000 |
Accrued expenses | ' | ' |
Due to affiliates | 4,137,000 | 0 |
Due to non-affiliates | 13,032,000 | 4,175,000 |
Payable to broker-dealers | 13,440,000 | 5,007,000 |
Deferred revenue (affiliated) | 3,186,000 | 0 |
Other liabilities | 1,045,000 | 0 |
Total liabilities | 36,256,000 | 10,485,000 |
Additional paid-in capital | 43,368,000 | 0 |
Accumulated other comprehensive loss | -32,000 | 0 |
Retained earnings | 188,000 | 0 |
Member's equity | 0 | 5,726,000 |
Total stockholders' equity | 43,551,000 | 5,726,000 |
Non-controlling interest | 22,551,000 | 0 |
Total liabilities and equity | 102,358,000 | 16,211,000 |
Common Class A [Member] | ' | ' |
Accrued expenses | ' | ' |
Common Stock | 3,000 | 0 |
Common Class B [Member] | ' | ' |
Accrued expenses | ' | ' |
Common Stock | $24,000 | $0 |
Consolidated_Statements_of_Fin1
Consolidated Statements of Financial Condition (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Common Class A [Member] | ' | ' |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 100,000,000 | 0 |
Common stock, shares issued (in shares) | 2,500,000 | 0 |
Common stock, shares outstanding (in shares) | 2,500,000 | 0 |
Common Class B [Member] | ' | ' |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 100,000,000 | 0 |
Common stock, shares issued (in shares) | 24,000,000 | 0 |
Common stock, shares outstanding (in shares) | 24,000,000 | 0 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Selling commissions | ' | ' | ' | ' |
Affiliated products | $106,867 | $59,438 | $335,181 | $127,399 |
Non-affiliated products | 32,299 | 5,561 | 73,688 | 12,286 |
Dealer manager fees | ' | ' | ' | ' |
Affiliated products | 54,069 | 38,633 | 194,764 | 75,206 |
Non-affiliated products | 15,416 | 2,912 | 36,822 | 6,617 |
Investment banking advisory services | ' | ' | ' | ' |
Affiliated products | 7,445 | 0 | 15,415 | 0 |
Non-affiliated products | 0 | 0 | 0 | 925 |
Transfer agency revenue (affiliated) | 2,830 | 0 | 5,760 | 0 |
Services revenue | ' | ' | ' | ' |
Affiliated products | 2,847 | 243 | 7,541 | 742 |
Non-affiliated products | 159 | 10 | 459 | 44 |
Reimbursable expenses and investment banking fees | ' | ' | ' | ' |
Affiliated products | 1,722 | 17 | 2,642 | 133 |
Non-affiliated products | 32 | 2 | 47 | 8 |
Other | 99 | 0 | 113 | 36 |
Total revenues | 223,785 | 106,816 | 672,432 | 223,396 |
Third-party commissions | ' | ' | ' | ' |
Affiliated products | 106,906 | 59,424 | 335,225 | 127,379 |
Non-affiliated products | 32,299 | 5,561 | 73,688 | 12,285 |
Third-party reallowance | ' | ' | ' | ' |
Affiliated products | 18,709 | 9,373 | 54,306 | 19,588 |
Non-affiliated products | 5,400 | 733 | 12,031 | 1,652 |
Internal commissions, payroll and benefits | 31,938 | 14,306 | 90,298 | 32,858 |
Conferences and seminars | 5,476 | 2,946 | 17,730 | 10,524 |
Travel | 2,315 | 1,302 | 4,738 | 4,329 |
Marketing and advertising | 1,655 | 924 | 4,876 | 1,077 |
Professional fees | 1,503 | 288 | 3,467 | 1,104 |
Data processing | 2,045 | 0 | 4,388 | 0 |
Management fee | 1,335 | 0 | 2,013 | 0 |
Other | 2,559 | 384 | 4,676 | 1,060 |
Total expenses | 212,140 | 95,241 | 607,436 | 211,856 |
Income before taxes | 11,645 | 11,575 | 64,996 | 11,540 |
Provision for income taxes | 466 | 0 | 626 | 0 |
Net income | 11,179 | 11,575 | 64,370 | 11,540 |
Less: net income attributable to non-controlling interests | 10,541 | 11,575 | 63,530 | 11,540 |
Net income attributable to RCS Capital Corporation | $638 | $0 | $840 | $0 |
Per Share Data | ' | ' | ' | ' |
Basic and diluted number of shares attributable to Class A stockholders | 2,500,000 | ' | ' | ' |
Net income per share attributable to RCS Capital Corporation | $0.26 | ' | ' | ' |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income Statement (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Net income | $11,179 | $11,575 | $64,370 | $11,540 |
Other comprehensive loss, net of tax: | ' | ' | ' | ' |
Unrealized gain on investments and securities | -406 | 0 | -345 | 0 |
Total other comprehensive income, net of tax | -406 | 0 | -345 | 0 |
Total comprehensive income | 10,773 | 11,575 | 64,025 | 11,540 |
Less: Net comprehensive income attributable to non-controlling interests | 10,173 | 11,575 | 63,217 | 11,540 |
Net comprehensive income attributable to RCS Capital Corporation | $600 | $0 | $808 | $0 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Unclassified Stock [Member] | Additional Paid-in Capital [Member] | Retained Deficit [Member] | Accumulated Other Comprehensive Income [Member] | Total Stocholder's Equity [Member] | Noncontrolling Interest [Member] | Member's Equity [Member] | Common Class A [Member] | Common Class A [Member] | Common Class B [Member] | ||
In Thousands, except Share data, unless otherwise specified | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Common Stock [Member] | Common Stock [Member] | ||||
USD ($) | USD ($) | ||||||||||||
Beginning Balance at Dec. 31, 2012 | $5,726 | ' | ' | ' | ' | ' | ' | $5,726 | ' | ' | ' | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Issuance of common stock, shares | [1] | ' | 100 | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Distributions | -19,650 | ' | ' | ' | ' | ' | ' | -19,650 | ' | ' | ' | ||
Net income | 47,454 | ' | ' | -165 | ' | -165 | ' | 47,619 | ' | ' | ' | ||
Ending Balance at Jun. 09, 2013 | 33,530 | ' | ' | -165 | ' | -165 | ' | 33,695 | ' | ' | ' | ||
Ending Balance, Shares at Jun. 09, 2013 | ' | 100 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Beginning Balance at Jun. 10, 2013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Retained earnings | 188 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Issuance of common stock, shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,500,000 | ' | ||
Issuance of common stock | 43,619 | ' | 43,616 | ' | ' | 43,619 | ' | ' | ' | 3 | ' | ||
Reorganization, shares | [2] | ' | -100 | ' | ' | ' | ' | ' | ' | ' | ' | 24,000,000 | |
Reorganization | ' | ' | ' | 165 | ' | 189 | 33,506 | -33,695 | ' | ' | 24 | ||
Equity-based compensation | 462 | ' | 0 | ' | ' | 0 | 462 | [3] | ' | ' | 0 | ' | |
Unrealized loss on available-for-sale securities, net of tax | -345 | ' | ' | ' | -32 | -32 | -313 | ' | ' | 0 | ' | ||
Net income | 16,916 | ' | ' | 840 | ' | 840 | 16,076 | ' | ' | 0 | ' | ||
Distributions to non-controlling interests | -27,180 | ' | ' | ' | ' | ' | -27,180 | ' | ' | ' | ' | ||
Dividends declared on common stock | -900 | ' | -248 | -652 | ' | -900 | ' | ' | ' | 0 | ' | ||
Ending Balance at Sep. 30, 2013 | $66,102 | ' | $43,368 | $188 | ($32) | $43,551 | $22,551 | ' | ' | $3 | $24 | ||
Ending Balance, Shares at Sep. 30, 2013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,500,000 | 24,000,000 | ||
[1] | Represents the initial 100 shares of $0.01 par value common stock issued to the Parent for $100.00, but due to rounding, $1.00 of par value and $99.00 of additional paid-in capital do not appear in the consolidated statement of changes in stockholders' equity. | ||||||||||||
[2] | Represents the reversal of the initial $1.00 aggregate par value common stock and related $99.00 additional paid-in capital. | ||||||||||||
[3] | During the three months ended September 30, 2013, the Company reclassified equity-based compensation from additional paid-in capital to non-controlling interest. |
Consolidated_Statements_of_Sto1
Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $) | 5 Months Ended | ||
Jun. 09, 2013 | Sep. 30, 2013 | ||
Common Stock | $100 | ' | |
Unclassified Stock [Member] | ' | ' | |
Issuance of common stock, shares | 100 | [1] | ' |
Common stock, par value (in dollars per share) | $0.01 | ' | |
Common Stock | ' | 1 | |
Additional Paid-in Capital [Member] | ' | ' | |
Common stock, par value (in dollars per share) | $1 | ' | |
Common Stock | $99 | $99 | |
[1] | Represents the initial 100 shares of $0.01 par value common stock issued to the Parent for $100.00, but due to rounding, $1.00 of par value and $99.00 of additional paid-in capital do not appear in the consolidated statement of changes in stockholders' equity. |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Net income | $64,370 | $11,540 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation | 108 | 105 |
Equity-based compensation | 462 | 0 |
Deferred income taxes | 25 | ' |
Loss on the sale of available-for-sale securities | 59 | 0 |
Change in fair value of trading securities | -23 | 0 |
Receivables - selling commissions and dealer manager fees | ' | ' |
Due from affiliates | -913 | -642 |
Due from non-affiliates | -769 | -108 |
Receivables - reimbursable expenses and investment banking fees | ' | ' |
Due from affiliates | -12,707 | -480 |
Due from non-affiliates | -514 | -75 |
Loan receivable | 0 | 77 |
Due from parent | -740 | 557 |
Prepaid expenses and other assets | -2,115 | -1,034 |
Accounts payable | 113 | -72 |
Accrued expenses | ' | ' |
Due from affiliates | 4,137 | 0 |
Due from non-affiliates | 8,857 | 1,545 |
Payable to broker-dealers | 8,433 | 1,531 |
Income tax payable | 595 | 0 |
Deferred revenue | 3,186 | 0 |
Purchases of trading securities | -1,000 | 0 |
Net cash provided by operating activities | 71,564 | 12,944 |
Cash flows from investing activities: | ' | ' |
Purchase of property and equipment | -366 | -147 |
Purchases of available-for-sale securities | 10,000 | 0 |
Proceeds from the sale of available-for-sale securities | 1,000 | 0 |
Net cash used in investing activities | -9,366 | -147 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of common stock | 50,000 | 0 |
Payments of offering costs and fees related to the stock issuance | -6,381 | 0 |
Contributions | 0 | 3,646 |
Distributions to non-controlling interest holders | -46,830 | 0 |
Distributions | 0 | -5,200 |
Dividends paid | -450 | 0 |
Net cash used in financing activities | -3,661 | -1,554 |
Net increase in cash | 58,537 | 11,243 |
Cash and cash equivalents, beginning of period | 12,683 | 3,941 |
Cash and cash equivalents, end of period | 71,220 | 15,184 |
Non-cash disclosures: | ' | ' |
Dividends declared but not yet paid | $450 | $0 |
Organization_and_Description_o
Organization and Description of the Company | 9 Months Ended | |
Sep. 30, 2013 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |
Organization and Description of the Company | ' | |
Organization and Description of the Company | ||
RCS Capital Corporation (the "Company") is a holding company incorporated under the laws of the State of Delaware on December 27, 2012, originally named 405 Holding Corporation. On February 19, 2013, 405 Holding Corporation changed its name to RCS Capital Corporation. The Company was formed to hold the following subsidiaries (together known as the "Operating Subsidiaries") and to grow business lines under such Operating Subsidiaries: | ||
• | Realty Capital Securities, LLC ("Realty Capital"), a wholesale broker-dealer registered with the U.S. Securities and Exchange Commission (the "SEC") and a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). Realty Capital also provides investment banking advisory services and capital markets services; | |
• | RCS Advisory Services, LLC ("Advisory Services"), a transaction management services business, and its newly formed wholly owned subsidiaries, Scotland Acquisition, LLC and Zoe Acquisition, LLC; and | |
• | American National Stock Transfer, LLC ("ANST"), an SEC-registered transfer agent. | |
On June 10, 2013, the Company closed its initial public offering (the "IPO”) of Class A common stock, par value $0.001 per share, in which it sold 2,500,000 Class A shares at $20.00 per share, resulting in net proceeds after offering costs and underwriting discounts and commissions of $43.6 million. Concurrently with the closing of the IPO on June 10, 2013, the Company underwent a reorganization, in which RCAP Holdings, LLC (the "Parent”) received 24,000,000 Class B shares, par value $0.001 per share, in exchange for 100 unclassified shares in the Company previously purchased by the Parent. | ||
Concurrently with the commencement of the IPO, the Operating Subsidiaries also underwent a reorganization, in which a new class of operating subsidiary units called "Class A Units," which entitle the holders thereof to voting and economic rights, were issued to the Company, and a new class of operating subsidiary units called "Class B Units," which entitle the holder thereof to economic rights but not voting rights, were issued to the Parent. Also created were "Class C Units" and "LTIP Units." After the subsidiary reorganization and IPO, through their ownership of Class A and Class B units, the Company owned a 9.4% economic interest in the Operating Subsidiaries and the Parent owned a 90.6% economic interest in the Operating Subsidiaries. Prior to the reorganization and IPO, the Parent held a 100% interest in each of the Operating Subsidiaries and the Company. | ||
Upon completion of the reorganization and the IPO, the Company became the managing member of the Operating Subsidiaries and the Company assumed the exclusive right to manage, control and conduct the business and affairs of the Operating Subsidiaries and to take any and all actions on their behalf in such capacity. As a result of this control, the Company consolidates the financial results of the Operating Subsidiaries with its own financial results. Net profits and net losses of the Operating Subsidiaries are allocated to their members pro rata in accordance with the respective percentages of their membership interests in the Operating Subsidiaries. Because the Company and the Operating Subsidiaries were under common control at the time of reorganization, the Company's acquisition of control of the Operating Subsidiaries was accounted for at historical cost in the accompanying consolidated financial statements. Accordingly, the operating results of the Operating Subsidiaries have been included in the Company’s consolidated financial statements from the date of common control. | ||
Realty Capital, a limited liability company organized in Delaware, is the securities broker-dealer for proprietary products sponsored by AR Capital, LLC (an affiliate) and its affiliates, including publicly registered non-traded real estate investment trusts ("REITs"), a publicly registered non-traded business development company, an open-end registered investment company and, from time to time, programs not sponsored by AR Capital, LLC. Realty Capital also provides investment banking advisory services and capital markets services to affiliated and non-affiliated issuers of public securities in connection with strategic alternatives related to potential liquidity events and other transactions. Realty Capital markets securities throughout the United States by means of a national network of selling group members consisting of unaffiliated broker-dealers and their registered representatives. | ||
Advisory Services was organized in Delaware in December 2012 as a limited liability company and commenced operations in January 2013. Advisory Services provides a range of services to alternative investment programs and other investment vehicles, including offering registration and blue sky filings advice with respect to SEC and FINRA registration maintenance, transaction management, marketing support, due diligence advice and related meetings, events, training and education, conference management and strategic advice in connection with liquidity events and other strategic transactions. | ||
ANST was organized in Delaware in November 2012 as a limited liability company and commenced operations in January 2013 as a transfer agent. ANST acts as a registrar, provides record-keeping services and executes the transfer, issuance and cancellation of shares or other securities in connection with offerings conducted by issuers sponsored directly or indirectly by AR Capital, LLC, effective March 1, 2013. ANST utilizes transfer agency services through third-party service providers. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | |
Sep. 30, 2013 | ||
Accounting Policies [Abstract] | ' | |
Summary of Significant Accounting Policies | ' | |
Summary of Significant Accounting Policies | ||
Basis of Presentation | ||
The consolidated unaudited financial statements include the accounts of the Company, Realty Capital, Advisory Services and ANST. All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated unaudited financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. Because of the nature of the Operating Subsidiaries’ business, interim period results may not be indicative of full year or future results. The statements of income for the three and nine months ended September 30, 2012 represent the results of operations of Realty Capital, the only Operating Subsidiary in operation during the period. The statement of financial condition as of December 31, 2012 was derived from the Realty Capital audited financial statements at that date (since it was the only Operating Subsidiary that was operational at that date), but does not include all the information and notes required by U.S. GAAP for complete financial statement presentation. Please refer to the notes to the Realty Capital financial statements for the year ended December 31, 2012 included in the Company's registration statement on Form S-1, as amended, filed with the SEC, for additional disclosures and a description of accounting policies. | ||
Reclassification | ||
Certain reclassifications have been made to the previously issued financial statements to conform to the current period presentation. During the three months ended September 30, 2013, the Company reclassified equity-based compensation from additional paid-in capital to non-controlling interests because the equity awards issued under the OPP (as defined in Note 11) are equity ownership interests in the Operating Subsidiaries. | ||
Use of Estimates | ||
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates, and these differences could be material. | ||
Cash and cash equivalents | ||
Cash and cash equivalents include all highly liquid instruments purchased with original maturities of 90 days or less. | ||
Available-for-sale Securities | ||
Available-for-sale securities represent investments in an equity mutual fund by Advisory Services which consist of shares of AR Capital Real Estate Income Fund. Advisory Services treats these securities as available-for-sale securities with unrealized gains (losses) recorded in accumulated other comprehensive income (loss) and realized gains (losses) recorded in earnings. See Notes 4 and 5 for more information. | ||
Trading Securities | ||
Trading securities represent investments in an equity mutual fund by Realty Capital which consist of shares of AR Capital Real Estate Income Fund. Realty Capital treats these securities as trading securities due to the fact that it is a broker-dealer and records both realized and unrealized gains (losses) in earnings. See Note 5 for more information. | ||
Receivables | ||
Receivables represent selling commission receivables and dealer manager receivables due from affiliates and non-affiliated entities in connection with the distribution of programs sponsored by an affiliate, AR Capital, LLC, and other sponsors. For more information, see “Selling Commissions and Dealer Manager Fees” on page 10. | ||
Reimbursable Expenses and Investment Banking Fees | ||
Reimbursable expenses and investment banking fees represent fees receivable for services provided to affiliates and non-affiliated entities related to investment banking, capital markets and related advisory services performed. For more information, see “Investment Banking Advisory Services” and “Reimbursable Expenses” on page 10. | ||
Other Liabilities | ||
Other liabilities include dividends payable and income taxes payable. | ||
Revenue Recognition | ||
The Company recognizes revenue generally when it is earned and realized or realizable, when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. | ||
Selling Commissions and Dealer Manager Fees | ||
Realty Capital receives selling commissions and dealer manager fees in connection with the distribution of programs sponsored by AR Capital, LLC and other third-party sponsors. The selling commission and dealer manager fee rates are established jointly in a single contract entered into with each individual issuer. As the dealer manager for, or distributor of offerings, Realty Capital generally receives selling commissions of up to 7.0% of gross offering proceeds for funds raised through the participating independent broker-dealer channel, which commissions are then redistributed to those third-party selling group participants who are FINRA member firms. Realty Capital generally receives dealer manager fees of 3.0% of gross offering proceeds for funds raised, a portion of which may be redistributed to those third-party selling group participants who are FINRA member firms. Realty Capital has discretion as to the reallowance of dealer manager fees to participating broker-dealers, based on such factors as the volume of shares sold and marketing support costs incurred by respective selling group members. Selling commission and dealer manager fee revenues and related expenses are recorded on a trade date basis as securities transactions occur. Selling commission and dealer manager fee revenues earned but not yet received are included in selling commission and dealer manager fees receivable in the consolidated statements of financial condition. | ||
The Company analyzes its contractual arrangements to determine whether to report revenue on a gross basis or a net basis. The analysis considers multiple indicators regarding the services provided to their customers and the services received from suppliers. The goal of the analysis is to determine which entity is the primary obligor in the arrangement. After weighing many indicators, including Realty Capital’s position as the exclusive distributor or dealer manager primarily responsible for the distribution of its customers’ shares, its discretion in supplier selection, that Realty Capital’s suppliers bear no credit risk and that the commission and dealer manager fee rates are established jointly in a single contract, Realty Capital concluded that the gross basis of accounting for its commission and fee revenues is appropriate. | ||
Realty Capital, serving as a dealer manager, receives fees and compensation in connection with the wholesale distribution of securities. Realty Capital works with independent broker-dealers to solicit share subscriptions from their clients. The securities are offered on a "best efforts" basis and Realty Capital is not obligated to underwrite or purchase any shares for its own account. | ||
Investment Banking Advisory Services | ||
Realty Capital, through its investment banking and capital markets division, receives fees and compensation for providing investment banking, capital markets and related advisory services. Such fees are charged based on agreements entered into with unaffiliated and affiliated public and private issuers of securities and their sponsors and advisors, on a negotiated basis. Fees that are unpaid are recorded in reimbursable expenses and investment banking fees receivable in the consolidated statement of financial condition. Income from certain investment banking agreements is recorded in deferred revenue in the consolidated statements of financial condition and is recognized over the life of the offering, which is normally 36 months. Income from investment banking agreements that are not deferred is recognized when the transactions are complete or the services have been performed. | ||
Transfer Agency Revenue | ||
ANST receives fees for providing transfer agency and related services. Such fees are charged based on agreements entered into with affiliated issuers of securities on a negotiated basis. Certain fees are billed and recorded monthly based on account activity, such as new account establishment fees and call fees. Other fees, such as account maintenance fees, are billed and recorded ratably. | ||
Services Revenue | ||
Advisory Services receives fees for providing transaction management, marketing support, due diligence advice, events, training and education, conference management and strategic advice. Such fees are charged at hourly billing rates for the services provided, based on agreements entered into with affiliated issuers of securities on a negotiated basis. Such fees are billed and recorded monthly based on services rendered. | ||
Reimbursable Expenses | ||
The Operating Subsidiaries include all reimbursable expenses in gross revenue because the Operating Subsidiaries are the primary obligor, have discretion in selecting a supplier, and bear credit risk of paying the supplier prior to receiving reimbursement from the customer. | ||
Marketing and Advertising | ||
The Operating Subsidiaries expense the cost of marketing and advertising as incurred. | ||
Income Taxes | ||
The Company files standalone federal and state income tax returns. Realty Capital, ANST and Advisory Services are treated as disregarded entities up to the date of reorganization (June 10, 2013) and as partnerships for federal and state income tax purposes thereafter. All income and expense earned by Realty Capital, ANST and Advisory Services flows through to their owner through the date of reorganization and to their partners (which includes the Company who is a 9.4% owner of these partnerships) thereafter. Income tax expense from operations and investments of Realty Capital, ANST and Advisory Services is not incurred by Realty Capital, ANST and Advisory Services but is reported by their owner through the date of reorganization and by their partners thereafter. | ||
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Current tax liabilities or assets are recognized for the estimated taxes payable or refundable on tax returns for the current year. | ||
A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. This determination is based upon a review of all available evidence, both positive and negative, including the Company's earnings history, the timing, character and amount of future earnings potential, the reversal of taxable temporary differences and the tax planning strategies available. | ||
The Company has adopted the authoritative guidance relating to accounting for uncertainty in income taxes. The guidance prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken by the Company. For more information, see Note 6. | ||
Reportable Segments | ||
The Company’s internal reporting is organized into four segments through its three Operating Subsidiaries, as follows: | ||
• | Realty Capital, under two business lines: | |
◦ | Wholesale Broker-Dealer; and | |
◦ | Investment Banking and Capital Markets | |
• | Advisory Services providing transaction management services | |
• | ANST providing transfer agency services | |
Recently Issued Accounting Pronouncements | ||
The Company is not aware of any recently issued, but not yet effective, accounting pronouncements that would have a significant impact on the Company's consolidated financial position or results of operations. |
OffBalance_Sheet_Risk_and_Conc
Off-Balance Sheet Risk and Concentrations | 9 Months Ended |
Sep. 30, 2013 | |
Risks and Uncertainties [Abstract] | ' |
Off-Balance Sheet Risk and Concentrations | ' |
Off-Balance Sheet Risk and Concentrations | |
The Company is engaged in various trading, brokerage activities and capital raising with counterparties primarily including broker-dealers, banks, direct investment programs and other financial institutions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty. It is the Company’s policy to review, as necessary, the credit standing of each counterparty. As of September 30, 2013, the Company had 70% of the reimbursable expenses, investment banking fees, services fees and transfer agent fees receivable concentrated in four affiliated direct investment programs, and 95% of the total commissions and dealer manager fees receivable concentrated in two affiliated and one non-affiliated direct investment program. | |
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains its cash and temporary cash investments in bank deposit and other accounts, the balances of which, at times, may exceed federally insured limits. Exposure to credit risk is reduced by maintaining the Company’s banking and brokerage relationships with high credit quality financial institutions. | |
Advisory Services and Realty Capital hold securities consisting of investments in an affiliated mutual fund that can potentially subject the Company to market risk. The amount of potential gain or loss depends on the fund's performance and overall market activity. Advisory Services and Realty Capital monitor the net asset value on a monthly basis to evaluate its positions, and, if applicable, may elect to sell all or a portion of the investments to limit the loss. |
AvailableforSale_Securities
Available-for-Sale Securities | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||||||||||||||
Available-for-Sale Securities | ' | |||||||||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||||||||||
The following table presents information about the Company's available-for-sale securities as of September 30, 2013 and December 31, 2012 (amounts in thousands): | ||||||||||||||||||||||||
Purchases | Sales | Realized Loss | Unrealized Losses | Fair Value | Cost | |||||||||||||||||||
30-Sep-13 | ||||||||||||||||||||||||
Mutual funds | $ | 10,000 | $ | 1,000 | $ | 59 | $ | 345 | $ | 8,596 | $ | 8,941 | ||||||||||||
31-Dec-12 | ||||||||||||||||||||||||
Mutual funds | — | — | — | — | — | — | ||||||||||||||||||
Fair_Value_Disclosures
Fair Value Disclosures | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Fair Value Disclosures | ' | |||||||||||||||
Fair Value Disclosures | ||||||||||||||||
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The guidance defines three levels of inputs that may be used to measure fair value: | ||||||||||||||||
Level 1 - Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. | ||||||||||||||||
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. | ||||||||||||||||
Level 3 - Unobservable inputs that reflect the entity's own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. | ||||||||||||||||
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare. | ||||||||||||||||
The Company's available-for-sale and trading securities trade in active markets and therefore, due to the availability of quoted market prices in active markets are classified as Level 1 in the fair value hierarchy. | ||||||||||||||||
The following table presents information about the Company's assets measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012, aggregated by the level in the fair value hierarchy within which those instruments fall (amounts in thousands): | ||||||||||||||||
Quoted Prices in Active Markets Level 1 | Significant Other Observable Inputs Level 2 | Significant Unobservable Inputs Level 3 | Total | |||||||||||||
September 30, 2013 | ||||||||||||||||
Mutual funds: | ||||||||||||||||
Available-for-sale securities | $ | 8,596 | $ | — | $ | — | $ | 8,596 | ||||||||
Trading securities | 1,023 | — | — | 1,023 | ||||||||||||
Total funds: | $ | 9,619 | $ | — | $ | — | $ | 9,619 | ||||||||
A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. There were no transfers between Level 1 and Level 2 or Level 3 of the fair value hierarchy during the three and nine months ended September 30, 2013. As of December 31, 2012 the Company had no available-for-sale or trading securities. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
Income Taxes | |
As of September 30, 2013, the Company had a deferred tax asset of $0.1 million. Current deferred tax assets consisted primarily of deferred revenues which is included in taxable income currently. The Company had a deferred tax liability of $0.2 million, which consists primarily of prepaid assets deducted for tax purposes earlier than for book purposes. | |
In accordance with Accounting Standards Codification ("ASC") Topic No. 270, Interim Reporting ("Topic No. 270"), and ASC Topic No. 740, Income Taxes ("Topic No. 740"), at the end of each interim period the Company is required to determine the best estimate of its annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. However, in certain circumstances where a reliable estimate cannot be made, Topic No. 740 recognizes that "the actual effective tax rate for the year-to-date may be the best estimate of the annual effective tax rate" and allows for its use in the current interim period. For the period ending September 30, 2013, the Company was unable to make a reasonable estimate of its annual effective tax rate because the reorganization in June 2013 would cause the annual effective rate to distort the year-to-date results. Therefore, the Company has chosen to use its actual effective income tax rate of 1.0% (before discrete items), as the Company believes that this method will yield a more reliable tax provision calculation. The effective rate is significantly below 35% because pretax income includes non-controlling interest (90.6%) of the Operating Subsidiaries, with the remainder, 9.4%, taxable to the Company after June 10, 2013 (the date of reorganization). Taxable income derived by the Company from its 9.4% share of taxable income allocated to it from the Operating Subsidiaries will be taxed at a 40.6% (federal and states) effective tax rate. | |
The Company believes that, as of September 30, 2013, it had no material uncertain tax positions. Interest and penalties relating to unrecognized tax expenses (benefits) are recognized in income tax expense, when applicable. There was no liability for interest or penalties accrued as of September 30, 2013. | |
The Company will file tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company will be open to audit under the statute of limitations by the Internal Revenue Service for 2013. The Company or its subsidiaries' state income tax returns will be open to audit under the statute of limitations for 2010 to 2013. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
Commitments and Contingencies | |
Leases — Realty Capital leases certain office space and equipment under various operating leases. These leases are generally subject to scheduled base rent and maintenance cost increases, which are recognized on a straight-line basis over the period of the leases. Total rent expense for all operating leases was approximately $0.1 million and $0.04 million for the three months ended September 30, 2013 and 2012, respectively, and $0.3 million and $0.1 million for the nine months ended September 30, 2013 and 2012. | |
Legal Proceedings — The Company and the Operating Subsidiaries are involved in legal proceedings from time to time arising out of their business operations, including arbitrations and lawsuits involving private claimants, and subpoenas, investigations and other actions by government authorities and self-regulatory organizations. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases in which claimants seek substantial or indeterminate damages, the Company cannot predict with certainty what the eventual loss or range of loss related to such matters will be. The Company recognizes a liability with regard to a legal proceeding when it believes it is probable a liability has occurred and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount. When no amount within the range is a better estimate than any other amount, however, the Company accrues the minimum amount in the range. The Company maintains insurance coverage, including general liability, errors and omissions, excess entity errors and omissions and fidelity bond insurance. The Company records legal reserves and related insurance recoveries on a gross basis. Other than noted below, there were no legal reserves or payments recorded for this period. | |
In April 2013, Realty Capital received notice and a proposed Letter of Acceptance, Waiver and Consent ("AWC") from FINRA that certain violations of SEC and FINRA rules, including Rule 10b-9 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and FINRA Rule 2010, occurred in connection with its activities as a co-dealer manager for a public offering. Without admitting or denying the findings, Realty Capital submitted an AWC, which FINRA accepted on June 4, 2013. In connection with the AWC, Realty Capital consented to the imposition of a censure and a fine of $60,000, paid in the second quarter of 2013. Realty Capital believes that the matter will not have a material adverse effect on Realty Capital or its business. | |
Defense costs with regard to legal proceedings are expensed as incurred and classified as professional services within the unaudited consolidated statements of income. When there is indemnification or insurance, the Company may engage in defense or settlement and subsequently seek reimbursement for such matters. |
Stockholders_Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2013 | |
Equity [Abstract] | ' |
Stockholders' Equity | ' |
Stockholders' Equity | |
The Company has two classes of common stock: | |
Class A Common Stock. 2,500,000 shares of Class A common stock were issued to the public in the IPO. Class A common stock entitles holders to one vote per share and full economic rights (including rights to dividends, if any, and distributions upon liquidation). Holders of Class A common stock hold 100% of the economic rights and a portion of the voting rights of the Company. | |
On June 13, 2013, the Company's Board of Directors authorized and the Company declared an annual dividend rate of $0.72 per share of Class A common stock or an annual dividend rate of 3.6% based on the Class A common stock price in the IPO of $20.00, which is equal to a quarterly dividend of $0.18 per share. The dividend is payable in cash quarterly, beginning in July 2013, on the seventh business day of each quarter, in respect of the previous quarter, to stockholders of record at the close of business on the last business day of the previous quarter. | |
On September 18, 2013, the Company’s Board of Directors authorized and the Company declared a cash dividend for the third quarter of 2013 for its Class A common stock. The cash dividend was paid on October 9, 2013 to record holders of the Company’s Class A common stock at the close of business on September 30, 2013 in an amount equal to $0.18 per share, consistent with the cash dividend declared and paid with respect to the second quarter of 2013. | |
Class B Common Stock. The Parent owns 24,000,000 Class B Units of each operating subsidiary and 24,000,000 shares of the Company’s Class B common stock. Currently, Class B common stock entitles holders to four votes per share; provided, however, that the Company’s certificate of incorporation provides that so long as any of the Class B common stock remains outstanding, the holders of Class B common stock always will have a majority of the voting power of the Company’s outstanding common stock, and thereby control the Company. Class B common stock holders have no economic rights (including no rights to dividends and distributions upon liquidation). Immediately following the conversion from 100 unclassified shares, the Parent, as holder of Class B common stock, held 0% of the economic rights and the majority of the voting rights of the Company. | |
Equity Plan. The RCS Capital Corporation Equity Plan provides for the grant of stock options, restricted shares of Class A common stock, restricted stock units, dividend equivalent rights and other equity-based awards to RCS Capital Management, LLC (the "Manager"), including under the Outperformance Agreement, non-executive directors, officers and other employees and independent contractors, including employees or directors of the Manager and its affiliates who are providing services to the Company. The Manager is an entity under common control with the Parent. The maximum number of shares of Class A common stock that may be made subject to awards under the equity plan is initially 250,000 shares of Class A common stock. Following any increase in the number of issued and outstanding shares of Class A common stock, the maximum number of shares of Class A common stock that may be made subject to awards under the equity plan will be a number of shares of Class A common stock equal to the greater of (x) 250,000 shares and (y) 10% of the total number of issued and outstanding shares of Class A common stock (on a fully diluted basis) at any time following such increase (subject to the registration of the increased number of available shares). |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||
Earnings Per Share | |||||||||||||||||
Basic earnings per share is computed by dividing net income available to Class A common stockholders by the weighted average number of shares of Class A common stock outstanding during the period. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased to include the number of additional shares of Class A common stock that would have been outstanding if dilutive potential shares of Class A common stock had been issued. The following table presents the calculation of basic and dilutive earnings per share for the three and nine months ended September 30, 2013 and 2012 (amounts in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Earnings for basic and diluted earnings per common Class A share: | |||||||||||||||||
Net income | $ | 11,179 | $ | 11,575 | $ | 64,370 | $ | 11,540 | |||||||||
Net income attributable to noncontrolling interests | 10,541 | 11,575 | 63,530 | 11,540 | |||||||||||||
Net income attributable to common stockholders | $ | 638 | $ | — | $ | 840 | $ | — | |||||||||
Shares: | |||||||||||||||||
Average Class A shares used in basic and diluted computation(1) | 2,500,000 | N/A | 2,500,000 | N/A | |||||||||||||
Earnings per common Class A share | |||||||||||||||||
Basic and diluted | $ | 0.26 | N/A | $ | 0.34 | N/A | |||||||||||
_____________________ | |||||||||||||||||
(1)Reflects the 2,500,000 shares of Class A common stock offered in the IPO. Shares of Class B common stock have no economic rights, including no rights to dividends, and therefore are excluded from the net income per share computation. | |||||||||||||||||
Dividends per share of Class A common stock declared during the period ended June 30, 2013 were $0.18 per share to stockholders of record at the close of business on June 28, 2013, and were paid on July 10, 2013. | |||||||||||||||||
Dividends per share of Class A common stock declared during the three months ended September 30, 2013 were $0.18 per share to stockholders of record at the close of business on September 30, 2013, and were paid on October 9, 2013. |
Net_Capital_Requirements
Net Capital Requirements | 9 Months Ended |
Sep. 30, 2013 | |
Regulatory Capital Requirements [Abstract] | ' |
Net Capital Requirements | ' |
Net Capital Requirements | |
Realty Capital is subject to the SEC Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital of the greater of $100,000 or 1/15th of aggregate indebtedness, as defined, and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As of September 30, 2013, Realty Capital had net capital of $41.0 million which was $38.9 million in excess of its required net capital, and aggregate indebtedness to net capital ratio was 0.77 to 1. As of December 31, 2012, net capital was $3.4 million which was $2.7 million in excess of its required net capital, and aggregate indebtedness to net capital ratio was 3.07 to 1. |
Affiliate_Transactions
Affiliate Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Affiliate Transactions | ' |
Affiliate Transactions | |
A significant portion of the Company’s revenues relate to fees earned from transactions with or on behalf of AR Capital, LLC and its affiliates, including investment banking fees, services fees, transfer agent fees and wholesale broker-dealer commissions and concessions, in the ordinary course of its trade or business. The Company earned revenues of $175.8 million and $561.3 million for the three and nine months ending September 30, 2013, respectively, from affiliated products. For the three and nine months ended September 30, 2012, the Company earned $98.3 million and $203.5 million, respectively, from affiliated products. As of September 30, 2013, the receivables for such revenues were $16.3 million. | |
The Operating Subsidiaries were initially capitalized and funded by the Parent. During the year ended December 31, 2012, Realty Capital received financial support from the Parent through capital contributions and expense allocation agreements. Through an agreement with an affiliate, Realty Capital was allocated certain operating expenses including occupancy, professional services, communications and data processing, advertising and employee benefits. The total expense allocation for the three and nine months ended September 30, 2012, was approximately $0.2 million and $0.5 million, respectively. | |
Beginning on January 1, 2013, the affiliate expense allocation arrangement was terminated. Pursuant to the new services agreement, AR Capital, LLC charges the Operating Subsidiaries for the services of information technology, human resources, accounting services and office services and facilities. For these services, the Company paid $1.0 million and $2.5 million for the three and nine months ending September 30, 2013, respectively. As of September 30, 2013, the payable for such expenses is $0.4 million. | |
The Company incurs expenses directly for certain services it receives. The Company either allocates these expenses to the Operating Subsidiaries or causes the Parent to pay its portion based on the Parent’s ownership interest. Expenses that are directly attributable to a specific Operating Subsidiary are allocated to the appropriate Operating Subsidiary at 100%. Expenses that are not specific to an Operating Subsidiary are allocated in proportion to income before taxes, management fees, incentive fees and outperformance fees. The intercompany receivables and payables for these expenses are eliminated in consolidation and are settled quarterly. For the three and nine months ended September 30, 2013, the Operating Subsidiaries incurred $2.0 million for such expenses. There were no expenses payable by the Parent as of September 30, 2013. | |
From time to time, the Parent may purchase shares of the Company's Class A common stock in the secondary market. As of September 30, 2013, the Parent owned 2.06% of the Company's Class A common stock outstanding. | |
Management Agreement. Pursuant to the management agreement, the Manager implements the Company's business strategy, as well as the business strategy of the Operating Subsidiaries, and performs executive and management services for the Company and Operating Subsidiaries, subject to oversight, directly or indirectly, by the Company's Board of Directors. | |
The Company, together with the Operating Subsidiaries, pays the Manager a management fee in an amount equal to 10% of the aggregate U.S. GAAP net income of the Operating Subsidiaries (and of any additional subsidiaries that the Parent may form or potentially acquire from time to time, anticipating such additional subsidiaries will be provided in an amendment to the management agreement at any such time), calculated and payable quarterly in arrears, subject to the aggregate U.S. GAAP net income of the Operating Subsidiaries being positive for the current and three preceding calendar quarters. | |
In addition, the Company pays the Manager an incentive fee, calculated and payable quarterly in arrears, that is based on the Company's earnings and stock price. The incentive fee is an amount (if such amount is a positive number) equal to the difference between: (1) the product of (x) 20% and (y) the difference between (i) the Company's Core Earnings, as defined below, for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price per share of the Company's common stock of all the Company's public offerings multiplied by the weighted average number of all shares of common stock outstanding (including any restricted shares of Class A common stock and any other shares of Class A common stock underlying awards granted under the Company's equity plan) in the previous 12-month period, and (B) 8.0%; and (2) the sum of any incentive fee paid to the Company's Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive fee is payable with respect to any calendar quarter unless the Company's Core Earnings for the 12 most recently completed calendar quarters is greater than zero. | |
Core Earnings is a non-U.S. GAAP measure and is defined as U.S. GAAP net income (loss) of RCS Capital Corporation, excluding non-cash equity compensation expense, management fees, incentive fees, acquisition fees, depreciation and amortization, any unrealized gains, losses or other non-cash items recorded in net income for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income. The amount will be adjusted to exclude one-time events pursuant to changes in U.S. GAAP and certain other non-cash charges after discussions between the Manager and the independent directors and after approval by a majority of the independent directors. | |
Such management and incentive fee calculations commenced on June 10, 2013, the date the offering was completed. For periods less than four quarters or 12 months, the calculations are based on a pro rata concept starting with the quarter ended June 30, 2013. | |
The management fee earned by the Manager for the period June 10, 2013 (commencement date of the agreement) to September 30, 2013 was $2.0 million, which is the expense recorded by the Company for the nine months ended September 30, 2013. The management fee earned by the Manager for the three months ended September 30, 2013 was $1.3 million. The payable for such expense is included in other liabilities within the accompanying consolidated statements of financial condition. | |
The incentive fee earned by the Manager for the period June 10, 2013 (commencement date of the agreement) to September 30, 2013, was $0.1 million, which is the expense recorded in other expense by the Company for the nine months ended September 30, 2013. The incentive fee earned by the Manager for the three months ended September 30, 2013, was $0.1 million. The payable for such expense is included in accrued expenses - due to affiliates within the accompanying consolidated statements of financial condition. | |
2013 Manager Multi-Year Outperformance Agreement. The Company has entered into the 2013 Manager Multi-Year Outperformance Agreement (the "OPP") with the Manager. The OPP provides for performance-based bonus awards to the Manager, which is intended to further align the Manager’s interests with those of the Company and its stockholders. Under the OPP, the Manager is eligible to earn performance-based bonus awards up to a maximum award opportunity ("OPP Cap") that is 5.00% of the Company's market capitalization on June 4, 2013 (the commencement date of the performance period). Subject to the OPP Cap, any award under the OPP will be determined based on the Company's achievement of total return to stockholders, which is referred to as "Total Return" and which includes both share price appreciation and common stock dividends, as measured against a peer group of companies, for the three-year performance period commencing on the commencement date. | |
Amounts earned under the OPP will be issued in the form of LTIP Units, which represent units of equity ownership in the Operating Subsidiaries that are structured as profits interest therein. The independent directors of the Company will determine the allocation of the LTIP Unit grants from among the Operating Subsidiaries based upon any reasonable method as determined in their sole discretion. Subject to the Manager's continued service through each vesting date, 1/3 of any amount earned will vest on each of the third, fourth and fifth anniversaries of the commencement date. The issuance of the LTIP Units will entitle the Manager to receive the same per unit cash distributions as the other outstanding units of the Operating Subsidiaries. Upon the occurrence of specified events, LTIP Units can over time achieve full parity with the other outstanding units of the Operating Subsidiaries and therefore accrete to an economic value for the holder equivalent to that of the other outstanding units of the Operating Subsidiaries. | |
In accordance with ASC Topic No. 718, Compensation - Stock Compensation, the Company recognizes the grant date fair value of the OPP award on the grant date fair value over the requisite service period of the award. The grant date fair value of the OPP award was determined utilizing a Monte Carlo simulation technique under a risk-neutral premise. The significant assumptions utilized in determining the grant date fair value of $5.4 million are as follows: | |
•Risk free rate of 0.5% utilizing the prevailing three-year zero-coupon U.S. treasury yield at the grant date; | |
•Expected dividend yield of 3.6% ; and | |
•Volatility of 35.0% based on the historical and implied volatility of the peer group of companies | |
For the three and nine months ended September 30, 2013, the Company recognized $0.4 million and $0.5 million, respectively, which is included in other expenses in the consolidated statements of income. As of September 30, 2013, total future compensation cost to be incurred related to the OPP Cap is $4.9 million, which is expected to be recognized over a period of 5 years. | |
RCS Advisory Services, LLC — AR Capital, LLC Services Agreement. Advisory Services entered into a services agreement with AR Capital, LLC, pursuant to which it provides AR Capital, LLC and its subsidiaries with transaction management services (including, transaction management, compliance, due diligence, event coordination and marketing services, among others), in connection with the performance of services to certain AR Capital, LLC sponsored companies. | |
Registration Rights Agreement. The Company entered into a registration rights agreement with the Parent and the Manager pursuant to which the Company will grant (i) the Parent, its affiliates and certain of its transferees the right, under certain circumstances and subject to certain restrictions, to require the Company to register under the Securities Act shares of its Class A common stock issuable upon exchange of the Operating Subsidiaries Units (and cancellation of corresponding shares of its Class B common stock) held or acquired by them, and (ii) the Manager, its affiliates and certain of its transferees the right, under certain circumstances and subject to certain restrictions, to require the Company to register under the Securities Act any equity-based awards granted to the Manager under the equity plan. | |
Exchange Agreement. The Parent entered into an exchange agreement with the Company under which the Parent will have the right, from time to time, to exchange its Operating Subsidiaries Units for shares of Class A common stock of the Company on a one-for-one basis. Pursuant to the exchange agreement, the parties have agreed to preserve their relative ownership of the Class A common stock, Class B common stock, Class A Units of the Operating Subsidiaries and Class B Units of the Operating Subsidiaries and, accordingly, that the transfer of units of an Operating Subsidiary to a transferee thereof shall be accompanied by the simultaneous transfer of an equal number of the same class, series or type of units of the other Operating Subsidiaries to such transfer. In connection with an exchange, a corresponding number of shares of the Company's Class B common stock will be canceled. The Parent does not intend to exchange any of its Operating Subsidiaries Units for shares of the Company's Class A common stock during the 180 days following June 5, 2013, which is December 2, 2013. Any such exchange by the Parent will result in dilution of the economic interests of the Company's public stockholders. Any exchange of Operating Subsidiaries Units generally will be a taxable event for the Parent. As a result, at any time following the 180 days after June 5, 2013, the Parent will be permitted to sell shares of Class A common stock. | |
If the Parent exchanges its Operating Subsidiaries Units for shares of the Company's Class A common stock, the Company's membership interests in the Operating Subsidiaries will be correspondingly increased and the Parent's corresponding shares of Class B common stock will be canceled. Because each share of Class B common stock initially will entitle the holder thereof to four votes, whereas each share of Class A common stock offered hereby will entitle the holder thereof to one vote, and because each share of Class A common stock issued to the Parent upon exchange of its Operating Subsidiaries Units will correspond to the cancellation of one share of Class B common stock held by the Parent, an exchange of one Operating Subsidiaries Unit for one share of Class A common stock will decrease the voting power of the Parent by three votes and consequently increase the voting power of the public stockholders; provided, however, that the Company's certificate of incorporation provides that so long as any of its Class B common stock remains outstanding, the holders of its Class B common stock always will have a majority of the voting power of its outstanding common stock, and thereby control the Company. The percentages of voting power in the Company will change accordingly. | |
Amended and Restated Limited Liability Company Agreements of the Operating Subsidiaries. The form of the amended and restated limited liability company agreement of each of the Operating Subsidiaries was filed as an exhibit to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013. The amended and restated operating agreements provide that going forward, any time the Company issues a share of its Class A common stock, the Company will transfer the net proceeds received by it with respect to such share, if any, to the Operating Subsidiaries (allocated among them in accordance with their relative equity values at the time) and each of them shall be required to issue to the Company one Class A Unit. Conversely, if at any time going forward, any shares of its Class A common stock are redeemed by the Company for cash, the Company can cause the Operating Subsidiaries, immediately prior to such redemption of the Company's Class A common stock, to redeem an equal number of Class A Units of each operating subsidiary held by the Company, upon the same aggregate terms and for the same price, as the shares of the Class A common stock are redeemed. | |
American National Stock Transfer, LLC - Transfer Agent Services Agreement. ANST has entered into a services agreement with AR Capital, LLC, pursuant to which it will provide transfer agent services to AR Capital sponsored REITs. The agreement provides for an initial term of ten years. The agreement provides that each REIT must pay a minimum monthly fee as well as additional ad hoc service fees and related expense reimbursements. | |
Tax Receivable Agreement. The Company entered into a tax receivable agreement with the Parent requiring the Company to pay to the Parent 85% of the amount of the reduction, if any, in U.S. federal, state and local income tax liabilities that the Company realizes (or is deemed to realize upon early termination of the tax receivable agreement or change of control) as a result of the increases in tax basis of its tangible and intangible assets created by the Parent's exchanges of its Operating Subsidiaries Units for shares of Class A common stock (with a cancellation of its corresponding shares of the Company's Class B common stock) pursuant to the exchange agreement. Cash payments pursuant to the tax receivable agreement will be the Company's obligation. The initial public offering did not generate tax benefits and did not require payments pursuant to this agreement. In general, the Company's payments under the tax receivable agreement will not be due until after the Company has filed its tax returns for a year in which the Company realizes a tax benefit resulting from an exchange; however, the timing of payments could be accelerated upon an early termination of the tax receivable agreement or change in control which could require payment prior to the Company's ability to claim the tax benefit on its tax returns. Furthermore, the Parent will not be required to reimburse the Company for any payments previously made under the tax receivable agreement even if the IRS were to successfully challenge the increase in tax basis resulting from an exchange and, as a result, increase the Company's tax liability. The accelerated timing of payments and the increase in the Company's tax liability without reimbursement could affect the cash available to it and could impact its ability to pay dividends. | |
AR Capital Real Estate Income Fund. As of September 30, 2013, Advisory Services and Realty Capital had investments in the AR Capital Real Estate Income Fund of $8.6 million and $1.0 million, respectively. As of December 31, 2012 Advisory Services and Realty Capital had no such investments. |
Segment_Reporting
Segment Reporting | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Reporting | ' | |||||||||||||||
Segment Reporting | ||||||||||||||||
The Company operates through its three Operating Subsidiaries in four principal segments: Wholesale Broker-Dealer; Transaction Management; Investment Banking and Capital Markets; and Transfer Agent. Realty Capital, the Company's Wholesale Broker-Dealer segment, includes the Company's alternative investment program activities and is the distributor or dealer manager for proprietary and non-proprietary publicly registered non-exchange traded ("non-traded") securities and for an open-end mutual fund. Proprietary programs are sponsored directly or indirectly by AR Capital, LLC, an affiliate. Realty Capital distributes these securities through selling groups comprised of FINRA member broker-dealers located throughout the United States. | ||||||||||||||||
Transaction Management is provided by Advisory Services whose activities support the alternative investment programs distributed by Realty Capital. These activities include: services related to offering registration and blue sky filings; regulatory advice; registration maintenance; transaction management; marketing support; due diligence support; events; training and education; conference management; and strategic advice. | ||||||||||||||||
The Investment Banking and Capital Markets segment is a division of Realty Capital and includes the Company's strategic advisory and capital markets services focused, in part, on the direct investment program industry. Activities related to the Investment Banking and Capital Markets segment include: corporate strategic planning and advice; and sourcing, structuring and maintaining debt finance and derivative arrangements. | ||||||||||||||||
ANST operates in the SEC registered Transfer Agent segment and performs transfer agency activities related to the direct investment programs. ANST acts as a registrar, provides record-keeping services and executes the transfers, issuances and cancellations of shares. | ||||||||||||||||
The reportable business segment information is prepared using the following methodologies: | ||||||||||||||||
• | Net revenues and expenses directly associated with each reportable business segment are included in determining earnings before taxes. | |||||||||||||||
• | Net revenues and expenses not directly associated with specific reportable business segments are allocated based on the most relevant measures applicable, including each reportable business segment's net revenues, time spent and other factors. | |||||||||||||||
• | Reportable business segment assets include an allocation of indirect corporate assets that have been fully allocated to the Company's reportable business segments, generally based on each reportable business segment's capital utilization. | |||||||||||||||
The following table presents the Company's net revenues, expenses and income before taxes by segment for the three and nine months ended September 30, 2013 and 2012 (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Wholesale broker-dealer: | ||||||||||||||||
Revenues | $ | 208,891 | $ | 106,816 | $ | 641,526 | $ | 222,471 | ||||||||
Expenses | 203,956 | 95,241 | 589,803 | 211,856 | ||||||||||||
Income | $ | 4,935 | $ | 11,575 | $ | 51,723 | $ | 10,615 | ||||||||
Transaction management: | ||||||||||||||||
Revenues | $ | 4,234 | $ | — | $ | 8,876 | $ | — | ||||||||
Expenses | 3,302 | — | 6,529 | — | ||||||||||||
Income | $ | 932 | $ | — | $ | 2,347 | $ | — | ||||||||
Investment banking and capital markets: | ||||||||||||||||
Revenues | $ | 7,566 | $ | — | $ | 15,536 | $ | 925 | ||||||||
Expenses | 2,278 | — | 4,834 | — | ||||||||||||
Income | $ | 5,288 | $ | — | $ | 10,702 | $ | 925 | ||||||||
Transfer agent: | ||||||||||||||||
Revenues | $ | 3,505 | $ | — | $ | 6,905 | $ | — | ||||||||
Expenses | 3,015 | — | 6,464 | — | ||||||||||||
Income | $ | 490 | $ | — | $ | 441 | $ | — | ||||||||
Revenue reconciliation | ||||||||||||||||
Total revenues for reportable segments | $ | 224,196 | $ | 106,816 | $ | 672,843 | $ | 223,396 | ||||||||
Intercompany revenues | (411 | ) | — | (411 | ) | — | ||||||||||
Total revenues | $ | 223,785 | $ | 106,816 | $ | 672,432 | $ | 223,396 | ||||||||
Income reconciliation | ||||||||||||||||
Total income for reportable segments | $ | 11,645 | $ | 11,575 | $ | 65,213 | $ | 11,540 | ||||||||
Corporate and other expenses | — | — | (217 | ) | — | |||||||||||
Income before income taxes | $ | 11,645 | $ | 11,575 | $ | 64,996 | $ | 11,540 | ||||||||
The following table presents the Company's total assets by segment as of September 30, 2013 and December 31, 2012 (in thousands): | ||||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||||
Segment assets: | ||||||||||||||||
Wholesale broker-dealer | $ | 72,727 | $ | 15,286 | ||||||||||||
Transaction management | 7,328 | — | ||||||||||||||
Investment banking and capital markets | 14,785 | 925 | ||||||||||||||
Transfer agent | 5,227 | — | ||||||||||||||
Total assets for reportable segments | $ | 100,067 | $ | 16,211 | ||||||||||||
Assets reconciliation: | ||||||||||||||||
Total assets for reportable segments | $ | 100,067 | $ | 16,211 | ||||||||||||
Other assets | 2,703 | — | ||||||||||||||
Less: intercompany receivables | (412 | ) | — | |||||||||||||
Total consolidated assets | $ | 102,358 | $ | 16,211 | ||||||||||||
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Subsequent Events | |
Acquisitions | |
Hatteras Funds Group: On October 1, 2013, the Company and Scotland Acquisition, LLC (“Purchaser”), a newly formed wholly owned subsidiary of Advisory Services, entered into an asset purchase agreement (the “Purchase Agreement”) with certain principals of the Hatteras Funds Group (defined below), Hatteras Investment Partners LLC, Hatteras Investment Management LLC, Hatteras Capital Investment Management, LLC, Hatteras Alternative Mutual Funds LLC, and Hatteras Capital Investment Partners, LLC (each, a “Hatteras Seller,” and, collectively, the “Hatteras Sellers”), and David Perkins, as the sellers’ representative (the “Sellers’ Representative”). The Hatteras Funds Group’s principal business is acting as sponsor of, investment adviser to and distributor for the Hatteras Funds complex, a family of alternative investment funds registered with the SEC. | |
Pursuant to the terms of the Purchase Agreement, Purchaser will purchase from the Hatteras Sellers, and the Hatteras Sellers will sell to the Purchaser, substantially all the assets related to the business and operations of the Hatteras Sellers and their respective subsidiaries (collectively, the "Hatteras Funds Group"), the Purchaser will assume certain liabilities of such parties and the Company will guarantee certain obligations of the Purchaser. | |
The initial purchase price to be paid by the Purchaser pursuant to the Purchase Agreement for the Hatteras Funds Group’s assets will be an amount equal to $40.0 million plus or minus the amount of any adjustment to the initial purchase price based on the Hatteras Funds Group’s net working capital and minus the amount of any adjustment to the initial purchase price (not to exceed $3.0 million) based on the Hatteras Funds Group’s net assets under management at closing and projected consolidated pre-tax net income from the date of the closing of the purchase through December 31, 2013. The Company expects to use cash available from its closed initial public offering and ongoing operations to fund the purchase. Additionally, pursuant to the Purchase Agreement, the Purchaser will pay the Hatteras Sellers additional consideration calculated and payable based on the consolidated pre-tax net operating income generated by the businesses of the Hatteras Funds Group in the fiscal years ending December 31, 2016 and December 31, 2018. The acquisition is expected to be consummated in the first quarter of 2014. | |
Investors Capital Holdings, Ltd.: On October 2, 2013, the Company entered into a non-binding letter of intent (the “Letter of Intent”) relating to the acquisition of Investors Capital Holdings, LTD. (“ICH”). On October 27, 2013, the Company and Zoe Acquisition, LLC (“MergerSub”), a newly formed wholly-owned subsidiary of the Company, entered into an agreement and plan of merger (the “Merger Agreement”) with ICH. | |
ICH is a financial service holding company that operates primarily through its wholly owned broker-dealer and registered investment adviser subsidiary, Investors Capital Corporation (“ICC”). ICC provides broker-dealer services to investors in support of trading and investment in securities, alternative investments and variable life insurance and also provides investment advisory and asset management services. | |
Pursuant to the terms and subject to the conditions of the Merger Agreement, MergerSub will merge with and into ICH (the “Merger”), with ICH surviving as a wholly-owned subsidiary of the Company. The Company expects that ICH’s business, once acquired, will operate independently of the Company’s wholesale broker-dealer subsidiary, Realty Capital, and function as a separate business unit alongside the Company’s existing operating subsidiaries. | |
The Merger Agreement provides that each holder of shares of common stock of ICH may, subject to the limitation described below, elect to receive, at the effective time of the Merger, either cash or shares of Class A common stock of the Company. Holders of shares of common stock of ICH who elect to receive cash will receive $7.25 per share of ICH common stock. Holders of shares of common stock of ICH who elect to receive shares of the Company’s Class A common stock will receive a number of such shares equal to the quotient of $7.25 divided by the volume weighted average trading price of a share of the Company’s Class A common stock for the five consecutive trading days immediately preceding the closing of the Merger. Holders who fail to make an election will automatically receive shares of the Company’s Class A common stock. The Merger Agreement provides that, in no event may the portion of the total merger consideration payable in cash exceed 60% of the total merger consideration, with a pro-rata adjustment if cash elections are made with respect to a number of shares of ICH common stock that would otherwise cause the cash consideration payable in the Merger to exceed such 60% threshold. Based on the issued and outstanding shares of common stock of ICH and shares of common stock of ICH issuable upon exercise of outstanding stock options as of October 25, 2013, the aggregate merger consideration payable in the Merger is approximately $52.5 million. | |
The completion of the Merger is subject to satisfaction or waiver of a number of conditions, including: (i) adoption of the Merger Agreement by the affirmative vote (in person or by proxy) of the holders of at least a majority of all outstanding shares of common stock of ICH; (ii) approval for listing on the New York Stock Exchange of the Class A common stock issued in the Merger; (iii) there being no law or injunction prohibiting consummation of the Merger; (iv) the effectiveness of a registration statement on Form S-4 with respect to the Class A common stock to be issued pursuant to the Merger; (v) FINRA’s approval to allow for certain changes in control of ICH’s FINRA-regulated broker-dealer businesses; (vi) the absence of a “material adverse effect” affecting the other party; (vii) subject to specified materiality standards, the accuracy of the representations and warranties of the other party; and (viii) compliance by the other party in all material respects with its covenants. In addition, the Company’s obligation to close is subject to the conditions that ICH maintain certain agreed levels of “gross dealer concessions”, “assets under administration” and “working capital.” |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | |
Sep. 30, 2013 | ||
Accounting Policies [Abstract] | ' | |
Basis of Presentation | ' | |
Basis of Presentation | ||
The consolidated unaudited financial statements include the accounts of the Company, Realty Capital, Advisory Services and ANST. All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated unaudited financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. Because of the nature of the Operating Subsidiaries’ business, interim period results may not be indicative of full year or future results. The statements of income for the three and nine months ended September 30, 2012 represent the results of operations of Realty Capital, the only Operating Subsidiary in operation during the period. The statement of financial condition as of December 31, 2012 was derived from the Realty Capital audited financial statements at that date (since it was the only Operating Subsidiary that was operational at that date), but does not include all the information and notes required by U.S. GAAP for complete financial statement presentation. Please refer to the notes to the Realty Capital financial statements for the year ended December 31, 2012 included in the Company's registration statement on Form S-1, as amended, filed with the SEC, for additional disclosures and a description of accounting policies. | ||
Reclassification, Policy | ' | |
Reclassification | ||
Certain reclassifications have been made to the previously issued financial statements to conform to the current period presentation. During the three months ended September 30, 2013, the Company reclassified equity-based compensation from additional paid-in capital to non-controlling interests because the equity awards issued under the OPP (as defined in Note 11) are equity ownership interests in the Operating Subsidiaries. | ||
Use of Estimates | ' | |
Use of Estimates | ||
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates, and these differences could be material. | ||
Cash and Cash Equivalents | ' | |
Cash and cash equivalents | ||
Cash and cash equivalents include all highly liquid instruments purchased with original maturities of 90 days or less. | ||
Marketable Securities, Available-for-sale Securities, Policy | ' | |
Available-for-sale Securities | ||
Available-for-sale securities represent investments in an equity mutual fund by Advisory Services which consist of shares of AR Capital Real Estate Income Fund. Advisory Services treats these securities as available-for-sale securities with unrealized gains (losses) recorded in accumulated other comprehensive income (loss) and realized gains (losses) recorded in earnings. See Notes 4 and 5 for more information. | ||
Marketable Securities, Trading Securities, Policy | ' | |
Trading Securities | ||
Trading securities represent investments in an equity mutual fund by Realty Capital which consist of shares of AR Capital Real Estate Income Fund. Realty Capital treats these securities as trading securities due to the fact that it is a broker-dealer and records both realized and unrealized gains (losses) in earnings. See Note 5 for more information. | ||
Receivables, Policy | ' | |
Receivables | ||
Receivables represent selling commission receivables and dealer manager receivables due from affiliates and non-affiliated entities in connection with the distribution of programs sponsored by an affiliate, AR Capital, LLC, and other sponsors. For more information, see “Selling Commissions and Dealer Manager Fees” on page 10. | ||
Reimburseable Expenses | ' | |
Reimbursable Expenses and Investment Banking Fees | ||
Reimbursable expenses and investment banking fees represent fees receivable for services provided to affiliates and non-affiliated entities related to investment banking, capital markets and related advisory services performed. For more information, see “Investment Banking Advisory Services” and “Reimbursable Expenses” on page 10. | ||
Other Liabilities | ' | |
Other Liabilities | ||
Other liabilities include dividends payable and income taxes payable. | ||
Revenue Recognition | ' | |
Revenue Recognition | ||
The Company recognizes revenue generally when it is earned and realized or realizable, when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. | ||
Selling Commissions and Dealer Manager Fees | ||
Realty Capital receives selling commissions and dealer manager fees in connection with the distribution of programs sponsored by AR Capital, LLC and other third-party sponsors. The selling commission and dealer manager fee rates are established jointly in a single contract entered into with each individual issuer. As the dealer manager for, or distributor of offerings, Realty Capital generally receives selling commissions of up to 7.0% of gross offering proceeds for funds raised through the participating independent broker-dealer channel, which commissions are then redistributed to those third-party selling group participants who are FINRA member firms. Realty Capital generally receives dealer manager fees of 3.0% of gross offering proceeds for funds raised, a portion of which may be redistributed to those third-party selling group participants who are FINRA member firms. Realty Capital has discretion as to the reallowance of dealer manager fees to participating broker-dealers, based on such factors as the volume of shares sold and marketing support costs incurred by respective selling group members. Selling commission and dealer manager fee revenues and related expenses are recorded on a trade date basis as securities transactions occur. Selling commission and dealer manager fee revenues earned but not yet received are included in selling commission and dealer manager fees receivable in the consolidated statements of financial condition. | ||
The Company analyzes its contractual arrangements to determine whether to report revenue on a gross basis or a net basis. The analysis considers multiple indicators regarding the services provided to their customers and the services received from suppliers. The goal of the analysis is to determine which entity is the primary obligor in the arrangement. After weighing many indicators, including Realty Capital’s position as the exclusive distributor or dealer manager primarily responsible for the distribution of its customers’ shares, its discretion in supplier selection, that Realty Capital’s suppliers bear no credit risk and that the commission and dealer manager fee rates are established jointly in a single contract, Realty Capital concluded that the gross basis of accounting for its commission and fee revenues is appropriate. | ||
Realty Capital, serving as a dealer manager, receives fees and compensation in connection with the wholesale distribution of securities. Realty Capital works with independent broker-dealers to solicit share subscriptions from their clients. The securities are offered on a "best efforts" basis and Realty Capital is not obligated to underwrite or purchase any shares for its own account. | ||
Investment Banking Advisory Services | ||
Realty Capital, through its investment banking and capital markets division, receives fees and compensation for providing investment banking, capital markets and related advisory services. Such fees are charged based on agreements entered into with unaffiliated and affiliated public and private issuers of securities and their sponsors and advisors, on a negotiated basis. Fees that are unpaid are recorded in reimbursable expenses and investment banking fees receivable in the consolidated statement of financial condition. Income from certain investment banking agreements is recorded in deferred revenue in the consolidated statements of financial condition and is recognized over the life of the offering, which is normally 36 months. Income from investment banking agreements that are not deferred is recognized when the transactions are complete or the services have been performed. | ||
Transfer Agency Revenue | ||
ANST receives fees for providing transfer agency and related services. Such fees are charged based on agreements entered into with affiliated issuers of securities on a negotiated basis. Certain fees are billed and recorded monthly based on account activity, such as new account establishment fees and call fees. Other fees, such as account maintenance fees, are billed and recorded ratably. | ||
Services Revenue | ||
Advisory Services receives fees for providing transaction management, marketing support, due diligence advice, events, training and education, conference management and strategic advice. Such fees are charged at hourly billing rates for the services provided, based on agreements entered into with affiliated issuers of securities on a negotiated basis. Such fees are billed and recorded monthly based on services rendered. | ||
Reimbursable Expenses | ||
The Operating Subsidiaries include all reimbursable expenses in gross revenue because the Operating Subsidiaries are the primary obligor, have discretion in selecting a supplier, and bear credit risk of paying the supplier prior to receiving reimbursement from the customer. | ||
Income Taxes | ' | |
Income Taxes | ||
The Company files standalone federal and state income tax returns. Realty Capital, ANST and Advisory Services are treated as disregarded entities up to the date of reorganization (June 10, 2013) and as partnerships for federal and state income tax purposes thereafter. All income and expense earned by Realty Capital, ANST and Advisory Services flows through to their owner through the date of reorganization and to their partners (which includes the Company who is a 9.4% owner of these partnerships) thereafter. Income tax expense from operations and investments of Realty Capital, ANST and Advisory Services is not incurred by Realty Capital, ANST and Advisory Services but is reported by their owner through the date of reorganization and by their partners thereafter. | ||
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Current tax liabilities or assets are recognized for the estimated taxes payable or refundable on tax returns for the current year. | ||
A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. This determination is based upon a review of all available evidence, both positive and negative, including the Company's earnings history, the timing, character and amount of future earnings potential, the reversal of taxable temporary differences and the tax planning strategies available. | ||
The Company has adopted the authoritative guidance relating to accounting for uncertainty in income taxes. The guidance prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken by the Company. For more information, see Note 6. | ||
Reportable Segments | ' | |
Reportable Segments | ||
The Company’s internal reporting is organized into four segments through its three Operating Subsidiaries, as follows: | ||
• | Realty Capital, under two business lines: | |
◦ | Wholesale Broker-Dealer; and | |
◦ | Investment Banking and Capital Markets | |
• | Advisory Services providing transaction management services | |
• | ANST providing transfer agency services | |
Recently Issued Accounting Pronouncments | ' | |
Recently Issued Accounting Pronouncements | ||
The Company is not aware of any recently issued, but not yet effective, accounting pronouncements that would have a significant impact on the Company's consolidated financial position or results of operations. |
AvailableforSale_Securities_Ta
Available-for-Sale Securities (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||||||||||||||
Disclosure of RCS Advisory's Investments | ' | |||||||||||||||||||||||
The following table presents information about the Company's available-for-sale securities as of September 30, 2013 and December 31, 2012 (amounts in thousands): | ||||||||||||||||||||||||
Purchases | Sales | Realized Loss | Unrealized Losses | Fair Value | Cost | |||||||||||||||||||
30-Sep-13 | ||||||||||||||||||||||||
Mutual funds | $ | 10,000 | $ | 1,000 | $ | 59 | $ | 345 | $ | 8,596 | $ | 8,941 | ||||||||||||
31-Dec-12 | ||||||||||||||||||||||||
Mutual funds | — | — | — | — | — | — | ||||||||||||||||||
Fair_Value_Disclosures_Fair_Va
Fair Value Disclosures Fair Value Disclosure (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Schedule of assets and liabilities measured on a recurring basis | ' | |||||||||||||||
The following table presents information about the Company's assets measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012, aggregated by the level in the fair value hierarchy within which those instruments fall (amounts in thousands): | ||||||||||||||||
Quoted Prices in Active Markets Level 1 | Significant Other Observable Inputs Level 2 | Significant Unobservable Inputs Level 3 | Total | |||||||||||||
September 30, 2013 | ||||||||||||||||
Mutual funds: | ||||||||||||||||
Available-for-sale securities | $ | 8,596 | $ | — | $ | — | $ | 8,596 | ||||||||
Trading securities | 1,023 | — | — | 1,023 | ||||||||||||
Total funds: | $ | 9,619 | $ | — | $ | — | $ | 9,619 | ||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Basic and diluted earnings per share | ' | ||||||||||||||||
The following table presents the calculation of basic and dilutive earnings per share for the three and nine months ended September 30, 2013 and 2012 (amounts in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Earnings for basic and diluted earnings per common Class A share: | |||||||||||||||||
Net income | $ | 11,179 | $ | 11,575 | $ | 64,370 | $ | 11,540 | |||||||||
Net income attributable to noncontrolling interests | 10,541 | 11,575 | 63,530 | 11,540 | |||||||||||||
Net income attributable to common stockholders | $ | 638 | $ | — | $ | 840 | $ | — | |||||||||
Shares: | |||||||||||||||||
Average Class A shares used in basic and diluted computation(1) | 2,500,000 | N/A | 2,500,000 | N/A | |||||||||||||
Earnings per common Class A share | |||||||||||||||||
Basic and diluted | $ | 0.26 | N/A | $ | 0.34 | N/A | |||||||||||
_____________________ | |||||||||||||||||
(1)Reflects the 2,500,000 shares of Class A common stock offered in the IPO. Shares of Class B common stock have no economic rights, including no rights to dividends, and therefore are excluded from the net income per share computation. |
Segment_Reporting_Tables
Segment Reporting (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Schedule of Revenue, Expenses, and Assets by Segment | ' | |||||||||||||||
The following table presents the Company's net revenues, expenses and income before taxes by segment for the three and nine months ended September 30, 2013 and 2012 (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Wholesale broker-dealer: | ||||||||||||||||
Revenues | $ | 208,891 | $ | 106,816 | $ | 641,526 | $ | 222,471 | ||||||||
Expenses | 203,956 | 95,241 | 589,803 | 211,856 | ||||||||||||
Income | $ | 4,935 | $ | 11,575 | $ | 51,723 | $ | 10,615 | ||||||||
Transaction management: | ||||||||||||||||
Revenues | $ | 4,234 | $ | — | $ | 8,876 | $ | — | ||||||||
Expenses | 3,302 | — | 6,529 | — | ||||||||||||
Income | $ | 932 | $ | — | $ | 2,347 | $ | — | ||||||||
Investment banking and capital markets: | ||||||||||||||||
Revenues | $ | 7,566 | $ | — | $ | 15,536 | $ | 925 | ||||||||
Expenses | 2,278 | — | 4,834 | — | ||||||||||||
Income | $ | 5,288 | $ | — | $ | 10,702 | $ | 925 | ||||||||
Transfer agent: | ||||||||||||||||
Revenues | $ | 3,505 | $ | — | $ | 6,905 | $ | — | ||||||||
Expenses | 3,015 | — | 6,464 | — | ||||||||||||
Income | $ | 490 | $ | — | $ | 441 | $ | — | ||||||||
Revenue reconciliation | ||||||||||||||||
Total revenues for reportable segments | $ | 224,196 | $ | 106,816 | $ | 672,843 | $ | 223,396 | ||||||||
Intercompany revenues | (411 | ) | — | (411 | ) | — | ||||||||||
Total revenues | $ | 223,785 | $ | 106,816 | $ | 672,432 | $ | 223,396 | ||||||||
Income reconciliation | ||||||||||||||||
Total income for reportable segments | $ | 11,645 | $ | 11,575 | $ | 65,213 | $ | 11,540 | ||||||||
Corporate and other expenses | — | — | (217 | ) | — | |||||||||||
Income before income taxes | $ | 11,645 | $ | 11,575 | $ | 64,996 | $ | 11,540 | ||||||||
The following table presents the Company's total assets by segment as of September 30, 2013 and December 31, 2012 (in thousands): | ||||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||||
Segment assets: | ||||||||||||||||
Wholesale broker-dealer | $ | 72,727 | $ | 15,286 | ||||||||||||
Transaction management | 7,328 | — | ||||||||||||||
Investment banking and capital markets | 14,785 | 925 | ||||||||||||||
Transfer agent | 5,227 | — | ||||||||||||||
Total assets for reportable segments | $ | 100,067 | $ | 16,211 | ||||||||||||
Assets reconciliation: | ||||||||||||||||
Total assets for reportable segments | $ | 100,067 | $ | 16,211 | ||||||||||||
Other assets | 2,703 | — | ||||||||||||||
Less: intercompany receivables | (412 | ) | — | |||||||||||||
Total consolidated assets | $ | 102,358 | $ | 16,211 | ||||||||||||
Organization_and_Description_o1
Organization and Description of the Company (Details) (USD $) | Sep. 30, 2013 | Jun. 10, 2013 | Sep. 30, 2013 | Jun. 10, 2013 | Jun. 05, 2013 | Jun. 13, 2013 | Jun. 05, 2013 | Jun. 30, 2013 | Jun. 10, 2013 | Jun. 10, 2013 | Jun. 05, 2013 | Jun. 05, 2013 |
In Millions, except Share data, unless otherwise specified | RCAP Holdings, LLC [Member] | RCAP Holdings, LLC [Member] | RCAP Holdings, LLC [Member] | IPO [Member] | IPO [Member] | IPO [Member] | IPO [Member] | IPO [Member] | Majority Shareholder [Member] | Majority Shareholder [Member] | ||
Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | Common Class B [Member] | Common Class B [Member] | Unclassified Stock [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share Price (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | $0.00 | ' | ' |
Issuance of common stock, shares | ' | ' | ' | ' | ' | ' | 2,500,000 | 2,500,000 | ' | ' | ' | ' |
Share price per share issued | ' | ' | ' | ' | ' | $20 | $20 | ' | ' | ' | ' | ' |
Proceeds from initial public offering | ' | ' | ' | ' | ' | ' | $43.60 | ' | ' | ' | ' | ' |
Shares received in reorganization | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 24,000,000 | ' |
Unclassified Shares Received | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100 |
Minority ownership percent in operating subsidiaries | 9.40% | 9.40% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership interest by Parent of Subsidiaries | ' | ' | 90.60% | 100.00% | 90.60% | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 10, 2013 |
subsidiary | |||||
segment | |||||
business_line | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' |
Minority ownership percent in operating subsidiaries | 9.40% | ' | 9.40% | ' | 9.40% |
Marketing and advertising | $1,655 | $924 | $4,876 | $1,077 | ' |
Number of divisions | ' | ' | 4 | ' | ' |
Number of operating subsidiaries | ' | ' | 3 | ' | ' |
Number of business lines | ' | ' | 2 | ' | ' |
Realty Capital [Member] | Maximum [Member] | ' | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' |
Sales commissions earned by related percentage of benchmark | 7.00% | ' | 7.00% | ' | ' |
Gross proceeds from the sales of common stock, before allowances, percentage of benchmark | 3.00% | ' | 3.00% | ' | ' |
OffBalance_Sheet_Risk_and_Conc1
Off-Balance Sheet Risk and Concentrations Off-Balance Sheet Risk and Concentrations (Details) | 9 Months Ended |
Sep. 30, 2013 | |
investor | |
program | |
Risks and Uncertainties [Abstract] | ' |
Percentage of remibursable and investment fees concentrated in affiliated investment programs | 70.00% |
Percentage of receivables from affiliated direct investment programs | 95.00% |
Number of direct investment programs | 4 |
Number of affiliate investment programs | 2 |
Number of non-affiliated investment programs | 1 |
AvailableforSale_Securities_De
Available-for-Sale Securities (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Purchases | ' | $0 |
Purchases of Available-For-Sale Securities | 10,000 | 0 |
Sale of Available for Sale Securities | 1,000 | 0 |
Realized Loss on Available-For-Sale Securities | 59 | 0 |
Fair Value | 8,596 | 0 |
Equity in mutual funds [Member] | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Purchases | 8,941 | ' |
Unrealized Losses | 345 | 0 |
Fair Value | $8,596 | $0 |
Fair_Value_Disclosures_Fair_Va1
Fair Value Disclosures Fair Value (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale securities | $8,596 | $0 |
Trading securities | 1,023 | 0 |
Investments, Fair Value Disclosure | ' | 0 |
Fair Value, Measurements, Recurring [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale securities | 8,596 | ' |
Trading securities | 1,023 | ' |
Investments, Fair Value Disclosure | 9,619 | ' |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale securities | 8,596 | ' |
Trading securities | 1,023 | ' |
Investments, Fair Value Disclosure | 9,619 | ' |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale securities | 0 | ' |
Trading securities | 0 | ' |
Investments, Fair Value Disclosure | 0 | ' |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Available-for-sale securities | 0 | ' |
Trading securities | 0 | ' |
Investments, Fair Value Disclosure | $0 | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 9 Months Ended | ||||
In Millions, unless otherwise specified | Sep. 30, 2013 | Jun. 10, 2013 | Sep. 30, 2013 | Jun. 10, 2013 | Jun. 05, 2013 |
RCAP Holdings, LLC [Member] | RCAP Holdings, LLC [Member] | RCAP Holdings, LLC [Member] | |||
Income Tax Contingency [Line Items] | ' | ' | ' | ' | ' |
Current deferred tax asset | $0.10 | ' | ' | ' | ' |
Current deferred tax liability | $0.20 | ' | ' | ' | ' |
Tax rate before discrete items | 1.00% | ' | ' | ' | ' |
Statutory rate | 35.00% | ' | ' | ' | ' |
Pre-tax income from non-controlling interest | ' | ' | 90.60% | 100.00% | 90.60% |
Minority ownership percent in operating subsidiaries | 9.40% | 9.40% | ' | ' | ' |
Effective tax rate | 40.60% | ' | ' | ' | ' |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 04, 2013 | |
Realty Capital [Member] | |||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ' |
Rental expense | $100,000 | $40,000 | $300,000 | $100,000 | ' |
Imposition of censure, fine paid | ' | ' | ' | ' | $60,000 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 0 Months Ended | 0 Months Ended | 0 Months Ended | 6 Months Ended | |||||||||
Sep. 19, 2013 | Jun. 13, 2013 | Jun. 13, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Jun. 05, 2013 | Jun. 13, 2013 | Jun. 05, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | Common Class B [Member] | Common Class B [Member] | RCAP Holdings, LLC [Member] | IPO [Member] | IPO [Member] | IPO [Member] | RCAP Holdings LLC [Member] | RCAP Holdings LLC [Member] | |||
Common Class B [Member] | Common Class A [Member] | Common Class A [Member] | Common Class B [Member] | Parent Company [Member] | |||||||||
Common Class B [Member] | |||||||||||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of common stock, shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,500,000 | 2,500,000 | ' | ' |
Percentage of economic rights held | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock, Dividends, Per Share, Declared, Per Annum | ' | ' | $0.72 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends declared (in dollars per share) | $0.18 | $0.18 | $0.18 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value (in dollars per share) | ' | ' | ' | $0.00 | $0.00 | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' |
Dividends declared | ' | ' | 3.60% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share price | ' | ' | ' | ' | ' | ' | ' | ' | $20 | $20 | ' | ' | ' |
Shares Held by Affiliated Entity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 24,000,000 |
Number of Votes Per Share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 |
Unclassified Shares Received | ' | ' | ' | ' | ' | ' | ' | 100 | ' | ' | ' | ' | ' |
Economic rights held by affiliated entity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% | ' |
Number of shares subject to awarnds | ' | ' | ' | 250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares oustanding to determine awards | ' | ' | ' | 250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of the number of shares oustanding to determine awards | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 0 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 6 Months Ended | |||||||
In Thousands, except Share data, unless otherwise specified | Sep. 19, 2013 | Jun. 13, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Jun. 09, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 13, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 05, 2013 | Jun. 30, 2013 | ||
Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | Common Class A [Member] | IPO [Member] | IPO [Member] | |||||||||||
Common Class A [Member] | Common Class A [Member] | ||||||||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Net income | ' | ' | $11,179 | $11,575 | $16,916 | $47,454 | $64,370 | $11,540 | ' | $11,179 | $11,575 | $64,370 | $11,540 | ' | ' | ||
Net income attributable to noncontrolling interests | ' | ' | 10,541 | 11,575 | ' | ' | 63,530 | 11,540 | ' | 10,541 | 11,575 | 63,530 | 11,540 | ' | ' | ||
Net income attributable to RCS Capital Corporation | ' | ' | $638 | $0 | ' | ' | $840 | $0 | ' | $638 | $0 | $840 | $0 | ' | ' | ||
Average Class A shares used in basic and diluted computation(1) | ' | ' | 2,500,000 | ' | 2,500,000 | ' | ' | ' | ' | 2,500,000 | [1] | ' | 2,500,000 | [1] | ' | ' | ' |
Earnings per Share, Basic and Diluted (in dollars per shares) | ' | ' | $0.26 | ' | $0.34 | ' | ' | ' | ' | $0.26 | ' | $0.34 | ' | ' | ' | ||
Issuance of common stock, shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,500,000 | 2,500,000 | ||
Dividends declared (in dollars per share) | $0.18 | $0.18 | ' | ' | ' | ' | ' | ' | $0.18 | ' | ' | ' | ' | ' | ' | ||
[1] | Reflects the 2,500,000 shares of Class A common stock offered in the IPO. Shares of Class B common stock have no economic rights, including no rights to dividends, and therefore are excluded from the net income per share computation. |
Net_Capital_Requirements_Detai
Net Capital Requirements (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Minimum ratio of aggregate indebtedness to net capital | 1500.00% | ' |
Net capital | $41,000,000 | $3,400,000 |
Excess capital | 38,900,000 | 2,700,000 |
Ratio of indebtedness to net capital | 0.77 | 3.07 |
Event One [Member] | ' | ' |
Minimum net capital | $100,000 | ' |
Event Two [Member] | ' | ' |
Minimum net capital as a percent of aggregate indebtedness | 0.07% | ' |
Affiliate_Transactions_Details
Affiliate Transactions (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
quarter | ||||
Y | ||||
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Manager and management fee | ' | ' | 10.00% | ' |
Number of preceeding calendar years | ' | ' | 3 | ' |
Management fee | $1,335,000 | $0 | $2,013,000 | $0 |
Incentive fee | 100,000 | ' | 100,000 | ' |
Number of Year Zero Coupon Bonds | ' | ' | 3 | ' |
Expenses allocated to the Operating Subsidiaries from the Company | 2,000,000 | ' | ' | ' |
American Realty Capital [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Revenue from related parties | 175,800,000 | 98,300,000 | 561,300,000 | 203,500,000 |
Less: intercompany receivables | 16,300,000 | ' | 16,300,000 | ' |
Parent [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Allocated operating expenses | ' | 200,000 | ' | 500,000 |
Tax liability share agreement percent | ' | ' | 85.00% | ' |
ARC Advisory Services, LLC [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Allocated operating expenses | 1,000,000 | ' | 2,500,000 | ' |
Allocated operating expenses payable | 400,000 | ' | 400,000 | ' |
American National Stock Transfer [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Transfer agency services agreement term | ' | ' | '10 years | ' |
OPP Award [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Annual vesting percentage | ' | ' | 33.30% | ' |
Outperformance agreement, performance term | ' | ' | '3 years | ' |
Grant date fair value | 5,400,000 | ' | 5,400,000 | ' |
Risk free rate | ' | ' | 0.50% | ' |
Expected dividend rate | ' | ' | 3.60% | ' |
Expected volatility rate | ' | ' | 35.00% | ' |
Equity-based outperformance plan | 357,000 | ' | 500,000 | ' |
Unrecognized compensation benefits | 4,900,000 | ' | 4,900,000 | ' |
Unrecognized compensation benefits term | ' | ' | '5 years | ' |
OPP Award [Member] | Manager [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Performance based award percentage, as percentage of the company's market capitalization | ' | ' | 5.00% | ' |
Incentive Fee Benchmark One [Member] | Manager [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Calculated incentive fee percentage, of the difference in product and core earnings | ' | ' | 20.00% | ' |
Incentive Fee Benchmark Two [Member] | Manager [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Percentage fee for incentive calculation | ' | ' | 8.00% | ' |
Common Class A [Member] | Other Affiliates [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Affilate ownership percentage | 2.06% | ' | 2.06% | ' |
Securities (Assets) [Member] | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Available-for-sale Securities, Amortized Cost Basis | 8,600,000 | ' | 8,600,000 | ' |
Trading Securities, Short-term Investments, Amortized Cost | $1,000,000 | ' | $1,000,000 | ' |
Segment_Reporting_Details
Segment Reporting (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
segment | |||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Number of segments | ' | ' | 4 | ' | ' |
Revenues | $223,785 | $106,816 | $672,432 | $223,396 | ' |
Expenses | 212,140 | 95,241 | 607,436 | 211,856 | ' |
Income (loss) | 11,645 | 11,575 | 64,996 | 11,540 | ' |
Assets | 102,358 | ' | 102,358 | ' | 16,211 |
Wholesale Broker Dealer [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Revenues | 208,891 | 106,816 | 641,526 | 222,471 | ' |
Expenses | 203,956 | 95,241 | 589,803 | 211,856 | ' |
Income (loss) | 4,935 | 11,575 | 51,723 | 10,615 | ' |
Transaction Managment [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Revenues | 4,234 | 0 | 8,876 | 0 | ' |
Expenses | 3,302 | 0 | 6,529 | 0 | ' |
Income (loss) | 932 | 0 | 2,347 | 0 | ' |
Investment Banking [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Revenues | 7,566 | 0 | 15,536 | 925 | ' |
Expenses | 2,278 | 0 | 4,834 | 0 | ' |
Income (loss) | 5,288 | 0 | 10,702 | 925 | ' |
Transfer Agent [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Revenues | 3,505 | 0 | 6,905 | 0 | ' |
Expenses | 3,015 | 0 | 6,464 | 0 | ' |
Income (loss) | 490 | 0 | 441 | 0 | ' |
Reporting Segments [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Revenues | 224,196 | 106,816 | 672,843 | 223,396 | ' |
Income (loss) | 11,645 | 11,575 | 65,213 | 11,540 | ' |
Assets | 100,067 | ' | 100,067 | ' | 16,211 |
Reporting Segments [Member] | Wholesale Broker Dealer [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Assets | 72,727 | ' | 72,727 | ' | 15,286 |
Reporting Segments [Member] | Transaction Managment [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Assets | 7,328 | ' | 7,328 | ' | 0 |
Reporting Segments [Member] | Investment Banking [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Assets | 14,785 | ' | 14,785 | ' | 925 |
Reporting Segments [Member] | Transfer Agent [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Assets | 5,227 | ' | 5,227 | ' | 0 |
Segment Reconciling Items [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Income (loss) | 0 | 0 | -217 | 0 | ' |
Other assets | 2,703 | ' | 2,703 | ' | 0 |
Intersegment Eliminations [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Revenues | -411 | 0 | -411 | 0 | ' |
Less: intercompany receivables | ($412) | ' | ($412) | ' | $0 |
Subsequent_Events_Acquisitions
Subsequent Events Acquisitions (Details) (Subsequent Event [Member], USD $) | 1 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Nov. 07, 2013 |
Investors Capital Holdings [Member] | ' |
Subsequent Event [Line Items] | ' |
Business Acquisition, Cost of Acquired Entities Throughout Period, Purchase Price | $52,500 |
Hatteras Funds Group [Member] | ' |
Subsequent Event [Line Items] | ' |
Potential Adjustments to Business Acquisition Purchase Price | 3,000 |
Business Acquisition, Cost of Acquired Entities Throughout Period, Purchase Price | $40,000 |
Common Stock [Member] | Investors Capital Holdings [Member] | ' |
Subsequent Event [Line Items] | ' |
Business Acquisition, Cost of Acquired Entities Throughout Period, Purchase Price per Share | $7.25 |
Cash [Member] | Investors Capital Holdings [Member] | ' |
Subsequent Event [Line Items] | ' |
Business Acquisition, Cost of Acquired Entities Throughout Period, Purchase Price per Share | $7.25 |