New York REIT Inc. jumped as a shareholder called for a sale of the real estate investment trust’s assets and firms controlled by investors Steven Witkoff and Michael Ashner offered to manage the company.
The REIT, which concentrates on office and retail properties in New York City, has been struggling since founder Nicholas Schorsch last year became embroiled in a scandal over accounting inaccuracies at American Realty Capital Properties Inc. Schorsch resigned from the board of New York REIT and 12 other companies at the end of December.
New York REIT jumped 9.8 percent Thursday to close at $10.50, the biggest gain since its public listing in April 2014. Since peaking in June of that year, the stock had fallen 21 percent through yesterday. New York REIT in October engaged bankers to study options to enhance shareholder value, a process the company said last month it had suspended.
“It’s difficult to weigh the likelihood of New York REIT returning to a strategic review, after they just closed a process,” Michael Lewis, a Suntrust Robinson Humphrey Inc. analyst with a hold rating on the company, said in a phone interview. “But the pressure appears to be mounting, and today the stock is clearly pricing in a higher probability of a sale.”
On Thursday, Rambleside Holdings, owner of 1.2 million shares of New York REIT, said it was skeptical of the landlord’s plans to create value and called for an outright sale of the company or the liquidation of its portfolio over six to nine months.
“Rambleside believes NYRT trades at a discount of at least 40 percent to true net asset value,” Gregory Cohen, Rambleside’s president, said in a letter to New York REIT Chief Executive Officer Michael Happel. “This is shocking given you have assembled a world-class portfolio of assets including Worldwide Plaza and 1440 Broadway at favorable prices over the past few years.”
Worldwide Plaza -- a 49-story tower on Eighth Avenue and West 50th Street in Manhattan -- could fetch $2.5 billion if marketed to “a patient, long-term investor,” Cohen said. The company, then a non-traded REIT, acquired a 48.9 percent stake in the building in 2013.
Also Thursday, letters were released in which Ashner and Witkoff offered to advise New York REIT, which is sponsored by Schorsch’s AR Capital, for a period of five years.
“We strongly believe that an external adviser whose interests are aligned with the company’s shareholders is best for all parties,” Ashner wrote in a letter dated June 10.
Ashner and Witkoff also offered to buy 8.3 million newly issued common shares of the REIT for $12 each, 32 percent more than the June 10 closing price.
Two days ago, Sorin Capital Management, one of New York REIT’s largest shareholders, released a letter to Happel questioning the decision to suspend the study of strategic alternatives and urging the landlord to sever ties with AR Capital and sell non-core assets.
The REIT responded that it “welcomes open communications” and said it was “actively pursuing several previously announced strategies” to lift its share price.
Jeff Cronin, a New York REIT spokesman, said Thursday that the company had no comment beyond the letter it issued in response to Sorin on Tuesday.
New York REIT, founded in 2010, controls 22 mostly office and retail properties in Manhattan and Brooklyn, which it began buying during the early stages of the city’s comeback from the financial crisis.
The company on Thursday said Worldwide Plaza reached full occupancy with a 33,100-square-foot (3,075-square-meter) lease to Prometheus Global Media LLC. The 10-year agreement was for the entire 29th floor of the 1.8 million-square-foot tower, according to a statement. In 2009, the tower was 40 percent vacant following the departure of advertising firm Ogilvy & Mather.