New York REIT Dissidents Oppose Merger With Landlord JBG

  • Ashner, Witkoff say they may seek their own board nominees
  • REIT’s shares declined 8% the day after deal was announced

A pair of dissident New York REIT investors say they are against a planned merger with JBG Cos., a closely held owner of Washington-area properties, and may run their own slate of candidates for the company’s board as part of their opposition to the deal.

Investors Michael Ashner and Steven Witkoff, who described themselves as joint owners of New York REIT holder WW Investors LLC, said in a statement Monday that the plan announced May 25 “is materially detrimental to the interests of all NYRT stockholders.” They said they are considering nominating new directors who, if elected, would consider a company sale for cash or a mix of cash and publicly traded shares, or a liquidation of New York REIT’s assets.

Ashner and Witkoff cited the 8 percent slide the stock experienced on May 26, the first day it traded following the announcement, as evidence that many investors share their concerns. New York REIT and JBG said they would form a new publicly traded company to be called JBG Realty Trust that would be 65 percent owned by JBG shareholders, with New York REIT holders owning the rest.

Under the transaction, JBG will receive 319.9 million shares of common stock and operating units of New York REIT in exchange for stakes in buildings owned by the Washington landlord.

Stock Deal

“The announced all-stock combination with JBG is one of the worst strategic transactions proposed to stockholders by a REIT board in recent memory,” Ashner and Witkoff wrote in their statement. “If the board insists on pursuing the current path, we will explore all of our options, with an appropriate sense of urgency, to protect the best interests of all stockholders.”

The investors hold about 1 million shares of New York REIT, their attorney, David Heymann, said in an e-mail.

A New York REIT spokesman declined to comment. Calls to Brandon Messina, a spokesman for JBG, weren’t returned. New York REIT shares rose 0.7 percent Monday to $9.32.

The new company would be valued at $8.4 billion and hold New York and Washington properties. The announcement followed a months-long strategic review during which New York REIT considered liquidating itself by selling off its assets, which include a stake in Manhattan’s Worldwide Plaza.

Ashner and Witkoff have been critics of New York REIT management for at least a year. As opponents of the REIT’s external manager, an entity which had connections with investor Nicholas Schorsch, the pair offered to manage the company themselves. Schorsch resigned from the board of New York REIT and 12 other companies in late 2014 following disclosure of accounting inaccuracies at another of his companies, American Realty Capital Properties Inc.

In a May 12 letter, Ashner and Witkoff said New York REIT failed to respond to an offer from a potential buyer, calling it a “clear disdain of duty and ugly discourtesy.”

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