New York REIT Dissidents Propose Five-Person Slate for Boardby
Ashner’s WW Investors opposes merger with Washington-based JBG
Investors prefer liquidation of New York REIT to combination
A group of dissident New York REIT investors proposed a five-person slate of candidates to replace board members backing the company’s merger with JBG Cos., a closely held owner of Washington-area properties.
The nominees were proposed by investors Michael Ashner, chairman and chief executive officer of Boston-based Winthrop Realty Trust, and developer Steven Witkoff, who are two of the five candidates. The others are Gregory Hughes, principal for Roscommon Capital LP and a former executive at SL Green Realty Corp.; James Hoffmann, a former partner and senior vice president of Wellington Management Co.; and Neil Koenig, co-founder of accounting firm Imowitz Koenig & Co.
Ashner and Witkoff are joint owners of WW Investors LLC, which owns shares of New York REIT. They are challenging the real estate investment trust’s decision to merge with JBG, creating a public company with properties in New York and the Washington metropolitan area, rather than sell off its assets at market prices and return cash to its stockholders. Those holdings include a 49 percent stake in Worldwide Plaza, a 1.8 million-square-foot (167,000-square-meter) skyscraper on Manhattan’s Eighth Avenue that contains the Americas headquarters of Nomura Holdings Inc.
“As a result of NYRT management’s many misjudgments, including its disastrous decision to approve the JBG transaction, we have absolutely no confidence in the ability of this board to unlock the significant value that remains trapped in NYRT’s shares,” Ashner said in a statement Monday, referring to the REIT’s ticker symbol.
Mahmoud Siddig, a spokesman for New York REIT, didn’t immediately return a call seeking comment.
In a presentation filed last week, WW Investors projected that the combined company’s shares would trade for between $3.52 and $5.71, based on halving the current dividend. Shares of New York REIT closed at $9.34 on June 23. They fell 8.1 percent to $9 on May 26, the first trading session after the two firms disclosed the proposed deal, which the companies said would create a $8.4 billion company. The net asset value of New York REIT properties would be $11.39 to $12.31 a share if they were liquidated, WW Investors said.
WW Investors accused New York REIT management of engaging in “a wanton destruction of shareholder value.” The company has an external manager that had connections with investor Nicholas Schorsch, who resigned in late 2014 from the New York REIT board and 12 other companies following the disclosure of accounting inaccuracies at another of his companies, American Realty Capital Properties Inc. A merger would trigger long-term performance incentives that would benefit the external manager, WW Investors said.
In Monday’s statement, the dissident group urged the board to hold its annual meeting, currently scheduled for Oct. 24, either before or at the same time as any special meeting to consider the JBG transaction, to give stockholders an opportunity to elect directors whom they believe will best represent their interests.
The REIT has 19 New York assets, 18 in Manhattan and one in Brooklyn. Among its holdings is 1440 Broadway, a 750,000-square-foot tower just south of Times Square whose tenants include Macy’s Inc., Mizuho Financial Group Inc. and Citigroup Inc..
JBG, whose top shareholders included Yale University’s endowment, argued in a May 25 presentation that the two firms’ portfolios are “complementary,” with well-occupied New York properties that have tenants on long-term leases, plus development-oriented JBG assets in Washington and its Maryland and Virginia suburbs.