New York REIT to Liquidate, a Plan Meeting With Resistance

  • Firm said earlier this month it will seek buyers for holdings
  • WW Advisors ‘extremely skeptical’ of liquidation proposal

New York REIT Inc., which has been under shareholder pressure to boost value, said it’s planning its liquidation, a plan some investors and analysts say the current board may be unable to carry out fairly.

The real estate investment trust will seek to sell its assets and return the proceeds to shareholders, pay off its debt and delist from the New York Stock Exchange, the company said in a statement on Monday. Between $8.73 and $11.50 a share will be returned to stockholders, according to the company. New York REIT’s management would also consider selling the company to a buyer.

The plan “will maximize value for our stockholders, while also preserving the flexibility to pursue a sale of the company, should a compelling offer that delivers superior value be made,” Chief Executive Officer Michael Happel said in the statement.

The office and retail-property owner began a strategic process following at least a year of criticism of the company’s management by shareholder WW Investors LLC. New York REIT announced earlier this month its merger talks with Washington landlord JBG Cos. were scrapped and it would sell properties it owns individually.

‘Extremely Skeptical’

WW Investors, jointly owned by Michael Ashner and Steven Witkoff, has criticized the REIT’s external manager. That entity had connections to investor Nicholas Schorsch, who’s resigned from the board of New York REIT and 12 other companies in late 2014 following the disclosure of accounting inaccuracies at another of his companies, American Realty Capital Properties Inc.

“WW Advisors is extremely skeptical as to the ability of the current board to implement a plan of liquidation fairly, efficiently and in a manner that will maximize value to shareholders,” Ashner said by phone following the announcement.

New York REIT shares fell 1.6 percent to $9.87 at 2:06 p.m. in New York, after earlier slipping as much as 1.8 percent, the most since June. The company is down 14 percent this year, compared with an 11 percent increase in the Bloomberg REIT Index.

Sheila McGrath, an analyst at Evercore ISI, said the New York-based company had better options than the liquidation and that a new board of directors must be installed immediately.

“This is the same board that approved the JBG merger transaction at a significant cost to shareholders,” McGrath wrote in a research note Monday. “The one thing that most institutional investors that we have spoken to support is the recasting of the NYRT board as soon as possible prior to making any final strategic decision.”

Worldwide Plaza

New York REIT’s buildings are mostly in Manhattan and include a stake of almost 49 percent in Worldwide Plaza, a 1.8 million-square-foot (167,000-square-meter) skyscraper on Eighth Avenue that contains the Americas headquarters of Nomura Holdings Inc.

New York REIT will refinance its credit facility to repay it in full, while continuing a previously announced plan to acquire the portion of Worldwide Plaza it doesn’t already own. The liquidation plan needs shareholder approval and the company said it will hold a special meeting and file financial documents “in the near future.”

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