Tuesday, August 23, 2016

Head Scratcher

I do not understand why New York REIT, Inc. (NYRT) is planning to liquidate.  NYRT is a former non-traded REIT that listed on the New York Stock Exchange in April 2014.  It is associated through management with AR Global.  NYRT has been battling outside institutional investors that opposed NYRT's planned merger with JBG Companies and certain of JBG Companies' private funds.  The merger was cancelled in early August. 

So the JBG Company merger did not happen and NYRT decides its only option is to sell all its properties?  NYRT's second quarter 10-Q states the REIT has $2 billion in assets and nineteen properties.  This Bloomberg article reports on institutional investor skepticism about the planned liquidation, including from WW Investors, the firm that helped end NYRT's merger with JBG Companies.   The asset sale and liquidation plan, like the JBG Companies merger, faces outside resistance as noted by this quote from the Bloomberg article:

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.”
 There is plenty of drama yet to come for NYRT.


Anonymous said...

Dispo fees?

Rational Realist said...

I don't see the disposition fees listed in NYRT's most recent 10-Q. In looking for the disposition fees, the Advisor receives operating partnership units as part of a long-term incentive plan. See Note 14 in the 10-Q. Liquidation of the REIT will allow the advisor to realize all the operating partnership shares it has been paid. I am guessing this is why there is a push to liquidate.

Anonymous said...

You were right about the more drama part...