NEW YORK CITY—New York REIT has initiated a series of governance, strategic and operational actions intended to enhance value for all shareholders and narrow the gap between net asset value and the company's current common share price. The measures come after a summer of complaints from activist investors.
NYRT's senior management and the board of directors unanimously endorsed the following actions: The board appointed Marc Rowan as a director. The board is conducting a search for two more independent directors.
Rowan is a co-founder and senior managing director of Apollo Global Management. In addition to serving on Apollo's board, he is a director of Athene Holding, Caesars Entertainment Corp. and Caesars Acquisition Co. He has previously served on the boards of 18 companies.
The company engaged the Eastdil Secured division of Wells Fargo Securities as strategic advisor to identify and consider potential strategic transactions at the asset or entity level. NYRT is releasing parties who participated in a previous strategic transaction process from the standstill provisions of their non-disclosure agreements, enabling them to participate in any strategic transactions at the asset or entity level.
Also, the firm continues to pursue its previously announced plan to sell non-core, outer-borough assets and the company is implementing a joint venture arrangement with American Realty Capital New York City REIT, a non-traded REIT, eliminating competition for transactions between the two entities.
“The steps we are taking today represent our commitment to narrow the gap between NYRT's net asset value and common share price and are indicative of the approach management and the Board intend to take to drive value for all shareholders,” says Michael Happel, CEO of NYRT.
“I am delighted that Marc Rowan is joining our Board,” says Randolph Read, chairman of the board. “I have known Marc for over 30 years and he will add substantial and relevant expertise and resources to the NYRT Board as we continue on our path to enhance value.”
Rowan brings significant experience in creating value and improving the performance of companies across a broad range of industries. He has significant public company and transaction experience. The appointment of Rowan expands the Board to five members, including three independent directors. The company plans to identify and appoint two additional independent directors in the near future.
“Despite the strong portfolio of assets, NYRT's share price reflects a substantial gap from the true value, which needs to be closed,” Rowan asserts. “I am confident the actions taken today will begin the process of closing the value gap.”
“I have met with several of the activist investors who have made suggestions about NYRT and believe that the actions to enhance the company's governance, strategy and operations announced today comprehensively address many of these holders' concerns,” he adds.
NYRT, with the assistance of Eastdil, is seeking institutional investors as potential asset-level partners and/or to pursue broader strategic options, as appropriate, in the company's effort to narrow the gap between net asset value and its share price. To facilitate the effectiveness of this process, the Company is releasing all parties from previous non-disclosure and standstill agreements related to the Company's previous strategic process in 2014.
NYRT also intends to continue with its plan to sell the outer borough assets within its portfolio. Earlier this month the firm announced the sale of 163 Washington Ave. in Brooklyn and it is actively marketing four additional non-core, outer borough assets.
The proceeds of any joint venture investments or dispositions may be used to execute on NYRT's previously announced $150 million share repurchase program and/or to make new investments.
NYRT is also taking steps to ensure that its relationship with NYCR is aligned with the interests of all shareholders. To that end, NYRT and NYCR will form a joint venture to pursue and invest in new transactions together.
The joint venture will replace the existing allocation agreement and will be structured as a 50/50 joint venture with the ability to adjust ownership of any transaction based on available capital. This new structure will facilitate the continued growth and diversification of both portfolios while reducing the need to raise additional equity capital.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
