by Joe Rosengarten
Investors in the New York REIT Inc. have firmly objected to the investment vehicle’s proposed combination with the Washington-area landlord, JBG, and have nominated five members to displace board members who are supporting the merger.
In recent months, New York REIT Inc. has been under mounting pressure to increase shareholder value and earlier this month it seemed as though it was only a matter of time until the deal was confirmed. If completed, the transaction would create an $8.4 billion real estate juggernaut, which would focus on properties in New York and the Washington area.
Michael Ashner, chief executive of Winthrop Realty Trust Inc., and Steven Witkoff, CEO of The Witkoff Group, are the investors who have challenged the merger and proposed the new nominees. Together the pair have 80 shares in New York REIT Inc. through a jointly owned entity called WW Investors LLC, and have put themselves forward to join the board in the possible shakeup. The other three nominees are James Hoffmann, a former partner and senior vice president of Wellington Management Co.; Gregory Hughes, principal for Roscommon Capital LP and a former executive at SL Green Realty Corp.; and Neil Koenig, co-founder of accounting firm Imowitz Koenig & Co.
Ashner and Witkoff, who believe the REIT should sell off its assets and return cash to stockholders, issued a press release saying the proposed merger would cause "material and permanent" damage of stockholder value. They said a reorganization of the board is needed to "unlock stockholder value and protect stockholder interests".
The New York REIT Inc. has 18 assets in Manhattan and one in Brooklyn, including 1440 Broadway, a 750,000-square-foot tower whose tenants include Citigroup Inc. and Mizuho Financial Group Inc. The REIT’s holdings also include a 49% stake in a 1.8 million-square-foot skyscraper on Eighth Avenue called Worldwide Plaza.
In order to give investors the chance to elect new directors to the board, the group of objectors have implored the board to hold its annual meeting either at the same time or before any special meeting to consider the JBG deal. “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 on Monday.