SL Green Realty is not in negotiations to buy New York REIT, contrary to published reports from December, a spokesperson for the Marc Holliday-led company told The Real Deal Thursday.
Bloomberg reported in early December, citing unnamed sources, that SL Green, the city’s largest commercial landlord, was close to finalizing a deal to buy the troubled real estate investment trust, which had been under scrutiny from investors since last year, when its chairman departed amid an accounting scandal at another company.
New York REIT’s portfolio in the city includes 23 properties and about 3.4 million square feet, 97 percent of which is located in Manhattan. The SL Green spokesperson declined to comment on whether a deal was ever in consideration, citing company policy.
But some who follow the company said they could see why New York REIT would not be an attractive buy for SL Green.
New York REIT’s assets “fit well into a New York City office portfolio,” said Alexander Goldfarb, an analyst at Sandler O’Neil, “but there are no must haves. If they could do this deal a really good price they probably would but I don’t see them paying top dollar to get something done.”
Among New York REIT’s most valuable assets are Worldwide Plaza and 1440 Broadway, both of which it purchased amid a spectacular acquisition spree in 2013.
Nicholas Schorsch, the man who led that spree, resigned as executive chairman of the company more than a year ago following news of an accounting scandal at American Realty Capital Properties, for which he also served as executive chairman.
Sheila McGrath, an analyst with Evercore ISI, said that amid declining REIT share prices, companies such as SL Green — whose share price fell more than 16 percent between Dec. 8 and Jan. 20 (to $96.63 from $115.08) — could be facing too much competition from private buyers willing to pay much higher premiums for well-performing assets.
“With most REIT share prices trading below net asset value, we would be surprised to see a public REIT as a buyer of NYRT, unless it teamed up with other partners and the bid required no equity issuance from the public REIT,” she said, declining to comment on SL Green specifically. “Private equity, pension funds and sovereign wealth funds would be more likely to have a more competitive bid than a public REIT.”
Eastdil Secured continues to market New York REIT for sale.