The Real Deal New York

NY REIT punts on Q4 earnings call in wake of “strategic review”

NYC-focused landlord reports 105K sf lease with Ford Foundation at 1440 Broadway

February 26, 2016 03:00PM
By Rey Mashayekhi

1440 Broadway NYC

1440 Broadway in Midtown (inset: Michael Happel)

New York City-focused real estate investment trust New York REIT announced that it would not host a conference call for investors and analysts in wake of its year-end earnings report Friday, as it continues to work through a “strategic review process.”

New York REIT’s year-end earnings report detailed both fourth-quarter and full-year highlights for the company. This included the previously announced sales of several “non-core,” outer-borough assets — such as the sale of a Clinton Hill rental building for nearly $38 million as well as two retail properties, one in Queens and another in Brooklyn, for almost $30 million combined.

The REIT also delivered a report of its office leasing activities, with overall occupancy within its 3.4 million-square-foot portfolio down to 95.2 percent as of year-end, compared to 97.2 percent occupied at the end of the third quarter.

New York REIT interim CFO Nicholas Radesca attributed the decline in occupancy to lease expirations at the 25-story, 756,000-square-foot office building at 1440 Broadway in Midtown.

But CEO Michael Happel noted that, of the 184,000 square feet that became available at the property in October, New York REIT had re-leased nearly 105,000 square feet of that space to the Ford Foundation, which is taking four full floors “at a cash rent increase of 12 percent,” the company said.

New York REIT continued to struggle as far as its balance sheet, however, recording a net loss attributable to stockholders of $8.5 million in the fourth quarter and a net loss of just over $39 million for the full year of 2015.

Last year saw the REIT face unprecedented pressure from shareholders concerned about the company’s governance and direction – concerns precipitated in part by New York REIT’s struggling stock price, which activist shareholders noted “has consistently traded at a significant discount” to the value of the company’s portfolio.

There was also the fallout from Apollo Global Management’s aborted acquisition of Nicholas Schorsch’s AR Capital, which would have included the Schorsch-affiliated New York REIT and led to Apollo co-founder Marc Rowan’s brief stint on the New York REIT board.

And in the fall, New York REIT retained Eastdil Secured to advise the company on “potential strategic transactions at the asset or entity level” – meaning a possible sale of core, trophy assets like One Worldwide Plaza or even the entire company. SL Green Realty, the city’s largest office landlord, was reportedly in discussions to acquire New York REIT before later distancing itself from any such deal last month.

In light of that ongoing process, New York REIT said it would not host a public conference call and webcast this quarter, as is customary for publicly-traded companies.

In a statement, New York REIT said it was “committed to working through this [strategic review] review process expeditiously” and would “provide additional updates when appropriate.”

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