New York REIT plans $150M buyback, marketing of non-core assets

Moves come after shareholders voice concerns

New York REIT
From left: Michael Happel and William Kahane

New York REIT is launching a $150 million buyback and has tapped Cushman & Wakefield and HFF to market several “non-core assets,” the real estate investment trust announced Monday.

In addition to repurchasing up to $150 million of its common stock, the New York City-centric REIT authorized the two commercial brokerages to market and sell select non-core assets.

The asset sales are part of an effort “to focus on high quality New York City real estate generating consistent, stable returns and providing significant long-term capital appreciation opportunities,” the company said in a statement.

The moves occurred after New York REIT shareholders publicly expressed concerns regarding the company’s direction last week, criticizing the “continuing deterioration” of the company’s stock price and calling for the sale of Assets Like One Worldwide Plaza in Midtown West.

Explaining the initiatives, New York REIT CEO Michael Happel said the company believes it “should be able to close the valuation difference between our current trading price and what management believes is our considerably higher net asset value.”

The buyback gives the REIT “a tool it may use when relative value differences between the company’s share price versus the company’s opinion of share value suggest an opportune time to repurchase shares,” Happel said in a statement.

In addition, the asset sales come after the REIT “closely examined its portfolio and, given robust market conditions, believes the time is right to pursue divestitures of non-core assets,” Happel said.

New York REIT also announced that it has appointed Randolph Read as non-executive chairman of the company’s board of directors. He will succeed William Kahane, who will continue to serve as a director.

Kahane’s departure is significant given shareholder criticism of New York REIT’s relationship with American Realty Capital. In an open letter last week, shareholder Sorin Capital Management noted American Realty Capital co-founder Kahane’s status as “executive chairman” of New York REIT and asked that the company “sever all ties” with the beleaguered REIT from which it spun off in 2010.

Happel recently distanced New York REIT from American Realty Capital, telling a REIT Week audience earlier this month that he felt “like an accounting problem at a different company has wreaked havoc on my company.”