New York REIT Lands $760M Financing, Prepares to Sell Assets

The proceeds will be used to repay debt, buy the remaining equity interest in Worldwide Plaza and fund the company’s dissolution.

By Gail Kalinoski

Worldwide Plaza, New York
Worldwide Plaza, New York

New York—New York REIT Inc., an office and retail REIT that is planning to liquidate, has closed on $760 million in financing from Credit Suisse secured by 12 assets that will be used to repay debt, buy the remaining equity interest in Worldwide Plaza and fund the company’s dissolution.

The REIT began making plans for the liquidation in August after a planned merger with JBG Cos., a major Washington, D.C.-area landlord, fell through due to activist shareholders’ concerns. The merger, proposed in late May, had called for NYRT to acquire the majority of JBG’s properties and its management business and create a REIT with an enterprise value of $8.4 billion. JBG later found a partner in Vornado Realty Trust, which announced in November it was spinning off its D.C.-area office portfolio and merging it with JBG in a deal also valued at $8.4 billion.

Meanwhile, NYRT shareholders led by Michael Ashner and Steve Witkoff, joint owners of WW Investors LLC, opposed the JBG deal calling it “one of the worst strategic transactions proposed to stockholders by a REIT board in recent memory,” according to Bloomberg. They had been vocal opponents of the REIT’s external manager, which was connected to Nicholas Schorsch, who resigned from the board of NYRT and 12 other companies in late 2014 after his real estate empire collapsed following an accounting scandal at his flagship company, American Realty Capital Properties Inc.

The financing deal announcement came two days after NYRT said its Board of Directors had selected Winthrop REIT Advisors LLC as its new external advisor led by Wendy Silverstein, a former Vornado executive.

“Following an extensive vetting process, the Board chose Winthrop and Silverstein for their deep real estate background and Winthrop’s extensive experience leading companies through liquidation events, as well as the cost savings the new contract will provide the company over its expected term,” Randolph Read, chairman of the NYRT board, said in a prepared statement.

Ashner is chairman & CEO of Winthrop Realty Partners LP and also the head of Winthrop Realty Trust.

“We are excited to have been selected as the new external advisor for NYRT and look forward to working alongside the Board to maximize value for all NYRT stockholders,” Ashner said in prepared remarks. “NYRT has an outstanding portfolio of asset and we are well prepared to work with the Board to execute the proposed plan of liquidation as expeditiously as possible pending approval by NYRT stockholders.”

Ashner credited Read with bringing all the parties together on the liquidation efforts. The NYRT stockholders will meet on Dec. 30 to elect directors to the board and again on Jan. 3 to vote on a liquidation plan.

Read said the $760 million financing from Credit Suisse will give NYRT “the financial flexibility and balance sheet strength to capture additional value associated with Worldwide Plaza and proceed with our plan of liquidation, pending stockholder approval.”

The REIT currently owns 49 percent of Worldwide Plaza, a 2 million-square-foot office building on Eighth Avenue in Manhattan. It has a fixed price option to purchase the rest of the property.

“NYRT has a strong portfolio of high-quality, well-leased assets in one of the best real estate markets in the world and we believe that increasing our ownership of Worldwide Plaza will bring significant value to our shareholders,” Michael Happel, president & CEO of NYRT, said in a prepared statement. “In addition to providing us with the capital we need to exercise the option at Worldwide Plaza, this financing allows us to pay off our existing credit facility in full and move forward with the previously announced plan of liquidation, following stockholder approval.”

The current credit facility has a balance of about $485 million and it would not have permitted the REIT to sell all or most of the assets and so had to be refinanced, company officials said.

In addition to Worldwide Plaza, some of NYRT’s other Manhattan holdings include office properties at 50 Varick St., 1440 Broadway, 256 W. 38th St., 229 W. 36th St., 333 W. 34th St., and retail properties at 367-387 Bleecker St., and 350 W. 42nd St.

Image courtesy of Yardi Matrix