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New York City REIT: Undervalued REIT Survives Proxy Fight, Suspends Dividend

James Angel, CFA profile picture
James Angel, CFA


  • NYC's price plummeted after it suspended dividend payments.
  • In my opinion, management earns an F in shareholder relations for refusing to respond to shareholder questions.
  • Management prevailed in a recent proxy fight.
  • NYC is selling far below the potential value of its assets, but it's unlikely that value will be unlocked soon.

Aerial view of Manhattan at sunset

bloodua/iStock via Getty Images

Distressed companies are often entertaining corporate soap operas, and the case of New York City REIT (NYSE:NYC) is no exception. This was a previously non-traded REIT that went public during the pandemic in 2020. It is a "pure

This article was written by

James Angel, CFA profile picture
James J. Angel, Ph.D., CFA James J. Angel is an associate professor of finance at Georgetown University. Jim served on the board of directors of the Direct Edge Stock Exchange and is a former Visiting Academic Fellow at the NASD. He has testified five times before Congress, and is a co-inventor of 11 patents on financial technology. He has also been quoted numerous times in the media and appeared on CNN, CNBC, Jim Lehrer News Hour and the Jay Leno Show, among others. Jim’s hobby is to visit stock exchanges ( -- he has visited over 70 of them around the world --) and to visit trading desks. Jim earned his B.S. in engineering from Caltech, his MBA from Harvard Business School, and his Ph.D. from U.C. Berkeley. He is also a Chartered Financial Analyst. You can follow him on twitter @GUFinProf.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of NYC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (36)

MrGruust profile picture
How is there a 10% OWNER gobbling up all the shares right now when that large ownership isn't allowed as you say? Did that change?
"RIGHTS OFFERING for NEW YORK CITY REIT, INC. has been made by NEW YORK CITY REIT, INC.." Anyone else get this Corporate Action Notice?
CPA Bob profile picture
@Eric ERBE - No Eric. You have to buy the shares for $12.95. So the rights are underwater now as the share price has dropped about $3. The rights expire on February 22nd - so not a lot of time to decide what to do assuming that the share price goes over $12.95. A big waste of legal fees, etc., if the price remains where it is today (<$12.95).

The share price has performed similar to other companies that have had reverse stock splits. Never a pretty matter.

Surprised that they made the rights non-transferable.
David Kincaid profile picture
@CPA Bob

i refuse to believe that!
David Kincaid profile picture
I think management like this, is what makes companies such as Berkshire Hathaway so remarkable. I think most business people are self-centered, but a few allow shareholders to follow along. And for management to treat fellow shareholders fairly, is remarkable in itself.
@James Angel, CFA Wonderful write up and thank you for the color of attending the stock holder meeting.

I don't own NYC but own RTL (formerly AFIN) another AR Global managed REIT. Any insights/thoughts if their behavior in how they manage NYC is representative of how they manage all their companies?
Anyone else receive a Beneficial Ownership letter from $NYC?
Thanks for the article. These scam external management deals in REITs are out of control. Management is probably trying to tank stock. Stewardship is nonexistant at NYC.
SeattleGoldMiner profile picture
@James Angel, CFA

James, your CV is one of the most impressive on SA. I went back to your GU page and it is clear that "ethics" are a core component of your personal and investing activities. The reality in the financial world is that there are thousands of UNethical publicly-held companies. I am constantly amazed at how quickly someone might invest $25,000 to buy a given stock. That $25,000 of savings required, e.g. for someone earning $100,000/year, perhaps one or two or three years of their life's work to accumulate; however they might only spend 10 or 20 hours researching the information underlying the risk they then take with that $25,000 (or even worse, follow a meme, which is a sort of "pump and dump" pyramid scheme with a few Pied Pipers leading sad followers over the cliff.)
I am hoping that your investment in this company is de minimis and that your write-up was more a combined academic/practical case-study. Clearly, I strongly disagree with your continuing to hold the shares of a stench-laden, seemingly corrupt company when you can sell (for whatever you get) and buy shares in something that you will feel better owning (with regard to how they are run and managed).... AND hopefully also earn a good return via the kind of due diligence I am sure someone with your background would perform (although I am mystified as to how you ever wound up buying this...IN MY OPINION cesspool.) While it is over 50 years since I was an Assistant Professor at Long Island University, I can easily recognize your obvious enthusiasm for what you are currently doing.
James Angel, CFA profile picture
@SeattleGoldMiner My investment is indeed, de minimis. I collect lots of oddball investments in small quantities for the entertainment value.
@James Angel, CFA I also have this in my Speculative/Casino Play Portfolio..
Squabkiller profile picture
Got to face it, this is a dog with fleas.
James Angel, CFA profile picture
Update: In the recent earnings call, management disclosed they spent $600K on the proxy fight. seekingalpha.com/...
CPA Bob profile picture
@James Angel, CFA - Why not ask your questions on the quarterly earnings conference call? The transcript that you reference suggests that management was civil and answered all questions (not many).

Also, James, what did you mean by "the forbidden list of questions"?
>>even though neither question was on the forbidden list of questions<<

I'm new to this company, but bought a few shares this morning at $2.80. How low can it go? [I know zero is the answer.]
Squabkiller profile picture
Perhaps Comrit should have the SEC investigate the voting. Oh, wait, the SEC gets involved AFTER everyone is broke except management.
Andrew Shapiro profile picture
@Squabkiller Voting is a matter of state law. Good luck with Maryland.
Squabkiller profile picture
@Andrew Shapiro It is not uncommon to have a "new" company screw up a proxy count. That is what I am saying.
Andrew Shapiro profile picture
@Squabkiller Oh I wouldn't doubt the proxy count was 'screwed up' in a proxy fight. Given my experience in these fights I wouldn't assume it was honest mistake either.
Weil and the management are incompetent or worse they have intentionally calculated and taken steps to rip off the investors. At what point doesn't someone take them to court to get them kicked out?
Matthew Senicola CRPC® profile picture
To really understand why this REIT has such a heavy level of anti-shareholder/takeover provisions, investors need to understand the backstory of Michael Weil and AR Global.

The management and board of AR Global lost control of their first publicly traded New York City property REIT - NYRT. As a result of poor governance, underperformance, and a self-serving executive team an activist got aggressively involved. They were successful in taking over the company and subsequently liquidated the buildings returning the proceeds to shareholders.

The current "self-serving" board has made it near impossible to lose another cash cow. As long as NYC REIT continues to operate the management can continue to milk their fees. They have set up a corporate governance structure where they really do not have to answer to anyone and have proven that business ethics and shareholders are last on their agenda.

Look at the record of CEO Michael Weil. He ran Realty Capital Securities into bankruptcy helping to destroy billions, currently is CEO of the troubled illiquid non-traded Healthcare Trust, CEO of Necessity Retail REIT and somehow finds the time to run NYC REIT (directly into the ground).

I think the author could add number 6 to his list of "So why is NYC so seemingly undervalued?"

Headlines like this are not inviting to investors:

The REIT has breached covenants on loans for four of its New York City properties over the past year, with its debt on the assets totaling over $200M. It attributed the woes to early lease expirations and tenants experiencing “financial difficulties," The Real Deal reported.May 27, 2022
BeaBaggage profile picture
NYC, GNL, RTL and HTI all are run for the benefit of AR mgmt alone as has been well documented here by contributors and commenters for years on SA.
To me they are nothing more than trading vehicles... had GNL at 13 in the FED yield swoon and sold last week for $15, collected a few divs.
Still in RTL but will exit on any pop, maybe post earnings as new acquisitions are supposed to be 'accretive'..
Have no problem w GNL and RTL pfds as divs are well covered and cumulative. That to me, again other than trading the common stocks of the AR bunch, are the only thing I would consider owning intermediate term. Bea
Steve Fischer profile picture
Unfortunately there are a lot of companies that don't allow shareholders to ask questions- some of them are good companies. I've been to shareholder meetings where i was the only shareholder aside from the board. I dont like it but it probably doesn't relate much to the stock. Someone there should do an appraisal of the properties as they are depreciated each year , they must be worth several times book. The NYC market is lukewarm now but it usually comes back-- Next time I would like to see more dissidents running.
Andrew Shapiro profile picture
@Steve Fischer They couldn't even get sufficient votes to elect one alternative nominee, WITH both Glass Lewis and ISS recommendations in support. What makes you think a greater number of nominees would get elected? If there were a majority slate, both Glass Lewis and ISS thresholds for support would be higher. This company's governance is so bad perhaps such a majority slate would garner their recommendation but still that couldn't garner enough votes.
Steve Fischer profile picture
@Andrew Shapiro Two reasons. 1 Dissatisfaction should be much more widespread. 2 It didnt seem well-organized -no mail outs etc
Andrew Shapiro profile picture
What a case study in bad corporate governance
Recently started a speculative position.. Thanks for the write up..
catsaunders financial profile picture
@rusty13 we may, gulp, open a small position today.......
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