ARC New York City REIT Hits Back at Dissident Investors
American Realty Capital New York City REIT, a publicly registered non-traded REIT sponsored by AR Global, sent a letter to shareholders dismissing recent claims made by dissident investor Cove Partners III that the company’s proposed charter amendments are not in the best interest of shareholders.
Cove Partners, an entity owned by Michael Ashner and John Alba, filed proxy materials with the SEC urging shareholders to vote against nine proposals that they believe “eliminate valuable stockholder protections and open the door for unlimited and unfettered control by the company’s advisor, which is controlled by Nicholas Schorsch.”
“As opposed to the vague and unsupported claims made in the Ashner Proxy, the company has provided shareholders with a clear sense of the proposals’ objectives, why the board is recommending shareholders vote to approve each proposal, and what impact it believes voting ‘FOR’ the proposals will have on the company and our shareholders,” said CEO Michael Weil.
The company maintains that the proposed amendments (which limit certain shareholder rights, reduce fiduciary obligations, and could allow for an advisory agreement in excess of the current one-year term) align with the charters of its peers and will provide the board with additional flexibility to pursue liquidity strategies.
ARC NYC REIT took specific issue with Cove Partners’ claim that shareholders have consistently rejected similar proposals, which he said was untrue since more than 75 percent of shares voted in favor of the proposed amendments in previous campaigns.
Earlier this year, another Ashner-owned entity, WW Investors, battled with the AR Global-affiliated New York REIT (NYSE: NYRT), and utilized a similar approach to shake up the board and replace AR Global as the external advisor with a WW Investors affiliate.
Weil criticized the new advisor’s handling of NYRT’s liquidation plan, which Ashner claimed could be completed within six months, although only one property out of 19 has been sold in the past seven months. He also criticized the WW Investor affiliate for claiming that NYRT’s share price should exceed $11.39 per share, which is $2.18 per share less that the recently disclosed liquidating distribution estimate of $9.21 per share. Weil called the gap “embarrassing.”
“It is simple for interlopers such as Michael Ashner to make bold claims but, as he has shown with NYRT, it is much more difficult to manage a company and produce tangible results that are consistent with those claims,” said Weil.
Shareholders will vote at the reconvened annual stockholder meeting on September 7th at The Core Club in New York City. The meeting was originally scheduled on June 27th and was adjourned and reconvened on both July 19th and August 2nd to solicit additional votes.
