ARC New York City REIT Proxy Fight Heats Up
Cove Partners III LLC, a shareholder of American Realty Capital New York City REIT Inc., responded to critical statements made by the non-traded REIT earlier this week as the proxy fight continues ahead of the upcoming shareholder vote to amend the company’s charter.
Cove Partners III, an entity owned by Michael Ashner and John Alba, sent a letter to fellow investors yesterday urging that they vote against the proposed charter amendments, which they believe are self-serving and eliminate valuable shareholder protections.
On Monday, chief executive officer Mike Weil issued a letter to shareholders accusing Cove Partners of making “untrue claims based on exaggerated assumptions,” maintaining that the proposed amendments give the company added flexibility to provide liquidity to shareholders and engage in other beneficial transactions.
Certain proposals, if approved, could reduce the fiduciary obligations of the board to shareholders, limit shareholder voting rights, limit stockholder access to the books and records of the company, and allow for an advisory agreement in excess of the current one-year term.
“In our view…these proposals limit [shareholder] rights and take value from [the shareholders], the true owners of the company, and give it to the Nick Schorsch hand-picked board and the Schorsch-controlled advisor,” said Cove Partners III in a statement.
The investors also warned shareholders not to be “fooled” into believing that the proposals are similar to those made by other non-traded REITs and BDCs.
“There is no reason we need to fall into this unwary trap of destructive changes to the corporate governance of our company by voting to eliminate valuable shareholder protections,” the investors said.
Ashner, along with Steven Witkoff, also owns WW Investors LLC which was instrumental in replacing AR Global as the advisor of New York REIT (NYSE: NYRT) with their affiliate Winthrop Realty Partners and shaking up the board of directors.
In his letter to New York City REIT investors, Weil attempted to discredit Ashner and criticized the new advisor’s handling of NYRT’s liquidation plan and the claims 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.”
Ashner responded that the valuation was based on information provided by the company. “As we said then, and we repeat – Their statements, their numbers. Notably, this comes from a board which has admitted to losing at least $135 million of our shareholder value in its most recent quarterly filing.”
ARC New York City REIT shareholders will vote at the reconvened annual stockholder meeting on September 7th at The Core Club in New York City.
