Home Alts News Comrit Nominates Dissident Director to AR Global’s NYC REIT Board

Comrit Nominates Dissident Director to AR Global’s NYC REIT Board

Comrit Investments 1 LP, a stockholder of New York City REIT Inc. (NYSE: NYC) that currently owns 267,520 shares, has filed a preliminary proxy statement with the Securities and Exchange Commission to nominate Sharon Stern to the board of directors.

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Comrit Investments 1 LP, a stockholder of New York City REIT Inc. (NYSE: NYC) that currently owns 267,500 shares, has filed a preliminary proxy statement with the Securities and Exchange Commission to nominate Sharon Stern to the board of directors at the 2022 annual meeting of stockholders.

New York City REIT is a former non-traded real estate investment trust sponsored by AR Global Investments that listed its Class A shares on the New York Stock Exchange in August 2020.

Comrit, which purchases shares of non-traded REITs through unsolicited tender offers, believes that a new independent director “is required to help address NYC REIT’s exceedingly poor corporate governance, perpetual underperformance and sustained discount to net asset value.”

The dissident shareholder announced its intention to nominate Stern to the board late last year, and subsequently launched a website dubbed “Rebuild NYC REIT” outlining its grievances with the company.

“As a long-term stockholder, we have had sustained concerns regarding NYC REIT’s poor corporate governance, chronic underperformance and the resulting trading price discount relative to the company’s net asset value,” said Ziv Sapir, managing partner of Comrit. “Stockholders of NYC REIT since the initial public offering in 2020 are painfully aware that this board has overseen poor operational and financial performance while failing to take meaningful actions to change the status quo…”

As of market close on March 14, 2022, NYC REIT’s stock price was $11.21 compared to a net asset value of $49.23 – the most recent valuation disclosed by the company on August 13, 2020. Prior to a 2.43-1 reverse stock split, the NAV per share was $20.26, as of June 30, 2019. Shares were originally priced at $25.00 each.

Comrit has criticized NYC REIT’s advisory agreement with AR Global, which automatically renews for successive five-year terms and includes a $15 million early termination fee. Comrit further alleges that the REIT’s “classified board, poison pill and limitations on stockholders’ ability to amend the bylaws suggests that the board is more focused on its own entrenchment than unlocking value for its investors.”

“Despite our best efforts to engage in good faith and pursue a compromise with the board, we were initially rebuffed and told that the company is ‘prepared to fight,’” explained Zapir. “This apparent contempt for stockholders only reinforced our view that immediate boardroom change is needed to help ensure objective and independent thinking on the part of the directors. Nevertheless, we would still prefer to reach a negotiated and constructive solution with NYC REIT that is in the best interests of all stockholders. We have nominated Ms. Stern for election to the board because she is committed to advocating for better governance and exploring all paths to enhancing stockholder value.”

Stern is the founder and president of Eastmore Management and Metro Investments, two organizations focused on multi-residential and commercial properties in downtown Montreal. She serves on the board of Cedar Realty Trust Inc. (NYSE: CDR), a publicly traded REIT specializing in grocery-anchored retail properties, as well as on its audit and compensation committees.

“We call on the board to set the date for the 2022 annual meeting so that stockholders will have an opportunity to have their voices heard…,” said Zapir.

Comrit Investments 1, LP is an investment partnership that invests in income generating real estate through public non-traded real estate investment trusts. Founded in 2015 and based in Tel Aviv, Washington D.C. and New York City, Comrit is sponsored by I.B.I. Investment House Ltd. (TLV: IBI), an Israel-based market leader in alternative fund offerings. Comrit’s management team collectively has 30 years of experience investing across the U.S. real estate market.

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