Author Topic: NYRT - New York REIT  (Read 8983 times)

BG2008

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Re: NYRT - New York REIT
« Reply #10 on: May 10, 2017, 03:13:33 PM »
Shares hit $8.75 in the aftermarket


MikeTheCannon

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Re: NYRT - New York REIT
« Reply #11 on: May 10, 2017, 03:42:32 PM »
well, the news out today of the $9.25 liquidation value is why i suggested using a more conservative cap rate.

Management's previous guidance was $8.49 to $11.26. With that in mind, is this revised $9.25 guidance really that earth shattering? That's an honest question, not some snarky remark.

glorysk87

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Re: NYRT - New York REIT
« Reply #12 on: May 10, 2017, 04:06:22 PM »
Management's previous guidance was $8.49 to $11.26. With that in mind, is this revised $9.25 guidance really that earth shattering? That's an honest question, not some snarky remark.

I don't think so. But there are two things I think impacting the market here. One is that the midpoint of the range you listed was $9.875 vs. the new guidance of $9.25.  So the market will likely price in that 6% reduction in value + more due to the uncertainty of future reductions.  Second is that, I think people were hoping that management would guide their estimate of value upwards. Every pitch and write-up I've seen on NYRT has liquidation values from like $11 to $14. So most people I think were assuming management would bring their estimate up closer to that range, which obviously didn't happen.

I think anyone who was rightfully conservative on the name probably wasn't very surprised, but unfortunately there were a lot of people out there building a lot of optimism into their models.

johnhuber

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Re: NYRT - New York REIT
« Reply #13 on: May 10, 2017, 04:13:34 PM »
That was the previous management's guidance. The new management team campaigned on assertions of much higher NAV. That said, I don't think the previous management's range was unrealistic, and given the state of NYC real estate, this isn't that surprising. The cap rates they used in their activist letters seemed pretty aggressive. The Winthrop guy has a history of being slightly conservative, so maybe this new estimate is on the lower end, but his previous liquidations all came during times of falling cap rates. I bet this estimate is pretty close to being accurate. Probably not a lot of downside (unless Cravath, the big tenant in their main asset, leaves). But not much upside either.
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atbed

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Re: NYRT - New York REIT
« Reply #14 on: May 10, 2017, 04:16:48 PM »
If rates are really going to rise 6 times in the next 2 years, do you really want to hold a portfolio of stabilized properties?
« Last Edit: May 10, 2017, 04:18:27 PM by atbed »

MikeTheCannon

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Re: NYRT - New York REIT
« Reply #15 on: May 10, 2017, 04:18:20 PM »
Management's previous guidance was $8.49 to $11.26. With that in mind, is this revised $9.25 guidance really that earth shattering? That's an honest question, not some snarky remark.

I don't think so. But there are two things I think impacting the market here. One is that the midpoint of the range you listed was $9.875 vs. the new guidance of $9.25.  So the market will likely price in that 6% reduction in value + more due to the uncertainty of future reductions.  Second is that, I think people were hoping that management would guide their estimate of value upwards. Every pitch and write-up I've seen on NYRT has liquidation values from like $11 to $14. So most people I think were assuming management would bring their estimate up closer to that range, which obviously didn't happen.

I think anyone who was rightfully conservative on the name probably wasn't very surprised, but unfortunately there were a lot of people out there building a lot of optimism into their models.

Thanks for the insight!

MikeTheCannon

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Re: NYRT - New York REIT
« Reply #16 on: May 10, 2017, 04:23:51 PM »
That was the previous management's guidance. The new management team campaigned on assertions of much higher NAV. That said, I don't think the previous management's range was unrealistic, and given the state of NYC real estate, this isn't that surprising. The cap rates they used in their activist letters seemed pretty aggressive. The Winthrop guy has a history of being slightly conservative, so maybe this new estimate is on the lower end, but his previous liquidations all came during times of falling cap rates. I bet this estimate is pretty close to being accurate. Probably not a lot of downside (unless Cravath, the big tenant in their main asset, leaves). But not much upside either.

Ah I didn't consider that old management gave the previous guidance. :/

peripatetic

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Re: NYRT - New York REIT
« Reply #17 on: May 10, 2017, 11:07:44 PM »
I'm no real estate expert, but it seems clear that management has a clear incentive to under-promise and over-deliver. I find it tempting to see the $9.25 estimate as a floor below which management is pretty confident they will not go (unless, of course, the real estate market really turns sour before they're done liquidating).

In any case, the notes to the 10Q still point to considerably higher potential. See e.g. page 33 which estimates total sales proceeds of $3.6b and sales costs of $126m. Subtract net debt of $1.15b from that and you arrive at a net asset value of $2.3b, which should work out to about $14 per share.




Hielko

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Re: NYRT - New York REIT
« Reply #18 on: May 11, 2017, 01:41:37 AM »
Aren't you missing the cost of exercising the option? was $320 million I think.

peripatetic

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Re: NYRT - New York REIT
« Reply #19 on: May 11, 2017, 02:09:00 AM »
Aren't you missing the cost of exercising the option? was $320 million I think.
Yes, you're right - my bad. That brings us down roughly $2b, or $12 per share.