Author Topic: NYRT - New York REIT  (Read 8987 times)

Gregmal

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Re: NYRT - New York REIT
« Reply #30 on: November 09, 2017, 08:19:40 AM »
What a complete shit show. These guys are world class scumbags.


thepupil

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Re: NYRT - New York REIT
« Reply #31 on: November 09, 2017, 08:22:01 AM »
I think this is finally interesting, but admittedly have not done detailed work and have been following from a distance.

$6.90
-$2.07 dividend
$4.83 for non OWW and 1/2 of OWW.

Management (after significant revisions down and sales coming in) says the non OWW is worth $3.84.

$4.83 - $3.84 = $1.06 for 1/2 of OWW.

Cheap?






Gregmal

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Re: NYRT - New York REIT
« Reply #32 on: November 09, 2017, 08:46:42 AM »
I think this is finally interesting, but admittedly have not done detailed work and have been following from a distance.

$6.90
-$2.07 dividend
$4.83 for non OWW and 1/2 of OWW.

Management (after significant revisions down and sales coming in) says the non OWW is worth $3.84.

$4.83 - $3.84 = $1.06 for 1/2 of OWW.

Cheap?

I don't own this but have been following it closely of late thinking the same thing, especially after today. That said, the revised figure has got to be pretty accurate if they felt compelled to again change it. These guys already looks hugely incompetent so I'm sure they would have preferred not guiding down AGAIN. So idk, on an absolute basis, yea its cheap. But is the 20-30%% discount enough at this point to push me to trust these clowns with my money? Probably not. These things can drag out forever. They're now saying 4 years for Worldwide Plaza? Why did they even agree to purchase the other half of this anyway if that was the case? They are idiots.

johnny

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Re: NYRT - New York REIT
« Reply #33 on: November 10, 2017, 07:46:57 AM »
Is there any reason to think their current rents on WW are above market?

I'm thinking $6.85/sh - $2.07 dividend - $3.14 in contracted sales = $1.64

That $1.64 gets you properties on the market (with bidders, allegedly) that they estimate at $0.70. Discount a little and say the net price of WW $1.00,

They say that the next 4 years of contracted rent should produce about 42 cents per share. So you're buying WW at 9 or 10x net income, which seems like an okay downside if their dreams of ~asset repositioning~ don't materialize.

I've spent a grand total of about 10 minutes looking at this, so don't take anything I just said seriously.
« Last Edit: November 10, 2017, 07:50:29 AM by johnny »

Sunrider

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Re: NYRT - New York REIT
« Reply #34 on: November 10, 2017, 09:18:33 AM »
Yes, you can add (as management did) the upside from the increase in WWP value over those years based on the investments they are making. That gets you to ca. $2.11 in value undercounted, according to management.


glorysk87

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Re: NYRT - New York REIT
« Reply #35 on: November 10, 2017, 11:37:35 AM »
What I don't really understand is why anyone would take managements liquidation value seriously when they've not only revised it down multiple times, but they spent a substantial amount of time on the LAST earnings call incessantly telling investors that their "new" liquidation value of $9 and change was not going to change.  Their credibility is zero, to me. Can't imagine why anyone would spend time on this here when there are plenty of other opportunities out there.

thepupil

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Re: NYRT - New York REIT
« Reply #36 on: November 10, 2017, 12:22:22 PM »
What I don't really understand is why anyone would take managements liquidation value seriously when they've not only revised it down multiple times, but they spent a substantial amount of time on the LAST earnings call incessantly telling investors that their "new" liquidation value of $9 and change was not going to change.  Their credibility is zero, to me. Can't imagine why anyone would spend time on this here when there are plenty of other opportunities out there.

I hear you, but every sale de-risks that number, no?

the end goal is to be in OWW at a discount to where SL Green bought it. Right now if they get $3.84 ($3.14 of which is contracted) from remaining non OWW then I get to about $1.5 billion for 1WW compared to where it just traded ($1.7B) which was a disappointing print and is for a "value add" price rather than trophy / stabilized. The appeal to me is to hopefully get a highly leveraged stake in OWW at a discount to where credible operators just bought the thing when they were one of a few (if not the only bidders) after a slowdown in NY RE.

The eventual value of that levered and illiquid stub is obviously very volatile/dependent on the re-positioning and NYC RE market a few years from now. Illiquidity of the remaining stub doesn't bother me. I want to own that stub to have levered exposure to the asset's re-positioning at a discounted price, for a small chunk of my portfolio.  That's the trade in my view. If you buy that thing for $1.00 and they are saying it's throwing off 42 cents over the next 4 years (implying a 10 ish % cash on cash for a big NYC building) that seems decent.

Not amazing or anything, but I think a good risk/reward that is on offer because this is bombed out by the loss of credibility/extension of event driven hedge funds timeline and blowing up of the IRR spreadsheets.

Assuming the $3.14 in contracted sales go through, then you are paying $0.94 - $1.64 for 1/2 of 1WW ($150mm - $275mm), versus $250 million where the asset just traded/re-financed and the upper bound is if they got $0.00 for the $0.70 of remaining non 1WW which we know will not be the case.





« Last Edit: November 10, 2017, 02:10:35 PM by thepupil »

BG2008

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Re: NYRT - New York REIT
« Reply #37 on: December 07, 2017, 01:34:01 PM »
How come no one talks about the levered nature of this investment?  Most of the value of the stub (post >$3 distribution) is in the WW plaza building.  But they recently financed it with $1.2 bn of debt.  Assuming the building is actually worth $2bn when sold, it's still got a LTV of 60% which is okay for a high end NYC office building.  But let's not forget that leverage cuts both ways and I think people massively miscalculated that in the case of NYRT.  In a way, I think Wendy did the best that she could.  But when you buy into a company with 50% LTV and 50% market cap and a 4% cap rate where foreign buyers, i.e. Chinese (kind of like Japanese in the 80s) set the trophy price, your margin of safety erodes fairly quickly.  But it was a the trendy event driven/workout pick of 2017 amongst the value crowd.  While Ashner is involved in both NYRT and the Winthrop liquidation, there is a key difference in that the Winthrop interest is a prefer security that compounds at a high rate.  So the common shareholders are being paid to wait. 

Foreign Tuffett

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Re: NYRT - New York REIT
« Reply #38 on: December 07, 2017, 02:50:05 PM »
What I don't really understand is why anyone would take managements liquidation value seriously when they've not only revised it down multiple times, but they spent a substantial amount of time on the LAST earnings call incessantly telling investors that their "new" liquidation value of $9 and change was not going to change.  Their credibility is zero, to me. Can't imagine why anyone would spend time on this here when there are plenty of other opportunities out there.

I hear you, but every sale de-risks that number, no?

the end goal is to be in OWW at a discount to where SL Green bought it. Right now if they get $3.84 ($3.14 of which is contracted) from remaining non OWW then I get to about $1.5 billion for 1WW compared to where it just traded ($1.7B) which was a disappointing print and is for a "value add" price rather than trophy / stabilized. The appeal to me is to hopefully get a highly leveraged stake in OWW at a discount to where credible operators just bought the thing when they were one of a few (if not the only bidders) after a slowdown in NY RE.

The eventual value of that levered and illiquid stub is obviously very volatile/dependent on the re-positioning and NYC RE market a few years from now. Illiquidity of the remaining stub doesn't bother me. I want to own that stub to have levered exposure to the asset's re-positioning at a discounted price, for a small chunk of my portfolio.  That's the trade in my view. If you buy that thing for $1.00 and they are saying it's throwing off 42 cents over the next 4 years (implying a 10 ish % cash on cash for a big NYC building) that seems decent.

Not amazing or anything, but I think a good risk/reward that is on offer because this is bombed out by the loss of credibility/extension of event driven hedge funds timeline and blowing up of the IRR spreadsheets.

Assuming the $3.14 in contracted sales go through, then you are paying $0.94 - $1.64 for 1/2 of 1WW ($150mm - $275mm), versus $250 million where the asset just traded/re-financed and the upper bound is if they got $0.00 for the $0.70 of remaining non 1WW which we know will not be the case.

If I'm understanding you correctly, I'm seeing this basically the same way you are:

If you (1) take the math from the last conference call (2) "look through" the $3.14 per share in announced and likely near term distributions and (3) discount the $0.70 per share in other marketed properties by an appropriate amount to account for management's poor track record of estimating sale prices and the time value of money, you are left with (4) a price for One Worldwide Plaza ("1WW") that is significantly discounted. A discount persists even once you adjust the NAV to account for the extended holding period (time value of money).

The kicker is that the above analysis uses the GAAP liquidating accounting that management made such a brouhaha about on the last conference call. Liquidation accounting values 1WW at the price of the recent transaction. If you read the transcript closely, there are three different sources of low hanging fruit: (1) 3 years of additional rental cash flows (2) the money the new ownership structure has allocated to make capital improvements to the building (3) a "transfer tax" that will not have to be paid due to the extended holding period. These sources of low hanging fruit are basically why NYRT management kept referencing a NAV # that was higher than the GAAP liquidation accounting NAV #.

Here an analyst quote from the call's transcript that follows a similar line of thinking:

"....just back on the Worldwide Plaza math, by my numbers, it doesn’t look like you’re assuming a big increase. If you take the $1.725 billion, if you invest about, I guess, 160 to 180 [million dollars] because SL Green will invest as well, that you get to 1.9 billion and then the tax savings – the transfer tax savings, you’re almost to the 2 billion."

BG2008

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Re: NYRT - New York REIT
« Reply #39 on: December 07, 2017, 03:48:56 PM »
What I don't really understand is why anyone would take managements liquidation value seriously when they've not only revised it down multiple times, but they spent a substantial amount of time on the LAST earnings call incessantly telling investors that their "new" liquidation value of $9 and change was not going to change.  Their credibility is zero, to me. Can't imagine why anyone would spend time on this here when there are plenty of other opportunities out there.

I hear you, but every sale de-risks that number, no?

the end goal is to be in OWW at a discount to where SL Green bought it. Right now if they get $3.84 ($3.14 of which is contracted) from remaining non OWW then I get to about $1.5 billion for 1WW compared to where it just traded ($1.7B) which was a disappointing print and is for a "value add" price rather than trophy / stabilized. The appeal to me is to hopefully get a highly leveraged stake in OWW at a discount to where credible operators just bought the thing when they were one of a few (if not the only bidders) after a slowdown in NY RE.

The eventual value of that levered and illiquid stub is obviously very volatile/dependent on the re-positioning and NYC RE market a few years from now. Illiquidity of the remaining stub doesn't bother me. I want to own that stub to have levered exposure to the asset's re-positioning at a discounted price, for a small chunk of my portfolio.  That's the trade in my view. If you buy that thing for $1.00 and they are saying it's throwing off 42 cents over the next 4 years (implying a 10 ish % cash on cash for a big NYC building) that seems decent.

Not amazing or anything, but I think a good risk/reward that is on offer because this is bombed out by the loss of credibility/extension of event driven hedge funds timeline and blowing up of the IRR spreadsheets.

Assuming the $3.14 in contracted sales go through, then you are paying $0.94 - $1.64 for 1/2 of 1WW ($150mm - $275mm), versus $250 million where the asset just traded/re-financed and the upper bound is if they got $0.00 for the $0.70 of remaining non 1WW which we know will not be the case.

If I'm understanding you correctly, I'm seeing this basically the same way you are:

If you (1) take the math from the last conference call (2) "look through" the $3.14 per share in announced and likely near term distributions and (3) discount the $0.70 per share in other marketed properties by an appropriate amount to account for management's poor track record of estimating sale prices and the time value of money, you are left with (4) a price for One Worldwide Plaza ("1WW") that is significantly discounted. A discount persists even once you adjust the NAV to account for the extended holding period (time value of money).

The kicker is that the above analysis uses the GAAP liquidating accounting that management made such a brouhaha about on the last conference call. Liquidation accounting values 1WW at the price of the recent transaction. If you read the transcript closely, there are three different sources of low hanging fruit: (1) 3 years of additional rental cash flows (2) the money the new ownership structure has allocated to make capital improvements to the building (3) a "transfer tax" that will not have to be paid due to the extended holding period. These sources of low hanging fruit are basically why NYRT management kept referencing a NAV # that was higher than the GAAP liquidation accounting NAV #.

Here an analyst quote from the call's transcript that follows a similar line of thinking:

"....just back on the Worldwide Plaza math, by my numbers, it doesn’t look like you’re assuming a big increase. If you take the $1.725 billion, if you invest about, I guess, 160 to 180 [million dollars] because SL Green will invest as well, that you get to 1.9 billion and then the tax savings – the transfer tax savings, you’re almost to the 2 billion."

Foreign Buffet,

Just wondering what your thoughts on the LTV of 60% and how that affects outcomes.  If the building got sold for $2.0 bn or $2.3 bn, it's a great outcome.  But if it got sold for $1.7bn, then there is only $500mm to be split between SLG and NYRT.  Net of a 3-6% sales cost (commission, closing cost, etc), there's less than $250mm net to NYRT.  Wendy and executives will be paid, so some additional G&A will have to be accounted for.  Four years stuck in a non-trade 60% LtV RE stub demands a high IRR.  A good way to think of this is that if you were pitched a private RE project, what kind of IRR would you demand to compensate for the risk.   I think 15-20% is probably the right number.