The company’s CEO is charged with dismantling a 4.4 million-square-foot portfolio amid a cooling market
Wendy Silverstein (Photos by Sasha Maslov)
Four months after New York REIT started liquidating its holdings, its first-quarter earnings call turned hostile. The company — which had been dogged by shareholder disputes, lackluster returns and scandals for the better part of three years — finally had a plan to recoup cash by selling off its trophy assets, but some investors and analysts expressed alarm about how it was all playing out.
The real estate investment trust’s newly minted CEO, Wendy Silverstein, estimated that the sale of the company’s assets would render $9.25 per share — $1.75 less than predicted shortly before she came on board. And some analysts on the call questioned whether NYRT’s pending sale of One Worldwide Plaza, a 1.8-million-square-foot trophy Manhattan office tower, would fall short.
Andrew Walker, of Rangeley Capital, told The Real Deal that some shareholders expected the property to fetch as much as $1.9 billion. But rumors have recently surfaced that RXR Realty and SL Green Realty are the two top bidders and that they’ve only offered $1.7 billion. Walker — who said the lower number would be a “massive disappointment” — argued, however, that Silverstein can’t be blamed for the cards she was dealt.
“She had a good reputation coming in, and I think she’s handled a really bad situation well,” Walker told TRD last month. “You can’t fault her for coming into a situation where everyone wants $11 per share, and then she canvasses the market and the best she can get is $9.”
In February, the REIT’s board appointed Silverstein — a 17-year veteran of Vornado Realty Trust — as CEO. But unlike most chief executives, the 56-year-old structured-finance expert was charged with dismantling the company rather than growing it. Now, not only is she responsible for liquidating NYRT’s 4.4 million-square-foot commercial portfolio, she is also expected to ensure that shareholders are paid back an estimated $1.55 billion when all is said and done.
It’s a complicated undertaking and not one that all high-level real estate executives would want. It requires unloading 19 properties (at maximum prices) in a market that’s cooled drastically in the last year. In 2017’s second quarter, Manhattan investment sales plummeted 60 percent year-over-year to $13.8 billion. And she has the added challenge of unloading those assets under the dark cloud cast by NYRT’s previous affiliate American Realty Capital Partners, whose former chief financial officer, Brian Block, was convicted in June of misleading shareholders about the financial health of the company.
Nonetheless, Silverstein — who ended her run at Vornado as the company’s highest-ranked female — sought out the job. She said it harks back to her days restructuring bad loans at Citibank during the commercial real estate collapse in the early 1990s.
“While people were streaming out of the door of real estate, to get away from it, I went into the fire,” she told TRD during an interview in her Midtown office last month. “If I could come in and help, then I’d be a hero.”
NYRT’s troubles began in October 2014, when news of an accounting scandal surfaced at American Realty Capital, led by former REIT czar Nicholas Schorsch. The news sent stock prices at NYRT tumbling and set off a months-long battle over the REIT’s leadership.
Schorsch resigned from NYRT and 12 other affiliated companies, and Michael Happel, previously president of NYRT, was appointed its CEO.
In May 2016, NYRT and Maryland-based JBG Companies announced that they would merge to form a new REIT with $8.4 billion in assets.
But that news did not sit well with some investors, who argued that it didn’t create enough value for shareholders and that the REIT had let better offers slip away.
NYRT’s stock immediately dropped more than 8 percent, to $9 per share, and activist investors began protesting the move. Leading the charge were Winthrop REIT Advisors’ Michael Ashner and developer Steve Witkoff, who fired off an angry letter to the board opposing the deal and instead lobbied it to elect five new members.
The following month, Ashner asked Silverstein to join the replacement board. She declined, saying she had no interest in joining a proxy slate. But when Ashner and Witkoff proposed having Winthrop take over as the REIT’s external advisor, meaning that the company would need a new CEO, Silverstein changed her tune.
“I literally raised my hand and volunteered,” Silverstein said.
Though she was surprised the board ultimately decided to bring Winthrop on in December, given Ashner’s aggressive approach, she was suddenly in a position to head up a public company — “a bucket-list item.”
“She was ready to be the boss,” said Michael Fascitelli, former CEO of Vornado, who worked with Silverstein for more than a decade. “It wasn’t a perfect situation. It was a little messy, but she’s not afraid of complexity.”
For Ashner and Witkoff, Silverstein seemed an ideal choice. She had an institutional pedigree and was experienced in responding to shareholders, Witkoff said.
“We wanted a real pro at the helm every single day,” he said. “We felt that it would’ve been irresponsible for us to not bring in someone of her caliber on it.”
Wendy, a history
Silverstein grew up in Middletown, N.J., the youngest of three children. Her father was an electronic-warfare expert for the government — his work was classified, and they didn’t talk about the specifics of his job at home. Her mother had a master’s degree in special education.
After graduating from the Wharton School at the University of Pennsylvania — with both her undergrad and master’s degrees — she started working at Citibank’s leveraged capital group in 1986. At the time, the sector was booming: Between 1980 and 1989, the U.S. saw more than 2,000 leveraged buyouts, worth some $250 billion, according to economists Sheridan Titman and Tim Opler in a 1993 article.
“The right answer to every deal you saw was ‘yes’,” Silve上海夜网论坛