Please ensure Javascript is enabled for purposes of website accessibility

Why New York REIT Stock Dropped 11%

By Jordan Wathen - May 11, 2017 at 12:37PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company disclosed an estimated liquidation value of $9.25 in its first-quarter earnings report.

What happened

Shares of New York REIT (NYRT) are down about 11% as of 11:30 a.m. EDT on Thursday after the company reported first-quarter earnings complete with an estimated liquidation value for its shares. 

So what

The real estate investment trust is currently in the process of liquidating its portfolio of commercial real estate in New York City. In its first-quarter 2017 earnings report, it said that its assets would result in liquidating distributions of $9.25 per share. 

New York City

Image source: Getty Images.

Its estimate included assets and liabilities, as well as future revenue and expenses incurred through liquidation. The actual value of its assets and future profits can't be determined with any certainty, nor is it known how long it will take to liquidate the company's portfolio.

The company reported having roughly $2.8 billion in assets against $1.2 billion in total liabilities at the end of the first quarter. Any difference between what New York REIT believes its assets to be worth and what it actually realizes in a sale will be magnified by its liabilities.

Now what

The decline in the share price values New York REIT at a modest 6.5% discount to its estimated liquidation value per share. Even after today's drop, investors will need a rather quick liquidation, or a liquidation that values its assets higher than it currently expects, in order to generate a meaningful return on their investment. 

 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

New York REIT Stock Quote
New York REIT
NYRT

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
344%
 
S&P 500 Returns
120%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.