NEW YORK, Oct. 19 /PRNewswire/ -- Beck Street Capital, a private New York City-based real estate investment firm, today reported that it holds 2,910,812 shares, in Realty Finance Corporation (Pink Sheets: RTYFZ), representing an approximate 9.4% ownership stake. The shares were purchased from September through December 2009, as a long term investment.
Earlier this year, representatives of Beck Street Capital met with Realty Finance management, including its acting Chief Executive Officer Douglas Eby, and discussed its concerns that Realty Finance stock is significantly undervalued, and that unlocking such inherent value is unlikely given the current course of management which is plagued with operating challenges such as severely limited cash flows and an inability to execute any property level business plan that might drive asset recovery or growth.
During this meeting, representatives of Beck Street Capital also presented a proposal outlining several initiatives designed to address these concerns and to grow shareholder value. As noted some are at the expense of existing management initiatives which seem designed to maintain the status quo. The proposals are designed to reduce overhead and position the Company for growth including:
- A complete Board of Director's reorganization, given remaining Board members are considered to be responsible for many of the problems facing the organization today;
- Creating a new entity, managed by Beck Street, to assume direct management control of Realty Finance, given that it is effectively without any management at this time, other than an acting CEO and CFO, an assistant in the accounting department and an investor relations officer;
- Beck Street would forgo receiving any customary management fees, until Realty Finance is on a more solid financial footing; and
- Relocating Realty Finance's headquarters to one of Beck Street's existing offices in Connecticut or New York City -- at no cost to Realty Finance.
Kevin Comer, Senior Managing Director of Beck Street Capital, today issued the following statement, "Our interest in Realty Finance is due to our ongoing commitment to unlocking shareholder value and expertise with long-term ownership and value maximization strategies within the real estate industry. However, our proposals were summarily rejected without sufficient explanation. Appropriately handling these aforementioned issues as well as the multitude of troubled and non-performing loans within Realty Finance's portfolio will involve multiple simultaneous foreclosure actions as well as significant and immediate on the ground operating expertise, neither of which is remotely possible with Realty Finance's current resources. Further, Realty Finance recently postponed its annual shareholder meeting twice, and finally canceled it altogether, due to an inability to obtain a quorum. Additionally, as of October 18, 2010, its shares were trading below $0.03."
Mr. Comer added, "As one of its largest shareholders, Beck Street has a strong vested interest in the performance of Realty Finance. At the present time, we believe Realty Finance's market price reflects a lack of confidence in the company's business strategy, its Board of Directors and the management team. Despite approximately $1.1 billion of total assets as of December 31, 2009, Realty Finance has virtually no access to cash for working capital purposes and the public market is attributing almost no value to its business. Further, we believe that an immediate strategic realignment is necessary to ensure Realty Finance's survival and strongly recommend that their Board of Directors revisit our proposals and re-engage in proactive conversations."
About Beck Street Capital
Beck Street Capital is a private real estate investment firm headquartered in New York City. Formed in 2000, Beck Street Capital invests in high value-added, mixed-use investment properties in dense urban locations with high barriers to entry. Beck Street invests in a number of asset classes, including office, residential and retail, and has successfully completed value creation strategies that include retail repositioning, residential condominium conversion, and asset redevelopment. For more about Beck Street, visit www.beckstreetcapital.com.
SOURCE Beck Street Capital