Shares of New York City REIT (NYSE:NYC) surged after a major shareholder purchased shares worth nearly $2 million. According to a Securities and Exchange Commission (SEC) filing, Nicholas S. Schorsch (who owns over 10% of NYC stock) and affiliates bought 632,911 shares at $3.16 apiece, for an aggregate amount of nearly $2 million, on September 2.
NYC shares surged 16.6% on Tuesday (September 6) following an 8.5% rise on Monday. New York City REIT is a real estate investment trust with a portfolio comprising commercial real estate located within the five boroughs of New York City.
More on the Insider – Nicholas S. Schorsch
Nicholas S. Schorsch is the sole managing member of Bellevue Capital Partners, LLC, which, as per the SEC filing, is the “ultimate controlling person” of New York City Advisors, LLC. Furthermore, New York City Advisors, LLC is the external advisor of New York City REIT.
Aside from the 632,911 shares purchased on September 2, the SEC filing also mentioned 151,194 NYC shares that were issued in connection with the fees earned by New York City Advisors. Note that in a press release, the company disclosed that its external advisor chose to receive stock in lieu of cash for its advisory services.
Meanwhile, Schorsch is also the Chairman, CEO, and co-founder of American Realty Capital, an investment services firm. In 2019, Schorsch, once considered a real-estate mogul, along with another executive of AR Capital LLC, collectively paid over $60 million as part of settlements with the SEC in connection with charges alleging wrongful extraction of millions of dollars in two separate mergers between real-estate investment trusts.
According to TipRanks’ Insider Trading Activity tool, the transaction made by Schorsch and affiliates is the only transaction categorized as an informative buy in NYC shares over the past three months.
TipRanks provides a comprehensive list of daily insider transactions that provides useful insights by tracking the buy or sell transactions made by insiders. For those seeking more information about what stocks insiders are interested in, TipRanks offers a list of hot stocks with either a Very Positive or Positive insider confidence signal.
NYC Board Highlights the Recent Insider Transaction
In a press release, NYC’s board of directors cheered the recent insider transaction. Betty Tuppeny, lead independent director, applauded the $2 million investment made by the external advisor and its affiliates, and believes that it will “enhance the Company’s balance sheet for future operating and capital needs.”
Tuppeny further stated, “The purchase of these shares during a turbulent market is a vote of confidence in both NYC’s business plan and the continuation of the strong operational results NYC achieved in the second quarter.”
Conclusion: Is NYC Stock Worth Buying?
Even after the notable rise over the past two days, NYC shares are down over 62% year-to-date. Investors were disappointed when the company announced in July that it was temporarily suspending its dividends to fund future expenses, essentially leasing commissions and tenant improvement costs. Investors generally prefer REITs for their dividends. The company’s decision to suspend dividends was bound to annoy investors.
While a key insider has shown confidence in the company, it would be prudent for retail investors to be cautious given the ongoing uncertainty.