Empire State Realty Trust Poised To Bear The Full Brunt Of This Storm

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Last week, we published our latest special report, Shareholder activism in Japan. The report highlights the trends that have emerged from the country in recent years, as activism becomes more explicit. The report includes a timeline of key events leading to a greater scope for activism in Japan, and notes Prime Minister Shinzo Abe’s hand in the renaissance of shareholder activism in the country. Since his election in 2012, government-mandated financial and governance reforms have made Japan one of the world’s most shareholder-friendly and best-performing markets, Activist Insight’s Jason Booth notes.

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Q1 2020 hedge fund letters, conferences and more

The report also features an article written by Cas Sydorowitz, global head of M&A and activism at Georgeson; a story detailing activists’ shifts towards strategy, operations, and M&A; and another about the experience of American activists. The number of Japan-based companies publicly subjected to activist demands by U.S. investors hit a record high in 2019 and has kept pace in 2020, despite a pandemic. Download the report to find out more.

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ValueWalk's Raul Panganiban interviews Jim O’Shaughnessy, Chairman, Co-chief Investment Officer, and Portfolio Manager at O’Shaughnessy Asset Management. In this part, Jim discusses the fear and emotional signals created by the reptilian brain. Q1 2020 hedge fund letters, conferences and more That's very cool. For the factor to try to seek the reason why it works, Read More


What We'll Be Watching For This Week

  • How will Dine Brands shareholders vote regarding JCP Investment Management’s proposal to spin off the firm’s IHOP pancake house chain at the meeting today?
  • Will Broadway Financial re-consider The Capital Corps’ $1.75 per share takeover offer after the investor extended its deadline?
  • What will Sherborne Investors do following a second unsuccessful attempt to remove Barclays CEO Jes Staley?

Empire State Realty Trust: Activist Shorts Update

Jonathan Litt’s Land & Buildings said last week that it believes the price of Empire State Realty Trust, owner of the prestigious New York landmark, could move "substantially lower." Noting that revenues for the Empire State Building-owner are being hit from all sides, the real estate-focused activist investor said it has a position in the stock, without saying explicitly that it is short.

Land & Buildings' thesis is that Empire State will lose out from tourism traffic after its observation deck is closed, while rent collection from retail and office tenants was below that of peers in April. Things are unlikely to improve soon, the activist said, with New York City likely oversupplied with office space as major tenants scale back their requirements following a surprisingly successful transition to practically all of their staff working from home, layoffs, and the opening of new sites at Hudson Yards. The hedge fund predicted that rents could fall 15-20% as vacancies tick up.

"The New York Office Market Isn’t Facing ‘Headwinds’ – It’s Facing an Existential Hurricane," a heading in Land & Buildings' report read. "Now in 2020, this existential hurricane has become a Category 5, as NYC is the epicenter for COVID-19 in the United States – and Empire State Realty Trust is poised to bear the full brunt of this storm."

Chart Of The Week

In the period January 1, 2013 - April 30, 2020, both Oasis Capital and Strategic Capital publicly subjected 15 Japan-based companies to activist demands.

Empire State Realty Trust