American Financial Realty Trust
jumped more than 5% Friday after the real estate investment trust gave hints that it may be exploring a sale of the company or some other measure to jumpstart shares, which have been steadily dropping over the past year.
The company, which owns properties leased to banks and other financial institutions, canceled its scheduled meetings at the National Association of Real Estate Investment Trust's conference in New York next week. American Financial gave the reason of "being engaged in a continuing review of a variety of measures to enhance our financial performance, cash flow and shareholder returns," according to a research note from Bank of America analysts.
American Financial shares rose 53 cents to $10.48 Friday, though the stock is still way off its 52-week high of $16 set last June. The firm's chairman is Lewis Ranieri, who built up the mortgage bond trading business at the former Salomon Brothers.
"We believe this is a sign AFR may be pursuing a significant strategic event," the Bank of America analysts wrote. "Yesterday AFR Chairman Lewis Ranieri opened AFR's annual shareholder meeting by declaring he is `disappointed with the stock price' and the `status quo should not be tolerated by shareholders and will not be tolerated by
the board.' He highlighted that acquisitions, dispositions, capital structure, or `other possible strategies' were being evaluated, potentially within `weeks.'"
In the letter canceling next week's NAREIT meetings, American Financial said that it is looking at a variety of moves, but it is premature to discuss details.
The Bank of America analysts noted that while they believe a strategic alternatives is a potential outcome, others possibilities are a major asset sale, joint venture formation, and a dividend cut.
"We remind investors that based on recent similar events, a company's cancellation of NAREIT meetings does not necessarily mean a major strategic event is imminent," Bank of America wrote.