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Wilshire
Enterprises strategy of changing and strengthening the management team as
well as focusing exclusively on its real estate operations is beginning to
pay off in terms of increased shareholder value
Services
Real Estate Operations
(WOC-AMEX)
Wilshire Enterprises Inc.
921 Bergen Avenue
Jersey City, NJ 07306
Phone: 201-420-2796
Daniel C. Pryor
President and COO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
February 24, 2004
BIO:
Dan Pryor President, Chief
Operating Officer
Dan Pryor joined Wilshire Enterprises, Inc. in May 2004 and became its
President and Chief Operating Officer on July 1, 2004.
Dan's background includes
11 years of investment banking at Salomon Smith Barney Inc. (seven years),
Lehman Brothers Inc. (two years) and Deloitte Corporate Finance (two years).
As an investment banker, he was responsible for executing numerous
transactions including mergers and acquisitions, equity offerings and debt
capital issuance for public and private companies.
Dan’s real estate
experience includes being the Director of Real Estate Development for Bolton
Valley Corporation, a 6,000 acre multi-use development project, and serving
as President of a real estate investment, marketing and management firm. Dan
has acquired and operated rental properties for his own account, and has
developed multi-family vacation homes, a condominium hotel and land parcels
on behalf of Bolton Valley.
In 1988, Dan was a
principal organizer and leader of the Wyoming Centennial Mount Everest
Expedition (“Cowboys on Everest”) which attempted the Irvine-Mallory route
on the North Col of Everest (China). The expedition was featured on Good
Morning America, CNN and National Public Radio’s All Things Considered.
During his high school and college years, Dan worked as a mountaineering,
wilderness and rafting guide for eight summers in Wyoming and Alaska.
Dan graduated from the
Yale School of Management with an M.B.A. in 1993 (Finance) and Middlebury
College with a B.A. in 1984 (English).
Company Profile:
Wilshire is an American Stock Exchange listed corporation engaged primarily
in the acquisition, ownership and management of real estate investments in
the United States including Arizona, Florida, Texas and New Jersey.
CEOCFOinterviews: Mr. Pryor, what attracted you to Wilshire
Enterprises?
Mr. Pryor: “What attracted me to Wilshire is
that historically this company was perceived as under managed and therefore
was undervalued by the capital markets. I thought those two issues could be
corrected by changing the management team and focusing on repositioning some
of the assets, and this gave us an opportunity to create shareholder value.”
CEOCFOinterviews: How have you started to do that and how will you
continue?
Mr. Pryor: “The first thing is sharing
information with investors. There was never an opportunity previously for
investors to understand what the company owns and controls and what it could
do with these assets. Investors had a tough time valuing the company, so in
October we did an investor presentation that we currently have on our
website. We are receiving many phone calls from investors about the
properties and what we plan to do to increase net asset value.
The four key things that we are
focused on are as follows: First, increase cash flow from operations.
Secondly, unlock value by monetizing or repositioning assets to increase the
net asset value of the company. Third, we are looking to get big and that is
either by merging with other companies, acquiring other companies or merging
our company with somebody else with the other company being the acquirer,
all of this being subject to our board of directors and shareholders.
Fourth, we are also looking at investing in assets, although we are very
price sensitive.”
CEOCFOinterviews: Is there a common thread with the properties that
you have now?
Mr. Pryor: “The common thread with our
properties is that they are geographically diversified and mostly
multi-family. The geographic diversification is principally in Arizona,
Texas, and New Jersey. All of those locations have good demographics, good
growth and good economy.”
CEOCFOinterviews: Is that by design?
Mr. Pryor: “I don’t think it was necessarily by
design. The common thread is that all of them we believe have the
opportunity to increase in value as we focus on a better living experience
or a better working experience at that property. Going forward, the common
thread will be most likely focusing on multi-family properties or niche
categories of multi-family such as senior apartments. However, in the right
situation we would consider alternative asset classes.”
CEOCFOinterviews: What is the appeal in multi-family properties, and
will you tell us about some of the multi-family properties that you operate
now?
Mr. Pryor: “Most of our properties are well
located. We hear this from realtors calling us saying they have excellent
location. We are trying to improve the residential experience. As a tenant
arrives at a property, whether they are an existing or a prospective
resident, eighty percent of the sale process occurs when they arrive at the
property. This actually happens when they arrive at the front gate, go
through the community center and see the pool and the amenities and see a
happy staff. The initial experience of the people looking at the property is
a positive one. Resident surveys show that our staff and property management
company is doing a good job. We are focusing on the details of the property
such as enhancing how they look ”
CEOCFOinterviews: How do you work this into your budget?
Mr. Pryor: “Historically, our properties have
run about a million dollars of capital expenditures per year. When you look
at the years from 2000 to 2002, the capx average is about $1 million. In
2003 and 2004 when we significantly invested in our properties, the
company’s capx went up considerably; to over a $1.6 million in 2003 and we
are budgeting about a $1.5 million for 2004. Over the past two years we have
done many key things such as repaving driveways and redoing tennis courts to
make the property look more attractive.”
CEOCFOinterviews: What areas are you looking to change?
Mr. Pryor: “There are a couple of opportunities
where we can change. We have one property that we are beginning to explore
how to significantly increase its value and this is something that we are
just beginning to fully evaluate and have not reached any conclusions. We’ve
arrived at the approach that says that this property may be worth much more
as land than it is currently as a rental operation. It is an outstanding
location and in this area developers are doing condominiums, and fancy
multi-family properties. There is an opportunity not for investment
property, to try to reposition it, but to enable some developer to go ahead
and build a larger more expensive property there, all for the benefit of the
shareholders.”
CEOCFOinterviews: You wanted to elaborate on a few points.
Mr. Pryor: “The first is our primarily
objective to increase cash flow from operations. I will give two examples
and they both happen to be commercial properties located in Arizona. One is
the Tempe Corporate Office Building. It is an attractive building, great
location, with unlimited access to the highway. There is, we believe, a good
opportunity to improve occupancy of that property. Here are some of the
things that we have done; for one, it has never had a professional leasing
agency. We have hired a professional leasing firm that has now listed this
property through the multiple listing services that are available in that
area. We are getting more traffic with people looking at the buildings. We
have invested in the building; painted the exterior, we did all of the
bathrooms, which probably had not been done in twenty years. We have done
hallways, changed the wallpaper, and light fixtures. It is a much more
attractive living and working experience. We have improved the building and
made it more accessible to the brokerage community. The building is at
occupancy comparable to other buildings, which are similar in this area.
Another example is that we have a shopping center in Mesa, which too never
had a professional leasing agent. We hired a leasing agent. The property has
general retail in front of it in one large L-shaped building. The two
buildings in the back of the property are all medical including a tenant
from a well-known chain. There is vacancy in all of these buildings and
we’ve hired professional leasing agents, one that specializes in retail and
another that specializes in medical leasing. We see increased traffic. The
NOI of the year 2003 for this shopping center was about $350,000 and we
believe that would increase if the occupancy can increase above the current
approximate percentage of 50%.”
CEOCFOinterviews: What precipitated the wakeup call for Wilshire?
Mr. Pryor: “That is an interesting question.
The wakeup call occurred a couple years when the chairwoman and CEO of the
company, Sherry Wilzig Izak announced at a shareholders annual meeting that
the Board would look at any alternatives possible to maximize shareholder
value. You can draw a direct line between that bold comment, that conviction
do everything possible – to everything that the company has done up until
today. They hired an investment bank to conduct a strategic review and I was
the banker involved in doing the strategic review. We coordinated the
Board’s deliberation to sell its oil and gas; the board of directors
announced this action in early 2003, in March or April. During the summer a
variety of people came and said, “hey we would like to buy the whole
company.” The board of directors responded and not only put up the oil and
gas assets for sale, but also the whole company.
The board has announced subsequently that it seriously negotiated bids to
buy the whole company; but terms proposed by a potential buyer to buy the
whole company were not the type that could be accepted by almost any board
of directors. So they proceeded and sold the oil and gas. At that point they
decided to have a change in management and they were kind enough to make
that offer to me to lead the new management team. The change was intended to
result in increased shareholder value.
The board was also looking at the
capital market issue; one where the small market cap was not heavily traded.
At that point, back when the board made the decision selling oil and gas, we
were a small company with two different business sections, oils and gas and
real estate. It is very difficult in today’s capital markets for a company
to be traded well when it has two different segments that really aren’t
related at all; particularly when you’re a small market cap.”
CEOCFOinterviews: Do you have rural land as well?
Mr. Pryor: “Yes we do have rural land. A lot of
our assets, -- one can see that from the investor presentation -- aren’t
generating cash. They are valuable and create net asset value for the
company and shareholders, but they don’t necessarily show up on the income
statements, except really as a negative impact. In regards to the previously
discussed objective of increasing the net asset value of the Company, one
example is to either sell or trade these assets to cash flow generating
assets of other types.”
CEOCFOinterviews: How is the macro economic situation working for
you?
Mr. Pryor: “Generally, it is working fairly
positively. We have seen from all of our properties increased traffic in
regard to residents looking for places to live or work. The real estate
industry has had a tough pricing environment in the past two to three years.
Everyone that we talked to is reporting a slight improvement; and we see the
beginning of increased occupancies and better pricing.”
CEOCFOinterviews: There are a fair number of properties that you are
looking to get off of your portfolio; is that correct?
Mr. Pryor: “In regard to pending sale, we
announced that Schalk Station, which is a property near Princeton, New
Jersey, is to be closing at the end of December 2004. That is on target.
With other properties, we are focused in making sure we reposition them or
optimize the value we can get out of them. There is a Georgia property,
which we could sell at a liquidated value and would benefit our shareholders
if we found the right buyer and the right transaction. I think we would say
the same thing for the Perth Amboy property as well; some work and some
investment in the building we will optimize the proceeds for the
shareholders.”
CEOCFOinterviews: What is ahead and what do you see for the company?
Mr. Pryor: “We went down a double path per the
guidance of the board. One the one hand, we wanted to reposition our assets,
increase the net asset to value, increase the cash flow and if possible
target an acquisition of another company to increase the size of Wilshire.
With a good merger, we could potentially double the price of the market cap
and with another merger we could potentially double the market cap again.
That is something that the board is interested in pursuing and it is part of
our job description to go and call on other companies and seeing if they are
interested in a merger combination. Again, it doesn’t matter whether we are
the acquirer or we are acquired, my background in investment banking has
helped in this regard. The other path is if we can’t effectively make the
company larger, get a nice market cap or pay a nice dividend to
shareholders, then the situation may exist, after we have done all the
fixing and trimming that we set out to do, where the board may decide to put
the company up for sale.”
CEOCFOinterviews: How much stock is available for shareholders?
Mr. Pryor: “Fully diluted shares outstanding is
approximately 8 million shares. One shareholder owns approximately 1.6
million shares or about 22%.”
CEOCFOinterviews: Why is it a good time for investors to be
interested in Wilshire, and what should they know about the company they
might not see when they first look?
Mr. Pryor: “I’m hoping that with the investor
presentation, our growth strategy and valuation potential will be coming
through. Clearly, people could not value the various assets previously. Some
of the investors might be traveling around the country to look at our
various properties for the type of value we have and they will see that even
at the current price of roughly $6.00 a share, that there is some
opportunity that they might appreciate there.”
CEOCFOinterviews: Do you have a budget and a plan on getting news out
to the investors on a continual basis?
Mr. Pryor: “We do have a budget, but at this
point we are probably not doing quarterly presentations. I don’t think our
timing and our news events are that quick where they would happen every
three months, so I think six months updates are key and more appropriate. I
should not we are very thinly staffed here at corporate and I think it is
better from a shareholder’s perspective to be focused on delivering what we
have promised to deliver. In regards to a budget, we will probably not do a
forecast on a quarterly basis but we will be reporting 2004 results probably
in March or April of 2005.”
CEOCFOinterviews: In closing, as president and COO, what is your
principal focus and responsibilities?
Mr. Pryor: “My responsibility is for all
elements of the business except for the financial reporting. One of the
first things we did is hire an excellent CFO, Seth Ugelow, who has a great
background in both control and SEC reporting. My principal focus when I
think of a week and what I spend the most time doing is as follows: First,
is just getting bigger, which is talking to other companies, engaging in
dialog and continuing with any possibilities to get bigger through
acquisition or selling the company through acquisitions. Secondly, it is
looking at real estate assets and understanding the opportunity out there,
so if the market turns and the prices become more appropriate for what we
would invest shareholders money into, we will be in position to capitalize
on those situations. The other fifty percent of my time is focusing on
increasing the net asset value of the company and it is looking at the
assets that aren’t generating cash flow and making sure that we are
optimizing every situation. For example, one 17-acre parcel of land that we
have is connected to a 32-unit condominium complex. That land will be worth
much more if we have a sewer permits for it, which I think we can get right
from our existing property. I mentioned our Perth Amboy property, which is a
10 story 75,000 square foot office building in Perth Amboy, New Jersey. It
is slated for sale and it needs to be improved upon, invested in and made
more attractive to really get the most money out of that.”
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