Trinity Place Holdings Inc. (TPHS) is a real estate holding, investment, development, and asset management company that has undergone a significant transformation in recent months. The company's primary business now centers around owning over $600 million in federal, state, and local net operating loss carryforwards (NOLs) and a variety of intellectual property assets focused on the consumer sector, as well as a 95% interest in TPHGreenwich, a joint venture that holds the company's real estate assets and related liabilities.
In the first quarter of 2024, Trinity Place Holdings reported quarterly revenue of $2.4 million, a significant decrease from the $14.7 million generated in the same period of the prior year. This decline was primarily attributable to the Recapitalization Transactions that closed on February 14, 2024, which resulted in the transfer of the company's real estate assets and related liabilities to TPHGreenwich. The company's quarterly net income attributable to common stockholders, however, increased to $8.1 million, compared to a loss of $6.2 million in the first quarter of 2023, largely due to a $21.0 million gain recognized on the contribution of assets to the joint venture.
Trinity Place Holdings' annual financial performance has also been impacted by the Recapitalization Transactions. For the full year 2023, the company reported annual revenue of $33.6 million, a decrease from the $52.9 million generated in the prior year. Annual net income for 2023 was a loss of $39.0 million, compared to a loss of $28.2 million in 2022. The company's annual operating cash flow was negative $5.5 million, and its annual free cash flow was negative $19.8 million.
Business Overview
Trinity Place Holdings' primary business is now focused on managing the assets and liabilities of TPHGreenwich, a joint venture in which the company holds a 95% interest. TPHGreenwich owns three key real estate properties: 77 Greenwich, a mixed-use development in Lower Manhattan; 237 11th Street, a multi-family apartment building in Brooklyn; and a retail property in Paramus, New Jersey.
The 77 Greenwich property is substantially complete and consists of 90 luxury residential condominium units, 7,500 square feet of retail space, and a 476-seat elementary school. As of March 31, 2024, the company had closed on the sale of 39 residential condominium units, with 50 remaining units to sell as of May 14, 2024. The 237 11th Street property is a 105-unit, 12-story multi-family apartment building, and the Paramus property is a one-story and partial two-story retail building leased to Restoration Hardware.
Risks and Challenges
Trinity Place Holdings faces several risks and challenges as it navigates the post-Recapitalization Transactions landscape. One key risk is the company's reliance on TPHGreenwich for the majority of its revenue, as the joint venture can terminate the Asset Management Agreement with Trinity Place Holdings at any time with or without cause. Additionally, TPHGreenwich and its subsidiaries are subject to significant leverage, which could adversely affect the company's financial condition and results of operations.
The company is also subject to extensive covenants and consent rights under the Stock Purchase Agreement with the Investor, many of which survive indefinitely following the closing of the Recapitalization Transactions. This could limit the company's flexibility and its ability to execute on strategic initiatives.
Furthermore, Trinity Place Holdings is subject to risks associated with the New York City residential condominium market, including adverse trends and general economic and business conditions that could impact the value and sales of the residential condominium units at 77 Greenwich.
Liquidity
As of March 31, 2024, Trinity Place Holdings had total cash and restricted cash of $4.0 million, of which approximately $285,000 was cash and cash equivalents, and approximately $3.7 million was restricted cash. The company believes that it will have sufficient cash and cash equivalents to fund its operations for the next 12 months, assuming TPHGreenwich does not terminate the Asset Management Agreement.
In connection with the Recapitalization Transactions, the company's Corporate Credit Facility, 77G Mortgage Loan, and 77G Mezzanine Loan were amended and extended, and were transferred to TPHGreenwich.
Outlook
Trinity Place Holdings has not provided any formal guidance or outlook for the future. However, the company has stated that it continues to focus on exploring a range of strategic and financing alternatives to maximize stockholder value, including engaging with parties that have expressed interest in the company's attributes and assets and may see it as a potential vehicle for growth.
The company has engaged Houlihan Lokey and Ackman-Ziff to act as advisors in connection with its strategic review process and to assist in identifying and evaluating potential alternatives, such as securing an equity and/or debt financing, refinancing of existing debt, and/or a sale or merger or reverse merger of the company. There is no assurance that Trinity Place Holdings will be successful in consummating any such strategic transaction on terms or a timeframe acceptable to the company or at all.
Financials
Trinity Place Holdings' financial performance has been significantly impacted by the Recapitalization Transactions, making year-over-year comparisons less meaningful. In the first quarter of 2024, the company reported quarterly revenue of $2.4 million, a decrease from $14.7 million in the same period of the prior year. This decline was primarily due to the transfer of the company's real estate assets and related liabilities to TPHGreenwich.
However, Trinity Place Holdings' quarterly net income attributable to common stockholders increased to $8.1 million in the first quarter of 2024, compared to a loss of $6.2 million in the same period of 2023. This was largely due to the $21.0 million gain recognized on the contribution of assets to the joint venture.
For the full year 2023, the company reported annual revenue of $33.6 million, a decrease from $52.9 million in the prior year. Annual net income for 2023 was a loss of $39.0 million, compared to a loss of $28.2 million in 2022. Trinity Place Holdings' annual operating cash flow was negative $5.5 million, and its annual free cash flow was negative $19.8 million.
The company's financial ratios have also been impacted by the Recapitalization Transactions. As of March 31, 2024, Trinity Place Holdings had a current ratio of 1.94, a quick ratio of 1.94, and a cash ratio of 1.76. The company's debt ratio was 0.15, and its debt-to-equity ratio was 0.34.
Conclusion
Trinity Place Holdings has undergone a significant transformation with the Recapitalization Transactions, which have reshaped the company's business and financial profile. While the company faces several risks and challenges, including its reliance on TPHGreenwich and the leverage within that joint venture, Trinity Place Holdings is now focused on exploring strategic alternatives to maximize shareholder value.
The company's financial performance has been mixed, with quarterly revenue declining but quarterly net income increasing due to the gain recognized on the contribution of assets to the joint venture. Trinity Place Holdings' annual financial results have also been impacted, with decreases in revenue and net income, as well as negative operating and free cash flow.
As Trinity Place Holdings continues to navigate this transitional period, investors will be closely watching the company's progress in identifying and executing on strategic opportunities that could unlock value for shareholders. The company's ability to effectively manage the risks and challenges it faces will be crucial in determining its long-term success.