UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 20172019

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____________ to _____________

Commission File Number 001-08546

TRINITY PLACE HOLDINGS INC.

(Exact Name of Registrant as Specified in Its Charter)

(212) 235-2190

(Registrant’s Telephone Number, Including Area Code:(212) 235-2190Code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”,filer,” “smaller reporting company”,company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer¨    Accelerated Filerx    Non-Accelerated Filer¨

Smaller Reporting Company¨    Emerging Growth Company¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨ Nox

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yesx No¨

As of November 8, 2017,2019, there were 31,451,79631,911,804 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

INDEX

PAGE NO.

PART I.        FINANCIAL INFORMATION

Item 1. Financial Statements

TRINITY PLACE HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)

See Notes to Condensed Consolidated Financial Statements

TRINITY PLACE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

See Notes to Condensed Consolidated Financial Statements    

TRINITY PLACE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKOLDERS' EQUITY

(In thousands)

See Notes to Condensed Consolidated Financial Statements

TRINITY PLACE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF STOCKOLDERS' EQUITYCASH FLOWS

(In thousands)

See Notes to Condensed Consolidated Financial Statements

TRINITY PLACE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

See Notes to Condensed Consolidated Financial Statements

Trinity Place Holdings Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2019

Note 1 – Business

Overview

Trinity Place Holdings Inc. (“Trinity,” “we”, “our”,“we,” “our,” or “us”) is a real estate holding, investment and asset management company. Our business is primarily to acquire, invest in, own, manage, develop or redevelop and sell real estate assets and/or real estate related securities. Our largest asset is currently a property located at 77 Greenwich Street in Lower Manhattan (“77 Greenwich”) in Lower Manhattan.. 77 Greenwich iswas a vacant building that was demolished and is under development as a mixed-use project consisting of a residential condominium tower, that also includes plans for retail space and a New York City elementary school. We also own a retail strip centernewly built 105-unit, 12-story multi-family property located at 237 11^th Street, Brooklyn, New York (“237 11^th”), acquired in West Palm Beach, Florida, a property formerly occupied by a retail tenant in Paramus, New Jersey,May 2018, and, through a joint venture, a 50% interest in a newly constructedbuilt 95-unit multi-family property, known as The Berkley, located inat 223 North 8^th Street, Brooklyn, New York.York, as well as a retail strip center located in West Palm Beach, Florida, and a property occupied by a retail tenant in Paramus, New Jersey. We continue to evaluate new investment opportunities.

We also control a variety of intellectual property assets focused on the consumer sector, a legacy of our predecessor, Syms Corp. (“Syms”), including our on-line marketplace at FilenesBasement.com, our rights to the Stanley Blacker® brand, as well as the intellectual property associated with the Running of the Brides® event and An Educated Consumer is Our Best Customer® slogan. We alsoIn addition, we had approximately $230.3$245.4 million of federal net operating loss carryforwards (“NOLs”) at September 30, 2017.2019, which can be used to reduce our future taxable income and capital gains.

Trinity is the successor to Syms, Corp. (“Syms”), which also owned Filene’s Basement. Syms and its subsidiaries filed for relief under the United States Bankruptcy Code in 2011. In September 2012, the Syms Plan of Reorganization (the “Plan”) became effective and Syms and its subsidiaries consummated their reorganization under Chapter 11 through a series of transactions contemplated by the Plan and emerged from bankruptcy. As part of those transactions, reorganized Syms merged with and into Trinity, with Trinity as the surviving corporation and successor issuer pursuant to Rule 12g-3 under the Exchange Act. On or about March 8, 2016, a General Unsecured Claim Satisfaction occurred under the Plan. On March 14, 2016, we made thecorporation. We completed our final Majority Shareholder payment (as defined in the Plan) to the former Majority Shareholder in the amount of approximately $6.9 million. Together these satisfied our remaining payment and reserve obligations under the Plan. Plan in March 2016.

On January 18, 2018, Syms and certain of its subsidiaries (together, the “Reorganized Debtors”) filed with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) a motion (the “Motion”) for entry of a final decree (the “Final Decree”) (i) closing the chapter 11 cases of the Reorganized Debtors; (ii) terminating the services of the claims and noticing agent; and (iii) retaining the Bankruptcy Court’s jurisdiction as provided for in the Plan, including to enforce or interpret its own orders pertaining to the chapter 11 cases including, but not limited to, the Plan and Final Decree. On the same date, the Reorganized Debtors filed a Final Report in support of the Motion. On February 6, 2018, the Bankruptcy Court entered the Final Decree pursuant to which the chapter 11 cases of the Reorganized Debtors were closed.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include our financial statements and the financial statements of our wholly-owned subsidiaries.

The accompanying unaudited condensed consolidated interim financial information has been prepared according toalso conform with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. Our managementManagement believes that the disclosures presented in these unaudited condensed consolidated financial statements are adequate to make the information presented not misleading. In management’s opinion, all adjustments and eliminations, consisting only of normal recurring adjustments, necessary to present fairly the financial position and results of operations for the reported periods have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. The accompanying unaudited condensed consolidated interim financial information should be read in conjunction with our December 31, 20162018 audited consolidated financial statements, as previously filed with the SEC in our 20162018 Annual Report on Form 10-K (the “2016“2018 Annual Report”), and other public information.

We consolidate a variable interest entity (the “VIE”) in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. As of September 30, 2017, we had no VIEs.

We assess the accounting treatment for joint venture investments. This assessment includes a review of the joint venture or limited liability company agreement to determine which party has what rights and whether those rights are protective or participating. For potential VIEs, we review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity's economic performance. In situations where we and our partner approve, among other things, the annual budget, receive a detailed monthly reporting package, meet on a quarterly basis to review the results of the joint venture, review and approve the joint venture's tax return before filing, and approve all leases that cover more than a nominal amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights that result in shared power of the activities that most significantly impact the performance of the joint venture. Our joint venture agreements may contain certain protective rights such as requiring partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan.

Fair value is defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

Assets and liabilities disclosed at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are defined by ASC 820-10-35, are directly related to the amount of subjectivity associated with the inputs to the fair valuation of these assets and liabilities. Determining which category an asset or liability falls within the hierarchy requires significant judgment and we evaluate our hierarchy disclosures each quarter.

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Valuations based on unobservable inputs reflecting management’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

ASC 740-10-65 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-65, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740-10-65 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased other disclosures. As of both September 30, 20172019 and December 31, 2016,2018, we had determined that no liabilities are required in connection with unrecognized tax positions. As of September 30, 2017,2019, our tax returns for the prior three years are subject to review by the Internal Revenue Service.

On December 22, 2017, the President of the United States signed into law P.L. 115-97, commonly referred to as the U.S. Tax Cuts and Jobs Act (the “TCJA”). The TCJA modified several provisions of the Internal Revenue Code related to corporations, including a permanent corporate income tax rate reduction from 35% to 21%, effective January 1, 2018. See Note 9 – Income Taxes for additional detail on our accounting for income taxes, including additional discussion on the enactment of the TCJA.

We are subject to certain federal, state and local income and franchise taxes.

Recent Accounting PronouncementsStandards Updates

In February 2017,August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-05, Other Income-Gains2018-13, “Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This amendment removed, modified and Losses fromadded the De-recognition of Nonfinancial Assets (Subtopic 610-20) to add guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. ASU 2017-05 reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. ASU 2017-05 isdisclosure requirements under Topic 820. The changes are effective for annual reporting periodsfiscal years beginning after December 16,15, 2019. Early adoption is permitted for the removed or modified disclosures with adoption of the additional disclosures upon the effective date. We have not yet adopted this new guidance and do not expect a material impact on our financial position, results of operations or cash flows when the new standard is implemented.

In August 2017, including interim reporting period within that reporting period.the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities.” The amendments in this standard permits more flexibility in hedging interest rate risk for both variable-rate and fixed-rate financial instruments. The standard will also enhance the presentation of hedge results in the financial statements. The adoption of ASU 2017-05 isthis guidance, effective January 1, 2019, did not expected to have a material impact on our consolidated financial statements.position, results of operations or cash flows.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The guidance clarifies the definition of a business and provides guidance to assist with determining whether transactions should be accounted for as acquisitions of assets or businesses. The main provision is that an acquiree is not a business if substantially all of the fair value of the gross assets is concentrated in a single identifiable asset or group of assets. Upon the adoption of ASU No. 2017-01, we evaluate each acquisition of real estate or in-substance real estate to determine if the integrated set of assets and activities acquired meet the definition of a business and need to be accounted as a business combination. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:

An acquired process is considered substantive if:

Generally, we expect that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

In February 2016, the FASB issued ASU No. 2016-02, Leases.“Leases.” ASU 2016-02 outlines a new model for accounting by lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, with the distinction between operating and direct financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard discussed above. We have no sales-type leases. As lessee, we are party to variousan office leaseslease with a present value of future payment obligations aggregating $3.2of $2.4 million at September 30, 2017as of January 1, 2019 (see Note 8 - Commitments) for which, and as such we expect to record right of userecorded right-of-use assets and corresponding lease liabilities upon the adoption of ASU 2016-02. The new guidance also requires that internal leasing costs be expensed as incurred, as opposed to capitalized and deferred. We do not capitalize internal leasing costs. ASU 2016-02 will also require extensive quantitative and qualitative disclosures and is effective beginning after December 15,on January 1, 2019 in this amount. In July 2018, but early adoption is permitted.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive2018-11, “Leases (Topic 842) – Targeted Improvements,” which provides an optional transition method of applying the new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, but will apply to reimbursed tenant costs. Additionally, this guidance modifies disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for all entities by one year, until years beginning in 2018, with early adoption permitted but not before 2017. Entities may adopt ASU 2014-09 using either a full retrospective approach reflecting the application of theleases standard in each prior reporting period with the option to elect certain practical expedients or a retrospective approach with the cumulative effect recognized at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Management believesWe have elected this optional transition method although it resulted in no cumulative-effect adjustment. As lessor, for reporting revenue, we have elected to combine the majoritylease and non-lease components of our revenue falls outside ofoperating lease agreements and account for the scope of this guidancecomponents as a single lease component in accordance with ASC 842. Also, we have elected the ‘package or practical expedients’ approach which allows us not to reassess our previous conclusions about lease identification, lease classification and does not anticipate any significant changes to the timing of our revenue recognition. We intend to implement the standard retrospectively with the cumulative effect recognized in retained earnings at the date of application.initial direct costs.

Note 3 – Real Estate, Net

As of September 30, 20172019 and December 31, 2016,2018, real estate, net, includes the following (in thousands):

Real estate under development as of September 30, 2017 consists of the2019 and December 31, 2018 included 77 Greenwich and the Paramus, New Jersey properties while real estate under development as of December 31, 2016 consists of the 77 Greenwich, Paramus, New Jersey and Westbury, New York properties. Buildingsproperty. Building and building improvements, tenant improvements and land at both dates consist ofand land improvements included 237 11^th and the West Palm Beach, Florida property.

On August 4, 2017, we closed on the sale Furniture and fixtures included 237 11^th as of our property located in Westbury, New York for a gross sale price of $16.0 million. The sale resulted in a gain of $3.9 millionSeptember 30, 2019 and generated approximately $15.2 million in net proceeds to us.December 31, 2018.

Depreciation expense amounted to approximately $61,000$402,000 and $57,000$424,000 for the three months ended September 30, 20172019 and September 30, 2016,2018, respectively, and $184,000$1.3 million and $145,000$754,000 for the nine months ended September 30, 20172019 and September 30, 2016, respectively. The increase in depreciation expense for the three and nine months ended September 30, 2017 related to the West Palm Beach, Florida property.2018, respectively,

On September 8, 2017, a wholly-owned subsidiaryIn May 2018, we closed on the acquisition of ours entered into an agreement pursuant to which it acquired an option to purchase237 11^th, a newly built 105-unit, 12 story12-story multi-family apartment building located at 237 11th11^th Street, Brooklyn, New York for a purchase price of $81.0$81.2 million, excluding transaction costs of approximately $0.7 million.  Under the agreement, we are entitled to exercise the option during the period commencing on February 1, 2018 and expiring on February 28, 2018.  We paid an initial deposit of $8.1 million, which is included in restricted cash on the condensed consolidated balance sheet, upon entering into the agreement, which is nonrefundable if we do not exercise the option.  The purchase price will beacquisition was funded through acquisition financing and cash on hand.  Due to certain construction defects that resulted in water penetration into the building and damage to certain apartment units and other property, we have submitted a property and casualty claim for business interruption (lost revenue), property damage and the related remediation costs. We have also filed legal claims against the seller, its parent company, and the general contractor to recover damages arising from the defective construction. Management expects to recover the cost to repair the property (or some portion thereof) through the litigation and insurance claim, although the insurance provider has not yet made the claim determination and the damages that may be recoverable in litigation are uncertain at this early stage of the litigation. Until the litigation and insurance claims are resolved, there will be significant cash outflows for repairs and remediation costs which commenced in September 2019. Management continues to pro-actively manage the leasing at the property. Occupancy continues to decrease as tenants vacate due to the ongoing remediation work. The acquisitionresidential portion of thisthe property was approximately 45.7% leased at September 30, 2019.

We allocate the purchase price of real estate to land and land improvements and building and building improvements (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of above-market and below-market leases, real estate tax abatements and origination costs associated with the in-place leases. We depreciate the amount allocated to building and building improvements (inclusive of tenant improvements) over their estimated useful lives, which generally range from one year to 27.5 years. We amortize the amount allocated to values associated with real estate tax abatement over the estimated period of benefit which is subject15 years for 237 11^th. We amortize the amount allocated to customary closingthe above-market and below-market leases over the remaining term of the associated lease, which generally range from one to two years, and record it as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental revenue. We amortize the amount allocated to the values associated with in-place leases over the expected term of the associated lease, which generally range from one to two years. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions is expected to close inthat may affect the first quarter of 2018.property.

Through a wholly-owned subsidiary, we entered into an agreement with the New York City School Construction Authority (the "SCA"), whereby we will construct a school that will be sold to the SCA as part of our condominium development at 77 Greenwich. Pursuant to the agreement, the SCA will pay us $41.5 million for the purchase of their condominium unit and reimburse us for the costs associated with constructing the school (including a construction supervision fee of approximately $5.0 million to us). Payments for construction are being made by the SCA to the general contractor in installments as construction on their condominium progresses. Payments to us for the land and construction supervision fee commenced in January 2018 and continued through October 2019 for the land and will continue through 2020 for the construction supervision fee. As of September 30, 2019, we have received an aggregate of $42.2 million of payments from the SCA, including the construction supervision fee. We have also received an aggregate of $38.3 million in reimbursable construction costs from the SCA through September 30, 2019. The payments and reimbursements have been recorded as deferred real estate deposits on the condensed consolidated balance sheets. Upon Substantial Completion, as defined in our agreement with the SCA, the SCA will close on the purchase of the school condominium unit from us, which is anticipated to occur during the fourth quarter 2019, at which point title will transfer to the SCA. Under the agreement, we are required to substantially complete construction of the school by September 6, 2023. To secure our obligations with the SCA, the 77 Greenwich property has been ground leased to the SCA and leased back to us until title to the school is transferred to the SCA. We have also guaranteed certain obligations with respect to the construction of the school.

The ultimate sale of the school condominium unit will be recognized when control of the asset is transferred to the buyer. This generally will include transfer of title of the school condominium, which is expected to occur in the fourth quarter of 2019. As payments from the SCA are received, the amounts will be recorded on the balance sheets as deferred real estate deposits until sales criteria are satisfied in accordance with ASU No. 2017-05, “Other Income-Gains and Losses from the De-recognition of Nonfinancial Assets (Subtopic 610-20),” which added guidance for partial sales of nonfinancial assets, including partial sales of real estate, eliminated rules specifically addressing sales of real estate, removed exceptions to the financial asset derecognition model, and clarified the accounting for contributions of non-financial assets to joint ventures.

The residential condominium units and construction of a new handicapped accessible subway entrance at 77 Greenwich are currently scheduled to be completed by the end of 2020.

Note 4 – Prepaid Expenses and Other Assets, Net

As of September 30, 20172019 and December 31, 2016,2018, prepaid expenses and other assets, net, include the following (in thousands):

Note 5 – Loans Payable and Secured Line of Credit

MortgagesLoans Payable

237 11^th Loans

In May 2018, in connection with the acquisition of 237 11^th, wholly owned subsidiaries of ours entered into two-year interest-only financings with an aggregate principal amount of $67.8 million, comprised of a $52.4 million mortgage loan with Canadian Imperial Bank of Commerce and a $15.4 million mezzanine loan with RCG LV Debt VI REIT, LLC (the “237 11^th Loans”), bearing interest at a blended average rate of 3.72% over the 30-day LIBOR, each with a one year extension option upon satisfaction of certain conditions. The 237 11^th Loans are non-recourse to us except for environmental indemnity agreements, certain non-recourse carve-out and carry guaranties covering among other things interest and operating expenses, and in the case of the mortgage loan, a guaranty of 25% of the principal amount, decreasing to 10% of the principal balance upon the debt yield ratio becoming equal to or greater than 7.0%. The effective interest rate at September 30, 2019 and December 31, 2018 was approximately 5.74% and 6.22%, respectively. The 237 11^th Loans are prepayable at any time in whole, provided that prepayment of the mortgage loan must be accompanied by prepayment of the mezzanine loan, and under certain circumstances in part, upon payment, in the case of the mortgage loan, of a 0.50% deferred commitment fee (unless the loan is refinanced with the mortgage lender in which case no such fee is payable), and, in the case of the mezzanine loan, with no fee.

The collateral for the 237 11^th mortgage loan is the fee interest of our subsidiary in 237 11^th and the collateral for the 237 11^th mezzanine loan is our equity interests in the mortgage loan borrower. The 237 11^th Loans require us to comply with various customary affirmative and negative covenants and provide for certain events of default, the occurrence of which would permit the lenders to declare the 237 11^th Loans due and payable, among other remedies. As of September 30, 2019, we were in compliance with all covenants of the 237 11^th Loans.

77 Greenwich LoanConstruction Facility

On February 9, 2015, ourDecember 22, 2017, a wholly-owned subsidiary that ownsof ours closed on a $189.5 million construction facility for 77 Greenwich and related assets (“TPH(the “77 Greenwich Borrower”Construction Facility”), entered into a loan agreement with Sterling National BankMassachusetts Mutual Life Insurance Company as lender and administrative agent (the “Agent”“Lender”), and Israel Discount Bank. We will draw down proceeds as costs related to the construction are incurred for 77 Greenwich over the next few years for the construction of the new mixed-use building containing approximately 300,000 square feet of gross floor area. The plans call for the development of 90 luxury residential condominium apartments, 7,500 square feet of street level retail space, a 476-seat elementary school serving New York as lender (the “Lender”), pursuant to which we borrowed $40.0City District 2, including the adaptive reuse of the landmarked Robert and Anne Dickey House, and construction of a new handicapped accessible subway entrance on Trinity Place. There was an outstanding balance of approximately $92.8 million (the “77 Greenwich Loan”). The 77 Greenwich Loan can be increased up to $50.0and $51.5 million subject to satisfaction of certain conditions. The 77 Greenwich Loan, which was scheduled to mature on August 8, 2017, was extended to mature on February 8, 2018. We are evaluating our options which include, among others, refinancing the 77 Greenwich Loan as partConstruction Facility at September 30, 2019 and December 31, 2018, respectively, of a construction loan.which at September 30, 2019, $7.0 million is collateralizing letters of credit securing our obligation with the New York City MTA to build the subway entrance.

The 77 Greenwich LoanConstruction Facility has a four-year term with one extension option for an additional year under certain circumstances. The collateral for the 77 Greenwich Construction Facility is the borrower’s fee interest in 77 Greenwich, which is the subject of a mortgage in favor of the Lender. The 77 Greenwich Construction Facility bears interest on amounts drawn at a rate per annum equal to the greater of (i) LIBOR plus 8.25% and (ii) 9.25%. The effective interest rate at September 30, 2019 and December 31, 2018 was 10.27% and 10.60%, respectively. The 77 Greenwich Construction Facility provides for certain interest payments to be advanced as an interest holdback and to the rate publishedextent that the cash flow from time77 Greenwich is insufficient to timepay the interest payments then due and payable, funds in the interest holdback will be applied by the Wall Street JournalLender as a disbursement to the U.S. Prime Rate plus 1.25% (the “Contract Rate”) or (ii) 4.50% and requiresborrower to make the monthly interest only payments through maturity. The interest rate on the 77 Greenwich LoanConstruction Facility, subject to certain conditions. The 77 Greenwich Construction Facility may be prepaid in part in certain circumstances such as in the event of the sale of residential and retail condominium units. Pursuant to the 77 Greenwich Construction Facility, we are required to achieve completion of the construction work and the improvements for the project on or before a completion date that is forty-two (42) months following the closing of the 77 Greenwich Construction Facility, subject to certain exceptions.

In connection with the 77 Greenwich Construction Facility, we executed certain guaranties and environmental indemnities, including a recourse guaranty under which we are required to satisfy certain net worth and liquidity requirements including the Company maintaining liquidity of at least $15.0 million, consisting of unrestricted cash and, for up to 50% of the requirement, qualified lines of credit, and additional customary affirmative and negative covenants for loans of this type and our agreements with the SCA. As a result of timing issues arising principally from a delay in the sale of our West Palm Beach, Florida property which was 5.00% asanticipated to occur in August 2019 and the MTA not releasing certain letters of December 31, 2016 and 5.50%credit required pursuant to our agreement with them, despite the MTA delaying the required work, the Company did not satisfy the liquidity requirement under the recourse guaranty as of September 30, 2017.2019, which in turn constituted an event of default under the facility. The Contract RateLender agreed to forbear for the fourth quarter of 2019, and waive the event of default, during which time the sale of the West Palm Beach, Florida property, whose contract was effective as of October 9, 2019, is anticipated to be completed, as described in Note 13 – Subsequent Events. In addition, the liquidity requirement will be increased by 1.5% per annumdecrease to $10.0 million upon transfer of the school condominium to the SCA, which is anticipated to occur during any period in which TPH Greenwich Borrower does not maintain funds in its deposit accountsthe fourth quarter of 2019. We also entered into certain completion and other guarantees with the AgentLender and the Lender sufficient to make payments then dueSCA in connection with the 77 Greenwich Construction Facility. As of September 30, 2019, we were in compliance with all other covenants of the 77 Greenwich Construction Facility.

On December 22, 2017, we entered into an interest rate cap agreement as required under the 77 Greenwich Loan documents. TPH Greenwich Borrower can prepayConstruction Facility. The interest rate cap agreement provides the 77 Greenwich Loan at any time,right to receive cash if the reference interest rate rises above a contractual rate. We paid a premium of approximately $393,000 for the 2.5% interest rate cap on the 30-day LIBOR rate on a notional amount of $189.5 million. The fair value of the interest rate cap as of September 30, 2019 and December 31, 2018 was approximately $2,000 and $497,000, respectively, and is recorded in whole orprepaid expenses and other assets, net in part, without premium or penalty.our condensed consolidated balance sheets. We did not designate this interest rate cap as a hedge and are recognizing the change in estimated fair value in interest expense. During the nine months ended September 30, 2019, the approximate $495,000 change in value of this instrument had been recorded as interest expense and subsequently capitalized to real estate, net.

The collateral for the 77 Greenwich Loan is TPH Greenwich Borrower’s fee interest in 77 Greenwich and the related air rights, which is the subject of a mortgage in favor of the Agent. TPH Greenwich Borrower also entered into an environmental compliance and indemnification undertaking.

The 77 Greenwich Loan agreement requires TPH Greenwich Borrower to comply with various affirmative and negative covenants including restrictions on debt, liens, business activities, distributions and dividends, disposition of assets and transactions with affiliates. TPH Greenwich Borrower has established blocked accounts with the initial lenders, and pledged the funds maintained in such accounts, in the amount of 9% of the outstanding loans. The 77 Greenwich Loan agreement also provides for certain events of default. As of September 30, 2017, TPH Greenwich Borrower was in compliance with all 77 Greenwich Loan covenants.

We entered into a Nonrecourse Carve-Out Guaranty pursuant to which we agreed to guarantee certain items, including losses arising from fraud, intentional harm to 77 Greenwich, or misapplication of loan, insurance or condemnation proceeds, a voluntary bankruptcy filing by TPH Greenwich Borrower, and the payment by TPH Greenwich Borrower of maintenance costs, insurance premiums and real estate taxes.

West Palm Beach, Florida Loan

On May 11, 2016, our subsidiary that owns our West Palm Beach, Florida property, commonly known as The Shoppes at Forest Hill, (the “TPH Forest Hill Borrower”), entered into a loan agreement with Citizens Bank, National Association, as lender (the “WPB Lender”), pursuant to which the WPB Lender willagreed to provide a loan to the TPH Forest Hill Borrower in the amount of up to $12.6 million, subject to the terms and conditions as set forth in the loan agreement (the “WPB Loan”). TPH Forest Hill Borrower borrowed $9.1 million under the WPB Loanwas borrowed at closing. The WPB Loan requires interest-only payments and bears interest at the 30-day LIBOR plus 230 basis points. The effective interest rate was 2.75%4.32% as of September 30, 2019 and 4.80% as of December 31, 2016 and 3.54% as of September 30, 2017.2018. The WPB Loan, matureswhich was scheduled to mature on May 11, 2019, is subject to extension until May 11, 2021 under certain circumstances. The TPH Forest Hill Borrowercircumstances, and can prepay the WPB Loanbe prepaid at any time, in whole or in part, without premium or penalty. On May 7, 2019, we extended the maturity date of the WPB Loan to May 11, 2020 pursuant to our first extension option. We have drawn down approximately $1.2 million of the $3.5 million available commitment primarily as reimbursement for leasing related capital spent at the property over the past three years. The balance of the WPB Loan was $10.3 million and $9.1 million at September 30, 2019 and December 31, 2018, respectively, and $2.3 million remains available to be borrowed under the WPB Loan as of September 30, 2019.

The collateral for the WPB Loan is the TPH Forest Hill Borrower’sborrower’s fee interest in ourthe West Palm Beach, Florida property. The WPB Loan requires the TPH Forest Hill Borrowerborrower to comply with various customary affirmative and negative covenants and provides for certain events of default, the occurrence of which would permit the WPB Lender to declare the WPB Loan due and payable, among other remedies. As of September 30, 2017, the TPH Forest Hill Borrower was2019, we were in compliance with all covenants of the WPB Loan covenants.Loan.

On May 11, 2016, we entered into an interest rate cap agreement as required under the WPB Loan. The interest rate cap agreement provides the right to receive cash if the reference interest rate rises above a contractual rate. We paid a premium of $14,000 for the 3.0% interest rate cap foron the 30-day LIBOR rate on thea notional amount of $9.1 million. The fair value of the interest rate cap was zero as of September 30, 20172019 and $1,000 as of December 31, 2016 is2018, and was recorded in prepaid expenses and other assets, net in our condensed consolidated balance sheets. We did not designate this interest rate cap as a hedge and are recognizing the change in estimated fair value in interest expense. During

As discussed above, we are currently under contract to sell the nine months ended September 30, 2017, we recognizedWest Palm Beach, Florida property, which, subject to customary closing conditions, is expected to close during the changefourth quarter of 2019. In connection with the sale, the WPB Loan will be repaid in value of the interest rate cap of approximately $3,000 in interest expense. As of September 30, 2017, the carrying value of the interest rate cap was approximately $6,000.full.

Secured Line of Credit

On February 22, 2017, we entered into two secured lines of credit for an aggregate of $12.0 million, with Sterling National Bank as the lender, which were secured by our properties located in Paramus, New Jersey and Westbury, New York, respectively, and had an original maturity date of February 22, 2018. On August 4, 2017, in connection with the sale of the Westbury, New York property, the $2.9 million line of credit that was secured by this property, and which was undrawn, matured on that date.matured. The remaining $9.1 million line of credit, which is secured by the Paramus, New Jersey property, was undrawn as of September 30, 2017 and November 8, 2017. This line of credit was increased to $11.0 million in September 2017, and we extended the maturity date extended to February 22, 2019. The line of credit bearswas further increased to $12.75 million in December 2018 and the maturity date was extended to February 21, 2020. The line of credit, which prior to December 2018 bore interest, for drawn amounts only, at 100 basis points over Prime, as defined with a floor of 3.75%,in the underlying credit agreement, now bears interest at 200 basis points over the 30-day LIBOR, and is pre-payable at any time without penalty. A portion of the line of credit is subject to an unused fee. This secured line of credit had an outstanding balance of $5.0 million and an effective interest rate of 4.02% as of September 30, 2019. As of December 31, 2018 the line of credit was undrawn.

Interest

Consolidated interest (income) expense,income, net includes the following (in thousands):

Note 6 – Fair Value Measurements

The fair value of our financial instruments are determined based upon applicable accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted processprices in active markets for identical assets or liabilities (Level 1), quoted processprices for similar instruments in active markets or quoted processprices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).

The fair values of cash and cash equivalents, receivables, prepaid expenses and other assets,net, accounts payable and accrued expenses, and other liabilities approximated their carrying value because of thetheir short-term nature of these instruments.nature. The fair value of each of the loans payable and the secured line of credit approximated their carrying value as all our loansthey are variable-rate instruments.

Note 7 – Pension and Profit Sharing Plans

Defined Benefit Pension PlansPlan –

Our predecessor, Syms, sponsored a defined benefit pension plan for certain eligible employees not covered under a collective bargaining agreement. The pension plan was frozen effective December 31, 2006. As of September 30, 20172019 and December 31, 2016,2018, we had a recorded liability of $2.9 million$2.4 and $3.4$2.8 million, respectively, which is included in pension liabilities on the accompanying condensed consolidated balance sheets. This liability represents the estimated cost to us of terminating the plan in a standard termination, which would require us to make additional contributions to the plan so that the assets of the plan are sufficient to satisfy all benefit liabilities.

We currently intendplan to maintain the Syms pension plan and make all contributions required under applicable minimum funding rules, althoughrules; however, we may terminate the Syms pension plan.it at any time. In the event that we terminate the Syms pension plan, we intend that any such termination shall be a standard termination. Although we have accrued the liability associated with a standard termination, we have not taken any steps to commence such a termination and have made no commitment to do so by a certain date. In accordance with minimum funding requirements and court ordered allowed claims distributions, we paid approximately $4.9 million to the Syms sponsored plan from September 17, 2012 through September 30, 2019. Historically, we have funded this plan in the third quarter of the calendar year. We funded $400,000 and $470,000 to the Syms sponsored plan during the nine months ended September 30, 2019 and 2018, respectively.

Prior to the bankruptcy, certainMultiemployer Pension Plans

Certain employees were covered by collective bargaining agreements and participated in various multiemployer pension plans. Syms ceased to have an obligation to contribute to these plans in 2012, thereby triggering a complete withdrawal from the plans within the meaning of section 4203 of the Employee Retirement Income Security Act of 1974. Consequently, we are subject to the payment of a withdrawal liability to the remainingone of these pension fund. Asfunds. We have a liability of approximately $312,000 and $922,000 as of September 30, 20172019 and December 31, 2016, we had a recorded liability of $1.9 million and $2.5 million,2018, respectively, related to this plan which is reflectedincluded in pension liabilities on the accompanying condensed consolidated balance sheets. We are required to make quarterly distributions in the amount of $0.2 millionapproximately $203,000 until this liability is completely paid to the multiemployer plan.

plan by the end of the first quarter of 2020. In accordance with minimum funding requirements and court ordered allowed claims distributions, we paid approximately $4.1$6.6 million to the Syms sponsored plan and approximately $5.0 million to thevarious multiemployer plans from September 17, 2012 through September 30, 2017. Approximately $0.5 million2019, of which approximately $610,000 was funded to the remaining multiemployer plan during each of the three and nine monthsmonth periods ended September 30, 2017 to the Syms sponsored plan2019 and $0.2 million and $0.6 million was funded during the three months and nine months, respectively, ended September 30, 2017 to the multiemployer plan.2018. We currently anticipate that our final payment, of approximately $109,000, will be made on or around January 2020.

Note 8 – Commitments

Note 9 – Income Taxes

Effects of the Tax Cuts and Jobs Act

On December 22, 2017, the TCJA was signed into U.S. law. ASC Topic 740, Accounting for Income Taxes, required companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions of the law, January 1, 2018.

As part of the TCJA, the U.S. corporate income tax rate applicable to us decreased from 35% to 21%.

Pursuant to the TCJA, alternative minimum tax (“AMT”) credit carryforwards will be eligible for a 50% refund in tax years 2018 through 2020. Beginning in tax year 2021, any remaining AMT credit carryforwards would be 100% refundable. As a result of these new regulations, as of December 31, 2017, we had released the valuation allowance of $3.1 million formerly reserved against our AMT credit carryforwards and we had recorded a tax benefit and refund receivable of $3.1 million in connection with this valuation allowance release, which is included in receivables, net on the condensed consolidated balance sheets. We received approximately $1.6 million of the refund receivable in October 2019.

Other significant provisions that are not yet effective but may impact income taxes in future years include, but are not limited to, an exemption from U.S. tax on dividends of future foreign earnings, limitation on the current deductibility of net interest expense in excess of 30% of adjusted taxable income and a limitation of net operating losses arising in tax years beginning after December 31, 2017 to 80% of taxable income.

Other

At September 30, 2017,2019, we had federal NOLs of approximately $230.3$245.4 million. These NOLs will expire in years through fiscal 2034.2037. At September 30, 2017,2019, we also had state NOLs of approximately $104.4$129.6 million. These NOLs expire between 2029 and 2034.in years through 2037. We also had the New York State and New York City prior NOL conversion (“PNOLC”) subtraction pools of approximately $31.1 million and $25.5 million, respectively. The conversion to the PNOLC under the New York State and New York City corporate tax reforms does not have any material tax impact.

Based on management’s assessment, we believe it is more likely than not that the entire deferred tax assets will not be realized by future taxable income or tax planning strategy. In recognition of this risk, we have provided a valuation allowance of $96.8$65.4 million and $95.3$62.1 million as of September 30, 20172019 and December 31, 2016,2018, respectively. If our assumptions change and we determine we will be able to realize these NOLs, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets would be recognized as a reduction of income tax expense and an increase in equity.

Note 10 – Stockholders’ Equity

Capital Stock

Our authorized capital stock consists of 120,000,000 shares $0.01 par value per share, consisting of 79,999,997 shares of common stock, $0.01 par value per share, two (2) shares of preferred stock, $0.01 par value per share (which have been redeemed in accordance with their terms and may not be reissued), one (1) share of special stock, $0.01 par value per share, and 40,000,000 shares of a new class of blank checkblank-check preferred stock, $0.01 par value per share. As of September 30, 20172019 and December 31, 2016,2018, there were 36,806,91537,603,133 shares and 30,679,56637,161,068 shares of common stock issued, respectively, and 31,451,79631,904,383 shares and 25,663,82031,647,284 shares of common stock outstanding, respectively.

On February 14, 2017, we issued an aggregate of 3,585,000 shares of common stockrespectively, with the difference being held in a private placement at a purchase price of $7.50 per share, and received gross proceeds of $26.9 million. On April 5, 2017, we issued an aggregate of 1,884,564 shares of common stock in a rights offering at a purchase price of $7.50 per share and received gross proceeds of $14.1 million (the “Rights Offering”). We anticipate using the proceeds from the private placement and the Rights Offering for the development of 77 Greenwich, potential new real estate acquisitions and investment opportunities and for working capital.treasury stock.

At-The-Market Equity Offering Program

In December 2016, we entered into an "at-the-market" equity offering program (the “ATM Program”), to sell up to an aggregate of $12.0 million of our common stock. During the yearyears ended December 31, 2016 and 2017, we issued 120,299 shares and 2,492 shares, respectively, of our common stock for aggregate gross proceeds of approximately $1.2 million (excluding approximately $218,000 in professional and brokerage fees) at a weighted average price of $9.76 per share. For the three and nine months ended September 30, 2017, we issued no shares and 2,492 shares, respectively, of our common stock and received gross proceeds of $0 and $23,000, respectively, at a weighted average price of $9.76 and $9.32 per share. As of Septembershare, respectively. We did not issue any shares through this program in 2018 or 2019. The sale agreement with our broker expired in accordance with its term on June 30, 2017, $10.8 million of common stock remained available for issuance under the ATM Program.2019 and was not extended.

Preferred Stock

We are authorized to issue two shares of preferred stock (one share each of Series A and Series B preferred stock)stock, each of which was automatically redeemed in 2016 and may not be reissued), one share of special stock and 40,000,000 shares of blank-check preferred stock. The share of Series A preferred stock was issued to a trustee acting for the benefit of our creditors. The share of Series B preferred stock was issued to the former Majority Shareholder. The share of special stock was issued and sold to Third Avenue Trust, on behalf of Third Avenue Real Estate Value Fund (“Third Avenue”), and enables Third Avenue or its affiliated designee to elect one member of the Board of Directors.

On or about March 8, 2016, a General Unsecured Claim Satisfaction occurred. Under the Plan, a General Unsecured Claim Satisfaction occurs when all of the allowed creditor claims of Syms Corp. and Filene’s Basement, LLC, have been paid in full their distributions provided for under the Plan and any disputed creditor claims have either been disallowed or reserved for by Trinity. On March 14, 2016, we made the final Majority Shareholder payment (as defined in the Plan) to the Majority Shareholder in the amount of approximately $6.9 million. Following the General Unsecured Claim Satisfaction and payment to the former Majority Shareholder, we satisfied our payment and reserve obligations under the Plan. Upon the occurrence of the General Unsecured Claim Satisfaction, the share of Series A preferred stock was automatically redeemed in accordance with its terms and may not be reissued. In addition, upon the payment to the former Majority Shareholder, the share of Series B preferred stock was automatically redeemed in accordance with its terms and may not be reissued.

Note 11 – Stock-Based Compensation

Stock Incentive Plan

We adopted the Trinity Place Holdings Inc. 2015 Stock Incentive Plan (the “SIP”), effective September 9, 2015. Prior to the adoption of the SIP, we granted restricted stock units (“RSUs”) to our executive officers and employees pursuant to individual agreements. The SIP, which has a ten yearten-year term, authorizes (i) stock options that do not qualify as incentive stock options under Section 422 of the Code, or NQSOs, (ii) stock appreciation rights, (iii) shares of restricted and unrestricted common stock, and (iv) RSUs. The exercise price of stock options will be determined by the compensation committee, but may not be less than 100% of the fair market value of the shares of common stock on the date of grant. To date, no stock options have been granted under the SIP. The SIP authorizesinitially authorized the issuance of up to 800,000 shares of our common stock. In June 2019, our stockholders approved an amendment and restatement of the SIP, including an increase to the number of shares of common stock available for awards under the SIP by 1,000,000 shares. Our SIP activity as of September 30, 2019 and December 31, 2018 was as follows:

We recognized stock-based compensation expense of approximately $42,000 and $127,000 during the three and nine months ended September 30, 2017, respectively, related to non-employee director stock grants.