☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 83-2426528 | |
State or Other Jurisdiction of Incorporation or Organization | I.R.S. Employer Identification No. |
2 Liberty Square, | 02109 | ||
Address of Principal Executive Offices | Zip Code |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
N/A | N/A | N/A |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
* | New York REIT Liquidating LLC is the successor in interest to New York REIT, Inc. and files reports under the Commission file number for New York REIT, Inc. |
PART I – FINANCIAL INFORMATION | Page | |||||||||
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4 | ||||||||||
5 | ||||||||||
Item 2. | 15 | |||||||||
Item 3. | 21 | |||||||||
Item 4. | 21 | |||||||||
Item 1. | 22 | |||||||||
Item 1A. | 22 | |||||||||
Item 2. | 22 | |||||||||
Item 3. | 22 | |||||||||
Item 4. | 22 | |||||||||
Item 5. | 22 | |||||||||
Item 6. | 22 | |||||||||
24 |
September | December | |||||||
Asset s | ||||||||
Investment in unconsolidated joint venture | $ | 269,040 | $ | 265,516 | ||||
Cash and cash equivalents | 7,572 | 7,650 | ||||||
Restricted cash held in escrow | 92,177 | 92,302 | ||||||
Accounts receivable | 60 | 60 | ||||||
Total Assets | 368,849 | 365,528 | ||||||
Liabilities | ||||||||
Liability for estimated costs in excess of estimated receipts during liquidation | 2,290 | 2,348 | ||||||
Accounts payable, accrued expenses and other liabilities | 253 | 389 | ||||||
Total Liabilities | 2,543 | 2,737 | ||||||
Commitments and Contingencies | ||||||||
Net assets in liquidation | $ | 366,306 | $ | 362,791 | ||||
September 30, 2021 | December 31, 2020 | |||||||
Assets | ||||||||
Investment in unconsolidated joint venture | $ | 226,805 | $ | 230,092 | ||||
Cash and cash equivalents | 7,385 | 7,722 | ||||||
Restricted cash held in escrow | 92,134 | 92,177 | ||||||
Accounts receivable | 60 | 60 | ||||||
Total Assets | 326,384 | 330,051 | ||||||
Liabilities | ||||||||
Liability for estimated costs in excess of estimated receipts during liquidation | 2,332 | 2,342 | ||||||
Accounts payable, accrued expenses and other liabilities | 296 | 319 | ||||||
Total Liabilities | 2,628 | 2,661 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Net assets in liquidation | $ | 323,756 | $ | 327,390 | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
Net assets in liquidation, beginning of period | $ | 366,850 | $ | 360,584 | $ | 362,791 | $ | 372,556 | ||||||||
Changes in net assets in liquidation: | ||||||||||||||||
Changes in liquidation value of investment in unconsolidated joint venture | 4,213 | 1,393 | 13,169 | 3,840 | ||||||||||||
Remeasurement of assets and liabilities | (559 | ) | (324 | ) | (2,0 98 | ) | (1,141 | ) | ||||||||
Net changes in liquidation value | 3,654 | 1,069 | 11,071 | 2,699 | ||||||||||||
Liquidating distributions to unitholders | (4,198 | ) | (1,679 | ) | (7,556 | ) | (15,281 | ) | ||||||||
Changes in net assets in liquidation | (544 | ) | (610 | ) | 3,515 | (12,582 | ) | |||||||||
Net assets in liquidation, end of period | $ | 366,306 | $ | 359,974 | $ | 366,306 | $ | 359,974 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||||
Net assets in liquidation, beginning of period | $ | 322,926 | $ | 366,850 | $ | 327,390 | $ | 362,791 | ||||||||
Changes in net assets in liquidation: | ||||||||||||||||
Changes in liquidation value of investment in unconsolidated joint venture | 3,535 | 4,213 | 7,669 | 13,169 | ||||||||||||
Remeasurement of assets and liabilities | (522 | ) | (559 | ) | (1,900 | ) | (2,098 | ) | ||||||||
Net changes in liquidation value | 3,013 | 3,654 | 5,769 | 11,071 | ||||||||||||
Liquidating distributions to unitholders | (2,183 | ) | (4,198 | ) | (9,403 | ) | (7,556 | ) | ||||||||
Changes in net assets in liquidation | 830 | (544 | ) | (3,634 | ) | 3,515 | ||||||||||
Net assets in liquidation, end of period | $ | 323,756 | $ | 366,306 | $ | 323,756 | $ | 366,306 | ||||||||
September 30, 2020 | December 31, 2019 | September 30, 2021 | December 31, 2020 | |||||||||||||
General and administrative expenses | $ | (2,290 | ) | $ | (2,348 | ) | $ | 2,332 | $ | 2,342 | ||||||
Liability for estimated costs in excess of estimated receipts during liquidation | $ | (2,290 | ) | $ | (2,348 | ) | $ | 2,332 | $ | 2,342 | ||||||
January 1, 2021 | Net Change in Working Capital (1) | Remeasurement of Assets and Liabilities | September 30, 2021 | |||||||||||||
Liabilities: | ||||||||||||||||
General and administrative expenses | $ | (2,342 | ) | $ | 1,910 | $ | (1,900 | ) | $ | (2,332 | ) | |||||
Total liability for estimated costs in excess of estimated receipts during liquidation | $ | (2,342 | ) | $ | 1,910 | $ | (1,900 | ) | $ | (2,332 | ) | |||||
January 1, 2020 | Net Change in Working Capital (1) | Remeasurement of Assets and Liabilities | September 30, 2020 | |||||||||||||
Liabilities: | ||||||||||||||||
General and administrative expenses | $ | (2,348 | ) | $ | 2,156 | $ | (2,098 | ) | $ | (2,290 | ) | |||||
Total liability for estimated costs in excess of estimated receipts during liquidation | $ | (2,348 | ) | $ | 2,156 | $ | (2,098 | ) | $ | (2,290 | ) | |||||
(1) |
Note 5 – Net Assets in Liquidation Net assets in liquidation increased by $0.8 million during the three months ended September 30, 2021 , primarily due to a net increase of $3.5 million in the estimated liquidation value of the Company’s investment in Worldwide Plaza related to the estimated distributions to be received from working capital at the property and property operations. The increase was offset in part by a liquidation distribution to unitholders of $2.2 million and a $0.5 million net decrease due to a remeasurement of estimated costs.Net assets in liquidation decreased by $3.6 million during the nine months ended September 30, 2021, primarily due to liquidating distributions to unitholders of $9.4 million and a $1.9 million net decrease due to a remeasurement of estimated costs. The decrease was offset in part by a net increase of $7.7 million in the estimated liquidation value of the Company’s investment in Worldwide Plaza related to the estimated distributions to be received from working capital at the property and property operations. Net assets in liquidation decreased by $0.5 million during the three months ended September 30, 2020, primarily due to a liquidating distribution to unitholders of $4.2 million and a $0.6 million net decrease due to a remeasurement of estimated costs. The decrease was offset in part by a net increase of $4.2 million in the estimated liquidation value of the Company’s investment in Worldwide Plaza related to the estimated distributions to be received from working capital at the property and property operations.Net assets in liquidation increased by $3.5 million during the nine months ended September 30, 2020 , primarily due to a net increase of $13.2 million in the estimated liquidation value of the Company’s investment in Worldwide Plaza related to the estimated distributions to be received from working capital at the property and property operations.9 NEW YORK REIT LIQUIDATING LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 (unaudited) The increase was offset in part by liquidating distributions to unitholders of $7.6 million and a $2.1 million net decrease due to a remeasurement of estimated costs. The net assets in liquidation at September 30, There were 16,791,769 Units outstanding at September 30, November 2 , 2021, the Board of Managers declared a cash liquidating distribution of 17 , November 2021, reducing the estimate of future liquidating distributions to 10 , Note 6 — Investment in Unconsolidated Joint Venture On October 30, 2013, the Predecessor purchased a 48.9% equity interest in Worldwide Plaza for a contract purchase price of $220.1 million, based on the property value at that time for Worldwide Plaza of $1.3 billion less On June 1, 2017, the Predecessor acquired an additional 49.9% equity interest On October 18, 2017, the Predecessor sold a 48.7% interest in Worldwide Plaza to a joint venture managed by SL Green Realty Corp. and RXR Realty LLC based on an estimated underlying property value of $1.725 billion. In conjunction with the equity sale, there was a concurrent $1.2 billion refinancing of the existing Worldwide Plaza debt. The Predecessor received cash at closing of approximately $446.5 million from the sale and excess proceeds from the financing, net of closing costs which included $108.3 million of defeasance and prepayment costs. The new debt on Worldwide Plaza bears interest at a blended rate of approximately 3.98% per annum, requires monthly payments of interest only and matures in November 2027. The Company has set aside $90.7 million of the proceeds in a separate account to fund future capital improvements to Worldwide Plaza. Following the sale of its interest, the Company now holds a 50.1% interest in Worldwide Plaza. The Company has determined that this investment is an investment in a variable interest entity The lease with one of the tenants at the Worldwide Plaza property contains a right of first offer in the event that Worldwide Plaza sells 100% of the property. The right requires Worldwide Plaza to offer the tenant the option to purchase 100% of the Worldwide Plaza property, at the price, and on other material terms, proposed by Worldwide Plaza to third parties. If, after a 45-day period, that tenant does not accept the offer, Worldwide Plaza may then sell the property to a third party, provided that Worldwide Plaza will be required tore-offer the property to that tenant if it desires to sell the property for a purchase price (and other economic consideration) less than 92.5% of the initial purchase price contained in the offer to that tenant.10 NEW YORK REIT LIQUIDATING LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 (unaudited) The following table lists the tenants whose annualized cash rent represented greater than
The termination, delinquency or non-renewal of any of the above tenants may have a material adverse effect on the Company’s operations. The lease with Cravath, Swaine & MooreThe amounts reflected in the following tables are based on the going concern basis financial information of Worldwide Plaza. Under liquidation accounting, equity investments are carried at net realizable value. The condensed balance sheets as of September 30,
11 NEW YORK REIT LIQUIDATING LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, (unaudited) The condensed statements of operations for the three and nine months ended September 30,
Note 7 — Common The Company had 16,791,769 Units outstanding as of September 30, 2 , 2021, the Company declared a cash liquidating distribution of 10 , Note 8 — Commitments and Contingencies Litigation and Regulatory Matters In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no legal or regulatory proceedings pending or known to be contemplated against the Company from which the Company expects to incur a material loss. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company, through its joint venture, maintains environmental insurance for its non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the consolidated results of operations.12 NEW YORK REIT LIQUIDATING LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, (unaudited) Note 9 — Related Party Transactions and Arrangements Winthrop Advisor and its Affiliates The activities of the Liquidating LLC are administered by the Winthrop Advisor pursuant to the terms of an advisory agreement, as amended, (the “Advisory Agreement”) between the Company and the Winthrop Advisor. The original term of the Advisory Agreement ended on November 7, 2018, the effective date of the conversion of the Company to a liquidating entity (the “Liquidation Date”). one-month renewal periods on the expiration of any renewal term, unless terminated by a majority of the Board of Managers or the Winthrop Advisor, upon written notice 45 days before the expiration of any renewal term and will automatically terminate at the effective time of the final disposition of the assets held by the Company. The Advisory Agreement may be terminated upon 15 days written notice by a majority of the Board of Managers if the Company’s chief executive officer resigns or is otherwise unavailable to serve as the Company’s chief executive officer for any reason and the Winthrop Advisor has not proposed a new chief executive officer acceptable to a majority of the Board of Managers. On July 12, 2018, the Company’s independent directors voted unanimously to appoint John Garilli as Chief Executive Officer upon the resignation of Wendy Silverstein from the position and accordingly did not exercise the Company’s right to terminate the Advisory Agreement.On October 30, In connection with the adoption of liquidation accounting, the Company accrues costs it expects to incur through the end of liquidation. As of September 30, In connection with the payment of (i) any distributions of money or other property by the Company to its stockholders or unitholders during the term of the Advisory Agreement and (ii) any other amounts paid to the Company’s stockholders or unitholders on account of their shares of common stock or membership interests in the Company in connection with a merger or other change in control transaction pursuant to an agreement with the Company entered into after March 8, 2017 (such distributions and payments, the “Hurdle Payments”), in excess of $110.00 per share (the “Hurdle Amount”), when taken together with all other Hurdle Payments, the Company will pay an incentive fee to Winthrop Advisor in an amount equal to 10.0% of such excess (the “Incentive Fee”). The Hurdle Amount will be increased on an annualized basis by an amount equal to the product of (a) the Treasury Rate plus 200 basis points and (b) the Hurdle Amount minus all previous Hurdle Payments. Based on the current estimated undiscounted net assets in liquidation, the Winthrop Advisor would not be entitled to receive any such incentive fee. The Company paid the Winthrop Advisor $300,000 and $317,000 for the three months ended September 30, 2021 and 2020, respectively and $900,000 and $1,017,000 for the nine months ended September 30, 2021 and 2020, respectively. 13 NEW YORK REIT LIQUIDATING LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, (unaudited) Note 10 — Economic Dependency As a result of these relationships, the Company is dependent upon Winthrop Note 11 — Subsequent Events The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except as disclosed in Notes5 14 NEW YORK REIT LIQUIDATING LLC September 30, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of New York REIT Liquidating LLC and the notes thereto. As used herein, the terms “Company,” “Liquidating LLC,” “we,” “our” and “us” refer to New York REIT Liquidating LLC, a Delaware limited liability company, and, as required by context to New York REIT, Inc., a Maryland corporation (the “Predecessor”), to New York Recovery Operating Partnership LP, a Delaware Limited Partnership (the “OP”), and to their subsidiaries. We are externally managed by Winthrop REIT Advisors, LLC (the “Winthrop Advisor”). Capitalized terms used herein but not otherwise defined have the meaning ascribed to those terms in “Part Forward-Looking Statements Certain statements i 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. Factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include, but are not limited to, public health crises, such as the10-K for the year ended DecemberManagement’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our unaudited consolidated interim financial statements and Overview On August 22, 2016 the Predecessor’s Board of Directors (the “Board”) approved a plan of liquidation to sell in an orderly manner all or substantially all of our assets and the assets of the OP (the “Liquidation Plan”), subject to stockholder approval. The Liquidation Plan was approved at a special meeting of stockholders on January 3, 2017. The Liquidation Plan provides for an orderly sale of our assets, payment of our liabilities and other obligations and the winding down of operations and the dissolution of the Company. We are no longer permitted to make any new investments except to make protective acquisitions or advances with respect to our existing assets. We are permitted to satisfy any existing contractual obligations and pay for required tenant improvements and capital expenditures at our real estate property owned by the joint venture in which we own an interest. In order to comply with applicable tax laws, the Predecessor converted into a limited liability company known as New York REIT Liquidating LLC. The conversion to the Company was approved by the stockholders on September 7, 2018 and became effective on November 7, 2018. The Liquidation Plan enables us to sell our assets without further approval of the stockholders or unitholders and provides that liquidating distributions be made to the stockholders as determined by the Board, and following the conversion, to our unitholders as determined by the Board of Managers. 15 NEW YORK REIT LIQUIDATING LLC September 30, In October 2018, we announced the withdrawal of our common stock from listing on the NYSE in connection with the conversion. November 2, 2018 was the last day on which shares of our common stock were traded on the NYSE and our stock transfer books were closed as of 4:00 p.m. (Eastern Time) on such date. At the effective time of the conversion, each outstanding share of common stock was converted into one unit of common membership interest in the LLC (a “Unit”), and holders of shares of our common stock automatically received one The Company is deemed to be the same entity as the Predecessor with the same assets and liabilities as the Predecessor. In addition, the charter and bylaws of the Predecessor were replaced by the operating agreement of the Company. For tax purposes, the fair value of each Unit in the Company received by stockholders when the conversion became effective, which reflected the value of the remaining assets of the Company (net of liabilities), was $14.00 per Unit and was equal to the average of the high and low trading prices for shares of the Predecessor’s common stock on the last three days on which the shares were traded on the NYSE. The business of the Company is the same as the business of the Predecessor immediately preceding the conversion, which, consistent with the Liquidation Plan, consists of the continued ownership of the Predecessor’s interest in Worldwide Plaza, the only remaining property-related asset. Under its operating agreement, the business and affairs of the Company will be managed by or under the direction of its Board of Managers, and the sole purpose is winding up the affairs of the Company and the liquidation of its remaining property-related asset. The Company will remain in existence until the earlier of (i) the distribution of all its assets pursuant to liquidation or (ii) November 7, 2022, which is four years from the effective time of the conversion. The term may be extended to such later date as the Board of Managers determines is reasonably necessary to fulfill the purposes of the Company. The dissolution process and the amount and timing of distributions to unitholders involves risks and uncertainties. Accordingly, it is not possible to predict the timing or aggregate amount which will be ultimately distributed to unitholders, and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the Consolidated Statement of Net Assets. To date, liquidating distributions totaling Liquidation Plan As of the date of this Quarterly Report on Form 10-Q, all of our property related assets have been sold except our remaining interest in Worldwide Plaza. For purposes of liquidation accounting, our estimate of net assets in liquidation value assumes a sale of Worldwide Plaza at September 30, The net assets in liquidation of as well as available market COVID-19 pandemic. We will continue to monitor the16 NEW YORK REIT LIQUIDATING LLC September 30, 2021 to focus on repositioning the property primarily as it relates to re-tenanting and modernizing the space currently occupied by Cravath Swaine & pro-rata share of the budgeted capital investment. To date, all capital costs incurred at the property have been satisfied from operating cash flow of the property.Management believes that the combined team of SL Green and RXR Realty will add the necessary talent, expertise and capital, along with the capital contributed by us, to bring this Class A asset with its investment grade tenant roster to its full potential. Management’s estimate, like any estimate or projection, is subject to various assumptions and uncertainties including the joint venture’s ability to execute on the business plan, tenants paying their rental obligations, the equity capital and financing markets and New York City market conditions generally. There is no assurance that the joint venture will be successful in taking these various actions and that these actions will, in fact, result in Current Activity For the fiscal quarter ended September 30, Liquidity and Capital Resources As of September 30, Our principal demands for funds are to pay or fund operating expenses, capital expenditures and liquidating distributions to our unitholders. We believe that cash flow distributions we expect to receive from our investment in Worldwide Plaza will continue to provide adequate capital to fund our operating, administrative and other expenses incurred during liquidation. We currently estimate that our current cash balance is sufficient to cover approximately three years of net operating expenses at the Company. If cash flow distributions from Worldwide Plaza are suspended or lower than currently estimated as a result of the economic conditions caused by the COVID-19 pandemic and government Principal Sources of Funds Cash Flows from Operating Activities Our cash flows from operating activities are primarily dependent upon the occupancy level at Worldwide Plaza, the net effective rental rates achieved on our leases, the collectability of rent, operating escalations and recoveries from our tenants at Worldwide Plaza and the level of operating and other costs, including general and administrative expenses and other expenses associated with carrying out our Liquidation Plan. Rent collections for retail and amenities tenants at Worldwide Plaza were impacted by the COVID-19 pandemic during the COVID-19 pandemic and government of the office rents that COVID-19 pandemic. The unpaid rents at September 30, 2021 represent approximately 2.4% of total rents due at the property since April 1, 2020. Negotiations with those tenants are ongoing. Subsequent to September 30, 2021, WWP received $2.8 million in outstanding rent payments, reducing the unpaid rent balance to $1.7 million. At this time, 17 NEW YORK REIT LIQUIDATING LLC September 30, 2021 See Note 3 to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding the impacts and risks we face relating to theCOVID-19 pandemic.Sales Proceeds In connection with the Liquidation Plan, we plan to sell Principal Use of Funds Capital Expenditures As of September 30, In October 2017 we set aside approximately $90.7 million from the proceeds of our sale of a 48.7% interest in Worldwide Plaza to cover estimated future leasing and capital improvement costs at the property. Our joint venture partners have committed to contribute their pro-rata share of the budgeted capital investment. To date, none of the $90.7 million has been utilized.Liquidating Distributions Until such time as we are able to dispose of our remaining asset, the actual amount and timing of, and record dates for, future liquidating distributions will be determined by our Board of Managers and will depend upon the timing and amount of cash flow distributions we receive from our Worldwide Plaza joint venture and the amounts deemed necessary by our Board of Managers to pay or provide for our liabilities and obligations. The timing and amount of our final liquidating distribution will be dependent on the timing and proceeds of the sale of our remaining interest in Worldwide Plaza. As the Company is treated as a partnership for federal and state income tax purposes, any such liquidating distributions on the Units will be deemed a return of capital. Cash Flows Our level of liquidity based upon cash and cash equivalents decreased by approximately The holders of Our primary sources of non-operating cash flow for the nine months ended September 30, $ 18 NEW YORK REIT LIQUIDATING LLC September 30, Our primary uses of non-operating cash flow for the nine months ended September 30, 2021 include:$9.4 million for liquidating distributions to unitholders. Our primary sources of non-operating cash flow for the nine months ended September 30, 2020 include:$9.6 million distributions in respect to our interest in Worldwide Plaza. Our primary uses of non-operating cash flow for the nine months ended September 30, 2020 include:$7.6 million for liquidating distributions to unitholders. Contractual Obligations We did not have any contractual debt or lease obligations as of September 30, Comparability of Financial Data From Period to Period Results of Operations Our remaining asset continues to perform in a manner that is relatively consistent with prior reporting periods. We have experienced no significant changes in occupancy or rental rates at Worldwide Plaza. Occupancy and Leasing Changes in Net Assets in Liquidation Net assets in liquidation increased by $0.8 million during the three months ended September 30, 2021, primarily due to a net increase of $3.5 million in the estimated liquidation value of the Company’s investment in Worldwide Plaza related to the estimated distributions to be received from working capital at the property and property operations. The increase was offset in part by a liquidation distribution to unitholders of $2.2 million and a $0.5 million net decrease due to a remeasurement of estimated costs. Net assets in liquidation decreased by $3.6 million during the nine months ended September 30, 2021, primarily due to liquidating distributions to unitholders of $9.4 million and a $1.9 million net decrease due to a remeasurement of estimated costs. The decrease was offset in part by a net increase of $7.7 million in the estimated liquidation value of the Company’s investment in Worldwide Plaza related to the estimated distributions to be received from working capital at the property and property operations. Net assets in liquidation decreased by $0.5 million during the three months ended September 30, 2020, primarily due to a liquidating distribution to unitholders of $4.2 million and a $0.6 million net decrease due to a remeasurement of estimated costs. The decrease was offset in part by Net assets in liquidation increased by $3.5 million during the nine months ended September 30, 2020, primarily due to a net increase of $13.2 million in the estimated liquidation value of 19 NEW YORK REIT LIQUIDATING LLC September 30, The net assets in liquidation at September 30, Our unaudited financial statements included in this Quarterly Report on Form 10-Q are prepared on the liquidation basis of accounting and accordingly include an estimate of the liquidation value of our assets and other estimates, including estimates of anticipated cash flow, timing of asset sales and liquidation expenses. These estimates update estimates that we have previously provided. These estimates are based on multiple assumptions, some of which may prove to be incorrect, and the actual amount of liquidating distributions we pay to you may be more or less than these estimates. We cannot assure you of the actual amount or timing of liquidating distributions you will receive pursuant to the Liquidation Plan.Tax Status We are taxed as a partnership for federal and state income tax purposes. Accordingly, no provision or benefit for income taxes is made in the consolidated financial statements. All distributions from the Liquidating LLC will be considered a return of capital for tax purposes. Unitholders will receive a Schedule K-1 from the Liquidating LLC annually reflecting their allocable share of the Liquidating LLC’s income, loss, gains and deductions.Inflation Many of Worldwide Plaza’s leases contain provisions designed to mitigate the adverse impact of inflation. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions. Off-Balance Sheet ArrangementsWe have no off-balance-sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.Significant Accounting Estimates and Critical Accounting Policies Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our consolidated financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. Subsequent to the adoption of the Liquidation Plan, we are required to estimate all costs and income we expect to incur and earn through the end of liquidation including the estimated amount of cash we expect to collect on the disposal of our assets and the estimated costs to dispose of our assets. 20 NEW YORK REIT LIQUIDATING LLC September 30, Investment in Unconsolidated Joint Venture We account for our investment in unconsolidated joint venture under the equity method of accounting because we exercise significant influence over, but do not control the entity and are not considered to be the primary beneficiary. Under liquidation accounting, the investment in unconsolidated joint venture is recorded at its net realizable value. We evaluate the net realizable value of our unconsolidated joint venture at each reporting period. Any changes in net realizable value will be reflected as a change in our net assets in liquidation. The liquidation value of our remaining investment in Worldwide Plaza as of September 30, Recent Accounting Pronouncement There are no new accounting pronouncements that are applicable or relevant to the Company under the liquidation basis of accounting. Item 3. Quantitative and Qualitative Disclosures About Market Risk As of September 30, Item 4. Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure. As of September 30, Rules 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 30, Other Matters There have been no changes in our internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 21 NEW YORK REIT LIQUIDATING LLC September 30, PART II — OTHER INFORMATION Item 1. Legal Proceedings. The information related to litigation and regulatory matters contained in Note 8 — Commitments and Contingencies of our notes to the consolidated financial statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1. Except as set forth therein, as of the end of the period covered by this Quarterly Report on Form10-Q, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.Item 1A. Risk Factors. There have been no material changes to the risk factors previously disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. Not applicable. Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety Disclosure. Not applicable. Item 5. Other Information. Item 6. Exhibits. The exhibits listed on the Exhibit Index are included, or incorporated by reference, in this Quarterly Report on Form 10-Q. 22 EXHIBIT INDEX The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended September 30, S-K).
23 NEW YORK REIT LIQUIDATING LLC September 30, SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 4, 2021 24 |