UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20162017
 OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________
Commission file number: 000-55393
arcnycsmalllogotransa07.jpg
American Realty Capital New York City REIT, Inc.
(Exact name of registrant as specified in its charter)
Maryland  46-4380248
(State or other  jurisdiction of incorporation or organization)  (I.R.S. Employer Identification No.)
405 Park Ave., 144th Floor, New York, NY      
  10022
(Address of principal executive offices)  (Zip Code)
(212) 415-6500
(Registrant's telephone number, including area code)

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. Yes x No o

Indicate by check mark whether the registrant 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company.  See definition of "large accelerated filer," "accelerated filer," and "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company x
Emerging growth company x

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. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

As of October 31, 2016,2017, the registrant had 30,701,00131,237,326 shares of common stock outstanding.



AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

INDEX TO FINANCIAL STATEMENTS

 Page
 
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  


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Table of Contents

Part I — FINANCIAL INFORMATION
Item 1. Financial Statements.

AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)


 September 30, 2016 December 31, 2015 September 30, 2017 December 31, 2016
ASSETS (Unaudited)   (Unaudited)  
Real estate investments, at cost:        
Land $133,380
 $133,380
 $133,380
 $133,380
Buildings and improvements 497,915
 336,582
 510,291
 502,067
Acquired intangible assets 113,994
 80,407
 107,131
 109,498
Total real estate investments, at cost 745,289
 550,369
 750,802
 744,945
Less accumulated depreciation and amortization (33,383) (18,045) (57,726) (37,889)
Total real estate investments, net 711,906
 532,324
 693,076
 707,056
Cash and cash equivalents 53,150
 182,700
 30,471
 47,671
Restricted cash 2,866
 
 28,519
 2,150
Investment securities, at fair value 508
 472
 
 477
Prepaid expenses and other assets (including amounts due from related parties of $95 and $819 at September 30, 2016 and December 31, 2015, respectively) 13,303
 7,635
Prepaid expenses and other assets (including amounts due from related parties of $83 and $670 at September 30, 2017 and December 31, 2016, respectively) 17,879
 13,017
Deferred leasing costs, net 3,475
 3,284
 5,324
 3,233
Total assets $785,208
 $726,415
 $775,269
 $773,604
        
LIABILITIES AND STOCKHOLDERS' EQUITY        
Mortgage note payable, net of deferred financing costs $190,672
 $93,176
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $2 and $184 at September 30, 2016 and December 31, 2015, respectively) 5,341
 4,889
Mortgage notes payable, net of deferred financing costs $233,361
 $191,328
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $72 and $167 at September 30, 2017 and December 31, 2016, respectively) 10,621
 6,580
Below-market lease liabilities, net 29,471
 26,644
 25,820
 28,528
Deferred revenue 3,383
 1,651
 5,557
 3,024
Distributions payable 3,800
 3,916
 3,873
 3,953
Total liabilities 232,667
 130,276
 279,232
 233,413
        
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2016 and December 31, 2015 
 
Common stock, $0.01 par value, 300,000,000 shares authorized, 30,632,079 and 30,410,467 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively 306
 304
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2017 and December 31, 2016 
 
Common stock, $0.01 par value, 300,000,000 shares authorized, 31,164,225 and 30,856,841 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 312
 309
Additional paid-in capital 675,517
 670,279
 687,342
 680,476
Accumulated other comprehensive income 32
 
 
 10
Accumulated deficit (123,314) (74,444) (191,617) (140,604)
Total stockholders' equity 552,541
 596,139
 496,037
 540,191
Total liabilities and stockholders' equity $785,208
 $726,415
 $775,269
 $773,604

The accompanying notes are an integral part of these unaudited consolidated financial statements.


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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except for share and per share data)
(Unaudited)



 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
 2016 2015 2016 2015 2017 2016 2017 2016
Revenues:                
Rental income $13,441
 $7,329
 $30,759
 $16,929
 $13,345
 $13,441
 $40,009
 $30,759
Operating expense reimbursements and other revenue 967
 550
 2,208
 1,207
 1,130
 967
 3,554
 2,208
Total revenues 14,408
 7,879
 32,967
 18,136
 14,475
 14,408
 43,563
 32,967
                
Operating expenses:                
Property operating 6,357
 3,514
 13,871
 7,586
 6,848
 6,357
 19,882
 13,871
Operating fees incurred from related parties 1,525
 128
 3,676
 128
 1,515
 1,525
 4,566
 3,676
Acquisition and transaction related 24
 
 4,327
 6,012
 
 24
 6
 4,327
General and administrative 1,268
 639
 3,770
 2,301
 2,066
 1,268
 5,634
 3,770
Depreciation and amortization 7,272
 4,822
 16,776
 11,598
 7,125
 7,272
 21,349
 16,776
Total operating expenses 16,446
 9,103
 42,420
 27,625
 17,554
 16,446
 51,437
 42,420
Operating loss (2,038) (1,224) (9,453) (9,489) (3,079) (2,038) (7,874) (9,453)
Other income (expense):                
Interest expense (2,387) (1,158) (5,027) (2,378) (2,866) (2,387) (8,365) (5,027)
Income from investment securities and interest 56
 77
 305
 141
 68
 56
 190
 305
Gain on sale of investment securities 
 
 24
 
Total other expense (2,331) (1,081) (4,722) (2,237) (2,798) (2,331) (8,151) (4,722)
Net loss $(4,369) $(2,305) $(14,175) $(11,726) $(5,877) $(4,369) $(16,025) $(14,175)
                
Other comprehensive income (loss):                
Unrealized gain (loss) on investment securities 10
 (21) 32
 (49)
Unrealized gain on investment securities 
 10
 
 32
Reversal of accumulated unrealized gain on investment securities 
 
 (10) 
Comprehensive loss $(4,359) $(2,326) $(14,143) $(11,775) $(5,877) $(4,359) $(16,035) $(14,143)
                
Basic and diluted weighted average shares outstanding 30,556,494
 29,867,646
 30,634,400
 26,657,732
 31,106,250
 30,556,494
 30,956,152
 30,634,400
Basic and diluted net loss per share $(0.14) $(0.08) $(0.46) $(0.44) $(0.19) $(0.14) $(0.52) $(0.46)
Dividends declared per common share $0.38
 $0.38
 $1.13
 $1.13
 $0.39
 $0.38
 $1.13
 $1.13

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Nine Months Ended September 30, 20162017
(In thousands, except for share data)
(Unaudited)



Common Stock        Common Stock        
Number of
Shares
 Par Value 
Additional
Paid-in
Capital
 Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders' Equity
Number of
Shares
 Par Value 
Additional
Paid-in
Capital
 Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders' Equity
Balance, December 31, 201530,410,467
 $304
 $670,279
 $
 $(74,444) $596,139
Balance, December 31, 201630,856,841
 $309
 $680,476
 $10
 $(140,604) $540,191
Common stock issued through distribution reinvestment plan677,835
 7
 16,091
 
 
 16,098
666,842
 7
 14,163
 
 
 14,170
Common stock repurchases(461,555) (5) (10,902) 
 
 (10,907)(359,458) (4) (7,333) 
 
 (7,337)
Share-based compensation5,332
 
 49
 
 
 49

 
 36
 
 
 36
Distributions declared
 
 
 
 (34,695) (34,695)
 
 
 
 (34,988) (34,988)
Net loss
 
 
 
 (14,175) (14,175)
 
 
 
 (16,025) (16,025)
Unrealized gain on investment securities
 
 
 32
 
 32
Balance, September 30, 201630,632,079
 $306
 $675,517
 $32
 $(123,314) $552,541
Reversal of unrealized gain upon realization of investment securities
 
 
 (10) 
 (10)
Balance, September 30, 201731,164,225
 $312
 $687,342
 $
 $(191,617) $496,037

The accompanying notes are an integral part of these unaudited consolidated financial statements.



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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Nine Months Ended September 30,Nine Months Ended September 30,
2016 20152017 2016
Cash flows from operating activities:      
Net loss$(14,175) $(11,726)$(16,025) $(14,175)
Adjustments to reconcile net loss to net cash used in operating activities:   
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:   
Depreciation and amortization16,776
 11,598
21,349
 16,776
Amortization of deferred financing costs1,823
 1,170
964
 1,823
Accretion of below- and amortization of above-market lease liabilities and assets, net(1,868) (1,525)(1,570) (1,868)
Share-based compensation49
 19
36
 49
Gain on sale of investment securities(24) 
Changes in assets and liabilities:      
Prepaid expenses, other assets and deferred costs(6,323) (10,267)(7,236) (6,323)
Accounts payable, accrued expenses and other liabilities1,399
 1,902
3,901
 1,399
Deferred revenue1,732
 591
2,533
 1,732
Net cash used in operating activities(587) (8,238)
Restricted cash(1,549) 
Net cash provided by (used in) operating activities2,379
 (587)
Cash flows from investing activities:      
Investments in real estate(79,162) (157,029)
 (79,162)
Purchase of investment securities(4) (15)
Acquisition funds released from escrow
 2,068
Purchase of investment securities, net
 (4)
Proceeds from the sale of investment securities491
 
Capital expenditures(12,401) (7,898)(8,084) (12,401)
Net cash used in investing activities(91,567) (162,874)(7,593) (91,567)
Cash flows from financing activities:   
   
Payments of offering costs and fees related to common stock issuances
 (30,426)
Proceeds from mortgage note payable115,180
 
Payment of mortgage note payable(96,000) 
Payments of financing costs(3,327) (4,574)(2,931) (3,327)
Proceeds from issuance of common stock
 230,600
Distributions paid(18,713) (14,281)(20,898) (18,713)
Repurchases of common stock(12,490) (1,601)(7,337) (12,490)
Restricted cash(2,866) 

 (2,866)
Net cash provided by (used in) financing activities(37,396) 179,718
Net cash used in financing activities(11,986) (37,396)
Net change in cash and cash equivalents(129,550) 8,606
(17,200) (129,550)
Cash and cash equivalents, beginning of period182,700
 184,341
47,671
 182,700
Cash and cash equivalents, end of period$53,150
 $192,947
$30,471
 $53,150
      
Supplemental Disclosures:      
Cash paid for interest$2,914
 $1,012
$6,976
 $2,914
   
Non-Cash Investing and Financing Activities      
Receivable for offering cost reimbursement$
 $700
Mortgage note payable used to acquire investments in real estate99,000
 96,000

 99,000
Accrued stock repurchase requests
 1,100
Distributions payable3,800
 3,766
3,873
 3,800
Accrued offering costs
 178
Accrued capital expenditures284
 507
140
 284
Other assets acquired in real estate transactions
 458
Other liabilities assumed in real estate transactions353
 429

 353
Common stock issued through distribution reinvestment plan16,098
 14,657
14,170
 16,098
Mortgage notes payable proceeds classified as restricted cash24,820
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20162017
(Unaudited)


Note 1 — Organization
American Realty Capital New York City REIT, Inc. (including, as required by context, New York City Operating Partnership, L.P., (the "OP"), and its subsidiaries, the “Company”) was incorporated on December 19, 2013 as a Maryland corporation and elected and qualified to be taxed as a real estate investment trust for U.S. federal income tax purposes (“REIT”) beginning with its taxable year ended December 31, 2014. On April 24, 2014, the Company commenced its initial public offering (the "IPO") on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million, pursuant to a registration statement on Form S-11, as amended (File No. 333-194135) (the "Registration Statement") filed with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement also covered up to 10.5 million shares available pursuant to a distribution reinvestment plan (the "DRIP") under which the Company's common stockholders could elect to have their distributions reinvested in additional shares of the Company's common stock at a price of $23.75 per share, which is equal to 95% of the offering price in the IPO.
On May 29, 2014, the Company received and accepted subscriptions in excess of the minimum offering amount for the IPO of $2.0 million in shares, broke general escrow and issued shares of common stock to initial investors who were admitted as stockholders of the Company. In February 2015, as permitted, the Company reallocated the remaining 10.0 million DRIP shares available under the Registration Statement to the primary offering. On May 22, 2015, the Company registered an additional 25.0 million shares to be issued pursuant to the DRIP pursuant to a registration statement on Form S-3 (File No. 333-204433). The Company closed its IPO on May 31, 2015, and continued to accept subscriptions in process as of that date. As of September 30, 2016, the Company had 30.6 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO and DRIP of $759.8 million, inclusive of $41.0 million from the DRIP and net of repurchases.
On October 24, 2016, the Company's board of directors approved an estimated net asset value per share of the Company's common stock ("Estimated Per-Share NAV") as of June 30, 2016, which was published on October 26, 2016 ("NAV Pricing Date"). The Company intends to publish subsequent valuations of Estimated Per-Share NAV periodically at the discretion of the Company's board of directors, provided that such valuations will be made at least once annually. Until the NAV Pricing Date, the Company offered shares pursuant to the DRIP and has repurchased shares pursuant to the Share Repurchase Program ("SRP") at a price based on $23.75 per share, the offering price in the IPO. Beginning with the NAV Pricing Date, the Company began to offer shares pursuant to the DRIP and repurchase shares pursuant to its SRP at a price based on Estimated Per-Share NAV.
The Company was formed to invest its assets in properties in the five boroughs of New York City, with a focus on Manhattan. The Company may also purchase for investment purposes certain real estate investment assets that accompany office properties, including retail spaces and amenities, as well as hospitality assets, residential assets and other property types exclusively in New York City. All such properties may be acquired and owned by the Company alone or jointly with another party. As of September 30, 2016,2017, the Company owned six properties consisting of 1,091,5711.1 million rentable square feet.feet, acquired for an aggregate purchase price of $686.1 million.
The Company was incorporated on December 19, 2013 as a Maryland corporation and elected and qualified to be taxed as a real estate investment trust for U.S. federal income tax purposes (“REIT”) beginning with its taxable year ended December 31, 2014. Substantially all of the Company’s business is conducted through New York City Operating Partnership, L.P.the OP.
On April 24, 2014, the Company commenced its initial public offering (the "IPO") on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million. The Company closed its IPO on May 31, 2015. As of September 30, 2017, the Company had 31.2 million shares of common stock outstanding, including unvested restricted shares of common stock ("restricted shares") and shares issued pursuant to a distribution reinvestment plan (the "DRIP"), a Delaware limited partnershipand had received total gross proceeds from the IPO of $771.6 million, inclusive of $60.1 million from the DRIP and net of repurchases.
The Company first established an estimated net asset value per share of its common stock (“Estimated Per-Share NAV”) in 2016. On October 24, 2016, the Company’s board of directors approved an Estimated Per-Share NAV as of June 30, 2016 (the “OP”“2016 Estimated Per-Share NAV”), which was published on October 26, 2016 (the “NAV Pricing Date”). Prior to the NAV Pricing Date, the Company had offered shares pursuant to the DRIP and had repurchased shares pursuant to the Share Repurchase Program (“SRP”) at a price based on $23.75 per share, the offering price in the IPO. Beginning with the NAV Pricing Date, the Company began to offer shares pursuant to the DRIP and repurchase shares pursuant to its SRP at a price based on Estimated Per-Share NAV.
On October 25, 2017, the Company's board of directors approved an Estimated Per-Share NAV as of June 30, 2017 (the "2017 Estimated Per-Share NAV"), which was published on October 26, 2017. This is the first annual update of Estimated Per-Share NAV the Company has published. The Company intends to publish subsequent valuations of Estimated Per-Share NAV at least once annually, at the discretion of the Company’s board of directors.
The Company has no employees. New York City Advisors, LLC (the "Advisor") manageshas been retained by the Company to manage the Company's affairs on a day-to-dayday to-day basis. The Company has retained New York City Properties, LLC (the “Property Manager”) manages our properties, unless services are performed by a third party for specific properties.to serve as the Company's property manager. The Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, "AR Global"), the parent of the Company's sponsor, American Realty Capital III, LLC (the "Sponsor"), as a result of which they are related parties, and each of these entities has received or will receive compensation, fees and expense reimbursements for services related to the IPO and the investment and management of the Company's assets. The Advisor, New York City Special Limited Partner, LLC (the "Special Limited Partner"), which is also under common control with AR Global, and the Property Manager have also received or will also receive fees, distributions and other compensation during the offering, acquisition, operational and liquidation stages.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

The Company is the sole general partner and holds substantially all of the units of limited partner interests in the OP (“OP Units”units”). The Advisor contributed $2,020 to the OP in exchange for 90 OP Units,units, which represents a nominal percentage of the aggregate OP ownership. A holder of OP Unitsunits has the right to convert OP Unitsunits for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, in accordance with the limited partnership agreement of the OP, provided, however, that such OP Unitsunits must have been outstanding for at least one year. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Note 2 — Summary of Significant Accounting Policies
The accompanying consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. The results of operations for the nine months ended September 30, 20162017 are not necessarily indicative of the results for the entire year or any subsequent interim period.
These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2015,2016, which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 16, 2016.28, 2017. There have been no significant changes to the Company's significant accounting policies during the nine months ended September 30, 2016,2017, other than the updates described below:
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued revised guidance relatingan update (“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a comprehensive model for entities to use in accounting for revenue recognition.arising from contracts with customers. Under the revised guidance,ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revised guidance was to becomeASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption wasor a full retrospective approach. The Company will adopt this guidance effective January 1, 2018 and currently expects to utilize the modified retrospective approach upon adoption and does not permittedexpect that this will result in a significant cumulative-effect adjustment to equity.
The Company has progressed in its project plan in evaluating its various revenue streams in order to identify any differences in the timing, measurement or presentation of revenue recognition under GAAP. ASC 606 and ASC Topic 842, Leases (“ASC 842”). Based on the Company’s evaluation of its various revenue streams, the Company believes that gains on sales of real estate could be impacted by adoption of ASC 606. The Company expects that this standard could have an impact on the timing of gains on certain sales of real estate as a result of more transactions generally qualifying as sales of real estate and revenue being recognized at an earlier date than under current accounting guidance. Specifically, the Company expects that this would impact partial sales of real estate in situations where the Company no longer retains a controlling financial interest. If the Company were to enter into partial sales of real estate, the Company would derecognize the real estate asset consistent with the principles outlined in ASC 606 and any retained non-controlling ownership interest would be measured at fair value consistent with the guidance on noncash consideration in ASC 606. The Company has not entered into any partial sales of real estate.
The Company is continuing to evaluate any differences in the timing, measurement, or presentation of revenue recognition and the impact on the Company's consolidated financial statements and internal accounting processes resulting from ASC 606 as well as ASC 842, Leases as discussed below.
In July 2015,January 2016, the FASB deferredissued an update that amends the effective daterecognition and measurement of financial instruments. The new guidance revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance by one year to annual reportingis effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as2017. Early adoption is not permitted for most of the original effective date.amendments in the update. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. The Company has not yet selected a transition method and is currently evaluating the impact of the new guidance.
In February 2016, the FASB issued an update to ASU 2016-02 establishing ASC 842, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASC 842 supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. ASC 842 will impact the lease accounting model for both lessees and lessors. The Company will adopt this guidance effective January 1, 2019.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

The Company is a lessee for a property in which it has a ground lease as of September 30, 2017. For this lease, the Company will be required to record a right-of-use asset and lease liability equal to the present value of the remaining lease payments upon adoption of this update. The new guidancestandard requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-linestraight line basis over the term of the lease.lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The
From a lessor perspective the Company expects that the new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leaseswill impact the presentation of lease and non-lease components of revenue such as rent, and operating leases.expense reimbursements including common area maintenance, taxes, and insurance from leases for which the Company is a lessor. The revisedCompany does not expect this guidance supersedes previous leasing standardsto impact its existing lessor revenue recognition pattern. The Company anticipates that it will elect the following practical expedients, which must be elected as a package and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted.applied consistently by an entity to all of its leases, which allow the Company to not have to reassess the following upon adoption: (i) whether any expired or existing contract contains a lease, (ii) lease classification related to expired or existing leases, or (iii) whether costs incurred on existing leases qualify as initial direct costs. The Company is currently evaluatingcontinuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of adopting the new guidance.
In March 2016,lessee accounting model on the FASB issued guidance which requires an entity to determine whether the natureCompany’s consolidated financial position, results of its promise to provide goods or services to a customer is performed in a principal or agent capacityoperations and to recognize revenue in a gross or net manner based on its principal/agent designation. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

In June 2016, the FASB issued guidance that changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance.disclosures.
In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance.
Recently Adopted Accounting PronouncementsIn November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance.
In February 2015,May 2017, the FASB amendedissued guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting for consolidationshould be used unless the fair value of certain legal entities. The amendments modify the evaluationaward, the vesting terms of whether certain legal entities are variable interest entities ("VIE")the award and the classification of the award as either equity or voting interest entities, eliminateliability, does not change as a result of the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships).modification. The revised guidance is effective for the Company's fiscal year endedannual periods and interim periods within those annual periods, beginning after December 31, 2016.15, 2017. Early adoption is permitted for reporting periods for which financial statements have not yet been issued. The Company has evaluatedis currently evaluating the impact of this new guidance.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Recently Adopted Accounting Pronouncements
In October 2016, the adoptionFASB issued guidance where a reporting entity will need to evaluate if it should consolidate a variable interest entity ("VIE"). The amendments change the evaluation of the new guidance on its consolidated financial statements and has determined the OP is considered to bewhether a VIE and continues to consolidate the OP as required under previous GAAP. However, the Company meets the disclosure exemption criteria as the Companyreporting entity is the primary beneficiary of thea VIE and the Company’s partnership interest is consideredby changing how a majority voting interestsingle decision maker of a VIE treats indirect interests in a business and the assets of the OP can be used for purposes other than settling its obligations, such as paying distributions. As such, the adoption of the new guidance did not have a material impact on the Company's consolidated financial statements.
In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendment requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability and that the entity apply the new guidance on a retrospective basis. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for the Company's fiscal year ended December 31, 2016. As a result of adoption of the new guidance, the Company has reclassified deferred financing costs, netheld through related to mortgage notes payable of $4.3 million and $2.8 million, respectively, as of September 30, 2016 and December 31, 2015 as a reduction of the carrying amount of its mortgage note payable. See Note 5 — Mortgage Note Payable.
In March 2016, the FASB issued an update that changes the accounting for certain aspects of share-based compensation. Among other things, the revised guidance allows companies to make an entity-wide accounting policy election to either estimate the number of awardsparties that are expected to vest or account for forfeitures when they occur.under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the provisions of this guidance beginning January 1, 20162017 and determined that there is no impact to the Company’sCompany's consolidated financial position, results of operations and cash flows.
In January 2017, the FASB issued guidance that revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single asset or group of similar assets, the assets acquired (or disposed of) would not be considered a business. The revised guidance is effective for reporting periods beginning after December 15, 2017, and the amendments will be applied prospectively. Early application is permitted only for transactions that have not previously been reported in issued financial statements. The Company has assessed this revised guidance and expects, based on historical acquisitions, future properties acquired to qualify as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. The Company adopted this guidance for the nine months ended September 30, 2017. The adoption of this guidance did not have a material impact on the Company's policy is to account for forfeitures as they occur.consolidated financial statements.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20162017
(Unaudited)

Note 3 — Real Estate Investments
There were no real estate assets acquired or liabilities assumed during the nine months ended September 30, 2017. On June 15, 2016, the Company, through a wholly-owned subsidiary of the OP, completed its acquisition of the leasehold interest in an institutional-quality office building located at 1140 Avenue of the Americas in Manhattan, New York ("1140 Avenue of the Americas"). 1140 Avenue of the Americas comprises 249,703 square feet and is subject to a remaining 50.3 year ground lease that expires on December 31, 2066, held by 1140 Sixth Avenue LLC. The ground lease has a fixed annual rent of $0.3 million until January 1, 2017, at which time the fixed annual rent increases to $4.7 million through December 2041 and $5.1 million through the remainder of the term. The seller of 1140 Avenue of the Americas was BPGL Holdings LLC. The contract purchase price for 1140 Avenue of the Americas was $180.0 million, exclusive of closing costs. The Company funded the purchase price with proceeds from the Company's IPO and a mortgage loan from Ladder Capital Finance I LLC (see Note 5 — Mortgage Note Payable). The Company accounted for the purchase of 1140 Avenue of the Americas as a business combination and incurred acquisition related costs of $4.3 million, which are reflected in the acquisition and transaction related line item of the consolidated statements of operations and comprehensive loss.
The following table presents the allocation of the real estate assets acquired and liabilities assumed during the nine months ended September 30, 2016 and 2015 as well as the weighted-average remaining amortization period (in years) as of the acquisition date for intangible assets acquired and liabilities assumed.2016:
  Nine Months Ended September 30,
  2016 2015
(Dollar amounts in thousands) Total Assets Acquired Weighted Average Amortization Period Total Assets Acquired
Real estate investments, at cost:      
Land $
   $50,064
Building and improvements 148,647
   182,917
Total tangible assets 148,647
   232,981
Acquired intangibles:      
In-place leases 27,433
 6.5 33,380
Above-market lease assets 5,230
 9.1 884
Below-market lease liabilities (5,277) 7.2 (14,245)
Below-market ground lease asset 2,482
 50.6 
Total intangible assets, net 29,868
 9.6 20,019
Total assets acquired, net 178,515
   253,000
Mortgage notes payable used to acquire real estate investments (99,000)   (96,000)
Other assets acquired 
   458
Other liabilities assumed (353)   (429)
Cash paid for acquired real estate investment $79,162
   $157,029
Number of properties purchased 1
   1

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

The following table presents unaudited pro forma information as if the acquisition during the nine months ended September 30, 2016 had been consummated on January 1, 2015 and the acquisition during the nine months ended September 30, 2015 had been consummated on January 1, 2014. Accordingly, the pro forma net loss was adjusted to reclassify acquisition and transaction related expense of $4.3 million from the nine months ended September 30, 2016 to the nine months ended September 30, 2015. Additionally, pro forma net loss was adjusted to reclassify acquisition and transaction related expense of $6.0 million from the nine months ended September 30, 2015 to January 1, 2014.
  Nine Months Ended September 30,
(In thousands) 2016 2015
Pro forma revenues(1) 
 $41,932
 $37,312
Pro forma net loss attributable to stockholders(1)
 $(15,274) $(9,153)
Basic and diluted pro forma net loss per share attributable to stockholders $(0.50) $(0.37)
_______________
(1)    For the nine months ended September 30, 2016, aggregate revenues and net income (adjusted for acquisition and transaction costs) derived from the Company's acquisition for the Company's period of ownership were $6.0 million and $0.6 million, respectively.
  Nine Months Ended September 30,
  2016
(Dollar amounts in thousands) Total Assets Acquired
Real estate investments, at cost:  
Land $
Building and improvements 148,647
Total tangible assets 148,647
Acquired intangibles:  
In-place leases 27,433
Above-market lease assets 5,230
Other intangibles 
Below-market lease liabilities (5,277)
Below-market ground lease asset 2,482
Total intangible assets, net 29,868
Total assets acquired, net 178,515
Mortgage notes payable used to acquire real estate investments (99,000)
Premiums on mortgages assumed 
Other assets acquired 
Other liabilities assumed (353)
Cash paid for acquired real estate investment $79,162
Number of properties purchased 1
Future Minimum Cash Rent

The following table presents future minimum base cash rental payments due to the Company subsequent to September 30, 2016.2017. These amounts exclude contingent rent payments, as applicable, that may be collected based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.
(In thousands) Future Minimum Base Cash Rent Payments
October 1, 2016 - December 31, 2016 $11,857
2017 44,940
2018 42,797
2019 41,040
2020 36,977
Thereafter 146,731
  $324,342
Significant Tenant
The following table lists the tenants whose annualized rental income on a straight-line basis represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis as of September 30, 2015. As of September 30, 2016 there were no tenants whose annualized rental income on a straight-line basis represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.
PropertyTenantSeptember 30, 2015
123 William StreetPlanned Parenthood Federation of America, Inc.11.2%
The termination, delinquency or non-renewal of this lease by the above tenant may have a material adverse effect on the Company's revenues.
(In thousands) Future Minimum Base Cash Rent Payments
2017 $11,180
2018 48,411
2019 47,063
2020 43,039
2021 39,069
Thereafter 139,430
  $328,192

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20162017
(Unaudited)

Significant Tenant
As of September 30, 2017 and 2016, there were no tenants whose annualized rental income on a straight-line basis, based on leases signed, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.
Intangible Assets and Liabilities
Acquired intangible assets and lease liabilities consist of the following as of September 30, 20162017 and December 31, 2015:2016:
 September 30, 2016 September 30, 2017
(In thousands) 
Gross Carrying
 Amount
 
Accumulated
 Amortization
 
Net Carrying
Amount
 
Gross Carrying
 Amount
 
Accumulated
 Amortization
 
Net Carrying
Amount
Intangible assets:            
In-place leases $70,040
 $14,048
 $55,992
 $63,177
 $19,918
 $43,259
Other intangibles 31,447
 2,310
 29,137
 31,447
 3,475
 27,972
Below-market ground lease 2,482
 14
 2,468
 2,482
 64
 2,418
Above-market leases 10,025
 1,196
 8,829
 10,025
 2,719
 7,306
Acquired intangible assets $113,994
 $17,568
 $96,426
 $107,131
 $26,176
 $80,955
Intangible liabilities:            
Below-market lease liabilities $34,659
 $5,188
 $29,471
 $34,069
 $8,249
 $25,820
 December 31, 2015 December 31, 2016
(In thousands) 
Gross Carrying
 Amount
 
Accumulated
 Amortization
 
Net Carrying
Amount
 
Gross Carrying
 Amount
 
Accumulated
 Amortization
 
Net Carrying
Amount
Intangible assets:            
In-place leases $44,165
 $8,017
 $36,148
 $65,544
 $14,045
 $51,499
Other intangibles 31,447
 1,436
 30,011
 31,447
 2,601
 28,846
Below-market ground lease 2,482
 27
 2,455
Above-market leases 4,795
 628
 4,167
 10,025
 1,618
 8,407
Acquired intangible assets $80,407
 $10,081
 $70,326
 $109,498
 $18,291
 $91,207
Intangible liabilities:            
Below-market lease liabilities $29,504
 $2,860
 $26,644
 $34,471
 $5,943
 $28,528
The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2016 2015 2016 2015 2017 2016 2017 2016
Amortization of in-place leases and other intangibles(1)
 $3,607
 $3,089
 $8,462
 $6,976
 $2,877
 $3,607
 $9,113
 $8,642
Amortization and (accretion) of above- and below-market leases, net(2)
 $(631) $(648) $(1,882) $(1,525) $(512) $(631) $(1,607) $(1,882)
Amortization of below-market ground lease(3)
 $14
 $
 $14
 $
 $13
 $14
 $37
 $14
_______________
(1)Reflected within depreciation and amortization expense.
(2)Reflected within rental income.
(3)Reflected within property operating expense.


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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20162017
(Unaudited)

The following table provides the projected amortization expense and adjustments to revenues for the next five years as of September 30, 2016:2017:
(In thousands) October 1, 2016 - December 31, 2016 2017 2018 2019 2020 October 1, 2017- December 31, 2017 2018 2019 2020 2021
In-place leases $3,118
 $10,800
 $9,502
 $8,744
 $6,842
 $2,576
 $9,372
 $8,588
 $6,718
 $5,332
Other intangibles 291
 1,165
 1,165
 1,165
 1,165
 291
 1,165
 1,165
 1,165
 937
Total to be included in depreciation and amortization $3,409
 $11,965
 $10,667
 $9,909
 $8,007
 $2,867
 $10,537
 $9,753
 $7,883
 $6,269
                    
Above-market lease assets $(308) $(1,232) $(1,135) $(1,107) $(1,038) $(366) $(1,369) $(1,305) $(1,164) $(1,064)
Below-market lease liabilities 929
 3,584
 3,436
 3,094
 2,680
 874
 3,435
 3,092
 2,679
 2,371
Total to be included in rental income $621
 $2,352
 $2,301
 $1,987
 $1,642
 $508
 $2,066
 $1,787
 $1,515
 $1,307
Note 4 — Investment Securities
As of September 30, 2016 and2017, the Company had no investment in equity securities. As of December 31, 2015,2016, the Company had an investment in an equity security with a fair value of $0.5 million. The equity security consists of a mutual fund managed by an affiliate of the Sponsor. See Note 9 — Related Party Transactions and Arrangements. This investment iswas considered to be an available-for-sale security and therefore increases or decreases in the fair value of this investment arewere recorded in accumulated other comprehensive income (loss) as a component of equity on the consolidated balance sheets unless the security iswas considered to be other-than-temporarily impaired, at which time the losses would be reclassified to expense. In addition, the unrealized gain or loss recorded in accumulated other comprehensive income (loss) were reversed on the date of the sale. On June 15, 2017, the Company redeemed its investment in equity securities at approximately $491,000 with a cost basis of approximately $467,000 and realized approximately $24,000 gain as of September 30, 2017.
The following table details the unrealized gains and losses on the investment security by security type as of September 30, 2016 and December 31, 2015:2016:
(In thousands) Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
September 30, 2016        
December 31, 2016        
Equity security $476
 $32
 $
 $508
 $467
 $10
 $
 $477
December 31, 2015        
Equity security $472
 $
 $
 $472

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20162017
(Unaudited)

Note 5 — Mortgage NoteNotes Payable
The Company's mortgage notenotes payable as of September 30, 20162017 and December 31, 2015 is2016 are as follows:
 Outstanding Loan Amount    Outstanding Loan Amount   
Portfolio Encumbered Properties September 30,
2016
 December 31,
2015
 Effective Interest Rate Interest Rate Maturity  Encumbered Properties September 30,
2017
 December 31,
2016
 Effective Interest Rate Interest Rate Maturity 
 (In thousands) (In thousands)    (In thousands) (In thousands)   
123 William Street(1)
 1 $96,000
 $96,000
 2.81%
(2) 
Variable Mar. 2017
(3) 
 1 $140,000
 $96,000
 4.73% Fixed Mar. 2027 
1140 Avenue of the Americas 1 99,000
 
 4.17% Fixed July 2026  1 99,000
 99,000
 4.17% Fixed Jul. 2026 
Less: deferred financing costs, net   (4,328) (2,824)      (5,639) (3,672)   
Mortgage note payable, net of deferred financing costs 2 $190,672
 $93,176
 3.58%  2 $233,361
 $191,328
 4.61% 
_____________________
(1)The Company may borrow up to $110.0 million subject to complianceentered into a loan agreement with certain provisions as describedBarclays Bank PLC, in the termsamount of $140.0 million, on March 6, 2017. A portion of the proceeds from the loan was used to repay the outstanding principal balance of approximately $96.0 million on the existing mortgage agreement.
(2)Interest rate is one month LIBOR, which was 0.524% atloan secured by the property. At closing, the lender placed $24.8 million of the proceeds in escrow, to be released to the Company in accordance with the conditions under the loan, in connection with leasing activity, tenant improvements, leasing commissions and free rent obligations related to this property. As of September 30, 2016, plus a margin2017, the $24.8 million of 2.25%, basedthe proceeds remained in escrow and is included in restricted cash on a 360 day year.
(3)The Company has a one-time option to extend the maturity date by one year.unaudited consolidated balance sheet.
Real estate assets of $445.1$447.5 million, at cost (net of below-market lease liabilities), at September 30, 20162017 have been pledged as collateral to the Company's mortgage note payable and are not available to satisfy the Company's other obligations unless first satisfying the mortgage note payable on the property. The Company makesis required to make payments of interest on its mortgage note payable on a monthly basis.
The following table summarizes the scheduled aggregate principal payments subsequent to September 30, 2016:2017:
(In thousands) Future Minimum Principal Payments Future Minimum Principal Payments
October 1, 2016 - December 31, 2016 $
2017 96,000
 $
2018 
 
2019 
 
2020 
 
2021 
Thereafter 99,000
 239,000
Total $195,000
 $239,000
The Company's mortgage notenotes payable requiresrequire compliance with certain property-level debt covenants. As of September 30, 2016,2017, the Company was in compliance with the debt covenants under its mortgage note agreement.agreements.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20162017
(Unaudited)

Note 6 — Fair Value of Financial Instruments
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the instrument. This alternative approach also reflects the contractual terms of the instrument, as applicable, including the period to maturity, and may use observable market-based inputs, including interest rate curves and implied volatilities, and unobservable inputs, such as expected volatility. The guidance defines three levels of inputs that may be used to measure fair value.
 Level 1Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
    
 Level 2Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
    
 Level 3Unobservable inputs that reflect the entity's own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.
See Note 4 — Investment Securities. The Company hasredeemed its investment in an equity security on June 15, 2017. As of December 31, 2016, the Company had an investment in a real estate income fund that iswas traded in active markets and therefore, due to the availability of quoted market prices in active markets, classifiesclassified this investment as Level 1 in the fair value hierarchy.
The following table presents information about the Company's assetassets measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015,2016, aggregated by the level in the fair value hierarchy within which that instrument falls.
 Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable Inputs   Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable Inputs  
(In thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
September 30, 2016        
December 31, 2016        
Investment Securities $508
 $
 $
 $508
 $477
 $
 $
 $477
December 31, 2015        
Investment Securities $472
 $
 $
 $472
There were no transfers between levels of the fair value hierarchy during the three months ended September 30, 2016 or 2015.2016.
Financial instruments not carried at fair value
The Company is required to disclose at least annually the fair value of financial instruments for which it is practicable to estimate the value. The fair value of short-term financial instruments such as cash and cash equivalents, prepaid expenses and other assets, accounts payable and distributions payable approximates their carrying value on the consolidated balance sheets due to their short-term nature. The fair values of the Company's financial instruments that are not reported at fair value on the consolidated balance sheet are reported below:
 September 30, 2016 September 30, 2017 December 31, 2016
(In thousands) Level Gross Principal Balance Fair Value Level Gross Principal Balance  Fair Value Gross Principal Balance Fair Value
Mortgage note payable — 123 William Street 3 $140,000
 $145,483
 * *
Mortgage note payable — 1140 Avenue of the Americas 3 $99,000
 $105,123
 3 $99,000
 $98,721
 $99,000
 $98,000
* The fair value of the mortgage note payable is estimated to be equivalent to its carrying value because it bears interest at a variable rate that fluctuates with market and there has been no significant change in the credit risk. This mortgage note payable was repaid on March 6, 2017.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20162017
(Unaudited)

As of December 31, 2015, the Company did not have any financial instruments not carried at fair value or an amount that approximates fair value. The fair value of the mortgage note payable on 123 William Street is deemed to be equivalent to its carrying value because it bears interest at a variable rate that fluctuates with market rates and there has been no material change in the credit risk or credit markets since origination.
Note 7 — Common Stock
As of September 30, 2016,2017, the Company had 30.631.2 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total proceeds from public offerings of $759.8$771.6 million, inclusive of $41.0$60.1 million from the DRIP and net of repurchases. As of December 31, 2015,2016, the Company had 30.430.9 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds of $754.6$764.8 million, inclusive of $24.9$46.0 million from the DRIP.DRIP and net of repurchases.
In May 2014, the board of directors of the Company authorized, and the Company declared,began paying, a monthly distribution payable to stockholders of record each day during the applicable period equal to $0.0041438356 per day, which is equivalent to $1.5125 per annum, per share of common stock. In March 2016, the board of directors of the Company ratified the existing distribution amount equivalent to $1.5125 per annum, per share of common stock, and, for calendar year 2016, affirmed a change to the daily distribution payable to stockholders of record each day during the applicable period to $0.004132513665 per day per share of common stock to accurately reflect that 2016 is a leap year. The distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.
The Company has a Share Repurchase Program ("SRP") that enables stockholders, subject to certain conditions and limitations, to sell their shares to the Company. Under the SRP stockholders may request that the Company repurchase all or any portion of their shares of common stock, if such repurchase does not impair the Company's capital or operations.
On January 25, 2016, the Company's board of directors approved an amendment of the SRP to supersede and replace the existing SRP effective beginning on February 28, 2016. Under the SRP, as amended, repurchases of shares of the Company's common stock, when requested, are at the sole discretion of the Company's board of directors and generally will be made semiannually (each six-month period ending June 30 or December 31, a "fiscal semester").
On October 24, 2016, the Company's board of directors approved anthe 2016 Estimated Per-Share NAV, and, on October 25, 2017, the Company's board of directors approved the 2017 Estimated Per-Share NAV.
On June 14, 2017, the Company announced that its board of directors had adopted an amendment and restatement of the SRP that superseded and replaced the existing SRP effective as of June 30, 2016.July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of the Company’s common stock or received their shares from the Company (directly or indirectly) through one or more non-cash transactions would be considered for repurchase. Other terms and provisions of the amended and restated SRP remained consistent with the existing SRP.
In cases of requests for death and disability, the repurchase price is equal to then-current Estimated Per-Share NAV at the time of repurchase. Prior to the establishment of Estimated Per-Share NAV, the repurchase price in these circumstances was equal to the price paid to acquire the shares.
Prior to the establishment of Estimated Per-Share NAV, the purchase price per share for requests other than for death or disability under the SRP dependsdepended on the length of time investors havehad held such shares as follows (in each case, as adjusted for any stock distributions, combinations, splits and recapitalizations):
after one year from the purchase date - the lower of $23.13 and 92.5% of the amount they actually paid for each share; and,
after two years from the purchase date - the lower of $23.75 and 95.0% of the amount they actually paid for each share.
Prior to the establishment of Estimated Per-Share NAV, in the case of requests for death or disability, the repurchase price per share is equal to the price paid to acquire the shares from the Company.
Following the establishment of Estimated Per-Share NAV, the purchase price per share for requests other than for death or disability under the SRP now dependsdepended on the length of time investors havehad held such shares as follows (in each case, as adjusted for any stock distributions, combinations, splits and recapitalizations):
after one year from the purchase date - 92.5% of the Estimated Per-Share NAV;
after two years from the purchase date - 95.0% of the Estimated Per-Share NAV;
after three years from the purchase date - 97.5% of the Estimated Per-Share NAV; and,
after four years from the purchase date - 100.0% of the Estimated Per-Share NAV.
Subsequent to the establishment
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Table of Estimated Per-Share NAV, in the case of requests for death or disability, the repurchase price per share is equal to the Estimated Per-Share NAV at the time of the repurchase.Contents
AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Repurchases for any fiscal semester will beare limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

number of shares of common stock outstanding on December 31st of the previous calendar year. In addition, the Company is only authorized to repurchase shares in a given fiscal semester up to the amount of proceeds received from the DRIP in that same fiscal semester, as well as any reservation of funds the Company's board of directors, may, in its sole discretion, make available for this purpose. If the establishment of an Estimated Per-Share NAV occurs during any fiscal semester, any repurchase requests received during such fiscal semester will be paid at the Estimated Per-Share NAV applicable on the last day of the fiscal semester.
As permittedWhen a stockholder requests a repurchase and the repurchase is approved by the Company's board of directors, the Company will reclassify such obligation from equity to a liability based on the value of the obligation. Shares purchased under the SRP will have the Company’s boardstatus of directors authorized with respect to redemption requests received duringbut unissued shares. The following table reflects the first fiscal semester, the repurchasenumber of shares validly submitted for repurchase in an amount equal to the amount of proceeds received from the DRIP in that same fiscal semester, representing less than all the shares validly submitted for repurchase during the first fiscal semester. Pursuant to this authorization 461,555 shares were repurchased for $10.9 million at an average repurchase price per share of $23.62 (including all shares submitted for death or disability) during the nine months endedcumulatively through September 30, 2016. The Company will complete a second repurchase in the first quarter of 2017 after completion of the second fiscal semester in accordance with the SRP.2017.
  Numbers of Shares Repurchased Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2016 645,335
 $23.63
Nine months ended September 30, 2017(1)
 359,458
 20.41
Cumulative repurchases as of September 30, 2017 1,004,793
 $22.48
_____________________
(1)Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13.7 thousand at a weighted average price per share of $23.68 and (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.
Note 8 — Commitments and Contingencies
Ground Lease
The Company entered into a ground lease agreement related to the acquisition of 1140 Avenue of the Americas under a leasehold interest arrangement. The following table reflects the minimum base cash rental payments due from the Company over the next five years and thereafter:
(In thousands) Future Minimum Base Cash Rent Payments- Ground Lease
2017 1,187
2018 4,746
2019 4,746
2020 4,746
2021 4,746
Thereafter 221,484
Total $241,655
The Company incurred ground rent expense of $1.2 million and $3.6 million during the three and nine months ended September 30, 2017, respectively. The Company incurred ground rent expense of $1.2 million and $1.4 million during the three and nine months ended September 30, 2016, respectively.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Litigation and Regulatory Matters
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company.
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. As of September 30, 2016,2017, the Company has not been notified by any governmental authority of any 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 results of operations.
Note 9 — Related Party Transactions and Arrangements
As of September 30, 2016,2017, an entity wholly owned by the Sponsor owned 8,888 shares of the Company’s outstanding common stock.
Realty Capital Securities, LLC (the "Former Dealer Manager") served as the dealer manager of the IPO, which was ongoing from September 2010April 2014 to December 2013,May 2015, and, together with its affiliates, continued to provide the Company with various services through December 31, 2015. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager and certain of its affiliates that provided services to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Global, the parent of the Sponsor. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc. On March 8, 2017, the creditor trust established in connection with the RCAP bankruptcy filed suit against AR Global, the Advisor, advisors of other entities sponsored by AR Global, and AR Global’s principals (including Mr. Weil, the Company's Executive Chairman, Chief Executive Officer, President and Secretary). The suit alleges, among other things, certain breaches of duties to RCAP. The Company is not named in the suit, nor are there allegations related to the services the Advisor provides to the Company. On May 26, 2017, the defendants moved to dismiss. The Advisor has informed the Company that the Advisor believes the suit is without merit and intends to defend against it vigorously.
As of SeptemberJune 30, 2016, and 2015, the Company had $0.5 million invested in a mutual fund managed by an affiliate of the Sponsor. See Note 4 — Investment Securities. There is no obligation to purchase any additional shares and the shares can be sold at any time. The Company recognized income fromsold its investment securities of approximately $3,000 and approximately $6,000, respectively,in a mutual fund during the three and nine months ended September 30,fourth quarter of 2016. The Company recognized income from investment securities of approximately $8,000 and approximately $15,000, respectively, during the three and nine months ended September 30, 2015.
Fees Paid in Connection with the IPO
The Former Dealer Manager was paid fees and compensation in connection with the sale of the Company's common stock in the IPO. The Former Dealer Manager was paid a selling commission of up to 7.0% of the per share purchase price of offering proceeds before reallowance of commissions earned by participating broker-dealers. In addition, the Former Dealer Manager was paid up to 3.0% of the gross proceeds from the sale of shares as a dealer manager fee. The Former Dealer Manager was able to reallow its dealer manager fee to participating broker-dealers. A participating broker-dealer had the option to elect to receive a fee equal to 7.5% of the gross proceeds from the sale of shares (not including selling commissions and dealer manager fees) by such participating broker-dealer, with 2.5% thereof paid at the time of such sale and 1.0% thereof paid on each anniversary of the closing of such sale up to and including the fifth anniversary of the closing of such sale. If this option was elected, the dealer manager fee would have been reduced to 2.5% of gross proceeds (not including selling commissions and dealer manager fees).

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

The following table details total selling commissions and dealer manager fees incurred from and due to the Former Dealer Manager as of and for the periods presented:
  Three Months Ended September 30, Nine Months Ended September 30, Payable as of
(In thousands) 2016 2015 2016 2015 September 30, 2016 December 31, 2015
Total commissions and fees incurred from the Former Dealer Manager $
 $2,056
 $
 $22,374
 $
 $
The Advisor and its affiliates were paid compensation and reimbursement for services relating to the IPO, including transfer agent services and other professional services providedmanaged by an affiliate of the Former Dealer Manager. All offering costs incurred by the Company, the Advisor and affiliated entitiesSponsor of the Advisor on behalf of the Company were charged to additional paid-in capital on the accompanying consolidated balance sheets through the end of the IPO. Subsequent to the closing of the IPO, transfer agent and other professional fees are recognized as a component of general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss. The following table details offering costs and reimbursements incurred from and due to the Advisor and affiliated parties of the Former Dealer Manager as of and for the periods presented:
  Three Months Ended September 30, Nine Months Ended September 30, Receivable as of
(In thousands) 2016 2015 2016 2015 September 30, 2016 December 31, 2015
Fees and expense reimbursements from the Advisor and affiliates of the Former Dealer Manager $
 $240
 $
 $5,277
 $
 $758
As of September 30, 2016 and December 31, 2015, cumulative offering costs, including selling commissions and dealer manager fees, were $84.0 million. The Company was responsible for paying offering and related costs from the IPO, excluding commissions and dealer manager fees, up to a maximum of 2.0% of gross proceeds received from the IPO, measured at the end of the IPO. Offering costs, excluding commissions and dealer manager fees, in excess of the 2.0% cap as of the end of the IPO are the Advisor’s responsibility. As of December 31, 2015, the Company had a receivable from the Advisor totaling $0.8 million related to excess offering and related costs. This amount was paid in fullapproximately $4,000 during the three and six months ended September 30, 2016 and therefore no receivable remains as of SeptemberJune 30, 2016.
Fees and Participations Paid in Connection With the Operations of the Company
The Advisor is paid an acquisition fee of 1.5% of (A) the contract purchase price of each acquired property and (B) the amount advanced for a loan or other investment. The Advisor is also reimbursed for expenses actually incurred related to selecting, evaluating and acquiring assets on the Company's behalf, regardless of whether the Company actually acquires the related assets. Specifically, the Company paysThese acquisition expenses may also include insourced expenses for services performed by the Advisor or its affiliates for any services provided for which they incur investment-related expenses, or insourced expenses.affiliates. Such insourced expenses are fixed initially at and may not exceed 0.50% of the contract purchase price of each property and 0.50% of the amount advanced for each loan or other investment, which is paid at the closing of each such investment. The Advisor is also reimbursed for legal expenses incurred in the process of acquiring properties, in an amount not to exceed 0.10% of the contract purchase price. In addition, the Company also pays third parties, or reimburses the Advisor for any investment-related expenses due to third parties. In no event will the total of all acquisition fees, acquisition expenses and any financing coordination fees (as described below) payable with respect to the Company's portfolio of investments exceed 4.5% of (A) the contract purchase price or (B) the amount advanced for all loans or other investments. Once the proceeds from the primary offering have been fully invested, the aggregate amount of acquisition fees and any financing coordination fees may not exceed 1.5% of (A) the contract purchase price and (B) the amount advanced for a loan or other investment, as applicable, for all the assets acquired. The Company incurred no acquisition fees and acquisition expense reimbursements to the Advisor during the three and nine months ended September 30, 2017. The Company incurred no acquisition fees and acquisition expense reimbursements to the Advisor during the three months endedSeptember 30, 2016 and $3.6 million during the nine months ended September 30, 2016.
If the Advisor provides services in connection with the origination or refinancing of any debt that the Company obtains and uses to acquire properties or to make other permitted investments, or that is assumed, directly or indirectly, in connection with the acquisition of properties, the Company pays the Advisor a financing coordination fee equal to 0.75% of the amount made available or outstanding under such financing, subject to certain limitations.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20162017
(Unaudited)

Until September 30, 2015, for its asset management services, the Company issued to the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the board of directors) to the Advisor performance-based, restricted, forfeitable partnership units in the OP designated as “Class B Units” on a quarterly basis in an amount equal to: (i) the product of (y) 0.1875% multiplied by (z) the cost of the Company's assets divided by (ii) the value of one share of common stock as of the last day of such calendar quarter, which is equal initially to $22.50 (the primary offering price minus selling commissions and dealer manager fees). The Class B Units are intended to be profits interests and will vest, and no longer be subject to forfeiture, at such time as: (a) the value of the OP's assets plus all distributions made by the Company to its stockholders equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pretax, non-compounded annual return thereon, or the "economic hurdle;" (b) any one of the following events occurs concurrently with or subsequently to the achievement of the economic hurdle described above: (i) a listing of the Company's common stock on a national securities exchange; (ii) a transaction to which the Company or the OP is a party, as a result of which OP Unitsunits or the Company's common stock are or will be exchanged for or converted into the right, or the holders of such securities will otherwise be entitled, to receive cash, securities or other property or any combination thereof; or (iii) the termination of the advisory agreement without cause by an affirmative vote of a majority of the Company's independent directors after the economic hurdle has been met; and (c) the Advisor pursuant to the advisory agreement is providing services to the Company immediately prior to the occurrence of an event of the type described in clause (b) above unless the failure to provide such services is attributable to the termination without cause of the advisory agreement by an affirmative vote of the majority of the Company's independent directors after the economic hurdle has been met (the "performance condition"). The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the performance condition to be probable. As of September 30, 2016,2017, the Company cannot determine the probability of achieving the performance condition. The Advisor receives distributions on its vested and unvested Class B Units, whether vested or unvested, at the same rate as distributions received on the Company's common stock. Such distributions on issued Class B Units are expensed in the consolidated statements of operations and comprehensive loss until the performance condition is considered probable to occur. As of September 30, 2016,2017, the Company's board of directors hashad approved the issuance of 159,159 Class B Units in connection with the arrangement. Beginning on October 1, 2015, and in lieu of the asset management subordinated participation, the Company paysbegan paying an asset management fee in cash to the Advisor or its assignees as compensation for services rendered in connection with the management of the Company’s assets. The asset management fee is payable on the first business day of each month in the amount of 0.0625% multiplied by (i) the cost of the Company's assets for the preceding monthly period or (ii) during the period of time after the Company publishes Estimated Per-Share NAV, the lower of the cost of assets and the estimated fair market value of the Company’s assets as reported in the applicable periodic or current report filed with the SEC disclosing the fair market value. The Company paid $1.4 million and $4.1 million in cash asset management fees during the three and nine months ended September 30, 2017, respectively. The Company paid $1.3 million and $3.3 million in cash asset management fees during the three and nine months ended September 30, 2016, respectively. The Company did not pay any cash asset management fees during the three or nine months ended September 30, 2015.
Unless the Company contracts with a third party, the Company pays the Property Manager a property management fee equal to: (i) for non-hotel properties, 4.0% of gross revenues from the properties managed, plus market-based leasing commissions; and (ii) for hotel properties, a market-based fee based on a percentage of gross revenues. The Company also reimburses the Property Manager for property-level expenses. The Property Manager may subcontract the performance of its property management and leasing services duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services. The Company paid $0.2 millionincurred approximately $145,000 and $0.3 million$470,000 in property management fees during the three and nine months ended September 30, 2017, respectively. The Company incurred $183,000 and $345,000 in property management fees during the three and nine months ended September 30, 2016, respectively. The Company paid $0.1 million in property management fees during the three and nine months ended September 30, 2015.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

The Company reimburses the Advisor’s costs of providing administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company’s operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairments or other similar non-cash expenses and excluding any gain from the sale of assets for that period, unless the Company's independent directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, in which case the excess amount may be reimbursed to the Advisor in subsequent periods. Additionally, the Company reimburses the Advisor for personnel costs in connection with other services; however, the Company may not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives acquisition fees, acquisition expense reimbursements or real estate commissions. The Company’s executive officers, who are employees of affiliates of the Advisorcommissions and Property Manager, do not receive any compensation directly from the Company for serving as executive officers. The Company does not reimburse the Advisor and its affiliates that are involved in managing the Company’s operations, including the Property Manager,no reimbursement shall be made for salaries, bonuses or benefits incurred by these entities andto be paid to the Company’sCompany's executive officers.officer. Total reimbursement of costs and expenses for the three and nine months ended September 30, 2016 was $0.52017 were $1.0 million and $1.3$2.5 million, respectively. Total reimbursement of costs and expenses for the three and nine months ended September 30, 2015 was $0.22016 were $0.5 million and $0.5$1.3 million, respectively.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

The predecessor to the parent of the Sponsor was party to a services agreement with RCS Advisory Services, LLC ("RCS Advisory"), a subsidiary of the parent company of the Former Dealer Manager ("RCS Advisory"),RCAP, pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by the Sponsor with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. The predecessor to the parent of the Sponsor instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory.
The Company was also party to a transfer agency agreement with American National Stock Transfer, LLC ("ANST"), a subsidiary of the parent company of the Former Dealer Manager,RCAP, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end Internal Revenue Service ("IRS") reporting and other services), and supervisory services overseeing the transfer agency services performed by DST Systems, Inc. ("DST"), a third-party transfer agent. The Sponsor received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. DST continued to provide the Company with transfer agency services and, on March 10, 2016, the Company entered into a definitive agreement with DST to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). For the three and nine months ended September 30, 2017 and 2016, the fees for services from DST are included in general and administrative expenses on the consolidated statements of operations and comprehensive loss during the period in which the service was provided.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

The following table details amounts incurred waived and payable in connection with the Company's operations-related services described above as of and for the periods presented:
  Three Months Ended September 30, Nine Months Ended September 30,  
  2016 2015 2016 2015 Payable (receivable) as of
(In thousands) Incurred 
Waived(1)
 Incurred 
Waived(1)
 Incurred 
Waived(1)
 Incurred 
Waived(1)
 September 30, 2016 December 31, 2015
Acquisition fees and reimbursements:                    
Acquisition fees and related cost reimbursements $
 $
 $
 $
 $3,600
 $
 $5,060
 $
 $
 $
Financing coordination fees 
 
 
 
 743
 
 825
 
 
 
Ongoing fees:  
  
                
Operating fees incurred from related parties 1,525
 
 128
 
 3,676
 
 332
 204
 (95) (44)
Professional fees and other reimbursements 460
 
 203
 
 1,286
 
 520
 
 2
 167
Distributions on Class B Units 60
 
 37
 
 180
 
 68
 
 
 
Total related party operation fees and reimbursements $2,045
 $
 $368
 $
 $9,485
 $
 $6,805
 $204
 $(93) $123
______________________
  Three Months Ended September 30, Nine Months Ended September 30, Payable (receivable) as of
(In thousands) 20172016 2017 2016 September 30, 2017 December 31, 2016
Acquisition fees and reimbursements:               
Acquisition fees and related cost reimbursements $
 $
  $
  $3,600
  $
 $(646)
Financing coordination fees 
 
  1,050
  743
  
 
Ongoing fees:  
             
Operating fees incurred from related parties 1,515
 1,525
  4,566
  3,676
  (77)
(1) 
(24)
Professional fees and other reimbursements 988
 460
  2,644
  1,286
  66
(2) 
167
Distributions on Class B units 61
 60
  180
  180
  
 
Total related party operation fees and reimbursements $2,564
 $2,045
  $8,440
  $9,485
  $(11) $(503)
_____________________
(1)Beginning in the third quarter 2015, feesRepresents a receivable balance of approximately $83,000 related to property management fees, offset with a payable balance of approximately $6,000 related to asset management fees. The receivable balance is included in prepaid expenses and leasing were charged toother assets on the Company.unaudited consolidated balance sheet. The payable balance is included in accounts payable, accrued expense and other liabilities on the unaudited consolidated balance sheet.
(2) The payable balance is included in accounts payable, accrued expense and other liabilities on the unaudited consolidated balance sheet.
Fees and Participations Paid in Connection with Liquidation or Listing
The Company will pay to the Advisor an annual subordinated performance fee calculated on the basis of the Company’s return to stockholders, payable annually in arrears, such that for any year in which investors receive payment of 6.0% per annum, the Advisor will be entitled to 15.0% of the excess return, provided that the amount paid to the Advisor does not exceed 10.0% of the aggregate return for such year, and that the amount paid to the Advisor will not be paid unless investors receive a return of capital contributions. This fee will be paid only upon the sale of assets, distributions or other event which results in the return on stockholders’ capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three and nine months ended September 30, 20162017 and 2015.2016.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

The Company will pay a brokerage commission to the Advisor or its affiliates on the sale of properties, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third party broker is also involved; provided, however, that in no event may the real estate commissions paid to the Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Advisor if the Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. No such fees were incurred during the three and nine months ended September 30, 20162017 and 2015.2016.
Upon a liquidation or sale of all or substantially all assets, including through a merger or sale of stock of the Company, the Special Limited Partner will be entitled to receive a subordinated distribution from the OP equal to 15.0% of remaining net sale proceeds after return of capital contributions to investors plus payment to investors of an annual 6.0% cumulative, pre-tax non-compounded return on the capital contributed by investors. The Special Limited Partner will not be entitled to the subordinated participation in net sale proceeds unless the Company’s investors have received a return of their capital plus a 6.0% cumulative non-compounded annual return on their capital contributions. No such participation in net sales proceeds became due and payable during the three and nine months ended September 30, 20162017 and 2015.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

2016.
If the Company’s shares of common stock are listed on a national exchange, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right receive subordinated incentive listing distributiondistributions from the OP equal to 15.0% of the amount by which the Company’s market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated incentive listing distributiondistributions unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distributions were incurred during the three and nine months ended September 30, 20162017 and 2015. Neither the Special Limited Partner nor any of its affiliates can earn both the subordinated participation in net sales proceeds and the subordinated incentive listing distribution.2016.
Upon termination or non-renewal of the advisory agreement with or without cause, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0% of the amount, calculated as of the termination date, by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to an annual 6.0% cumulative, pre-tax, non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. The Special Limited Partner may elect to defer its right to receive athe subordinated termination distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.occurs, subsequently, in which case the Company's market value will be calculated as of the date of the applicable listing or liquidity event. No such distributions were incurred during the three and nine months ended September 30, 2017 and 2016.
The Special Limited Partner and its affiliates can earn only one of the subordinated distribution from the OP described above.
Note 10 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services, transaction management and investor relations.
As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.
Note 11 — Share-Based Compensation
Restricted Share Plan
The Company has an employee and director incentive restricted share plan (as amended to date, the “RSP”). Until an amendment to the RSP in August 2017 (the “RSP”“RSP Amendment”), which providesthe RSP provided for the automatic grant of 1,333 restricted shares of common stock (“restricted shares”) to each of the independent directors,directors. Following the RSP Amendment, the number of restricted shares to be issued automatically in those circumstances is equal to $30,000 divided by the then-current Estimated

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Per-Share NAV. In November 2017, the RSP was amended and restated to reflect the RSP Amendment and certain clarifying changes.
These automatic grants are made without any further approval by the Company’s board of directors or the stockholders, after initial election to the board of directors and after each annual stockholder meeting, with such restricted shares vesting annually beginning with the one year anniversary of initial election to the board of directors and the date of the next annual meeting, respectively. Restricted stock issued to independent directors will vest over a five-year period following the grant date in increments of 20.0% per annum. The RSP provides the Company with the ability to grant awards of restricted shares to the Company's directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company. The total number of common shares granted as awards under the RSP shall not exceed 5.0% of the Company’s outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 1.5 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).
Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time. For restricted share awards granted prior to July 1, 2015, such awards would typically be forfeited with respect to the unvested restricted shares upon the termination of the recipient's employment or other relationship with the Company. For restricted share awards granted on or after July 1, 2015, such awards provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient's voluntary termination or the failure to be re-elected to the board. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash distributions on the same basis as distributions paid on shares of common stock prior to the time that the restrictions on the restricted shares have lapsed.lapsed and thereafter. Any distributions payable in shares of common stock shallwill be subject to the same restrictions as the underlying restricted shares.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2016
(Unaudited)

The following table displays restricted share award activity during the nine months ended September 30, 2016:2017:
  Number of
Restricted Shares
 Weighted-Average Issue Price
Unvested, December 31, 2015 4,799
 $22.50
Granted 5,332
 22.50
Unvested, September 30, 2016 10,131
 $22.50
  Number of
Restricted Shares
 Weighted-Average Issue Price
Unvested, December 31, 2016 9,065
 $22.50
Granted 
 
Vested (2,133) 22.50
Forfeited 
 
Unvested, September 30, 2017
6,932
 $22.50
As of September 30, 2016,2017, the Company had $0.2$0.1 million of unrecognized compensation cost related to unvested restricted share awards granted under the Company's RSP. That cost is expected to be recognized over a weighted-average period of 4.13.1 years. Restricted share awards are expensed in accordance with the service period required. Compensation expense related to restricted stockshare awards was approximately $12,000 and $36,000 for the three and nine months ended September 30, 2017, respectively. Compensation expense related to restricted share awards was approximately $29,000 and $49,000 for the three and nine months ended September 30, 2016, respectively, and approximately $18,000 and $19,000 for the three and nine months ended September 30, 2015, respectively. Compensation expense related to restricted stockshare awards is recorded as general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss.
Other Share-Based Compensation
The Company may issue common stock in lieu of cash to pay fees earned by the Company's directors at the respective director's election. There are no restrictions on the shares issued. There were no shares of common stock issued in lieu of cash during the three and nine months ended September 30, 20162017 or 2015.2016.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Note 12 — Net Loss Per Share
The following is a summary of the basic and diluted net loss per share computation for the periods presented:
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
 2016 2015 2016 2015 2017 2016 2017 2016
Net loss (in thousands)
 $(4,369) $(2,305) $(14,175) $(11,726) $(5,877) $(4,369) $(16,025) $(14,175)
Basic and diluted weighted average shares outstanding 30,556,494
 29,867,646
 30,634,400
 26,657,732
 31,106,250
 30,556,494
 30,956,152
 30,634,400
Basic and diluted net loss per share $(0.14) $(0.08) $(0.46) $(0.44) $(0.19) $(0.14) $(0.52) $(0.46)
The Company had the following potentially dilutive securities as of September 30, 20162017 and 2015,2016, which were excluded from the calculation of diluted net loss per share attributable to stockholders as the effect would have been antidilutive:
  Nine Months Ended September 30,
  2016 2015
Unvested restricted stock 10,131
 4,799
OP Units 90
 90
Class B Units 159,159
 115,798
Total potentially dilutive securities 169,380
 120,687
  Nine Months Ended September 30,
  2017 2016
Unvested restricted shares 6,932
 10,131
OP units 90
 90
Class B units 159,159
 159,159
Total potentially dilutive securities 166,181
 169,380
Note 13 — 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.statements, except for the following disclosures:
Election of Katie P. Kurtz as Chief Financial Officer and Treasurer
On October 5, 2017, Nicholas Radesca notified the Company's board of directors that he intends to retire and therefore resign from his positions as chief financial officer and treasurer of the Company, the Advisor and the Property Manager. Mr. Radesca's resignations will be effective on the later of (i) November 15, 2017 and (ii) the day after the Company files its Quarterly Report on Form 10-Q for the quarter ended September 30, 2017. There were no disagreements between Mr. Radesca and the Company or the Advisor.
On October 9, 2017, the Company's board of directors unanimously elected Katie P. Kurtz as chief financial officer and treasurer of the Company, effective upon the effectiveness of Mr. Radesca’s resignation. Ms. Kurtz has also been appointed as chief financial officer and treasurer of the Advisor and the Property Manager, effective upon the effectiveness of Mr. Radesca's resignation.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of American Realty Capital New York City REIT, Inc. (including, as required by context, New York City Operating Partnership, L.P. (the "OP") and its subsidiaries, the "Company," "we," "our" or "us") and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:
We have a limited operating history which makes our future performance difficult to predict;
All of our executive officers are also officers, managers or holders of a direct or indirect controlling interest in our advisor, New York City Advisors, LLC (our "Advisor") and other entities affiliated with AR Global Investments, LLC (the successor business to AR Capital, LLC, "AR Global"); as a result, our executive officers, our Advisor and its affiliates face conflicts of interest, including significant conflicts created by our Advisor's compensation arrangements with us and other investor entities advised by AR Global affiliates and conflicts in allocating time among these entities and us, which could negatively impact our operating results;
We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants;
We may not be able to achieve our rental rate objectives on new and renewal leases and our expenses could be greater, which may impact operations;
We do not expect to generate sufficient cash flow from operations in 2017 to fund distributions at our current level. There can be no assurance that additional liquidity will be available to us on favorable terms, or at all, in sufficient amounts to maintain distributions at our current levels. There can be no assurance we will be able to continue paying cash distributions at our current level or at all;
Our properties may be adversely affected by economic cycles and risks inherent to the New York metropolitan statistical area, especially New York City;
We are obligated to pay fees, which may be substantial, to our Advisor and its affiliates;
We may fail to continue to qualify to be treated as a real estate investment trust for United States federal income tax purposes ("REIT");
Because investment opportunities that are suitable for us may also be suitable for other AR Global-advised programs or investors, our Advisor and its affiliates may face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders;
We are party to an investment opportunity allocation agreement with another program that is sponsored by American Realty Capital III, LLC (our "Sponsor"), pursuant to which we may not have the first opportunity to acquire all properties identified by our Advisor and its affiliates;
No public market currently exists, or may ever exist, for shares of our common stock and our shares are, and may continue to be, illiquid;
Our stockholders are limited in their ability to sell their shares pursuant to our share repurchase program (the “SRP”) and may have to hold their shares for an indefinite period of time;
If we and our Advisor are unable to find suitable investments, then we may not be able to achieve our investment objectives, or pay distributions with cash flows from operations;
Increases in interest rates could increase the amount of our debt payments and limit our ability to pay distributions;
We do not expect to generate sufficient cash flow from operations in 2016 to fund distributions at our current level, and there can be no assurance we will be able to continue paying cash distributions at our current level or at all;
We cannot assure our stockholders that we will be able to continue to pay distributions or that distributions will increase over time;

We may be deemed to be an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and thus subject to regulation under the Investment Company Act; and
As of September 30, 2016,2017, we owned only six properties and therefore have limited diversification.

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Overview
Table of Contents
We were incorporated on December 19, 2013 as a Maryland corporation and elected and qualified to be taxed as a REIT beginning with our taxable year ended December 31, 2014. On April 24, 2014, we commenced our initial public offering ("IPO") on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million, pursuant to our registration statement on Form S-11, as amended (File No. 333-194135) (the "Registration Statement") filed with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement also covered up to 10.5 million shares available pursuant to a distribution reinvestment plan (the "DRIP") under which our common stockholders may elect to have their distributions reinvested in additional shares of our common stock at a price of $23.75 per share, which is equal to 95% of the offering price in the IPO.
On May 29, 2014, we received and accepted subscriptions in excess of the minimum offering amount for the IPO of $2.0 million in shares, broke general escrow and issued shares of common stock to initial investors who were admitted as stockholders. In February 2015, as permitted, we reallocated the remaining 10.0 million DRIP shares available under the Registration Statement to the primary offering. On May 22, 2015, we registered an additional 25.0 million shares to be issued pursuant to the DRIP pursuant to a registration statement on Form S-3 (File No. 333-204433). We closed our IPO on May 31, 2015, and continued to accept subscriptions in process as of that date. As of September 30, 2016, we had 30.6 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO and the DRIP of $759.8 million, inclusive of $41.0 million from the DRIP. The per share purchase price in the IPO was up to $25.00 per share (including the maximum allowed to be charged for commissions and fees) and shares issued under the DRIP is equal to $23.75 per share, which is equal to 95% of the offering price in the primary offering.
On October 24, 2016, our board of directors approved an estimated net asset value per share of the Company's common stock ("Estimated Per-Share NAV) as of June 30, 2016, which was published on October 26, 2016 ("NAV Pricing Date"). We intend to publish subsequent valuations of Estimated Per-Share NAV periodically at the discretion of our board of directors, provided that such valuations will be made at least once annually. Until the NAV Pricing Date, we offered shares pursuant to the DRIP at $23.75 per share and have repurchased shares pursuant to the Share Repurchase Program ("SRP"). Beginning with the NAV Pricing Date, we began to offer shares pursuant to the DRIP and repurchase shares pursuant to our SRP at a price based on Estimated Per-Share NAV.Overview
We were formed to invest our assets in properties in the five boroughs of New York City, with a focus on Manhattan. We may also purchase certain real estate assets that accompany office properties, including retail spaces and amenities, as well as hospitality assets, residential assets and other property types exclusively in New York City. All such properties may be acquired and owned by us alone or jointly with another party. As of September 30, 2016,2017, we owned six properties consisting of 1,091,5711,085,084 rentable square feet whichacquired for an aggregate purchase price of $686.1 million.
We were 89.8% leased,incorporated on December 19, 2013 as a Maryland corporation and elected and qualified to be taxed as a REIT beginning with a weighted average remaining lease term of 6.6 years. Our six properties include one commercial property, one property consisting of three condominium units (one retail unit, a parking garage and one office unit), one parking garage and three institutional-quality office buildings.
our taxable year ended December 31, 2014. Substantially all of our business is conducted through the OP.
On April 24, 2014, we commenced our initial public offering ("IPO") on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million. We closed our IPO on May 31, 2015. As of September 30, 2017, we had 31.2 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO and the DRIP of $771.6 million, inclusive of $60.1 million from the DRIP and net of repurchases.
We first established an estimated net asset value per share of our common stock (“Estimated Per-Share NAV”) in 2016. On October 24, 2016, our board of directors approved an Estimated Per-Share NAV of $21.25 as of June 30, 2016 (the “2016 Estimated Per-Share NAV”), which was published on October 26, 2016 (the “NAV Pricing Date”). Prior to the NAV Pricing Date, we had offered shares pursuant to the DRIP and had repurchased shares pursuant to the Share Repurchase Program (“SRP”) at a price based on $23.75 per share, the offering price in the IPO. Beginning with the NAV Pricing Date, we began to offer shares pursuant to the DRIP and repurchase shares pursuant to its SRP at a price based on Estimated Per-Share NAV.
On October 25, 2017, our board of directors approved an Estimated Per-Share NAV of $20.26 as of June 30, 2017 (the "2017 Estimated Per-Share NAV"), based on an estimated fair value of our assets less the estimated fair value of our liabilities, divided by 31,029,865 shares of common stock outstanding on a fully diluted basis as of June 30, 2017, which was published on October 26, 2017. We intend to publish subsequent valuations of Estimated Per-Share NAV at least once annually. We offer shares pursuant to the DRIP and repurchase shares pursuant to our SRP at a price based on Estimated Per-Share NAV.
We have no employees. Our Advisor manages our affairs on day-to-day basis. We have retained New York City Operating Partnership, L.P.Properties, LLC (our "Property Manager") to serve as our property manager. The Advisor and Property Manager are under common control with AR Global, the parent of our Sponsor, as a Delaware limited partnership (the “OP”).result of which they are related parties and each of these entities has received or will receive compensation, fees and expense reimbursements for services related to our IPO and, the investment and management of our assets. We are the sole general partner and hold substantially all of the units of limited partner interests in the OP, entitled "OP Units"units" (“OP Units”units”). The Advisor contributed $2,020 to the OP in exchange for 90 OP Units,units, which represents a nominal percentage of the aggregate OP ownership. A holder of OP Unitsunits has the right to convert OP Unitsunits for the cash value of a corresponding number of shares of our common stock or, at the option of the OP, a corresponding number of shares of our common stock, in accordance with the limited partnership agreement of the OP, provided, however, that such OP Unitsunits must have been outstanding for at least one year. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.
We have no employees. Our Advisor manages our affairs on a day-to-day basis. New York City Properties, LLC (our "Property Manager") manages our properties, unless services are performed by a third party for specific properties. The Advisor and Property Manager are under common control with AR Global, the parent of our Sponsor, as a result of which they are related parties and have received or will continue to receive compensation, fees and expense reimbursements for services related to the investment and management of our assets.

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. These significant accounting estimates and critical accounting policies include:

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Offering and Related Costs
All offering costs incurred by us, our Advisor and its affiliates on our behalf are charged to additional paid-in capital on the consolidated balance sheets. Offering and related costs include all expenses incurred in connection with our IPO. Offering costs (other than selling commissions and the dealer manager fees) include costs that may be paid by the Advisor, the Former Dealer Manager or their affiliates on our behalf. These costs include but are not limited to (i) legal, accounting, printing, mailing, and filing fees; (ii) escrow service related fees; (iii) reimbursement of the Former Dealer Manager for amounts it may pay to reimburse itemized and detailed due diligence expenses of broker-dealers; and (iv) reimbursement to the Advisor for a portion of the costs of its employees and other costs in connection with preparing supplemental sales materials and related offering activities. We are obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on our behalf, provided that the Advisor is obligated to reimburse us to the extent organization and offering costs (excluding selling commissions and the dealer manager fee) incurred by us in our IPO exceedexceeded 2.0% of gross offering proceeds in the IPO. As a result, these costs are our liability to the extent aggregate selling commissions, the dealer manager fee and other organization and offering costs are less than 12.0% of the gross proceeds determined at the end of the IPO. As of the end of the IPO, aggregate selling commissions, dealer manager fees and other offering costs did not exceed 12.0% of the gross proceeds received in the IPO.
Revenue Recognition
Our revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Because many of our leases provide for rental increases at specified intervals, accounting principles generally accepted in the United States ("GAAP") require us to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. We defer the revenue related to lease payments received from tenants in advance of their due dates. When we acquire a property, the acquisition date is considered to be the commencement date for the purposes of this calculation.
Rental revenue recognition commences when the tenant takes possession of or controls the physical use of the leased space. For the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, we evaluate whether we own or if the tenant owns the tenant improvements. When we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such improvements are substantially complete. When we conclude that the tenant is the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space.
When we conclude that we are the owner of tenant improvements, we capitalize the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants. When we conclude that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred leasing costs, net on the consolidated balance sheets and amortized as a reduction to rental income on a straight-line basis over the term of the lease.
We continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, we will record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our consolidated statements of operations.
We may own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant's sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. As the lessor to the aforementioned leases, we defer the recognition of contingent rental income until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. If we own certain properties with leases that include these provisions, contingent rental income will be included in rental income on the consolidated statements of operations and comprehensive loss.
Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.

Investments in Real Estate
We evaluate the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statement of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.
In business combinations, we
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We allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and non-controlling interests based on their respective estimated fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets or liabilities may include the value of in-place leases, above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics.
The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases is recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and our estimate of the comparable fair market lease rate, measured over the remaining term of the lease. The fair value of other intangible assets, such as real estate tax abatements and signage rights, are recorded based on the present value of the expected benefit and amortized over the expected useful life including any below-market fixed rate renewal options for below-market leases.
Fair values of assumed mortgages, if applicable, are recorded as debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates.
Non-controlling interests in property owning entities are recorded based on the fair value of units issued at the date of acquisition, as determined by the terms of the applicable agreement.
We utilizeuse a number of sources in making our estimates of fair values for purposes of allocating purchase price, including real estate valuations prepared by independent valuation firms. We also consider information and other factors including: market conditions, the industry in which the tenant operates, characteristics of the real estate such as location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business.
Disposals of real estate investments that represent a strategic shift in operations that will have a major effect on our operations and financial results are presented as discontinued operations in the consolidated statements of operations and comprehensive loss for all periods presented; otherwise, we continue to report these properties' operations within continuing operations. Properties that are intended to be sold will be designated as "held for sale" on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs for all periods presented when they meet specific criteria to be presented as held for sale. Properties are no longer depreciated when they are classified as held for sale.
Restricted Cash
Restricted cash consists of mortgage lender required reserves for maintenance, real estate tax, structural, and debt service, reserves.lease, tenant improvement and leasing commission cost.
Depreciation and Amortization
Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Acquired above-market leases are amortized as a reduction of rental income over the remaining terms of the respective leases. Acquired below-market leases are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.
The value of in-place leases, exclusive of the value of above and below-market in-place leases, is amortized to depreciation and amortization expense over the remaining periods of the respective leases.
Assumed mortgage premiums or discounts, if applicable, are amortized as a reduction or increase to interest expense over the remaining term of the respective mortgages.

Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, we review the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If such estimated cash flows are less than the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is based on the adjustment to estimated fair value less estimated cost to dispose of the asset. Generally, we determine estimated fair value for properties held for sale based on the agreed-upon selling price of an asset. These assessments may result in the immediate recognition of an impairment loss resulting in a reduction to net income (loss).

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Recent Accounting Pronouncement
In May 2014, the Financial Accounting Standards Board (“FASB”) issued revised guidance relatingan update (“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a comprehensive model for entities to use in accounting for revenue recognition.arising from contracts with customers. Under the revised guidance,ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revised guidance was to becomeASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption wasor a full retrospective approach. We will adopt this guidance effective January 1, 2018 and currently expect to utilize the modified retrospective approach upon adoption and do not permittedexpect that this will result in a significant cumulative-effect adjustment to equity.
We have progressed in our project plan in evaluating our various revenue streams in order to identify any differences in the timing, measurement or presentation of revenue recognition under GAAP.ASC 606 and ASC Topic 842, Leases (“ASC 842”). Based on our evaluation of our various revenue streams, we believe that gains on sales of real estate could be impacted by adoption of ASC 606. We expect that this standard could have an impact on the timing of gains on certain sales of real estate as a result of more transactions generally qualifying as sales of real estate and revenue being recognized at an earlier date than under current accounting guidance. Specifically, we expect that this would impact partial sales of real estate in situations where we no longer retain a controlling financial interest. If we were to enter into partial sales of real estate, we would derecognize the real estate asset consistent with the principles outlined in ASC 606 and any retained non-controlling ownership interest would be measured at fair value consistent with the guidance on noncash consideration in ASC 606.
We are continuing to evaluate any differences in the timing, measurement, or presentation of revenue recognition and the impact on our consolidated financial statements and internal accounting processes resulting from ASC 606 as well as ASC 842, Leases as discussed below.
In January 2016, the FASB issued an update that amends the recognition and measurement of financial instruments. The new guidance revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. In July 2015, the FASB deferred theis effective date of the revised guidance by one year to annual reportingfor fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as2017. Early adoption is not permitted for most of the original effective date.amendments in the update. We have not yet selected a transition method and are currently evaluating the impact of the new guidance.
In February 2016, the FASB issued an update to ASU 2016-02 establishing ASC 842, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASC 842 supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. ASC 842 will impact the lease accounting model for both lessees and lessors. We will adopt this guidance effective January 1, 2019.
We are a lessee for a property in which we have a ground lease as of September 30, 2017. For this lease, we will be required to record a right-of-use asset and lease liability equal to the present value of the remaining lease payments upon adoption of this update. The new guidancestandard requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-linestraight line basis over the term of the lease.lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The
From a lessor perspective we expect that the new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leaseswill impact the presentation of lease and non-lease components of revenue such as rent, and operating leases. The revisedexpense reimbursements including common area maintenance, taxes, and insurance from leases for which we are a lessor. We do not expect this guidance supersedes previous leasing standardsto impact its existing lessor revenue recognition pattern. We anticipate that it will elect the following practical expedients, which must be elected as a package and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted.applied consistently by an entity to all of its leases, which allow us to not have to reassess the following upon adoption: (i) whether any expired or existing contract contains a lease, (ii) lease classification related to expired or existing leases, or (iii) whether costs incurred on existing leases qualify as initial direct costs. We are currently evaluatingcontinuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of adopting the new guidance.lessee accounting model on our consolidated financial position, results of operations and disclosures.
In March 2016, the FASB issued guidance which requires an entity to determine whether the nature
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Table of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of this new guidance.Contents
In June 2016, the FASB issued guidance that changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. We are currently evaluating the impact of this new guidance.
In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of this new guidance.

In November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of this new guidance.
In May 2017, the FASB issued guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, does not change as a result of the modification. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for reporting periods for which financial statements have not yet been issued. We are currently evaluating the impact of this new guidance.
Recently Adopted Accounting Pronouncements
In February 2015,October 2016, the FASB amended the accounting for consolidation of certain legal entities.issued guidance where a reporting entity will need to evaluate if it should consolidate a variable interest entity ("VIE"). The amendments modifychange the evaluation of whether certain legal entities are variable interest entities ("VIE") or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for our fiscal year ended December 31, 2016. In determining whether we have a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a VIE for which we are the primary beneficiary. We have evaluated the impact of the adoption of the new guidance on our consolidated financial statements and determined that the OP, which holds substantially all of our assets and liabilities, is considered to be a VIE. We meet the disclosure exemption criteria of the new guidance as we are the primary beneficiary of the OP and our partnership interest is considered a majority voting interestVIE by changing how a single decision maker of a VIE treats indirect interests in a business, and the OP's assets can be used for purposes other than settling its obligations, such as paying distributions. Further, we have consolidated the OP even prior to the adoption of the new guidance. As such, the adoption of the new guidance did not have a material impact on our consolidated financial statements.
In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendment requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability and that the entity apply the new guidance on a retrospective basis. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for the fiscal year ending December 31, 2016. As a result of adoption of the new guidance, we reclassified deferred financing costs, netheld through related to mortgage notes payable as a reduction of the carrying amount of mortgage notes payable.
In March 2016, the FASB issued an update that changes the accounting for certain aspects of share-based compensation. Among other things, the revised guidance allows companies to make an entity-wide accounting policy election to either estimate the number of awardsparties that are expected to vest or account for forfeitures when they occur.under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. We have adopted the provisions of this guidance beginning January 1, 20162017 and determined that there is no impact to our consolidated financial position, results of operations and cash flows. Our policy
In January 2017, the FASB issued guidance that revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset or group of similar assets, the assets acquired would not be considered a business. The revised guidance is effective for reporting periods beginning after December 15, 2017, and the amendments will be applied prospectively. Early application is permitted only for transactions that have not previously been reported in issued financial statements. We have assessed this revised guidance and expect, based on historical acquisitions, future properties acquired to accountqualify as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. We adopted this guidance for forfeitures as they occur.the nine months ended September 30, 2017 and have had no acquisition to apply the new standard.
Properties -
The following table presents certain information about the investment properties we owned as of September 30, 2016:2017:
Portfolio Acquisition Date Rentable Square Feet Occupancy 
Remaining Lease Term (1)
 Acquisition Date Rentable Square Feet Occupancy 
Remaining Lease Term (1)
421 W. 54th Street - Hit Factory Jun. 2014 12,327
 100.0% 4.0 Jun. 2014 12,327
 100.0% 3.0
400 E. 67th Street - Laurel Condominium Sept. 2014 58,750
 100.0% 7.5 Sept. 2014 58,750
 100.0% 6.5
200 Riverside Boulevard - ICON Garage Sept. 2014 61,475
 100.0% 21.0 Sept. 2014 61,475
 100.0% 20.0
9 Times Square Nov. 2014 166,640
 56.0% 4.7 Nov. 2014 167,390
 57.9% 5.3
123 William Street Mar. 2015 542,676
 97.7% 7.4 Mar. 2015 542,676
 92.1% 8.0
1140 Avenue of the Americas June 2016 249,703
 89.7% 5.5 Jun. 2016 242,466
 89.1% 4.5
 1,091,571
 89.8% 6.6 1,085,084
 87.1% 6.4

(1) Remaining lease term in years as of September 30, 2016,2017, calculated on a weighted-average basis, as applicable.

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Results of Operations
ComparisonAs of Three Months Ended September 30, 2016 to Three Months Ended September 30, 2015
As of July 1, 2015, we owned five properties (our "Three-Month Same Store"). From July 1, 2015 through2017 and September 30, 2016, we acquiredowned six properties, comprising five properties purchased prior to January 1, 2016 (our "Initial Five Properties"), and one property we acquired in June 2016 located at 1140 Avenue of the Americas in Manhattan, New York (our "Three-Month Acquisition""1140 Property"), and therefore as of September 30, 2016 we owned six properties.. Due to our Three-Month Acquisition1140 Property, our results of operations for the threenine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, reflect significant increases in most categories.
As of September 30, 2017, our overall portfolio occupancy was 87.1% notwithstanding the fact that occupancy at our property located at 9 Times Square was57.9% and 56.0% as compared toof September 30, 2017 and December 31, 2016, respectively. In August, we entered into a lease with a tenant for three full floors at 9 Times Square totaling approximately 26,000 square feet. Terms for two of the three floors representing approximately 18,000 square feet had not commenced as of September 30, 2017, and, as a result were not included in our occupancy as of that date. However, if the term for the 18,000 square feet comprising these two floors had commenced during the quarter ended September 30, 2017, the occupancy for 9 Times Square as of September 30, 2017 would have been 68.4%.
During the three months ended September 30, 2015, reflect significant increases2017, six leases with six different tenants totaling approximately 51,000 square feet expired, although a new lease was executed by one of those tenants with respect to approximately 41,000 square feet in most categories.connection with the expiration of the existing lease.
AsThe following table is a summary of our quarterly leasing activity for the nine months ended September 30, 2016, 9 Times Square2017:
  Q3 2017Q2 2017 Q1 2017
Leasing activity:     
Lease executed 2
3
 2
Total square feet leased 9,983
23,579
 21,701
Annualized straight-line rent(1)
 $80.95
$49.65
 $44.78
Weighted average lease term (years) 10.74
9.2
 5.8
      
Replacement leases:(2)
    

Replacement leases executed 2
2
 2
Square feet 48,519
19,639
 21,701
      
Tenant improvements on replacement leases per square foot(3)
 $40.00
$60.00
 $14.04
Leasing commissions on replacement leases per square foot(3)
 $36.04
$19.73
 $14.42

(1) Represents the GAAP basis weighted average rent per square feet that is recognized over the term on the respective leases, includes free rent and periodic rent increases, excludes recoveries.
(2) Replacement leases are for spaces that were leased during the period and also have been leased at some time during the prior twelve months.
(3) Presented as if tenant improvements and leasing commissions were incurred in the period in which the lease was 56.0% occupied,signed, which increased from 49.7% occupied as of September 30, 2015. may be different than the period in which these amounts were actually paid.
Subsequent to the acquisition of 9 Times Square in November 2014, we allowed leases to expire and terminate as part of the implementation of our repositioning, redeveloping and remarketing plan with respect to the property. Leasing activity forThis effort has taken longer than anticipated, however, as of September 30, 2017, we have substantially completed our repositioning and redevelopment plan and are working to lease the remodeledremaining vacant space at the property. Although this effort has taken longer than originally anticipated and the overall New York City leasing market has not been as strong as expected through September 30, 2017, during the third quarter of 2017, and continuing into the fourth quarter of 2017, we have seen strong interest in the leasing of the vacant space at the property. We are also working with several prospective tenants interested in office space and existing tenants interested in expanding the office space they currently occupy, and we are expecting these positive leasing trends to continue. In addition to the positive leasing trends with respect to the office space, we have seen an increase in interest in leasing the retail space at the building has been slower than expected, however, largely dueproperty since engaging new leasing brokers as of March 30, 2017 to construction timing delaysre-engage and excess retail space capacity inrefresh the Times Square sub-market. Continued delays or market weakness could suppress our financial resultsmarketing for this space. Although we continue to experience vacancies at this property; however,the property, given the trends that we have seen positive leasing with respectare seeing at the property, we expect revenue generated by the property to increase during the vacant office space in the current quarter and expect this trendremainder of 2017.

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Comparison of Three Months Ended September 30, 2017 to continue.Three Months Ended September 30, 2016
Rental Income
Rental income increased $6.1decreased $0.1 million to $13.3 million for the three months ended September 30, 2017, from $13.4 million for the three months ended September 30, 2016, from $7.3due to a slight decrease in occupancy.
Operating Expense Reimbursements
Operating expense reimbursements increased $0.1 million to $1.1 million for the three months ended September 30, 2015,2017, compared to $1.0 million for the three months ended September 30, 2016, primarily due to an increase in real estate tax reimbursements.
Pursuant to many of our Three-Month Acquisition which contributed $4.9lease agreements, tenants are required to pay their pro rata share of certain property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are directly responsible for most operating costs of the respective properties. Therefore, operating expense reimbursements are directly affected by changes in property operating expenses, although not all increases in property operating expenses may be reimbursed by our tenants. Operating expense reimbursements primarily relate to costs associated with maintaining our properties including utilities, repairs and maintenance and real estate taxes incurred by us and subsequently reimbursed by the tenant.
Property Operating Expenses
Property operating expenses increased $0.4 million to $6.8 million for the increase. Our Three-Month Same Store provided $1.2three months ended September 30, 2017 from $6.4 million offor the three months ended September 30, 2016. The increase is primarily due to lease commencements at 123 William Street and an acquisition that closed in March 2015. Additionally, 9 Times Square contributed $0.1 million to the increase in Three-Month Same Store, primarily dueproperty operating expense relates to lease commencements.the increased costs of maintaining our six properties including the costs of real estate taxes, utilities, and repairs and maintenance.
Operating Expense ReimbursementsFees incurred from Related Parties
OperatingWe incurred $1.5 million and $1.5 million in fees for asset and property management services from our Advisor and Property Manager for the three months ended September 30, 2017 and 2016, respectively. Please see Note 9 — Related Party Transactions and Arrangements for more information on fees incurred from our Advisor.
Acquisition and Transaction Related Expenses
We incurred no acquisition and transaction related expenses for the three months ended September 30, 2017. We incurred $24,000 in acquisition and transaction related expenses for the three months ended September 30, 2016.
General and Administrative Expenses
General and administrative expenses increased $0.8 million to $2.1 million for the three months ended September 30, 2017 compared to $1.3 million for the three months ended September 30, 2016, primarily related to an increase in general and administrative expense reimbursements incurred from our Advisor, as well as an increase in audit, legal and proxy fees. General and administrative expense reimbursements incurred from our Advisor increased $0.4$0.5 million to $1.0 million for the three months ended September 30, 2016,2017 compared to $0.6$0.5 million for the three months ended September 30, 2015,2016. Audit, legal and proxy fees contributed $0.3 million to the increase.
Depreciation and Amortization
Depreciation and amortization expenses decreased $0.2 million to $7.1 million for the three months ended September 30, 2017, compared to $7.3 million for the three months ended September 30, 2016. The decrease is due to the expiration of several leases during the period that had been amortizing.
Interest Expense
Interest expense increased $0.5 million to $2.9 million for the three months ended September 30, 2017, from $2.4 million for the three months ended September 30, 2016, primarily due to the refinancing of 123 William Street. As of September 30, 2017, we had two loans outstanding with a combined balance of $239.0 million and a weighted average effective interest rate of 4.61%. As of September 30, 2016, we had two loans outstanding with a combined balance of $195.0 million and a weighted average effective interest rate of 3.58%.
Income from Investment Securities and Interest
Income from investment securities and interest increased approximately $12,000 to approximately $68,000 for the three months ended September 30, 2017, compared to approximately $56,000 three months ended September 30, 2016. The income primarily related to interest earned on our cash balance during the period.

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Comparison of Nine Months Ended September 30, 2017 to Nine Months Ended September 30, 2016
Rental Income
Rental income increased $9.2 million to $40.0 million for the nine months ended September 30, 2017, from $30.8 million for the nine months ended September 30, 2016, primarily due to our Three-Month Acquisition1140 Property, which contributed $8.9 million to the increase and Three-Month Same Storeour Initial Five Properties provided $0.3 million of the increase in rental income.
Operating Expense Reimbursements
Operating expense reimbursements increased $1.4 million to $3.6 million for the nine months ended September 30, 2017, compared to $2.2 million for the nine months ended September 30, 2016, primarily due to the acquisition of our 1140 Property on June 15, 2016, which each contributed $0.2to $0.9 million toof the increase. Our Initial Five Properties provided $0.4 million of the increase.
Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of certain property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are directly responsible for most operating costs of the respective properties. Therefore, operating expense reimbursements are directly affected by changes in property operating expenses, although not all increases in property operating expenses may be reimbursed by our tenants. Operating expense reimbursements primarily relate to costs associated with maintaining our properties including utilities, repairs and maintenance and real estate taxes incurred by us and subsequently reimbursed by the tenant.
Property Operating Expenses
Property operating expenses increased $2.8$6.0 million to $6.4$19.9 million for the threenine months ended September 30, 2017 from $13.9 million for the nine months ended September 30, 2016 from $3.5 million for the three months ended September 30, 2015 primarily due to our Three-Month Acquisition,1140 Property, which contributed $2.5$5.0 million to the increase. Our Three-Month Same StoreInitial Five Properties provided $0.3$1.0 million of the increase mainly due to increases at 9 Times Square due to higher occupancy.increase. The increase in property operating expenses primarily related to lease commencements and the increased costs of maintaining our six properties including the costs of real estate taxes, condominium fees, utilities, repairs and maintenance and property insurance.
Operating Fees incurred from Related Parties
We incurred $1.5$4.6 million and $3.7 million in fees for asset and property management services from our Advisor and Property Manager for the threenine months ended September 30, 2016. Until September 30, 2015, for its asset management services, we issued to the Advisor performance-based, restricted, forfeitable partnership units in the OP designated as "Class B Units." Beginning on October 1, 2015, we began paying monthly2017 and 2016, respectively. Cash asset management fees increased in cash,direct correlation with the increase in sharescost of common stock, orassets, as a combination of both, the form of payment to be determined at the sole discretionresult of the Advisor.acquisition of our 1140 Property. We paid $1.3$4.1 million and $3.3 million in cash for asset management fees for the threenine months ended September 30, 2016.
2017 and 2016, respectively. Property management fees increaseincreased in direct correlation with gross revenue and amounted to $0.2$0.5 million and $0.3 million for the threenine months ended September 30, 2017 and 2016, respectively. Please see Note 9 — Related Party Transactions and 2015.Arrangements for more information on fees incurred from our Advisor.
Acquisition and Transaction Related Expenses
We incurred approximately $24,000$6,000 of acquisition and transaction related expenses for the threenine months ended September 30, 2016.2017 related to a dead deal cost. For the threenine months ended September 30, 2015,2016, we incurred noapproximately $4.3 million of acquisition and transaction related expenses.

expenses in connection with acquiring our 1140 Property.
General and Administrative Expenses
General and administrative expenses increased $0.6$1.8 million to $1.3$5.6 million for the threenine months ended September 30, 2017 compared to $3.8 million for the nine months ended September 30, 2016, from $0.6 million for the three months ended September 30, 2015, primarily duerelated to an increase in general and administrative expense reimbursements incurred from our Advisor, of $0.5 million. During the year ended December 31, 2015,as well as an increase in audit, legal fees and proxy services. General and administrative expense reimbursements incurred from our Advisor began requesting reimbursement of general and administrative expenses, which had not previously been requested, but no such reimbursement requests were made duringincreased $1.2 million to $2.5 million for the threenine months ended September 30, 2015. Increased professional2017 compared to $1.3 million for the nine months ended September 30, 2016. Audit, legal and proxy fees related to our 2016 annual meeting and to maintaining our larger real estate portfolio also contributed to$0.5 million of the increase in general and administrative expenses.increase.
Depreciation and Amortization
Depreciation and amortization expenses increased $2.5$4.5 million to $7.3$21.3 million for the threenine months ended September 30, 2017, compared to $16.8 million for the nine months ended September 30, 2016, compared to $4.8 million for the three months ended September 30, 2015,primarily due to our Three-Month Acquisition. Our Three-Month Same Store1140 Property, which contributed $0.1to $4.7 million toof the increase.
Interest Expense
Interest expense increased $1.2$3.4 million to $2.4$8.4 million for the threenine months ended September 30, 2016,2017, from $1.2$5.0 million for the threenine months ended September 30, 2015 primarily2016, due to the closing of the loan on our Three-Month Acquisition in1140 Property on June 2016.15, 2016 and refinancing of 123 William Street on March 6, 2017. As of September 30, 2017, we had two loans outstanding with a combined balance of $239.0 million and a weighted average effective interest rate of 4.61%. As of September 30, 2016, we had two loans outstanding with a combined balance of $195.0 million and a weighted average effective interest rate of 3.58%.
Income from Investment Securities and Interest
Income from investment securities and interest remained at $0.1 million for the three months ended September 30, 2016 and 2015. The income related to interest earned on our cash balance for the three months ended September 30, 2016 and 2015 and dividends earned on our investment in equity securities purchased in August 2014.
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Comparison
Table of Nine Months Ended September 30, 2016 to Nine Months Ended September 30, 2015Contents
As of January 1, 2015, we owned four properties (our "Nine-Month Same Store"). From January 1, 2015 through September 30, 2016, we acquired two properties (our "Nine-Month Acquisitions"), and therefore as of September 30, 2016 we owned six properties. Accordingly, due to our Nine-Month Acquisitions, our results of operations for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015 reflect significant increases in most categories.
Rental Income
Rental income increased $13.8 million to $30.8 million for the nine months ended September 30, 2016, from $16.9 million for the nine months ended September 30, 2015, primarily due to our Nine-Month Acquisitions, which contributed $13.3 million to the increase. Our Nine-Month Same Store contributed $0.5 million to the increase in rental income, driven primarily by lease commencements at 9 Times Square.
Operating Expense Reimbursements
Operating expense reimbursements increased $1.0 million to $2.2 million for the nine months ended September 30, 2016, compared to $1.2 million for the nine months ended September 30, 2015, primarily due to our Nine-Month Acquisitions.
Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of certain property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are directly responsible for most operating costs of the respective properties. Therefore, operating expense reimbursements are directly affected by changes in property operating expenses, although not all increases in property operating expenses may be reimbursed by our tenants.
Property Operating Expenses
Property operating expenses increased $6.3 million to $13.9 million for the nine months ended September 30, 2016 from $7.6 million for the nine months ended September 30, 2015, primarily due to our Nine-Month Acquisitions. Our Nine-Month Same Store also contributed $0.5 million to the increase. Property operating expenses related to lease commencements and the costs of maintaining our six properties including real estate taxes, condominium fees, utilities, repairs and maintenance and property insurance.

Operating Fees incurred from Related Parties
We incurred $3.7 million in fees for asset and property management services from our Advisor and Property Manager for the nine months ended September 30, 2016. Until September 30, 2015, for its asset management services, we issued to the Advisor performance-based, restricted, forfeitable partnership units in the OP designated as "Class B Units." Beginning on October 1, 2015, we began paying monthly asset management fees in cash, in shares of common stock, or a combination of both, the form of payment to be determined at the sole discretion of the Advisor. We paid $3.3 million in cash for asset management fees for the nine months ended September 30, 2016.
Property management fees increase in direct correlation with gross revenue and amounted to $0.3 million and $0.1 million for the nine months ended September 30, 2016 and 2015, respectively. The Property Manager elected to waive a portion of property management fees for the nine months ended September 30, 2015. For the nine months ended September 30, 2015, we would have incurred and additional $0.2 million of property management fees had these fees not been waived.
Acquisition and Transaction Related Expenses
We incurred $4.3 million of acquisition and transaction related expenses for the nine months ended September 30, 2016 which related to our purchase of 1140 Avenue of the Americas, which closed in June 2016. For the nine months ended September 30, 2015, acquisition and transaction related expenses of $6.0 million related to our purchase of 123 William Street, which closed in March 2015.
General and Administrative Expenses
General and administrative expenses increased $1.5 million to $3.8 million for the nine months ended September 30, 2016 from $2.3 million for the nine months ended September 30, 2015, primarily due to general and administrative expense reimbursements incurred from our Advisor of $1.3 million. During the year ended December 31, 2015, our Advisor began requesting reimbursement of general and administrative expenses, which had not previously been requested, but no such reimbursement requests were made during the nine months ended September 30, 2015.
Depreciation and Amortization
Depreciation and amortization expenses increased $5.2 million to $16.8 million for the nine months ended September 30, 2016, compared to $11.6 million for the nine months ended September 30, 2015, due to our Nine-Month Acquisitions.
Interest Expense
Interest expense of $5.0 million for the nine months ended September 30, 2016 related to our two mortgage notes payable, the proceeds of which funded portions of our Nine-Month Acquisitions. As of September 30, 2016, the loans had a combined balance of $195.0 million and a weighted average effective interest rate of 3.58%. For the nine months ended September 30, 2015, interest expense was $2.4 million.
Income from Investment Securities and Interest
Income from investment securities and interest increaseddecreased $0.1 million to $0.3$0.2 million for the nine months ended September 30, 2016 from2017, compared to approximately $0.1$0.3 million for the nine months ended September 30, 2015.2016. The income is primarily related to interest earned on our cash balance during the period.
Gain on Sale of Investment Securities
Gain on sale of investment securities increased approximately $24,000 for the nine months ended September 30, 2016 and dividends earned on our2017, which resulted from the sale of investment in equity securities purchasedwith a cost basis of approximately $467,000 for approximately $491,000. No investment in August 2014.equity securities was sold during the nine months ended September 30, 2016.
Cash Flows for the Nine Months Ended September 30, 2017
During the nine months ended September 30, 2017, net cash provided by operating activities was approximately $2.4 million, compared to net cash used of $0.6 million during nine months ended September 30, 2016. The increase is primarily due to the acquisition of our 1140 Property, acquired in June 2016.
The level of cash flows provided by or used in operating activities is affected by the volume of acquisition activity, restricted cash we are required to maintain, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses.
Net cash provided by operating activities was $2.4 million during the nine months ended September 30, 2017 and consisted of a net loss of $16.0 million, adjusted for depreciation and amortization for tangible and intangible assets and other non-cash expenses of $20.8 million, which resulted in cash inflows of $4.8 million. Net cash provided by operating activities included net cash inflows of $2.5 million for an increase in deferred rent related to payments received from tenants in advance of their due dates and other liabilities, as well as a $3.9 million increase related to accounts payable and accrued expenses associated with operating activities. These operating cash inflows were partially offset by a decrease in prepaid expenses and other assets of $7.2 million primarily related to an increase in unbilled rent receivables recorded in accordance with accounting for rental income on a straight-line basis and restricted cash of $1.5 million reserved for ground rent and real estate taxes required by the mortgage lender for the property at 1140 Avenue of the Americas.
Net cash used in investing activities of $7.6 million during the nine months ended September 30, 2017 related to payments of capital expenditures of $8.1 million relating to building and tenant improvements at 9 Times Square, 123 William Street and 1140 Avenue of the Americas, offset by the proceeds received from the sale of investment securities of $0.5 million.
Net cash used in financing activities of $12.0 million during the nine months ended September 30, 2017 related to the proceeds from mortgage note payable of $115.2 million, which include $140.0 million of mortgage note payable, net $24.8 million of restricted cash required by the mortgage lender for leasing, tenant improvement and leasing commission reserves, partially offset by payment of mortgage note payable of $96.0 million, distributions to stockholders of $20.9 million, payments of $2.9 million relating to financing costs and repurchases of common stock of $7.3 million.
Cash Flows for the Nine Months Ended September 30, 2016
During the nine months ended September 30, 2016, net cash used in operating activities was $0.6 million, compared to $8.2 million of net cash used in operating activities during nine months ended September 30, 2015. Net cash used in operating activities contained acquisition and transaction related expenses of approximately $4.3 million and $6.0 million, respectively, for the nine months ended September 30, 2016 and 2015.
The level of cash flows used in operating activities is affected by the volume of acquisition activity, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses. Notwithstanding a net loss of $14.2 million, net cash used in operating activities included adjustments for depreciation and amortization of tangible and intangible assets and other non-cash expenses of $16.8 million, which resulted in cash outflows of $2.6 million. Net cash used in operating activities also included net cash inflows of $1.7 million for an increase in deferred rent related to payments received from tenants in advance of their due dates and other liabilities. As occupancy increases at 9 Times Square, cash flows from operations is expected to increase.
Net operating cash outflows primarily related to an increase in prepaid expenses and other assets of $6.3 million primarily related to an increase in unbilled rent receivables recorded in accordance with accounting for rental income on a straight-line basis as well as a $1.4 million decrease related to accounts payable and accrued expenses associated with operating activities.

Net cash used in investing activities during the nine months ended September 30, 2016 was $91.6 million, primarily related to the acquisition of 1140 Avenue of the Americas for $79.2 million, consisting of a purchase price of $178.5 million, net of purchase price adjustments, partially funded with a mortgage note payable of $99.0 million. Net cash used in investing activities also related to payment of capital expenditures of $12.4 million relating to building and tenant improvements at 9 Times Square and 123 William Street.

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Net cash used in financing activities of $37.4 million during the nine months ended September 30, 2016 consisted primarily of distributions to stockholders of $18.7 million, payments of $3.3 million relating to financing costs, repurchases of common stock of $12.5 million and an increase in restricted cash of $2.9 million.
Cash Flows
Liquidity and Capital Resources
As of September 30, 2017, we had cash and cash equivalents of $30.5 million as compared to $43.5 million as of June 30, 2017. Our principal demands for cash are to fund acquisitions, including the purchase price of any properties, loans and securities we acquire, improvement costs, the payment of our operating and administrative expenses, continuing debt service obligations, distributions to our stockholders and repurchases under our SRP.
We expect to fund our future short-term operating liquidity requirements, including distributions, through a combination of net cash provided by our current property operations and the operations of properties to be acquired in the future, proceeds from secured mortgage financings and proceeds from reinvestments under the DRIP. 
Management expects that, as our portfolio of investments stabilizes, specifically 9 Times Square, cash flow from our properties will be sufficient to fund operating expenses and a larger portion of the payment of our monthly distributions. There can be no assurance, however, that this stabilization will occur on a timely basis, or at all.
Other potential future sources of capital include proceeds from secured and unsecured financings from banks or other lenders, proceeds from future offerings, proceeds from the sale of properties and cash flows from operations to the extent we have cash flow in excess of the amount needed to fund distributions to our stockholders.
As with prior periods, for the Nine Months Endedthree and nine months ended September 30, 2015
During the nine months endedSeptember 30, 2015, net cash used in operating activities was $8.2 million. The level of2017, our cash flows used in or provided by operating activities is affected by recent acquisition activity, the timing of interest payments andfrom operations was less than the amount we distributed to our stockholders. We do not expect to generate sufficient cash flow from operations in 2017 to fund distributions at our current level. To pay distributions in future periods, as we have in prior periods, we expect to use cash on hand, proceeds from the sale of borrowings outstanding duringour shares through DRIP and proceeds from secured mortgages financings. In prior periods, we have also used remaining proceeds from the period,IPO to fund distributions, but this source will not be available to us in future periods as well aswe used the receipt of scheduled rent payments. Cash flows used in operating activitiesremaining $2.4 million proceeds we received from the IPO during the nine months endedSeptember 30, 2015 included $6.0 million2017. If these sources are insufficient to fund distributions, we may seek to obtain additional liquidity from other sources, such as borrowings other than secured mortgage financings, to fund distributions. Management expects that, as our portfolio of acquisitioninvestments stabilizes, specifically 9 Times Square, cash flow from our properties will be sufficient to fund operating expenses and transaction costs. Cash flowsa larger portion of the payment of our monthly distributions. There can be no assurance, however, that this stabilization will occur on a timely basis, or at all. A decrease in the level of stockholder participation in our DRIP or continued cash flow less than the amount distributed or need to use cash flow that we may generate in the future for other purposes could have an adverse impact on our ability to meet these expectations. To the extent we are required to borrow additional amounts to pay distributions, we may not be able to do so on favorable terms or at all. There can be no assurance we will be able to continue paying cash distributions at our current level or at all.
We have used mortgage financing to acquire two of our properties and expect to continue to use debt financing as a source of capital. Under our charter, the maximum amount of our total indebtedness may not exceed 300% of our total "net assets" (as defined in operating activities includedour charter) as of the date of any borrowing, which is generally equal to 75% of the cost of our investments. We may exceed that limit if approved by a net loss adjustedmajority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for non-cash items of $0.5 million (net loss of $11.7 million adjusted for non-cash items consisting of depreciation and amortization of tangible and intangibleexceeding such limit. This charter limitation, however, does not apply to individual real estate assets share based compensation,or investments. In addition, we intend to limit our aggregate borrowings to 40% to 50% of the aggregate fair market value of our assets, which would be an aggregate borrowing of approximately $322.4 million to $403.1 million, respectively. As of September 30, 2017, our aggregate borrowings were $239.0 million. We may exceed that limit if approved by a majority of our independent directors and deferred financing costsdisclosed to stockholders in our next quarterly report following such borrowing along with justification for borrowing such a greater amount. This limitation will be calculated once we have invested substantially all the proceeds of $11.3 million)our IPO and will not apply to individual real estate assets or investments. At the date of acquisition of each asset, we anticipate that the cost of investment for such asset will be substantially similar to its fair market value, which will enable us to satisfy our requirements under our charter. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits.
Share Repurchase Program
Our board of directors has adopted the SRP that enables stockholders, subject to certain conditions and limitations, to sell their shares to us. Due to these conditions and limitations, there can be no assurance that all, or any, shares submitted validly for repurchase will be repurchased under the SRP.
On June 14, 2017, we announced that our board of directors had adopted an increaseamendment and restatement of the SRP that superseded and replaced the existing SRP effective as of July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of our common stock or received their shares from us (directly or indirectly) through one or more non-cash transactions would be

34


considered for repurchase. Other terms and provisions of the amended and restated SRP remained consistent with the existing SRP.
Under the SRP in prepaid expenses, other assetseffect prior to this amendment and deferred costsrestatement, repurchases of $10.3 million relatedshares of our common stock, when requested, are at the sole discretion of our board of directors and generally will be made semiannually (each six-month period ending June 30 or December 31, a "fiscal semester"). Repurchases for any fiscal semester were limited to tenant and other accounts receivable, unbilled rent receivables recorded in accordance with accounting for rental income on a straight-line basis and leasing costs. These cash outflows were partially offset by an increase in accounts payable and accrued expensesmaximum of $1.9 million, primarily related to accrued property operating costs and professional fees and an increase in deferred rent and other liabilities2.5% of $0.6 million.
Net cash used in investing activitiesthe weighted average number of shares of common stock outstanding during the nine months endedSeptember 30, 2015 was $162.9 million primarily related to our acquisition of one property for $157.0 million, with an aggregate purchase price of $253.0 million, partially fundedprevious fiscal year, with a mortgage note payablemaximum for any fiscal year of $96.0 million,5.0% of the weighted average number of shares of common stock outstanding on December 31st of the previous calendar year. In addition, we are only authorized to repurchase shares in a given fiscal semester up to the amount of proceeds received from the DRIP in that same fiscal semester, as well as any reservation of funds our board of directors may, in its sole discretion, make available for this purpose. Since we established the 2016 Estimated Per-Share NAV during the second fiscal semester of 2016, any repurchase requests received during the second fiscal semester of 2016 were paid at the Estimated Per-Share NAV. The SRP amendment became effective on February 28, 2016, and we published the 2017 Estimated Per-Share NAV in the second fiscal semester, after the repurchases with respect to the first fiscal semester of 2017 had been completed. Any shares repurchased with respect to the second fiscal semester of 2017 will be at the 2017 Estimated Per-Share NAV.
If a stockholder requests a repurchase and the repurchase is approved by our board of directors, we will reclassify such obligation from equity to a liability based on the value of the obligation. Shares purchased under the SRP will have the status of authorized but unissued shares. The following table reflects the number of shares repurchased cumulatively through September 30, 2017:
  Numbers of Shares Repurchased Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2016 645,335
 $23.63
Nine months ended September 30, 2017(1)
 359,458
 20.41
Cumulative repurchases as of September 30, 2017 1,004,793
 $22.48
_____________________
(1)Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13.7 thousand at a weighted average price per share of $23.68 and (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.
Capital Expenditures
We may fund additional capital expenditures if we believe doing so will enhance the value of $7.9our investments. Additionally, many of our lease agreements with tenants require us to fund tenant improvement allowances.
As previously noted, subsequent to the acquisition of 9 Times Square in November 2014, we allowed leases to expire and terminate as part of the implementation of our repositioning, redeveloping and remarketing plan with respect to the property. As a result of these initiatives, we funded approximately $7.1 million relatingof capital expenditures in 2016 related to building improvements, tenant improvements and leasing commissions. While we have substantially completed our repositioning and redevelopment plan with respect to 9 Times Square and are currently working to lease the remaining vacant space at the property, there can be no assurance that we will be successful in lease-up of this property or effectively repositioning or remarketing any other property we may acquire for these purposes, including increasing the occupancy rate. We expect capital expenditures in 2017 to be less than 2016 and consist primarily of tenant requested improvements incurred in connection with our leasing efforts. The remainder of $9.7 million in capital expenditures for the year ended December 31, 2016 related to building and tenant improvements at 9 Times Square and 123 William Street. These cash outflows were partially offset by funds released from escrowStreet and 1140 Avenue of $2.1 million related to a prior period acquisition.
Net cash provided by financing activities of $179.7 million duringthe Americas. For the nine months endedSeptember 30, 2015 consisted2017, we have funded $8.1 million of proceeds from the issuancecapital expenditures.

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Non-GAAP Financial Measures
This section includesreports non-GAAP financial measures, including funds from operations ("FFO") and, modified funds from operations ("MFFO") and cash net operating income ("Cash NOI"). A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income (loss), is provided below.
Funds from Operations and Modified Funds from Operations
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.
Because of these factors, theThe National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has published a standardized measure of performance known as FFO, which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT’s operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.
We define FFO a non-GAAP measure, consistent with the standards set forth in the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, but excluding gains or losses from sales of property and real estate related impairments, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
We believe that the use of FFO provides a more complete understanding of our performance to investors and to management, and, when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.
Because of these factors, the Investment Program Association (the “IPA”), an industry trade group, has published a standardized measure of performance known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year over year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisitions fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.
We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the “Practice Guideline”) issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction related fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition and transaction-related fees and expenses, amounts relating to deferred rent receivables and amortization of above and below marketabove-and below-market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

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We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring properties and once our portfolio is stabilized. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.
Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations, as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. FFO and MFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.
NeitherNone of the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guideline or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.

The table below reflects the items deducted or added to net loss in our calculation of FFO and MFFO for the periods presented.
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
(In thousands) March 31, 2016 June 30, 2016 September 30, 2016 September 30, 2016 March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
Net loss (in accordance with GAAP) $(3,405) $(6,401) $(4,369) $(14,175) $(4,786) $(5,362) $(5,877) $(16,025)
Depreciation and amortization 4,769
 4,735
 7,272
 16,776
 6,997
 7,227
 7,125
 21,349
FFO 1,364
 (1,666) 2,903
 2,601
 2,211
 1,865
 1,248
 5,324
Acquisition and transaction-related fees and expenses 40
 4,263
 24
 4,327
Acquisition and transaction related 6
 
 
 6
Accretion of below- and amortization of above-market lease liabilities and assets, net (635) (616) (617) (1,868) (539) (532) (499) (1,570)
Straight-line rent (1,126) (1,277) (1,110) (3,513) (618) (603) (1,365) (2,586)
Straight-line ground rent 
 
 1,127
 1,127
 27
 27
 28
 82
Loss on extinguishment of debt 131
 
 
 131
Gain on sale of investment securities $
 $(24) $
 $(24)
MFFO $(357) $704
 $2,327
 $2,674
 $1,218
 $733
 $(588) $1,363
Cash Net Operating Income
Cash NOI is a non-GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, less income from investment securities and interest, plus general and administrative expenses, acquisition and transaction-related expenses, depreciation and amortization, other non-cash expenses and interest expense. In calculating Cash NOI, we also eliminate the effects of straight-lining of rent and the amortization of above and below market leases. Cash NOI should not be considered an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity.

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Table of Contents

We use Cash NOI internally as a performance measure and believe Cash NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe Cash NOI is a useful measure for evaluating the operating performance of our real estate assets and to make decisions about resource allocations. Further, we believe Cash NOI is useful to investors as performance measures because, when compared across periods, Cash NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition activity on an unlevered basis. Cash NOI excludes certain components from net income in order to provide results that are more closely related to a property's results of operations. For example, interest expense is not linked to the operating performance of a real estate asset and Cash NOI is not affected by whether the financing is at the property level or corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. Cash NOI presented by us may not be comparable to Cash NOI reported by other REITs that define Cash NOI differently. We believe that in order to facilitate a clear understanding of our operating results, Cash NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements.
The table below reflects the items deducted or added to net loss in our calculation of Cash NOI for the periods presented.
  Three Months Ended Nine Months Ended
(In thousands) March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
Net loss (in accordance with GAAP) $(4,786) $(5,362) $(5,877) $(16,025)
Income from Investment Securities and Interest (49) (73) (68) (190)
General and administrative 1,576
 1,992
 2,066
 5,634
Operating fees incurred from related parties 1,538
 1,513
 1,515
 4,566
Acquisition and transaction related 6
 
 
 6
Depreciation and amortization 6,997
 7,227
 7,125
 21,349
Interest Expense 2,665
 2,834
 2,866
 8,365
Gain on sale of investment securities 
 (24) 
 (24)
Accretion of below- and amortization of above-market lease liabilities and assets, net (539) (532) (499) (1,570)
Straight-line rent
 (618) (603) (1,365) (2,586)
Straight-line ground rent
 27
 27
 28
 82
Cash NOI $6,817
 $6,999
 $5,791
 $19,607
Liquidity and Capital ResourcesDistributions
As of September 30, 2016, we had cash and cash equivalents of $53.2 million. The decrease in cash and cash equivalents from the second quarter 2016 is primarily due to the repurchase of shares which were requested and accrued for repurchase under our SRP as of June 30, 2016. Our principal demands for cash will be for acquisition costs, including the purchase price of any properties, loans and securities we acquire, improvement costs, the payment of our operating and administrative expenses, continuing debt service obligations, distributions to our stockholders and repurchases under our SRP. If we acquire additional assets, we intend to pay for them with cash proceeds from our IPO and mortgage or other debt, but we also may acquire assets free and clear of mortgage or other indebtedness by paying the entire purchase price for the asset in cash or in OP Units.
We expect to fund our future short-term operating liquidity requirements, including distributions, through a combination of net cash provided by our current property operations and the operations of properties to be acquired in the future, the remaining proceeds from the sale of common stock and proceeds from secured mortgage financings. Management expects that, as our portfolio of investments stabilizes, specifically 9 Times Square, cash flow from our properties will be sufficient to fund operating expenses and a larger portion of the payment of our monthly distributions. Other potential future sources of capital include proceeds from secured and unsecured financings from banks or other lenders, proceeds from public and private offerings, proceeds from the sale of properties and undistributed funds from operations.
We have used mortgage financing to acquire two of our properties and expect to use debt financing as a source of capital. Under our charter, the maximum amount of our total indebtedness may not exceed 300% of our total "net assets" (as defined in our charter) as of the date of any borrowing, which is generally equal to 75% of the cost of our investments. We may exceed that limit if approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for exceeding such limit. This charter limitation, however, does not apply to individual real estate assets or investments. In addition, it is currently our intention to limit our aggregate borrowings to 40% to 50% of the aggregate fair market value of our assets unless borrowing a greater amount is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for borrowing such a greater amount. This limitation will be calculated once we have invested substantially all the proceeds of our IPO and will not apply to individual real estate assets or investments. At the date of acquisition of each asset, we anticipate that the cost of investment for such asset will be substantially similar to its fair market value, which will enable us to satisfy our requirements under our charter. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits.
Once the total of our Estimated Per-Share NAV multiplied by the number of shares of common stock outstanding exceeds $1.0 billion, we intend to maintain 5% of the total of our Estimated Per-Share NAV multiplied by the number of shares of common stock outstanding in liquid assets that can be liquidated more readily than properties. However, our stockholders should not expect that we will maintain liquid assets at or above this level. To the extent that we maintain borrowing capacity under a line of credit, such available amount will be included in calculating our liquid assets. Our Advisor will consider various factors in determining the amount of liquid assets we should maintain, including, but not limited to, our receipt of proceeds from sales of additional shares, our cash flow from operations, available borrowing capacity under a line of credit, if any, our receipt of proceeds from any asset sale, and the use of cash to fund repurchases. Our board of directors will review the amount and sources of liquid assets on a quarterly basis.

Share Repurchase Program
Our board of directors has adopted the SRP that enables stockholders, subject to certain conditions and limitations, to sell their shares to us. Due to these conditions and limitations, there can be no assurance that all, or any, shares submitted validly for repurchase will be repurchased under the SRP. On January 25, 2016, we announced thatMay 2014, our board of directors had unanimously approved an amendmentauthorized, and we began paying monthly distributions to the SRP. Under the SRP amendment, repurchasesstockholders of shares of our common stock, when requested, arerecord at the sole discretion of our board of directors and generally will be made semiannually (each six-month period ending June 30 or December 31, a "fiscal semester"). Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average number of shares of common stock outstanding on December 31st of the previous calendar year. In addition, we are only authorized to repurchase shares in a given fiscal semester up to the amount of proceeds received from the DRIP in that same fiscal semester, as well as any reservation of funds our board of directors may, in its sole discretion, make available for this purpose. Since we established an Estimated Per-Share NAV during the second fiscal semester of 2016, any repurchase requests received during the second fiscal semester of 2016 will be paid at the Estimated Per-Share NAV applicable on the last day of the fiscal semester. The SRP amendment became effective beginning on February 28, 2016.
As permitted under the SRP, the only repurchase requests completed during the three months ended September 30, 2016 were for death or disability. Our second fiscal semester will end on December 31, 2016 at which time we will evaluate repurchase requests. During our first fiscal semester of 2016, 461,555 shares were repurchased for $10.9 million at an average repurchase price per share of $23.62 (including all shares submitted for death or disability), while requests to repurchase 874,782 shares for $20.3 million at an average price per share of $23.21 were not fulfilled.
Capital Expenditures
We may invest in additional capital expenditures to further enhance the value of our investments. Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances.
As previously noted, subsequent to the acquisition of 9 Times Square in November 2014, we allowed leases to expire and terminate as part of the implementation of our repositioning, redeveloping and remarketing plan with respect to the property. As a result of these initiatives, we expect to incur $2.5 million to $3.0 million of additional capital expenditures during 2016 related to building improvements, tenant improvements and leasing commissions as we continue to execute on our repositioning, redeveloping and remarketing plan. For the nine months ended September 30, 2016, we incurred $4.6 million of capital expenditures related to building improvements, tenant improvements and leasing commissions for 9 Times Square. The remainder of our $8.1 million in capital expenditures for the nine months ended September 30, 2016 related to building and tenant improvements at 123 William Street and 1140 Avenue of the Americas.
Acquisitions
On June 15, 2016, we, through a wholly-owned subsidiary of the OP, completed our acquisition of the leasehold interest in an institutional-quality office building located at 1140 Avenue of the Americas in Manhattan, New York ("1140 Avenue of the Americas"). 1140 Avenue of the Americas comprises 249,703 square feet and is subject to a ground lease held by 1140 Sixth Avenue LLC. The seller of 1140 Avenue of the Americas was BPGL Holdings LLC. The purchase price of 1140 Avenue of the Americas was $178.5 million, exclusive of closing costs and net of any purchase price adjustments. We funded the purchase price with proceeds from our IPO and a mortgage loan from Ladder Capital Finance I LLC. We accounted for the purchase of 1140 Avenue of the Americas as a business combination and incurred acquisition related costs of $4.3 million, which are reflected in the acquisition and transaction related line item of the consolidated statements of operations and comprehensive loss.
Our Advisor evaluates potential acquisitions of real estate and real estate-related assets and engages in negotiations with sellers and borrowers on our behalf. Investors should be aware that after a purchase contract is executed that contains specific terms, the property will not be purchased until the successful completion of due diligence and fully negotiated binding agreements. During this period, we may decide to temporarily invest any unused proceeds from common stock offerings in certain investments that could yield lower returns than the properties. These lower returns may affect our ability to make distributions.
Distributions
We are required to distribute annually at least 90% of our annual REIT taxable income, determined without regard for the deduction for distributions paid and excluding net capital gains. On March 9, 2016, our board of directors approved a change to the daily distribution amount to $0.0041325137 per day per share of common stock to accurately reflect that 2016 is a leap year and maintain equivalencerate equal to $1.5125 per annum, per share of common stock. DistributionsWe continue to record holderspay monthly distributions at this rate, but we do not expect to generate sufficient cash flow from operations in 2017 to fund distributions at our current level. There can be no assurance that additional liquidity will be available to us, on favorable terms, or at all, in sufficient amounts to maintain distributions at our current levels. Our board of directors may reduce the amount of distributions paid or suspend distribution payments and therefore the amount and timing of future distribution payments, if any, are payable bynot assured.
Both the 5th day following each month end to stockholdersamount and timing of record at the close of business each day during the prior month.

Futurefuture distributions to our stockholders will be determined by our board of directors and are dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). Distribution payments are dependent on the availability of funds. Our board of directors may reduce
As with prior periods, for the amount of distributions paid or suspend distribution payments at any timethree and therefore distribution payments are not assured.
During the nine months ended September 30, 2016, distributions paid to common stockholders totaled $34.8 million. Of that amount, $16.1 million was reinvested in shares of our common stock pursuant to the DRIP. During the nine months ended September 30, 2016, cash used to pay our distributions was generated from proceeds from our IPO and proceeds from the sale of our shares through the DRIP.
For the nine months ended September 30, 20162017, our cash flows from operations was negative,less than the amount distributed, and we do not expect to generate sufficient cash flow from operations in 20162017 to fund distributions at our current level. We may not generate sufficientNo assurance as to cash flows from operations can be made with respect to fund future distributions.years. The amount of cash available for distributions is affected by many factors, such as rental income from acquired properties, and our operating expense levels, as well asthe amount of our cash and many other variables. Actual cash available for distributions may vary substantially from estimates. With limited operating history, we cannot assure our stockholders that we will be able to continue to pay distributions or that distributions will increase over time. We cannot give any assurance that rents from the properties we have acquired will increase, or that future acquisitions of real properties will increase our cash available for distributions to stockholders. Management expects that, as our portfolio of investments stabilizes, specifically 9 Times Square, cash flow from our properties will be sufficient to fund operating expenses and a larger portion of the payment of our monthly distributions. There can be no assurance, however, that this stabilization will occur on a timely basis, or at all. Our actual results may differ significantly from the assumptions used by our board of directors in establishing a distribution rate to stockholders.
We do not expectDuring the nine months ended September 30, 2017, distributions paid to generate sufficientcommon stockholders totaled $35.1 million. Of that amount, $14.2 million was reinvested in shares of our common stock pursuant to the DRIP. During the three months ended September 30, 2017, we funded distributions from cash flowsprovided by operations, cash proceeds received from our operations tocommon stock issued under the DRIP and cash on hand which represented the remaining $2.4 million in proceeds from the IPO and proceeds from secured financings.

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To pay distributions at the current level. In addition to cash flow from operations,in future periods, we expect to use a portion of our cash on hand, which represents the remaining proceeds we received in our IPO, and the proceeds from the sale of our shares through DRIP to pay distributions.and proceeds from secured mortgages financings. A decrease in the level of stockholder participation in our DRIP or any decline incontinued cash flow less than the amount distributed or need to use cash flow that we may generate in the future for other purposes could have an adverse impact on our ability to meet these expectations. To the extent we are required to borrow additional amounts to pay distributions, we may not be able to do so on favorable terms or at all. If these sources are insufficient, we may use other sources, such as from borrowings the sale of additional securities, advances from our Advisor, and our Advisor's deferral, suspension or waiver of its fees and expense reimbursements, as to which it has no obligation,other than secured mortgage financings, to fund distributions. There can be no assurance we will be able to continue paying cash distributions at our current level or at all.
The following table shows the sources for the payment of distributions to common stockholders for the periods presented:
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 March 31, 2016 June 30, 2016 September 30, 2016 September 30, 2016 March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
(In thousands)   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions
Distributions:(1)
                                
Distributions to stockholders $11,485
   $11,678
   $11,648
   $34,811
  
Cash distributions paid to stockholders not reinvested in common stock $6,661
   $7,004
   $7,233
   $20,898
  
Cash distributions reinvested in common stock issued under the DRIP 4,794
   4,771
   4,605
   14,170
  
Total distributions paid $11,455
   $11,775
   $11,838
   $35,068
  
Source of distribution coverage:                                
Cash flows provided by (used in) operations $1,308
 11.4% $(1,308) (11.2)% $
  % $
 %
Net proceeds from the sale of shares through DRIP 4,019
 35.0% 5,294
 45.3 % (5,705) (49.0)% 3,608
 10.4%
Offering proceeds from issuance of common stock 6,158
 53.6% 7,692
 65.9 % 17,353
 149.0 % 31,203
 89.6%
Cash flows provided by operations * % $3,612
 30.7% * % $3,612
 10.3%
Cash proceeds received from common stock issued under the DRIP 4,936
 43.1% 4,673
 39.7% 4,655
 39.3% 14,264
 40.7%
Available cash on hand(2)
 6,519
 56.9% 3,490
 29.6% 7,183
 60.7% 17,192
 49.0%
Total sources of distributions $11,485
 100.0% $11,678
 100.0 % $11,648
 100.0 % $34,811
 100.0% $11,455
 100.0% $11,775
 100.0% $11,838
 100.0% $35,068
 100.0%
Cash flows provided by (used in) operations (GAAP basis) $1,308
   $(3,254)   $1,359
   $(587)  
Cash flows (used in) provided by operations (GAAP basis) $(98)   $3,612
   $(1,135)   $2,379
  
Net loss (in accordance with GAAP) $(3,405)   $(6,401)   $(4,369)   $(14,175)   $(4,786)   $(5,362)   $(5,877)   $(16,025)  

(1)Excludes distributions related to Class B Units, the expense for which is included in general and administrative expenses on the consolidated statements of operations and comprehensive loss.
(1) Excludes distributions related to Class B Units, the expense for which is included in general and administrative expenses on the consolidated statements of operations and comprehensive loss.
(2) Includes remaining proceeds from the IPO and proceeds from secured mortgages financing. As of September 30, 2017, there were no remaining proceeds from the IPO. See Note 5 — Mortgage Notes Payable for information on our secured mortgage loans outstanding.
* No cash flows from operations were used to cover distributions during the three months ended March 31, 2017 and September 30, 2017. Net cash used in operating activities was approximately $98,000 and $1.1 million for the three months ended March 31, 2017 and September 30, 2017, respectively.

Contractual Obligations
Debt Obligations
The following is a summary of our contractual debt obligations as of September 30, 2016:2017:
     Years Ended December 31,       Years Ended December 31,  
(In thousands) Total October 1, 2016 — December 31, 2016 2017 — 2018 2019 — 2020 Thereafter Total October 1, 2017 — December 31, 2017 2018 — 2019 2020 — 2021 Thereafter
Mortgage note payable:                    
Principal payments $195,000
 $
 $96,000
 $
 $99,000
 $239,000
 $
 $
 $
 $239,000
Interest payments 41,898
 1,709
 8,900
 8,260
 23,029
 99,372
 2,680
 21,496
 21,525
 53,671
Total debt obligations $236,898
 $1,709
 $104,900
 $8,260
 $122,029
 $338,372
 $2,680
 $21,496
 $21,525
 $292,671

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Ground Lease Obligations
The following is a summary of our contractual ground lease obligations as of September 30, 2016:2017:
     Years Ended December 31,       Years Ended December 31,  
(In thousands) Total October 1, 2016 — December 31, 2016 2017 — 2018 2019 — 2020 Thereafter Total October 1, 2017 — December 31, 2017 2018 — 2019 2020 — 2021 Thereafter
Ground lease payments $245,301
 $87
 $9,492
 $9,492
 $226,230
 $241,655
 $1,187
 $9,492
 $9,492
 $221,484
Election as a REIT 
We elected and qualified to be taxed as a REIT under the Code, effective for our taxable year ended December 31, 2014. We believe that, commencing with such taxable year, we have been organized and operated in a manner so that we qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to remain qualified for taxation as a REIT. In order to continue to qualify for taxation as a REIT we must, among other things, distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard for the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on that portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as federal income and excise taxes on our undistributed income.
Inflation
Many of our 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. In addition, our net leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in operating expenses resulting from inflation.
Related-Party Transactions and Agreements
See Note 9 — Related Party Transactions and Arrangements to our accompanying consolidated financial statements.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have had 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our long-term debt, which consists of secured financings, bears interest at fixed and variable-rates.rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. From time to time, we may enter into interest rate hedge contracts such as swaps, caps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.
As of September 30, 2016,2017, our debt consisted of both fixed and variable-rate debt. We had a fixed-rate secured mortgage notenotes payable with an aggregate carrying value of $99.0$239.0 million and a fair value of $105.1$244.2 million.Changes in market interest rates on our fixed-rate debt impact the fair value of the note, but it has no impact on interest due on the note. For instance, if interest rates rise 100 basis points and our fixed rate debt balance remains constant, we expect the fair value of our obligation to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed–rate debt assumes an immediate 100 basis point move in interest rates from their September 30, 20162017 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt by $1.0 million. $17.4 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt by $1.0$19.0 million.
As
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Table of September 30, 2016, our variable-rate secured mortgage note payable had a carrying value and fair value of $96.0 million. Interest rate volatility associated with this variable-rate mortgage note payable affects interest expense incurred and cash flow. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their September 30, 2016 levels, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate mortgage note payable would increase or decrease our interest expense by $1.0 million annually.Contents

These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs, and assuming no other changes in our capital structure. As the information presented above includes only those exposures that existed as of September 30, 20162017 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.
Item 4. Controls and Procedures.
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), our management, under the supervision and with the participation of our Chief Executive Officer and Interim Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded, as of the end of such period, that our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.
No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended September 30, 20162017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to any material pending legal proceedings.
Item 1A. Risk Factors.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities.
Recent Sales of Unregistered Securities
On July 29, 2016, we granted 3,999 shares of restricted stock that vest over a period of five years to our independent directors, pursuant to our employee and director incentive restricted share plan. No selling commissions or other consideration were paid in connection with such issuance, which was made without registration under the Securities Act in reliance upon exemption from the registration in Section 4(a)(2) of the Securities Act as transactions not involving any public offering.None.
Use of Proceeds from Sales of Registered Securities
On April 24, 2014, we commenced our IPO on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, pursuant to the Registration Statement filed with the SEC under the Securities Act (File No. 333-194135). The Registration Statement also coveredincluded 10.5 million shares of common stock issuable pursuant to the DRIP under which common stockholders may elect to have their distributions reinvested in additional shares of common stock. On May 29, 2014, we received and accepted subscriptions in excess of the minimum offering amount for the IPO of $2.0 million in shares, broke general escrow and issued shares of common stock to initial investors who were admitted as stockholders. On May 31, 2015, we closed our IPO after having sold substantially all of the shares registered in our IPO, and continued to accept subscriptions in process as of that date. As of September 30, 2016,2017, we had 30.631.2 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO and DRIP of $759.8$771.6 million, inclusive of $41.0$60.1 million from the DRIP.
The following table reflects the offering costs associated with the issuance of common stock:
  Year Ended December 31,
(In thousands) 2015 2014
Selling commissions and dealer manager fees $22,374
 $46,997
Other offering costs 6,050
 8,628
Total offering costs $28,424
 $55,625
The Former Dealer Manager was able to reallow the selling commissions and a portion of the dealer manager fees to participating broker-dealers. The following table details the selling commissions incurred and reallowed related to the sale of shares of common stock:
  Year Ended December 31,
(In thousands) 2015 2014
Total commissions paid to the Former Dealer Manager $22,374
 $46,997
Less:    
  Commissions to participating brokers (15,505) (31,920)
  Reallowance to participating broker dealers (2,625) (5,685)
Net to the Former Dealer Manager $4,244
 $9,392
As of September 30, 2016,2017, we have incurred $84.0 million of cumulative offering costs in connection with the issuance and distribution of our registered securities. Cumulative offering proceeds from the sale of common stock exceeded cumulative offering costs by $675.8$680.0 million at September 30, 2016.2017.

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As of September 30, 2016,2017, cumulative offering costs included $69.4 million of selling commissions and dealer manager fees and $11.9 million of offering cost reimbursements incurred from the Advisor and Former Dealer Manager. We are obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on our behalf, provided that the Advisor is obligated to reimburse us to the extent organization and offering costs (excluding selling commissions and the dealer manager fee) incurred by us in our IPO exceed 2.0% of gross offering proceeds in the IPO. As a result, these costs were only our liability to the extent aggregate selling commissions, the dealer manager fee and other organization and offering costs did not exceed 12.0% of the gross proceeds determined at the end of the IPO. As of the end of the IPO, aggregate selling commissions, dealer manager fees and other offering costs did not exceed 12.0% of the gross proceeds received in the IPO.
As of September 30, 2016,2017, we have used $715.4$11.2 million of the $718.8proceeds from secured mortgage financing and all $711.5 million in aggregate net proceeds from our IPO, excluding the DRIP, as follows: (i) $492.5 million to pay all or a portion of the purchase price of six properties; (ii) $69.4 million to pay selling commissions and dealer manager fees to our Former Dealer Manager; (iii) $11.9 million to reimburse our Advisor for Offering expenses; (iv) $16.5$17.6 million to pay acquisition fees, acquisition cost reimbursements, financing coordination fees and other fees and reimbursements to our Advisor and its affiliates; (v) $83.0$69.5 million to pay cash distributions to our stockholders; (vi) $26.9$39.3 million to fund capital expenditures; and (vii) $15.2$22.5 million to repurchase shares of our common stock pursuant to the SRP. As of September 30, 2017, there were no remaining proceeds from the IPO.
Issuer Purchases of Equity Securities
As permitted under the SRP, as amended and restated on June 14, 2017 and effective as of July 14, 2017, our board of directors authorized, with respect to redemption requests received during the nine monthsquarter ended September 30, 2016,2017, the repurchase of all shares validly submitted for repurchase in an amount equalfollowing the death or qualifying disability of a shareholder. When a shareholder requests a repurchase and the repurchase is approved by our board of directors, we will reclassify such obligation from equity to a liability based on the amountvalue of proceeds received from the DRIP in that same fiscal semester, representing less than allobligation. Shares purchased under the SRP will have the status of authorized but unissued shares. The following table reflects the number of shares validly submitted for repurchase during the nine months endedrepurchased cumulatively through September 30, 2016. Accordingly, in July 2016, 457,982 shares were repurchased for $10.8 million at an average repurchase price per share of $23.60 (including all shares submitted for death or disability), while requests to repurchase 874,782 shares for $20.3 million at an average price per share of $23.21 were not fulfilled. Additionally, during April 2016, 3,573 additional shares submitted for death or disability were repurchased for $0.1 million at an average repurchase price of $25.00.2017.
  Numbers of Shares Repurchased Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2016 645,335
 $23.63
Nine months ended September 30, 2017(1)
 359,458
 20.41
Cumulative repurchases as of September 30, 2017 1,004,793
 $22.48
_____________________
(1)Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13.7 thousand at a weighted average price per share of $23.68 and (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.

Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.

43


Item 5. Other Information.
None.Indemnification Agreement
OnNovember 13, 2017, in connection with the election of Katie P. Kurtz as our chief financial officer and treasurer, effective upon the resignation of Nicholas Radesca from the same role, we entered into an indemnification agreement (the “Indemnification Agreement”) with Ms. Kurtz in the same form as the indemnification agreements we have entered into with our other directors and officers. Under the Indemnification Agreement, Ms. Kurtz will be indemnified by us to the maximum extent permitted by Maryland law for certain liabilities and will be advanced certain expenses that have been incurred as a result of actions brought, or threatened to be brought, against him as our officer as a result of his service, subject to the limitations set forth in the Indemnification Agreement. The Indemnification Agreement will become effective on November 15, 2017, the date Mr. Radesca’s resignation will become effective.
The foregoing description of the Indemnification Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Indemnification Agreement, which is filed as an exhibit to this Quarterly Report on Form 10-Q.
Item 6. Exhibits.
The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.

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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.
 AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.
 By:/s/ Michael A. Happel
Michael A. HappelEdward M. Weil, Jr.
  
Edward M. Weil, Jr.

Executive Chairman, Chief Executive Officer, President and Secretary
(Principal Executive Officer)

   
 By:/s/ Nicholas Radesca
  Nicholas Radesca
  Interim Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)

Dated: November 14, 201613, 2017

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EXHIBITS INDEX

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended September 30, 20162017 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.  Description
3.1 (1)
Articles Supplementary of American Realty Capital New York City REIT, Inc.
10.1 (2)

First Amendment to Employee and Director Incentive Restricted Share Plan of American Realty Capital New York City REIT, Inc.
10.2 *
Amended and Restated Employee and Director Incentive Restricted Share Plan of American Realty Capital New York City REIT, Inc.
10.3 *
Indemnification Agreement between the Company and Katie P. Kurtz, dated as of November 13, 2017.
31.1 *
 Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *
 Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 *
 Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 * 
XBRL (eXtensible Business Reporting Language). The following materials from American Realty Capital New York City REIT, Inc.'s Quarterly Report on Form 10-Q for the three months ended September 30, 2016,2017, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
____________________
*     Filed herewith
(1) Filed as an exhibit to the Company's Current Report on Form 8-K filed with the SEC on October 10, 2017.
(2) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 11, 2017.






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