UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)




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

For the quarterly period ended March 31, ~~2020~~

2021


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

For the transition period from _________ to __________

Commission file number: ~~000-55393~~001-39448

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.)

650 Fifth Ave., 30^th Floor,, New York,, NY10019

______________________________________________________________________________________ _________________________________________________________________________

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (~~212~~) (212) 415-6500

Securities registered pursuant to section 12(b) of the Act: None.

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/Class A common stock, $0.01 par value per share

~~N/A~~NYC

N/New York Stock Exchange

Class A Preferred Stock Purchase Rights

New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

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

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

As of May ~~11, 2020,~~10, 2021, the registrant had ~~30,994,891~~12,776,448 shares of common stock ~~outstanding.~~outstanding, comprised of 9,600,335 shares of Class A common stock and 3,176,113 shares of Class B common stock.

NEW YORK CITY REIT, INC.

INDEX TO FINANCIAL STATEMENTS


			Page
PART I - FINANCIAL INFORMATION

			~~Page~~
~~PART I - FINANCIAL INFORMATION~~

Item 1. Financial Statements

Consolidated Balance Sheets as of March 31 ~~2020~~, 202 1 (Unaudited) and December 31, ~~2019~~20 20			3
Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31 ~~2020~~, 202 1 and ~~2019~~20 20 (Unaudited)			4
Consolidated Statements of Changes in Equity for the Three Months Ended March 31 ~~2020 and 2019~~, 202 1 (Unaudited)			5
Consolidated Statements of Cash Flows for the Three Months Ended March 31 ~~2020~~, 202 1 and ~~2019~~20 20 (Unaudited)			6
Notes to Consolidated Financial Statements (Unaudited)			7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2834

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3747

Item 4. Controls and Procedures			3747

PART II - OTHER INFORMATION			3848

Item 1. Legal Proceedings			3848

Item 1A. Risk Factors			3848

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3948

Item 3. Defaults Upon Senior Securities			3948

Item 4. Mine Safety Disclosures			3948

Item 5. Other Information			3948

Item 6. Exhibits			3948

Signatures			4049

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

NEW YORK CITY REIT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)


	March 31, 2021		December 31, 2020
ASSETS	(Unaudited)
Real estate investments, at cost:
Land	$	193,658	$	193,658
Buildings and improvements	569,410		568,861
Acquired intangible assets	98,118		98,118
Total real estate investments, at cost	861,186		860,637
Less accumulated depreciation and amortization	(146,790)		(139,666)
Total real estate investments, net	714,396		720,971
Cash and cash equivalents	29,396		30,999
Restricted cash	11,197		8,995
Operating lease right-of-use asset	55,323		55,375
Prepaid expenses and other assets (includes amounts due from related parties of $0 and $435 at March 31, 2021 and December 31, 2020, respectively)	8,902		12,953
Straight-line rent receivable	22,690		22,050
Deferred leasing costs, net	9,264		10,503
Total assets	$	851,168	$	861,846

LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net	$	396,959	$	396,574
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $199 and $0 at March 31, 2021 and December 31, 2020, respectively)	8,479		6,916
Operating lease liability	54,808		54,820
Below-market lease liabilities, net	13,503		14,006
Derivative liability, at fair value	2,816		3,405
Deferred revenue	5,370		4,558

Total liabilities	481,935		480,279

Preferred stock, $0.01 par value, 50,000,000 shares authorized, NaN issued and outstanding at March 31, 2021 and December 31, 2020	0		0
Common stock, $0.01 par value, 300,000,000 shares authorized, 12,776,448 and 12,802,690 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	129		129
Additional paid-in capital	686,555		686,715
Accumulated other comprehensive loss	(2,815)		(3,404)
Distributions in excess of accumulated earnings	(320,737)		(305,882)
Total stockholders’ equity	363,132		377,558
Non-controlling interests	6,101		4,009
Total equity	369,233		381,567
Total liabilities and equity	$	851,168	$	861,846

March 31,
2020 December 31,
2019
ASSETS (Unaudited)
Real estate investments, at cost:
Land $ 193,658
$ 193,658
Buildings and improvements 567,210
565,829
Acquired intangible assets 102,365
103,121
Total real estate investments, at cost 863,233
862,608
Less accumulated depreciation and amortization (121,031 ) (114,322 )
Total real estate investments, net 742,202
748,286
Cash and cash equivalents 53,240
51,199
Restricted cash 8,490
7,098
Operating lease right-of-use asset 55,529
55,579
Prepaid expenses and other assets (including amounts due from related parties of $0 and $0 at March 31, 2020 and December 31, 2019, respectively) 6,353
8,602
Straight-line rent receivable

22,341
21,649
Deferred leasing costs, net 9,024
8,943
Total assets $ 897,179
$ 901,356

LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net $ 395,417
$ 395,031
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $339 and $222 at March 31, 2020 and December 31, 2019, respectively) 8,531
7,033
Operating lease liability 54,855
54,866
Below-market lease liabilities, net 17,641
18,300
Derivative liability, at fair value 3,918
1,327
Deferred revenue 5,624
4,250
Total liabilities 485,986
480,807

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at March 31, 2020 and December 31, 2019 —
—
Common stock, $0.01 par value, 300,000,000 shares authorized, 30,994,891 shares issued and outstanding as of March 31, 2020 and December 31, 2019 310
310
Additional paid-in capital 685,867
685,844
Accumulated other comprehensive loss (3,918 ) (1,327 )
Distributions in excess of accumulated earnings (271,066 ) (264,278 )
Total stockholders’ equity 411,193
420,549
Total liabilities and equity $ 897,179
$ 901,356

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

Table of Contents

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 March 31,
	2021		2020
Revenue from tenants	$	15,186	$	17,477

Operating expenses:
Asset and property management fees to related parties	1,907		1,998
Property operating	8,736		8,016



Equity-based compensation	2,115		23
General and administrative	2,732		1,996
Depreciation and amortization	8,526		7,519
Total operating expenses	24,016		19,552
Operating loss	(8,830)		(2,075)
Other income (expense):
Interest expense	(4,713)		(4,832)
Other income	8		119
Total other expense	(4,705)		(4,713)


Net loss attributable to common stockholders	$	(13,535)	$	(6,788)

Other comprehensive income (loss):
Change in unrealized gain (loss) on derivative	589		(2,591)
Other comprehensive income (loss)	589		(2,591)
Comprehensive income (loss)	$	(12,946)	$	(9,379)

Weighted-average shares outstanding — Basic and Diluted (1)	12,780,027		12,749,724
Net loss per share attributable to common stockholders — Basic and Diluted (1)	$	(1.06)	$	(0.53)

_____

Three Months Ended March 31,
2020 2019
Revenue from tenants $ 17,477
$ 17,051

Operating expenses:
Asset and property management fees to related parties 1,998
1,548
Property operating 8,016
7,336
General and administrative 2,019
1,931
Depreciation and amortization 7,519
7,414
Total operating expenses 19,552
18,229
Operating loss (2,075 ) (1,178 )
Other income (expense):
Interest expense (4,832 ) (3,560 )
Other income 119
154
Total other expense (4,713 ) (3,406 )
Net loss (6,788 ) (4,584 )

Other comprehensive loss:
Change in unrealized loss on derivative (2,591 ) (70 )
Other comprehensive loss (2,591 ) (70 )
Comprehensive loss $ (9,379 ) $ (4,654 )

Weighted-average shares outstanding — Basic and Diluted 30,981,830
30,977,955
Net loss per share attributable to common stockholders — Basic and Diluted $ (0.22 ) $ (0.15 )
(1) Prior period amounts retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).

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

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NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for share data)

(Unaudited)

Common Stock

Number of
Shares
Par Value
Additional
Paid-in
Capital
Accumulated Other Comprehensive Loss Distributions in excess of accumulated earnings Total Stockholders’ Equity
Balance, December 31, 2019 30,994,891
$ 310
$ 685,844
$ (1,327 ) $ (264,278 ) $ 420,549
Equity-based compensation —
—
23
—
—
23
Net loss —
—
—
—
(6,788 ) (6,788 )
Other comprehensive loss —
—
—
(2,591 ) —
(2,591 )
Balance, March 31, 2020 30,994,891
$ 310
$ 685,867
$ (3,918 ) $ (271,066 ) $ 411,193


	Three Months Ended March 31, 2021
	Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, December 31, 2020	12,802,690	$	129	$	686,715	$	(3,404)	$	(305,882)	$	377,558	$	4,009	$	381,567

Repurchase and cancellation of common stock	(26,236)	—		(183)		—		—		(183)		—		(183)
Redemption of fractional shares of common stock and restricted shares	(6)	—		—		—		—		—		—		—


Equity-based compensation	—	—		23		—		—		23		2,092		2,115
Dividends declared on common stock, $0.10 per share	—	—		—		—		(1,280)		(1,280)		—		(1,280)
Distributions paid to non-controlling interest holders	—	—		—		—		(40)		(40)		—		(40)
Net loss	—	—		—		—		(13,535)		(13,535)		—		(13,535)
Other comprehensive income (loss)	—	—		—		589		—		589		—		589
Balance, March 31, 2021	12,776,448	$	129	$	686,555	$	(2,815)	$	(320,737)	$	363,132	$	6,101	$	369,233


																Three Months Ended March 31, 2020
	Common Stock															Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Distributions in excess of accumulated earnings			Total Stockholders' Equity				Number of Shares (1)	Par Value(1)		Additional Paid-in Capital (1)		Accumulated Other Comprehensive Loss		Distributions in excess of accumulated earnings		Total Stockholders' Equity
Balance, December 31, 2018	30,990,448	$	310	$	685,758	$	—		$	(242,388	)	$	443,680
Balance, December 31, 2019															Balance, December 31, 2019	12,755,099	$	128	$	686,026	$	(1,327)	$	(264,278)	$	420,549

Equity-based compensation	—	—		21					—			21			Equity-based compensation	—	—		23		—		—		23

Net loss	—	—		—		—			(4,584		)	(4,584		)	Net loss	—	—		—		—		(6,788)		(6,788)
Other comprehensive loss	—	—		—		(70		)	—			(70		)	Other comprehensive loss	—	—		—		(2,591)		—		(2,591)
Balance, March 31, 2019	30,990,448	$	310	$	685,779	$	(70	)	$	(246,972	)	$	439,047
Balance, March 31, 2020															Balance, March 31, 2020	12,755,099	$	128	$	686,049	$	(3,918)	$	(271,066)	$	411,193

_____

(1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).

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

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NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(13,535)	$	(6,788)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	8,526		7,519
Amortization of deferred financing costs	385		386
Accretion of below- and amortization of above-market lease liabilities and assets, net	(215)		(362)
Equity-based compensation	2,115		23

Changes in assets and liabilities:
Straight-line rent receivable	(640)		(691)
Straight-line rent payable	28		27
Prepaid expenses, other assets and deferred costs	3,613		1,829
Accounts payable, accrued expenses and other liabilities	1,056		1,111
Deferred revenue	812		1,374
Net cash provided by operating activities	2,145		4,428
Cash flows from investing activities:




Capital expenditures	(43)		(995)
Net cash used in investing activities	(43)		(995)
Cash flows from financing activities:



Dividends paid on common stock	(1,280)		0

Repurchase of common stock	(183)		0
Distributions to non-controlling interest holders	(40)		0
Net cash used in financing activities	(1,503)		0
Net change in cash, cash equivalents and restricted cash	599		3,433
Cash, cash equivalents and restricted cash, beginning of period	39,994		58,297
Cash, cash equivalents and restricted cash, end of period	$	40,593	$	61,730

Cash and cash equivalents	$	29,396	$	53,240
Restricted cash	11,197		8,490
Cash, cash equivalents and restricted cash, end of period	$	40,593	$	61,730




Non-Cash Investing and Financing Activities:

Accrued capital expenditures	507		385

Three Months Ended March 31,
2020 2019
Cash flows from operating activities:
Net loss $ (6,788 ) $ (4,584 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 7,519
7,414
Amortization of deferred financing costs 386
221
Accretion of below- and amortization of above-market lease liabilities and assets, net (362 ) (467 )
Equity-based compensation 23
21
Changes in assets and liabilities:
Straight-line rent receivable (691 ) (1,411 )
Straight-line rent payable 27
27
Prepaid expenses, other assets and deferred costs 1,829
1,044
Accounts payable, accrued expenses and other liabilities 1,111
(235 )
Deferred revenue 1,374
368
Net cash provided by operating activities 4,428
2,398
Cash flows from investing activities:
Investments in real estate —
—
Capital expenditures (995 ) (705 )
Net cash used in investing activities (995 ) (705 )
Cash flows from financing activities:
Payments of financing costs —
—
Net cash provided by financing activities —
—
Net change in cash, cash equivalents and restricted cash 3,433
1,693
Cash, cash equivalents and restricted cash, beginning of period 58,297
54,801
Cash, cash equivalents and restricted cash, end of period $ 61,730
$ 56,494

Cash and cash equivalents $ 53,240
$ 48,574
Restricted cash 8,490
7,920
Cash, cash equivalents and restricted cash, end of period $ 61,730
$ 56,494

Supplemental Disclosures:
Cash paid for interest $ 4,307
$ 3,117

Non-Cash Investing and Financing Activities:
Accrued capital expenditures 385
1,393

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

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2020~~2021

(Unaudited)

Note 1 — Organization

New York City REIT, Inc. (including, New York City Operating Partnership L.P., (the “OP”) and its subsidiaries, the “Company”) ~~was formed to invest its assets~~is an externally managed real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”) that invests primarily in office properties located inexclusively within the five boroughs of New York City, ~~with a focus on~~primarily Manhattan. The Company has also purchased ~~for investment purposes~~ certain real estate ~~investment~~ assets that accompany office properties, including retail spaces and amenities, and may purchase hospitality assets, residential assets and other property types also located exclusively inwithin the five boroughs of New York City. ~~All such properties may be acquired and owned by the Company alone or jointly with another party.~~ As of March 31, ~~2020,~~2021, the Company owned 8 properties consisting of 1.2 million rentable square feet, acquired for an aggregate purchase price of $790.7 million.

On August 18, 2020 (the “Listing Date”), the Company listed shares of Class A common stock on the New York Stock Exchange (“NYSE”) under the symbol “NYC” (the “Listing”). In anticipation of the Listing, the Company implemented a series of corporate actions which resulted in the bifurcation of the Company’s common stock into Class A common stock and Class B common stock and in a net reduction of 2.43 shares for every one share of common stock outstanding prior to these corporate actions (the “Reverse Stock Split”). All references made to share or per share amounts as of dates prior to August 5, 2020 in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Reverse Stock Split on that date. To effect the Listing, and to address the potential for selling pressure that may have existed at the outset of the Listing, the Company listed only shares of Class A common stock, which represented approximately 25% of the Company’s outstanding shares of common stock, on the NYSE when trading commenced. The ~~Company was incorporated~~Company’s other class of outstanding stock is Class B common stock, which comprised approximately 75% of its outstanding shares of common stock at that time. The first of three equal tranches of shares of Class B common stock that were not listed on the NYSE on the Listing Date converted into 3,189,204 shares of Class A common stock and the shares were listed on the NYSE on December ~~19, 2013 as a Maryland corporation~~16, 2020. On February 26, 2021, the Company’s board of directors approved an advancement of the automatic conversion date for the second tranche of shares of Class B common stock from April 15, 2021 to March 1, 2021. Accordingly, the second tranche of shares of Class B common stock converted into 3,176,127 shares of Class A common stock and ~~elected~~were listed on the NYSE on March 1, 2021. The remaining tranche of shares of Class B common stock will convert into shares of Class A common stock 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.~~ listed on the NYSE on August 13, 2021, unless earlier converted. For additional information, see Note 7 – Stockholders’ Equity.

Substantially all of the Company’s business is conducted through the ~~OP.~~

~~In March 2019, the Company changed~~OP and its ~~name from American Realty Capital New York City REIT, Inc. to New York City REIT, Inc.~~

~~On October 24, 2019, the~~wholly-owned subsidiaries. The Company’s board of directors approved an estimated net asset value per share of its common stock (the “Estimated Per-Share NAV”) as of June 30, 2019 which was published on October 25, 2019. This was the third annual update of Estimated Per-Share NAV the Company has published. Until the Company lists shares of its common stock or another liquidity event occurs, 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 0 employees.~~advisor, New York City Advisors, LLC (the “Advisor”) ~~has been retained by the Company to manage~~, manages the Company’s ~~affairs on a~~ day-to-day ~~basis. The Company has retained~~business with the assistance of the Company’s property manager, New York City Properties, LLC (the “Property Manager”) ~~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”), and these ~~entities~~related parties receive compensation and fees ~~and expense reimbursements~~ for providing services ~~related~~ to the ~~investment and management of the Company’s assets.~~

Company. The Company ~~is the sole general partner and holds substantially all of the units of limited partner interests~~also reimburses these entities for certain expenses they incur in the OP (“OP units”). The Advisor contributed $2,020 to the OP in exchange for 90 OP units, which represents a nominal percentage of the aggregate OP ownership. A holder of OP units has the right to convert OP units 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 units 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.providing these services.

Note 2 — Summary of Significant Accounting Policies

Basis of Accounting

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 statement of results for the interim periods. The results of operations for the three months ended March 31, 2021 and 2020 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, ~~2019,~~2020, which are included in the Company’s Annual Report on Form 10-K filed with the ~~SEC~~Securities and Exchange Commission (the “SEC”) on March ~~19, 2020.~~29, 2021. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, ~~2020.~~2021.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership

~~Table of Contents~~

~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

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 variable interest entity (“VIE”) for which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. The Company has determined the OP is a VIE of which the Company is the primary beneficiary.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable.

Non-controlling Interests

The non-controlling interests represent the portion of the equity in the OP that is not owned by the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and presented as net loss attributable to non-controlling interests on the consolidated statements of operations and comprehensive loss. Non-controlling interests are allocated a share of net loss based on their share of equity ownership. Prior to the Listing, the Advisor held 37 units of limited partnership designated as “Class A Units” (“Class A Units”), after giving effect to the Reverse Stock Split, which represented a nominal percentage of the aggregate OP ownership. These Class A Units were redeemed for an equal number of shares of Class A common stock on the Listing Date. As of March 31, 2021, 13,100 Class A Units held by a third party were still outstanding and represent a non-controlling interest in the OP. In addition, under the multi-year outperformance agreement with the Advisor (the “2020 OPP”), the OP issued a new class of units of limited partnership designated as LTIP Units (“LTIP Units”) during 2020, which are also reflected as part of non-controlling interest as of March 31, 2021. See Note 7 - Stockholders’ Equity and Note 11 - Equity-Based Compensation for additional information on amounts recorded in non-controlling interests during the first quarter of 2021.

Reclassifications

Certain ~~prior year~~ amounts have been reclassified to conform to the current ~~year~~period presentation. The Company currently presents ~~straight-line rent receivable and straight-line rent payable~~equity-based compensation on its own line ~~items~~item in the consolidated ~~statement~~statements of ~~cash flows and consolidated balance sheets,~~operations, which was previously ~~included within prepaid expenses~~presented in general and ~~other assets.~~administrative expenses.

Impacts of the COVID-19 Pandemic

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. During the first quarter of 2020, ~~there was a~~the global ~~outbreak of a novel coronavirus, (the virus~~COVID-19 pandemic that ~~causes COVID-19), which~~ has spread ~~to over 200 countries~~around the world and ~~territories, including the United States, and has spread~~ to every state in the United ~~States.~~States commenced. The ~~World Health Organization~~pandemic has ~~designated COVID-19 as a pandemic,~~had and ~~numerous countries, including the United States,~~could continue to have declared national emergencies with respect to COVID-19. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading and operations of non-essential offices and retail centers. Such actions are creating disruption in global supply chains, and adversely impacting many industries. The outbreak could have a continuedan adverse impact on economic and market conditions and ~~trigger~~triggered a period of global economic slowdown. The continued rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company considered the impact of COVID-19 on the assumptions and estimates underlying its consolidated financial statements and believes the estimates and assumptions ~~underlying its consolidated financial statements~~ are reasonable and supportable based on the information available as of March 31, ~~2020, however uncertainty over~~2021. However, given the ~~ultimate impact~~rapid evolution of the COVID-19 ~~will have on~~pandemic and the global ~~economy generally, and the Company’s business in particular, makes any~~response to curb its spread, these estimates and assumptions as of March 31, ~~2020~~2021 are inherently less certain than they would be absent the ~~current~~actual and potential impacts of ~~COVID-19.~~the COVID-19 pandemic. Actual results may ultimately differ from those estimates.

New York City, where all the Company’s properties are located, has been among the hardest hit locations in the country and ~~continues to operate under a mandatory order to close all non-essential operations.~~has not yet fully reopened. The Company’s properties remain accessible to all tenants, ~~while each tenant operates under the appropriate~~although, even as operating ~~restrictions.~~restrictions expire, not all tenants have resumed operations. In addition, as operating restrictions expire, operating costs may begin to rise, including for services, labor and personal protective equipment and other supplies, as the Company’s property managers take appropriate actions to protect tenants and property management personnel. Some of these costs may be recoverable through reimbursement from ~~tenants.~~tenants but others will be borne by the Company. In addition, one of the Company’s tenants, Knotel, Inc. (“Knotel”), which was a tenant at the Company’s 123 William Street and 9 Times Square properties, declared bankruptcy in early 2021. In the fourth quarter of 2020, the Company put Knotel on a cash basis of accounting and fully reserved all receivables from Knotel with the exception of security deposits held, which was reflected as a reduction in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

revenue from tenants during the period ended December 31, 2020. Management has already re-leased a portion of the vacant space and is working on securing additional new leases, although there can be no assurance the Company will be able to lease all or any portion of the currently vacant space at any property on acceptable or favorable terms, or at all.

The financial stability and overall health of tenants is critical to the Company’s business. The negative effects that the global pandemic has had on the economy includes the closure or reduction in activity for many retail operations such as some of those operated by the Company’s tenants. This has impacted the ability of some of the Company’s tenants to pay their monthly rent either temporarily or in the long term. During the year ended December 31, 2020, the Company reduced revenue from tenants by $8.5 million for reserves recorded during the period on receivables for which the related tenants have been put on a cash basis. The Company has ~~already experienced~~continued to experience delays in rent collections induring 2021. In the ~~month~~first quarter of ~~April.~~2021, there has been no rental income received from any of the tenants that were previously placed on a cash basis. The Company has taken a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, in 2020 and 2021, the Company ~~has~~ executed ~~rent deferral~~different types of lease amendments. These agreements included deferrals and abatements and, in ~~April 2020.~~ some cases, extensions to the term of the leases. In the first quarter of 2021, the Company executed lease amendments with multiple tenants, which include deferrals, abatements, extensions to the terms of the lease, and in one instance, a reduction of the lease term.

As a result of the financial difficulties of the Company’s tenants and early lease terminations, the Company is in breach of debt covenants at its 1140 Avenue of Americas, 9 Times Square, and Laurel/Riverside properties under the non-recourse mortgages for those properties. These breaches caused cash trap events. Refer to Note 4 - Mortgage Notes Payable, Net for further details regarding these breaches.

For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess ~~the~~a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the ~~lease.~~lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which does not apply to leases subsequently modified). However, in light of the COVID-19 pandemic in which many leases are being modified, the ~~Financial Accounting Standards Board (“FASB”)~~FASB and SEC ~~has~~have provided relief that ~~will allow~~allows companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification. In order to be considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. ~~If the cash flows are substantially the same or less,~~For COVID-19 relief qualified changes, there are two methods to potentially account for such rent deferrals or abatements under the relief, (1) as if nothe changes towere originally contemplated in the lease contract ~~were made, and~~or (2) as if the deferred payments are variable lease ~~payments. Under method (1), a lessor~~payments contained in the lease contract. For all other lease changes that did not qualify for FASB relief, the Company would ~~increase its~~be required to apply modification accounting including assessing classification under ASC 842.

Some, but not all of the Company’s lease ~~receivable and a lessee would increase its accounts payable~~modifications qualify for the FASB relief. In accordance with the relief provisions, instead of treating these qualifying leases as ~~receivables/payments accrue. In its income statement, a lessor would continue to recognize revenue during~~modifications, the ~~deferral period. The~~ Company has elected to ~~use method (2)~~treat the modifications as if previously contained in the lease and ~~therefore will have~~recast rents receivable prospectively (if necessary). Under that accounting, for modifications that were deferrals only, there would be no ~~change~~impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease.

For leases not qualifying for this relief, the Company applied modification accounting and determined that there were no changes in the current classification of its leases ~~in connection with many of the leases~~ impacted by negotiations with its tenants.

Revenue Recognition

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

The Company’s revenues, which are derived primarily from lease contracts, 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. As of March 31, ~~2020,~~2021, these leases had ~~an average~~a weighted-average remaining lease term of ~~6.8~~6.9 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires that the Company record a receivable for, and include in revenue from tenants, unbilled rent receivables that the Company will receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses (recorded in total revenue from tenants), in addition to

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For comparative purposes, the Company reflected prior revenue and reimbursements reported under ASC 842 also on a single line. For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.

The following tables present future base rent payments due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.

(In thousands) Future Base Rent Payments
2020 (remainder) $ 45,655
2021 58,496
2022 54,704
2023 46,662
2024 42,191
Thereafter 198,434
Total $ 446,142

~~The~~ Company continually reviews receivables related to rent and unbilled rents receivable and determines 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. Under ~~ASC 842,~~the leasing standard adopted on January 1, 2019, the Company is required to assess, based on credit risk, if ~~it’s~~it is probable that itthe Company will collect virtually all of the lease payments at the lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. In fiscal 2020 and 2021, this assessment ~~would include~~has included consideration of the impacts of the COVID-19 pandemic on ~~our~~the Company’s tenant’s ability to pay rents in accordance with their contracts. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that ~~it’s~~it is probable that it will collect virtually all of the lease payments (base rent and additional rent), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines ~~it’s~~it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and ~~a full reserve would~~the straight line rent receivable accrued will be ~~recorded on previously accrued amounts in cases~~written off where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants in accordance with ~~new~~current accounting rules, on the accompanying consolidated statements of operations and comprehensive loss in the period the related costs are incurred, as applicable.

In accordance with ~~the~~ lease accounting rules the Company records uncollectable amounts as reductions in revenue from tenants. During the three months ended March 31, ~~2020,~~2021, the Company ~~reduced lease income by $5,000 for amounts deemed uncollectable during the period. There were 0~~had no such reductions ~~recorded during the three months ended March 31, 2019.~~

~~Investments~~ in ~~Real Estate~~

The Company evaluates the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or an asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. 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 asset. See Purchase Price Allocation section in this Note for a discussion of the initial accounting for investments in real estate.

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company's operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations. No properties were presented as discontinued operations duringrevenue. During the three months ended March 31, 2020, ~~or 2019.~~

~~Properties that are intended to be sold are to be designated as “held~~the Company reduced revenue from tenants by $5,000 for ~~sale”~~reserves recorded during the period on receivables for which the ~~consolidated balance sheets at~~related tenants have been put on a cash basis (see accounting policy above). During the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year. The Company evaluates probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. As of Marchyear ended December 31, 2020, ~~and December 31, 2019,~~ the Company ~~did not~~reduced revenue from tenants by $8.5 million for reserves recorded during the period on receivables for which the related tenants have been put on a cash basis. In the first quarter of 2021, no rental income was received from any ~~properties held for sale.~~

~~As more fully discussed in this Note under~~ ~~Recently Issued Accounting Pronouncements - ASU No. 2016-02 Leases, all~~ of the ~~Company’s leases as lessor prior to adoption of ASC 842~~tenants that were accounted for as operating leases and will continue to be accounted for as operating leases under the transition guidance. The Company will evaluate new leases originated after the adoption date (by the Company or by a predecessor lessor/owner) pursuant to the new guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than major part of remaining economic useful life of the asset (e.g., equal to or greater than 75%), if the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or if the asset so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor. For the three months ended March 31, 2020 and 2019, the Company has no leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.

~~The Company is also the lessee under a land lease which was~~ previously classified, prior to adoption of ASC 842, and will continue to be classified as an operating lease under transition elections unless subsequently modified. This lease is reflected on the balance sheet and the rent expense is reflectedplaced on a ~~straight line basis over the lease term.~~

~~Purchase Price Allocation~~

In both a business combination and an asset acquisition, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an if vacantcash basis. Intangible assets may include the value of in-place leases and above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to 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. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. There were no acquisitions during the three months ended March 31, 2020 or 2019.

For acquired properties with leases classified as operating leases, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value estimates are also made using significant assumptions such as capitalization rates, discount rates, fair market lease rates and land values per square foot.

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates and the value of in-place leases as applicable. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.

The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on the Company's evaluation of the specific characteristics of each tenant’s lease and the Company's overall relationship with the tenant. Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The Company did not record any intangible asset amounts related to customer relationships during the three months ended March 31, 2020 or 2019.

~~Gain on Dispositions of Real Estate Investments~~

Gains on sales of rental real estate after January 1, 2018 are not considered sales to customers and will generally be recognized pursuant to the provisions included in ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”). The Company did not have any dispositions during the three months ended March 31, 2020 or 2019.

~~Impairment of Long-Lived Assets~~

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the property for impairment. This review is based on an estimate of the future undiscounted cash flows 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 an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the consolidated statement of operations and comprehensive loss 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 recorded would equal the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings. The Company did not recognize any impairment losses for the three months ended March 31, 2020 or 2019.

Accounting for Leases

Lessor Accounting

As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.

Lessee Accounting

For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 8 - Commitments and Contingencies.

~~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, 5 years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

~~The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.~~

The value of customer relationship intangibles, if any, is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.

~~Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.~~

~~Above and Below-Market Lease Amortization~~

Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below-market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time.

Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.

Recently Issued Accounting Pronouncements

Adopted as of January 1, ~~2020:~~2020

~~In August 2018, the FASB issued ASU No. 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement~~. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amended guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,, which changes how entities measure credit losses for financial assets carried at

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

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 amended standard 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. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. The new guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amended guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.

Pending Adoption as of March 31, 2021

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815). The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The standard allows for either modified or full retrospective transition methods. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that the Company’s hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of the Company’s derivatives, which will be consistent with the Company’s past presentation. The Company will continue to evaluate the impact of the guidance and may apply other elections, as applicable, as additional changes in the market occur.

Note 3 — Real Estate Investments

There were no real estate assets acquired or liabilities assumed during the three months ended March 31, ~~2020~~2021 or ~~2019.~~

2020. Also, there were no dispositions of real estate during the three months ended March 31, 2021 or 2020. However, the Company is evaluating its options for its 421 W. 54th Street - Hit Factory property, which include marketing the property for sale. As no buyer has been identified for the property, it does not qualify to be classified as held for sale on the consolidated balance sheet as of March 31, 2021. There have also not been any impairment charges recorded for this property as the estimated fair value exceeds its carrying value at March 31, 2021.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2020~~2021

(Unaudited)

Significant Tenants

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, there were no tenants whose annualized rental income on a straight-line basis, based on leases commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.

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 March 31,
	Three Months Ended March 31,							2021		2020
(In thousands)	2020			2019
In-place leases	$	1,852		$	2,246		In-place leases	$	1,488	$	1,852
Other intangibles	291			291			Other intangibles	291		291
Total included in depreciation and amortization	$	2,143		$	2,537		Total included in depreciation and amortization	$	1,779	$	2,143

Above-market lease intangibles	$	285		$	336		Above-market lease intangibles	$	276	$	285
Below-market lease liabilities	(659		)	(815		)	Below-market lease liabilities	(503)		(659)
Total included in revenue from tenants	$	(374	)	$	(479	)	Total included in revenue from tenants	$	(227)	$	(374)

Below-market ground lease, included in property operating expenses	$	12		$	12		Below-market ground lease, included in property operating expenses	$	12	$	12

The following table provides the projected amortization expense and adjustments to revenues for the next five years as of March 31, ~~2020:~~2021:


(In thousands)	2021 (remainder)		2022		2023		2024		2025
In-place leases	$	3,995	$	4,665	$	3,427	$	2,676	$	1,559
Other intangibles	645		708		708		708		708
Total to be included in depreciation and amortization	$	4,640	$	5,373	$	4,135	$	3,384	$	2,267

Above-market lease assets	$	787	$	974	$	825	$	495	$	206
Below-market lease liabilities	(1,424)		(1,677)		(1,452)		(1,422)		(1,049)
Total to be included in revenue from tenants	$	(637)	$	(703)	$	(627)	$	(927)	$	(843)

(In thousands) 2020 (remainder) 2021 2022 2023 2024
In-place leases $ 5,228
$ 5,902
$ 4,787
$ 3,548
$ 2,797
Other intangibles 874
937
708
708
708
Total to be included in depreciation and amortization $ 6,102
$ 6,839
$ 5,495
$ 4,256
$ 3,505

Above-market lease assets $ 855
$ 1,079
$ 991
$ 842
$ 512
Below-market lease liabilities (1,927 ) (2,314 ) (1,823 ) (1,597 ) (1,567 )
Total to be included in revenue from tenants $ (1,072 ) $ (1,235 ) $ (832 ) $ (755 ) $ (1,055 )

Write-off of Deferred Leasing Commissions

In January 2021, the Company’s former tenant, Knotel, filed for bankruptcy and all leases with the Company were terminated effective January 31, 2021. As a result of these terminations, the Company wrote-off $1.3 million of deferred leasing costs, which are included in depreciation and amortization expense in our consolidated statement of operations for the three months ended March 31, 2021.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2020~~2021

(Unaudited)

Note 4 — Mortgage Notes Payable, Net

The Company’s mortgage notes payable, net as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020 are as follows:


		Outstanding Loan Amount
Portfolio	Encumbered Properties	March 31, 2021		December 31, 2020		Effective Interest Rate		Interest Rate		Maturity
		(In thousands)		(In thousands)
123 William Street (1)	1	$	140,000	$	140,000	4.74	%	Fixed		Mar. 2027
1140 Avenue of the Americas (2)	1	99,000		99,000		4.18	%	Fixed		Jul. 2026
400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage (2)	2	50,000		50,000		4.59	%	Fixed		May 2028
8713 Fifth Avenue	1	10,000		10,000		5.05	%	Fixed		Nov. 2028
9 Times Square (2)	1	55,000		55,000		3.73	%	Fixed	(3)	Apr. 2024
196 Orchard Street	1	51,000		51,000		3.91	%	Fixed		Aug. 2029
Mortgage notes payable, gross	7	405,000		405,000		4.35	%
Less: deferred financing costs, net (4)		(8,041)		(8,426)
Mortgage notes payable, net		$	396,959	$	396,574

Outstanding Loan Amount
Portfolio Encumbered Properties March 31,
2020 December 31,
2019 Effective Interest Rate Interest Rate Maturity
(In thousands) (In thousands)
123 William Street ⁽¹⁾
1 $ 140,000
$ 140,000
4.74 % Fixed Mar. 2027
1140 Avenue of the Americas 1 99,000
99,000
4.18 % Fixed Jul. 2026
400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage 2 50,000
50,000
4.59 % Fixed May 2028
8713 Fifth Avenue 1 10,000
10,000
5.05 % Fixed Nov. 2028
9 Times Square 1 55,000
55,000
3.73 % Fixed
⁽²⁾
Apr. 2024
196 Orchard Street 1 51,000
51,000
3.91 % Fixed Aug. 2029
Mortgage notes payable, gross 7 405,000
405,000
4.35 %
Less: deferred financing costs, net ⁽³⁾
(9,583 ) (9,969 )
Mortgage notes payable, net
$ 395,417
$ 395,031

_____________________

~~_____________________~~(1)As of March 31, 2021, $3.0 million was in escrow in accordance with the conditions under the loan agreement and presented as part of restricted cash on the unaudited consolidated balance sheet. The escrow amount will be released to fund leasing activity, tenant improvements and leasing commissions related to this property.


⁽¹⁾ (2)Due to covenant breaches resulting in cash traps for these properties, all cash generated from operating these properties is being held in a segregated account, and the Company no longer has access to the excess cash flows. See “Collateral and Interest Payments” section below for additional details. (3)	As of March 31, 2020, $2.5 million was in escrow in accordance with the conditions under the loan agreement and presented as part of restricted cash on the unaudited consolidated balance sheet. The escrow amount will be released to fund leasing activity, tenant improvements and leasing commissions related to this property.


⁽²⁾	Fixed as a result of the Company having ~~entered into a “pay-fixed” interest rate swap agreement, which is included in derivatives, at fair value on the consolidated balance sheet as of March 31, 2020 (see~~ ~~Note 6~~ ~~— Derivatives and Hedging Activities~~).

⁽³⁾

Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.

~~Nationwide Life Insurance Company Loan~~

~~On July 17, 2019, the Company, through the OP,~~ entered into a ~~loan~~“pay-fixed” interest rate swap agreement, ~~with Nationwide Life Insurance Company for a $51.0 million loan~~which is included in ~~connection with the acquisition of 196 Orchard Street. The loan bears interest~~derivatives, at ~~a fixed rate of 3.85% and matures on August 1, 2029. The loan requires monthly interest-only payments, with the principal balance due~~fair value on the ~~maturity date,~~consolidated balance sheet as of March 31, 2021 (see Note 6 — Derivatives and ~~is secured by, among~~Hedging Activities).

(4)Deferred financing costs represent commitment fees, legal fees, and other ~~things, a first mortgage on~~costs associated with obtaining commitments for financing. These costs are amortized to interest expense over the ~~property. The Company has guaranteed, (i) at all times, certain enumerated recourse liabilities~~terms of the ~~borrower under~~respective financing agreements using the ~~agreement, and (ii) from and after certain events of defaults and other breaches under~~effective interest method. Unamortized deferred financing costs are expensed when the ~~agreement and other loan documents (including bankruptcies~~associated debt is refinanced or ~~similar events), payment of all amounts due to~~repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the ~~lender~~period in ~~respect of~~which it is determined that the ~~loan.~~financing will not close.

~~Capital One Loan~~

On April 26, 2019, the Company, through the OP, entered into a term loan agreement with Capital One, National Association, as administrative agent, and the other lenders party thereto for a $55.0 million loan with an interest rate fixed at 3.67% by a swap agreement. The loan has a maturity date of April 26, 2024, and requires monthly interest-only payments, with the principal balance due on the maturity date. The loan is secured by, among other things, a mortgage lien on the Company’s previously unencumbered 9 Times Square property. The Company has guaranteed certain enumerated recourse liabilities of the borrower under the agreement and the guaranty requires the Company to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets of $10.0 million.

Collateral and Principal Payments

Real estate assets and intangible assets of ~~$826.6~~$828.8 million, at cost (net of below-market lease liabilities), at March 31, ~~2020~~2021 have been pledged as collateral to the Company’s mortgage notes payable and are not available to satisfy the Company’s other obligations unless first satisfying the mortgage note payable on the property. The Company is required to make payments of interest on its mortgage notes payable on a monthly basis.

1413

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2020~~2021

(Unaudited)

The following table summarizes the scheduled aggregate principal payments subsequent to March 31, ~~2020:~~2021:


(In thousands)	Future Minimum Principal Payments
2021 (remainder)	$	0
2022	0
2023	0
2024	55,000
2025	0
Thereafter	350,000
Total	$	405,000

(In thousands) Future Minimum Principal Payments
2020 (remainder) $ —
2021 —
2022 —
2023 —
2024 55,000
Thereafter 350,000
Total $ 405,000

The ~~Company’s~~Company has been in breach of a debt service coverage provision and a reserve fund reserve provision under its non-recourse mortgage ~~notes payable~~secured by the 1140 Avenue of the Americas property for the last three quarters. These breaches are not events of default, rather they require ~~compliance with certain property-level~~excess cash (after payment of operating costs, debt ~~covenants.~~service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured after achieving two consecutive quarters when the required debt service coverage for the property is maintained, whereupon the additional collateral will be released. As of March 31, ~~2020,~~2021, the Company has $4.1 million cash retained by the lender and maintained in restricted cash associated with this event, all of which relate to the non-recourse mortgage secured by the 1140 Avenue of the Americas property. Currently, the Company has not cured the breaches through any other means. The Company can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications.

The Company has also been in breach of a debt service coverage and debt yield covenants under its non-recourse mortgage secured by the 9 Times Square property for the last two quarters. These breaches are not events of default, but rather require the Company to enter into a cash management period whereby all rents and other revenue of the property are to be held in a segregated account as additional collateral under the loan. The covenants may be cured after achieving two consecutive quarters when the required debt service coverage and debt yield for the property is maintained. The Company may remain in breach of the covenants for up to four consecutive quarters. In the near term, the Company anticipates funding interest shortfalls on this loan out of cash on hand.

The Company also breached a debt service coverage covenant under its non-recourse mortgage secured by 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage in the first quarter of 2021. This breach is not an event of default but rather requires the Company to enter into a cash management period whereby all rents and other revenue of the property are to be held in a segregated account as additional collateral under the loan. The covenant may be cured after achieving two consecutive quarters when the required debt service coverage for the property is maintained. The Company can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications.

The Company is currently in compliance with the debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue. However, in the event of a breach of this covenant, such breach would not result in an event of default but rather would trigger an excess cash flow sweep period. If this were to occur, the Company has the ability to avoid such an excess cash flow sweep period by electing to fund a reserve in the amount of $125,000 of additional collateral in cash or as a letter of credit. The Company has the ability to continue to avoid the excess cash flow sweep period by funding an additional $125,000 each quarter until the debt service coverage ratio covenant breach is cured in accordance with the terms of the loan agreement, whereupon, provided no other excess cash flow sweep trigger exists at such time, the full amount of the reserve will be returned to the Company. If the Company does not elect to continue to fund the $125,000 additional collateral in a subsequent quarter, then the excess flow sweep period would commence in such quarter and continue until the debt service coverage ratio covenant breach is cured in accordance with the terms of the loan agreement.

The Company was in compliance with the ~~debt~~remaining covenants under its other mortgage ~~note agreements.~~notes payable as of March 31, 2021, however, it continues to monitor compliance with those provisions. If the Company experiences additional lease terminations, due to tenant bankruptcies or otherwise, it is possible that certain of the covenants on other loans may be breached and the Company may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, the Company’s other mortgages also contain cash management provisions that are not considered events of default, and as such, acceleration of principal would only occur upon an event of default.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

LIBOR Transition

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline, announcing that it will cease the publication of the one-week and two-month USD LIBOR settings immediately following December 31, 2021. The remaining USD LIBOR settings will continue to be published through June 30, 2023. The Company is not able to predict when there will be sufficient liquidity in the SOFR market. The Company is monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate. While the Company expects LIBOR to be available in substantially its current form until at least the end of 2021, it is possible that LIBOR will become unavailable prior to that time. This could occur, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator.

The Company has a mortgage loan agreement and a related derivative agreement for a “pay-fixed” swap that have terms based on LIBOR. Those agreements have alternative rates already contained in the agreements, and the Company anticipates that it will either utilize the alternative rates contained in the agreements or negotiate a replacement reference rate for LIBOR with the lenders and derivative counterparties.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

Note 5 — 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 1	—	Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2	—	Inputs 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 3	—	Unobservable 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.

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

Financial Instruments ~~Carried~~Measured at Fair Value on a Recurring Basis

Derivative Instruments

The ~~following table presents information about the~~ Company’s ~~assets and liabilities~~derivative instruments are measured at fair value on a recurring basis. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with this derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparty. However, as of March 31, ~~2020~~2021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and ~~December 31, 2019.~~has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivatives valuation in its entirety is classified in Level 2 of the fair value hierarchy.

The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.

(In thousands)
Quoted Prices
in Active
Markets
Level 1

Significant Other
Observable
Inputs
Level 2

Significant
Unobservable
Inputs
Level 3
Total
March 31, 2020

Interest rate “Pay - Fixed” swaps - liabilities $ —
$ (3,918 ) $ —
$ (3,918 )
Total $ —
$ (3,918 ) $ —
$ (3,918 )

December 31, 2019
Interest rate “Pay - Fixed” swaps - liabilities $ —
$ (1,327 ) $ —
$ (1,327 )
Total $ —
$ (1,327 ) $ —
$ (1,327 )


(In thousands)	Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
March 31, 2021
Interest rate “Pay - Fixed” swaps - liabilities	$	0	$	(2,816)	$	0	$	(2,816)
Total	$	0	$	(2,816)	$	0	$	(2,816)

December 31, 2020
Interest rate “Pay - Fixed” swaps - liabilities	$	0	$	(3,405)	$	0	$	(3,405)
Total	$	0	$	(3,405)	$	0	$	(3,405)

Financial Instruments ~~Not Carried~~that are not Reported 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, restricted cash, prepaid expenses and other assets, accounts payable and distributions payable approximates their carrying value on the consolidated

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

balance sheets due to their short-term nature. The fair value of the variable mortgage note payable ~~may differ from~~is deemed to be equivalent to its carrying value ~~due to widening of~~because it bears interest at a variable rate that fluctuates with the market and there has been no significant change in the credit ~~spreads during the current period.~~risk or credit markets since origination.

The fair values of the Company’s financial instruments that are not reported at fair value on the consolidated balance sheet are reported below:


		March 31, 2021				December 31, 2020
(In thousands)	Level	Gross Principal Balance		Fair Value		Gross Principal Balance		Fair Value
Mortgage note payable — 123 William Street	3	$	140,000	$	147,638	$	140,000	$	149,733
Mortgage note payable — 1140 Avenue of the Americas	3	99,000		101,918		99,000		102,849
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage	3	50,000		51,990		50,000		53,087
Mortgage note payable — 8713 Fifth Avenue	3	10,000		10,681		10,000		10,937
Mortgage note payable — 9 Times Square	3	55,000		53,259		55,000		52,504
Mortgage note payable — 196 Orchard Street	3	51,000		50,067		51,000		49,250
Total		$	405,000	$	415,553	$	405,000	$	418,360

March 31, 2020 December 31, 2019
(In thousands) Level Gross Principal Balance Fair Value Gross Principal Balance Fair Value
Mortgage note payable — 123 William Street 3 $ 140,000
$ 150,224
$ 140,000
$ 151,428
Mortgage note payable — 1140 Avenue of the Americas 3 $ 99,000
$ 102,740
$ 99,000
$ 103,340
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage 3 $ 50,000
$ 53,406
$ 50,000
$ 53,951
Mortgage note payable — 8713 Fifth Avenue 3 $ 10,000
$ 11,044
$ 10,000
$ 11,175
Mortgage note payable — 9 Times Square 3 $ 55,000
$ 52,058
$ 55,000
$ 54,759
Mortgage note payable — 196 Orchard Street 3 $ 51,000
$ 51,748
$ 51,000
$ 52,369

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

Note 6 — Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company currently uses derivative financial instruments, including an interest rate swap, and may in the future use others, including options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company endeavors to only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

On March 28, 2019, the Company entered into a forward starting five-year interest rate swap which became effective on May 1, 2019. The Company entered into this derivative in order to lock-in and swap the floating rate interest on its term loan encumbering the Company’s 9 Times Square property to a fixed rate. Upon entering into the swap, the Company paid a deposit of $0.8 million which was refunded at the closing of the new financing for the 9 Times Square property effective as of April 26, 2019.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.

(In thousands) Balance Sheet Location March 31,
2020 December 31, 2019
Derivatives designated as hedging instruments:
Interest Rate “Pay-fixed” Swap Derivative liability, at fair value $ (3,918 ) $ (1,327 )

(In thousands)

Balance Sheet Location

March 31,
2021

December 31, 2020

Derivatives designated as hedging instruments:

Interest Rate “Pay-fixed” Swap

Derivative liability, at fair value

(2,816)

(3,405)

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate collars designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract and payments of variable-rate amounts if interest rates fall below the floor strike rate on the contract.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the ~~quarter~~three months ended March 31, ~~2020~~2021 and year ended December 31, ~~2019,~~2020, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates that ~~$1.0~~$1.1 million will be reclassified from other comprehensive loss as an increase to interest expense.

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk.

March 31, 2021

December 31, 2020

Interest Rate Derivative

Number of
Instruments

Notional Amount

Number of
Instruments

Notional Amount

(In thousands)

Interest Rate “Pay-fixed” Swap

55,000

March 31, 2020 December 31, 2019
Interest Rate Derivative
Number of
Instruments
Notional Amount
Number of
Instruments
Notional Amount
(In thousands) (In thousands)
Interest Rate “Pay-fixed” Swap 1 $ 55,000
1 $ 55,000

The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the ~~period ended March 31, 2020 and December 31, 2019.~~periods indicated.


	Three Months Ended March 31,
(In thousands)	2021		2020
Amount of gain (loss) recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)	$	307	$	(2,660)
Amount of gain (loss) reclassified from accumulated other comprehensive loss into income as interest expense	$	(281)	$	(69)
Total interest expense recorded in consolidated statements of operations and comprehensive loss	$	4,713	$	4,832

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

Three Months Ended March 31,
(In thousands) 2020 2019
Amount of loss recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion) $ (2,660 ) $ (70 )
Amount of loss reclassified from accumulated other comprehensive loss into income as interest expense $ (69 ) $ —
Total interest expense recorded in consolidated statements of operations and comprehensive loss $ 4,832
$ 3,560

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Balance Sheet.


									Gross Amounts Not Offset on the Balance Sheet
(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts of Recognized (Liabilities)		Gross Amounts Offset on the Balance Sheet		Net Amounts of Assets (Liabilities) Presented on the Balance Sheet		Financial Instruments		Cash Collateral Received (Posted)		Net Amount
March 31, 2021	$	0	$	(2,816)	$	0	$	(2,816)	$	0	$	0	(2,816)
December 31, 2020	$	0	$	(3,405)	$	0	$	(3,405)	$	0	$	0	(3,405)

Gross Amounts Not Offset on the Balance Sheet
(In thousands) Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset on the Balance Sheet Net Amounts of Assets (Liabilities) Presented on the Balance Sheet Financial Instruments Cash Collateral Received (Posted) Net Amount
March 31, 2020 $ —
$ (3,918 ) $ —
$ (3,918 ) $ —
$ —
(3,918 )
December 31, 2019 $ —
$ (1,327 ) $ —
$ (1,327 ) $ —
$ —
(1,327 )

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparty that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

As of March 31, ~~2020,~~2021, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was ~~$4.1~~$3.0 million. As of March 31, ~~2020,~~2021, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of ~~$4.1~~$3.0 million.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

Note 7 — ~~Common Stock~~Stockholders’ Equity

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had ~~31.0~~12.8 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP.

~~In 2018, until~~ As of March 31, 2021, the ~~Company suspended payment of distributions, the Company paid a monthly distribution equivalent to $1.5125 per annum, per share~~Company’s shares of common stock ~~payable by~~outstanding was comprised of 9.6 million shares of Class A common stock, including unvested restricted shares and 3.2 million shares of Class B common stock, including unvested restricted shares. On March 1, 2021, half of the ~~5th day following each month end~~then outstanding Class B Shares of the Company converted into Class A Shares of the Company and were listed on the NYSE. Except with respect to ~~stockholders~~listing and conversion as described inNote 1 - Organization, shares of ~~record at~~Class B common stock have identical preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption as the ~~close~~shares of ~~business each day during~~Class A common stock. Accordingly, the ~~prior month.~~ shares of Class A common stock and the Class B common stock are reflected collectively as “common stock” on a combined basis in the financial statements.

On February 27, 2018, the Company’s board of directors unanimously authorized a suspension of the distributions that the Company pays to holders of the Company’s common stock, effective as of March 1, 2018.

~~The~~ As a result, the Company ~~first established an estimated net asset value~~did not pay distributions during the three months ended March 31, 2020. Following the Listing, the Company reinstated distributions to the Company’s common stockholders in the amount of $0.40 per share of ~~its~~ common stock ~~(“Estimated Per-Share NAV”)~~per year, payable as dividends in ~~2016. On~~arrears on a quarterly basis to holders of record on a single quarterly record date. The first dividend was declared on October ~~23, 2018,~~1, 2020 and paid on October 15, 2020 in a partial quarterly amount equal to $0.04889 per share of common stock covering the period from the Listing Date through September 30, 2020 and the second dividend was declared on January 1, 2021 and paid on January 15, 2021 in the quarterly amount of $0.10 per share. Additionally, the next dividend was declared on April 1, 2021 and paid on April 15, 2021 in the quarterly amount of $0.10 per share.

Corporate Actions

In order to effect the Listing, the Company took the following corporate actions on August 5, 2020, which resulted in a net reduction of 2.43 for every one share of common stock:

•amended its charter to effect a 9.72-to-1 reverse stock split combining every 9.72 shares of the Company’s ~~board~~common stock, par value $0.01 per share, into one share of ~~directors approved~~common stock, par value $0.0972 per share;

•amended its charter to reduce the par value of the shares of common stock outstanding after the reverse stock split from $0.0972 per share to $0.01 per share and rename the common stock “Class A common stock;”

•reclassified 9,750,000 authorized but unissued shares of Class A common stock (equal to approximately three times the number of shares of Class A common stock then issued and outstanding) into shares of Class B common stock, par value $0.01 per share; and

•declared and paid a stock dividend of 3 shares of Class B common stock to every holder of record of Class A common stock

In connection with the Listing, the Company repurchased 6,672 fractional shares of common stock for $0.3 million.

Listing Impacts

On the Listing Date, the following events impacted the Company’s common shares outstanding:

•65,498 Class B Units were converted into Class A Units, of which 52,398 of these Class A Units then held by the Advisor, were subsequently redeemed for an ~~Estimated Per-Share NAV~~equal number of shares of Class A common stock (see Note 9 — Related Party Transactions and Arrangements for additional information on the Class B Units). As a result, the Company recorded expense of $1.2 million, resulting in an increase to total stockholders’ equity of $0.9 million and an increase to non-controlling interests of $0.2 million with respect to the remaining 13,100 Class A Units still held by a third party and not redeemed as of June 30, 2018, which was published on October 25, 2018. On October 24, 2019, the Company’s board of directors approved an Estimated Per-Share NAV as of June 30, 2019 which was published on October 25, 2019. This was the third annual update of Estimated Per-Share NAV

December 31, 2020. The remaining Class A Units were subsequently submitted for

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March 31, ~~2020~~2021

(Unaudited)

redemption for an equal number of shares of Class A common stock in September 2020, and the redemption will be completed later in 2021.

•37 Class A Units, which were held by the Advisor, were redeemed for an equal number of shares of Class A common stock.

Equity Offerings

Class A Common Stock

On October 1, 2020, the Company ~~has published.~~ entered into an Equity Distribution Agreement, under which the Company may, from time to time, offer, issue and sell to the public, through its sales agents, shares of Class A common stock having an aggregate offering price of up to $250.0 million in an “at the market” equity offering program (the “Common Stock ATM Program”). Under SEC rules, as long as the aggregate market value of outstanding Class A common stock held by non-affiliates, or public float, remained below $75.0 million, the maximum aggregate offering amount of the shares sold pursuant to the Common Stock ATM Program was $18.7 million. Following the conversion of 3,174,760 shares of the Company’s Class B common stock into Class A common stock on March 1, 2021, the Company’s public float increased and it can now offer and sell shares in excess of $18.7 million after filing a new prospectus supplement with the SEC on April 1, 2021.

The Company ~~intends~~has not yet sold any shares of Class A common stock through the Common Stock ATM Program, however, during the year ended December 31, 2020, the Company incurred $0.8 million in costs related to ~~publish subsequent valuations~~the establishment of ~~Estimated Per-Share NAV at least once annually, at~~ the ~~discretion~~Common Stock ATM Program. Since no proceeds have been received under the Common Stock ATM Program as of March 31, 2021 these costs are currently being deferred, and are recorded in prepaid expenses and other assets in the Company’s consolidated balance sheet as of March 31, 2021. Upon receiving proceeds under the Common Stock ATM Program, the Company will reclassify the prepaid balance to additional paid in capital in the Company’s consolidated statement of changes in equity as a reduction of the gross proceeds received under the Common Stock ATM Program. Until then, the Company will assess the probability of receiving proceeds under the Common Stock ATM Program each reporting period and if it becomes probable that no proceeds will be received, it will expense the amounts deferred.

Repurchase Program

The Company’s directors has adopted a resolution authorizing consideration of share repurchases of up to $100 million of shares of Class A common stock over a long-term period following the Listing. Actual repurchases would be reviewed and approved by the Company’s board of ~~directors.~~directors based on management recommendations taking into consideration all information available at the specific time including the Company’s available cash resources (including the ability to borrow), market capitalization, trading price and alternative uses such as acquisitions. Repurchases would typically be made on the open market in accordance with SEC rules creating a safe harbor for issuer repurchases but may also occur in privately negotiated transactions. NaN shares have been repurchased during the three ended March 31, 2021.

~~Share Repurchase Program~~Tender Offer

On December 28, 2020, in response to an unsolicited offer to the Company’s stockholders, the Company commenced a tender offer, (as amended, the “December Offer”) to purchase up to 65,000 shares of Class B common stock for cash at a purchase price equal to $7.00 per share. The December Offer expired on January 27, 2021 and, in accordance with the terms of the December offer, the Company purchased 26,236 shares of Class B common stock for a total cost of approximately $0.2 million, including fees and expenses relating to the tender offer, with cash on hand in February 2021. These shares were subsequently cancelled after being purchased.

Stockholder Rights Plan

In May 2020, the Company announced that its board of directors had approved a stockholder rights plan, but did not take actions to declare a dividend for the plan to become effective. In August 2020, in connection with the Listing and the related bifurcation of common stock into Class A and Class B common stock, the Company entered into an amended and restated rights agreement, which amended and restated the stockholders rights plan approved in May 2020 and declared a dividend payable in August 2020, of one Class A right for and on each share of Class A common stock and one Class B right for and on each share of Class B common stock, in each case, outstanding on the close of business on August 28, 2020 to the stockholders of record on that date. Each right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”), of the Company at a price of $55.00 per one one-thousandth of a share of Series A Preferred Stock, represented by a right, subject to adjustment.

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March 31, 2021

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Distribution Reinvestment Plan

Until August 28, 2020, the Company had a distribution reinvestment plan (“DRIP”), pursuant to which, stockholders may elect to reinvest distributions paid in cash in additional shares of common stock. The Company ~~has a share repurchase program~~had the right to amend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants.

An amendment and restatement of the DRIP (the ~~“SRP”~~“A&R DRIP”) ~~that enables qualifying~~in connection with the Listing became effective on August 28, 2020. The A&R DRIP allows stockholders ~~subject~~who have elected to ~~certain conditions and limitations,~~participate to ~~sell their shares~~have dividends paid with respect to the Company. The Company suspended the SRP effective September 25, 2018, and the suspension will remain in effect until the Company announces that it will resume paying regular cash distributions to its stockholders, if it does so at all. Under the SRP, qualifying stockholders may request that the Company repurchase all or a portion of their shares of Class A common stock ~~provided~~and Class B common stock reinvested in additional shares of Class A common stock. Shares received by participants in the A&R DRIP will represent shares that are, at the ~~amount is~~election of the Company, either (i) acquired directly from the Company, which would issue new shares, at ~~least 25%~~a price based on the average of the high and low sales prices of Class A common stock on the NYSE on the date of reinvestment, or (ii) acquired through open market purchases by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares ~~held~~of Class A common stock purchased by the ~~stockholder. Additionally, under~~plan administrator with proceeds from reinvested dividends to participants for the 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 may be considered for repurchase. Additionally, repurchases of shares of the Company’s common stock when requested pursuant to the SRP 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,related quarter, less a ~~“fiscal semester”). Further, the repurchase price~~ per share ~~is equal to 100% of the Estimated Per-Share NAV in effect on the last day of the fiscal semester in which the repurchase request was received by the Company.~~processing fee.

Pursuant to the SRP, repurchases for any fiscal semester are 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 during the previous fiscal year. In addition, the Company is only authorized to repurchase shares to the extent that the Company has sufficient liquid assets, and funding for the SRP is limited to the amount of proceeds received during that same fiscal semester through the issuance of the Company’s common stockShares issued pursuant to the DRIP ~~as well as any reservation of funds~~or the ~~Company’s board of directors, may,~~A&R DRIP are recorded within stockholders’ equity in ~~its sole discretion, make available for this purpose.~~

~~NaN repurchases were made through~~ the ~~SRP for~~consolidated balance sheets in the period dividends or other distributions are declared. During the three months ended March 31, ~~2020 because the SRP was suspended.~~

~~When a qualifying stockholder requests a repurchase~~2021, any DRIP transactions were settled through open market transactions and ~~the repurchase is approved~~no shares were issued by the Company’s board of directors, the Company will reclassify the 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 March 31, 2020.Company.

Numbers of Shares Repurchased Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2019 1,259,734
$ 22.03
Three months ended March 31, 2020 —
—
Cumulative repurchases as of March 31, 2020 1,259,734
$ 22.03

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March 31, ~~2020~~2021

(Unaudited)

Note 8 — Commitments and Contingencies

Lessee Arrangement - Ground Lease

The Company entered into a ground lease agreement in 2016 related to the acquisition of 1140 Avenue of the Americas under a leasehold interest arrangement and recorded an ROU asset and lease liability related to this lease upon adoption of ASU 2016-02 during the year ended December 31, 2019. The ground lease is considered an operating lease. In computing the lease liabilities, the Company discounts future lease payments at an estimated incremental borrowing rate at adoption or acquisition if later. The ~~terms~~term of the Company’s ground ~~leases are~~lease is significantly longer than the ~~terms~~term of borrowings available to the Company on a fully-collateralized basis. The Company’s estimate of ~~this~~the incremental borrowing rate required significant judgment.

As of March 31, ~~2020,~~2021, the Company’s ~~operating~~ ground ~~leases have~~lease has a weighted-average remaining lease term ~~including assumed renewals,~~ of ~~46.8~~45.8 years and a ~~weighted-average~~ discount rate of 8.6%. As of March 31, ~~2020,~~2021, the Company’s balance sheet includes an ROU asset and liability of ~~$55.5~~$55.3 million and ~~$54.9~~$54.8 million, respectively, which are included in operating lease right-of-use asset and operating lease liability, respectively, on the consolidated balance sheet. For the three months ended March 31, 2021 and 2020, the Company paid cash of $1.2 million for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million on a straight-line basis in accordance with the standard. ~~The Company paid cash of $1.2 million and incurred ground rent expense of $1.2 million during the three months ended March 31, 2019.~~ The lease expense is recorded in property operating expenses in the consolidated statements of operations and comprehensive loss. The Company did not enter into any additional ground leases as lessee during the three months ended March 31, 2021 and 2020.

The following table reflects the ground lease rent payments due from the Company and a reconciliation to the net present value of those payments as of March 31, ~~2020:~~2021:

(In thousands) Future Base Rent Payments
2020 (remainder) $ 3,560
2021 4,746
2022 4,746
2023 4,746
2024 4,746
Thereafter 207,246
Total lease payments $ 229,790
Less: Effects of discounting (174,935 )
Total present value of lease payments $ 54,855


(In thousands)	Future Base Rent Payments
2021 (remainder)	$	3,560
2022	4,746
2023	4,746
2024	4,746
2025	4,746
Thereafter	202,500
Total lease payments	225,044
Less: Effects of discounting	(170,236)
Total present value of lease payments	$	54,808

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 March 31, ~~2020,~~2021, 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.

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March 31, 2021

(Unaudited)

Note 9 — Related Party Transactions and Arrangements

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, an entity wholly owned by AR Global owned ~~8,888~~56,091 shares of the Company’s outstanding common stock.

Fees and Participations ~~Paid~~Incurred in Connection with the Operations of the Company

~~On November 16, 2018, the members~~Summary of ~~a special committee of the Company’s board of directors approved certain amendments~~Advisory Agreement

Pursuant to the ~~Amended and Restated Advisory Agreement (the “Original Advisory Agreement”)~~advisory agreement with the Advisor ~~(the “Second Advisory~~(as amended from time to time, the “Advisory Agreement”)~~. The Company also entered into a related amendment (the “November 2018 PMA Amendment”) to~~, the Advisor manages the Company’s ~~Property Management and Leasing Agreement with the Property Manager. The Second Advisory Agreement, which superseded~~

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

~~the Original Advisory Agreement, and the November 2018 PMA Amendment both took effect on November 16, 2018.~~day-to-day operations. The initial term of the ~~Second~~ Advisory Agreement ends in July 2030, and will automatically renew for successive five-year terms unless either party gives written notice of its election not to renew at least 180 days prior to the then-applicable expiration date. The Company may only elect not to renew the ~~Second~~ Advisory Agreement on this basis with the prior approval of at least two-thirds of the Company’s independent directors, and no change of control fee (as defined in the ~~Second~~ Advisory Agreement) is payable if the Company makes this election.

~~Acquisition Fees~~

Under the Original Advisory Agreement and until November 16, 2018, the Advisor was 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 was also reimbursed for expenses incurred related to selecting, evaluating and acquiring assets on the Company’s behalf, regardless of whether the Company actually acquired the related assets. Specifically, the Company reimbursed the Advisor or its affiliates for services provided for which they incurred investment-related expenses, or insourced expenses. The insourced expenses were fixed at, and were not to exceed, 0.5% of the contract purchase price of each property and 0.5% of the amount advanced for each loan or other investment, which was paid at the closing of the investment. The Advisor was 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 paid third parties, or reimbursed the Advisor for any reasonable investment-related expenses due to third parties. In no event was 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 to 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 were fully invested in 2017, the aggregate amount of acquisition fees and any financing coordination fees could 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 Second Advisory Agreement does not provide for an acquisition fee, however the Advisor may continue to be reimbursed for acquisition-related expenses and insourced acquisition expenses which are subject to limitations on administrative and overhead expenses (see the “Professional Fees and Other Reimbursements” section below for additional information on limitations on administrative and overhead expenses).

~~Accordingly, 0 acquisition fees have been incurred after November 16, 2018 and 0 acquisition fees were incurred to the Advisor for the three months ended March 31, 2020 or March 31, 2019.~~

~~Financing Coordination Fees~~

Under the Original Advisory Agreement, the Company was required to pay a financing coordination fee to the Advisor or its assignees in connection with the financing of any investment in real estate assets, real estate related loans or any other asset, assumption of any loans with respect to any investment or refinancing of any loan in an amount equal to 0.75% of the amount made available or outstanding under the loan, including any assumed loan.

The Second Advisory Agreement eliminates financing coordination fees payable to the Advisor. Accordingly, 0 financing coordination fees have been incurred after November 16, 2018 and 0 financing coordination fees were incurred to the Advisor for the three months ended March 31, 2020 or March 31, 2019.

Asset Management Fees and Variable Management/Incentive Fees

~~With respect to periods ending prior to October 1, 2015, for its asset management services,~~The Company pays 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”. During these periods, the Company caused the OP to issue 159,159 Class B Units pursuant to the then effective advisory agreement. The Class B Units are intended to be profits interests, and vest, and are no longer 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 equal 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 units 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 (the “performance condition”).

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

Any outstanding Class B Units will be forfeited immediately if the advisory agreement is terminated for any reason other than a termination without cause. Additionally, any outstanding Class B Units will be forfeited immediately if the advisory agreement is terminated without cause by an affirmative vote of a majority of the Company’s independent members of the Board of Directors before the economic hurdle has been met.

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 March 31, 2020, the Company cannot determine the probability of achieving the performance condition. The Advisor receives distributions on Class B Units, whether vested or unvested, at the same rate as distributions, if any, received on the Company’s common stock. Such distributions on issued Class B Units, if any, are expensed in the consolidated statements of operations and comprehensive loss until the performance condition is considered probable to occur. As of March 31, 2020, the Company’s board of directors had 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 began paying a base 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 base asset management fee was payable~~ on the first business day of each month in the amount of 0.0625% multiplied by 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 Second Advisory Agreement changed the calculation of the base asset management fee~~equal to ~~a fixed amount of~~ (x) $0.5 million ~~payable on the first business day of each month~~ plus (y) a variable amount equal to (a) 1.25% of the equity proceeds received after November 16, 2018, divided by (b) 12. The base asset management fee is payable in cash, ~~however the Advisor may elect to receive OP units or~~shares of common stock, units of limited partnership interest in the ~~Company,~~OP, or a combination thereof, at the Advisor’s election. Equity proceeds are defined as, with respect to any period, cumulative net proceeds of all common and preferred equity and equity-linked securities issued by the Company and its subsidiaries during the period, including: (i) any equity issued in exchange or conversion of exchangeable notes based on the stock price at the date of issuance and convertible equity; (ii) any other issuances of equity, including but not limited to units in the OP (excluding equity-based compensation but including issuances related to an acquisition, investment, joint-venture or partnership); and (iii) effective following the time the Company commences paying a dividend of at least $0.05 per share per annum to its stockholders, ~~(although the Company is not currently paying distributions to its stockholders)~~(which occurred in October 2020), any cumulative Core Earnings (as defined in the ~~Second~~ Advisory Agreement) in excess of cumulative distributions paid on the Company’s common ~~stock.~~stock since November 16, 2018, the effective date of the most recent amendment and restatement of the Advisory Agreement.

The ~~Second~~ Advisory Agreement also entitles the Advisor to an incentive variable management fee. In August 2020, the Company entered into an amendment to the Advisory Agreement to adjust the quarterly thresholds of Core Earnings Per Adjusted Share (as defined in the Advisory Agreement) the Company must reach on a quarterly basis for the Advisor to receive the variable management fee ~~payable quarterly in arrears,~~to reflect the Reverse Stock Split. Prior to this amendment, the variable management fee was equal to (i) the product of (a) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (b) 15.0% multiplied by (c) the excess of Core Earnings Per Adjusted Share ~~(as defined in the Second Advisory Agreement)~~ for the previous three-month period in excess of $0.06, plus (ii) the product of (x) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (y) 10.0% multiplied by (z) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.08. Following the August 2020 amendment, the quarterly thresholds of Core Earnings Per Adjusted Share increased from$0.06 and $0.08 to$0.1458 and $0.1944.The variable management fee is payable quarterly in arrears in cash, shares of ~~the Company’s~~ common stock, units of limited partnership interest in the OP ~~units~~ or a combination thereof, at the Advisor’s election. No incentive variable management fees were earned during the three months ended March 31, 2021 orMarch 31, 2020.

The ~~Company~~Company paid ~~cash of $1.5~~$1.5 million and $1.5 million ~~for~~in cash asset management fees during the three months ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, respectively. There were no variable management fees incurred in either of these periods.

Prior to October 1, 2015, for its asset management services provided under the advisory agreement, the Company caused the OP to issue to the Advisor 65,498 Class B Units (52,398 of which were still held by the Advisor at the time of the Listing), after giving effect to the Reverse Stock Split (see Note 1 — Organization for additional details). The Class B Units were intended to be profits interests that would vest, and no longer 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 equaled or exceeded the total amount of capital contributed by investors plus a 6.0% cumulative, pretax, non-compounded annual return thereon, (the “Economic Hurdle”); (b) any one of the following events occurred concurrently with or subsequently to the achievement of the Economic Hurdle: (i) a listing of the Company’s common stock on a national securities exchange; (ii) a transaction to which the Company or the OP was a party, as a result of which OP units or the Company’s common stock were 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 had been met;

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(Unaudited)

and (c) the Advisor pursuant to the advisory agreement was providing services to the Company immediately prior to the occurrence of an event of the type described in clause (b) above (the “performance condition”).

Pursuant to the limited partnership agreement of the OP, the Advisor was entitled to receive distributions on Class B Units, whether vested or unvested, at the same rate as distributions, if any, received on the Company’s common stock. Such distributions on issued Class B Units, if any, were expensed in the consolidated statements of operations and comprehensive loss until the performance condition was considered probable to occur. As a result of the Listing, which satisfied the performance condition, and the prior determination by the Company’s independent directors that the Economic Hurdle, had been satisfied, the Class B Units vested in accordance with their terms and were converted into an equal number of Class A Units. In addition, effective at the Listing following this conversion and as approved by the Company’s independent directors, 52,398 Class A Units, which were then held by the Advisor, were redeemed for an equal number of newly issued shares of Class A common stock consistent with redemption provisions contained in the A&R OP Agreement. As a result of the conversion of all 65,498 Class B Units into Class A Units, the Company recorded a non-cash expense of approximately $1.2 million which was recorded in vesting and conversion of Class B Units in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2020. The remaining Class A Units, which were still held by a third party and not redeemed as of March 31, 2021, were submitted for redemption for an equal number of shares of Class A common stock in September 2020 and this redemption is expected to be completed later in 2021.

Property Management Fees

Pursuant to the Property Management and Leasing Agreement, dated as of April 24, 2014 (the “PMA”) ~~and prior to the November 2018 PMA Amendment effective on November 16, 2018,~~, except in certain cases where the Company ~~contracted~~contracts with a third party, the Company ~~paid~~pays the Property Manager a property management fee equal to: (i) for non-hotel properties, ~~4.0%~~3.25% 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 term of the PMA is coterminous with the term of the Advisory Agreement.

Pursuant to the PMA, the Company reimburses the Property Manager for property-level expenses. These reimbursements are not limited in amount and may include reasonable salaries, bonuses, and benefits of individuals employed by the Property Manager, except for the salaries, bonuses, and benefits of individuals who also serve as one of the Company’s executive officers or as an executive officer of the Property Manager or any of its affiliates. The Property Manager may also 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.

On April 13, 2018, in connection with ~~the~~a loan the Company entered into in April 2018, the borrowers entered into a new property management agreement with the Property Manager (the “April 2018 PMA”) to manage the properties secured by the loan. With respect to these properties, the substantive terms of the April 2018 PMA are identical to the terms of the PMA, except that the ~~April 2018 PMA does not include provisions related to the management of the hotels. On April 13, 2018, concurrently~~

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

with entering into the April 2018 PMA, the Company and the Property Manager entered into an amendment to the PMA (the “April 2018 PMA Amendment”). Prior to this amendment, the Property Manager had been retained by the Company, pursuant to the PMA, to manage, operate and maintain all the Company’s properties. Following the April 2018 PMA Amendment, any of the Company’s properties that are or become subject to a separate property management ~~agreement with the Property Manager (including the properties secured by the loan, which are subject to the April 2018 PMA) are not subject to the PMA.~~

~~On November 16, 2018, the effective date of the November 2018 PMA Amendment, the property management fees the Company pays the Property Manager~~fee for non-hotel properties ~~decreased to 3.25%~~is 4.0% of gross revenues from the properties managed, plus market-based leasing commissions. The ~~November~~April 2018 PMA ~~Amendment also amended the~~has an initial term of one year that is automatically extended for an unlimited number of successive one-year terms at the ~~PMA~~end of each year unless any party gives 60 days’ written notice to ~~make it coterminous with~~ the ~~term~~other parties of ~~the Second Advisory Agreement.~~its intention to terminate.

The Company incurred ~~approximately~~approximately $0.4 million and $0.5 million ~~and $48,562~~ in property management fees during the three months ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, respectively.

Professional Fees and Other Reimbursements

~~Under the Original Advisory Agreement, and prior to the Second Advisory Agreement effective on November 16, 2018, the~~The Company ~~reimbursed the Advisor’s costs of providing administrative services, subject to the limitation that the Company would not reimburse~~pays directly or reimburses the Advisor monthly in arrears, for ~~any amount~~all the expenses paid or incurred by which the Company’s operating expenses at the end of the four preceding fiscal quarters exceeded 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 determined that such excess was justified based on unusual and nonrecurring factors which they deemed sufficient, in which case the excess amount would have been reimbursed to the Advisor in subsequent periods. This reimbursement included reasonable overhead expenses for employees of the Advisor or its affiliates directly involved in the performance of services on behalf of the Company, including the reimbursement of rent expense at certain properties that are both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor. Additionally, under the Original Advisory Agreement, the Company reimbursed the Advisor for personnel costs in connection with ~~other services; however,~~the services it provides to the Company ~~did not reimburse~~under the Advisor for personnel costs in connection with services for which the Advisor received acquisition fees, acquisition expense reimbursements or real estate commissions and no reimbursement was made for salaries, bonuses or benefits paidAdvisory Agreement, subject to the ~~Company’s executive officers.~~following limitations:

The Second Advisory Agreement eliminated the previously existing limits on reimbursement by the Company of the Advisor’s expenses and costs based on total operating expenses and added new administrative expense reimbursement limits as follows:

•With respect to administrative and overhead expenses of the Advisor, including administrative and overhead expenses of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services but not including their salaries, wages, and benefits, ~~(which may not exceed comparable market rates),~~ these costs may not exceed in any fiscal year,

(i) $0.4 million, or

(ii) if the Asset Cost (as defined in the ~~Second~~ Advisory Agreement) as of the last day of the fiscal quarter immediately preceding the month is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal quarter multiplied by (y) 0.10%.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

•With respect to the salaries, wages, and benefits of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services (including the Company’s executive officers), these amounts must be comparable to market rates and reimbursements may not exceed, in any fiscal year,

(i) $2.6 million, or

(ii) if the Asset Cost as of the last day of the fiscal year is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal year multiplied by (y) 0.30%.

~~The Company began implementing~~Professional fees and other reimbursements for the three months ended March 31, 2021 and March 31, 2020 were$1.4 million and $1.0 million, respectively. These amounts include reimbursements to the Advisor for administrative, overhead and personnel services, which are subject to the limits noted above, inas well as costs associated with directors and officers insurance which are not subject to those limits.

The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the ~~month~~Advisor for the three months ended March 31, 2021 were $1.2 million, of ~~December 2018.~~ which $0.3 million related to administrative and overhead expenses and $0.9 million were for salaries, wages, and benefits. Total reimbursement expenses for administrative and personnel services provided by and reimbursed to the Advisor during the three months ended March 31, 2020 were $1.0 million, of which $0.3 million ~~were~~ related to administrative and overhead expenses and $0.7 million ~~were~~ related to salaries, wages, and benefits. ~~For~~

As part of this reimbursement, with respect to the salaries, wages, and benefits of all employees of the Advisor or its affiliates, the Company paid approximately $0.9 million in 2019 to the Advisor or its affiliates as reimbursement for bonuses of employees of the Advisor or its affiliates who provided administrative services during such calendar year, prorated for the time spent working on matters relating to the Company. The Company does not reimburse the Advisor or its affiliates for any bonus amounts relating to time dedicated to the Company by Edward M. Weil, Jr., the Company’s Chief Executive Officer. The Advisor formally awarded 2019 bonuses to employees of the Advisor or its affiliates in September 2020 (the “2019 Bonus Awards”). The original $0.9 million estimate for bonuses recorded and paid to the Advisor in 2019 exceeded the cash portion of the 2019 Bonus Awards to be paid to employees of the Advisor or its affiliates by $0.4 million and that were to be reimbursed by the Company. As a result, during the three months ended September 30, 2020, the Company recorded a receivable from the Advisor of $0.4 million in prepaid expenses and other assets on the consolidated balance sheet and a corresponding reduction in general and administrative expenses. Pursuant to authorization by the Company’s board of directors, the $0.4 million receivable is payable to the Company over a 10-month period from January 2021 through October 2021. During the three months ended March 31, ~~2019, total reimbursement expenses~~2021, approximately $0.1 million was received.

Reimbursements for ~~administrative~~the cash portion of 2020 bonuses to employees of the Advisor or its affiliates were expensed and ~~personnel services~~reimbursed on a monthly basis during 2020, and 2021 bonuses continue to be expensed and reimbursed on a monthly basis during 2021 in accordance with the cash bonus estimates provided by the Advisor. Generally, prior to the 2019 Bonus Awards, employee bonuses have been formally awarded to employees of the Advisor or its affiliates in March as an all-cash award and paid out by the Advisor in the year subsequent to the year in which services were ~~$1.0 million,~~rendered to the Company.

Summary of ~~which $0.3 million were related to administrative~~Fees, Expenses and ~~overhead expenses and $0.7 million were related to salaries, wages and benefits.~~

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

Related Payables

The following table details amounts incurred in connection with the Company’s operations-related services described above as of and for the periods presented:

Three Months Ended March 31, Payable (receivable) as of
(In thousands) 2020 2019 March 31, 2020 December 31, 2019
Acquisition fees and reimbursements:
Acquisition fees and related cost reimbursements $ —
$ —
$ —
$ —

Financing coordination fees and leasing commissions⁽¹⁾
—
6
—
—

Ongoing fees:

Asset and property management fees to related parties ⁽²⁾
1,998
1,548
(8 )
⁽⁴⁾
(6 )
⁽⁴⁾
Professional fees and other reimbursements ⁽³⁾
1,042
1,033
347
⁽⁴⁾
228
⁽⁴⁾
Distributions on Class B units —
—
—
—

Total related party operation fees and reimbursements $ 3,040
$ 2,587
$ 339
$ 222


	Three Months Ended March 31,				Payable (receivable) as of
(In thousands)	2021		2020			March 31, 2021			December 31, 2020



Ongoing fees:
Asset and property management fees to related parties	$	1,907	$	1,998		$	21	(2)	$	(28)	(3)
Professional fees and other reimbursements (1)	1,392		1,042			463		(2)	0
Professional fee credit due from the Advisor	0		0			(285)		(4)	(407)		(4)
Total related party operation fees and reimbursements	$	3,299	$	3,040		$	199		$	(435)

~~_____________________~~


⁽¹⁾	Financing coordination fees are included as deferred financing costs within mortgage notes payable, net and leasing commissions are included within deferred leasing costs, net on the consolidated balance sheets, respectively.


⁽²⁾	~~Beginning on April 1, 2019, property management fees due to the Property Manager are no longer adjusted for reimbursable expenses paid by the Company to third-party property managers.~~


⁽³⁾	~~Amounts for the three months ended March 31, 2020 and 2019 are included in general and administrative expenses in the unaudited consolidated statements of operations and comprehensive loss.~~


⁽⁴⁾	~~Included in accounts payable, accrued expense and other liabilities on the consolidated balance sheet.~~

________

~~Fees and Participations Paid in Connection with Liquidation or Listing~~

~~Annual Subordinated Performance Fees~~

Under the Original Advisory Agreement and until eliminated in the Second Advisory Agreement effective November 16, 2018, the Company was required to pay 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 received payment of 6.0% per annum, the Advisor was entitled to 15.0% of the excess return, provided that the amount paid to the Advisor did not exceed 10.0% of the aggregate return for such year, and that the amount paid to the Advisor was not paid unless investors received a return of capital contributions. This fee was to be paid only upon the sale of assets, distributions or other event which resulted in the return on stockholders’ capital exceeding 6.0% per annum. Furthermore, 0 subordinated performance fees can be incurred after November 16, 2018 and 0 subordinated performance fees were incurred to the Advisor(1)Amounts for the three months ended March 31, 2021 and 2020 are included in general and administrative expenses in the unaudited consolidated statements of operations and comprehensive loss.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2019.~~2021

~~Brokerage Commissions~~(Unaudited)

~~Under the Original Advisory Agreement~~(2)Included in accounts payable, accrued expense and ~~until eliminated in the Second Advisory Agreement effective November 16, 2018, the Company was required to pay a brokerage commission to the Advisor or its affiliates~~other liabilities on the ~~sale of properties, not~~consolidated balance sheet.

(3) Included in prepaid expenses and other assets on the consolidated balance sheet.

(4) Included in general and administrative expenses. The $0.4 million relates to ~~exceed the lesser of 2.0%~~overpayment of the ~~contract sale price~~2019 Bonus Awards, of ~~the property and 50.0% of the total brokerage commission paid if a third party broker~~which $0.1 million was also involved; provided, however, that in no event could 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. Any brokerage commissions payable to the Advisor or its affiliates, were to be subject to approval 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. NaN broker commissions can be incurred after November 16, 2018 and 0 such fees were incurredreceived during the three months ended March 31, ~~2020 and March 31, 2019.~~2021.

~~Subordinated Participation in Real Estate Sales~~Listing Arrangements

Listing Note

Pursuant to the limited partnership agreement of the OP, ~~upon a liquidation or sale of all or substantially all~~which was amended and restated in connection with the effectiveness of the Listing on the Listing Date (as so amended and restated, the “A&R OP Agreement”), in the event the Company’s ~~assets, including through~~shares of common stock was listed on a ~~merger or sale of stock, New York City~~national exchange, the OP was obligated to distribute to the Special Limited ~~Partnership, LLC~~Partner a promissory note in an aggregate amount (the ~~“Special Limited Partner”~~“Listing Amount”)~~, a subsidiary of AR Global, which is the special limited partner of the OP, will be entitled to receive a subordinated distribution from the OP~~ equal to 15.0% of ~~remaining~~the difference (to the extent the result is a positive number) between:

•the sum of (i) (A) the average closing price of the shares of Class A common stock over the Measurement Period (as defined below) multiplied by the number of shares of common stock issued and outstanding as of the Listing, plus (B) the sum of all distributions or dividends (from any source) paid by the Company to its stockholders prior to the Listing; and (ii) (X) the aggregate purchase price (without deduction for organization and offering expenses or any other underwriting discount, commissions or offering expenses) of the initial public offering of the Company’s common stock, plus (Y) the total amount of cash that, if distributed to the stockholders who purchased shares of the Company’s common stock in the initial public offering, would have provided those stockholders with a 6.0% cumulative, non-compounded, pre-tax annual return on the aggregate purchase price of shares sold in the initial public offering through the listing, minus any distributions of net ~~sale~~sales proceeds made to the Special Limited Partner prior to the end of the Measurement Period (as defined below).

Effective at the Listing, the OP entered into a listing note agreement with respect to this obligation (the “Listing Note”) with the Special Limited Partner. The Listing Note evidences the OP’s obligation to distribute to the Special Limited Partner the Listing Amount, which will be calculated based on the Market Value of the Company’s common stock. Until the end of the 30 consecutive trading dates commencing on the 180th day after ~~return~~all of ~~capital contributions~~the shares of the Company’s Class B common stock have fully converted into shares of Class A common stock and are eligible for trading on the NYSE (the “Measurement Period”), the final value of the Listing Note will not be determinable. Until the amount of the Listing Note can be determined, the Listing Note will be considered a liability which will be marked to ~~investors plus payment~~fair value at each reporting date, with changes in the fair value recorded in the consolidated statements of operations and comprehensive loss. The fair value of the Listing Note at issuance on the Listing Date (August 18, 2020) and at March 31, 2021 was nominal and was determined using a Monte Carlo simulation, which uses a combination of observable and unobservable inputs. The fair value of the Listing Note, if any, will be paid at the end of the Measurement Period. The Special Partner has the right to receive distributions of Net Sales Proceeds (as defined in the Listing Note), until the Listing Note is paid in full; provided that, the Special Limited Partner has the right, but not the obligation, to convert its entire special limited partnership interest in the OP into Class A Units.

Multi-Year Outperformance Agreement

The amendments effected to the limited partnership agreement of the OP pursuant to the A&R OP Agreement generally reflect provisions more consistent with the agreements of limited partnership of other operating partnerships controlled by real estate investment trusts with securities that are publicly traded and listed and make other changes in light of the transactions entered into by the Company in connection with the Listing. The A&R OP Agreement sets forth the terms of a new class of units of limited partnership designated as “LTIP Units” (“LTIP Units”), which includes the Master LTIP Unit (the “Master LTIP Unit”) issued to the Advisor on August 18, 2020 pursuant to a multi-year outperformance award agreement entered into with the Advisor (the “2020 OPP”).

In addition, the A&R OP Agreement describes the procedures pursuant to which holders of Class A Units may redeem all or a portion of their Class A Units on a one-for-one basis for, at the Company’s election, shares of Class A common stock or the cash equivalent thereof. The A&R OP Agreement also requires the Company, upon the request of a holder of Class A Units but subject to certain conditions and limitations, to register under the Securities Act, the issuance or resale of the shares of Class A common stock issuable upon redemption of Class A Units in accordance with the A&R OP Agreement.

On the Listing Date, the Company, the OP and the Advisor entered into the 2020 OPP pursuant to which a performance-based equity award was granted to the Advisor. Initially, the award under the 2020 OPP was in the form of a single Master LTIP Unit. On September 30, 2020, the Master LTIP Unit automatically converted into 4,012,841 LTIP Units in accordance with its terms. For additional information on the 2020 OPP, see Note 11 – Equity-Based Compensation.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2020~~2021

(Unaudited)

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. NaN such participation in net sales proceeds became due and payable during the three months ended March 31, 2020 or 2019. Any amount of net sales proceeds paid to the Special Limited Partner or any of its affiliates prior to the Company’s listing or termination or non-renewal of the advisory agreement with the Advisor, as applicable, will reduce dollar for dollar the amount of the subordinated incentive listing distribution and subordinated incentive termination distribution described below.

~~Subordinated Participation in Connection with a Listing~~

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 to receive subordinated incentive listing distributions 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 distributions unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. NaN such distributions were incurred during three months ended March 31, 2020 or 2019. If the Special Limited Partner or any of its affiliates receives the subordinated incentive listing distribution, the Special Limited Partner and its affiliates will no longer be entitled to receive the subordinated participation in net sales proceeds described above or the subordinated incentive termination distribution described below.

~~Termination Payments~~

~~Subordinated Participation in Connection with a Termination of the Advisory Agreement~~

Upon termination or non-renewal of the Company’s 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 become entitled to the subordinated termination distributions unless as of the termination the Company’s investors were entitled to their capital contributions if the Company were liquidated plus 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 the subordinated termination distribution until either a listing on a national securities exchange or other liquidity event occurs, subsequently, in which case the Company’s market value will be calculated as of the date of the applicable listing or liquidity event. NaN such distributions were incurred during the three months ended March 31, 2020 or 2019. If the Special Limited Partner or any of its affiliates receives the subordinated incentive termination distribution, the Special Limited Partner and its affiliates will no longer be entitled to receive the subordinated participation in net sales proceeds above or the subordinated incentive listing distribution described above.

Termination Fees Payable to the Advisor

The ~~Second~~ Advisory Agreement requires the Company to pay a termination fee to the Advisor in the event the ~~Second~~ Advisory Agreement is terminated prior to the expiration of the initial term in certain limited scenarios. The termination fee will be payable to the Advisor if either the Company or the Advisor exercises the right to terminate the ~~Second~~ Advisory Agreement in connection with the consummation of the first change of control (as defined in the ~~Second~~ Advisory Agreement). The termination fee is equal to

•$15 million plus an amount equal to the product of

(i) three (if the termination iswas effective on or prior to June 30, 2020) or four (if the termination is effective after June 30, 2020), multiplied by

(ii) applicable Subject Fees.

The “Subject Fees” are equal to (i) the product of

•(a) 12, multiplied by (b) the actual base management fee for the month immediately prior to the month in which the ~~Second~~ Advisory Agreement is terminated, plus

(ii) the product of (x) four multiplied by (y) the actual variable management fee for the quarter immediately prior to the quarter in which the ~~Second~~ Advisory Agreement is terminated, plus,

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

(iii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity issued by the Company and its subsidiaries in respect of the fiscal quarter immediately prior to the fiscal quarter in which the ~~Second~~ Advisory Agreement is terminated.

In connection with the termination or expiration of the ~~Second~~ Advisory Agreement, the Advisor will be entitled to receive (in addition to any termination fee) all amounts then accrued and owing to the Advisor, including an amount equal to then-present fair market value of its shares of the Company’s common stock and interest in the OP.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

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 services 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 — Equity-Based Compensation

Equity Plans

Restricted Share Plan

~~The~~Prior to the Listing, the Company ~~has~~had an employee and director incentive restricted share plan (as amended, ~~to date,~~ the “RSP”). The RSP ~~provides~~provided for the automatic grant of the number of restricted shares equal to $30,000 divided by the then-current Estimated Per-Share ~~NAV.~~

~~These automatic grants are~~NAV, which were 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 over a five-year period following the grant date in increments of 20.0% per annum. The RSP ~~provides~~also provided the Company with the ability to grant awards of restricted shares to the Company’s board of 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.

2020 Equity Plan

Effective at the Listing, the Company’s independent directors approved an equity plan for the Advisor (the “Advisor Plan”) and an equity plan for individuals (the “Individual Plan” and together with the Advisor Plan, the “2020 Equity Plan”). The ~~total number~~Advisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Awards under the Individual Plan are open to the Company’s directors, officers and employees (if the Company ever has employees), employees, officers and directors of ~~shares~~the Advisor and as a general matter, employees of affiliates of the Advisor that provide services to the Company. Awards under the Advisor Plan may only be granted asto the Advisor and its affiliates (including any person to whom the Advisor subcontracts substantially all of responsibility for directing or performing the day-to-day business affairs of the Company).

The 2020 Equity Plan succeeded and replaced the existing RSP. Following the effectiveness of the 2020 Equity Plan at the Listing, no further awards will be granted under the RSP; provided, however, any outstanding awards under the RSP, such as unvested restricted shares held by the Company’s independent directors, will remain in effect in accordance with their terms and the terms of the RSP, until all those awards are exercised, settled, forfeited, canceled, expired or otherwise terminated. The Company accounts for forfeitures when they occur. While the RSP provided only for awards of restricted shares, the 2020 Equity Plan has been expanded to also permit awards of restricted stock units, stock options, stock appreciation rights, stock awards, LTIP Units and other equity awards. In addition, the 2020 Equity Plan eliminates the “automatic grant” provisions of the RSP that dictated the terms and amount of the annual award of restricted shares to independent directors. Going forward, grants to independent directors will be made in accordance with the Company’s new director compensation program, as described below under “—Director Compensation.” The 2020 Equity Plan has a term of 10 years, expiring August 18, 2030. The number of shares of the Company’s capital stock that may ~~not exceed 5.0%~~be issued or subject to awards under the 2020 Equity Plan, in the aggregate, is equal to 20.0% of the Company’s outstanding shares of common stock on a fully diluted basis at any ~~time~~time. Shares subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a 1-for-one basis and vice versa.

Director Compensation

Effective on the Listing Date, the Company’s independent directors approved a change to the Company’s director compensation program. Starting with the annual award of restricted shares to be made in ~~any event~~connection with the Company’s 2021 annual meeting of stockholders, the amount of the annual award will ~~not exceed 1.5 million shares (as such number may~~ be ~~adjusted for stock splits, stock dividends, combinations and similar events).~~increased from $30,000 to $65,000. No other changes have been made to the Company’s director compensation program.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

Restricted Shares

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. Restricted share awards that have been granted to the Company’s directors 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 Company’s board of directors. There have not been any grants of restricted shares to other individuals as permitted under the 2020 Equity Plan.

Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares receive cash ~~distributions~~dividends on the same basis as ~~distributions~~dividends paid on shares of common stock, if any, prior to the time that the restrictions on the restricted shares have lapsed and thereafter. Any ~~distributions~~dividends payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

The following table displays restricted share award activity during the three months ended March 31, ~~2020:~~2021:


	Number of Restricted Shares	Weighted-Average Issue Price
Unvested, December 31, 2020	5,516	$	50.20
Granted	0	0
Vested	(110)	54.68
Fractional share redemption (1)	(6)	9.81
Unvested March 31, 2021	5,400	50.15

Number of
Restricted Shares Weighted-Average Issue Price
Unvested, December 31, 2019 13,201
$ 21.00
Granted —
—
Vested (267 ) 22.50
Unvested, March 31, 2020
12,934
$ 20.97

(1) Represents fractional shares redeemed in connection with the conversion of the second tranche of shares of Class B common stock to shares of Class A common stock that occurred on March 1, 2021.

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~~NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2020~~

~~(Unaudited)~~

As of March 31, ~~2020,~~2021, the Company ~~had~~had $0.3 million of unrecognized compensation cost related to unvested restricted share awards granted ~~under the RSP~~ and is expected to be recognized over a weighted-average period of ~~3.0~~2.9 years. ~~Restricted~~Restricted share ~~awards~~awards are expensed in accordance with the service period required. Compensation expense related to restricted share awards was approximately ~~$22,494~~$23,192 and ~~$20,992~~$22,494 for the three months ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, respectively. Compensation expense related to restricted share awards is recorded as ~~general and administrative expense~~equity-based compensation in the accompanying unaudited consolidated statements of operations and comprehensive loss.

Multi-Year Outperformance Award

On the Listing Date, the Company, the Company, the OP and the Advisor entered into the 2020 OPP pursuant to which a performance-based equity award was granted to the Advisor. The award was based on the recommendation of the Company’s compensation consultant, and approved by the Company’s independent directors, acting as a group.

Initially, the award under the 2020 OPP was in the form of a single Master LTIP Unit. On September 30, 2020, the 30th trading day following the Listing Date, in accordance with its terms, the Master LTIP Unit automatically converted into 4,012,841 LTIP Units, the quotient of $50.0 million divided by $12.46, representing the average closing price of one share of one share of Class A common stock over the ten consecutive trading days immediately prior to September 30, 2020. This number of LTIP Units represents the maximum number of LTIP Units that may be earned by the Advisor during a performance period ending on the earliest of (i) August 18, 2023, (ii) the effective date of any Change of Control (as defined in the 2020 OPP) and (iii) the effective date of any termination of the Advisor’s service as advisor of the Company.

For accounting purposes, July 19, 2020 is treated as the grant date (the “Grant Date”), because the Company’s independent directors approved the 2020 OPP and the award made thereunder on that date. The Company engaged third party specialists, who used a Monte Carlo simulation, to calculate the fair value as of the date the Master LTIP Unit converted (September 30, 2020), on which date the fair value was also fixed. The total fair value of the LTIP Units of $25.8 million is being recorded over the requisite service period of 3.07 years beginning on the Grant Date and ending on the third anniversary of the Listing Date (August 18, 2023). As a result, during the three months ended March 31, 2021, the Company recorded equity-based compensation expense related to the LTIP Units of $2.1 million, which is recorded in equity-based compensation in the consolidated statements of operations and comprehensive loss. As of March 31, 2021, the Company had $19.9 million of unrecognized compensation expense related to the LTIP Units, which is expected to be recognized over a period of 2.38 years.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

Half of the LTIP Units (the “Absolute TSR LTIP Units”) are eligible to be earned as of the last day of the performance period if the Company achieves total stockholder return (“TSR”) measured on an absolute basis for the performance period as follows:


Performance Level	Absolute TSR			Percentage of LTIP Units Earned
Below Threshold	Less than	12%		0	%
Threshold		12%		25	%
Target		18%		50	%
Maximum		24%	or higher	100	%

If the Company’s absolute TSR is more than 12% but less than 18%, or more than 18% but less than 24%, the percentage of the Absolute TSR LTIP Units earned is determined using linear interpolation as between those tiers, respectively.

Half of the LTIP Units (the “Relative TSR LTIP Units”) are eligible to be earned as of the last day of the performance period if the amount, expressed in terms of basis points, whether positive or negative, by which the Company’s absolute TSR for the performance period exceeds the average TSR for the performance period of a peer group consisting of Empire State Realty Trust, Inc., Franklin Street Properties Corp., Paramount Group, Inc. and Clipper Realty Inc. as follows:


Performance Level	Relative TSR Excess			Percentage of LTIP Units Earned
Below Threshold	Less than	-600	basis points	0	%
Threshold		-600	basis points	25	%
Target		0	basis points	50	%
Maximum		+600	basis points	100	%

If the relative TSR excess is between -600 bps and 0 bps, or between 0 bps and +600 bps, the percentage of the Relative TSR LTIP Units earned is determined using linear interpolation as between those tiers, respectively.

Until an LTIP Unit is earned, the holder of the LTIP Unit is entitled to distributions on the LTIP Unit equal to 10% of the distributions made per Class A Unit (other than distribution of sale proceeds). Distributions on Class A Units equal dividends paid on Class A common stock. Distributions paid with respect to an LTIP Unit are not subject to forfeiture, even if the LTIP Unit is ultimately forfeited because it is not earned in accordance with the 2020 OPP. In light of the automatic conversion feature of the Master LTIP Unit, the Advisor was entitled to receive a distribution equal to the product of 10% of the distributions made per Class A Unit during the period from the Listing Date (August 18, 2020) to September 30, 2020 (if any) multiplied by the number of LTIP Units issued when the Master LTIP Unit automatically converted into LTIP Units, however, no distributions were paid on Class A Units during this period. For the three months ended March 31, 2021, the Company recorded $40,000 of distributions related to the LTIP Units. After an LTIP Unit is earned, the holder will be entitled to a priority catch-up distribution per earned LTIP Unit equal to the aggregate distributions paid on a Class A Unit during the performance period, less the aggregate distributions paid on the LTIP Unit during the performance period. As of the last day of the performance period, the earned LTIP Units will become entitled to receive the same distributions as are paid on Class A Units. At the time the Advisor’s capital account with respect to an LTIP Unit that is earned and vested is economically equivalent to the average capital account balance of a Class A Unit, the Advisor, as the holder of the LTIP Unit in its sole discretion, will, in accordance with the A&R OP Agreement, be entitled to convert the LTIP Unit into a Class A Unit, which may, in turn, be redeemed on a 1-for-one basis for, at the Company’s election, a share of Class A common stock or the cash equivalent thereof.

If the last day of the performance period is the effective date of a Change of Control or a termination of the Advisor without Cause (as defined in the Advisory Agreement), then the number of LTIP Units earned will be calculated based on actual performance as of (and including) the effective date of the Change of Control or termination (as applicable), with the hurdles for calculating absolute TSR pro-rated to reflect that the performance period lasted less than three years but without pro-rating the number of Absolute TSR LTIP Units or Relative TSR LTIP Units the Advisor would be eligible to earn to reflect the shortened period.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

If the last day of the performance period is the effective date of a termination of the Advisor with Cause, then the number of LTIP Units earned will also be calculated based on actual performance as of (and including) the effective date of the termination based on the performance through the last trading day prior to the effective date of the termination, with the hurdles for calculating absolute TSR pro-rated to the extent that the performance period lasted less than three years and with the number of Absolute TSR LTIP Units or Relative TSR LTIP Units the Advisor would be eligible to earn also pro-rated to reflect the shortened period.

The award of LTIP Units under the 2020 OPP is administered by the compensation committee, provided that any of the compensation committee’s powers can be exercised instead by the Company’s board of directors if the board of directors so elects. Following the last day of the performance period, the compensation committee is responsible for determining the number of Absolute TSR LTIP Units and Relative TSR LTIP Units earned, as calculated by an independent consultant engaged by the compensation committee and as approved by the compensation committee in its reasonable and good faith discretion. The valuation model used to calculate the fair value utilizes several significant assumptions, such as stock price volatility, dividend yield, and correlation estimate. The compensation committee also must approve the transfer of any Absolute TSR LTIP Units and Relative TSR LTIP Units (or Class A Units into which they may be converted in accordance with the terms of the A&R OP Agreement).

LTIP Units earned as of the last day of the performance period will also become vested as of the last day of the performance period. Any LTIP Units that are not earned and vested after the compensation committee makes the required determination will automatically and without notice be forfeited without the payment of any consideration by the Company or the OP, effective as of the last day of the performance period.

Other Share-Based Compensation

The Company may issue common stock in lieu of cash to pay fees earned by the Company’s board of directors at the respective director’s election. There are no restrictions on the shares issued. There were no0 shares of common stock issued in lieu of cash during the three months ended March 31, ~~2020~~2021 or March 31, ~~2019.~~2020.

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:~~presented and has been retroactively adjusted to reflect the Reverse Stock Split (see Note 1 — Organization for additional details):


	Three Months Ended March 31,
	2021		2020
Net loss attributable to common stockholders (in thousands)	$	(13,535)	$	(6,788)
Basic and diluted weighted average shares outstanding	12,780,027		12,749,724
Basic and diluted net loss per share	$	(1.06)	$	(0.53)

Three Months Ended March 31,
2020 2019
Net loss (in thousands)
$ (6,788 ) $ (4,584 )
Basic and diluted weighted average shares outstanding 30,981,830
30,977,955
Basic and diluted net loss per share $ (0.22 ) $ (0.15 )

Diluted net loss per share assumes the vesting or conversion of restricted shares and Class A Units into an equivalent number of unrestricted shares of Class A common stock, unless the effect is antidilutive. Conditionally issuable shares relating to the 2020 OPP (see Note 11 — Equity-Based Compensation for additional information) would be included in the computation of fully diluted EPS on a weighted-average basis for the three months ended March 31, 2021 and 2020 based on shares that would be issued if the balance sheet date were the end of the measurement period. No LTIP Unit share equivalents were included in the computation for the three months ended March 31, 2021 because no LTIP Units would have been earned based on the trading price of Class A common stock including any cumulative dividends paid (since inception of the 2020 OPP) at March 31, 2021. There was also no impact from any of the Company’s potentially dilutive securities during the three months ended March 31, 2021 or 2020 due to the net losses in both periods.

The Company had the following weighted-average common share equivalents ~~as of March 31, 2020 and March 31, 2019,~~for the periods indicated, which were excluded from the calculation of diluted net loss per share attributable to stockholders as the effect would have been ~~anti-dilutive:~~anti-dilutive. The amounts in the table below have been retroactively adjusted to reflect the Reverse Stock Split (see Note 1 — Organization for additional details):

Three Months Ended March 31,
2020 2019
Unvested restricted shares 13,057
12,359
OP units 90
90
Class B units 159,159
159,159
Total weighted-average anti-dilutive common share equivalents 172,306
171,608

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)


	Three Months Ended March 31,
	2021	2020
Unvested restricted shares (1)	5,461	5,373
Class A Units (2)	13,100	37
Class B Units (3)	0	65,498
LTIP Units (4)	4,012,841	0
Total weighted-average anti-dilutive common share equivalents	4,031,402	70,908

__________

(1) There were 5,400 and 5,323 unvested restricted shares outstanding as of March 31, 2021andMarch 31, 2020, respectively.

(2) Formerly known as OP Units. There were 13,100 and 37 Class A Units outstanding as of March 31, 2021andMarch 31, 2020, respectively.

(3) There were 0 and 65,498 Class B Units outstanding as of March 31, 2021 andMarch 31, 2020, respectively (see Note 7 — Stockholders’ Equity for additional information).

(4) There were 4,012,841 and 0 LTIP Units outstanding as of March 31, 2021andMarch 31, 2020, respectively (see Note 11 — Equity-Based Compensation for additional information).

Note 13 — Subsequent Events

~~The~~Quarterly Dividend

On April 1, 2021, the Company ~~has evaluated subsequent events through the filing~~declared a dividend of ~~this Quarterly Report~~$0.10 per share on ~~Form 10-Q~~each share of its Class A common stock and ~~determined that there have not been any events that have occurred that would require adjustments to disclosures~~Class B common stock. This dividend was paid on April 15, 2021 in the ~~consolidated financial statements.~~

~~Dispositions~~

~~During the three months ended March 31, 2020, the Company entered into a purchase and sale agreement to dispose~~aggregate amount of ~~421 W. 54th Street property for a contract price of $7.1 million. Subsequent to March 31, 2020, the buyer terminated the transaction and the Company retained the security deposit of $0.7~~$1.3 million.

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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~~including statements regarding the intent, belief or current expectations of New York City REIT, Inc. (including, as required by context, New York City Operating Partnership, L.P. (the “OP”) and its subsidiaries, “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~~These forward-looking statements are ~~some~~subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. 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:~~

~~All~~statements are set forth in the Risk Factors section 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;Annual Report on Form 10-K for the year ended December 31, 2020.

~~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;~~

~~Effective March 1, 2018, we ceased paying distributions. There can be no assurance we will be able to resume paying distributions at our previous level or at all;~~

~~Our properties may be adversely affected by economic cycles and risks inherent to the New York metropolitan statistical area (“MSA”), especially New York City;~~Overview

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~~an externally managed real estate investment trust for ~~United States federal~~U.S. Federal income tax purposes (“REIT”);

We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, including negative impacts on our tenants and their respective businesses;

~~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;

~~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”) which is currently suspended 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; and~~

~~As of March 31, 2020, we owned only eight properties and therefore have limited diversification.~~

~~Overview~~

We were incorporated on December 19, 2013 as a Maryland corporation and elected to be taxed as a REIT beginning with our taxable year ended December 31, 2014. Substantially all of our business is conducted through the OP.

~~In March 2019, we changed our name from American Realty Capital New York City REIT, Inc. to New York City REIT, Inc.~~

~~We were formed to invest our assets~~invests primarily in office properties located inexclusively within the five boroughs of New York City, ~~with a focus on~~primarily Manhattan. We have also purchased certain real estate assets that accompany office properties, including retail spaces and amenities,

and may purchase hospitality assets, residential assets and other property types also located exclusively inwithin the five boroughs of New York City. As of March 31, ~~2020,~~2021, we owned eight properties consisting of ~~1,163,061~~1.2 million rentable square feet, acquired for an aggregate purchase price of $790.7 million.

On ~~October 23, 2018,~~August 18, 2020, we listed shares of our Class A common stock on the New York Stock Exchange (“NYSE”) under the symbol “NYC”. In anticipation of the listing, we implemented a series of corporate actions which resulted in a bifurcation of our common stock into Class A common stock and Class B common stock and in a net reduction of 2.43 shares for every one share of common stock outstanding prior to these corporate actions, which we refer to as the Reverse Stock Split. All references made to share or per share amounts as of dates prior to August 5, 2020 in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Reverse Stock Split on that date. To effect the listing, and to address the potential for selling pressure that may have existed at the outset of listing, we listed only shares of Class A common stock, which represented approximately 25% of our outstanding shares of common stock, on the NYSE when trading commenced. Our other class of outstanding stock is Class B common stock, which comprised approximately 75% of our outstanding shares of common stock at that time. The first of three equal tranches of shares of Class B common stock that were not listed on the NYSE on the listing date converted into 3,189,204 shares of Class A common stock and the shares were listed on the NYSE on December 16, 2020. Following a determination by our board of directors, ~~approved~~ the ~~2018 Estimated Per-Share NAV equal~~second tranche of shares of Class B common stock converted into 3,176,127 shares of Class A common stock and were listed on the NYSE on March 1, 2021. The remaining tranche of shares of Class B common stock will convert into shares of Class A common stock to ~~$20.26 based~~be listed on ~~an estimated fair value~~the NYSE on August 13, 2021, unless earlier converted. For additional information, see Note 7 – Stockholders’ Equityto our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Substantially all of our ~~assets less~~business is conducted through the ~~estimated fair value~~OP and its wholly-owned subsidiaries. New York City Advisors, LLC (our “Advisor”) manages our day-to-day business with the assistance of our liabilities, divided by 31,346,179 shares of common stock outstanding on a fully diluted basis as of June 30, 2018. On October 24, 2019, our board of directors approved the 2019 Estimated Per-Share NAV equal to $20.26 as of June 30, 2019, which was published on October 25, 2019. Until we list shares of our common stock or another liquidity event occurs, we intend to publish subsequent valuations of Estimated Per-Share NAV at least once annually.

~~We have no employees. Our Advisor has been retained by us to manage our affairs on a day-to-day basis, and we have retained our Property Manager to serve as our property manager.~~New York City Properties, LLC (our “Property Manager”). Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees ~~and expense reimbursements~~ for providing services ~~related~~ to ~~the investment and management~~us. We also reimburse these entities for certain expenses they incur in providing these services to us.

Table of ~~our assets.~~Contents

Management Update on the Impacts of the COVID-19 Pandemic

The ~~economic uncertainty created by the~~ COVID-19 global pandemic has created several risks and uncertainties that have affected and may continue to impact our business, including our financial condition, future results of operations and our liquidity. A pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global pandemic of COVID-19 affecting states or regions in which we or our tenants operate could have material and adverse effects on our business, financial condition, results of operations and cash flows. The ultimate impact on our results of operations, our liquidity and the ability of our tenants to continue to pay us rent will depend on numerous factors including the overall length and severity of the COVID-19 pandemic. Management is unable to predict the nature and scope of any of these factors. These factors include the following, among others:


•	The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all. However, we have taken proactive steps with regard to rent collections to mitigate the impact on our business (see ~~“—Management Actions”~~ ~~below).~~

There may be a decline in the demand for tenants to lease real estate, as well as a negative impact on rental rates. As of March 31, 2020, our portfolio had a high occupancy level of 89.0%, the weighted-average remaining term of our leases was 6.8 years (based on annualized straight-line rent).

New York City, where all of our properties are located, has been among the ~~hardest hit~~most affected locations in the ~~country and continues to operate~~country. Until it began its phased reopening in June 2020, which is still underway as of March 31, 2021, New York City operated under a mandatory order under which tenants were required to ~~close~~cease all non-essential ~~operations.~~in-office functions. Our properties remain accessible to all tenants, ~~while each tenant operates under the appropriate~~although, even as operating ~~restrictions.~~restrictions expire, not all tenants have resumed operations. In addition, as ~~operating restrictions expire,~~New York’s phased opening continues, and occupants continue to return to our properties, operating costs may begin to rise, including for services, labor, and personal protective equipment and other supplies, as our property managers take appropriate actions to protect tenants and property management personnel. Some of these costs may be recoverable through reimbursement from ~~tenants.~~tenants but others will be borne by us. We have experienced an increase in non-reimburseable property operating expenses and general and administrative expenses for legal fees associated with litigation against tenants that have not paid amounts contractually due under their leases and tenant lease amendment negotiations. However, despite the current restrictions and continued reopening, we expect that continued vaccination efforts will result in a “return to normalcy” after the summer holidays and will support an increase in office usage and leasing trends by the end of 2021 and through 2022.

~~Capital market volatility~~The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all. During the year ended December 31, 2020, we reduced revenue from tenants by $8.5 million for reserves recorded during the period on receivables for which the related tenants have been put on a ~~tightening~~cash basis or there were early lease terminations. In the first quarter of ~~credit standards could negatively~~2021, there has been no rental income received from any of the tenants that were previously placed on a cash basis. During the quarter ended March 31, 2021, we experienced one large termination due to the termination of leases within two of our buildings, 123 William Street and 9 Times Square, with our former tenant, Knotel, after declaring bankruptcy in January 2021, and an expiration without a renewal. We had previously written off any contract and straight line rent receivables net of any security deposits associated with this tenant as of December 31, 2020 as they were deemed to be uncollectible. However, we also signed four new leases during the period, including replacement leases for approximately half of the vacant space left by Knotel. Although management is currently working on securing additional new leases, there can be no assurance we will be able to lease all or any portion of our currently vacant space at any property on acceptable or favorable terms, or at all. The impact of COVID-19 on our ~~ability~~tenants led to ~~obtain debt financing. We do not have any significant debt principal repayments due until 2024.~~

early lease terminations and expirations without renewals that has caused cash trap events on three of our mortgages, all as described further in this section. The negative impact of the pandemic on our results of operations and cash flows could continue to impact our ability to comply with covenants in our ~~loans.~~loans as we are in violation of covenants on three of our mortgage loans aggregating $204.0 million in principal amount and may also experience additional covenant violations on our mortgages at other properties.

The ~~potential negative~~ultimate impact on our results of operations, our liquidity and the ~~health of personnel~~ability of our ~~Advisor, particularly if a significant number~~tenants to continue to pay us rent will depend on numerous factors including the overall length and severity of the ~~Advisor’s employees are impacted, could result in~~COVID-19 pandemic. For a ~~deterioration in our ability to ensure business continuity.~~

~~For additional information on~~further discussion of the risks and uncertainties associated with the impact of the COVID-19 ~~pandemic, please~~on us, see Item 1A. ~~“Risk~~Risk Factors ~~— We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, which has caused severe disruptions~~ in ~~the U.S. and global economy and financial markets and has already had adverse effects and may worsen” included in this Quarterly~~our Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~March~~December 31, 2020.

The Advisor has responded to the challenges resulting from the COVID-19 pandemic. Beginning in early March, the Advisor took proactive steps to prepare for and actively mitigate the inevitable disruption COVID-19 would cause, such as, enacting safety measures, both required or recommended by relevant government authorities, including remote working policies, cooperation with localized closure or curfew directives, and social distancing measures at all of our properties. Additionally, there has been no material adverse impact on our financial reporting systems or internal controls and procedures and the Advisor’s ability to perform services for us. In light of the current COVID-19 pandemic, we are supplementing the historical discussion of our results of operations for the first quarter of 2020 with a current update on the measures we have taken to mitigate the negative impacts of the pandemic on our business and future results of operations.

~~Management’s Actions~~

We have taken several steps to mitigate the impact of the pandemic on our business. ~~For rent collections, we~~We have been in direct contact with our tenants since the crisis began, ~~cultivating~~continuing to cultivate open dialogue and ~~deepening~~deepen the fundamental relationships that we have carefully developed through prior transactions and historic operations. We have taken a proactive approach to achieve mutually agreeable solutions with our tenants and in some cases, in 2020 and 2021, we executed different types of lease amendments, including rent deferrals and abatements and, in some cases, extensions to the term of the leases. Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our cash rent collections during this pandemic.

Our portfolio is primarily comprised of office ~~retail, bank,~~ and ~~restaurant industry~~retail tenants with ~~73%~~76%, and ~~15%~~23% of ~~April~~first quarter 2021 original cash rent due from office and retail tenants, respectively. We have collected ~~77%~~92% of ~~April’s~~first quarter 2021 original cash rent due from our office tenants, ~~39%~~63% of ~~April’s~~original cash rent due from our retail tenants and ~~73%~~85% of ~~April’s~~original cash rent due across our entire portfolio, including ~~76%~~89% of ~~April’s~~original cash rent due from our top 20ten tenants (based on annualized straight-line rent as of March 31, 2021). The original cash rent received across our entire portfolio was consistent with the fourth quarter of 2020 in which we reported total portfolio original cash rent collections of 82% due for the fourth quarter 2020 as of March 1, 2021, which is unchanged as of April 30, 2021.

“Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in their originally executed lease agreement at inception or as amended, prior to any rent deferral agreement. We calculate “original cash rent collections” by comparing the total amount of ~~April’s~~rent collected during the period to the original cash rent due. Total rent collected during the period includes both original cash rent due ~~from~~and payments made by tenants pursuant to rent deferral agreements. Eliminating the impact of deferred rent paid, we collected 85% of original cash rent collections for the first quarter of 2021. The deferral amounts received in the third and fourth quarters of 2020 were less than 1% of total rent collected in those quarters.

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A deferral agreement is an executed or approved amendment to an existing lease to defer a certain portion of cash rent due to a future period. During the year ended December 31, 2020, we granted rent deferrals for an aggregate of $1.5 million or approximately 7% of original cash rent due for the year. Those deferral amounts are or were scheduled for repayment during 2020 or 2021.

The cash rent collections for the first quarter of 2021 uses cash receipts as of April 30, 2021 and therefore is inclusive of cash received in April for rent due in the first quarter of 2021. Such cash receipts are not included in cash and cash equivalents on our ~~top 20 tenants).~~ March 31, 2021 consolidated balance sheet.

The table below presents additional information on our ~~April~~first quarter cash rent collection status, which includes cash rent due from tenants that were put on a cash basis in 2020, and is based on available information as of April 30, 2021.


First Quarter 2021 Cash Rent Status	Total Portfolio
First quarter cash rent paid (1)	85	%
Approved agreements (2)	8	%
Agreement negotiation (3)	6	%
Other (4)	1	%
	100	%

____________

(1) Represents total of all contractual rents on a cash basis due from tenants as stipulated in the originally executed lease agreements at inception or as amended, prior to any rent deferral agreement. We calculate “original cash rent collections” by comparing the total amount of rent collected during the period to the original cash rent due. Eliminating the impact of deferred rent paid, we collected 85% of original Cash Rent due.

(2) Includes deferral agreements as well as amendments granting the tenant a rent credit for some portion of cash rent due. The rent credit is generally coupled with an extension of the lease. The terms of the lease amendments providing for rent credits differ by tenant in terms of length and amount of the credit. A deferral agreement is an executed or approved amendment to an existing lease to defer a certain portion of cash rent due. The most common arrangements during the first quarter of 2021 represent deferral of some or all of the rent due for the first quarter of 2021 with such amounts to be paid later in 2021. As of April 30, 2021, we granted rent credits with respect to 2.3% of first quarter cash rent due.

(3) Represents active tenant discussions where no approved agreement has yet been reached. There can be no assurance that these negotiations will be successful and will lead to formal agreements on favorable terms, or at all. These amounts are substantially comprised of tenants that were placed on a cash basis during the fourth quarter, which represented 6% of fourth quarter original cash rent due, after concluding that it was no longer probable that substantially all amounts due would be collected. We have fully reserved for amounts due from these tenants as a reduction in revenue as of December 31, 2020.

(4) Consists of tenants who have made a partial payment and/or tenants without active communication on a potential approved agreement. There can be no assurance that such cash rent will be collected. Includes approximately 0.3% of first quarter cash rent due from a tenant that was placed on cash basis during the fourth quarter of 2020 for which we have fully reserved as a reduction in revenue as of December 31, 2020.

Our cash rent collections may not be indicative of any future period and remains subject to changes based ongoing collection efforts and negotiation of additional agreements. Moreover, there is no assurance that we will be able to collect the cash rent that is due in future months including the deferred 2020 rent amounts due during 2021 under deferral agreements we have entered into with our tenants. The impact of the COVID-19 pandemic on our tenants and thus our ability to collect rents in future periods cannot be determined at ~~present:~~present.



~~April Cash Rent Status~~	~~Total Portfolio~~
~~April cash rent paid~~⁽¹⁾	73	%
~~Deferral in negotiation~~⁽²⁾	16	%
~~Approved deferral agreements~~ ⁽³⁾	9	%
~~Other~~ ⁽⁴⁾	2	%
	~~100~~	%

^____________

⁽¹⁾~~Includes both cash~~Fourth quarter rent ~~paid~~collections were particularly impacted by the Knotel bankruptcy and a lease amendment with one of our tenants that granted a rent credit of $0.6 million over the fourth quarter of 2020 and the first quarter of 2021 in ~~full and in part pursuant~~exchange for a 24-month lease extension. Moreover, certain tenants that have entered into agreements with us with respect to second, third or fourth quarter rents have, following the expiration of those agreements, sought to enter into new agreements further deferring or abating rent ~~deferral agreements or otherwise.~~

⁽²⁾for additional periods. There can be no assurance additional tenants will not similarly seek future rent during 2021. Through April 30, 2021, we had collected 25% of cash rent originally due in 2020 that ~~these negotiations will be successful~~was deferred until January 2021, 32% of cash rent originally due in 2020 that was deferred until February 2021, and ~~will lead to formal~~27% of cash rent ~~deferral agreements on favorable terms, or at all.~~

⁽³⁾ ~~Consists~~originally due in 2020 that was deferred until March 2021. We expect this trend of ~~executed deferral agreements and approved deferral agreements where~~lower collections of amounts previously deferred may continue in 2021. In the first quarter of 2021, we ~~and the tenant have agreed to certain rent deferral terms and conditions. The typical rent deferral agreement provides that payment of approximately 30% of the~~did not collect any cash rent due ~~each month for April, May~~from any of the tenants that were moved to a cash basis in 2020. We expect our cash rent collections will stay at current levels and ~~June of 2020 is deferred~~could potentially decline until the ~~first half of 2021. We retain all~~New York City economy reopens and recovers sufficiently for our ~~rights and remedies upon default under the lease, including the right~~tenants ability to ~~accelerate the unpaid portion of deferred amounts if those amounts are not repaid in accordance with the~~pay rent ~~deferral agreements. The tenant is not entitled~~ to ~~any reduction or return of any security deposit until the deferred amounts have been repaid.~~

⁽⁴⁾ In general, this represents tenants that have paid partial April cash rent but where we have not agreed to, or commenced negotiations regarding, any formal deferral arrangements. We expect to collect the remainder of these amounts. Thereimprove, although there can be no assurance wehow long this will ~~be successful~~take.

We entered into six approved agreements, outside of the new and replacement leases included in the “Results of Operations” section below, that commenced during the quarter ended March 31, 2021. The total amount deferred for the quarter ended March 31, 2021 under these ~~efforts on a timely basis, or at all.~~approved agreements was $0.3 million. The total amount of abatements (i.e., rent credits) entered into during the quarter ended March 31, 2021 was $0.4 million. Under agreements entered into during 2020, the total amount of rent credits (i.e., abatements) was $0.1 million for the quarter ended March 31, 2021.

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Significant Accounting Estimates and Critical Accounting Policies

For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our ~~2019~~2020 Annual Report on Form 10-K. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.

Recently Issued Accounting Pronouncements

See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our ~~unaudited~~ consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Properties

The following table presents certain information about the investment properties we owned as of March 31, ~~2020:~~2021:


Portfolio	Acquisition Date	Number of Properties	Rentable Square Feet	Occupancy			Remaining Lease Term (1)

421 W. 54th Street - Hit Factory	Jun. 2014	1	12,327	—	%		0
400 E. 67th Street - Laurel Condominium	Sept. 2014	1	58,750	100.0	%		3.6
200 Riverside Boulevard - ICON Garage	Sept. 2014	1	61,475	100.0	%		16.5
9 Times Square	Nov. 2014	1	167,390	57.7	%	(2)	7.8
123 William Street	Mar. 2015	1	542,676	87.0	%	(2)	5.3
1140 Avenue of the Americas	Jun. 2016	1	242,646	80.7	%		6.8
8713 Fifth Avenue	Oct. 2018	1	17,500	100.0	%		4.2
196 Orchard Street	Jul. 2019	1	60,297	100.0	%		13.8
		8	1,163,061	82.8	%		6.9

______

(1)Calculated on a weighted-average basis as of March 31, 2021, as applicable.

(2)In January 2021, our former tenant, Knotel, filed for bankruptcy and all leases were terminated effective January 31, 2021, which impacted two of our properties. These terminations represented a decline of 21% in the occupancy of 9 Times Square from December 31, 2020 to March 31, 2021. After taking into account the former Knotel space that has been re-leased as of March 31, 2021, the terminations represented a decline of 2% in the occupancy of 123 William Street from December 31, 2020 to March 31, 2021.

Portfolio Acquisition Date Number of Properties Rentable Square Feet Occupancy
Remaining Lease Term⁽¹⁾

421 W. 54th Street - Hit Factory Jun. 2014 1 12,327
— % 0
400 E. 67th Street - Laurel Condominium Sept. 2014 1 58,750
100.0 % 6.1
200 Riverside Boulevard - ICON Garage Sept. 2014 1 61,475
100.0 % 17.5
9 Times Square Nov. 2014 1 167,390
85.8 % 7.3
123 William Street Mar. 2015 1 542,676
92.5 % 6.5
1140 Avenue of the Americas Jun. 2016 1 242,646
79.0 % 4.3
8713 Fifth Avenue Oct. 2018 1 17,500
100.0 % 5.2
196 Orchard Street Jul. 2019 1 60,297
100.0 % 12.6
8 1,163,061
89.0 % 6.8

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⁽¹⁾	~~Calculated on a weighted-average basis as of March 31, 2020, as applicable.~~

Results of Operations

As of March 31, ~~2020~~2021 and ~~2019,~~2020, our overall portfolio occupancy was ~~89.0%~~82.8% and ~~94.6%~~89.0%, respectively. The following table is a summary of our quarterly leasing activity for the three months ended March 31, ~~2020:~~2021:

Q1 2020
Leasing activity:
New leases: ⁽¹⁾

New leases commenced 4
Total square feet leased 4,227
Annualized straight-line rent per square foot ⁽²⁾
$ 160.44
Weighted-average lease term (years) ⁽³⁾
6.7

Replacement leases: ⁽⁴⁾

Replacement leases commenced 3
Square feet 4,227
Annualized straight-line rent per square foot⁽²⁾
$ 162.64
Weighted-average lease term (years)⁽³⁾
6.8

Terminated leases: ⁽⁵⁾

Number of leases terminated 2
Square feet 8,376
Annualized straight-line rent per square foot ⁽²⁾
$ 39.27

Tenant improvements on replacement leases per square foot ⁽⁶⁾
$ —
Leasing commissions on replacement leases per square foot ⁽⁶⁾
$ —

~~_____________________________~~

Q1 2021

Leasing activity:

^{New leases:}(1)

~~Includes new and replacement (for which additional information is provided below)~~

New leases commenced ~~during the quarter.~~

Total square feet leased

30,271

^{Annualized straight-line rent per square foot}(2)

~~Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries (see “~~$

~~— Management Actions~~50.16 ~~” above).~~

⁽³⁾

~~The weighted-average remaining~~Weighted-average lease term (years) ~~is based on annualized straight-line rent.~~(3)

2.9

^{Replacement leases:}(4)

~~Represents~~

Replacement leases commenced ~~for spaces that had been previously leased in the prior twelve months.~~

Square feet

23,429

⁽⁵⁾Annualized straight-line rent per square foot (2)

~~Calculated as of the date of termination for terminated leases and expiration for those leases that have expired.~~

$	49.12
⁽⁶⁾Weighted-average lease term (years) (3)		~~Presented as if tenant~~	1.0

Terminated or expired leases: (5)
Number of leases terminated or expired			3
Square feet			78,952
Annualized straight-line rent per square foot (2)			$	66.14

Tenant improvements and leasing commissions were incurred in the period in which the lease commenced, which may be different than the period in which these amounts are actually paid. Does not include tenant improvements and leasingon replacement leases per square foot (6)			$	—
Leasing commissions on ~~new~~replacement leases ~~that are not replacement leases.~~per square foot (6)			$	2.63

___________

(1)Includes new and replacement (for which additional information is provided below) leases commenced during the quarter. This excludes lease renewals, amendments, and lease modifications for deferrals/abatements in responses to COVID-19 negotiations which qualify for FASB relief. For more information - see Management Update on Impacts of the COVID-19 Pandemic.

(2)Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries (see “— Management Actions” above).

(3)The weighted-average remaining lease term (years) is based on annualized straight-line rent.

(4)Represents leases commenced for spaces that had been previously leased in the prior twelve months, including spaces that were vacant at the time of the lease.

(5)Calculated as of the date of termination for terminated leases and expiration for those leases that have expired.

(6)Presented as if tenant improvements and leasing commissions were incurred in the period in which the lease commenced, which may be different than the period in which these amounts are actually paid. Does not include tenant improvements and leasing commissions on new leases that are not replacement leases.

Comparison of Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

As of March 31, ~~2020,~~2021, we owned eight properties, ~~comprising~~all of ~~seven properties~~which were acquired prior to January 1, ~~2019 and one property acquired in July 2019 (“196 Orchard Street”).~~2020. Our results of operations for the three months ended March 31, ~~2020~~2021 as compared to the three months ended March 31, ~~2019~~2020 primarily reflect changes due to leasing ~~activity and the impact of our acquisition of 196 Orchard Street.~~

~~In addition to the comparative quarter-over-quarter discussion below, please see the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s responses.~~activity.

Revenue from Tenants

Revenue from tenants ~~increased $0.4~~ decreased $2.3 million to $15.2 million for the three months ended March 31, 2021, from $17.5 million for the three months ended March 31, ~~2020,~~2020. Approximately $1.0 million of the decrease is attributable to the termination of several leases with our former tenant, Knotel, with the remainder due to the tenants that were placed on cash basis during 2020. We did not collect any cash rent during the three months ended March 31, 2021 from ~~$17.1~~tenants previously placed on a cash basis.

Asset and Property Management Fees to Related Parties

Fees for asset and property management services paid to our Advisor and Property Manager decreased $0.1 million to $1.9 million for the three months ended March 31, 2019. This increase is primarily due to $1.7 million related to the acquisition of 196 Orchard Street in July 2019 offset by a decrease of $1.3 million due to expiration of leases on 1140 Avenue of the Americas and 123 William Street properties.

~~Asset and Property Management Fees to Related Parties~~

~~Fees for asset and property management services~~2021 from ~~our Advisor and Property Manager increased $0.5 million to~~ $2.0 million for the three months ended March 31, ~~2020 from $1.5 million for~~2020. This is primarily due to a reduction in property management fees which are calculated based on cash receipts, which decreased during the three months ended March 31, 2019. This is primarily related to the impact of property management fees due to the Property Manager that are no longer adjusted for reimbursable expenses paid by us to third-party property managers effective on April 1, 2019. 2021 as described below. See Note 9 — Related Party Transactions and

Arrangements to our ~~unaudited~~ consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager.

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Property Operating Expenses

Property operating expenses increased $0.7 million to $8.7 million for the three months ended March 31, 2021 from $8.0 million for the three months ended March 31, 2020. This is due to increased legal fees associated with tenant lease amendment negotiations that are non-reimbursable to us, as well as an increase in other non-reimbursable expenses, such as real estate taxes which certain tenants that stopped paying rent under their leases in 2020 ~~from $7.3~~are not paying.

Equity-Based Compensation

Equity-based compensation increased to $2.1 million for the three months ended March 31, ~~2019.~~2021 from $23,000 for the three months ended March 31, 2020. This increase ~~was primarily due~~is related to the ~~acquisition~~amortization of ~~196 Orchard Street~~our multi-year outperformance award granted to the Advisor in ~~July 2019~~August 2020 (the “2020 OPP”), for which $2.1 million of expense was recorded during the three months ended March 31, 2021. Approximately $23,000 of expense was also recorded for the amortization of restricted shares of common stock. See Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and ~~the increased costs~~restricted shares of ~~operating and maintaining our properties, including real estate taxes, utilities, and repairs and maintenance.~~common stock.

General and Administrative Expenses

General and administrative expenses ~~essentially remained flat at~~ increased to $2.7 million for the three months ended March 31, 2021 from $2.0 million for three months ended March 31, 2020. This was due to an increase of $0.3 million in compensation expense paid to the Advisor, mainly related to salaries, an increase of $0.2 million for legal fees associated with litigation with tenants that have not paid rent, and the remainder of the increase is related to insurance premiums and audit fees. See Note 9 — Related Party Transactions and Arrangementsto our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details. For additional information on amounts recorded in prepaid expenses and other assets related to potential equity offerings, see Note 7 — Stockholders’ Equityto our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Total reimbursement expenses for administrative and personnel services provided by the Advisor during the three months ended March 31, 2021 were $1.2 million, of which $0.3 million related to administrative and overhead expenses and $0.9 million related to salaries, wages, and benefits. Pursuant to our advisory agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits, which were not reached as of March 31, 2021. Total reimbursement expenses for administrative and personnel services provided by the Advisor during the three months ended March 31, 2020 ~~when compared~~were $1.0 million, of which $0.3 million related to administrative and overhead expenses and $0.7 million related to salaries, wages, and benefits. See Note 9 — Related Party Transactions and Arrangementsto our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Depreciation and Amortization

Depreciation and amortization expense increased $1.0 million to $8.5 million for the three months ended March 31, ~~2019.~~

~~Depreciation and Amortization~~

~~Depreciation and amortization expense increased $0.1 million to~~2021 from $7.5 million for the three months ended March 31, 2020 ~~from $7.4 million for~~, which is mainly attributable to deferred leasing commission write-offs associated with lease terminations recorded during the three months ended March 31, ~~2019 primarily due to a higher depreciable asset base as a result of the 196 Orchard Street acquisition completed in July 2019.~~ 2021.

Interest Expense

Interest ~~expense increased $1.2~~expense was $4.7 million for the three months ended March 31, 2021, compared to $4.8 million for the three months ended March 31, 2020, compared to $3.6 million for the three months ended March 31, 2019. The increase was primarily due to a $55.0 million loan entered into in April 2019 secured by our previously unencumbered 9 Times Square property and a $51.0 million loan entered into in July 2019 in connection with the acquisition of our 196 Orchard Street property which was offset by lower interest rates during the period ended March 31, 2020. ~~(see~~ ~~Note 4~~ ~~- Mortgage Notes Payable, Net~~ ~~to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q for additional information).~~ During the three months ended March 31, 2021 and 2020, our ~~weighted average~~weighted-average outstanding debt balance was $405.0 million and had a weighted-average effective interest rate of 4.35%. ~~During the three months ended March 31, 2019, the weighted average outstanding balance of our debt was $299.0 million and had a weighted-average effective interest rate of 4.54%.~~

Cash Flows from Operating Activities

The level of cash flows used in or provided by operating activities is affected by the volume of acquisition activity, the 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 ~~$4.4~~$2.1 million during the three months ended March 31, ~~2020~~2021 and consisted primarily of a net loss of ~~$6.8~~$13.5 million, adjusted for non-cash items of ~~$7.6~~$10.8 million, including depreciation and amortization of tangible and intangible real estate assets, amortization of deferred financing costs, accretion/amortization of below market and above market lease liabilities and assets and share-based compensation. Net cash provided by operating activities also included a decrease in prepaid expenses and other assets of $3.6 million. These decreases were partially offset by increases related to accounts payable and accrued expenses associated with operating activities of $1.1 million an increase in deferred revenue (prepaid rent) of $0.8 million, and an increase in straight-line receivable of $0.6 million.

Net cash provided by operating activities was $4.4 million during the three months ended March 31, 2020 and consisted primarily of a net loss of $6.8 million, adjusted for noncash items of $7.6 million, including depreciation and amortization of tangible and intangible real estate assets, amortization of deferred financing costs, accretion/amortization of below market and above market lease liabilities and assets and equity-based compensation. Net cash provided by operating activities also included a decrease in prepaid expenses and other assets of $1.8 million. These decreases were partially offset by an increase related to

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accounts payable and accrued expenses associated with operating activities of $1.1 million, an increase in deferred revenue of $1.4 million, and an increase in straight-line rent receivable of $0.7 million.

Cash Flows from Investing Activities

Net cash ~~provided by operating~~used in investing activities ~~was $2.4 million~~of $43,000 during the three months ended March 31, 2019 and consisted primarily of a net loss of $4.6 million, offset by depreciation and amortization for tangible and intangible assets and other non-cash items of $7.2 million, which resulted in net cash inflows of $2.6 million. Net cash provided by operating activities also included an increase in prepaid expenses and other assets of $0.3 million, primarily2021 related to ~~an increase in unbilled rent receivables recorded in accordance with accounting for rental income on a straight-line basis~~the funding of capital expenditures relating to tenant and ~~a net cash inflow~~building improvements at 123 William Street and 1140 Avenue of ~~$0.4 million for an increase in deferred rent. These increases were partly offset by a $0.2 million decrease related to accounts payable and accrued expenses associated with operating activities.~~

~~Cash Flows from Investing Activities~~the Americas.

Net cash used in investing activities of $1.0 million during the three months ended March 31, 2020 related to the funding of capital expenditures relating to tenant improvements at 9 Times Square, 123 William Street and 1140 Avenue of the Americas.

Cash Flows from Financing Activities

Net cash used in ~~investing~~financing activities ~~of $0.7~~was $1.5 million during the three months ended March 31, ~~2019~~2021 related to ~~funding~~the payment of ~~capital expenditures relating to building~~dividends on common stock of $1.3 million and ~~tenant improvements at 9 Times Square and 123 William Street.~~

~~Cash Flows from Financing Activities~~the repurchase of common stock as part of the tender offer completed in January 2021 of $0.2 million.

There was no cash financing activity during the three months ended March 31, ~~2020 and 2019.~~2020.

Liquidity and Capital Resources

Our principal demands for cash are to fund operating and administrative expenses, capital expenditures, tenant improvement and leasing commission costs related to our properties, our debt service obligations and, subject to capital availability, acquisitions and share repurchases.

As of March 31, 2021, we had cash and cash equivalents of $29.4 million as compared to $31.0 million as of December 31, 2020. Under the guarantee of certain enumerated recourse liabilities of the borrower under one of our mortgage loans, we are required to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million.

Our principal sources of cash in recent periods have been the net cash, if any, provided by our current property operations and cash on hand consisting primarily of proceeds from financings of then-unencumbered assets. In some recent periods, including the fourth quarter and full year 2020, the net cash provided by our property operations has not alone been sufficient to fund operating expenses and other capital requirements. The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, which has had, and could continue to have, an adverse effect on the amount of cash we receive from our ~~operations. We have taken proactive steps with regard~~operations and therefore our ability to ~~rent collections~~fund operating expenses and other capital requirements, which, beginning in October 2020, include dividends to ~~mitigate~~our common stockholders. During the ~~impact on our business~~third and ~~liquidity. The ultimate impact on our results~~fourth quarters of ~~operations, our liquidity~~2020 and the ~~ability~~first quarter of ~~our tenants to continue to pay us~~

~~rent will depend on numerous factors including~~2021, the ~~overall length and severity~~operating results at 1140 Avenue of the ~~COVID-19 pandemic. Management is unable to predict the nature~~Americas, 9 Times Square and scope of any of these factors. Because substantially all of our income is derived from rentals of commercial real property, our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations and to consummate future property acquisitions would be adversely affected if a significant number of tenants are unable to meet their obligations to us. In addition to the discussion below, please see the ~~“Overview — Management Update on the Impacts of the COVID-19 Pandemic”~~ ~~section above for additional information on the risks and uncertainties associated with~~400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard Garage properties were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages for those properties to be triggered. Specifically for these properties, there were early lease terminations, expirations without renewal and ~~management’s actions taken~~a tenant bankruptcy for a significant tenant in ~~response.~~

the 9 Times Square property (Knotel). As a result, at these properties, which together represent 46% of the rentable square feet in our portfolio as of March 31, ~~2020,~~2021, we had cash and cash equivalents of $53.2 million as compared to $51.2 million as of December 31, 2019. Effective as of March 1, 2018, we suspended the distributions we pay to holders of our common stock. Our board of directors will ~~continue to evaluate our performance and assess our distribution policy, however there can be no assurance as to when, or if, we will~~not be able to ~~resume paying distributions or~~use excess cash flow from the ~~level~~properties to fund operating expenses at ~~which~~our other properties and other capital requirements until the breaches have been cured.

Although we ~~may pay them. Our ability to pay distributions~~had positive cash flow from operating activities in the ~~future will depend on~~first quarter of 2021, due to rent deferrals, vacancies and the ~~amount~~other impacts of cash we are able to generate from our operations. The amount of cash available for distributions is affected by many factors, such as capital availability, rental income from acquired properties and our operating expense levels,COVID-19, as well as ~~many~~the terms of our leases, we anticipate we may continue to fund a portion of our operating expenses and other ~~variables, including~~capital requirements with cash on hand through at least the first half of 2021. We do not have any ~~negative impacts from the COVID-19 pandemic discussed above. There is no assurance~~significant debt principal repayments due until 2024, and we believe that ~~rents from the properties~~ we ~~own or rent from future acquisitions of properties~~ will ~~increase our~~have sufficient cash available ~~for distributions~~ to ~~the level necessary for~~ us to ~~resume paying distributions to~~meet our ~~stockholders.~~

~~Our principal demands for~~operating cash are to fund operating and administrative expenses, capital expenditures, tenant improvement and leasing commission costs related to our properties, our debt service obligations and, subject to capital availability, acquisitions. Distributions to our stockholders and repurchases underrequirements over the SRP are currently suspended, therefore these are not currently a principal demand on our cash flow. The SRP has been suspended since September 25, 2018 and the suspension will remain in effect unless our board of directors authorizes us to resume paying regular cash distributions to our stockholders. For additional information on the SRP, see ~~Note 7~~ ~~— Common Stock~~ ~~to our unaudited consolidated financial statements found in this Quarterly Report on Form 10-Q.~~

next year. We expect to fund our future capital needs, including for acquisitions or share repurchases, if ~~any, and operations~~authorized, through a combination of net cash, if any, provided by our current property operations, or the operations of properties that we may ~~be acquired~~acquire in the future, proceeds from property dispositions (if any) and proceeds from ~~financings, and we believe that we will have sufficient cash flow to meet~~ our ~~operating needs over the next year. As mentioned above, additional sources of capital may also include proceeds from secured and unsecured financing from banks~~Common Stock ATM Program (as defined below) or other ~~lenders. To the extent we are required to obtain additional financing we may not be able to do so on favorable terms or at all (please see the~~ ~~“Overview — Management Update on the Impacts of the COVID-19 Pandemic”~~ ~~section above for additional information on the risks~~future equity offerings and ~~uncertainties associated with the COVID-19 pandemic and management’s actions taken in response). However, we do not have any significant~~ debt ~~principal repayments due until 2024.~~financings.

Mortgage Loans

We have ~~used mortgage financing to acquire properties and have also incurred~~six mortgage loans ~~on previously unencumbered~~secured by seven of our eight properties ~~resulting in a total of six mortgage loans~~ with an aggregate balance of $405.0 million as of March 31, ~~2020. Based on debt outstanding as~~2021 with a weighted-average effective interest rate of ~~March 31, 2020, we do not have future anticipated principal payments due on our mortgage notes payable for the remainder of 2020 or the year ended December 31, 2021.~~4.35%. We do not currently ~~anticipate incurring additional~~have a commitment for a corporate-level revolving credit facility or any other corporate-level indebtedness, ~~secured by our existing properties, however, despite~~and there ~~have been been a tightening of the credit markets,~~can be no assurance we ~~expect to~~would be able to ~~continue to use debt~~obtain corporate-level financing ~~as a source of capital.~~on favorable terms, or at all. Our only asset that is not serving as collateral for a mortgage is 421 W. 54th Street - Hit Factory, which is unoccupied and therefore unlikely to be accepted as collateral for a new mortgage loan. See “-Acquisitions and Dispositions” section below for further detail on this property. We do not currently anticipate incurring additional indebtedness secured by our existing properties, however, despite a tightening of the credit markets, we expect to be able to continue to use debt financing as a source of capital to the extent we acquire additional properties.

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We do not have principal payments due on our mortgage notes payable for the year ending December 31, 2021.

We have been in breach of a debt service coverage provision and a reserve fund reserve provision under the non-recourse mortgage loan with $99.0 million principal amount outstanding as of March 31, 2021 secured by the 1140 Avenue of the Americas property for the last three quarters. These breaches are not events of default, rather they require excess cash (after payment of operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured after achieving two consecutive quarters when the required debt service coverage for the property is maintained, whereupon the additional collateral will be released. As of March 31, 2021 we have $4.1 million cash trapped and maintained in restricted cash associated with these events, all of which relate to the non-recourse mortgage loan secured by the 1140 Avenue of the Americas property. Currently, we have not cured the breaches through these or any other means. We do not expect similar amounts to be trapped in future periods in the short-term as we expect there will be little to no excess cash flow at the three properties after paying property expenses, interest and capital expenditures. This restricted cash is not available to be used for other corporate purposes. We can remain subject to this reserve requirement through maturity of the loan without causing an event of default under loan that could give rise to the lenders’ right to accelerate the principal amount due under the loan or further penalty or ramifications.

We have also been in breach of debt service coverage and debt yield covenants under the non-recourse mortgage loan with $55.0 million principal amount outstanding as of March 31, 2021 secured by the 9 Times Square property for the last two quarters. These breaches were caused by the January 2021 bankruptcy of one of our tenants, Knotel, a co-working company that was previously the second largest tenant in our portfolio based on annualized straight-line rent as of September 30, 2020. These breaches are not events of default, but rather require us to enter into acash management period whereby all rents and other revenue of the property are to be held in a segregated account as additional collateral under the loan. The covenants may be cured after achieving two consecutive quarters when the required debt service coverage and debt yield for the property is maintained. We may remain in breach of the covenants for up to four consecutive quarters, after which an event of default could occur that could give the lenders the right to accelerate the principal amount due under the loan and other remedies.

We also breached a debt service coverage covenant under our non-recourse mortgage secured by 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage in the first quarter of 2021. This breach is not an event of default but rather requires us to enter into a cash management period whereby all rents and other revenue of the property are to be held in a segregated account as additional collateral under the loan. The covenant may be cured after achieving two consecutive quarters when the required debt service coverage for the property is maintained. We can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications.

We are currently in compliance with the debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue. However, in the event of a breach of this covenant, such breach would not result in an event of default but rather would trigger an excess cash flow sweep period. If this were to occur, we have the ability to avoid such an excess cash flow sweep period by electing to fund a reserve in the amount of $125,000 of additional collateral in cash or as a letter of credit. We have the ability to continue to avoid the excess cash flow sweep period by funding an additional $125,000 each quarter until the debt service coverage ratio covenant breach is cured in accordance with the terms of the loan agreement, whereupon, provided no other excess cash flow sweep trigger exists at such time, the full amount of the reserve will be returned to us. If we do not elect to continue to fund the $125,000 additional collateral in a subsequent quarter, then the excess flow sweep period would commence in such quarter and continue until the debt service coverage ratio covenant breach is cured in accordance with the terms of the loan agreement.

While we have entered into short-term leases with two of Knotel’s former tenants at 123 William Street that collectively represent over 23,400 square feet and we are working to find new tenants to replace Knotel and to increase the rental income at our 1140 Avenue of the Americas and 9 Times Square properties through leasing activity, there can be no assurance we will be able to lease all or any portion of our currently vacant space at any property on acceptable or favorable terms, or at all. Unless we are able to enter into new leases at both the properties on terms that allow us to cure the breach, we will be unable to access excess cash flow from either property. If we experience additional lease terminations, due to tenant bankruptcies or otherwise, it is possible that certain of the covenants on other loans may be breached and we may also become restricted from accessing excess cash flows from those properties. We were in compliance with the remaining covenants under our mortgage notes payable as of March 31, 2021.

Common Stock ATM Program

On October 1, 2020, we entered into an Equity Distribution Agreement, pursuant to which we may, from time to time, offer, issue and sell to the public, through our sales agents, shares of Class A common stock, having an aggregate offering price of up to $250.0 million in an “at the market” equity offering program (the “Common Stock ATM Program”). We have not yet sold any shares of Class A common stock through the Common Stock ATM Program.

Repurchase Program

Our board of directors adopted a resolution authorizing consideration of share repurchases of up to $100.0 million of shares of Class A common stock over a long-term period following the listing of our Class A common stock on the NYSE. Actual repurchases would be reviewed and approved by our board of directors based on management recommendations taking into

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consideration all information available at the specific time including our available cash resources (including the ability to borrow), market capitalization, trading price and alternative uses such as acquisitions. Repurchases would typically be made on the open market in accordance with SEC rules creating a safe harbor for issuer repurchases but may also occur in privately negotiated transactions. As of March 31, 2021, no shares had been repurchased by the Company under this program. As of March 31, 2021, we also had cash and cash equivalents of approximately $29.4 million. We are also subject to a covenant under one of our mortgage loans requiring us to maintain minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million.

Tender Offer

On December 28, 2020, in response to an unsolicited offer to our stockholders, we commenced a tender offer to purchase up to 65,000 shares of Class B common stock for cash at a purchase price equal to $7.00 per share. The offer expired on January 27, 2021, and we purchased 26,236 shares of Class B common stock for a total cost of approximately $0.2 million, including fees and expenses relating to the tender offer, with cash on hand in February 2021. These shares were subsequently cancelled after being purchased.

Leasing Activity/Occupancy

We had an occupancy level of 82.8% across our portfolio as of March 31, 2021, as compared to 87.0% as of December 31, 2020. The significant occupancy changes were as follows:

•Occupancy at 9 Times Square declined to 57.7% as of March 31, 2021, compared to 78.7% as of December 31, 2020. The decrease was due to the termination of our leases with Knotel, which represented over 32,000 occupied square feet at this property as of December 31, 2020, with no new leases signed during the three months ended March 31, 2021.

•Occupancy at 123 William Street declined to 87.0% as of March 31, 2021, compared to 90.3% as of December 31, 2020. The decrease was due to the termination of our leases with Knotel, which represented over 36,000 occupied square feet at this property as of December 31, 2020, and the expiration of another lease, which was partially offset by the commencement of three new leases (two of them replacing part of the space formerly occupied by Knotel), causing a net decrease of approximately 18,000 occupied square feet compared to December 31, 2020.

As of December 31, 2020, occupancy included the leased space occupied by one of our former tenants, Knotel (6.2%), which was a tenant at both our 9 Times Square and 123 William Street properties. In January 2021, Knotel filed for bankruptcy and all leases were terminated effective January 31, 2021. If Knotel was not included in the occupancy calculation as of December 31, 2020, occupancy across our portfolio would have been 80.8%. In addition, during the year ended December 31, 2020, we put certain tenants on a cash basis and fully reserved certain receivables and reflected this as a reduction in revenue from tenants during the period. For additional information on our accounting policy related to revenue recognition, see Note 2 — Summary of Significant Accounting Polices to our consolidated financial statements included in this Quarterly Report on Form 10-Q. Also, for a discussion of overall impact on our result of operations for this and other reserves and write-offs for tenant receivables recorded in 2021 and for additional information on leasing activity during the three months ended March 31, 2021, see Results of Operations section.

We continue to focus on increasing occupancy of the portfolio by seeking replacement tenants for leases that had expired or otherwise have been terminated. We believe that certain market tenant incentives we have used and expect to continue to use, including free rent periods and tenant improvements, will support our occupancy rate and extend the average duration of our leases upon commencement of executed leases. While we do not receive cash during initial free rent periods, which has impacted and may continue to impact the net cash provided by our property operations in recent periods adversely, we believe this helps position us to negotiate longer, more attractive lease terms by having the flexibility to include such a feature.

Acquisitions and Dispositions

We had no acquisitions or dispositions during the three months ended March 31, 2021.

We also continue to evaluate our strategic alternatives for our 421 W. 54th Street - Hit Factory property, where the sole tenant terminated its lease early and vacated the space during the second quarter of 2018. During ~~the three months ended March 31,~~ 2020 we entered into a purchase and sale agreement to dispose of this property for a contract price of $7.1 million. ~~Subsequent to March 31,~~During the three months ended June 30, 2020, the buyer terminated the transaction and we retained the security deposit of $0.7 million. There can be no assurance we will be able to find a replacement buyer or a new tenant or as to how much, if any, liquidity we will be able to generate from this property.

~~We planned to increase our indebtedness over time such~~ Moreover, because the property is unoccupied, it does not generate any revenues that aggregate borrowings are closer to 40% to 50% of the aggregate fair market value of our assets, or approximately $363.1 and $453.9 million, respectively, based on the fair market value of our real estate assets established in connection with the approval by our independent board of directors of our Estimated Per-Share NAV as of June 30, 2019 (published on October 25, 2019). As of March 31, 2020, our gross aggregate borrowings were $405.0 million with a weighted-average effective interest rate of 4.35%.

~~We do not currently anticipate incurring additional indebtedness secured by our existing properties. At the date of acquisition of any asset, we anticipate that~~offset the cost of ~~investment for~~owning and maintaining the asset will be substantially similar to its fair market value. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding our target leverage levels.

~~Leasing Activity~~

We had an occupancy level of 89.0% across our portfolio as of March 31, 2020, as compared to 89.6% as of December 31, 2019. Specifically, the occupancy level at 9 Times Square declined from 90.1% as of December 31, 2019 to 85.8% as of March 31,

property.

~~2020, due to the expiration of a certain lease during the three months ended March 31, 2020. See —Results of Operations~~ ~~for additional information on leasing activity during the three months ended March 31, 2020.~~

We continue to focus on increasing occupancy of the portfolio by seeking replacement tenants for leases that had expired or otherwise have been terminated. In furtherance of this goal, we are currently negotiating non-binding letters of intent (“LOIs”) with certain potential tenants at our 9 Times Square and 1140 Avenue of the Americas properties. There can be no assurance these LOIs or negotiations will result in executed leases or that these executed leases will result in increased occupancy across our portfolio or at any particular property. We believe that certain market tenant incentives we have used and expect to continue to use, including free rent periods and tenant improvements, will drive occupancy rates higher and have extended the average duration of our leases upon commencement of executed leases. While we do not receive cash during initial free rent periods, we believe this helps position us to negotiate longer, more attractive lease terms by having the flexibility to include such a feature.

Capital Expenditures

For the three months ended March 31, ~~2020,~~2021, we funded ~~$1.0 million~~$43,000 of capital expenditures primarily related to tenant and building improvements at 123 William Street ~~9 Times Square,~~ and 1140 Avenue of the Americas. The capital expenditures for the three months ended March 31, ~~2019~~2020 of ~~$0.7~~$1.0 million were primarily related to ~~tenant~~ improvements at 9 Times Square and 123 William Street. ~~For the year ended December 31, 2019, we funded $7.7 million~~We

Table of ~~capital expenditures primarily related to tenant improvements at our 123 William Street, 9 Times Square and 1140 Avenue of the Americas properties. We~~ Contents

may invest in additional capital expenditures to further enhance the value of our ~~investments.~~properties. Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances. ~~We expect the~~The amount we invest in capital expenditures during ~~2020,~~the full year 2021, including amounts we are, or expect to be, contractually obligated to fund under new or replacement leases, will likely be less than $3.8 million, the amount invested in ~~2019 but not materially higher than that amount.~~2020. We funded our capital expenditures during the three months ended March 31, 2021 from cash on hand consisting of proceeds from financings and sales of real estate investments in prior periods, and expect to fund any future capital expenditures with available cash on hand and potential future financings. The recent economic uncertainty created by the COVID-19 global pandemic has impacted and could continue to impact our decisions on the amount and timing of future capital expenditures.

Non-GAAP Financial Measures

This section discusses the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), ~~Modified~~Core Funds from Operations (“~~MFFO”~~Core FFO”) 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~~Core Funds from Operations

~~The historical accounting convention used for~~Funds from Operations

Due to certain unique operating characteristics of 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,~~companies, as discussed below, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has ~~published~~promulgated a ~~standardized~~performance measure ~~of performance~~ known as FFO, which ~~is used in the REIT industry as a supplemental performance measure. We~~we believe ~~FFO, which excludes certain items such as real estate-related depreciation and amortization, is~~to be an appropriate supplemental measure to reflect the operating performance of a ~~REIT’s operating performance.~~REIT. FFO is not equivalent to ~~our~~ net income or loss as determined under GAAP.

We ~~define~~calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from ~~the sale~~sales of certain real estate assets, ~~gains~~gain and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated partially-owned entities (including our OP) and equity in earnings of unconsolidated ~~partnerships and joint ventures~~affiliates are ~~calculated~~made to ~~reflect FFO.~~arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and 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 inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, 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~~Core Funds from Operations

Beginning in the ~~accounting and reporting promulgations under GAAP~~third quarter 2020, following the listing of our Class A common stock on the NYSE, we began presenting Core FFO as a non-GAAP metric. We have presented prior periods on a comparable basis so that ~~were put into effect in 2009 subsequent~~the metric is useful 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 Institute for Portfolio Alternatives (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 allusers of our ~~offering proceeds and are no longer incurring a significant amount~~financial statements. Our presentation of acquisition 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, whichCore FFO may not be ~~immediately apparent from net income. MFFO~~comparable to Core FFO reported by other REITs that define Core FFO differently. In calculating Core FFO, we start with FFO, then we exclude the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which 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 forcore business platform. Specific examples of discrete non-operating items include acquisition and transaction related ~~fees~~costs for dead deals, debt extinguishment costs, listing related costs and expenses (including the vesting and ~~other items. In calculating MFFO, we follow~~conversion of partnership units in the ~~Practice Guideline~~OP designated as “Class B Units” and ~~exclude acquisition~~cash expenses and ~~transaction-related~~ fees which are non-recurring in nature incurred in connection with the listing of our Class A common stock on the NYSE and ~~expenses, amounts relating to~~related transactions), and non-cash equity-based compensation. We add back non-cash write-offs of deferred ~~rent receivables~~financing costs and ~~amortization~~prepayment penalties incurred with the early extinguishment of ~~above- and below-market leases and liabilities (which~~debt which are adjusted in order to reflect the 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~~but are considered financing cash flows when paid in ~~net income from~~ the ~~extinguishment or sale~~statement of debt, hedges, foreign exchange, derivatives or securities holdings where trading of the holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting,cash flows. We consider these write-offs and ~~after adjustments for consolidated and unconsolidated partnerships and joint ventures, with the adjustments calculated to reflect MFFO on the same basis.~~

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 continueprepayment penalties to be ~~maintained) of our operating performance after the period in which we are acquiring properties~~capital transactions 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~~operations. By excluding expensed acquisition and ~~should not be considered~~transaction dead deal costs as ~~an alternative to net income (loss) or income (loss) from continuing operations~~well as ~~determined under GAAP as an indication~~non-operating costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our ~~performance, as an alternative to cash flows~~properties. In future periods, we may also exclude other items from ~~operations, as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to pay distributions to our stockholders.~~Core 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.

~~None 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~~believe 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 adjusthelp investors compare our ~~calculation and characterization~~results.

Table of ~~FFO or MFFO accordingly.~~Contents

Accounting Treatment of Rent Deferrals

~~We currently anticipate that the~~The majority of the concessions granted to ~~its~~our tenants as a result of the COVID-19 pandemic ~~will be~~are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of

Financial Condition and Results of Operations for additional ~~information on April rent deferrals)~~information). As a result of relief granted by the FASB and the SEC related to lease modification accounting, ~~we do not expect~~ rental revenue used to calculate Net Income, ~~and~~ NAREIT FFO and Core FFO have not been, and we do not expect it to be, significantly impacted by ~~deferrals. In addition, since we currently believe that~~ these ~~amounts are collectible, we would not plan to adjust from MFFO the amounts recognized under GAAP relating to rent~~types of deferrals. For a detailed discussion of our revenue recognition policy, including details related to the relief granted by the FASB and SEC, see Note 2 -— Significant Accounting Polices to our consolidated financial statements ~~included~~ in ~~the~~this Quarterly Report on Form 10-Q.

The table below reflects the items deducted or added to net loss in our calculation of FFO and ~~MFFO~~Core FFO for the periods presented.


	Three Months Ended March 31,
(In thousands)	2021		2020
Net loss attributable to common stockholders (in accordance with GAAP)	$	(13,535)	$	(6,788)
Depreciation and amortization	8,526		7,519

FFO (deficit) (As defined by NAREIT) attributable to common stockholders	(5,009)		731



Equity-based compensation	2,115		23

Core FFO (deficit) attributable to common stockholders	$	(2,894)	$	754

Three Months Ended March 31,
(In thousands) 2020 2019
Net loss (in accordance with GAAP) $ (6,788 ) $ (4,584 )
Depreciation and amortization 7,519
7,414
FFO (As defined by NAREIT) 731
2,830
Acquisition and transaction related —
—
Accretion of below- and amortization of above-market lease liabilities and assets, net (362 ) (467 )
Straight-line rent (revenues as lessor) (691 ) (1,411 )
Straight-line ground rent (expenses as lessee) 27
27
MFFO $ (295 ) $ 979

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.

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.

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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 March 31,
(In thousands)	2021		2020
Net loss (in accordance with GAAP)	$	(13,535)	$	(6,788)
Other income	8		(119)
General and administrative	2,732		1,996
Asset and property management fees to related parties	1,907		1,998



Equity-based compensation	2,115		23
Depreciation and amortization	8,526		7,519
Interest expense	4,713		4,832
Accretion of below- and amortization of above-market lease liabilities and assets, net	(215)		(362)
Straight-line rent (revenue as a lessor)	(640)		(691)
Straight-line ground rent (expense as lessee)	28		27
Cash NOI	$	5,639	$	8,435

Three Months Ended March 31,
(In thousands) 2020 2019
Net loss (in accordance with GAAP) $ (6,788 ) $ (4,584 )
Other income (119 ) (154 )
General and administrative 2,019
1,931

Asset and property management fees to related parties 1,998
1,548

Acquisition and transaction related —
—

Depreciation and amortization 7,519
7,414

Interest expense 4,832
3,560

Accretion of below- and amortization of above-market lease liabilities and assets, net (362 ) (467 )
Straight-line rent (revenue as a lessor) (691 ) (1,411 )
Straight-line ground rent (expense as lessee) 27
27

Cash NOI $ 8,435
$ 7,864

~~Distributions~~Dividends

We are required to 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. In May 2014, our board of directors authorized, and we began paying, a monthly distribution equivalent to $1.5125 per annum, per share of common stock payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. On February 27, 2018, our board of directors unanimously authorized a suspension of the distributions we pay to holders of our common stock, effective as of March 1, 2018. A tax loss for a particular year eliminates the need to distribute REIT taxable income to meet the 90% distribution requirement for that year and may minimize or eliminate the need to pay distributions in order to meet the distribution requirement in one or more subsequent years. We had a loss for tax purposes in ~~2019~~2020 and therefore there was no REIT taxable income requiring distribution to maintain our qualification as a REIT in ~~2019.~~2020.

~~We did not~~On October 1, 2020, we declared a dividend equal to $0.04889 per share on each share of common stock, which was paid on October 15, 2020. The dividend covered the period from August 18, 2020, the date on which shares of Class A common stock commenced trading on the NYSE, through September 30, 2020, based on the previously-announced cash dividend rate equal to $0.40 per share per year. In January and April of 2021 we also declared and paid a dividend equal to $0.10 per share on each share of common stock.

Decisions regarding the frequency and amount of any future dividends we pay ~~distributions during~~on our common stock will remain at all times entirely at the ~~year ended December 31, 2019 or the quarter ended March 31, 2020. Our~~discretion of our board of directors, ~~will continue~~which reserves the right to ~~evaluate~~change our ~~performance~~dividend policy at any time and ~~assess~~for any reason. Our ability to pay dividends in the future depends on our ~~distribution policy; however, there can be no assurance as~~ability to ~~when, or if,~~operate profitably and to generate sufficient cash flows from the operations of our existing properties and any properties we may acquire. We cannot guarantee that we will be able to ~~resume paying distributions~~pay dividends on a regular basis on our common stock or ~~the level at which~~any other class or series of stock we may issue in the future. Our board of directors previously suspended and then reinstituted dividends. There is no assurance we will continue to pay ~~them. Our~~dividends at the current rate, or at all. The amount of dividends payable to our stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, provisions in our loans and any agreement we are party to that may restrict our ability to pay ~~distributions in the future will depend on the amount~~dividends or repurchase shares, capital expenditure requirements, as applicable, requirements of ~~cash we are able~~Maryland law and annual distribution requirements needed to ~~generate from~~maintain our ~~operations. The amount of cash available for distributions is affected by many factors, such~~status as ~~capital availability, rental income for acquired properties and our operating expense levels.~~a REIT. Our net cash provided by operating activities was approximately ~~$4.4~~$2.1 million for the three months ended March 31, ~~2020. There is no assurance that rents~~2021. During this period, we paid dividends of $1.3 million. These dividend payments were funded from ~~the properties we own will increase, or that future acquisitions will increase our~~ cash ~~available for distributions to the level necessary for us to resume paying distributions to our stockholders.~~flows from operations.

~~Share Repurchase Program~~

~~Although our board~~

Table of directors adopted the SRP to provide stockholders with interim liquidity by enabling them, subject to significant conditions and limitations, to sell their shares back to us after having held them for at least one year, the SRP has been suspended, and there can be no assurance as to when or if it will be reactivated, and on what terms. Under the SRP, which first became effective as of December 31, 2015, shares were repurchased on a semi-annual basis.Contents

The following table ~~reflects~~shows the ~~number~~sources for the payment of ~~shares repurchased cumulatively through March 31, 2020:~~dividends to holders of common stock and distributions to holders of LTIP Units for the periods indicated:


	Three Months Ended
	March 31, 2021
(In thousands)			Percentage of Dividends
Dividends and Distributions:
Dividends to holders of common stock	$	1,280
Distributions to holders of LTIP Units	40
Total dividends and distributions	$	1,320

Source of dividend coverage:
Cash flows provided by operations	$	1,320	100	%
Available cash on hand	—		—	%
Total sources of dividend and distribution coverage	$	1,320	100	%

Cash flows provided by (used in) operations (GAAP basis)	$	2,145

Net loss attributable to common stockholders (in accordance with GAAP)	$	(13,535)

Contractual Obligations

There were no material changes in our contractual obligations as of March 31, ~~2020,~~2021, as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Election as a REIT

We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), effective for our taxable year ended December 31, 2014. We believe that, commencing with such taxable year, we have been organized and have 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 can provide no assurances that we will operate in a manner so as to remain qualified ~~for taxation~~ as a REIT. To continue to qualify as a REIT, we must 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 as a REIT, we generally will not be subject to U.S. federal corporate income tax on ~~that~~the portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify as a REIT, we may be subject to certain state and local taxes on our income and properties as well as U.S. federal income and excise taxes on our undistributed income. A tax loss for a particular year eliminates the need to distribute REIT taxable income to meet the 90% distribution requirement for that year and may minimize or eliminate the need to pay distributions in order to meet the distribution requirement in one or more subsequent years. We had a loss for tax purposes in ~~2019~~2020 and therefore there was no REIT taxable income requiring distribution to maintain our qualification as a ~~REIT.~~REIT in 2020.

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 ~~unaudited~~ consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

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.

There has been no material change in our exposure to market risk during the three months ended March 31, ~~2020.~~2021. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

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 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 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 March 31, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

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.

There have been no material changes to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020 and we direct your attention to those risk factors.

We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, which has caused severe disruptions in the New York City, U.S. and global economy and financial markets and has already had adverse effects and may worsen.

The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across many sectors and areas of the global economy and financial markets, leading to significant adverse impacts on economic activity as well as significant volatility and negative pressure in financial markets.

The impact of the COVID-19 pandemic has been rapidly evolving. In New York City, where our tenants operate their businesses and where our properties are located, preventative measures have been taken to alleviate the public health crisis, including “shelter-in-place” or “stay-at-home” orders issued by local and state authorities that have resulted in many “non-essential” businesses being required to close. A number of our tenants operate businesses that require in-person interactions. Even if not prevented by “shelter-in-place” or “stay-at-home” orders, concern regarding the transmission of COVID-19 has impacted, and will likely continue to impact, the willingness of persons to engage in in-person commerce which will likely further impact the revenues generated by our tenants which may further impact the ability of our tenants to pay their rent obligations to us when due. Furthermore, certain categories of tenants, such as retail and certain types of office tenants, such as those that utilize share spaces and co-working, are particularly hard hit by COVID-19 and the resulting economic disruption. Our office tenants may also make adaptions in response to these orders and future limitations on in-person work environments could lead to a sustained shift away from in-person work environments and have an adverse effect on the overall demand for office space across our portfolio. This could make it difficult for us to renew or re-lease our properties at rental rates equal to or above historical rates. We could also incur more significant re-leasing costs, and the re-leasing process with respect to both anticipated and unanticipated vacancies could take longer.

The COVID-19 pandemic has triggered a decrease in global economic activity that may result in a global recession. A sustained downturn in the U.S. economy due to the prolonged existence and threat of the COVID-19 pandemic could cause an economic recession all of which could impact the ability of our tenants to pay their rent when due. Our ability to lease space and negotiate and maintain favorable rents could also be negatively impacted by a prolonged recession in the economy. Moreover, a significant downturn in the New York City economy and resulting job losses could substantially reduce the demand for leasing space in our properties which could result in a decline in our occupancy percentage and reduction in rental revenues.

In addition, the COVID-19 pandemic has also led to complete or partial shutdowns of manufacturing facilities and distribution centers in many countries, which could result in temporary or long-term disruptions in supply chains which may also impact the operations at each of our tenants further impacting their revenues and ability to pay rent when due.

Our tenants may also be negatively impacted if the outbreak of COVID-19 occurs within their workforce or otherwise disrupts their management. Further, certain of our tenants may not be eligible for or may not be successful in securing stimulus funds under the Coronavirus Aid, Relief, and Economic Security Act of 2020.

As a result of these and other factors, tenants that experience deteriorating financial conditions as a result of the outbreak of COVID-19 may be unwilling or unable to pay rent in full or on a timely basis due to bankruptcy, lack of liquidity, lack of funding, operational failures, or for other reasons. Our portfolio is primarily comprised of office, retail, bank, and restaurant industry tenants with 73% and 15% of April cash rent due from office and retail tenants, respectively. During the month of April 2020, we have collected 77% of April’s cash rent due from our office tenants, 39% of April’s cash rent due from our retail tenants and 73% of April’s cash rent due across our entire portfolio, including 76% of April’s cash rent due from our top 20 tenants (based on the total of April’s cash rent due from our top 20 tenants). We also entered into rent deferral agreements representing approximately 9% of the April cash rent that would have been due in April 2020 permitting these tenants to defer paying approximately 30% of the cash rent due for April, May and June of 2020 until the first half of 2021. The impact of the COVID-19 pandemic on the amount of cash rent that we collect going forward cannot be determined at present and the April 2020 results may not be indicative of any future period. In addition, there is no assurance that we will be able to collect the cash rent that is due in future months including the deferred 2020 rent amounts due during 2021 under the deferral agreements.

The impact of the COVID-19 pandemic on our tenants and thus our ability to collect rents in future periods cannot be determined at present. We may face defaults and additional requests for rent deferrals or abatements or other allowances. Furthermore, if we declare any tenants in default for non-payment of rent or other potential breaches of their leases with us, we might not be able to

fully recover and may experience delays and additional costs in enforcing our rights as landlord to recover amounts due to us. Our ability to recover amounts under the terms of our leases may also be restricted or delayed due to moratoriums imposed by relevant jurisdictions in light of the COVID-19 pandemic on landlord-initiated commercial eviction and collection actions. If any of our tenants, or any guarantor of a tenant’s lease obligations files for bankruptcy, we could be further adversely affected due to loss of revenue but also because the bankruptcy may also make it more difficult for us to lease the remainder of the property or properties in which the bankrupt tenant operates.

Because substantially all of our income is derived from rentals of commercial real property, our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations and to fund our ongoing other capital requirements would be adversely affected if a significant number of tenants are unable to meet their obligations to us.

In addition to the impacts on us related to the impacts on our tenants described above, the COVID-19 pandemic has also impacted us in other ways and could have a significant adverse effect on our business, financial condition and results of operations due to, among other factors:

difficulty accessing debt and equity capital on favorable terms, or at all, due to the severe disruption and instability in the global financial markets or deteriorations in our ongoing capital requirements and financing conditions may affect our access to capital, or increase the cost of capital, necessary to fund our capital requirements, such as refinancing maturing liabilities on a timely basis, or at all, and may have similar effects on our tenants and their ability to fund their business operations and meet their obligations to us;

disruption and instability in the global financial markets or deteriorations in credit and financing conditions could have an impact on the overall amount of capital being invested in real estate and could result in price or value decreases for real estate assets, which could negatively impact the value of our assets and may result in future acquisitions generating lower overall economic returns;

~~we may not be able to acquire properties in the future;~~

if we are unable to comply with financial covenants and other obligations under of our loans, we could default under those agreements which could potentially result in an acceleration of our indebtedness or foreclosure on our properties and could otherwise negatively impact our liquidity;

~~we may recognize impairment charges on our assets;~~

one or more counterparties to our derivative financial instruments could default on their obligations to us or could fail, increasing the risk that we may not realize the benefits of utilizing these instruments;

~~with respect to our leases, we may be required to record reserves on previously accrued amounts in cases where it is subsequently concluded that collection is not probable;~~

as operating restrictions on our tenants expire, operating costs may begin to rise, including for services, labor and personal protective equipment and other supplies, as our property managers take appropriate actions to protect tenants and property management personnel and not all of these costs will be recoverable through reimbursement from tenants;

~~difficulties completing capital improvements at our properties on a timely basis, on budget or at all, could affect the value of our properties;~~

~~our ability to ensure business continuity in the event our Advisor’s continuity of operations plan is not effective or is improperly implemented or deployed during a disruption; and~~

increased operating risks resulting from changes to our Advisor’s operations and remote work arrangements, including the potential effects on our financial reporting systems and internal controls and procedures, cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events.

The extent to which the COVID-19 pandemic, or a future pandemic, impacts our operations and those of our tenants will depend on future developments, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others, which are highly uncertain and cannot be predicted with confidence but could be material. The situation is rapidly changing and additional impacts to the business may arise that we are not aware of currently. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic, but a prolonged outbreak as well as related mitigation efforts could continue to have a material impact on our revenues and could materially and adversely affect our business, results of operations and financial condition. Moreover, many risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 should be interpreted as heightened risks as a result of the impact of the COVID-19 pandemic.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities.

Recent Sales of Unregistered Securities

~~None.~~We did not complete any sales of unregistered equity securities during the three months ended March 31, 2021 that were not disclosed in a Current Report on Form 8-K.

Use of Proceeds from Sales of Registered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

~~None.~~The first of three equal tranches of shares of Class B common stock that were not listed on the NYSE on August 18, 2020 converted into 3,189,204 shares of Class A common stock and the shares were listed on the NYSE on December 16, 2020. In connection with the conversion of the first tranche of shares of Class B common stock to shares of Class A common stock, we repurchased approximately seven fractional shares of Class B common stock at a price of $10.34 per share. Following a determination by our board of directors, the second tranche of shares of Class B common stock converted into 3,174,760 shares of Class A common stock and were listed on the NYSE on March 1, 2021. In connection with the conversion of the second tranche of shares of Class B common stock to shares of Class A common stock, we repurchased approximately six fractional shares of Class B common stock at a price of $9.80 per share. The remaining tranche of shares of Class B common stock will convert into shares of Class A common stock to be listed on the NYSE on August 13, 2021, unless earlier converted. For additional information, see Note 7 – Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

On December 28, 2020, in response to an unsolicited offer to our stockholders, we commenced a tender offer to purchase up to 65,000 shares of Class B common stock for cash at a purchase price equal to $7.00 per share. The offer expired on January 27, 2021, and we purchased 26,236 shares of Class B common stock at the offer price for a total cost of approximately $183,000, not including expenses.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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.


			NEW YORK CITY REIT, INC.

			~~NEW YORK CITY REIT, INC.~~
By:
	~~By:~~	/s/ Edward M. Weil, Jr.
				Edward M. Weil, Jr.
				Executive Chairman, Chief Executive Officer, President and Secretary (Principal Executive Officer)

			By:	/s/ Christopher J. Masterson
				Christopher J. Masterson
				Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

Dated: May 13, ~~2020~~

2021

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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 three months ended March 31, ~~2020~~2021 (and are numbered in accordance with Item 601 of Regulation S-K).



Exhibit No.						Description
3.1 ⁽¹⁾						Articles of Amendment and Restatement ~~for American Realty Capital~~
3.2 (2)						Articles of Amendment relating to corporate name change
3.3 (1)						Amended and Restated Bylaws of New York City REIT, Inc.
3.4~~3.2~~⁽²⁾(3)						Amendment to Amended and Restated Bylaws of New York City REIT, Inc.
3.5(4)						Articles of Amendment ~~for American Realty Capital~~relating to reverse stock split
3.6(4)						Articles of Amendment relating to par value decrease and common stock name change
3.7(4)						Articles Supplementary classifying and designating Class B common stock
3.8(5)						Articles Supplementary classifying and designating Series A Preferred Stock
4.1(5)						Amended and Restated Agreement of Limited Partnership of New York City Operating Partnership, L.P., dated as of August 18, 2020
4.2(5)						Amended and Restated Distribution Reinvestment Plan of New York City REIT, Inc.
4.3(5)						Amended and Restated Rights Agreement, dated as of August 17, 2020, between New York City REIT, Inc. and Computershare Trust Company, N.A., as Rights Agent
10.1(5)						Listing Note Agreement, dated as of August 18, 2020, between New York City Operating Partnership, L.P. and New York City Special Limited Partnership, LLC
10.2(5)						First Amendment, dated as of August 18, 2020, to Second Amended and Restated Advisory Agreement among New York City REIT, Inc., ~~dated March 13, 2019.~~New York City Operating Partnership, L.P. and New York City Advisors, LLC
10.3~~3.3~~⁽¹⁾(5)						~~Amended and Restated Bylaws~~Advisor Multi-Year Outperformance Award Agreement, dated as of ~~American Realty Capital~~August 18, 2020, among New York City REIT, Inc., New York City Operating Partnership, L.P. and New York City Advisors, LLC
10.4~~31.1~~(5)						2020 Advisor Omnibus Incentive Compensation Plan of New York City REIT, Inc.
10.5(5)						2020 Omnibus Incentive Compensation Plan of New York City REIT, Inc.
10.6(6)						Equity Distribution Agreement, dated October 1, 2020, among New York City REIT, Inc., New York City Operating Partnership, L.P., Truist Securities, Inc. and B. Riley Securities, Inc.
10.7 *						Form of Restricted Share Award Agreement
14.1(5)						Amended and Restated Code of Business Conduct and Ethics of New York City REIT, Inc.
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.
99.1(7)						Certificate of Notice of New York City REIT, Inc. filed with the State Department of Assessments and Taxation of Maryland on February 26, 2021
101.INS *						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *						Inline XBRL Taxonomy Extension Schema Document.
101.CAL *						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 *						Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

_______

* Filed herewith

(1) Filed as an exhibit to ~~the Company’s~~our Quarterly Report on Form 10-Q filed with the SEC on August 14, 2018.

(2) Filed as an exhibit to ~~the Company’s~~our Annual Report on Form 10-K filed with the SEC on March 15, 2019.

(3) Filed as an exhibit to our Form 8-K filed with the SEC on May 19, 2020.

(4) Filed as an exhibit to our Form 8-K filed with the SEC on August 5, 2020.

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EXHIBITS INDEX

(5) Filed as an exhibit to our Form 8-K filed with the SEC on August 18, 2020.

(6) Filed as an exhibit to our Form 8-K filed with the SEC on October 1, 2020.

(7) Filed as an exhibit to our Form 8-K filed with the SEC on February 26, 2021.



	March 31, 2020			December 31, 2019
ASSETS	(Unaudited)
Real estate investments, at cost:
Land	$	193,658		$	193,658
Buildings and improvements	567,210			565,829
Acquired intangible assets	102,365			103,121
Total real estate investments, at cost	863,233			862,608
Less accumulated depreciation and amortization	(121,031		)	(114,322		)
Total real estate investments, net	742,202			748,286
Cash and cash equivalents	53,240			51,199
Restricted cash	8,490			7,098
Operating lease right-of-use asset	55,529			55,579
Prepaid expenses and other assets (including amounts due from related parties of $0 and $0 at March 31, 2020 and December 31, 2019, respectively)	6,353			8,602
Straight-line rent receivable	22,341			21,649
Deferred leasing costs, net	9,024			8,943
Total assets	$	897,179		$	901,356

LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net	$	395,417		$	395,031
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $339 and $222 at March 31, 2020 and December 31, 2019, respectively)	8,531			7,033
Operating lease liability	54,855			54,866
Below-market lease liabilities, net	17,641			18,300
Derivative liability, at fair value	3,918			1,327
Deferred revenue	5,624			4,250
Total liabilities	485,986			480,807

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at March 31, 2020 and December 31, 2019	—			—
Common stock, $0.01 par value, 300,000,000 shares authorized, 30,994,891 shares issued and outstanding as of March 31, 2020 and December 31, 2019	310			310
Additional paid-in capital	685,867			685,844
Accumulated other comprehensive loss	(3,918		)	(1,327		)
Distributions in excess of accumulated earnings	(271,066		)	(264,278		)
Total stockholders’ equity	411,193			420,549
Total liabilities and equity	$	897,179		$	901,356



(In thousands)	Future Base Rent Payments
2020 (remainder)	$	45,655
2021	58,496
2022	54,704
2023	46,662
2024	42,191
Thereafter	198,434
Total	$	446,142



		March 31, 2020				December 31, 2019
(In thousands)	Level	Gross Principal Balance		Fair Value		Gross Principal Balance		Fair Value
Mortgage note payable — 123 William Street	3	$	140,000	$	150,224	$	140,000	$	151,428
Mortgage note payable — 1140 Avenue of the Americas	3	$	99,000	$	102,740	$	99,000	$	103,340
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage	3	$	50,000	$	53,406	$	50,000	$	53,951
Mortgage note payable — 8713 Fifth Avenue	3	$	10,000	$	11,044	$	10,000	$	11,175
Mortgage note payable — 9 Times Square	3	$	55,000	$	52,058	$	55,000	$	54,759
Mortgage note payable — 196 Orchard Street	3	$	51,000	$	51,748	$	51,000	$	52,369



	Numbers of Shares Repurchased	Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2019	1,259,734	$	22.03
Three months ended March 31, 2020	—	—
Cumulative repurchases as of March 31, 2020	1,259,734	$	22.03



	Number of Restricted Shares		Weighted-Average Issue Price
Unvested, December 31, 2019	13,201		$	21.00
Granted	—		—
Vested	(267	)	22.50
Unvested, March 31, 2020	12,934		$	20.97



	Q1 2020
Leasing activity:
New leases: ⁽¹⁾
New leases commenced	4
Total square feet leased	4,227
Annualized straight-line rent per square foot ⁽²⁾	$	160.44
Weighted-average lease term (years) ⁽³⁾	6.7

Replacement leases: ⁽⁴⁾
Replacement leases commenced	3
Square feet	4,227
Annualized straight-line rent per square foot⁽²⁾	$	162.64
Weighted-average lease term (years)⁽³⁾	6.8

Terminated leases: ⁽⁵⁾
Number of leases terminated	2
Square feet	8,376
Annualized straight-line rent per square foot ⁽²⁾	$	39.27

Tenant improvements on replacement leases per square foot ⁽⁶⁾	$	—
Leasing commissions on replacement leases per square foot ⁽⁶⁾	$	—