NYC - Earnings call 4 2020 | New York City REIT, Inc.

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Operator

Good morning and welcome to the New York City REIT Fourth Quarter and Full Year 2020 Earnings Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead.

Louisa Quarto

Thank you, operator. thank Full joining Year and Fourth for everyone, and quarter XXXX morning, you us for NYC's Good Earnings Call. being at is of event webcast Investor the This Relations NYC's website www.newyorkcityreit.com. in section

call Joining me Mike NYC's Chief Executive Chief discuss NYC's quarter's and Masterson, Officer. results Weil, Chris to Officer; Financial today are the the on

for materially or The following Should filed which materialize, made or XX-K by factors as of more cause statements, this results one this all these SEC statements. ended subsequent or filings actual only filed to XXXX, for statements We of uncertainties expressed including call. call differences. a are subject Any that our of information are on could contains from forward-looking discussion may forward-looking the you differ XX, provided risk Form March the more during of XXXX, these implied SEC the forward-looking uncertainties. all year risks XX, date and those detailed risks refer and filings, to the December of

stated NYC intent update obligation to by forward-looking disclaims revise as filings, in these our or or law. statements, any except As SEC required

tenants, in use measure consider our available we detailed GAAP these in evaluating implied about call, earnings with more These comparable we'll a in can non-GAAP we discuss throughout our release. we be be as accordance of today's measures for information Please a financial to or measures isolation financial term company's financial call. which prepared useful to most the GAAP. refer our measures, during Also, investment-grade should release results will not considered is in earnings today's the performance. believe be for substitute also to Reconciliation directly a what

City the turn Michael Chief New call ahead, of Officer York Please now go Mike. over Weil, REIT. I'll Executive to

Edward Weil

morning, Louisa. you today. for us thank joining Thanks, Good and

XX% across COVID-XX of to top despite strategy, fourth from XX% cash the management of our REIT highlighted ongoing drive a portfolio through XX City the quarter challenges York rent pandemic. by our continues and collection New results tenants proactive asset the

for confident further remain our create City, highly XXXX a our and the to shareholder opportunity portfolio its year strength challenging Although value. New was and long-term everyone, York the real grow estate, business of we model in

We've City built a pure-play tenants, that New Bank investment-grade other Bank, a government of City large agencies. CVS, portfolio features National York and mix including TD

As XX, or our remaining of stability XX% earnings of we average top and implied XX quality tenants investment-grade almost years, NYC's believe of portfolio. and in have term December were the investment-grade XX which an rated lease increases

has effects years the $XXX.X million million of XX XX%, the value Despite York foot capable challenges rebounding York months, remaking in as X.X resilient we the the City that the excess of term weighted square remaining and of believe seeing portfolio long-term and in has City confidence last York that New Our a will faced we're we available incremental substantial is bolster X.X earnings short-term of the growth for itself outweigh New high estate a and average crisis. our currently lease up opportunity of irreplaceable occupancy times signals The real space. New pandemic. city in of lease

COVID-XX a policy that virus New return vaccination believe against City be in continues and aggressive plan expedite fight leader in-place to to York the has normalcy. a the recovery and we an will

X a an June. outline end XX% have million includes more the doses, children of offices in administered New COVID-XX has than Mayor return and de been by Blasio to million has York City. to X.X that to of provided of State given plan classrooms vaccine New York which vaccinating residents workers

of efforts. lag from This return we is through with that of vaccination move as to the expectation have who of the start mass to estimated summer, We consistent similar normalcy office our are a least as X-month some their expecting employers, the rollout the a peers second at returning employees at the levels the during to Further, end XXXX. back Netflix, prepandemic year. major expressed intentions have before will ranging office to bring to of scale from usage to start half this BlackRock Goldman to Sachs

tech significant capitalize innovation. Throughout Apple, we've of tech to announced of commitments of workers. emerge signed that York's the physical largest hub that workspaces continues pandemic, collaborative affirm plans that York seeking the well and COVID-XX office-using City a technology leases New an before their will and the essential Facebook, New and These to on of Amazon productivity began others seen remain hire the continue important capital. companies companies course have to pandemic some thousands trend to world's confidence human and as

engaged as with continue credit on every to and at on to XXX portfolio, and with a bankruptcy are problems past-due Fortune XX Chapter seek Street Square and operator William subtenants was a rights seen nonbinding this tenant the the the over to of company's their York termination operator XX the Knotel, feet and lease of opportunity increasing In City on agreement to at along of committee. month the We evidence subtenant a and leases we've of we Fortune as ultimately at last tenant now Knotel The William ours a and to step We'll shared is New XXXX, XX,XXX way tech help for our XX its recover and a that to This unsecured our intent X a tech's their own with company we Street. years. XXX recently executed unique rent and presence. short-term as footprint identified protect possible. city square in early much letter tech's led us. commitment lease X for filing capitalize Times expand company of Manhattan Early technology space

the XXX represent addition rent over the at entered agreements Street. into tech space of X XX% global also previous we previous At company. a In the prime turnkey believe space The leasing Knotel to Combined, with us lease, value X-year William for previously is a Street, condition, previously XXX Times and in by of excellent condition Knotel is there's we tenants. fully improvement mentioned aggressively these and tenant Square re-lease. to to an requires to space X creditworthy that's have leased and furnished XX% Knotel to William resource significant human lease opportunity minimal in create

to management broker tenants. XXXX. Chris' and leasing New team. already Most fourth space who a Management for part can effort of Director the leasing and with experience generate Chris Knotel space To as has team Chao, Chris' lease in portfolio. the Leading help at asset and attract for of in over former is and the available working Time responsibility management industry him our hired leases of focus in quarter at remains York. to Chris as across Square, of seen the he expanding be support years veteran, Paramount real NYC asset Leasing commercial in across our impact creditworthy NYC's estate, recently, -- us have our occupancy was Asset increase of asset portfolio Wakefield lending. and the joined comes team on in our we've spanning Cushman XX an who our to X effort is a management, and tenants our to portfolio, top current pleased Group momentum I'm acquisition & our

who most effect Masterson by quarter, a had the As on in for detail, will the Chris this primarily our discuss were impacted COVID in tenants onetime of more write-offs. results material form

confident parking believe of residents recovery and significantly line X by return garages garages and mutually operating agreement In be Knotel, swiftly. Management who've the to the workers we the we'll pandemic will that pre-COVID and back Sports. may to as as addition the portfolio beneficial to include and with COVID-related headwinds able early been to we're subside. our reach level impacted other We end has be garages engaged tenants own time tenants, in Universal parking a their bounce the on city, these

lease a from a of extension overall X-year AaX that to We're to impact of remaining increased results William Earlier increased over an X years rent at management and extension enhance tenant year, an City signed delivered Bank Street. $XX lease by portfolio. term in from gross the early approach the As advanced lease the with term our to counterweight XX-year proactive has these portfolio years for the discussions XXX that tenants, expected NYC with the quality last XX credit lease the the we National million.

this lease rent due X term. we year. annual amendment all future the Since MakeSpace by rent represents we've Finally, that executed reduction a also later the year, exchange XX% cash of lease of the cash commences X-year Street XXXX William new once approximately beginning for past-due that in XXX of executed the rent lease recaptured in discounted $XXX,XXX with and at

increase a We by to of also of that to with over annual expire pipeline our rent rent square favorably XX% commence. have compare leases $X.X if feet XXXX. million scheduled these leasing base peers Rent XX,XXX through forward expirations would

Turning to corporate matters.

in know, this as August are NYC's shares and of shares We'll under B year, of the with phased of shares Class the A A NYC's a Class listed complete trading Class is This the the symbol year. XX% of shares final step the first last NYSE. NYC. were you common on later outstanding listing listing, As of phased today, conversion common

results? over Chris, full the can take it over and to through turn the I'll you financials. Masterson go us to Chris fourth year quarter

Christopher Masterson

$XX was million quarter. for the year. net in Thanks, the for quarter. million of $XX.X the Mike. to to common $XX XXXX, for year million quarter in attributable to compared third Revenue compared quarter was $XX.X prior stockholders $XX.X $XX.X million for was million XX, GAAP compared was loss fourth to a Revenue million December Net ended XXXX. in loss million year prior company's the full the compared The net million to $XX.X $X.X the loss

$X.X third stockholders in FFO For to common Core FFO $XXX,XXX in the the quarter negative of quarter. quarter. negative fourth $X.X the compared $X.X XXXX, our attributable compared to was prior quarter million million in the to negative fourth million was

supplemental a income net earnings measures to can non-GAAP be As Form reconciliation XX-K. GAAP always, our of in found release, and

and Mike come effect was of a FFO back our the outstanding million garages. quarter-over-quarter the COVID-related on X X in from XX% that headwinds periods to Knotel the of mainly core $X.X fourth have $X.X from earlier decline result the mentioned because like parking including results. material had quarter, to in I'd million from written past-due they prior off some balances Approximately tenants of were

million approximately off $X quarter-over-quarter. was revenue Total

revenue We was are leasing to will expect in recover to begin that aggressive this and we off. rent past-due written efforts quarters, the future that working replace our aggressively

and rulings Creditor properties X expenses of related on the and of these We have rents judgment the of a presentation on regarding judgment our Committee of provides seat Slide received for have in another. rent further filed the for favorable investor similar arrears analysis XX details to expenses Knotel, the impacts. all for Unsecured summary balance and pass-through a and

a next debt of NYC maintains a of debt average $XX the with to prudent sheet XX.X%. weighted Liquidity, a cash rate at X.X conservative the is effective stood subject and million, fourth which cash. a no and leverage maturities balance debt requires quarter remaining and estimated cash unrestricted at $XX net X.XX% net interest loan X average years as We measured of million with million term in at with weighted years. ended $XXX equivalents, that covenant within

call remarks. back closing the for to turn I'll that, some Mike With

Edward Weil

New abates. of and York on normalcy but a vaccinations Chris. return Manhattan-focused COVID-XX will our rollout progress well believe We're positioned to deliver significant York City City you, We Thank and portfolio Great. New only a degree New City resilient benefit and not all Yorkers. value portfolio our nationwide that encouraged and York of by long-term is the to New that as believe

and We remaining future will At provide are concentrated expirations room relative that investment continued annualized Manhattan and XX support a weighted have tenant Our the high-quality with occupancy average of the growth growth. of long a tremendous base, which believe own of The value term business comprised in and assets our limited stability, to portfolio properties and largest rent. the diversified XX% grade. X leaves of for continue are rate the portfolio. near-term foundation to performed to present valuation, solid there's provide the we stable, straight-line in well we believe lease

questions. for line the open please Operator,

Operator

Our Instructions] today question Maher with come B. will Securities. [Operator Bryan from first Riley

Bryan Maher

A questions. few

the Knotel at properties? Square? reason was occupancy Or On that main for on was -- declines else the going at anything and there William Knotel, was Times XXX those the

Edward Weil

did have Knotel Bryan, yes, Knotel the was -- biggest impact. the

Bryan Maher

then at we an color a of And Avenue noticed on property? Can the Americas. Okay. give occupancy little that you decline us

Edward Weil

that yourself introduce you Yes. good bit it Chao, asset. be a Chris about think little would I a and opportunity would talk if

Christopher Chao

Sure. an tenant And of at lease there Otherwise, XXXX of call, some had the broker had Avenue a this Thank Chao end our speaking. expiration at that who tenant our is a led tenant we've as building really only expiration. that Bryan, to you, Mike. earlier this that is on one space active Americas, been the quarter. leasing the natural and At Chris top leased building decline. the discussed XXXX was with of floor that occupancy on and we've the successfully

Bryan Maher

thinking give Okay. kind what with And that? that rent foot of it a you or are to broad any to square spaces be as strokes you about the how remaining a per Knotel roll-down just about we kind roll-up on on following re-lease as thought relates of those process, you space, should Can go thinking and basis? from

Edward Weil

the have were. pretty to been is seen the where and in are not boutique proposed again, where These, rents. seeing we're and good rents -- locations, very quality now, really have What we the held rents a we market buildings have in Bryan, B decline market significant is Yes. buildings, well

that lightly used. optimistic turnkey as of condition is the for first-generation other would It's in what we're part. we most The space It's think build-out. about is the thing

So will of course able effort, control to the expenses the which 'XX. we'll TI anticipating another we're in that positive be re-leasing during be

Bryan Maher

think leasing how that given or experience, to changed has mean tenants, That's good business of And you about Knotel type do forward? I or at as leasing going news. your it your flex the of criteria mindset Great. kind all those relates short-term the guys? it

Edward Weil

at I'll job as We we the just direct and, tenants the company the occupied going Fortune great building space. would that progress XX look with. was that not by about making in to by direct, XXX frankly, experiencing tenant fill very to going we're we pretty space William technology taking quick there. talked very it's of that. Chris that positive be were Knotel and refilling the doing place type -- the direct, a is We're

for strength the it's So tenant tenancy, business. of corporate obviously We of us. the direction the the better their enjoy and

with the is I for it will space. So that It's am nobody in -- go direct that's but we us. downtime involved, opportunistic feeling users likes that

Bryan Maher

note, that of place? are those tenants physically in On Yes. still any Knotel like Mike,

Edward Weil

I X shorter-term touch is give Square corporate know Chris, William? you color platform, Times little on But why XXX don't enterprise space -- a us with tenants. the William their bit of was and because on which XXX

So immediate that's been pickup. an

Christopher Chao

who space the that X these At a to Times move Sure. for with Mike a We've Square, in Mike. X, last of subtenants, quarter, are are in we've into that currently approximately the X Thank built already at building. XX% all you, years. the as so space. Yes, vacant. ready marketing there been X leases earlier secured Knotel in the earlier, that And subtenants to great as Street, X XXX mentioned, were alluded are those in shape -- when of floors turnkey recouping that aggressively in place. Knotel declared presence only were floors And really were short-term bankruptcy tenant were there William X

Edward Weil

can very Bryan, X just we're Great. this of Cushman this leasing work we're lot back. of And aggressively. has a doing team if activity, coming with Times and The with pretty priority. also the Chris excited. off is XXXX I And add, their started seeing we're city tours. at has pushing relationship new been the And top Chris that team Cushman Square, also the -- number a are

Bryan Maher

Great.

best housekeeping, for this of more for maybe Masterson. two me, is Chris one and Just kind one

Knotel, its we impact the So financial behind should forget Knotel, at NYC of kind Or in in else to some write-downs put relates it Chris. you? and and related fourth moment? for the anything does residual first on Knotel that the that maybe As expect quarter write-offs quarter the to

New you for that's all a for Mike, me. of? in anything values take XXXX can that there you any your to And look as at? grow, might market think make ability seeing you run your out advantage are to that there the And you Are to sheet, out and balance York

Edward Weil

Chris, Thank why you, you Bryan. on. follow go and I'll first, then don't

Christopher Masterson

Sure.

on will to still Knotel are Those other all lease. be quarter. impact. the related the that. are end the see quarter, books an revenue that depreciation off, and of first we the a in intangibles in in we'll there won't quarter, impact took written What from the So the so fourth additional flushing would outside no through first up you write-offs some And perspective, see we

Edward Weil

Thanks, Chris. the active, in being about reviewing are Chris deals been and that market. talked I have very

to by have market. market, considered sellers come are Some being to to come some

but think to early, see it's in we're I bit opportunities I going XXXX. a do think little

New continues are values a -- fairly standpoint, stable. from value York market cost replacement

at upon quickly cost have reflected deals So we've I in we to opportunity the and did acquiring market. feel deals how opportunity was didn't And these a looked that go couple we invest of would through surprised frankly that the property the it.

look going going continue and the in earlier. as asked buildings buyer, direct to brokerage to you And Chris tenants, we'll The as in knows Manhattan through, know this tenants, market remain very capable is occupying market, the a boutique-type we're that disciplined. We're continue I stable to involved. year be about we the are So to active again, community. goes with

Operator

this like back to time, Instructions] being I this any turn [Operator questions for session. There to management no remarks. our conference will the question-and-answer over further at conclude would closing

Edward Weil

today. and all thank us Grant, you, for you thank Well, right. joining All

on XXXX, excited about come and rollout. vaccine our optimism, through very indicated we're have as we've with We call today,

for updated. everybody that's positive to the we'll to City join impact York you a tremendous continue think the time New And And I we on keep have taking us. going thank to market.

Operator

Thank presentation. now has attending concluded. for you conference today's The

may disconnect. You now

New York City REIT (NYC) 16 Mar 212020 Q4 Earnings call transcript