Financial Data and Key Metrics Changes - The second quarter revenue was $16.2 million, an increase from $15 million in the same quarter of 2021, reflecting an 8.4% growth [23] - Cash NOI grew by 16.5% to $7 million compared to the same quarter last year [11] - The GAAP net loss attributable to common stockholders was $11.3 million, slightly higher than the net loss of $11.1 million in the second quarter of 2021 [23] - FFO attributable to common stockholders was a negative $4.2 million, compared to negative $4 million in the same quarter of 2021 [24] Business Line Data and Key Metrics Changes - The portfolio occupancy increased to 85%, up 20 basis points from the first quarter [9] - The weighted average remaining lease term extended to 7.1 years from 6.8 years at the end of the first quarter [9] - The top 10 tenants are 71% investment grade, indicating a strong tenant roster [9][13] Market Data and Key Metrics Changes - Year-over-year cash rent collection improved from 91% to 98%, with all cash rent collected from the top 10 tenants in the second quarter [16] - The company has a robust leasing pipeline of 23,400 square feet expected to increase occupancy by an additional 2% [14] Company Strategy and Development Direction - The company maintains a conservative balance sheet with net leverage at 40.1% and no debt maturities until 2024 [25][19] - The focus remains on a Manhattan-centric strategy, with significant potential for value creation in the NYC real estate market [20] - The Board of Directors suspended dividends to fund tenant acquisition and retention costs, allowing for continued leasing momentum [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strength of the NYC real estate market, anticipating increased office and retail traffic as pandemic restrictions are lifted [18] - The company expects to achieve occupancy in the low to mid-90s over the next four quarters based on current market activity [36] Other Important Information - The company’s portfolio consists of eight office and retail condominium assets located entirely in New York City, primarily in Manhattan [12] - The independent Board members and affiliates own a significant number of shares, indicating alignment with shareholder interests [21] Q&A Session Summary Question: G&A expenses were higher than expected; what caused this? - The increase was primarily due to proxy costs, including $600,000 related to a contested proxy and additional legal and audit expenses [32] Question: What is the timing for the leasing pipeline to increase occupancy? - The company anticipates occupancy to increase by 2% within the current quarter and possibly into the next quarter [34] Question: Can you elaborate on the parking garage leases executed during the quarter? - The company replaced a non-performing tenant with a qualified New York City parking operator, executing a long-term lease anticipated to be 15 years [38] Question: Update on the Brooklyn asset leasing status? - The Brooklyn asset is 100% leased, with a lease for a preschool expected to commence shortly [40] Question: What is the current market for acquisitions? - The acquisition market has been slow, but the company continues to seek buildings in the $50 million to $300 million range, focusing on properties with upside potential [42]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's financial statements, management's analysis, market risks, and internal controls [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show the company's financial position as of June 30, 2022, and December 31, 2021, indicating a decrease in total assets and stockholders' equity over the period | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total real estate investments, net | $682,886 | $694,774 | | Cash and cash equivalents | $8,097 | $11,674 | | Restricted cash | $12,444 | $16,754 | | Total assets | $805,941 | $823,051 | | Mortgage notes payable, net | $393,388 | $398,117 | | Total liabilities | $470,798 | $471,915 | | Total stockholders' equity | $318,813 | $338,989 | | Total equity | $335,143 | $351,136 | [Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The consolidated statements of operations and comprehensive loss detail the company's financial performance for the three and six months ended June 30, 2022, and 2021, reporting net losses for both periods | Metric (in thousands) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue from tenants | $16,231 | $14,977 | $31,877 | $30,163 | | Total operating expenses | $22,803 | $21,297 | $44,802 | $45,313 | | Operating loss | $(6,572) | $(6,320) | $(12,925) | $(15,150) | | Interest expense | $(4,703) | $(4,763) | $(9,418) | $(9,476) | | Net loss | $(11,273) | $(11,052) | $(22,378) | $(24,587) | | Comprehensive loss | $(10,651) | $(10,819) | $(20,006) | $(23,765) | | Net loss per share (Basic & Diluted) | $(0.84) | $(0.87) | $(1.68) | $(1.93) | [Consolidated Statements of Changes in Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) The consolidated statements of changes in equity illustrate the movements in stockholders' equity for the three and six months ended June 30, 2022, and 2021, reflecting common stock issuances, equity-based compensation, dividends, and net losses | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Total Equity (Dec 31 Balance) | $351,136 | $381,567 | | Common stock issued to Advisor | $2,321 | — | | Equity-based compensation | $4,321 | $4,235 | | Dividends declared on common stock | $(2,670) | $(2,562) | | Net loss | $(22,378) | $(24,587) | | Other comprehensive income | $2,372 | $822 | | Total Equity (June 30 Balance) | $335,143 | $362,055 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows provide a summary of cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2022, and 2021, showing a net decrease in cash and cash equivalents for both periods | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $1,737 | $(5,397) | | Net cash used in investing activities | $(1,374) | $(1,114) | | Net cash (used in) provided by financing activities | $(8,250) | $527 | | Net change in cash, cash equivalents and restricted cash | $(7,887) | $(5,984) | | Cash, cash equivalents and restricted cash, end of period | $20,541 | $34,010 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the consolidated financial statements, covering the company's structure, significant accounting policies, real estate portfolio, debt obligations, derivative instruments, equity changes, and related party transactions [Note 1 — Organization](index=8&type=section&id=Note%201%20%E2%80%94%20Organization) New York City REIT, Inc. is an externally managed REIT primarily investing in office properties within New York City, owning eight properties totaling 1.2 million rentable square feet as of June 30, 2022. Its day-to-day operations are managed by related parties, the Advisor and Property Manager - The Company is an externally managed REIT focused on office properties in New York City, primarily Manhattan[23](index=23&type=chunk) - As of June 30, 2022, the Company owned eight properties with **1.2 million rentable square feet**, acquired for an aggregate purchase price of **$790.7 million**[23](index=23&type=chunk) - The Company's day-to-day business is managed by New York City Advisors, LLC (the "Advisor") and New York City Properties, LLC (the "Property Manager"), both under common control with AR Global Investments, LLC[24](index=24&type=chunk) [Note 2 — Summary of Significant Accounting Policies](index=8&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's accounting principles, including GAAP compliance for interim reporting, consolidation methods, use of estimates, and treatment of non-controlling interests. It also details the significant impacts of the COVID-19 pandemic on operations, revenue recognition policies, and accounting for leases, along with recently adopted and pending accounting pronouncements [Basis of Accounting](index=8&type=section&id=Basis%20of%20Accounting) Interim financial statements are prepared in accordance with GAAP, omitting some annual statement details - Interim financial statements are prepared in accordance with GAAP and do not include all information required for complete annual statements[25](index=25&type=chunk) [Principles of Consolidation](index=8&type=section&id=Principles%20of%20Consolidation) Consolidated financial statements include the Company, its Operating Partnership, and subsidiaries, eliminating inter-company transactions - Consolidated financial statements include the Company, its Operating Partnership (OP), and subsidiaries, with inter-company transactions eliminated[27](index=27&type=chunk) - The OP is determined to be a variable interest entity (VIE) for which the Company is the primary beneficiary[27](index=27&type=chunk) [Use of Estimates](index=8&type=section&id=Use%20of%20Estimates) Significant estimates are made for revenue recognition, real estate purchase price allocations, and fair value measurements - Significant estimates are made for revenue recognition, purchase price allocations for real estate investments, and fair value measurements[28](index=28&type=chunk) [Non-controlling Interests](index=8&type=section&id=Non-controlling%20Interests) Non-controlling interests represent equity in the Operating Partnership not owned by the Company, presented separately - Non-controlling interests represent the portion of equity in the OP not owned by the Company and are presented separately on the balance sheet[29](index=29&type=chunk) - LTIP Units issued under the multi-year outperformance agreement with the Advisor are reflected as part of non-controlling interest[32](index=32&type=chunk) [Impacts of the COVID-19 Pandemic](index=9&type=section&id=Impacts%20of%20the%20COVID-19%20Pandemic) COVID-19 impacted operations, leading to tenant bankruptcies, lease terminations, and debt covenant breaches - COVID-19 significantly impacted New York City, affecting tenant operations and willingness for in-person commerce[33](index=33&type=chunk) - Knotel, a tenant at 123 William Street and 9 Times Square, declared bankruptcy in early 2021, leading to lease terminations[35](index=35&type=chunk) - Lease terminations and financial difficulties of tenants in 2020-2021 led to breaches of debt covenants and cash trap events on mortgages for 9 Times Square, 1140 Avenue of the Americas, Laurel/Riverside, and 8713 Fifth Avenue properties[39](index=39&type=chunk) - The Company did not enter into any new rent deferral or abatement agreements in the first half of 2022, and only one tenant was on a cash basis as of June 30, 2022[38](index=38&type=chunk)[36](index=36&type=chunk) [Revenue Recognition](index=10&type=section&id=Revenue%20Recognition) Revenues are primarily from lease contracts, recognized on a straight-line basis, with continuous assessment of collectability - Revenues are primarily derived from lease contracts and reported on a straight-line basis over the initial lease term[43](index=43&type=chunk) - Collectability of lease payments is continuously assessed based on tenant's payment history, financial condition, and economic conditions[45](index=45&type=chunk) [Accounting for Leases](index=11&type=section&id=Accounting%20for%20Leases) As a lessor, the Company accounts for lease and non-lease components as a single operating lease - As a lessor, the Company accounts for lease and non-lease components as a single operating lease[47](index=47&type=chunk) - As a lessee, the Company recognizes a right-of-use asset and lease liability for all leases with a term greater than 12 months[48](index=48&type=chunk) [Recently Issued Accounting Pronouncements](index=11&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section details the adoption of ASU 2020-06 and the application of hedge accounting expedients under ASU 2020-04 - ASU 2020-06 (Debt with Conversion and Other Options) was adopted on January 1, 2021, with no material impact[49](index=49&type=chunk) - The Company elected to apply hedge accounting expedients under ASU 2020-04 (Reference Rate Reform) for LIBOR-indexed cash flows[50](index=50&type=chunk) [Note 3 — Real Estate Investments](index=12&type=section&id=Note%203%20%E2%80%94%20Real%20Estate%20Investments) This note confirms no real estate acquisitions or dispositions in H1 2022 or 2021 and highlights the evaluation of strategic options for the 421 W. 54th Street - Hit Factory property. It also details the absence of significant tenants and the write-off of deferred leasing commissions due to Knotel's bankruptcy - No real estate assets were acquired or disposed of during the three or six months ended June 30, 2022, or 2021[53](index=53&type=chunk) - The Company is evaluating options, including marketing for sale, its 421 W. 54th Street - Hit Factory property, which is not yet classified as held for sale[53](index=53&type=chunk) [Significant Tenants](index=12&type=section&id=Significant%20Tenants) No tenant's annualized rental income exceeded 10% of total annualized rental income as of June 30, 2022 - No tenant's annualized rental income exceeded **10% of total annualized rental income** as of June 30, 2022, and December 31, 2021[54](index=54&type=chunk) [Write-off of Deferred Leasing Commissions](index=12&type=section&id=Write-of%20of%20Deferred%20Leasing%20Commissions) $1.3 million of deferred leasing costs were written off in Q1 2021 due to Knotel's bankruptcy and lease terminations - **$1.3 million** of deferred leasing costs were written off in Q1 2021 due to Knotel's bankruptcy and lease terminations[56](index=56&type=chunk)[58](index=58&type=chunk) [Note 4 — Mortgage Notes Payable, Net](index=13&type=section&id=Note%204%20%E2%80%94%20Mortgage%20Notes%20Payable%2C%20Net) This note details the company's mortgage notes payable, which decreased to $393.4 million as of June 30, 2022. It outlines collateral pledges, scheduled principal payments, and significant debt covenant breaches on properties like 9 Times Square, 1140 Avenue of the Americas, and 8713 Fifth Avenue, leading to cash trap events. It also notes the curing of breaches for Laurel/Riverside and the transition from LIBOR to SOFR for the 9 Times Square loan | Metric (in thousands) | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------ | :---------------- | | Mortgage notes payable, gross | $399,500 | $405,000 | | Less: deferred financing costs, net | $(6,112) | $(6,883) | | Mortgage notes payable, net | $393,388 | $398,117 | - As of June 30, 2022, **$7.7 million** is held in restricted cash due to cash trap events from covenant breaches on certain properties[59](index=59&type=chunk) - A **$5.5 million** principal payment was made in March 2022 on the 9 Times Square property loan[59](index=59&type=chunk) - The Company was in breach of covenants for 9 Times Square, 1140 Avenue of the Americas, and 8713 Fifth Avenue as of June 30, 2022[64](index=64&type=chunk)[71](index=71&type=chunk)[75](index=75&type=chunk) - The debt service coverage covenant for Laurel/Riverside was satisfied for two consecutive quarters (Dec 31, 2021, and Mar 31, 2022), ending the cash management period[74](index=74&type=chunk) [Collateral and Principal Payments](index=13&type=section&id=Collateral%20and%20Principal%20Payments) Real estate assets and intangible assets of $835.9 million are pledged as collateral for mortgage notes payable - Real estate assets and intangible assets of **$835.9 million** are pledged as collateral for mortgage notes payable[60](index=60&type=chunk) Future Minimum Principal Payments | Year | Future Minimum Principal Payments (in thousands) | | :--- | :--------------------------------------------- | | 2022 (remainder) | $— | | 2023 | $— | | 2024 | $49,500 | | 2025 | $— | | 2026 | $99,000 | | Thereafter | $251,000 | | Total | $399,500 | [Debt Covenants](index=14&type=section&id=Debt%20Covenants) This section details debt covenant breaches and cash trap events for specific properties [9 Times Square](index=14&type=section&id=9%20Times%20Square) Breached debt service coverage and debt yield covenants, triggering a cash management period and a $5.5 million principal payment - Breached debt service coverage and debt yield covenants from 2020 through 2021, triggering a cash management period[64](index=64&type=chunk) - A waiver and amendment in March 2022 required a **$5.5 million** principal payment (funded from restricted cash) and revised covenant calculations (e.g., reduced hypothetical interest rate, lower debt yield covenant to **7.5%**, inclusion of free rent periods)[65](index=65&type=chunk)[66](index=66&type=chunk) - As of June 30, 2022, **$2.5 million** remained in a cash management account. The Company expects to not be in breach by Q3 2022 and request to exit the cash trap[67](index=67&type=chunk) [1140 Avenue of the Americas](index=15&type=section&id=1140%20Avenue%20of%20the%20Americas) Breached debt service coverage and reserve fund provisions for eight consecutive quarters, resulting in $5.2 million in restricted cash - Breached debt service coverage and reserve fund provisions for eight consecutive quarters ended June 30, 2022[71](index=71&type=chunk) - **$5.2 million** in cash is retained by the lender in restricted cash due to these breaches, which are not events of default[71](index=71&type=chunk) [400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage](index=15&type=section&id=400%20E.%2067th%20Street%20-%20Laurel%20Condominium%2F200%20Riverside%20Boulevard%20-%20Icon%20Garage) Debt service coverage covenant breaches in 2021 were cured, ending the cash management period, with new leases commencing in July 2022 - Breached debt service coverage covenant in Q1-Q3 2021, but cured by satisfying the covenant in Q4 2021, Q1 2022, and Q2 2022[72](index=72&type=chunk)[74](index=74&type=chunk) - A **$1.4 million** lease termination fee received in Q4 2021 was reclassified from restricted cash to cash and cash equivalents in Q1 2022 after the cash trap ended[73](index=73&type=chunk)[74](index=74&type=chunk) - New leases for the garage properties commenced in July 2022, expiring in June 2037, replacing previous six-month license agreements[73](index=73&type=chunk) [8713 Fifth Avenue](index=15&type=section&id=8713%20Fifth%20Avenue) Breached debt service coverage ratio covenant for five consecutive quarters, triggering an excess cash flow sweep - Breached debt service coverage ratio covenant for five consecutive quarters (Q2 2021 - Q2 2022)[75](index=75&type=chunk) - The breach triggers an excess cash flow sweep, which can be avoided by funding a **$125,000** reserve quarterly[75](index=75&type=chunk) - A new tenant is expected to occupy the space in Q3 2022, bringing occupancy back to **100%**[77](index=77&type=chunk) [Other Debt Covenants](index=16&type=section&id=Other%20Debt%20Covenants) The Company was in compliance with remaining covenants under other mortgage notes payable as of June 30, 2022 - The Company was in compliance with remaining covenants under other mortgage notes payable as of June 30, 2022[78](index=78&type=chunk) [LIBOR Transition](index=16&type=section&id=LIBOR%20Transition) The 9 Times Square mortgage loan and related interest swap transitioned from LIBOR to SOFR in March 2022 - The 9 Times Square mortgage loan and related "pay-fixed" interest swap transitioned from LIBOR to SOFR in March 2022[79](index=79&type=chunk) [Note 5 — Fair Value of Financial Instruments](index=16&type=section&id=Note%205%20%E2%80%94%20Fair%20Value%20of%20Financial%20Instruments) This note describes the company's approach to fair value measurements, categorizing financial instruments into a three-level hierarchy. Derivative instruments are measured at fair value on a recurring basis and classified as Level 2, while fixed-rate mortgage notes payable are not reported at fair value on the balance sheet but their fair values are disclosed using Level 3 inputs - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[81](index=81&type=chunk) [Financial Instruments Measured at Fair Value on a Recurring Basis](index=17&type=section&id=Financial%20Instruments%20Measured%20at%20Fair%20Value%20on%20a%20Recurring%20Basis) Derivative instruments are measured at fair value on a recurring basis, classified as Level 2 in the fair value hierarchy - Derivative instruments are measured at fair value on a recurring basis, primarily using discounted cash flow analysis[84](index=84&type=chunk) - Derivatives are classified as Level 2 in the fair value hierarchy, as Level 3 credit valuation adjustments are not significant[83](index=83&type=chunk) [Financial Instruments that are not Reported at Fair Value](index=17&type=section&id=Financial%20Instruments%20that%20are%20not%20Reported%20at%20Fair%20Value) Fair value of short-term financial instruments approximates carrying value - Fair value of short-term financial instruments (cash, restricted cash, payables) approximates their carrying value[86](index=86&type=chunk) - Fixed-rate mortgage notes payable are not reported at fair value on the balance sheet but their fair values are disclosed using Level 3 inputs[89](index=89&type=chunk) [Note 6 — Derivatives and Hedging Activities](index=18&type=section&id=Note%206%20%E2%80%94%20Derivatives%20and%20Hedging%20Activities) This note details the company's use of derivative financial instruments, primarily "pay-fixed" interest rate swaps, to hedge interest rate risk and stabilize interest expense. It outlines the accounting for cash flow hedges, including the termination and replacement of a LIBOR-based swap with a SOFR-based swap in March 2022, and discusses credit-risk-related contingent features - The Company uses interest rate derivatives (e.g., interest rate swaps) to hedge interest rate risk and stabilize interest expense, not for speculative purposes[90](index=90&type=chunk) - Counterparty risk is mitigated by engaging with major financial institutions with high credit ratings[90](index=90&type=chunk) [Risk Management Objective of Using Derivatives](index=18&type=section&id=Risk%20Management%20Objective%20of%20Using%20Derivatives) The Company uses interest rate derivatives to hedge interest rate risk and stabilize interest expense [Cash Flow Hedges of Interest Rate Risk](index=18&type=section&id=Cash%20Flow%20Hedges%20of%20Interest%20Rate%20Risk) Changes in fair value of cash flow hedges are recorded in AOCI and reclassified to interest expense - Changes in fair value of cash flow hedges are recorded in accumulated other comprehensive income (AOCI) and reclassified to interest expense[95](index=95&type=chunk) - The existing **$55.0 million** notional, LIBOR-based "pay-fixed" interest rate swap was terminated and replaced with a new **$49.5 million** notional, SOFR-based swap in March 2022[95](index=95&type=chunk) - A charge of approximately **$38,338** was reflected in Other Income (Expense) for the six months ended June 30, 2022, due to the termination/replacement of the swap[95](index=95&type=chunk) [Offsetting Derivatives](index=20&type=section&id=Offsetting%20Derivatives) Derivatives are presented on a gross basis, with no offsetting on the balance sheet - Derivatives are presented on a gross basis, with no offsetting on the balance sheet[100](index=100&type=chunk)[101](index=101&type=chunk) [Credit-risk-related Contingent Features](index=20&type=section&id=Credit-risk-related%20Contingent%20Features) Derivative agreements include provisions where indebtedness default could lead to derivative obligations default - Derivative agreements include provisions where a default on indebtedness could lead to a default on derivative obligations[102](index=102&type=chunk) - As of June 30, 2022, the net asset position of derivatives was **$0.7 million**, with no collateral posted and no breaches of agreement provisions[103](index=103&type=chunk) [Note 7 — Stockholders' Equity](index=20&type=section&id=Note%207%20%E2%80%94%20Stockholders%27%20Equity) This note details the company's stockholders' equity, including 13.6 million shares of common stock outstanding as of June 30, 2022. It highlights the suspension of dividends starting Q2 2022 and the Advisor's reinvestment of $2.5 million in base management fees for Class A common stock in H1 2022. It also covers equity offerings, a repurchase program, a tender offer, the stockholder rights plan, and the distribution reinvestment plan - As of June 30, 2022, **13.6 million shares** of common stock were outstanding[104](index=104&type=chunk) - The Company suspended its dividend policy on Class A common stock, effective for the quarter ended June 30, 2022[105](index=105&type=chunk) - The Advisor reinvested **$2.5 million** in base management fees for Class A common stock in H1 2022, issuing **215,306 shares**[106](index=106&type=chunk)[15](index=15&type=chunk) [Equity Offerings](index=21&type=section&id=Equity%20Offerings) The Company has a Common Stock ATM Program for up to $250.0 million in Class A common stock - The Company has a Common Stock ATM Program to sell up to **$250.0 million** in Class A common stock[110](index=110&type=chunk) - No shares were sold through the Common Stock ATM Program during the three or six months ended June 30, 2022, or 2021[111](index=111&type=chunk) [Repurchase Program](index=21&type=section&id=Repurchase%20Program) The board authorized consideration of repurchases up to $100.0 million of Class A common stock - The board authorized consideration of repurchases up to **$100 million** of Class A common stock[112](index=112&type=chunk) - No repurchases have been authorized since the initial resolution[112](index=112&type=chunk) [Tender Offer](index=21&type=section&id=Tender%20Offer) In January 2021, the Company purchased 26,236 shares of Class B common stock for approximately $0.2 million - In January 2021, the Company purchased **26,236 shares** of Class B common stock for approximately **$0.2 million** through a tender offer[113](index=113&type=chunk) [Stockholder Rights Plan](index=21&type=section&id=Stockholder%20Rights%20Plan) A stockholder rights plan was adopted in May 2020, with its expiration date extended to August 18, 2025 - A stockholder rights plan was adopted in May 2020 and amended in August 2020[114](index=114&type=chunk) - The expiration date of the rights was extended from August 16, 2022, to August 18, 2025[114](index=114&type=chunk) [Distribution Reinvestment Plan](index=21&type=section&id=Distribution%20Reinvestment%20Plan) The A&R DRIP allows stockholders to reinvest dividends in additional Class A common stock - The A&R DRIP allows stockholders to reinvest dividends in additional Class A common stock[117](index=117&type=chunk) - During H1 2022, DRIP transactions were settled via open market purchases, and no new shares were issued by the Company[118](index=118&type=chunk) [Note 8 — Commitments and Contingencies](index=22&type=section&id=Note%208%20%E2%80%94%20Commitments%20and%20Contingencies) This note details the company's commitments, including an operating ground lease for 1140 Avenue of the Americas with a 44.5-year remaining term. It also confirms no material legal or regulatory proceedings and no significant environmental conditions [Lessee Arrangement - Ground Lease](index=22&type=section&id=Lessee%20Arrangement%20-%20Ground%20Lease) The Company has an operating ground lease for 1140 Avenue of the Americas with a 44.5-year remaining term - The Company has an operating ground lease for 1140 Avenue of the Americas with a weighted-average remaining lease term of **44.5 years** and a discount rate of **8.6%**[120](index=120&type=chunk) ROU Asset and Operating Lease Liability | Metric (in thousands) | June 30, 2022 | | :-------------------- | :------------ | | ROU asset | $55,061 | | Operating lease liability | $54,744 | [Litigation and Regulatory Matters](index=22&type=section&id=Litigation%20and%20Regulatory%20Matters) No material legal or regulatory proceedings are pending or known to be contemplated against the Company - No material legal or regulatory proceedings are pending or known to be contemplated against the Company[123](index=123&type=chunk) [Environmental Matters](index=23&type=section&id=Environmental%20Matters) The Company is not aware of any environmental conditions that would materially adversely affect its results of operations - The Company is not aware of any environmental conditions that would have a material adverse effect on its results of operations[124](index=124&type=chunk) [Note 9 — Related Party Transactions and Arrangements](index=23&type=section&id=Note%209%20%E2%80%94%20Related%20Party%20Transactions%20and%20Arrangements) This note details the company's extensive related party transactions, including significant ownership by AR Global entities. It covers the cash management plan, various fees paid to the Advisor and Property Manager (asset management, variable management, property management, professional fees, and reimbursements), and the Listing Note arrangement. It also outlines the termination fees payable to the Advisor under specific conditions - Entities wholly owned by AR Global owned **215,306 shares** of the Company's common stock as of June 30, 2022[125](index=125&type=chunk) [Cash Management Plan](index=23&type=section&id=Cash%20Management%20Plan) Bellevue Capital Partners, LLC expressed a desire to invest additional capital, leading to amended ownership limits - Bellevue Capital Partners, LLC (controlling the Advisor) expressed a desire to invest additional capital in the Company[126](index=126&type=chunk) - The Company amended Waiver Agreements and lowered the ownership limit for other stockholders to facilitate potential investments by AR Parties[126](index=126&type=chunk) [Fees and Participations Incurred in Connection with the Operations of the Company](index=23&type=section&id=Fees%20and%20Participations%20Incurred%20in%20Connection%20with%20the%20Operations%20of%20the%20Company) This section details various fees paid to the Advisor and Property Manager [Summary of Advisory Agreement](index=23&type=section&id=Summary%20of%20Advisory%20Agreement) The Advisory Agreement with the Advisor has an initial term ending July 2030 and automatically renews - The Advisory Agreement with the Advisor has an initial term ending July 2030 and automatically renews for successive five-year terms[127](index=127&type=chunk) [Asset Management Fees and Variable Management/Incentive Fees](index=23&type=section&id=Asset%20Management%20Fees%20and%20Variable%20Management%2FIncentive%20Fees) The Advisor receives monthly base asset management fees and quarterly incentive variable management fees - The Advisor receives a monthly base asset management fee and a quarterly incentive variable management fee[128](index=128&type=chunk)[129](index=129&type=chunk) - No incentive variable management fees were earned during the three months ended June 30, 2022, or 2021[131](index=131&type=chunk) - A Side Letter (Feb 2022 - Aug 2022) required the Advisor to invest up to **$3.0 million** of fees in Class A common stock at a minimum price of **$10.55 per share**[132](index=132&type=chunk) [Property Management Fees](index=25&type=section&id=Property%20Management%20Fees) Property management fees are 3.25% of gross revenues for non-hotel properties - Property management fees are **3.25% of gross revenues** for non-hotel properties, and **4.0%** for 400 E. 67th Street - Laurel Condominium and 200 Riverside Boulevard properties[135](index=135&type=chunk)[138](index=138&type=chunk) - The Company incurred approximately **$0.5 million** and **$0.9 million** in property management fees during the three and six months ended June 30, 2022, respectively[139](index=139&type=chunk) [Professional Fees and Other Reimbursements](index=26&type=section&id=Professional%20Fees%20and%20Other%20Reimbursements) Reimbursements for administrative and overhead expenses are capped at $0.4 million annually - Reimbursements for administrative and overhead expenses are capped at **$0.4 million annually**, and for salaries, wages, and benefits at **$2.6 million annually**[140](index=140&type=chunk)[143](index=143&type=chunk) - As of June 30, 2022, the annual limit of **$0.4 million** for administrative and overhead reimbursements was reached[141](index=141&type=chunk) [Summary of Fees, Expenses and Related Payables](index=26&type=section&id=Summary%20of%20Fees%2C%20Expenses%20and%20Related%20Payables) This section summarizes asset and property management fees, professional fees, and other reimbursements | Metric (in thousands) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Asset and property management fees | $1,785 | $1,847 | $3,707 | $3,754 | | Professional fees and other reimbursements | $1,223 | $975 | $2,739 | $2,367 | | Total related party operation fees and reimbursements | $3,008 | $2,822 | $6,446 | $6,121 | [Listing Arrangements](index=27&type=section&id=Listing%20Arrangements) The Listing Amount, an obligation to the Special Limited Partner, was calculated as zero - The Listing Amount, an obligation to the Special Limited Partner, was calculated as zero based on the market value during the measurement period (Feb 9 - Mar 23, 2022)[146](index=146&type=chunk) [Termination Fees Payable to the Advisor](index=27&type=section&id=Termination%20Fees%20Payable%20to%20the%20Advisor) A termination fee is payable to the Advisor if the Advisory Agreement is terminated due to a change of control - A termination fee is payable to the Advisor if the Advisory Agreement is terminated due to a change of control[147](index=147&type=chunk) - The termination fee is **$15 million** plus four times the "Subject Fees" (annualized base and variable management fees)[147](index=147&type=chunk)[149](index=149&type=chunk) [Note 10 — Economic Dependency](index=28&type=section&id=Note%2010%20%E2%80%94%20Economic%20Dependency) The company is economically dependent on its Advisor and affiliates for essential services, including asset management, property management, and administrative responsibilities - The Company is dependent on its Advisor and affiliates for essential services such as asset management, property management, and administrative responsibilities[151](index=151&type=chunk) [Note 11 — Equity-Based Compensation](index=28&type=section&id=Note%2011%20%E2%80%94%20Equity-Based%20Compensation) This note details the company's equity-based compensation, including the transition from the Restricted Share Plan (RSP) to the 2020 Equity Plan. It covers director compensation, restricted share grants (109,875 shares to Advisor employees in Q2 2022), and the Multi-Year Outperformance Award of 4,012,841 LTIP Units to the Advisor, with a fair value of $25.8 million being expensed over 3.07 years. It also outlines the performance measures for LTIP Units and other share-based compensation [Equity Plans](index=28&type=section&id=Equity%20Plans) This section details the transition from the Restricted Share Plan to the 2020 Equity Plan [Restricted Share Plan](index=28&type=section&id=Restricted%20Share%20Plan) The RSP, which provided for automatic restricted share grants, was replaced by the 2020 Equity Plan at the Listing - The RSP, which provided for automatic restricted share grants, was replaced by the 2020 Equity Plan at the Listing[155](index=155&type=chunk) [2020 Equity Plan](index=28&type=section&id=2020%20Equity%20Plan) The 2020 Equity Plan allows for various equity awards, including restricted stock units, stock options, and LTIP Units - The 2020 Equity Plan (Advisor Plan and Individual Plan) allows for various equity awards, including restricted stock units, stock options, and LTIP Units[157](index=157&type=chunk) - The plan has a 10-year term, expiring August 18, 2030, and limits total shares issued to **20.0%** of outstanding common stock on a fully diluted basis[157](index=157&type=chunk) [Director Compensation](index=29&type=section&id=Director%20Compensation) Annual restricted share awards to independent directors increased from $30,000 to $65,000 - Annual restricted share awards to independent directors increased from **$30,000** to **$65,000**, effective on the Listing Date[158](index=158&type=chunk) [Restricted Shares](index=29&type=section&id=Restricted%20Shares) Restricted share awards entitle recipients to common stock, vesting over time - Restricted share awards entitle recipients to common stock, vesting over time, with holders receiving cash dividends[159](index=159&type=chunk) - In Q2 2022, **109,875 restricted shares** were granted to Advisor employees, vesting in **25% increments** over four years[162](index=162&type=chunk) - As of June 30, 2022, **$0.4 million** of unrecognized compensation cost related to restricted shares is expected to be recognized over **4.2 years**[165](index=165&type=chunk) [Multi-Year Outperformance Award](index=30&type=section&id=Multi-Year%20Outperformance%20Award) The 2020 OPP granted 4,012,841 LTIP Units to the Advisor, with a fixed fair value of $25.8 million - The 2020 OPP granted **4,012,841 LTIP Units** to the Advisor, with a fixed fair value of **$25.8 million** as of September 30, 2020[167](index=167&type=chunk)[168](index=168&type=chunk) - The **$25.8 million** fair value is being expensed over a **3.07-year** service period, ending August 18, 2023[168](index=168&type=chunk) [LTIP Units/Distributions/Redemption](index=30&type=section&id=LTIP%20Units%2FDistributions%2FRedemption) LTIP Unit holders receive distributions equal to 10% of Class A Unit distributions until earned - LTIP Unit holders receive distributions equal to **10% of Class A Unit distributions** until earned[169](index=169&type=chunk) - Earned LTIP Units can convert to Class A Units, which are redeemable for Class A common stock or cash[169](index=169&type=chunk) - Dividends on Class A common stock were suspended starting Q2 2022, impacting LTIP Unit distributions[169](index=169&type=chunk) [Performance Measures](index=30&type=section&id=Performance%20Measures) Half of LTIP Units are earned based on absolute TSR, and the other half on relative TSR compared to a peer group - Half of LTIP Units are earned based on absolute TSR, with thresholds at **12%**, **18%**, and **24%**[170](index=170&type=chunk)[172](index=172&type=chunk) - The other half of LTIP Units are earned based on relative TSR compared to a peer group, with thresholds at **-600**, **0**, and **+600 basis points**[173](index=173&type=chunk)[174](index=174&type=chunk) [Other Terms](index=31&type=section&id=Other%20Terms) For Change of Control or termination without Cause, earned LTIP Units are based on actual performance - For Change of Control or termination without Cause, earned LTIP Units are based on actual performance with prorated TSR hurdles, but not prorated LTIP Units[175](index=175&type=chunk) - For termination for Cause, both TSR hurdles and the number of LTIP Units are prorated[176](index=176&type=chunk) [Other Share-Based Compensation](index=31&type=section&id=Other%20Share-Based%20Compensation) The Company issues common stock to independent directors in lieu of cash for board fees - The Company issues common stock to independent directors in lieu of cash for board fees[180](index=180&type=chunk) - In H1 2022, **10,043 shares** of Class A common stock were issued to independent directors for services rendered in Q4 2021 and Q1 2022[15](index=15&type=chunk)[109](index=109&type=chunk)[180](index=180&type=chunk) [Note 12 — Net Loss Per Share](index=32&type=section&id=Note%2012%20%E2%80%94%20Net%20Loss%20Per%20Share) This note presents basic and diluted net loss per share for H1 2022, applying the two-class method, with common share equivalents being anti-dilutive | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss attributable to common stockholders | $(11,273) | $(11,052) | $(22,378) | $(24,587) | | Weighted-average shares outstanding | 13,433,690 | 12,799,703 | 13,367,040 | 12,789,919 | | Net loss per share (Basic & Diluted) | $(0.84) | $(0.87) | $(1.68) | $(1.93) | - The two-class method is used for EPS calculation, including unvested restricted shares, Class A Units, and unearned LTIP Units as participating securities[181](index=181&type=chunk) - Common share equivalents (unvested restricted shares, Class A Units, LTIP Units) were excluded from diluted EPS calculation as their effect would have been anti-dilutive due to net loss[182](index=182&type=chunk)[185](index=185&type=chunk) [Note 13 — Subsequent Events](index=33&type=section&id=Note%2013%20%E2%80%94%20Subsequent%20Events) This note reports key events occurring after June 30, 2022, including the suspension of quarterly dividends, the Advisor's completion of its $3.0 million fee reinvestment, the issuance of shares for August 2022 management fees, new long-term leases for parking garages, and amendments to the cash management plan and stockholder rights plan [Quarterly Dividend](index=33&type=section&id=Quarterly%20Dividend) The Company suspended its Class A common stock dividend policy on July 1, 2022 - The Company suspended its Class A common stock dividend policy on July 1, 2022, for the quarter ended June 30, 2022[186](index=186&type=chunk) [Side Letter to the Advisory Agreement](index=33&type=section&id=Side%20Letter%20to%20the%20Advisory%20Agreement) In July 2022, the Advisor reinvested $0.5 million in base management fees, fulfilling the $3.0 million commitment - In July 2022, the Advisor reinvested **$0.5 million** in base management fees for **47,393 shares** of Class A common stock, fulfilling the **$3.0 million** commitment under the Side Letter[187](index=187&type=chunk) [August 2022 Asset Management Fees](index=33&type=section&id=August%202022%20Asset%20Management%20Fees) In August 2022, 124,685 shares of Class A common stock were issued to the Advisor for August management fees - In August 2022, **124,685 shares** of Class A common stock were issued to the Advisor in lieu of cash for August management fees[188](index=188&type=chunk) [New Leases - 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard](index=33&type=section&id=New%20Leases%20-%20400%20E.%2067th%20Street%20-%20Laurel%20Condominium%2F200%20Riverside%20Boulevard) New leases for the parking garages at 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard commenced in July 2022 - New leases for the parking garages at 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard properties commenced in July 2022, expiring in June 2037[189](index=189&type=chunk) [Cash Management Plan](index=33&type=section&id=Cash%20Management%20Plan) Bellevue and the Advisor may invest additional capital, with amended ownership limits for AR Parties - Bellevue and the Advisor may invest additional capital by purchasing Class A common stock or accepting shares for fees[190](index=190&type=chunk) - The Company amended Charter Ownership Limit Waiver Agreements to increase the limit for AR Parties to **21%** (potentially **25%**) and reduced the limit for other stockholders to **6%**[191](index=191&type=chunk)[193](index=193&type=chunk) [Stockholder Rights Plan Amendment](index=34&type=section&id=Stockholder%20Rights%20Plan%20Amendment) The expiration date of the stockholder rights plan was extended to August 18, 2025 - The expiration date of the stockholder rights plan was extended to August 18, 2025[325](index=325&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's analysis of financial condition and operational results, covering business overview, COVID-19 impacts, property portfolio, liquidity, and non-GAAP measures [Forward-Looking Statements](index=35&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding the company's intent, belief, or current expectations, which are subject to risks and uncertainties that could cause actual results to differ materially [Overview](index=35&type=section&id=Overview) New York City REIT is an externally managed REIT focused on office properties in NYC, owning eight properties (1.2 million sq ft) as of June 30, 2022. Its operations are managed by related parties, the Advisor and Property Manager - The Company is an externally managed REIT investing primarily in office properties within the five boroughs of New York City[199](index=199&type=chunk) - As of June 30, 2022, the Company owned eight properties totaling **1.2 million rentable square feet**[199](index=199&type=chunk) - The Advisor and Property Manager, under common control with AR Global, manage day-to-day business and receive compensation and expense reimbursements[200](index=200&type=chunk) [Management Update on the Impacts of the COVID-19 Pandemic](index=35&type=section&id=Management%20Update%20on%20the%20Impacts%20of%20the%20COVID-19%20Pandemic) The COVID-19 pandemic continued to impact operations in New York City, leading to tenant bankruptcies (Knotel), lease terminations, and increased non-reimbursable expenses. However, rent collections improved to 98% in Q2 2022, and new leases are being secured, though cash trap events persist on some mortgages - New York City properties remained accessible, but not all tenants resumed full operations, and some vacated or did not renew leases[201](index=201&type=chunk) - Knotel's bankruptcy in January 2021 led to lease terminations at 123 William Street and 9 Times Square, with new leases for replacement space having lower annualized straight-line rent[202](index=202&type=chunk) - The Company collected **98% of original cash rent** due across its portfolio for Q2 2022, including **100%** from its top ten tenants, a trend consistent with Q4 2021 and Q1 2022[206](index=206&type=chunk) - The Company did not enter into any new rent deferral or abatement agreements in Q1 or Q2 2022[205](index=205&type=chunk) [Significant Accounting Estimates and Critical Accounting Policies](index=36&type=section&id=Significant%20Accounting%20Estimates%20and%20Critical%20Accounting%20Policies) No material changes to significant accounting estimates and critical accounting policies were reported, except for those required by new accounting pronouncements - No material changes to significant accounting estimates and critical accounting policies, except for new accounting pronouncements[210](index=210&type=chunk)[211](index=211&type=chunk) [Recently Issued Accounting Pronouncements](index=37&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section refers to Note 2 for further discussion on recently issued accounting pronouncements - Refer to Note 2 for details on recently issued accounting pronouncements[212](index=212&type=chunk) [Properties](index=37&type=section&id=Properties) As of June 30, 2022, the Company owned eight properties with an overall portfolio occupancy of 84.6%. Occupancy increased at 9 Times Square (to 64.3%) and 123 William Street (to 92.3%) due to new leases Property Portfolio Overview | Property | Acquisition Date | Rentable Square Feet | Occupancy (June 30, 2022) | Remaining Lease Term (Years) | | :------------------------------------------------ | :--------------- | :------------------- | :-------------------------- | :--------------------------- | | 421 W. 54th Street - Hit Factory | Jun. 2014 | 12,327 | — % | — | | 400 E. 67th Street - Laurel Condominium | Sept. 2014 | 58,750 | 100.0 % | 5.0 | | 200 Riverside Boulevard - ICON Garage | Sept. 2014 | 61,475 | 100.0 % | 15.0 | | 9 Times Square | Nov. 2014 | 167,390 | 64.3 % | 6.7 | | 123 William Street | Mar. 2015 | 542,676 | 92.3 % | 6.2 | | 1140 Avenue of the Americas | Jun. 2016 | 242,646 | 76.1 % | 6.1 | | 8713 Fifth Avenue | Oct. 2018 | 17,500 | 57.1 % | 8.6 | | 196 Orchard Street | Jul. 2019 | 60,297 | 100.0 % | 12.9 | | **Total Portfolio** | | **1,163,061** | **84.6 %** | **7.1** | - Overall portfolio occupancy was **84.6%** as of June 30, 2022, up from **82.9%** at December 31, 2021[214](index=214&type=chunk)[274](index=274&type=chunk) - Occupancy at 9 Times Square increased to **64.3%** (from **59.3%**) and at 123 William Street to **92.3%** (from **90.8%**) due to new leases in H1 2022[274](index=274&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) The Company's results for H1 2022 showed increased revenue from tenants due to higher occupancy, while operating expenses remained relatively stable or increased due to specific factors like proxy contest costs. Net loss improved slightly - Overall portfolio occupancy was **84.6%** as of June 30, 2022, compared to **84.5%** as of June 30, 2021[214](index=214&type=chunk) Leasing Activity | Leasing Activity | Q1 2022 | Q2 2022 | | :--------------- | :------ | :------ | | New leases commenced | 1 | 1 | | Total square feet leased | 3,940 | 3,416 | | Annualized straight-line rent per square foot | $52.72 | $48.02 | | Weighted-average lease term (years) | 5.3 | 3 | | Terminated or expired leases (Number) | — | 2 | | Terminated or expired leases (Square feet) | — | 10,293 | | Annualized straight-line rent per square foot (Terminated/Expired) | $— | $60.34 | [Comparison of Three Months Ended June 30, 2022 and 2021](index=38&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030%2C%202022%20and%202021) For the three months ended June 30, 2022, revenue from tenants increased by $1.3 million due to new leasing activity and Innovate NYC. Operating expenses saw increases in equity-based compensation and general & administrative costs (due to proxy contest and labor), while property operating expenses and depreciation remained consistent. Interest expense slightly declined - Revenue from Tenants: Increased by **$1.3 million** to **$16.2 million** (from **$15.0 million**), driven by increased leasing activity (8713 Fifth Ave, 9 Times Square) and **$0.2 million** from Innovate NYC[218](index=218&type=chunk) - Asset and Property Management Fees to Related Parties: Remained consistent at **$1.8 million**. The Advisor reinvested **$1.5 million** in base management fees for Class A common stock[219](index=219&type=chunk) - Property Operating Expenses: Remained consistent at **$8.3 million**[220](index=220&type=chunk) - Equity-Based Compensation: Increased by **$0.1 million** to **$2.2 million**, primarily due to additional restricted share grants in 2022[221](index=221&type=chunk) - General and Administrative Expenses: Increased to **$3.5 million** (from **$2.0 million**) due to costs for the annual meeting/proxy contest and higher labor costs[222](index=222&type=chunk) - Depreciation and Amortization: Remained consistent at **$7.0 million**[224](index=224&type=chunk) - Interest Expense: Decreased by **$0.1 million** to **$4.7 million** due to a partial pay-down of the 9 Times Square loan[225](index=225&type=chunk) [Comparison of Six Months Ended June 30, 2022 and 2021](index=39&type=section&id=Comparison%20of%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) For the six months ended June 30, 2022, revenue from tenants increased by $1.7 million due to higher occupancy and Innovate NYC. General and administrative expenses rose due to proxy contest costs, while depreciation and amortization decreased due to prior impairments/write-offs. Net loss improved - Revenue from Tenants: Increased by **$1.7 million** to **$31.9 million** (from **$30.2 million**), driven by increased occupancy (8713 Fifth Ave, 9 Times Square) and **$0.4 million** from Innovate NYC[227](index=227&type=chunk) - Asset and Property Management Fees to Related Parties: Decreased slightly to **$3.7 million** (from **$3.8 million**). The Advisor reinvested **$1.5 million** in base management fees for Class A common stock[228](index=228&type=chunk) - Property Operating Expenses: Decreased by **$0.2 million** to **$16.8 million**, mainly due to lower legal fees, partially offset by increased non-reimbursable real estate taxes[230](index=230&type=chunk) - Equity-Based Compensation: Remained consistent at **$4.3 million**, primarily from the 2020 OPP amortization[231](index=231&type=chunk) - General and Administrative Expenses: Increased by **$1.2 million** to **$5.9 million** (from **$4.7 million**) due to **$0.6 million** in proxy contest costs and higher reimbursements to the Advisor[232](index=232&type=chunk) - Depreciation and Amortization: Decreased by **$1.5 million** to **$14.0 million** due to a lower depreciable/amortizable asset base from prior impairments and write-offs[234](index=234&type=chunk) - Interest Expense: Decreased by **$0.1 million** to **$9.4 million** due to the partial pay-down of the 9 Times Square loan[235](index=235&type=chunk) [Cash Flows from Operating Activities](index=41&type=section&id=Cash%20Flows%20from%20Operating%20Activities) Net cash provided by operating activities was $1.7 million in H1 2022, a significant improvement from a $5.4 million use in H1 2021, primarily due to adjustments for non-cash items and changes in working capital | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $1,737 | $(5,397) | | Net loss | $(22,378) | $(24,587) | | Depreciation and amortization | $14,022 | $15,549 | | Equity-based compensation | $4,321 | $4,235 | | Management fees reinvested by Advisor | $2,321 | $— | | Changes in accounts payable, accrued expenses | $6,862 | $(356) | [Cash Flows from Investing Activities](index=42&type=section&id=Cash%20Flows%20from%20Investing%20Activities) Net cash used in investing activities was $1.4 million in H1 2022, primarily for capital expenditures at 123 William Street and 1140 Avenue of the Americas | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash used in investing activities | $(1,374) | $(1,114) | | Capital expenditures | $(1,374) | $(1,114) | - Capital expenditures were primarily for tenant and building improvements at 123 William Street and 1140 Avenue of the Americas[240](index=240&type=chunk)[241](index=241&type=chunk) [Cash Flows from Financing Activities](index=42&type=section&id=Cash%20Flows%20from%20Financing%20Activities) Net cash used in financing activities was $8.3 million in H1 2022, mainly due to mortgage principal payments and common stock dividends. This contrasts with H1 2021, which saw net cash provided by financing activities due to common stock issuance proceeds | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by financing activities | $(8,250) | $527 | | Payments on mortgage note payable | $(5,500) | $— | | Common stock issuance proceeds | $— | $3,352 | | Dividends paid on common stock | $(2,670) | $(2,562) | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The Company suspended dividends to conserve cash for leasing and tenant improvements. It faces cash trap events on three mortgages ($164.0 million principal) due to covenant breaches, restricting access to excess cash flow. The Company expects to fund future capital needs through cash on hand, ATM program, dispositions, and Advisor reinvestments - Dividends on Class A common stock were suspended effective Q2 2022 to generate additional working capital for future leasing and tenant improvement costs[245](index=245&type=chunk) - As of June 30, 2022, cash and cash equivalents were **$8.1 million**, and restricted cash was **$12.4 million**[246](index=246&type=chunk)[247](index=247&type=chunk) - The Company is required to maintain minimum liquid assets of **$10.0 million** and a minimum net worth of **$175.0 million**[246](index=246&type=chunk) - Cash trap events are active on three mortgages (9 Times Square, 1140 Avenue of the Americas, 8713 Fifth Avenue), aggregating **$164.0 million** in principal, restricting access to excess cash flow[203](index=203&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) - The Advisor reinvested **$2.5 million** in base management fees in H1 2022, with an additional **$0.5 million** expected in July 2022[250](index=250&type=chunk) [Mortgage Loans](index=44&type=section&id=Mortgage%20Loans) Six mortgage loans secured by seven properties totaled $399.5 million as of June 30, 2022 - Six mortgage loans secured by seven properties totaled **$399.5 million** as of June 30, 2022, with a **4.35%** weighted-average effective interest rate[255](index=255&type=chunk) - All mortgage loans bear fixed interest rates, except one variable loan effectively converted to fixed via an interest rate swap[255](index=255&type=chunk) [9 Times Square](index=44&type=section&id=9%20Times%20Square) Breached debt service coverage and debt yield covenants, resulting in a cash trap with $2.5 million restricted cash - Breached debt service coverage and debt yield covenants, resulting in a cash trap with **$2.5 million** restricted cash as of June 30, 2022[258](index=258&type=chunk) - A March 2022 waiver and amendment required a **$5.5 million** principal payment and revised covenant calculations, including a lower debt yield covenant (**7.5%**) and SOFR transition[259](index=259&type=chunk)[260](index=260&type=chunk) - The Company expects to cure breaches by Q3 2022 to request exiting the cash trap[262](index=262&type=chunk) [1140 Avenue of the Americas](index=45&type=section&id=1140%20Avenue%20of%20the%20Americas) Breached debt service coverage and reserve fund provisions for eight consecutive quarters, leading to $5.2 million in restricted cash - Breached debt service coverage and reserve fund provisions for eight consecutive quarters, leading to **$5.2 million** in restricted cash[264](index=264&type=chunk) - These breaches are not events of default and can persist through loan maturity without further penalty[264](index=264&type=chunk) [400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage](index=45&type=section&id=400%20E.%2067th%20Street%20-%20Laurel%20Condominium%2F200%20Riverside%20Boulevard%20-%20Icon%20Garage) Debt service coverage covenant breaches in 2021 were cured, ending the cash management period - Debt service coverage covenant breaches in 2021 were cured by satisfying the covenant for two consecutive quarters (Q4 2021 and Q1 2022), ending the cash management period[265](index=265&type=chunk)[267](index=267&type=chunk) - **$1.4 million** previously in restricted cash was reclassified to cash and cash equivalents in Q1 2022[267](index=267&type=chunk) - New leases for the garage properties commenced in July 2022, expiring in June 2037[266](index=266&type=chunk) [8713 Fifth Avenue](index=46&type=section&id=8713%20Fifth%20Avenue) Breached debt service coverage ratio covenant for five consecutive quarters, triggering an excess cash flow sweep - Breached debt service coverage ratio covenant for five consecutive quarters, triggering an excess cash flow sweep[268](index=268&type=chunk) - The sweep can be avoided by funding a **$125,000** additional collateral reserve quarterly[268](index=268&type=chunk) - Occupancy is expected to return to **100%** in Q3 2022 with a new tenant[268](index=268&type=chunk) [Other Information](index=46&type=section&id=Other%20Information) The Company focuses on increasing occupancy and rental income through new leasing activity and market tenant incentives - The Company is focused on increasing occupancy and rental income through new leasing activity and market tenant incentives[269](index=269&type=chunk)[253](index=253&type=chunk) - Cash restricted by covenant breaches is not available for other corporate purposes, and there is no assurance these breaches will be cured[270](index=270&type=chunk) [Common Stock ATM Program](index=46&type=section&id=Common%20Stock%20ATM%20Program) The Company has a Common Stock ATM Program for up to $250.0 million in Class A common stock - The Company has a Common Stock ATM Program for up to **$250.0 million** in Class A common stock[271](index=271&type=chunk) - No shares were sold under the program during the six months ended June 30, 2022[271](index=271&type=chunk) [Repurchase Program](index=46&type=section&id=Repurchase%20Program) The board authorized consideration of repurchases up to $100.0 million of Class A common stock - The board authorized consideration of repurchases up to **$100.0 million** of Class A common stock[272](index=272&type=chunk) - No repurchases have been authorized since the initial resolution[272](index=272&type=chunk) [Tender Offer](index=46&type=section&id=Tender%20Offer) In January 2021, the Company purchased 26,236 shares of Class B common stock for approximately $0.2 million - In January 2021, the Company purchased **26,236 shares** of Class B common stock for approximately **$0.2 million** through a tender offer[273](index=273&type=chunk) [Leasing Activity/Occupancy](index=47&type=section&id=Leasing%20Activity%2FOccupancy) Overall portfolio occupancy increased to 84.6% as of June 30, 2022, from 82.9% at December 31, 2021, driven by new leases at 9 Times Square and 123 William Street - Overall portfolio occupancy increased to **84.

Financial Data and Key Metrics Changes - First quarter 2022 revenue was $15.6 million, an increase from $15.2 million in the first quarter of 2021 [17] - GAAP net loss attributable to common stockholders was $11.1 million, improved from a net loss of $13.5 million in the first quarter of 2021 [17] - Core FFO was negative $2 million compared to negative $2.9 million in the first quarter of 2021, translating to negative $0.15 per share versus negative $0.23 per share last year [17][18] - Adjusted EBITDA increased by 50% and core FFO grew by 31% [14] Business Line Data and Key Metrics Changes - Portfolio occupancy grew by 1.5% to 84.4% at quarter end, with significant increases at 9 Times Square (3%) and 123 William Street (1.5%) [7] - Rent collection was strong at 98% of original cash rent collected, up from 96% last quarter and an 11% improvement from the first quarter of last year [10] - The company achieved 100% net absorption of lease square footage during the quarter, with no lease expirations or terminations [12] Market Data and Key Metrics Changes - The portfolio consists of eight office and retail condominium assets located entirely in New York City, primarily in Manhattan, with a total value of $854 million and a size of 1.2 million square feet [11] - The top 10 tenants were 71% investment grade or implied investment grade rated, with an average remaining lease term of 9.5 years [12] Company Strategy and Development Direction - The company continues to focus on proactive asset and property management strategies to enhance portfolio value [7] - There is a strong belief in the long-term strength of New York City real estate, with expectations for continued rent payments and lease renewals as workers return to offices [11] - The company has built a leasing pipeline of 18,000 square feet expected to increase occupancy by 1.6% and straight-line rent by $900,000 [13] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about future value-generating opportunities and the ongoing recovery of New York City [20] - The company anticipates continued momentum in occupancy, rent collection, and overall portfolio performance as business activities resume [40] Other Important Information - The company maintains a conservative balance sheet with net leverage at 40% and no debt maturities until 2024 [18] - All debt is fixed rate, with a weighted average effective interest rate of 4.4% [18] Q&A Session Summary Question: Impact of WeWork on shared space business - Management noted an increase in usage of their shared space business, supported by local advertising and referrals from existing licensees [26][27] Question: Short-term parking license renewals - Management clarified that short-term extensions are temporary while anticipating execution of long-term agreements [28][29] Question: Impact of inflation on operating expenses - Management acknowledged some inflation impact but noted that higher operating expenses in the first quarter are typically seasonal due to winter heating costs [34] Question: New tenant industries and future space demand - Management indicated a diverse range of new tenants, including data tech, nonprofit, creative, and financial services, with strong momentum in demand [36]

NEW YORK CITY REIT First Quarter Investor Presentation CALVIN KLEIN RESH FI 0 9 Times Square - New York, NY_ First Quarter 2022 Highlights NYC is a real estate investment trust with a high-quality portfolio of real estate assets focused on the Manhattan market and is supported by a robust Advisor platform that has diligently navigated through the COVID-19 pandemic resulting in portfolio Cash Rent collection at nearly 100%, maintained and enhanced a credit worthy tenant base and delivered exceptional investo ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Q1 2022 report a net loss of **$11.1 million**, an improvement from the prior year, with total assets at **$810.2 million** Consolidated Balance Sheet Highlights (Unaudited) | | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total real estate investments, net | $689,004 | $694,774 | | Cash and cash equivalents | $10,342 | $11,674 | | Total assets | $810,182 | $823,051 | | Mortgage notes payable, net | $393,002 | $398,117 | | Total liabilities | $466,583 | $471,915 | | Total equity | $343,599 | $351,136 | Consolidated Statements of Operations Highlights (Unaudited) | | Three Months Ended March 31, 2022 (in thousands, except per share data) | Three Months Ended March 31, 2021 (in thousands, except per share data) | | :--- | :--- | :--- | | Revenue from tenants | $15,646 | $15,186 | | Operating loss | $(6,353) | $(8,830) | | Net loss attributable to common stockholders | $(11,105) | $(13,535) | | Net loss per share — Basic and Diluted | $(0.84) | $(1.06) | Consolidated Statements of Cash Flows Highlights (Unaudited) | | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,178 | $2,145 | | Net cash used in investing activities | $(406) | $(43) | | Net cash used in financing activities | $(6,869) | $(1,503) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the ongoing COVID-19 impacts, reporting a **98%** cash rent collection rate for Q1 2022 and a **$0.5 million** increase in tenant revenue, while addressing liquidity and significant debt covenant breaches on four properties - The company collected **98%** of original cash rent due across its portfolio for Q1 2022, consistent with Q4 2021, with no new rent deferral or abatement agreements entered into during the quarter[198](index=198&type=chunk) - Due to the financial impact of COVID-19, the company experienced cash trap events on four mortgages (9 Times Square, 1140 Avenue of the Americas, Laurel/Riverside, and 8713 Fifth Avenue) due to breaches of debt covenants, restricting cash from these properties for other corporate purposes as of March 31, 2022[195](index=195&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - On March 2, 2022, the company entered into a waiver and amendment for the 9 Times Square mortgage, paying down **$5.5 million** in principal to waive a potential default, though the property remains in a cash trap with a potential default if covenants are not met by Q3 2022[236](index=236&type=chunk)[238](index=238&type=chunk) Non-GAAP Financial Measures (Q1 2022 vs Q1 2021) | (In thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(11,105) | $(13,535) | | FFO (deficit) attributable to common stockholders | $(4,124) | $(5,009) | | Core FFO (deficit) attributable to common stockholders | $(2,004) | $(2,894) | | Cash NOI | $5,741 | $5,639 | - The company declared and paid a dividend of **$0.10 per share**, totaling **$1.3 million** in Q1 2022, which management states was **100%** covered by cash flows from operations[266](index=266&type=chunk)[269](index=269&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material change in its market risk exposure during Q1 2022, referring to the detailed discussion in its 2021 Annual Report on Form 10-K - There has been no material change in the company's market risk exposure during the three months ended March 31, 2022[275](index=275&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of Q1 2022, with no material changes to internal control over financial reporting during the period - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of March 31, 2022[276](index=276&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[277](index=277&type=chunk) [PART II - OTHER INFORMATION](index=46&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings as of the end of the quarter - The company is not currently a party to any material pending legal proceedings[279](index=279&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section highlights specific risks including vulnerability to terrorist attacks due to the New York City portfolio and economic risks from the war in Ukraine, such as exacerbated inflation and potential recession - All company properties are located in New York City, making them susceptible to terrorist attacks or other acts of violence which could negatively impact business and profitability[280](index=280&type=chunk) - The military conflict in Ukraine is identified as a risk that has exacerbated inflation, supply chain disruptions, and volatility in commodity, credit, and capital markets[281](index=281&type=chunk) - Sanctions against Russia could lead to significant increases in energy prices, potentially triggering a recession and making it more difficult for the company to access debt or equity financing[282](index=282&type=chunk)[283](index=283&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company discloses a side letter agreement with its Advisor for reinvestment of up to **$3.0 million** in management fees into Class A common stock, with **$1.0 million** reinvested in Q1 2022 - The company entered into a side letter agreement with its Advisor, requiring the Advisor to invest up to **$3.0 million** of its management fees into the company's Class A common stock between February 4, 2022, and August 4, 2022[286](index=286&type=chunk) - During Q1 2022, the Advisor reinvested **$1.0 million** in fees, receiving **88,880** shares of Class A Common Stock in an unregistered sale[287](index=287&type=chunk) [Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities during the period - None[290](index=290&type=chunk) [Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[291](index=291&type=chunk) [Other Information](index=48&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None[292](index=292&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists exhibits included with or incorporated by reference into the Quarterly Report on Form 10-Q, in accordance with Item 601 of Regulation S-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission file number: 001-39448 New York City REIT, Inc. (Exact name of registrant as specified in its charter) Maryland 46-4380248 (State or other ...

NEW YORK CITY REIT Fourth Quarter Investor Presentation CALVIN KLEIN RESH FI 0 9 Times Square - New York, NY_ Fourth Quarter 2021 Highlights NYC is a real estate investment trust with a high-quality portfolio of real estate assets focused on the Manhattan market and is supported by a robust Advisor platform that has increased portfolio Cash Rent collection by 14% year over year, maintained an attractive top 10 tenant base that is 72% Investment Grade(1) rated and completed 17 new leases for over 200,000 SF ...

Financial Data and Key Metrics Changes - The company achieved a total return of 55% for shareholders from the beginning of 2021 through March 1, 2022, outperforming the S&P 500 by over 36% and New York City-focused peer REITs by over 31% [10] - Revenue for the year ended December 31, 2021, was $70.2 million, with fourth-quarter revenue at $24.2 million, compared to $9.9 million in Q4 2020 and $15.8 million in Q3 2021 [26] - Cash NOI for Q4 2021 increased by 74% to $7.1 million compared to Q4 2020 [29] Business Line Data and Key Metrics Changes - The company collected 96% of the original cash rent due in Q4 2021, a 4% increase from Q3 2021 and a 14% improvement from Q4 2020 [12] - The company executed 17 new leases for over 200,000 square feet in 2021, adding approximately $7.4 million of annualized straight-line rent [19] - The company replaced over 69% of the space formerly occupied by Knotel with creditworthy tenants, achieving a weighted average remaining lease term of 7 years and combined annualized straight-line rent of almost $2.5 million [16] Market Data and Key Metrics Changes - The company's portfolio had an occupancy rate of 82.9% at year-end, with a forward-leasing pipeline that could increase occupancy to 84% [20] - The top 10 tenants were 72% investment-grade or implied investment-grade rated, with an average remaining lease term of 9.6 years, enhancing the quality and stability of earnings [24] Company Strategy and Development Direction - The company is focused on proactive asset and property management initiatives to navigate the impacts of the pandemic and is well-positioned to benefit from the return of workers and tourists to New York City [9][11] - The company aims to grow occupancy and earnings, with expectations of reaching 95% to 96% occupancy over time as corporate tenants return to offices [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strength of New York City real estate, citing the necessity of office and retail space in the city [23] - The management team highlighted the importance of their proactive approach to asset management, which has helped maintain rent collection and tenant relationships during the pandemic [35] Other Important Information - The company reported a full-year GAAP net loss attributable to common stockholders of $39.5 million, an improvement from a net loss of $41 million in 2020 [28] - The company maintains a conservative balance sheet with net leverage at 40.1% and no debt maturity scheduled within the next 3 years [31] Q&A Session Summary Question: What triggered the amortization of below-market lease liabilities? - The amortization was triggered by the termination of the parking garage lease in Q4, leading to the acceleration of all related amortization [40] Question: What is the occupancy situation at 123 William Street and 9 Times Square? - Management indicated that there is net positive absorption at both buildings, with no notable upcoming vacancies impacting occupancy [45] Question: What drove the occupancy dip at Avenue of the Americas, and what are the expectations for 2022? - Management noted strong leasing activity in 2022 and a pipeline that could add approximately 1 percentage point to occupancy, with expectations of continued growth [46] Question: What is the acquisition outlook for the company? - The company is monitoring the acquisition pipeline and is looking for opportunities, particularly in Manhattan, but has not yet identified any positive additions to the portfolio [48]

PART I - FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q3 and nine months ended September 30, 2021, highlighting a **$35.7 million** net loss and ongoing debt covenant challenges [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2021, total assets decreased to **$832.1 million** from **$861.8 million**, with total equity declining to **$353.6 million** due to the net loss Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$832,143** | **$861,846** | | Total real estate investments, net | $700,870 | $720,971 | | Cash and cash equivalents | $23,169 | $30,999 | | **Total Liabilities** | **$478,525** | **$480,279** | | Mortgage notes payable, net | $397,731 | $396,574 | | **Total Equity** | **$353,618** | **$381,567** | [Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported a **$11.1 million** net loss for Q3 2021, with the nine-month net loss widening to **$35.7 million** due to lower tenant revenue and higher equity compensation Statement of Operations Summary (in thousands) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue from tenants | $15,848 | $16,997 | $46,011 | $53,035 | | Total operating expenses | $22,160 | $24,215 | $67,473 | $63,261 | | Operating loss | $(6,312) | $(7,218) | $(21,462) | $(10,226) | | Net loss | $(11,110) | $(12,288) | $(35,697) | $(24,362) | | Net loss per share | $(0.85) | $(0.96) | $(2.78) | $(1.91) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$4.3 million** for the nine months ended September 30, 2021, resulting in a **$5.2 million** decrease in total cash and equivalents Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,311) | $(6,019) | | Net cash used in investing activities | $(1,998) | $(3,162) | | Net cash provided by (used in) financing activities | $1,095 | $(328) | | **Net change in cash, cash equivalents and restricted cash** | **$(5,214)** | **$(9,509)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, real estate portfolio, and debt obligations, highlighting COVID-19's impact on rent collections and significant debt covenant breaches - As of September 30, 2021, the company owned eight properties in New York City totaling **1.2 million** rentable square feet[24](index=24&type=chunk) - The company experienced rent collection delays due to COVID-19, reducing 2020 revenue by **$8.5 million** for reserves, with no rental income from these tenants in the first nine months of 2021[42](index=42&type=chunk)[51](index=51&type=chunk) - The company is in breach of debt covenants on mortgages for its 1140 Avenue of Americas, 9 Times Square, Laurel/Riverside, and 8713 Fifth Avenue properties, resulting in cash trap events[43](index=43&type=chunk) - A multi-year outperformance award (2020 OPP) granted to the Advisor, consisting of **4,012,841 LTIP Units**, has a total fair value of **$25.8 million** being expensed over 3.07 years, with **$6.3 million** recognized in the first nine months of 2021[185](index=185&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses COVID-19's operational and financial challenges, including rent collection, tenant bankruptcies, liquidity, and mortgage covenant breaches [Management Update on the Impacts of the COVID-19 Pandemic](index=36&type=section&id=Management%20Update%20on%20the%20Impacts%20of%20the%20COVID-19%20Pandemic) The COVID-19 pandemic continues to impact operations, leading to tenant bankruptcies and rent deferral agreements, though cash rent collections improved to **92%** for Q3 2021 - The bankruptcy of former tenant Knotel in January 2021 led to the termination of leases at 123 William Street and 9 Times Square[211](index=211&type=chunk) Original Cash Rent Collection Rates | Period | Collection Rate | | :--- | :--- | | Q3 2021 | 92% | | Q2 2021 | 91% (as of Oct 31, 2021) | | Q1 2021 | 87% | | Q4 2020 | 82% | - In the first nine months of 2021, the company entered into 12 abatement or deferral agreements, deferring **$0.6 million** and abating **$0.9 million** in rent[218](index=218&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Q3 2021 tenant revenue decreased by **$1.1 million** to **$15.8 million**, contributing to a nine-month net loss of **$35.7 million** due to lower revenue and higher equity compensation - Q3 2021 revenue from tenants decreased by **$1.1 million** year-over-year to **$15.8 million**, mainly due to lease terminations and tenants being placed on a cash basis[228](index=228&type=chunk) - For the nine months ended September 30, 2021, revenue from tenants decreased by **$7.0 million** year-over-year to **$46.0 million**[242](index=242&type=chunk) - Equity-based compensation for the nine months ended September 30, 2021, increased by **$4.6 million** to **$6.4 million**, primarily due to the amortization of the 2020 OPP award[249](index=249&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is pressured by negative operating cash flow and mortgage debt challenges, with **$23.2 million** in cash, cash trap events on four properties, and reliance on its ATM equity program - As of September 30, 2021, the company had **$23.2 million** in cash and cash equivalents and is required to maintain a minimum of **$10.0 million** in liquid assets under a loan covenant[264](index=264&type=chunk) - Cash trap events are in effect for four properties (1140 Avenue of the Americas, 9 Times Square, Laurel/Riverside, and 8713 Fifth Avenue), preventing the company from using excess cash flow from these properties, which represent **47%** of the portfolio's rentable square feet[265](index=265&type=chunk) - The company believes it breached covenants for the 9 Times Square loan for a fourth consecutive quarter, which would cause an event of default if not cured by a significant principal repayment or providing additional collateral[269](index=269&type=chunk)[270](index=270&type=chunk) - During the nine months ended September 30, 2021, the company sold **466,651 shares** through its Common Stock ATM Program for gross proceeds of **$5.3 million**[277](index=277&type=chunk) [Non-GAAP Financial Measures](index=47&type=section&id=Non-GAAP%20Financial%20Measures) The company uses FFO, Core FFO, and Cash NOI, reporting a **$11.9 million FFO deficit** and a **$5.5 million Core FFO deficit** for the nine months ended September 30, 2021 FFO and Core FFO Reconciliation (in thousands) | Metric | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(35,711) | $(24,362) | | Depreciation and amortization | $23,400 | $24,070 | | Impairment of real estate investments | $413 | $0 | | **FFO (deficit) attributable to common stockholders** | **$(11,898)** | **$(292)** | | Listing expenses | $0 | $1,299 | | Vesting and conversion of Class B Units | $0 | $1,153 | | Equity-based compensation | $6,356 | $1,758 | | **Core FFO (deficit) attributable to common stockholders** | **$(5,542)** | **$3,918** | Cash NOI Reconciliation (in thousands) | Metric | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | | Net loss | $(35,711) | $(24,362) | | Adjustments (G&A, D&A, Interest, etc.) | $50,277 | $51,139 | | Straight-line rent & lease amortization adjustments | $(3,623) | $(6,389) | | **Cash NOI** | **$17,382** | **$23,195** | [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the company's market risk exposure during the nine months ended September 30, 2021, compared to its 2020 Annual Report - There has been no material change in the company's exposure to market risk during the nine months ended September 30, 2021[309](index=309&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls were effective as of September 30, 2021, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[310](index=310&type=chunk) - No material changes occurred in the company's internal control over financial reporting during the third quarter of 2021[311](index=311&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) As of the end of the third quarter of 2021, the company reports that it is not a party to any material pending legal proceedings - The company is not a party to any material pending legal proceedings[313](index=313&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new material risks, primarily breaches of **$214.0 million** in mortgage loan covenants and the company's ability to fund capital requirements - The company is in breach of covenants under four separate mortgage loans aggregating **$214.0 million** in principal, secured by properties representing **47%** of the portfolio's total rentable square feet[315](index=315&type=chunk) - An anticipated fourth consecutive quarterly covenant breach on the 9 Times Square loan could trigger an event of default, potentially requiring a significant principal repayment or foreclosure[316](index=316&type=chunk)[317](index=317&type=chunk) - The company's ability to fund capital requirements is at risk, as cash from operations has not been sufficient, necessitating reliance on the Common Stock ATM Program and available cash on hand[318](index=318&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities[323](index=323&type=chunk) [Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities - There were no defaults upon senior securities[327](index=327&type=chunk) [Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[328](index=328&type=chunk) [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) The company reports no other information required to be disclosed under this item - None[329](index=329&type=chunk) [Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL data files - The report includes required exhibits such as CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906[331](index=331&type=chunk)

New York City REIT, Inc. (NYSE:NYC) Q3 2021 Earnings Conference Call November 12, 2021 11:00 AM ET Company Participants Louisa Quarto - Investor Relations Mike Weil - Chief Executive Officer Chris Masterson - Chief Financial Officer Conference Call Participants Bryan Maher - B. Riley Securities Operator Good day and thank you for standing by and welcome to the New York City REIT Inc. Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ remarks, ther ...