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New York City REIT Announces First Quarter 2021 Results

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New York City REIT, Inc. (NYSE: NYC) ("NYC" or the "Company"), a real estate investment trust that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City, announced today its financial and operating results for the first quarter ended March 31, 2021.

First Quarter 2021 and Subsequent Event Highlights

  • Revenue was $15.2 million as compared to $17.5 million for the first quarter 2020 and up from $9.9 million in fourth quarter 2020

  • Net loss attributable to common stockholders was $13.5 million as compared to $6.8 million for the first quarter 2020 and $16.6 million in the quarter ended December 31, 2020

  • Cash net operating income ("NOI") was $5.6 million compared to $8.4 million for the first quarter 2020 and up from $4.1 million in prior quarter

  • Funds from Operations ("FFO") of $(5.0) million, compared to $0.7 million for the first quarter 2020 and up from $(8.9) million in fourth quarter, 2020

  • Core Funds from Operations ("Core FFO") of $(2.9) million compared to $0.8 million in the prior year first quarter, up from $(6.8) million last quarter

  • Collected 85% of original cash rent due in first quarter 2021, including 89% among the top 10 tenants, growing from 82% in the fourth quarter, 20201,2

  • Top 10 tenants are 73% investment grade or implied investment grade3 rated and have a weighted-average remaining lease term of 9.5 years

  • Portfolio occupancy4 of 82.8% as of March 31, 2021 with weighted-average lease term5 of 6.9 years

  • Executed two new leases totaling 6,800 square feet and two replacement leases encompassing 23,400 square feet that total $1.5 million in annualized straight line rent, partially offsetting lease terminations during the quarter

  • Forward leasing pipeline6 of over 28,000 square feet that would increase occupancy to 85%, if signed non-binding letters of intent ("LOI’s") lead to definitive agreements, which is not assured, and assuming no other terminations or expirations

  • Conservative balance sheet with net leverage7 of 37.6%, no debt maturities in the next three years and a weighted average debt maturity of 5.9 years

"As New York City continues to move toward a full reopening, we are well-positioned to execute on our proactive asset management strategy by collecting substantial cash rent and aggressively leasing available space," said Michael Weil, CEO of NYC. "We executed new or renewed leases or have signed LOIs to lease more than 58,000 square feet for the first quarter, including replacement leases for part of the space formerly leased to Knotel with terms in line with or better than the prior leases and with more robust tenants. We continue to be encouraged by the steps local, state and national leadership have taken to encourage vaccination efforts and position the city for reopening. We look forward to the return to offices and retail businesses, as workers, restaurants and the cultural institutions that contribute to making New York City a great place to live and work return to normal operation and begin to thrive once more."

Financial Results

Three Months Ended March 31,

(In thousands, except per share data)

2021

2020

Revenue from tenants

$

15,186

$

17,477

Net loss attributable to common stockholders

$

(13,535

)

$

(6,788

)

Net loss per common share (a)

$

(1.06

)

$

(0.53

)

FFO attributable to common stockholders

$

(5,009

)

$

731

FFO per common share (a)

(0.39

)

$

0.06

Core FFO attributable to common stockholders

$

(2,894

)

$

754

Core FFO per common share (a)

$

(0.23

)

$

0.06

(a)

All per share data based on 12,780,027 and 12,749,724 diluted weighted-average shares outstanding for the three months ended March 31, 2021 and 2020, respectively. 2020 values are retroactively adjusted for the effects of the reverse stock split in August 2020.

Real Estate Portfolio

The Company’s portfolio consisted of eight properties comprised of 1.2 million rentable square feet as of March 31, 2021. Portfolio metrics include:

  • 82.8% leased, down from the prior quarter primarily due to leases with Knotel that were terminated in January 2021 when Knotel filed for bankruptcy

  • 6.9 years remaining weighted-average lease term

  • 73% of annualized straight-line rent from top 10 tenants derived from investment grade or implied investment grade tenants with 9.5 years of weighted-average remaining lease term

  • Diversified portfolio, comprised of 20% financial services tenants, 18% government and public administration tenants, 15% non-profit and 47% all other industries, based on square feet.

Capital Structure and Liquidity Resources

As of March 31, 2021, the Company had $29.4 million of cash and cash equivalents.8 The Company’s net debt9 to gross asset value10 was 37.6%, with net debt of $375.6 million.

All of the Company’s debt was fixed-rate as of March 31, 2021. The Company’s total combined debt had a weighted-average interest rate of 4.4%.11

Rent Collection Update

First Quarter of 2021

For the first quarter of 2021, NYC collected 85% of the original cash rents that were due across the portfolio, including 89% of the original cash rent payable from the top 10 tenants in the portfolio (based on annualized straight-line rent). Cash rent collected includes both contractual rents and deferred rents paid during the period.1

Footnotes/Definitions

1

We calculate "original cash rent collections" by comparing original cash rent due under our lease agreements to the total amount of rent collected during the period, which includes both original cash rent due and payments of amounts deferred from prior periods. Eliminating the impact of deferred rent paid, we collected 85% of original cash rent for the first quarter of 2021 (88% for our top 10 tenants) and 82% of original cash rent for the fourth quarter of 2020. Top 10 tenants based on annualized straight-line rent. This information may not be indicative of future periods.

2

The impact of the COVID-19 pandemic on the Company’s future results of operations and liquidity will depend on the overall length and severity of the COVID-19 pandemic, which management is unable to predict.

3

As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term "parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of March 31, 2021. Based on annualized straight-line rent, top 10 tenants are 53% actual investment grade rated and 20% implied investment grade rated.

4

Represents percentage of square footage of which the tenant has taken possession of divided by the respective total rentable square feet as of the date or period end indicated.

5

The weighted-average remaining lease term (years) is based on annualized straight-line rent as of March 31, 2021.

6

Includes (i) all leases fully executed by both parties as of April 30, 2021, but after March 31, 2021 and (ii) all leases under negotiation with an executed LOI by both parties as of April 30, 2021. This represents one executed lease that commenced in the second quarter of 2021 totaling approximately 7,800 square feet and three LOI’s totaling 20,300 square feet. There have been no lease terminations or expirations since March 31, 2021. There can be no assurance that LOIs will lead to definitive leases that will commence on their current terms, or at all. Leasing pipeline should not be considered an indication of future performance.

7

Net leverage equals net debt to gross asset value

8

Under one of our mortgage loans, we are required to maintain minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million.

9

Total debt of $405.0 million less cash and cash equivalents of $29.4 million as of March 31, 2021. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents.

10

Defined as the carrying value of total assets of $851.2 million plus accumulated depreciation and amortization of $146.8 million as of March 31, 2021.

11

Weighted based on the outstanding principal balance of the debt.

Webcast and Conference Call

NYC will host a webcast and call on May 13, 2021 at 11:00 a.m. ET to discuss its financial and operating results. This webcast will be broadcast live over the Internet and can be accessed by all interested parties through the NYC website, www.newyorkcityreit.com, in the "Investor Relations" section.

Dial-in instructions for the conference call and the replay are outlined below.

To listen to the live call, please go to NYC’s "Investor Relations" section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the NYC website at www.newyorkcityreit.com.

Live Call
Dial-In (Toll Free): 1-888-317-6003
International Dial-In: 1-412-317-6061
Canada Dial-In (Toll Free): 1-866-605-3851
Participant Elite Entry Number: 2402508

Conference Replay*
Domestic Dial-In (Toll Free): 1-877-344-7529
International Dial-In: 1-412-317-0088
Canada Dial-In (Toll Free): 1-855-669-9658
Conference Number: 10155579
*Available one hour after the end of the conference call through August 13, 2021

About New York City REIT, Inc.

New York City REIT, Inc. (NYSE: NYC) is a publicly traded real estate investment trust listed on the NYSE that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City. Additional information about NYC can be found on its website at www.newyorkcityreit.com.

Supplemental Schedules

The Company will file supplemental information packages with the Securities and Exchange Commission (the "SEC") to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the "Presentations" tab in the Investor Relations section of NYC’s website at www.newyorkcityreit.com and on the SEC website at www.sec.gov.

Important Notice

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties that could cause the outcome to be materially different. In addition, words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "would," or similar expressions indicate a forward-looking statement, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements, including those set forth in the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" sections of NYC’s most recent Annual Report on Form 10-K and NYC’s most recent Form 10-Q, as such Risk Factors may be updated from time to time in subsequent reports. Further, forward-looking statements speak only as of the date they are made, and NYC undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.

Accounting Treatment of Rent Deferrals

The majority of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable. As a result of relief granted by the FASB and the SEC related to lease modification accounting, rental revenue used to calculate Net Income, NAREIT FFO and Core FFO have not been, and we do not expect it to be, significantly impacted by these types of deferrals.

New York City REIT, Inc.

Consolidated Balance Sheets

(In thousands. except share and per share data)

March 31,
2021

December 31,
2020

ASSETS

(Unaudited)

Real estate investments, at cost:

Land

$

193,658

$

193,658

Buildings and improvements

569,410

568,861

Acquired intangible assets

98,118

98,118

Total real estate investments, at cost

861,186

860,637

Less accumulated depreciation and amortization

(146,790

)

(139,666

)

Total real estate investments, net

714,396

720,971

Cash and cash equivalents

29,396

30,999

Restricted cash

11,197

8,995

Operating lease right-of-use asset

55,323

55,375

Prepaid expenses and other assets (includes amounts due from related parties of $0 and $435 at March 31, 2021 and December 31, 2020, respectively)

8,902

12,953

Straight-line rent receivable

22,690

22,050

Deferred leasing costs, net

9,264

10,503

Total assets

$

851,168

$

861,846

LIABILITIES AND STOCKHOLDERS’ EQUITY

Mortgage notes payable, net

$

396,959

$

396,574

Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $199 and $0 at March 31, 2021 and December 31, 2020, respectively)

8,479

6,916

Operating lease liability

54,808

54,820

Below-market lease liabilities, net

13,503

14,006

Derivative liability, at fair value

2,816

3,405

Deferred revenue

5,370

4,558

Total liabilities

481,935

480,279

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at March 31, 2020 and December 31, 2020

Common stock, $0.01 par value, 300,000,000 shares authorized, 12,776,448 and 12,802,690 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

129

129

Additional paid-in capital

686,555

686,715

Accumulated other comprehensive loss

(2,815

)

(3,404

)

Distributions in excess of accumulated earnings

(320,737

)

(305,882

)

Total stockholders’ equity

363,132

377,558

Non-controlling interests

6,101

4,009

Total equity

369,233

381,567

Total liabilities and equity

$

851,168

$

861,846

New York City REIT, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands, except share and per share data)

Three Months Ended March 31,

2021

2020

Revenue from tenants

$

15,186

$

17,477

Operating expenses:

Asset and property management fees to related parties

1,907

1,998

Property operating

8,736

8,016

Equity-based compensation

2,115

23

General and administrative

2,732

1,996

Depreciation and amortization

8,526

7,519

Total operating expenses

24,016

19,552

Operating loss

(8,830

)

(2,075

)

Other income (expense):

Interest expense

(4,713

)

(4,832

)

Other income

8

119

Total other expense

(4,705

)

(4,713

)

Net loss attributable to common stockholders

$

(13,535

)

$

(6,788

)

Net loss per share attributable to common stockholders — Basic and Diluted

$

(1.06

)

$

(0.53

)

Weighted-average shares outstanding — Basic and Diluted

12,780,027

12,749,724

New York City REIT, Inc.

Quarterly Reconciliation of Non-GAAP Measures (Unaudited)

(In thousands)

Three Months Ended March 31,

2021

2020

Adjusted EBITDA

Net loss

$

(13,535

)

$

(6,788

)

Depreciation and amortization

8,526

7,519

Interest expense

4,713

4,832

Equity-based compensation

2,115

23

Other income

8

(119

)

Adjusted EBITDA

1,827

5,467

Asset and property management fees to related parties

1,907

1,998

General and administrative

2,732

1,996

NOI

6,466

9,461

Accretion of below- and amortization of above-market lease liabilities and assets, net

(215

)

(362

)

Straight-line rent (revenue as a lessor)

(640

)

(691

)

Straight-line ground rent (expense as lessee)

28

27

Cash NOI

$

5,639

$

8,435

Cash Paid for Interest:

Interest expense

$

4,713

$

4,832

Amortization of deferred financing costs

(385

)

(368

)

Total cash paid for interest

$

4,328

$

4,464

New York City REIT, Inc.

Quarterly Reconciliation of Non-GAAP Measures (Unaudited)

(In thousands)

Three Months Ended March 31,

2021

2020

Net loss attributable to common stockholders

$

(13,535

)

$

(6,788

)

Depreciation and amortization

8,526

7,519

FFO attributable to common stockholders

(5,009

)

731

Equity-based compensation

2,115

23

Core FFO attributable to common stockholders

$

(2,894

)

$

754

Non-GAAP Financial Measures

This release discusses the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations ("FFO"), Core Funds from Operations ("Core FFO"), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), Net Operating Income ("NOI") and Cash Net Operating Income ("Cash NOI"). While NOI is a property-level measure, Core FFO is based on our total performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, Core FFO and NOI attributable to stockholders.

Caution on Use of Non-GAAP Measures

FFO, Core FFO, Adjusted EBITDA, NOI and Cash NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.

Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate Core FFO differently than we do. Consequently, our presentation of FFO and Core FFO may not be comparable to other similarly titled measures presented by other REITs.

We consider FFO and Core FFO useful indicators of our performance. Because FFO and Core FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO and Core FFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.

As a result, we believe that the use of FFO and Core FFO, together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO and Core FFO are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends. Investors are cautioned that FFO and Core FFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

Funds from Operations and Core Funds from Operations

Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the NAREIT, an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.

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

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Core Funds from Operations

Beginning in the third quarter 2020, following the listing of our Class A common stock on the NYSE, we began presenting Core FFO as a non-GAAP metric. We believe that Core FFO is utilized by other publicly-traded REITs although Core FFO presented by us may not be comparable to Core FFO reported by other REITs that define Core FFO differently. In calculating Core FFO, we start with FFO, then we exclude the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating items include acquisition and transaction related costs for dead deals, debt extinguishment costs, listing related costs and expenses (including the vesting and conversion of Class B units and cash expenses and fees which are non-recurring in nature incurred in connection with the listing of Class A common stock on the NYSE and related transactions), and non-cash equity-based compensation. We add back non-cash write-offs of deferred financing costs and prepayment penalties incurred with the early extinguishment of debt which are included in net income but are considered financing cash flows when paid in the statement of cash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of operations. By excluding expensed acquisition and transaction dead deal costs as well as non-operating costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income and Cash Net Operating Income.

We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, fees related to the listing related costs and expenses, other non-cash items such as the vesting and conversion of the Class B Units, equity-based compensation expense and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unleveraged basis. We use NOI to assess and compare property level performance and to make decisions concerning the operations of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss). NOI excludes certain items included in calculating net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or our ability to pay dividends.

Cash NOI, is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as NOI excluding amortization of above/below market lease intangibles and straight-line adjustments that are included in GAAP lease revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income, as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs present Cash NOI.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210513005065/en/

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