New York REIT Liquidating LLC - FORM 10-Q

New York REIT Liquidating LLC - FORM 10-Q - May 9, 2018

Attached files

Attached files

New York REIT Liquidating LLC Reports

file	filename
EX-32 - EX-32 - New York REIT Liquidating LLC	d563642dex32.htm
EX-31.2 - EX-31.2 - New York REIT Liquidating LLC	d563642dex312.htm
EX-31.1 - EX-31.1 - New York REIT Liquidating LLC	d563642dex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended: March 31, 2018

☐	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 001-36416

NEW YORK REIT, INC.

(Exact name of Registrant as specified in its certificate of incorporation)


Maryland		27-1065431
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

7 Bulfinch Place, Suite 500, Boston, MA		02114
(Address of principal executive offices)		(Zip Code)

(617) 570-4750
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes ☒ No ☐

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule12b-2). Yes ☐ No ☒

As of April 30, 2018, the registrant had 16,791,769 shares of common stock, $0.01 par value per share, outstanding.

NEW YORK REIT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Consolidated Statements of Net Assets (Liquidation Basis) as of March 31, 2018 and December 31, 2017		3

Consolidated Statements of Changes in Net Assets (Liquidation Basis) for the Three Months Ended March 31, 2018 and March 31, 2017		4

Notes to Consolidated Financial Statements		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3. Quantitative and Qualitative Disclosures About Market Risk		34

Item 4. Controls and Procedures		35

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		35

Item 1A. Risk Factors		35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		35

Item 3. Defaults Upon Senior Securities		35

Item 4. Mine Safety Disclosures		35

Item 5. Other Information		35

Item 6. Exhibits		35

Signatures		37

NEW YORK REIT, INC.

FORM 10-Q MARCH 31, 2018

CONSOLIDATED STATEMENTS OF NET ASSETS

(Liquidation Basis)

(Unaudited, in thousands)


	March 31, 2018		December 31, 2017
Assets
Investments in real estate	$	122,716	$	488,616
Investment in unconsolidated joint venture		264,408		257,634
Cash and cash equivalents		92,589		241,019
Restricted cash held in escrow		92,844		99,768
Accounts receivable		8,487		3,696

Total Assets		581,044		1,090,733
Liabilities
Mortgage notes payable		57,112		215,494
Liability for estimated costs in excess of estimated receipts during liquidation		10,879		27,228
Accounts payable, accrued expenses and other liabilities		10,337		14,881
Related party fees payable		9		17

Total Liabilities		78,337		257,620

Commitments and Contingencies
Net assets in liquidation	$	502,707	$	833,113

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

NEW YORK REIT, INC.

FORM 10-Q MARCH 31, 2018

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(Liquidation Basis)

(Unaudited, in thousands)


	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017
Net assets in liquidation, beginning of period	$	833,113		$	1,552,926
Changes in net assets in liquidation
Changes in liquidation value of investments in real estate		(4,000	)		—
Changes in liquidation value of investment in unconsolidated joint venture		6,774			—
Remeasurement of assets and liabilities		2,678			121

Net changes in liquidation value		5,452			121
Liquidating distributions to common stockholders		(335,858	)		—

Changes in net assets in liquidation		(330,406	)		121

Net assets in liquidation, end of period	$	502,707		$	1,553,047

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

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Note 1 — Organization

New York REIT, Inc. (the “Company”) was incorporated on October 6, 2009 as a Maryland corporation that qualified as a real estate investment trust for U.S. federal income tax purposes (“REIT”) beginning with its taxable year ended December 31, 2010. On April 15, 2014, the Company listed its common stock on the New York Stock Exchange (“NYSE”) under the symbol “NYRT.”

The Company purchased its first property and commenced active operations in June 2010. As of March 31, 2018, the Company owned nine properties including the Company’s share of WWP Holdings, LLC (Worldwide Plaza), aggregating 1.1 million rentable square feet, with an average occupancy of 97.6%. Seven properties were sold subsequent to March 31, 2018. The Company’s portfolio at March 31, 2018 primarily consisted of office and retail properties, representing 73% and 10%, respectively, of rentable square feet as of March 31, 2018. The Company also owns a hotel and one stand alone parking garage. Properties other than office and retail spaces represent 17% of rentable square feet.

Substantially all of the Company’s business is conducted through its operating partnership, New York Recovery Operating Partnership, L.P., a Delaware limited partnership (the “OP”). The Company’s only significant asset is the general partnership interests it owns in the OP and assets held by the Company for the use and benefit of the OP.

On August 22, 2016, the Company’s Board of Directors (the “Board”) approved a plan of liquidation to sell in an orderly manner all or substantially all of the assets of the Company and its OP and to liquidate and dissolve the Company and the OP (the “Liquidation Plan”), subject to stockholder approval. The Liquidation Plan was approved at a special meeting of stockholders on January 3, 2017.

The Company has no employees. Prior to March 8, 2017, the Company retained (i) New York Recovery Advisors, LLC (the “Former Advisor”) to manage its affairs on a day-to-day basis and (ii) New York Recovery Properties, LLC (the “ARG Property Manager”) to serve as the Company’s property manager, unless services were performed by a third party for specific properties. The Former Advisor and ARG Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”), (the “Sponsor”).

On March 8, 2017, the Company transferred all advisory duties from the Former Advisor to Winthrop REIT Advisors, LLC (the “Winthrop Advisor”) and property management services with respect to properties managed by ARG Property Manager were transferred to Winthrop Management, L.P. (the “Winthrop Property Manager”).

In March 2018 the Company effected a 1-for-10 reverse stock split (the “Reverse Split”) of its common stock (“Common Shares”) pursuant to which each of ten Common Shares issued and outstanding as of the close of market on March 15, 2018 were automatically combined into one Common Share, subject to the elimination of fractional shares. All references to Common Shares outstanding and per Common Share amounts have been restated to reflect the effect of the Reverse Split for all periods presented.

Any fractional shares resulting from the Reverse Split have been redeemed for cash in lieu of shares.

Note 2 – Liquidation Plan

The Liquidation Plan, as amended by the Board of Directors in accordance with the terms of the Liquidation Plan, provides for an orderly sale of the Company’s assets, payment of the Company’s liabilities and other obligations and the winding down of operations and final dissolution of the Company. The Company is not permitted to make any new investments except to exercise its option (the “WWP Option”) to purchase additional equity interests in Worldwide Plaza, and enter into the transaction relating to Worldwide Plaza pursuant to the Membership Interest Purchase Agreement with a purchaser, a joint venture between an affiliate of SL Green Realty Corp. and a private equity fund sponsored by RXR Realty LLC or to make protective acquisitions or advances with respect to its existing assets (see Note 7). The Company is permitted to satisfy any existing contractual obligations and fund required tenant improvements and capital expenditures at its real estate properties, including real estate properties owned by joint ventures in which the Company owns an interest.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

The Liquidation Plan enables the Company to sell any and all of its assets without further approval of the stockholders and provides that liquidating distributions be made to the stockholders as determined by the Board. Pursuant to applicable REIT rules, the Company must complete the disposition of its assets by January 3, 2019, two years after the date the Liquidation Plan was approved by the stockholders, in order to deduct liquidating distributions as dividends. To the extent that all of the Company’s assets are not sold by such date, the Company intends to satisfy the requirement by converting the Company to a limited liability company, which will require stockholder approval, or by transferring the remaining assets and liabilities to a liquidating trust.

The dissolution process and the amount and timing of distributions to stockholders involves risks and uncertainties. Accordingly, it is not possible to predict the timing or aggregate amount which will be ultimately distributed to stockholders and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the Consolidated Statements of Net Assets.

The Company expects to continue to qualify as a REIT throughout the liquidation until such time as the Company is converted into a limited liability company, which will require stockholder approval, or any remaining assets are transferred into a liquidating trust. The Board shall use commercially reasonable efforts to continue to cause the Company to maintain its REIT status, provided however, the Board may elect to terminate the Company’s status as a REIT if it determines that such termination would be in the best interest of the stockholders.

Although the Board does not intend to do so, the Board may terminate the Liquidation Plan without stockholder approval only (i) if the Board approves the Company to enter into an agreement involving the sale or other disposition of all or substantially all of the assets or common stock by merger, consolidation, share exchange, business combination, sale or other transaction involving the Company or (ii) if the Board determines, in exercise of its duties under Maryland law, after consultation with the Winthrop Advisor, if applicable, or other third party experts familiar with the market for Manhattan office properties, that an adverse change in the market for Manhattan office properties has occurred and reasonably would expect it to adversely affect continuing with the Liquidation Plan. Notwithstanding approval of the Liquidation Plan by the stockholders, the Board may amend the Liquidation Plan without further action by the stockholders to the extent permitted under the current law.

Note 3 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation.

Liquidation Basis of Accounting

As a result of the approval of the Liquidation Plan by the stockholders, the Company adopted the liquidation basis of accounting as of January 1, 2017 and for the periods subsequent to December 31, 2016 in accordance with GAAP. Accordingly, on January 1, 2017, the carrying value of the Company’s assets were adjusted to their liquidation value, which represents the estimated amount of cash that the Company will collect on disposal of assets as it carries out its liquidation activities under the Liquidation Plan. The current estimate of net assets in liquidation has been calculated based on undiscounted cash flow projections that all the properties will be sold by July 31, 2018 except for the remaining interest in Worldwide Plaza. The Company projects that the remaining interest in Worldwide Plaza will be sold approximately during the fourth quarter of 2021. The actual timing of sales has not yet been determined and is subject to future events and uncertainties. These estimates are subject to change based on the actual timing of future asset sales.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

The liquidation value of the Company’s investments in real estate is based on expected sales proceeds presented on an undiscounted basis. Estimated costs to dispose of assets have been presented separately from the related assets. Liabilities are carried at their contractual amounts due as adjusted for the timing and other assumptions related to the liquidation process.

The Company accrues costs and revenues that it expects to incur and earn as it carries out its liquidation activities through the end of the projected liquidation period to the extent it has a reasonable basis for estimation. Estimated costs expected to be incurred through the end of the liquidation period include budgeted property expenses and corporate overhead, costs to dispose of the properties, mortgage interest expense, costs associated with satisfying known and contingent liabilities and other costs associated with the winding down and dissolution of the Company. Revenues are based on in-place leases plus management’s estimates of revenue upon re-lease based on current market assumptions. These amounts are classified as a net liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets. Actual costs and revenues may differ from amounts reflected in the consolidated financial statements due to the inherent uncertainty in estimating future events. These differences may be material. See Note 4 for further discussion. Actual costs incurred but unpaid as of March 31, 2018 and December 31, 2017 are included in accounts payable, accrued expenses and other liabilities on the Consolidated Statement of Net Assets.

As a result of the change to the liquidation basis of accounting, the Company no longer presents a Consolidated Balance Sheet, a Consolidated Statement of Operations and Comprehensive Income (Loss), a Consolidated Statement of Changes in Equity or a Consolidated Statement of Cash Flows.

Use of Estimates

Certain of the Company’s accounting estimates are particularly important for an understanding of the Company’s financial position and results of operations and require the application of significant judgment by management. As a result, these estimates are subject to a degree of uncertainty. The Company is required to estimate all costs and revenue it expects to incur and earn through the end of liquidation including the estimated amount of cash it expects to collect on the disposal of its assets and the estimated costs to dispose of its assets. All of the estimates and evaluations are susceptible to change and actual results could differ materially from the estimates and evaluations.

Revenue Recognition

Under liquidation basis of accounting, the Company has accrued all revenue that it expects to earn through the end of liquidation to the extent it has a reasonable basis for estimation. Revenues are accrued based on contractual amounts due under the leases in place over the estimated hold period of each asset. These amounts are classified within liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets.

In accordance with liquidation accounting, as of January 1, 2017, tenant and other receivables were adjusted to their net realizable values. Management continually reviews tenant and other receivables to determine collectability. Any changes in the collectability of the receivables is reflected in the net realizable value of the receivable.

The Company owns certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. Contingent rental income is not contemplated under liquidation accounting unless there is a reasonable basis to estimate future receipts.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Investments in Real Estate

As of January 1, 2017, the investments in real estate were adjusted to their estimated net realizable value upon sale, or liquidation value, to reflect the change to the liquidation basis of accounting. The liquidation value represents the estimated amount of cash the Company expects to collect on the disposal of its assets as it carries out the liquidation activities of its Liquidation Plan. The liquidation value of the Company’s investments in real estate are presented on an undiscounted basis. Estimated revenue during the period following the commencement of liquidation and prior to the expected sale date and costs to dispose of these assets are presented separately from the related assets. Subsequent to January 1, 2017, all changes in the estimated liquidation value of the investments in real estate are reflected as a change in the Company’s net assets in liquidation presented on an undiscounted basis.

The liquidation value of investments in real estate is based on a number of factors including discounted cash flow and direct capitalization analyses, detailed analysis of current market comparables and broker opinions of value, and binding purchase offers to the extent available.

Investment in Unconsolidated Joint Venture

The Company accounts for its investment in unconsolidated joint venture under the equity method of accounting because the Company exercises significant influence over, but does not control the entity and is not considered to be the primary beneficiary. Under liquidation accounting, the investment in unconsolidated joint venture is recorded at its net realizable value. The Company evaluates the net realizable value of its unconsolidated joint venture at each reporting period. Any changes in net realizable value will be reflected as a change in the Company’s net assets in liquidation. The liquidation value of the Company’s remaining investment in Worldwide Plaza as of March 31, 2018 is based on the value of the property as a result of the Company’s recent sale of its 48.7% interest in Worldwide Plaza.

Amortization

Under liquidation accounting, intangible assets and liabilities are included in the liquidation value of investments in real estate and are no longer amortized.

Restricted Cash

Restricted cash primarily consists of the $90.7 million capital improvement reserve for Worldwide Plaza with the balance representing maintenance, real estate tax, structural and debt service reserves.

Recent Accounting Pronouncement

There are no new accounting pronouncements that are applicable or relevant to the Company under the liquidation basis of accounting.

Note 4—Liability for Estimated Costs in Excess of Estimated Receipts During Liquidation

The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation. The Company currently estimates that it will have costs in excess of estimated receipts during the liquidation. These amounts can vary significantly due to, among other things, the timing and estimates for executing and renewing leases, estimates of tenant improvement costs, the timing of property sales, direct costs incurred to complete the sales, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding down of operations. These costs are estimated and are anticipated to be paid out over the liquidation period.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

The Company accrued the following revenues and expenses expected to be earned or incurred during liquidation (in thousands):


	March 31, 2018			December 31, 2017
Rents and reimbursements	$	737		$	1,956
Hotel revenues		7,298			11,769
Release of liability		4,270			—
Property operating expenses		(520	)		1,930
Hotel operating expense		(5,473	)		(10,487	)
Interest expense		(52	)		(1,779	)
General and administrative expenses		(11,242	)		(11,137	)
Capital expenditures		(477	)		(920	)
Sales costs		(5,420	)		(18,560	)

Liability for estimated costs in excess of estimated receipts during liquidation	$	(10,879	)	$	(27,228	)

The change in the liability for estimated costs in excess of estimated receipts during liquidation for the three month periods ended March 31, 2018 and 2017 are as follows (in thousands):


	January 1, 2018			Net Change in Working Capital (1)			Remeasurement of Assets and Liabilities			March 31, 2018
Assets:
Estimated net inflows from investments in real estate	$	3,920		$	(2,862	)	$	4,725		$	5,783
Liabilities:
Sales costs		(18,559	)		13,004			135			(5,420	)
Corporate expenditures		(12,589	)		3,529			(2,182	)		(11,242	)

		(31,148	)		16,533			(2,047	)		(16,662	)

Total liability for estimated costs in excess of estimated receipts during liquidation	$	(27,228	)	$	13,671		$	2,678		$	(10,879	)

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)


	January 1, 2017			Net Change in Working Capital (1)			Remeasurement of Assets and Liabilities			March 31, 2017
Assets:
Estimated net inflows from investments in real estate	$	58,303		$	(22,209	)	$	309		$	36,403
Liabilities:
Sales costs		(69,524	)		—			—			(69,524	)
Corporate expenditures		(67,360	)		17,795			(188	)		(49,753	)

		(136,884	)		17,795			(188	)		(119,277	)

Total liability for estimated costs in excess of estimated receipts during liquidation	$	(78,581	)	$	(4,414	)	$	121		$	(82,874	)

(1)	Represents changes in cash, restricted cash, accounts receivable, accounts payable and accrued expenses as a result of the Company’s operating activities for the periods ended March 31, 2018 and 2017.

Note 5 – Net Assets in Liquidation

Net assets in liquidation decreased by $330.4 million during the three months ended March 31, 2018 primarily due to a liquidating distribution to common stockholders of $335.9 million and a $4.0 million decrease in the estimated liquidation value of the Viceroy property, which was directly offset by a release of liability of $4.3 million associated with the termination of the Viceroy management agreement. The decrease in net assets was further offset by a net increase of $2.9 million due to a remeasurement of estimated receipts and an increase of $2.3 million related to an increase in the estimated hold period for Worldwide Plaza.

Net assets in liquidation increased by $121,000 during the three months ended March 31, 2017. The primary reason for the increase in net assets was due to a change in the estimate of expected cash flows from various properties.

The net assets in liquidation at March 31, 2018, presented on an undiscounted basis include the Company’s proportionate share in Worldwide Plaza’s net assets which include a property value at $1.725 billion based on the Company’s recent sale of its 48.7% interest in Worldwide Plaza discussed in Note 7. Future increases in value of Worldwide Plaza, if any, from the agreed additional capital investment will be reflected in the statement of net assets when such capital investments are made and such increases in market value can be observed.

There were 16,791,769 Common Shares outstanding at March 31, 2018. The net assets in liquidation as of March 31, 2018, if sold at their net asset value, would result in liquidating distributions of approximately $29.94 per common share. On May 1, 2018, the Board declared a cash liquidating distribution of $4.85 per share payable on May 18, 2018 to stockholders of record on May 11, 2018, reducing the estimate of future liquidating distributions to $25.09 per share. The net assets in liquidation as of March 31, 2018 of $502.7 million, if sold at their net asset value, plus the cumulative liquidating distribution to common stockholders of $851.4 million ($50.70 per common share) prior to March 31, 2018 would result in cumulative liquidating distributions to common stockholders of $80.64 per share. There is inherent uncertainty with these projections, and they could change materially based on the timing of the sales, the performance of the underlying assets and any changes in the underlying assumptions of the projected cash flows.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Note 6 — Real Estate Investments

2018 Activity

333 West 34^th Street – property sale – On January 5, 2018, the Company sold to an independent third party the 333 West 34^th Street office property in Manhattan, New York for a gross sales price of $255.0 million. The property was part of the collateral for the Company’s $760.0 million POL Loans (defined in Note 8). In connection with the sale, the Company paid down $110.6 million as required under the POL Loans upon the sale of the property. After satisfaction of debt, pro-rations and closing costs, the Company received net proceeds of approximately $134.6 million. The estimated liquidation value of the property was $255.0 million at December 31, 2017.

350 West 42nd Street – property sale – On January 10, 2018, the Company sold to an independent third party the 350 West 42nd Street retail property in Manhattan, New York for a gross sales price of $25.1 million. The property was part of the collateral for the Company’s $760.0 million POL Loans. In connection with the sale, the Company paid down $11.3 million as required under the POL Loans upon the sale of the property. After satisfaction of debt, pro-rations and closing costs, the Company received net proceeds of approximately $12.6 million. The estimated liquidation value of the property was $25.1 million at December 31, 2017.

One Jackson Square – property sale – On February 6, 2018, the Company sold to an independent third party the One Jackson Square retail property in Manhattan, New York for a gross sales price of $31.0 million. The property was part of the collateral for the Company’s $760.0 million POL Loans. In connection with the sale, the Company paid down $13.0 million as required under the POL Loans upon the sale of the property. After satisfaction of debt, pro-rations and closing costs, the Company received net proceeds of approximately $16.5 million. The estimated liquidation value of the property was $31.0 million at December 31, 2017.

306 East 61st Street—property sale – On February 16, 2018, the Company sold to an independent third party the 306 East 61^st Street office property in Manhattan, New York for a gross sales price of $47.0 million. The property was encumbered by a $19.0 million mortgage loan which was satisfied in full at closing. After satisfaction of debt, pro-rations and closing costs, the Company received net proceeds of approximately $26.5 million. The estimated liquidation value of the property was $47.0 million at December 31, 2017.

2091 Coney Island Avenue – property sale – On February 14, 2018, the Company sold to an independent third party the 2091 Coney Island Avenue office property in Brooklyn, New York for a gross sales price of $3.8 million. The property, together with the retail property located at 2067-2073 Coney Island Avenue make up 1100 Kings Highway. The property was part of the collateral for the $20.2 million mortgage note payable on 1100 Kings Highway. In connection with the sale and as required in the mortgage loan agreement, the Company paid down a portion of the outstanding mortgage loan of $4.4 million. The estimated liquidation value of the property was $3.8 million at December 31, 2017.

416 Washington Street – property sale – On January 22, 2018, the Company entered into a contract to sell to an independent third party the 416 Washington Street retail property in Manhattan, New York for a gross sales price of $11.2 million. The sale was completed on April 19, 2018. The property was part of the collateral for the Company’s $760.0 million POL Loans. The Company was required to pay down $5.5 million under the POL Loans upon the sale of the property. After satisfaction of debt, pro-rations and closing costs, the Company received net proceeds of approximately $5.1 million. The estimated liquidation value of the property was $11.2 million at March 31, 2018 and December 31, 2017.

350 Bleecker Street and 367-387 Bleecker Street – property sale – On February 15, 2018, the Company entered into a combined contract to sell to an independent third party the 350 Bleecker Street and 367-387 Bleecker Street properties located in Manhattan, New York for a gross sales price of $31.5 million. The sale was completed on April 19, 2018. The properties were part of the collateral for the Company’s $760.0 million POL Loans. In connection with the sale, the Company was required to pay down the POL Loans by $21.1 million. After satisfaction of debt, pro-rations and closing costs, the Company received net proceeds of approximately $8.8 million. The estimated liquidation value of the properties was $31.5 million at March 31, 2018 and December 31, 2017.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

2067 – 2073 Coney Island Avenue – property sale – On January 25, 2018, the Company entered into a contract to sell to an independent third party the 2067-2073 Coney Island Avenue retail property in Brooklyn, New York for a gross sales price of $30.5 million. The sale was completed on May 1, 2018. The property was part of the collateral for the $20.2 million mortgage note payable on 1100 Kings Highway. The estimated liquidation value of the property was $30.5 million at March 31, 2018 and December 31, 2017.

Centurion Parking Garage – property sale – On March 15, 2018, the Company entered into a contract to sell to an independent third party the Centurion Parking Garage property located at 33 West 56^th Street, Manhattan, New York, for a gross sales price of $3.5 million. The sale was completed on May 1, 2018. The estimated liquidation value of the property was $3.5 million at March 31, 2018 and December 31, 2017.

POL Loans – In April 2018, the POL Loans were fully satisfied using proceeds from the sales of 382-384 Bleecker Street, 350 Bleecker Street, 416-415 Washington Street and reserves.

Future Minimum Rent

The following table presents future minimum base cash rental payments due to the Company, excluding future minimum base cash rental payments related to the Company’s unconsolidated joint venture, subsequent to March 31, 2018. These amounts exclude contingent rental payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items.


(In thousands)	Future Minimum Base Cash Rental Payments
April 1, 2018 - December 31, 2018	$	3,737
2019		4,492
2020		4,330
2021		3,176
2022		2,597
Thereafter		6,247

Total	$	24,579

Based on the Company’s anticipated holding period for each property, the Company has accrued approximately $0.6 million of contractual base cash rental payments, excluding reimbursements.

The following table lists the tenants whose annualized cash rent represented greater than 10% of total annualized cash rent for the three months ended March 31, 2018 and 2017, including annualized cash rent related to the Company’s unconsolidated joint venture:


		March 31,
Property Portfolio	Tenant	2018			2017
Worldwide Plaza	Cravath, Swaine & Moore, LLP		41.9	%		16	%
Worldwide Plaza	Nomura Holdings America, Inc.		27.3	%		11	%

The termination, delinquency or non-renewal of any of the above tenants may have a material adverse effect on the Company’s operations.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Note 7 — Investment in Unconsolidated Joint Venture

The Company initially owned a 48.9% equity interest in Worldwide Plaza. On June 1, 2017, the Company acquired an additional 49.9% equity interest in Worldwide Plaza on exercise of the WWP Option pursuant to the Company’s rights under the joint venture agreement of Worldwide Plaza for a contract purchase price of $276.7 million, based on the option price of the property of approximately $1.4 billion less $875.0 million of debt on the property. The Company’s joint venture partner exercised its right to retain 1.2% of the aggregate membership interests in Worldwide Plaza. Following the exercise of the option, the Company owned a total equity interest of 98.8% in Worldwide Plaza.

On October 18, 2017, the Company sold a 48.7% interest in Worldwide Plaza to a joint venture managed by SL Green Realty Corp. and RXR Realty LLC based on an estimated underlying property value of $1.725 billion. In conjunction with the equity sale, there was a concurrent $1.2 billion refinancing of the existing Worldwide Plaza debt. The Company received cash at closing of approximately $446.5 million from the sale and excess proceeds from the financing, net of closing costs which included $108.3 million of defeasance and prepayment costs. The new debt on Worldwide Plaza bears interest at a blended rate of approximately 3.98% per annum, requires monthly payments of interest only and matures in November 2027. The Company has reserved $90.7 million of the proceeds in a separate account to fund future capital improvements to Worldwide Plaza. Following the sale of its interest, the Company now holds a 50.1% interest in Worldwide Plaza. The Company has determined that this investment is an investment in a variable interest entity (VIE). The Company has determined that it is not the primary beneficiary of this VIE since the Company does not have the power to direct the activities that most significantly impact the VIE’s economic performance. The Company accounts for this investment using the equity method of accounting.

The lease with one of the tenants at the Worldwide Plaza property contains a right of first offer in the event that Worldwide Plaza sells 100% of the property. The right requires Worldwide Plaza to offer the tenant the option to purchase 100% of the Worldwide Plaza property, at the price, and on other material terms, proposed by Worldwide Plaza to third parties. If, after a 45-day period, that tenant does not accept the offer, Worldwide Plaza may then sell the property to a third party, provided that Worldwide Plaza will be required to re-offer the property to that tenant if it desires to sell the property for a purchase price (and other economic consideration) less than 92.5% of the initial purchase price contained in the offer to that tenant.

The amounts reflected in the following tables are based on the financial information of Worldwide Plaza. Under liquidation accounting, equity investments are carried at net realizable value.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

The condensed balance sheets as of March 31, 2018 and December 31, 2017 for Worldwide Plaza are as follows:


(In thousands)	March 31, 2018			December 31, 2017
Real estate assets, at cost	$	825,316		$	825,310
Less accumulated depreciation and amortization		(192,092	)		(185,377	)

Total real estate assets, net		633,224			639,933
Cash and cash equivalents		36,614			15,964
Other assets		149,640			161,285

Total assets	$	819,478		$	817,182

Debt	$	1,216,161		$	1,213,193
Other liabilities		130,044			126,142

Total liabilities		1,346,205			1,339,335
Deficit		(526,727	)		(522,153	)

Total liabilities and deficit	$	819,478		$	817,182

The condensed statements of operations for the three months ended March 31, 2018 and 2017 for Worldwide Plaza are as follows:


	March 31,
(In thousands)	2018			2017
Rental income	$	34,179		$	34,300
Operating expenses:
Operating expenses		13,947			13,399
Depreciation and amortization		7,650			7,202

Total operating expenses		21,597			20,601
Operating income		12,582			13,699
Interest expense		(18,205	)		(15,255	)

Net loss	$	(5,623	)	$	(1,556	)

Note 8 — Mortgage Notes Payable

Mortgage notes payable are carried at their contractual amounts due under liquidation accounting. The Company had outstanding mortgage notes payable of $57.1 million at March 31, 2018 and $215.5 million at December 31, 2017. The mortgage notes payable are collateralized directly by the real estate held by the Company identified in the table below.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

The Company’s mortgage notes payable as of March 31, 2018 and December 31, 2017 consist of the following (in thousands):


			Outstanding Loan Amount				Effective Interest Rate at March 31, 2018
Portfolio	Encumbered Properties		March 31, 2018		December 31, 2017		Effective Interest Rate at March 31, 2018			Interest Rate			Maturity
Mortgage Loan (1)		5	$	41,262	$	176,246		5.4	%		Libor + 3.5	%		Sep 2018
1100 Kings Highway (3)		1		15,850		20,200		4.3	%		Libor + 2.4	%		May 2018
Design Center (4)		—		—		19,048		N/A			N/A			N/A

Mortgage notes payable, gross principal amount			$	57,112		215,494		5.1	% (2)

(1)	At March 31, 2018 encumbered properties are 382-384 Bleecker Street, 350 Bleecker Street, 416-425 Washington Street, 33 W 56th Street and 120 W 57th Street (the “POL Loan Properties”). The Mortgage Loan has been repaid in full subsequent to March 31, 2018 as discussed further below.

(2)	Calculated on a weighted average basis for all mortgages outstanding as of March 31, 2018.

(3)	Loan was paid off in connection with the sale of the property.

(4)	The loan was satisfied in full subsequent to March 31, 2018 in connection with the sale of the property.

On August 1, 2017, the Company’s mortgage loan collateralized by the 1100 Kings Highway property was modified to extend the maturity date to April 1, 2018 and to allow for partial release of the collateral. The loan also requires a cash sweep starting January 1, 2018 unless the property is under contract for sale for an amount equal to or greater than 133% of the outstanding mortgage loan payable. As the property is under contract for sale for an amount that exceeds the threshold, the lender has not initiated the cash sweep. In April 2018, the loan maturity date was extended to May 29, 2018.

On December 20, 2016, the Company, through indirect wholly owned subsidiaries of the OP, entered into a mortgage loan (the “Mortgage Loan”) in the aggregate amount of $500.0 million and a mezzanine loan in the aggregate amount of $260.0 million (the “Mezzanine Loan” and, together with the Mortgage Loan, the “POL Loans”). The POL Loans were initially secured directly, in the case of the Mortgage Loan, and indirectly in the case of the Mezzanine Loan, by properties located in New York, New York at 245-249 West 17th Street, 333 West 34th Street, 216-218 West 18th Street, 50 Varick Street, 229 West 36th Street, 122 Greenwich Street, 350 West 42nd Street, 382-384 Bleecker Street, 350 Bleecker Street, 416-425 Washington Street, 33 West 56th Street and 120 West 57th Street (the “POL Loan Properties”). Properties sold during 2017 and 2018 have been released and are no longer collateral for the POL Loans.

The Mortgage Loan initially required monthly interest payments at an initial weighted average interest rate of LIBOR plus 2.38% and the Mezzanine Loan required monthly interest payments at an initial weighted average interest rate of LIBOR plus 5.65%. The LIBOR portions of the interest rates due under the POL Loans were capped at 3.0% pursuant to interest rate cap agreements.

On December 20, 2017, the Mortgage Loan was extended through September 30, 2018. Under the extended term, the Mortgage Loan requires monthly interest payments at a weighted average interest rate of LIBOR plus 3.50%. The Mezzanine Loan was fully satisfied in 2017.

The POL Loans were recourse to the Company and could have been accelerated only in the event of a default. The POL Loans could have been prepaid, in whole or in part, without payment of any prepayment premium or spread maintenance premium or any other fee or penalty.

In connection with a sale or disposition of an individual POL Loan Property to a third party, such POL Loan Property could have been released from the collateral securing the Mortgage Loan, subject to certain conditions, by prepayment of a release price (the “Release Amount”) as defined in the Mortgage Loan agreements. In certain instances, 110% of the Release Amount was required to be paid in order to release the property. During the three months ended March 31, 2018, the POL Loans were paid down approximately $134.9 million as a result of the sale of 333 West 34^th Street, 350 West 42^nd Street and 122 Greenwich Street. In April 2018, the POL Loans were fully satisfied using proceeds from the sales of 382-384 Bleecker Street, 350 Bleecker Street, 416-425 Washington Street and reserves.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Concurrently with the POL Loans, the Company entered into guaranty agreements with respect to the POL Loans that required the Company to maintain, (i) on a consolidated basis, a minimum net worth of $300.0 million, which minimum net worth will be reduced pro rata with any prepayment of the POL Loans once the outstanding principal amount of the POL Loans is less than $300.0 million, but in no event will the minimum net worth be reduced below $150.0 million, and (ii) liquid assets having a market value of at least $25.0 million, which minimum market value of liquid assets may be reduced to $15.0 million in the event the outstanding amount under the POL Loans is equal to or less than $100.0 million. As of March 31, 2018, the minimum net worth requirement was $150.0 million, and the minimum liquidity requirement was $15.0 million. The Company met both requirements as of March 31, 2018. As a result of the repayment of the POL Loans, these requirements are no longer applicable.

Some of the Company’s mortgage note agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of March 31, 2018, the Company was in compliance with the financial covenants under its mortgage note agreements.

Note 9 — Interest Rate Derivatives and Hedging Activities Risk

Management Objective of Using Derivatives

The Company periodically uses derivative financial instruments, including interest rate swaps, caps, collars, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not utilize derivatives for speculative purposes or purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements will not perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties that the Company believes to have high credit ratings and with major financial institutions with which the Company and the Former Advisor and its affiliates may also have had other financial relationships.

As these instruments were not converted to cash or other considerations, derivative financial instruments were valued at $0 as of January 1, 2017 in accordance with liquidation accounting. The Company was not a party to any derivative financial instruments at March 31, 2018 or December 31, 2017.

Note 10 — Common Stock

In March 2018, the Company effected a 1-for-10 reverse stock split pursuant to which each of ten Common Shares issued and outstanding as of the close of market on March 15, 2018 were automatically combined into one Common Share, subject to elimination of fractional shares.

As of March 31, 2018 and December 31, 2017 the Company had 16.8 million shares of common stock outstanding, including unvested shares of restricted common stock (“restricted shares”). On January 3, 2017, the Company issued 84,166 shares of its common stock upon redemption of 841,660 OP units held by certain individuals who were members of the Former Advisor or its affiliates. As of March 31, 2018 and December 31, 2017, there were no OP units outstanding, other than OP units held by the Company. See Note 15 – Non-Controlling Interests.

The Company expects to make periodic liquidating distributions out of net proceeds of asset sales, subject to satisfying its liabilities and obligations, in lieu of regular monthly dividends. During 2017, the Company paid aggregate liquidating distributions equal to $30.70 per share. On January 26, 2018, the Company paid a cash liquidating distribution of $20.00 per share. On May 1, 2018, the Company declared a cash liquidating distribution of $4.85 per share payable to stockholders of record as of May 11, 2018. There can be no assurance as to the actual amount or timing of future liquidating distributions stockholders will receive.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Note 11 — Commitments and Contingencies

Future Minimum Lease Payments

The Company entered into operating and capital lease agreements primarily related to certain properties under leasehold interest arrangements. The following table reflects the minimum contractual base cash payments, excluding reimbursements, due from the Company over the next five years and thereafter under these arrangements, including the present value of the net minimum payments due under capital leases. These amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes among other items.


	Future Minimum Base Rent Payments
(In thousands)	Ground Leases
April 1, 2018 - December 31, 2018		3,927
2019		5,432
2020		5,432
2021		5,633
2022		5,914
Thereafter		238,138

Total minimum lease payments	$	264,476

As of March 31, 2018, the future minimum base rent payments related to the ground leases accrued until the projected disposal of the related properties amounted to $1.2 million and are included in liability for estimated costs in excess of estimated receipts during liquidation.

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no legal or regulatory proceedings pending or known to be contemplated against the Company from which the Company expects to incur a material loss.

Eastdil/Wells Fargo Arbitration

On October 18, 2017, the Company sold a 48.7% interest in Worldwide Plaza to a joint venture managed by SL Green Realty Corp. and RXR Realty LLC. The Company had previously retained Wells Fargo Securities, LLC (pursuant to an agreement that contemplated that certain of the services could be delegated to an affiliate, Eastdil Secured LLC) (collectively “Eastdil/Wells Fargo”) to, among other services, assist the Company in a possible sale of Worldwide Plaza. In late 2016, Eastdil lost key personnel to a competitor, Cushman & Wakefield. As a result of these personnel losses at Eastdil, the Company felt it necessary to also hire CBRE to assist the Company and in support of Eastdil in the possible sale of Worldwide Plaza. In connection with the sale of the 48.7% interest in Worldwide Plaza, the Company paid compensation to Eastdil/Wells Fargo of $2.1 million pursuant to the Company’s understanding of the fee due to Eastdil/Wells Fargo based on specific oral and written representations by Eastdil/Wells Fargo to the Company of what would be due to Eastdil/Wells Fargo on the partial interest sale. Subsequent to the completion of the sale of the 48.7% interest in Worldwide Plaza, Eastdil/Wells Fargo is now alleging additional amounts are due to Eastdil/Wells Fargo, as if the Company’s entire interest in Worldwide Plaza was sold, and has filed a demand for arbitration with the American Arbitration Association against the Company. Eastdil/Wells Fargo is claiming compensation totaling $4.4 million, or an additional $2.3 million over the $2.1 million that has already been paid Eastdil/Wells Fargo by the Company. The Company believes Eastdil/Wells Fargo should be bound by their representations concerning the sale, and will vigorously defend the Company’s position. No date has been set for the arbitration hearing as of the date of this filing. The Company has included an amount it feels appropriate for legal fees and the contingent liability in its Consolidated Statement of Net Assets as a component of liability for estimated costs in excess of estimated receipts during liquidation at March 31, 2018.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Harris Derivative Suit

In October 2016, Berney Harris (the “Plaintiff”) filed a derivative complaint (the “Harris Complaint”) on behalf of the Company against certain current and former members of the Company’s board of directors (the “director defendants”), the Former Advisor, and certain affiliates of the Former Advisor (together with the Former Advisor, the “Former Advisor defendants”). The Complaint was filed in the Supreme Court of the State of New York, New York County on October 13, 2016. The Harris Complaint alleged, among other things, that the director defendants breached their fiduciary duties by putting the interests of the Former Advisor defendants before those of the public stockholders, which breach was aided and abetted by the Former Advisor defendants. The Harris Complaint also asserted claims of corporate waste against the director defendants and unjust enrichment against certain of the Former Advisor defendants. On December 16, 2016, the defendants filed motions to dismiss on the basis of a provision in the Company’s bylaws providing that the state or federal courts of Maryland are the sole and exclusive forum for derivative claims such as those raised in the Harris Complaint. On August 10, 2017, the Court issued an Order granting the Company’s and the director defendants’ motion to dismiss and also granted the motion to dismiss of one of the Former Advisor defendants. At the same time, the Court requested additional briefing as to the other Former Advisor defendants’ motion to dismiss, which the Court neither granted nor denied at the time and which is still pending before the Court. On September 15, 2017, the Former Advisor defendants who had not been dismissed filed a memorandum of law in further support of their motion to dismiss. On October 3, 2017, Plaintiff filed a motion seeking to modify the Court’s August 10, 2017 Order to the extent that it dismissed the Company as a nominal defendant. On October 18, 2017, Plaintiff filed a notice of appeal of the Court’s Order dismissing the Company, the director defendants, and one Former Advisor defendant. On November 21, 2017, Plaintiff filed a motion for leave to appeal from certain parts of the Court’s August 10, 2017 Order.

On December 6, 2017, the Court dismissed the Harris Complaint in its entirety without prejudice. Accordingly, the Court denied as moot Plaintiff’s November 21, 2017 motion for leave to appeal. On January 31, 2018, Plaintiff filed an amended notice of appeal of the Court’s Order dismissing the Harris Complaint and the Court’s prior August 10, 2017 Order. At this time, it is unclear whether Plaintiff will pursue any of his appeals, whether he will succeed if he does pursue any appeals, or whether Plaintiff will seek to file a complaint in another jurisdiction.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company maintains environmental insurance for its properties that provides coverage for potential environmental liabilities, subject to the policy’s coverage conditions and limitations. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the consolidated results of operations.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Note 12 — Related Party Transactions and Arrangements

Viceroy Hotel

The following table details revenues from related parties at the Viceroy Hotel. The Company did not have any receivables from related parties as of March 31, 2018 and 2017.


	March 31,
(In thousands)	2018		2017
Hotel revenues	$	1	$	3

Winthrop Advisor and its Affiliates

On December 19, 2016 the Company entered into an agreement (the “Current Advisory Agreement”) with Winthrop Advisor, pursuant to which Winthrop Advisor served as the Company’s exclusive advisor with respect to all matters primarily related to any plan of liquidation and dissolution of the Company and as a consultant to the Board on certain other matters during the period from January 3, 2017 through March 7, 2017 and is serving as exclusive advisor to the Company from and after March 8, 2017.

On each of January 3, 2017 and February 1, 2017, the Company paid Winthrop Advisor a fee of $500,000 in cash as compensation for advisory services and consulting services rendered prior to March 1, 2017.

Beginning on March 1, 2017, the Company pays Winthrop Advisor an asset management fee equal to 0.325% per annum of the cost of assets (as defined in the Current Advisory Agreement) up to $3.0 billion and 0.25% per annum of the cost of assets in excess of $3.0 billion.

On February 28, 2018, the Company and the Winthrop Advisor entered into an amendment to the Current Advisory Agreement providing for a term ending March 31, 2018 and amending the Current Advisory Agreement to provide that the Current Advisory Agreement will automatically renew for a one month period on the expiration of any renewal term, unless terminated by a majority of our independent directors or the Winthrop Advisor elects to terminate the Current Advisory Agreement without cause and without penalty, upon written notice forty-five (45) days before the expiration of any renewal term. The Current Advisory Agreement will also automatically terminate at the effective time of the dissolution of the Company in accordance with a Plan of Liquidation or, if the assets of the Company are transferred to a liquidating trust (or the Company is converted into a liquidating entity), the final disposition of the assets transferred to the liquidating trust or held by the liquidating entity. In addition, the amendment provides that commencing March 1, 2018, the Company will reimburse the Winthrop Advisor for the compensation of Wendy Silverstein as chief executive officer of the Company as determined by the Compensation Committee. During the three months ended March 31, 2018, the Company reimbursed Winthrop Advisor $167,000 for compensation of the Chief Executive Officer.

In connection with the adoption of liquidation accounting, the Company accrues costs it expects to incur through the end of liquidation. As of March 31, 2018, the Company has accrued asset management fees and compensation reimbursements totaling $2.4 million payable to Winthrop Advisor representing management’s estimate of future asset management costs to final liquidation, provided there is no assurance that the contract will continue to be extended at the same terms, if at all. This amount is included in estimated costs in excess of estimated receipts during liquidation.

In connection with the payment of (i) any distributions of money or other property by the Company to its stockholders during the term of the Current Advisory Agreement and (ii) any other amounts paid to the Company’s stockholders on account of their shares of common stock in connection with a merger or other change in control transaction pursuant to an agreement with the Company entered into after March 8, 2017 (such distributions and

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

payments, the “Hurdle Payments”), in excess of $11.00 per share (the “Hurdle Amount”), when taken together with all other Hurdle Payments, the Company will pay an incentive fee to Winthrop Advisor in an amount equal to 10.0% of such excess (the “Incentive Fee”). The Hurdle Amount will be increased on an annualized basis by an amount equal to the product of (a) the Treasury Rate plus 200 basis points and (b) the Hurdle Amount minus all previous Hurdle Payments. Based on the current estimated undiscounted net assets in liquidation, the Winthrop Advisor would not be entitled to receive any such incentive fee.

Effective March 2017, Winthrop Property Manager began providing property management services to those properties for which the ARG Property Manager had been providing property management services. The Company pays to Winthrop Property Manager 1.75% of gross revenues, inclusive of all third party property management fees, for property management services provided to the Company by the Winthrop Property Manager or any of its affiliates.

The following table details amounts incurred by the Company to Winthrop Advisor and its affiliates in connection with the operations related services described above for the periods presented and any amounts payable to or due from Winthrop Advisor as of the dates specified:


					Payable as of
	Three Months Ended March 31,				March 31,		December 31,
(In thousands)	2018		2017		2018		2017
Asset management fees	$	863	$	1,667	$	—	$	—
Property management fees		34		46		9		46
Reimbursements		167		—		—		—

Total related party operational fees and reimbursements	$	1,064	$	1,713	$	9	$	46

Former Advisor and its Affiliates

Prior to March 8, 2017, the Company paid to the Former Advisor an asset management fee equal to 0.50% per annum of the cost of assets, as defined, up to $3.0 billion and 0.40% per annum of the cost of assets above $3.0 billion.

Prior to March 8, 2017, unless the Company contracted with a third party, the Company paid the ARG Property Manager a property management fee equal to: (i) for non-hotel properties, 4.0% of gross revenues from properties managed, plus market-based leasing commissions; and (ii) for hotel properties, a market based fee equal to a percentage of gross revenues. The Company also reimbursed the ARG Property Manager for property-level expenses. The ARG Property Manager was permitted to subcontract the performance of its property management and leasing services duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracted for these services. If the Company contracted directly with third parties for such services, the Company paid them customary market fees and paid the ARG Property Manager an oversight fee equal to 1.0% of the gross revenues of the applicable property.

The Company reimbursed the Former Advisor for costs and expenses paid or incurred prior to March 8, 2017 by the Former Advisor and its affiliates in connection with providing services to the Company (including reasonable salaries and wages, benefits and overhead of all employees directly involved with the performance of such services), although the Company did not reimburse the Former Advisor for personnel costs in connection with services for which the Former Advisor received a separate fee.

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

The following table details amounts incurred and paid by the Company to the Former Advisor and its affiliates in connection with the operations related services described above for the periods presented:


	Three Months Ended March 31, 2017
(In thousands)	Incurred
To the Former Advisor and affiliates:
Asset management fees	$	2,339
Transfer agent and other professional fees		414
Property management fees		560

Total related party operational fees and reimbursements	$	3,313

The Former Advisor, individual members of the Former Advisor, and employees or former employees of the Former Advisor held interests in the OP. See Note 15 — Non-Controlling Interests.

Note 13 — Economic Dependency

Under various agreements, the Company has engaged Winthrop Advisor, its affiliates and entities under common control with Winthrop Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services, transaction management and investor relations.

As a result of these relationships, the Company is dependent upon Winthrop Advisor and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

Note 14 — Share-Based Compensation

Stock Option Plan

The Company has a stock option plan (the “Plan”) which authorizes the grant of nonqualified stock options to the Company’s independent directors, officers, advisors, consultants and other personnel, subject to the absolute discretion of the board of directors and the applicable limitations of the Plan. The exercise price for all stock options granted under the Plan will be equal to the fair market value of a share on the date of grant. Upon a change in control, unvested options will become fully vested and any performance conditions imposed with respect to the options will be deemed to be fully achieved. A total of 50,000 shares have been authorized and reserved for issuance under the Plan. As of March 31, 2018 and December 31, 2017, no stock options were issued under the Plan.

Restricted Share Plan

The Company’s employee and director incentive restricted share plan (“RSP”) provides the Company with the ability to grant awards of restricted shares to the Company’s directors, officers and employees (if the Company ever has employees), employees of the Former Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Former Advisor or of entities that provide services to the Company, certain consultants to the Company and the Former Advisor and its affiliates or to entities that provide services to the Company.

Under the RSP, the annual amount granted to the independent directors is determined by the board of directors. The maximum number of shares of stock granted under the RSP cannot exceed 10% of the Company’s outstanding shares of common stock on a fully diluted basis at any time. Restricted shares issued to independent directors generally

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

vest over a three- year period in increments of 33.3% per annum. Generally, such awards provide for accelerated vesting of (i) all unvested restricted shares upon a change in control or a termination without cause and (ii) the portion of the unvested restricted shares scheduled to vest in the year of voluntary termination or the failure to be re-elected to the board.

Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares receive cash dividends and other distributions (including any liquidating distributions made pursuant to the Liquidation Plan) prior to the time that the restrictions on the restricted shares have lapsed. Any dividends payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

The following table displays restricted share award activity during the three months ended March 31, 2018:


	Number of Restricted Shares		Weighted-Average Issue Price
Unvested, December 31, 2017		6,828	$	103.20
Granted		—		—
Vested		3,299		103.68

Unvested, March 31, 2018		3,529		102.71

2014 Advisor Multi-Year Outperformance Agreement

On April 15, 2014 (the “Effective Date”), the Company entered into a multi-year outperformance agreement (the “OPP”) with the OP and the Former Advisor. Under the OPP, the Former Advisor was issued 8,880,579 LTIP Units in the OP with a maximum award value on the issuance date equal to 5.0% of the Company’s market capitalization (the “OPP Cap”). The LTIP Units are structured as profits interests in the Operating Partnership.

Prior to the OPP Side Letter dated December 19, 2016 (“OPP Side Letter”), subject to the Former Advisor’s continued service through each vesting date, one third of any earned LTIP Units would vest on each of the third, fourth and fifth anniversaries of the Effective Date.

On April 15, 2015 and 2016, in connection with the end of the One-Year Period and Two-Year Period, 367,059 and 805,679 LTIP Units, respectively, were earned by the Former Advisor under the terms of the OPP. Pursuant to the OPP Side Letter, these LTIP Units immediately vested upon approval by the Compensation Committee and converted into unrestricted shares of the Company’s common stock.

Based on calculations for the Three-Year Period, the Former Advisor earned 43,685 LTIP Units under the terms of the OPP on April 15, 2017. Pursuant to the terms of the OPP Side Letter, these LTIP units were immediately vested on April 15, 2017, were converted into unrestricted shares of the Company’s common stock on May 9, 2017, and were issued to the Former Advisor on May 9, 2017. Following the issuance of the shares of common stock on May 9, 2017, the remaining 7,664,156 LTIP Units issued to the Former Advisor were forfeited.

Under the OPP, the Former Advisor’s eligibility to earn a number of LTIP units with a value equal to a portion of the OPP Cap upon the first, second and third anniversaries of the Effective Date was based on the Company’s achievement of certain levels of total return to the Company’s stockholders (“Total Return”), including both share price appreciation and common stock dividends, as measured against a peer group of companies, for the three-year performance period commencing on the Effective Date (the “Three-Year Period”); each 12-month period during the Three-Year Period (the “One-Year Period”); and the initial 24-month period of the Three-Year Period (the “Two-Year Period”).

NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(unaudited)

Note 15 — Non-Controlling Interests

On January 3, 2017, the Company issued 84,166 shares of its common stock upon redemption of 841,660 OP units held by the Former Advisor or members, employees or former employees of the Former Advisor. Following the issuance, no OP units remained outstanding other than OP units held by the Company corresponding to shares of the Company’s common stock.

Note 16 — Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements, except as disclosed in Note 6.

NEW YORK REIT, INC.

March 31, 2018

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

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of New York REIT, Inc. and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to New York REIT, Inc., a Maryland corporation, and, as required by context, to New York Recovery Operating Partnership, L.P., a Delaware limited partnership (the “OP”), and to their subsidiaries. As of March 8, 2017, we are externally managed by Winthrop REIT Advisors, LLC (the “Winthrop Advisor”). Prior to March 8, 2017, we were externally managed by New York Recovery Advisors, LLC (the “Former Advisor”), a Delaware limited liability company. Capitalized terms used herein but not otherwise defined have the meaning ascribed to those terms in “Part I - Financial Information” included in the notes to consolidated financial statements and contained herein.

Forward-Looking Statements

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “estimates,” “expects,” “anticipates,” “intends,” “plans,” “would,” “may” or similar expressions in this Quarterly Report on Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. Factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those set forth in our Annual Report on Form 10-K for the year ended December 31, 2017 under “Forward Looking Statements” and “Item 1A – Risk Factors,” as well as our other filings with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on forward-looking statements, which are based on information, judgments and estimates at the time they are made, to anticipate future results or trends.

Management’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our unaudited consolidated interim financial statements and footnotes thereto. These unaudited interim financial statements are prepared in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

In March 2018 we effected a 1-for-10 reverse stock split, which we refer to as the Reverse Split, of its common shares of beneficial interest, which we refer to as common shares, pursuant to which each of ten shares of its common shares issued and outstanding as of the close of the market on March 15, 2018 were automatically combined into one common share, subject to the elimination of fractional shares. All common shares and per common share data included in this Quarterly Report on Form 10-Q and the accompanying Consolidated Financial Statements and Notes thereto have been adjusted to reflect this Reverse Split.

Overview

On August 22, 2016 our Board of Directors (the “Board”) approved a plan of liquidation to sell in an orderly manner all or substantially all of our assets and the assets of the OP (the “Liquidation Plan”), subject to stockholder approval. The Liquidation Plan was approved at a special meeting of stockholders on January 3, 2017.

The Liquidation Plan provides for an orderly sale of our assets, payment of our liabilities and other obligations and the winding down of operations and the dissolution of the Company. We are not permitted to make any new investments except to exercise our option (the “WWP Option”) to purchase additional equity interests in our WWP Holdings, LLC (“Worldwide Plaza”) venture or to make protective acquisitions on advances with respect to our existing assets. We are permitted to satisfy any existing contractual obligations and pay for required tenant improvements and capital expenditures at our real estate properties, including real estate properties owned by joint ventures in which we own an interest.

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The Liquidation Plan enables us to sell any and all of our assets without further approval of the stockholders and provides that liquidating distributions be made to the stockholders as determined by the Board. Pursuant to applicable REIT rules, we must complete the disposition of our assets by January 3, 2019, two years after the date the Liquidation Plan was approved by the stockholders, in order to deduct liquidating distributions as dividends. In order to comply with applicable tax laws, the Company will be converted into a limited liability company or any of our assets not sold by January 3, 2019, will be distributed into a liquidating trust. If the Company will be converted into a limited liability company or we transfer our assets to a liquidating trust, holders of our common shares will receive beneficial interests in the liquidating entity equivalent to those held in the Company. Holders of our common shares should note that unlike our common shares, which are freely transferable, interests in the liquidating entity will generally not be transferable except by will, intestate succession or operation of law. Therefore, the recipients of the interests in the liquidating entity will not have the ability to realize any value from these interests except from distributions made by the liquidating entity, the timing of which will be solely in the discretion of the liquidating entity’s trustees. As compared to the Company which is required to comply with all of the filing requirements of the Securities and Exchange Commission for publicly traded entities, based on current guidance provided by the staff of the Securities and Exchange Commission applicable to liquidating trusts, the liquidating entity may be required to file only annual reports containing unaudited financial statements on Form 10-K and current reports on Form 8-K with the Securities and Exchange Commission.

We expect to continue to qualify as a REIT throughout the liquidation until such time as any remaining assets, if any, are transferred into a liquidating entity. The Board is required to use commercially reasonable efforts to continue to cause us to maintain the Company’s REIT status, provided however, the Board may elect to terminate our status as a REIT if they determine that such termination would be in the best interest of the stockholders.

Although we expect that our common stock will continue to be traded on the New York Stock Exchange until our assets are either disposed of or transferred to a liquidating entity, under New York Stock Exchange rules, it is possible that following the implementation of the Liquidation Plan and prior to the disposition of all of the assets that the common shares could be delisted.

Liquidation Plan

On June 1, 2017 we closed on our acquisition of the additional interest in Worldwide Plaza, which is further discussed below. As of the date of this Quarterly Report on Form 10-Q, all of our assets have been sold, except for the Viceroy Hotel and our remaining interest in Worldwide Plaza. Our current estimates of net assets in liquidation, presented on an undiscounted basis, are based on an expectation that all of our properties will be sold by July 31, 2018, except for the remaining interest in Worldwide Plaza. For purposes of liquidation accounting, our estimate of net assets in liquidation value assumes a sale of Worldwide Plaza on March 31, 2019 based on an estimated value of $1.725 billion. These estimates are subject to change based on the actual timing of future asset sales.

The net assets in liquidation at March 31, 2018 are presented on an undiscounted basis and does not include Management’s estimated future increase in value from the planned investment in the repositioning of Worldwide Plaza. Our current estimate of the liquidation value of investments in real estate includes Worldwide Plaza at $1.725 billion which is based on a current market transaction associated with our sale of a 48.7% interest in the property on October 18, 2017 discussed in Note 7 in the accompanying consolidated financial statements. Our venture partners have jointly developed and recommended a capital budget, which we have agreed to. The timing of the sale of the property, and the ultimate value we receive from the sale, are subject to change. The capital plan includes targeted capital improvements aimed at maintaining the institutional quality of the building and an appropriate allocation to

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allow for critical tenant lease renewals and rolls. In addition, capital will be available for new management to focus on repositioning the property as a more modern asset, with a corresponding program to rebrand and likely rename the building as well as energizing and maximizing the potential of the retail and concourse space. We have set aside approximately $90.7 million from the refinancing proceeds to cover an estimate of our share of potential future leasing and capital costs at the property. To the extent the full $90.7 million reserve is not used, the balance is expected to be available for distribution to stockholders. Our joint venture partners have committed to contribute their pro-rata share of the budgeted capital investment.

Management believes that the combined team of SL Green and RXR Realty will add the necessary talent, expertise and capital, along with the capital contributed by us, to bring this Class A asset with its blue chip tenant roster to its full potential. Management believes that implementation of the business plan for Worldwide Plaza will take at least two years and may take up to four years given the size of the building, which is a little over 2 million square feet, the scope and nature of the capital investment and to allow time for the critical milestones in leasing and asset repositioning to take place.

Management believes that if these actions are successful, the estimated value of the property could increase to between $1.9 billion and $2.2 billion, on an undiscounted basis, by November 2021, our estimated sale date of this investment. Assuming additional investment in Worldwide Plaza of $64.0 million, plus a corresponding investment from our joint venture partners, a future value for Worldwide Plaza between $2.0 billion and $2.2 billion would produce a residual value between $21.99 and $27.69 per share, an increase of $3.30 to $8.99 per share over our current carrying value. In addition, we have contractual rents which generate a predictable cash flow from Worldwide Plaza during the estimated four-year hold period through 2021 which, net of expenses, we estimate would produce an additional $3.58 per share over the four-year hold period versus the $1.16 currently accrued. These estimates of potential future cash flow are undiscounted. Management’s estimate, like any estimate or projection, is subject to various assumptions and uncertainties including the joint venture’s ability to execute on the business plan, tenants paying their rental obligations, the equity capital and financing markets and New York City market conditions generally. There is no assurance that the joint venture will be successful in taking these various actions and that these actions will, in fact, result in the estimated increase in the value of the property.

Current Activity

To date in 2018, we have sold 12 properties for an aggregate sales price of $438.6 million. The 2018 sales of properties and the pending contracts to sell properties are summarized below.

333 West 34^th Street – property sale – On January 5, 2018, we sold to an independent third party the 333 West 34^th Street office property in Manhattan, New York for a gross sales price of $255.0 million. The property was part of the collateral for our $760.0 million POL Loans. In connection with the sale, we paid down $110.6 million as required under the POL Loans upon the sale of the property. After satisfaction of debt, pro-rations and closing costs, we received net proceeds of approximately $134.6 million. The estimated liquidation value of the property was $255.0 million at December 31, 2017.

350 West 42nd Street – property sale – On January 10, 2018, we sold to an independent third party the 350 West 42nd Street retail property in Manhattan, New York for a gross sales price of $25.1 million. The property was part of the collateral for our $760.0 million POL Loans. In connection with the sale, we paid down $11.3 million as required under the POL Loans upon the sale of the property. After satisfaction of debt, pro-rations and closing costs, we received net proceeds of approximately $12.6 million. The estimated liquidation value of the property was $25.1 million at December 31, 2017.

One Jackson Square – property sale – On February 6, 2018, we sold to an independent third party the One Jackson Square retail property in Manhattan, New York for a gross sales price of $31.0 million. The property was part of the collateral for our $760.0 million POL Loans. In connection with the sale, we paid down $13.0 million as required under the POL Loans upon the sale of the property. After satisfaction of debt, pro-rations and closing costs, we received net proceeds of approximately $16.5 million. The estimated liquidation value of the property was $31.0 million at December 31, 2017.

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306 East 61st Street - property sale – On February 16, 2018, we sold to an independent third party the 306 East 61^st Street office property in Manhattan, New York for a gross sales price of $47.0 million. The property was encumbered by a $19.0 million mortgage loan which was satisfied in full at closing. After satisfaction of debt, pro-rations and closing costs, we received net proceeds of approximately $26.5 million. The estimated liquidation value of the property was $47.0 million at December 31, 2017.

2091 Coney Island Avenue – property sale – On February 14, 2018, we sold to an independent third party the 2091 Coney Island Avenue office property in Brooklyn, New York for a gross sales price of $3.8 million. The property, together with the retail property located at 2067-2073 Coney Island Avenue make up 1100 Kings Highway. The property was part of the collateral for the $20.2 million mortgage note payable on 1100 Kings Highway. In connection with the sale, we were required to pay down the outstanding mortgage loan by $4.4 million. The estimated liquidation value of the property was $3.8 million at December 31, 2017.

416 Washington Street – property sale – On January 22, 2018, we entered into a contract to sell to an independent third party the 416 Washington Street retail property in Manhattan, New York for a gross sales price of $11.2 million. The sale was completed on April 19, 2018. The property was part of the collateral for our $760.0 million POL Loans. We were required to pay down $5.5 million under the POL Loans upon the sale of the property. After satisfaction of debt, pro-rations and closing costs, we received net proceeds of approximately $5.1 million. The estimated liquidation value of the property was $11.2 million at March 31, 2018 and December 31, 2017.

350 Bleecker Street and 367-387 Bleecker Street – property sale – On February 15, 2018, we entered into a combined contract to sell to an independent third party the 350 Bleecker Street and 367-387 Bleecker Street properties located in Manhattan, New York for a gross sale price of $31.5 million. The sale was completed on April 19, 2018. The properties are part of the collateral for our $760.0 million POL Loans. In connection with the sale, we were required to pay down the POL Loans by $21.1 million. After satisfaction of debt, pro-rations and closing costs, we received net proceeds of approximately $8.8 million. The estimated liquidation value of the properties was $31.5 million at March 31, 2018 and December 31, 2017.

2067 – 2073 Coney Island Avenue – property sale – On January 25, 2018, we entered into a contract to sell to an independent third party the 2067-2073 Coney Island Avenue retail property in Brooklyn, New York for a gross sales price of $30.5 million. The sale was completed on May 1, 2018. The property was part of the collateral for the $20.2 million mortgage note payable on 1100 Kings Highway. After satisfaction of debt, pro-rations and closing costs, we received net proceeds of approximately $13.7 million. The estimated liquidation value of the property was $30.5 million at March 31, 2018 and December 31, 2017.

Centurion Parking Garage – property sale – On March 15, 2018 we entered into a contract to sell to an independent third party the Centurion Parking Garage property located at 33 West 56^th Street, Manhattan, New York, for a gross sales price of $3.5 million. The sale was completed on May 1, 2018. After satisfaction of pro-rations and closing costs, we received net proceeds of approximately $3.3 million. The estimated liquidation value of the property was $3.5 million at March 31, 2018 and December 31, 2017.

POL Loans – In April 2018, the POL Loans were fully satisfied using proceeds from the sales of 382-384 Bleecker Street, 350 Bleecker Street, 416-415 Washington Street and reserves.

Liquidity and Capital Resources

As of March 31, 2018, we had cash and cash equivalents of $92.6 million. Our total assets and undiscounted net assets in liquidation were $0.6 million and $0.5 million, respectively, at March 31, 2018. Our ability to meet our obligations is contingent upon the disposition of our assets in accordance with our Liquidation Plan. We estimate that the proceeds from our Liquidation Plan will be adequate to pay our obligations, however, we cannot provide any assurance as to the prices or net proceeds we will receive from the disposition of our assets.

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Our principal demands for funds are to pay or fund operating expenses, capital expenditures, principal and interest payments on our outstanding indebtedness and liquidating distributions to our stockholders. We believe that cash flow from operations, along with sale proceeds, will continue to provide adequate capital to fund our operating, administrative and other expenses incurred during liquidation as well as debt service obligations in the short term. Due to the property sales, we will have reduced future operating revenue and may need to fund future operating expenses from cash on hand. As a REIT, we must distribute annually at least 90% of our REIT taxable income. Our principal sources and uses of funds are further described below.

Principal Sources of Funds

Cash Flows from Operating Activities

Our cash flows from operating activities is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent, operating escalations and recoveries from our tenants and the level of operating and other costs, including general and administrative expenses, transaction costs and other expenses associated with carrying out our Liquidation Plan.

POL Loans

On December 20, 2016, we entered into a mortgage loan (the “Mortgage Loan”) in the aggregate amount of $500.0 million and a mezzanine loan in the aggregate amount of $260.0 million (the “Mezzanine Loan” and, together with the Mortgage Loan, the “POL Loans”), which were secured directly, in the case of the mortgage loan, and indirectly in the case of the mezzanine loan, by our properties located in New York, New York at 245-249 West 17th Street, 333 West 34th Street, 216-218 West 18th Street, 50 Varick Street, 229 West 36th Street, 122 Greenwich Street, 350 West 42nd Street, 382-384 Bleecker Street, 350 Bleecker Street, 416-425 Washington Street, 33 West 56th Street and 120 West 57th Street (the “POL Loan Properties”). The properties sold during 2017 and to date in 2018 have been released and are no longer collateral for the POL Loans. POL Loans were paid in full in April 2018 and all of the POL Loan Properties have been released as collateral.

The POL Loans provided that in connection with a sale or disposition of an individual POL Loan Property to a third party, such POL Loan Property could be released from the collateral securing the Mortgage Loan, subject to certain conditions, by prepayment of a release price (the “Release Amount”) as defined in the Mortgage Loan agreements. In certain instances, 110% of the Release Amount was required to be paid in order to release the property. During 2017, the Mezzanine Loan was repaid in full and $323.8 million was repaid on the Mortgage Loan, reducing the POL Loan balance to $176.2 million at December 31, 2017. During 2018, the POL Loans were repaid as a result of the sale of 333 West 34^th Street, 350 West 42^nd Street, 122 Greenwich Street, 382-384 Bleecker Street, 350 Bleecker Street, 416-425 Washington Street and the use of reserves. The outstanding principal amount after such pay downs was $41.3 million.

On December 20, 2017, the POL Loans were extended through September 20, 2018. The Mortgage Loan requires monthly interest payments at a weighted average interest rate of LIBOR plus 3.50%. Additionally, during the extension period we are no longer required to pay down 110% of the Release Amount in order to release the property.

Sales Proceeds

In connection with the Liquidation Plan, we plan to sell all of our assets. We believe the sales proceeds will be sufficient to satisfy the mortgage notes payable encumbering the properties.

Principal Use of Funds

Capital Expenditures

As of March 31, 2018, we owned nine properties, including seven properties which have been sold subsequent to March 31, 2018. In connection with the leasing of our properties, we have entered into and will continue to enter into agreements with our tenants to provide allowances for tenant

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improvements. These allowances require us to fund capital expenditures up to amounts specified in our lease agreements. We intend to fund tenant improvement allowances with cash on hand and cash flows from operations. We funded $0.1 million in capital expenditures during the three months ended March 31, 2018, which was funded primarily from cash on hand.

We have set aside approximately $90.7 million from the remaining proceeds of Worldwide Plaza to cover estimated future leasing and capital improvement costs at the property. Our joint venture partners have committed to contribute their pro-rata share of the budgeted capital investment.

Dividends

In order to avoid paying corporate level tax, we are required to distribute annually at least 90% of our annual REIT taxable income, plus 100% of our capital gains. As previously disclosed, due to the approval of the plan of liquidation by the Company’s stockholders, the Company ceased paying regular monthly dividends. The actual amount and timing of, and record dates for, future liquidating distributions will be determined by our Board and will depend upon the timing and proceeds of the sale of our assets and the amounts deemed necessary by our Board to pay or provide for our liabilities and obligations and REIT requirements. Any such liquidating distributions on our common shares will be deemed a return of capital until the applicable holder has received liquidating distributions totaling its cost basis.

Loan Obligations

As of March 31, 2018, we had consolidated mortgage notes payable of $57.1 million, which had a weighted average interest rate of 5.1%. During April 2018, the $41.3 million outstanding balance on our POL Loans was repaid in full.

On August 1, 2017, our mortgage loan collateralized by the 1100 Kings Highway property, which consisted of 2091 Coney Island Avenue and 2067-2073 Coney Island Avenue, was modified to extend the maturity date to April 1, 2018 and to allow for partial release of the collateral. The 2091 Coney Island Avenue property was sold on February 14, 2018 and we made a $4.4 million payment on the loan in connection with the sale. Following the pay down, the outstanding mortgage loan balance was $15.8 million and was collateralized only by the 2067-2073 Coney Island Avenue property. On April 1, 2018, the mortgage loan was modified to extend the maturity date to May 29, 2018. The 2067-2073 Coney Island Avenue property was sold on May 1, 2018 and the loan was repaid in full at closing.

The payment terms of our mortgage loan obligations require interest only payments payable monthly. Some of our mortgage note agreements require us to comply with specific reporting covenants. As of March 31, 2018, we were in compliance with the financial covenants under our mortgage note agreements.

Cash Flows

Our level of liquidity based upon cash and cash equivalents decreased by approximately $148.4 million from $241.0 million at December 31, 2017 to $92.6 million at March 31, 2018.

The common stockholders approved the Liquidation Plan on January 3, 2017, and we adopted the liquidation basis of accounting effective January 1, 2017. We did not make any acquisitions in new investments in 2018, and, in accordance with the Liquidation Plan, no further acquisitions are expected.

Our primary sources of non-operating cash flow for the three months ended March 31, 2018 include:

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$255.0 million from the sale of our 333 West 34^th Street property;

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$47.0 million from the sale of our 306 East 61^st Street property;

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$31.0 million from the sale of our One Jackson Square property;

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$25.1 million from the sale of our 350 West 42^nd Street property; and

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$3.8 million from the sale of our 2091 Coney Island Avenue property.

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Our primary uses of non-operating cash flow for the three months ended March 31, 2018 include:

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$158.4 million for principal repayments on our mortgage notes;

•

$335.9 million for liquidating distributions to common shareholders; and

•

$13.0 million for costs associated with the sale of properties.

We did not have any sources of non-operating cash flow for the three months ended March 31, 2017.

Our primary uses of non-operating cash flow for the three months ended March 31, 2017 include:

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$30.0 million for the deposit required upon our exercise of the WWP Option which was funded from restricted cash;

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$0.5 million for capital improvements at our properties; and

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$0.1 million for principal repayments on our mortgage notes payable.

Contractual Obligations

Debt Obligations

The following is a summary of our contractual debt obligations as of March 31, 2018:


			April 1, 2018 - December 31, 2018		Years Ended December 31,
(In thousands)	Total		April 1, 2018 - December 31, 2018		2019 - 2020		2021 - 2022		Thereafter
Principal payment due:
Mortgage notes payable	$	57,112	$	57,112	$	—	$	—	$	—

Interest payments due:
Mortgage notes payable	$	287	$	287	$	—	$	—	$	—

All debt maturing during 2018 is expected to be paid in full with proceeds from property sales. To date in 2018, $158.4 million of the debt maturing in 2018 has been repaid.

Lease Obligations

We entered into ground lease agreements with the owners of the land parcels at 350 Bleecker Street and the Viceroy Hotel. The following table reflects the minimum base cash rental payments due from us over the next five years and thereafter under these arrangements. These amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes, among other items.


			April 1, 2018 - December 31, 2018		Years Ended December 31,
(In thousands)	Total		April 1, 2018 - December 31, 2018		2019 - 2020		2021 - 2022		Thereafter
Ground lease obligations	$	264,479	$	3,927	$	10,865	$	11,546	$	238,138

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Comparability of Financial Data From Period to Period

Results of Operations

In light of the adoption of liquidation basis accounting as of January 1, 2017, the results of operations for the current period are not comparable to the prior year period. Our remaining assets continue to perform in a manner that is relatively consistent with prior reporting periods. We have experienced no significant changes in occupancy or rental rates, other than those discussed below in our remaining properties.

Due to the adoption of the Liquidation Plan, we are no longer reporting funds from operations, core funds from operations, adjusted funds from operations, adjusted earnings before interest, taxes, depreciation and amortization, net operating income, cash net operating income and adjusted cash net operating income, as we no longer consider these to be key performance measures.

Occupancy and Leasing

As of March 31, 2018 our consolidated portfolio was 97.6% leased, compared to 99.7% as of March 31, 2017 as adjusted for properties sold in 2017 and through March 31, 2018. Occupancy is inclusive of leases signed but not yet commenced. See Significant Accounting Estimates and Critical Accounting Policies below for accounting policies relating to revenue recognition.

Changes in Net Assets in Liquidation

A summary of the change in net asset value for the three months ended March 31, 2018 is as follows:


Liquidating distribution to common stockholders	$	(335,858	)
Release of liability (1)		4,270
Revised estimated liquidation value of Viceroy		(4,000	)
Revised estimated costs		2,850
Adjustments for holding periods		2,332

Change in net asset value	$	(330,406	)

(1)

Amount is associated with the termination of the Viceroy management agreement and is included in accounts payable, accrued expenses and other liabilities on our Consolidated Statement of Net Assets at December 31, 2017. It is expected that upon sale of the Viceroy, this liability will be transferred to the buyer.

A summary of the change in net asset value for the three months ended March 31, 2017 is as follows:


Revised estimated costs		121

Change in net asset value	$	121

The net assets in liquidation at March 31, 2018, which are presented on an undiscounted basis, includes Worldwide Plaza valued at $1.725 billion which is based on the recent sale of a 48.7% interest in the property as discussed in Note 7 in the accompanying consolidated financial statements and excludes Management’s estimate of the future increase in value from the planned investment in the repositioning of Worldwide Plaza, resulting in liquidating distributions of approximately $29.94 per common share. This estimate of liquidating distributions includes projections of costs and expenses to be incurred during the period required to complete the Liquidation Plan. As of October 18, 2017, Worldwide Plaza is managed by a joint venture of SL Green and RXR Realty, two of the largest owner operators in New York City. We, along with our new joint venture partners, are committed to investing significant additional capital into Worldwide Plaza to further improve and reposition the asset which we believe

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includes embedded opportunities to roll leases to increase the value of the property. We believe that once the actions are implemented and come to fruition, the value of Worldwide Plaza will range from $1.9 billion to $2.2 billion by our anticipated sale date of November 2021. The increase in the future market value of Worldwide Plaza will be reflected in the Statement of Net Assets in liquidation as the specific actions related to the repositioning have been completed and such increases in market value can be observed. Assuming a future value of $2.0 billion in November 2021, would result in an increase to our net assets in liquidation of approximately $6.88 per share, which would result in estimated net assets in liquidation, on an undiscounted basis, of $36.82 per share. Management’s estimate, like any estimate or projection, is subject to various assumptions and uncertainties including the joint venture’s ability to execute on the business plan, tenants paying their rental obligations, the equity capital and financing markets and New York City market conditions generally. There is no assurance that the joint venture will be successful in taking these various actions and that these actions will, in fact, result in the estimated increase in the value of the property.

Our unaudited financial statements included in this Quarterly Report on Form 10-Q are prepared on the liquidation basis of accounting and accordingly include an estimate of the liquidation value of our assets and other estimates, including estimates of anticipated cash flow, timing of asset sales and liquidation expenses. These estimates update estimates that we have previously provided. These estimates are based on multiple assumptions, some of which may prove to be incorrect, and the actual amount of liquidating distributions we pay to you may be more or less than these estimates. We cannot assure you of the actual amount or timing of liquidating distributions you will receive pursuant to the Liquidation Plan.

Election as a REIT

We elected and qualified to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), effective for our taxable year ended December 31, 2010. We believe that, commencing with such taxable year, we have been organized and operated in a manner so that we qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to remain qualified for taxation as a REIT. In order to continue to qualify for taxation as a REIT we must, among other things, distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard for the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on that portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as federal income and excise taxes on our undistributed income.

Inflation

Many of our leases contain provisions designed to mitigate the adverse impact of inflation. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions. In addition, our net leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in costs and operating expenses resulting from inflation.

Off-Balance Sheet Arrangements

We have no off-balance-sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

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Significant Accounting Estimates and Critical Accounting Policies

Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our consolidated financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. Prior to the adoption of the Liquidation Plan, our most sensitive estimates involved the allocation of the purchase price of acquired properties, evaluating our real estate investments for impairment, and valuing our OP and LTIP units. Subsequent to the adoption of the Liquidation Plan, we are required to estimate all costs and income we expect to incur and earn through the end of liquidation including the estimated amount of cash we expect to collect on the disposal of our assets and the estimated costs to dispose of our assets.

Revenue Recognition

Under liquidation accounting, we have accrued all income that we expect to earn through the end of liquidation to the extent we have a reasonable basis for estimation. These amounts are classified in liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets.

In accordance with liquidation accounting, as of January 1, 2017, tenant and other receivables were adjusted to their net realizable values. We continually review tenant and other receivables to determine collectability. Any changes in the collectability of the receivables is reflected in the net realizable value of the receivable.

We own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. Contingent rental income is not contemplated under liquidation accounting unless we have a reasonable basis to estimate future receipts.

Investments in Real Estate

As of January 1, 2017, the investments in real estate were adjusted to their estimated net realizable value, or liquidation value, to reflect the change to the liquidation basis of accounting. The liquidation value represents the estimated amount of cash we expect to collect on the disposal of our assets as we carry out our Liquidation Plan. The liquidation value of our investments in real estate are presented on an undiscounted basis. Estimated costs to dispose of these assets are presented separately from the related assets. Subsequent to January 1, 2017, all changes in the estimated liquidation value of the investments in real estate are reflected as a change in our undiscounted net assets in liquidation.

The liquidation value of real estate investments is determined by considering projected operating cash flows, sales of comparable assets, if any, and replacement costs among other measures. The methods used to estimate the fair value of real estate investments include the discounted cash flow method, sales approach and/or third party information such as appraisals and sale offers to the extent available.

Investment in Unconsolidated Joint Venture

We account for our investment in unconsolidated joint venture under the equity method of accounting because we exercise significant influence over, but do not control the entity and are not considered to be the primary beneficiary. Under liquidation accounting, the investment in unconsolidated joint venture is recorded at its net realizable value. We evaluate the net realizable value of our unconsolidated joint venture at each reporting period. Any changes in net realizable value will be reflected as a change in our net assets in liquidation. The liquidation value of our remaining investment in Worldwide Plaza as of March 31, 2018 is based on the value of the property as a result of the recent sale of our 48.7% interest in Worldwide Plaza.

Derivative Instruments

We used derivative financial instruments to hedge the interest rate risk associated with a portion of our borrowings. The principal objective of such agreements is to minimize the risks and costs associated with our operating and financial structure as well as to hedge specific anticipated transactions. As of March 31, 2018, we did not hold any derivative instruments.

NEW YORK REIT, INC.

March 31, 2018

Prior to the adoption of the Liquidation Plan, all derivatives were carried on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depended on the intended use of the derivative, whether we elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

If we designated a qualifying derivative as a hedge, changes in the value of the derivative were reflected in accumulated other comprehensive income (loss) on the accompanying consolidated balance sheet. If a derivative did not qualify as a hedge, or if we did not elect to apply hedge accounting, changes in the value of the derivative were reflected in other income (loss) on the accompanying consolidated statement of operations and comprehensive income (loss).

Recent Accounting Pronouncement

There are no new accounting pronouncements that are applicable or relevant to the Company under the liquidation basis of accounting.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our mortgage debt, which consists of secured financings, bears interest at fixed rates and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. From time to time, we may enter into interest rate hedge contracts such as swaps, caps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.

As of March 31, 2018, our debt consisted of solely variable-rate debt.

As of March 31, 2018, our variable-rate debt had a carrying and fair value of $57.1 million. Interest rate volatility associated with this variable-rate debt affects interest expense incurred and cash flow. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their March 31, 2018 levels, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate debt would increase or decrease our interest expense by $.06 million annually.

These amounts were determined by considering the impact of hypothetical interest rates changes on our borrowing costs, and assuming no other changes in our capital structure. As the information presented above includes only those exposures that existed as of March 31, 2018, it does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

NEW YORK REIT, INC.

March 31, 2018

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.

As of March 31, 2018 an evaluation was performed under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of March 31, 2018.

Other Matters

There have been no changes in our internal controls over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

The information related to litigation and regulatory matters contained in Note 11 — Commitments and Contingencies of our notes to the consolidated financial statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1. Except as set forth therein, as of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.

Item 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

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

Not applicable.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed on the Exhibit Index are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.

EXHIBIT INDEX

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (and are numbered in accordance with Item 601 of Regulation S-K).


Exhibit No.		Description

31.1*		Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32*		Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*		XBRL (eXtensible Business Reporting Language). The following materials from New York REIT, Inc.‘s Quarterly Report on Form 10-Q for the three months ended March 31, 2018, formatted in XBRL: (i) the Consolidated Statement of Net Assets, (ii) the Consolidated Statement of Changes in Net Assets and (iii) the Notes to the Consolidated Financial Statements.

*	Filed herewith

NEW YORK REIT, INC.

March 31, 2018

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


NEW YORK REIT, INC.

By:		/s/ Wendy Silverstein
		Wendy Silverstein Chief Executive Officer and President (Principal Executive Officer)




By:		/s/ John Garilli
		John Garilli Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)

Date: May 9, 2018

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