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MarketScreener Homepage  >  Equities  >  Nyse  >  New York REIT Inc    NYRT

NEW YORK REIT INC (NYRT)
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NEW YORK REIT : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

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08/08/2018 | 11:22pm CEST
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 no longer permitted to make any new
investments except 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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                                 June 30, 2018



The Liquidation Plan enabled us to sell 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 either convert into a limited liability
company, subject to stockholder approval, or our remaining assets will be
distributed into a liquidating trust. The Company has filed a Registration
Statement on Form S-4 with the Securities and Exchange Commission with respect
to solicitation of stockholder approval. The Registration Statement became
effective on August 6, 2018 and we commenced solicitation. A special meeting of
stockholders will be held on Friday, September 7, 2018 at 11:00 AM, local time,
at the offices of Proskauer Rose LLP, 11 Times Square, New York, New York, to
conduct the vote.

If the Company is 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, in either case, stockholders 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.

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 Statement of
Net Assets. To date, liquidating distributions totaling $55.55 per common share
have been paid.

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. The Viceroy Hotel
is currently under contract for sale and, if consummated, is expected to close
in the third quarter of 2018 or shortly thereafter. 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 September 30, 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 June 30, 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 June 30, 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



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                              NEW YORK REIT, INC.

                                 June 30, 2018



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 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 $21.90 and $27.69 per share, an increase of $3.20 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 three-and-a-half-year hold period through 2021 which, net
of expenses, we estimate would produce $5.01 per share over the
three-and-a-half-year hold period versus the $1.45 currently accrued based on a
12-month hold period assumed for liquidation accounting purposes. 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 34th Street - property sale - On January 5, 2018, we sold to an
independent third party the 333 West 34th 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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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.

306 East 61st Street - property sale - On February 16, 2018, we sold to an
independent third party the 306 East 61st 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.

350 Bleecker Street and 367-387 Bleecker Street - property sale - On April 19,
2018, we sold 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 properties were 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.

416 Washington Street - property sale - On April 19, 2018, we sold 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 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.

2067 - 2073 Coney Island Avenue - property sale - On May 1, 2018, we sold 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 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 May 1, 2018 we sold to an
independent third party the Centurion Parking Garage property located at 33 West
56th Street, Manhattan, New York, for a gross sales price of $3.5 million. 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, 416-425 Washington Street and reserves.


Viceroy Hotel - contract for sale - On June 29, 2018, we entered into a contract
to sell to an independent third party the Viceroy Hotel property located in New
York, New York for a purchase price of $41.0 million. If consummated, the sale
of the property is expected to close in the third quarter of 2018 or shortly
therafter. After satisfaction of closing costs, we expect to receive net
proceeds or approximately $39.5 million. The estimated liquidation value of the
property was $46.0 million at March 31, 2018 and $50.0 million at December 31,
2017. The estimated liquidation value at June 30, 2018 has been decreased to
$41.0 million to reflect the contract for sale.



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                              NEW YORK REIT, INC.

                                 June 30, 2018


Liquidity and Capital Resources


As of June 30, 2018, we had cash and cash equivalents of $30.5 million. Our
total assets and undiscounted net assets in liquidation were $431.8 million and
$421.4 million, respectively, at June 30, 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.

Our principal demands for funds are to pay or fund operating expenses, capital
expenditures 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. 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.

Sales Proceeds

In connection with the Liquidation Plan, we plan to sell all of our assets.

Principal Use of Funds

Capital Expenditures


As of June 30, 2018, we owned two properties. Historically, in connection with
the leasing of our properties, we entered into agreements with our tenants to
provide allowances for tenant improvements. These allowances required us to fund
capital expenditures up to amounts specified in our lease agreements. We funded
$0.2 million in capital expenditures during the six months ended June 30, 2018,
which was funded primarily from cash on hand.

With respect to Worldwide Plaza, the venture has entered into, and will continue
to enter into, agreements with its tenants to provide allowances for tenant
improvements. 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 which are not funded by operating cash flow of
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.



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                              NEW YORK REIT, INC.

                                 June 30, 2018



Loan Obligations

During April 2018, the $41.3 million outstanding balance on our POL Loans was
repaid in full, and we no longer have any consolidated mortgage notes payable as
of June 30, 2018.

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.

Cash Flows

Our level of liquidity based upon cash and cash equivalents decreased by approximately $210.5 million from $241.0 million at December 31, 2017 to $30.5 million at June 30, 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 six months ended June 30, 2018 include:

$255.0 million from the sale of our 333 West 34thStreet property;




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



$31.5 million from the sale of our 350 Bleecker Street and 367-387Bleecker

         Street properties;




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



$30.5 million from the sale of our 2067-2073 Coney Island Avenue property;

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




  •   $11.2 million from the sale of our 416 Washington Street property;



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

$3.5 million from the sale of our Centurion Parking Garage property.

Our primary uses of non-operating cash flow for the six months ended June 30, 2018 include:

$417.3 million for liquidating distributions to common shareholders;

$215.5 million for principal repayments on our mortgage notes; and




  •   $16.7 million for costs associated with the sale of properties.

We did not have any sources of non-operating cash flow for the six months ended June 30, 2017.

Our primary uses of non-operating cash flow for the six months ended June 30, 2017 include:

$276.7 million for the acquisition of the additional interest in Worldwide

         Plaza, $260.0 million of which was funded from restricted cash and the
         balance of which was funded from cash on hand;




  •   $2.9 million for capital improvements at our properties; and



$0.2 million for principal repayments on our mortgage notes payable.




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Contractual Obligations

We did not have any contractual debt obligations as of June 30, 2018.

Lease Obligations


We entered into a ground lease agreement with the owner of the land parcel at
the Viceroy Hotel. The following table reflects the minimum base cash rental
payments due from us over the next five years and thereafter under this
arrangement. 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. The rent payments under
the ground lease with respect to the leasehold interest will be paid by the
purchaser following the sale of the Viceroy Hotel.



                                                     July 1, 2018 -           Years Ended December 31,
(In thousands)                         Total        December 31, 2018      2019 - 2020        2021 - 2022       Thereafter
Ground lease obligation              $ 259,608     $             2,636     

$ 10,692 $ 11,375 $ 234,905

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 June 30, 2018 our consolidated portfolio was 98.2% leased, compared to
98.3% as of June 30, 2017 as adjusted for properties sold in 2017 and through
June 30, 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


Net assets in liquidation decreased by $81.3 million and $411.8 million during
the three and six months ended June 30, 2018, respectively. During the three
months ended June 30, 2018, there was a liquidating distribution to common
stockholders of $81.4 million and a $5.0 million decrease in the estimated
liquidation value of the Viceroy Hotel property based on the contract for sale.
The decrease in net assets during the three months ended June 30, 2018 was
offset by a $5.1 million increase in the estimated liquidation value of the
Company's investment in Worldwide Plaza primarily related to the extended
estimated hold period.

The decrease during the six months ended June 30, 2018 is primarily due to
liquidating distributions to common stockholders totaling $417.3 million, a
$9.0 million decrease in the estimated liquidation value of the Viceroy Hotel
property based on the contract for sale, which was directly offset by a release
of liability of $4.2 million associated with the termination of the Viceroy
Hotel management agreement and a $1.6 million decrease due to a remeasurement of
estimated receipts related to the extended estimated hold period. The decrease
in net assets was offset by a net increase of $11.9 million in the estimated
liquidation value of the Company's investment in Worldwide Plaza primarily
related to the extended estimated hold period.



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                                 June 30, 2018



Net assets in liquidation decreased by $5.9 million during the three and six
months ended June 30, 2017. With the exception of a $0.1 million remeasurement
which occurred in the first quarter ended March 31, 2017, the balance of these
changes were made during the three months ended June 30, 2017. The primary
reasons for the decrease in net assets was due to (i) a $2.5 million decrease in
the liquidation value of investments in real estate as a result of the contract
for sale of the 50 Varick Street office property (see Subsequent Events), (ii)
an increase of $1.7 million of projected tenant and capital improvement costs
primarily at the 1440 Broadway and 256 West 38th Street properties, (iii) an
increase of $1.8 million in estimated corporate expenditures and (iv) other
cumulative adjustments across the portfolio which net to a $1.0 million decrease
in net operating cash flow. The increase in projected corporate expenditures is
primarily the result of a $1.2 million increase in the estimated asset
management fee payable to the Winthrop Advisor as a result of the timing of the
acquisition of the additional interest in Worldwide Plaza and a change in the
anticipated holding periods of certain assets, and a $0.4 million increase in
interest expense due to an increase in the LIBOR rate.

These items were partially offset by a $1.1 million increase in estimated cash flows resulting from extended holding periods of certain assets.


The net assets in liquidation at June 30, 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 $25.09 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 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 $6.76 per
share, which would result in estimated net assets in liquidation, on an
undiscounted basis, of $31.85 per share as of June 30, 2018. 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



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                              NEW YORK REIT, INC.

                                 June 30, 2018



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.

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.



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                                 June 30, 2018



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
June 30, 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
June 30, 2018, we did not hold any derivative instruments.

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.

© Edgar Online, source Glimpses

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Craig T. Bouchard Independent Director
Joe C. McKinney Independent Director
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