SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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

650 Fifth Ave., 30th Floor, New York, NY 10019

______________________________________________________________________________________ _________________________________________________________________________

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (212) 415-6500

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to section 12(b) of the Act: None.

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.01 par value per share

NYC

New York Stock Exchange

Class A Preferred Stock Purchase Rights

New York Stock Exchange

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 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 the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web Site, 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 x☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See ~~definition~~the definitions of ~~"large~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

~~Large accelerated filer~~ o

~~Accelerated filer~~ o

~~Non-accelerated filer~~ o

~~(Do not check if a smaller reporting company)~~

~~Smaller reporting company~~ x

Emerging growth companyx

☐

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. x☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes x☒ No

As of ~~October 31, 2017,~~November 10, 2022, the registrant had ~~31,237,326~~14,892,411 shares of Class A common stock outstanding.

The Company is filing this Amendment No. 1 on Form 10-Q/A to amend and restate in their entirety the following items of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 as originally filed with the Securities and Exchange Commission on August 12, 2022 (the “Original Form 10-Q”): (i) Item 1 of Part I “Financial Information,” (ii) Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” (iii) Item 4 of Part I, “Controls and Procedures,” (iv) Item 1A of Part II, “Risk Factors, ” and (v) Item 6 of Part II, “Exhibits,” and we have also updated the signature page, the certifications of the Company’s Chief Executive Officer and Chief Financial Officer in Exhibits 31.1, 31.2 and 32, and the Company’s financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibits 101. No other sections were affected, but for the convenience of the reader, this report on Form 10-Q/A restates in its entirety, as amended, our Original Form 10-Q. This report on Form 10-Q/A is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring after that date, or modify or update disclosures in any way other than as required to reflect the restatement described below.

In connection with the preparation of the consolidated financial statements for the third quarter September 30, 2022, the Company identified errors in its previously filed unaudited quarterly consolidated financial statements for the first two quarterly periods of 2022. The prior period errors related to unrecorded expenses directly related to its 2022 annual meeting which involved a contested proxy solicitation, as well as other administrative and operating expenses. In connection with these errors, the Company is (i) restating its previously issued unaudited condensed consolidated financial statements of the Company as of and for the three and six month periods ended June 30, 2022, as filed in the Company’s Quarterly Report on Form 10-Q filed on August 12, 2022 and (ii) revising its previously issued unaudited condensed consolidated financial statements of the Company as of and for the three month period ended March 31, 2022, as filed in the Company’s Quarterly Report on Form 10-Q filed on May 13, 2022 to be included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023.

For additional details, see Note 1 — Organization to the consolidated financial statements included in this Form 10-Q/A.

The Company has concluded there was a material weakness in the Company’s internal control over financial reporting as of March 31, 2022 and that its disclosure controls and procedures remained ineffective as of June 30, 2022. See additional discussion included in Part II Item 1A of this amended quarterly report.

~~AMERICAN REALTY CAPITAL~~

NEW YORK CITY REIT, INC.

INDEX TO FINANCIAL STATEMENTS

~~Table of Contents~~

~~Part~~PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)


	June 30, 2022		December 31, 2021
	As Restated (Note 1)
ASSETS	(Unaudited)
Real estate investments, at cost:
Land	$	192,600	$	192,600
Buildings and improvements	574,454		572,576
Acquired intangible assets	87,119		87,478
Total real estate investments, at cost	854,173		852,654
Less accumulated depreciation and amortization	(171,287)		(157,880)
Total real estate investments, net	682,886		694,774
Cash and cash equivalents	8,097		11,674
Restricted cash	12,444		16,754
Operating lease right-of-use asset	55,061		55,167
Prepaid expenses and other assets	9,174		9,293
Derivative asset, at fair value	776		—
Straight-line rent receivable	28,075		25,838
Deferred leasing costs, net	9,428		9,551
Total assets	$	805,941	$	823,051

LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net	$	393,388	$	398,117
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $214 and $141 at June 30, 2022 and December 31, 2021, respectively)	17,712		8,131
Operating lease liability	54,744		54,770
Below-market lease liabilities, net	3,572		4,224
Derivative liability, at fair value	—		1,553
Deferred revenue	3,717		5,120

Total liabilities	473,133		471,915

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at June 30, 2022 and December 31, 2021	—		—
Common stock, $0.01 par value, 300,000,000 shares authorized, 13,638,789 and 13,277,738 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	136		133
Additional paid-in capital	693,695		691,118
Accumulated other comprehensive income (loss)	819		(1,553)
Distributions in excess of accumulated earnings	(378,172)		(350,709)
Total stockholders’ equity	316,478		338,989
Non-controlling interests	16,330		12,147
Total equity	332,808		351,136
Total liabilities and equity	$	805,941	$	823,051

September 30, 2017 December 31, 2016
ASSETS (Unaudited)
Real estate investments, at cost:
Land $ 133,380
$ 133,380
Buildings and improvements 510,291
502,067
Acquired intangible assets 107,131
109,498
Total real estate investments, at cost 750,802
744,945
Less accumulated depreciation and amortization (57,726 ) (37,889 )
Total real estate investments, net 693,076
707,056
Cash and cash equivalents 30,471
47,671
Restricted cash 28,519
2,150
Investment securities, at fair value —
477
Prepaid expenses and other assets (including amounts due from related parties of $83 and $670 at September 30, 2017 and December 31, 2016, respectively) 17,879
13,017
Deferred leasing costs, net 5,324
3,233
Total assets $ 775,269
$ 773,604

LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable, net of deferred financing costs $ 233,361
$ 191,328
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $72 and $167 at September 30, 2017 and December 31, 2016, respectively) 10,621
6,580
Below-market lease liabilities, net 25,820
28,528
Deferred revenue 5,557
3,024
Distributions payable 3,873
3,953
Total liabilities 279,232
233,413

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2017 and December 31, 2016 —
—
Common stock, $0.01 par value, 300,000,000 shares authorized, 31,164,225 and 30,856,841 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 312
309
Additional paid-in capital 687,342
680,476
Accumulated other comprehensive income —
10
Accumulated deficit (191,617 ) (140,604 )
Total stockholders' equity 496,037
540,191
Total liabilities and stockholders' equity $ 775,269
$ 773,604

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

Table of Contents

~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except for share and per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	As Restated (Note 1)				As Restated (Note 1)
Revenue from tenants	$	16,231	$	14,977	$	31,877	$	30,163

Operating expenses:
Asset and property management fees to related parties	1,785		1,847		3,707		3,754
Property operating	8,329		8,323		16,926		17,059




Equity-based compensation	2,201		2,120		4,321		4,235
General and administrative	5,175		1,984		8,161		4,716
Depreciation and amortization	7,041		7,023		14,022		15,549
Total operating expenses	24,531		21,297		47,137		45,313
Operating loss	(8,300)		(6,320)		(15,260)		(15,150)
Other income (expense):
Interest expense	(4,703)		(4,763)		(9,418)		(9,476)
Other income (expense)	2		31		(35)		39
Total other expense	(4,701)		(4,732)		(9,453)		(9,437)


Net loss and Net loss attributable to common stockholders	$	(13,001)	$	(11,052)	$	(24,713)	$	(24,587)

Other comprehensive income (loss):
Change in unrealized gain on derivative	622		233		2,372		822
Other comprehensive income	622		233		2,372		822
Comprehensive loss	$	(12,379)	$	(10,819)	$	(22,341)	$	(23,765)



Weighted-average shares outstanding — Basic and Diluted	13,433,690		12,799,703		13,367,040		12,789,919
Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.97)	$	(0.87)	$	(1.85)	$	(1.93)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Rental income $ 13,345
$ 13,441
$ 40,009
$ 30,759
Operating expense reimbursements and other revenue 1,130
967
3,554
2,208
Total revenues 14,475
14,408
43,563
32,967

Operating expenses:
Property operating 6,848
6,357
19,882
13,871
Operating fees incurred from related parties 1,515
1,525
4,566
3,676
Acquisition and transaction related —
24
6
4,327
General and administrative 2,066
1,268
5,634
3,770
Depreciation and amortization 7,125
7,272
21,349
16,776
Total operating expenses 17,554
16,446
51,437
42,420
Operating loss (3,079 ) (2,038 ) (7,874 ) (9,453 )
Other income (expense):
Interest expense (2,866 ) (2,387 ) (8,365 ) (5,027 )
Income from investment securities and interest 68
56
190
305
Gain on sale of investment securities —
—
24
—
Total other expense (2,798 ) (2,331 ) (8,151 ) (4,722 )
Net loss $ (5,877 ) $ (4,369 ) $ (16,025 ) $ (14,175 )

Other comprehensive income (loss):
Unrealized gain on investment securities —
10
—
32
Reversal of accumulated unrealized gain on investment securities —
—
(10 ) —
Comprehensive loss $ (5,877 ) $ (4,359 ) $ (16,035 ) $ (14,143 )

Basic and diluted weighted average shares outstanding 31,106,250
30,556,494
30,956,152
30,634,400
Basic and diluted net loss per share $ (0.19 ) $ (0.14 ) $ (0.52 ) $ (0.46 )
Dividends declared per common share $ 0.39
$ 0.38
$ 1.13
$ 1.13

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

Table of Contents

~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN EQUITY

~~For the Nine Months Ended September 30, 2017~~

(In thousands, except for share data)

(Unaudited)


	Six Months Ended June 30, 2022
	Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
								As Restated (Note 1)		As Restated (Note 1)				As Restated (Note 1)
Balance, December 31, 2021	13,277,738	$	133	$	691,118	$	(1,553)	$	(350,709)	$	338,989	$	12,147	$	351,136

Common stock issued to the Advisor	215,306	2		2,319		—		—		2,321		—		2,321



Equity-based compensation	135,702	1		137		—		—		138		4,183		4,321
Common stock issued to directors in lieu of cash for board fees	10,043	—		121		—		—		121		—		121
Dividends declared on common stock, $0.10 per share	—	—		—		—		(2,670)		(2,670)		—		(2,670)
Distributions paid to non-controlling interest holders	—	—		—		—		(80)		(80)		—		(80)
Net loss	—	—		—		—		(24,713)		(24,713)		—		(24,713)
Other comprehensive income	—	—		—		2,372		—		2,372		—		2,372
Balance, June 30, 2022	13,638,789	$	136	$	693,695	$	819	$	(378,172)	$	316,478	$	16,330	$	332,808

Common Stock

Number of
Shares
Par Value
Additional
Paid-in
Capital
Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders' Equity
Balance, December 31, 2016 30,856,841
$ 309
$ 680,476
$ 10
$ (140,604 ) $ 540,191
Common stock issued through distribution reinvestment plan 666,842
7
14,163
—
—
14,170
Common stock repurchases (359,458 ) (4 ) (7,333 ) —
—
(7,337 )
Share-based compensation —
—
36
—
—
36
Distributions declared —
—
—
—
(34,988 ) (34,988 )
Net loss —
—
—
—
(16,025 ) (16,025 )
Reversal of unrealized gain upon realization of investment securities —
—
—
(10 ) —
(10 )
Balance, September 30, 2017 31,164,225
$ 312
$ 687,342
$ —
$ (191,617 ) $ 496,037


	Three Months Ended June 30, 2022
	Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
								As Restated (Note 1)		As Restated (Note 1)				As Restated (Note 1)
Balance, March 31, 2022	13,371,810	$	134	$	692,212	$	197	$	(363,790)	$	328,753	$	14,239	$	342,992

Common stock issued to the Advisor	126,426	1		1,312		—		—		1,313		—		1,313



Equity-based compensation	135,702	1		109		—		—		110		2,091		2,201
Common stock issued to directors in lieu of cash for board fees	4,851	—		62		—		—		62		—		62
Dividends declared on common stock, $0.10 per share	—	—		—		—		(1,341)		(1,341)		—		(1,341)
Distributions paid to non-controlling interest holders	—	—		—		—		(40)		(40)		—		(40)
Net loss	—	—		—		—		(13,001)		(13,001)		—		(13,001)
Other comprehensive income	—	—		—		622		—		622		—		622
Balance, June 30, 2022	13,638,789	$	136	$	693,695	$	819	$	(378,172)	$	316,478	$	16,330	$	332,808

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

Table of Contents

~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for share data)

(Unaudited)


	Six Months Ended June 30, 2021
	Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, December 31, 2020	12,802,690	$	129	$	686,715	$	(3,404)	$	(305,882)	$	377,558	$	4,009	$	381,567
Proceeds from sale of common stock, net	254,602	3		2,840		—		—		2,843		—		2,843
Repurchase and cancellation of common stock	(26,236)	—		(183)		—		—		(183)		—		(183)
Redemption of fractional shares of common stock and restricted shares	(6)	—		—		—		—		—		—		—
Redemption of Class A Units	13,100	—		230		—		—		230		(230)		—
Equity-based compensation	21,546	—		51		—		—		51		4,184		4,235
Dividends declared on common stock, $0.10 per share	—	—		—		—		(2,562)		(2,562)		—		(2,562)
Distributions paid to non-controlling interest holders								(80)		(80)				(80)
Net loss	—	—		—		—		(24,587)		(24,587)		—		(24,587)
Other comprehensive income	—	—		—		822		—		822		—		822
Balance, June 30, 2021	13,065,696	$	132	$	689,653	$	(2,582)	$	(333,111)	$	354,092	$	7,963	$	362,055


	Three Months Ended June 30, 2021
	Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, March 31, 2021	12,776,448	$	129	$	686,555	$	(2,815)	$	(320,737)	$	363,132	$	6,101	$	369,233
Proceeds from sale of common stock, net	254,602	3		2,840		—		—		2,843		—		2,843
Redemption of Class A Units	13,100	—		230		—		—		230		(230)		—
Equity-based compensation	21,546	—		28		—		—		28		2,092		2,120


Dividends declared on common stock, $0.10 per share	—	—		—		—		(1,282)		(1,282)		—		(1,282)
Distributions paid to non-controlling interest holders	—	—		—		—		(40)		(40)		—		(40)
Net loss	—	—		—		—		(11,052)		(11,052)		—		(11,052)
Other comprehensive income	—	—		—		233		—		233		—		233
Balance, June 30, 2021	13,065,696	$	132	$	689,653	$	(2,582)	$	(333,111)	$	354,092	$	7,963	$	362,055

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

Table of Contents

NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2022		2021
	As Restated (Note 1)
Cash flows from operating activities:
Net loss	$	(24,713)	$	(24,587)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	14,022		15,549
Amortization of deferred financing costs	771		771
Accretion of below- and amortization of above-market lease liabilities and assets, net	(101)		(440)
Equity-based compensation	4,321		4,235
Management fees reinvested by the Advisor	2,321		—


Changes in assets and liabilities:
Straight-line rent receivable	(2,233)		(1,078)
Straight-line rent payable	54		54
Prepaid expenses, other assets and deferred costs	(499)		70
Accounts payable, accrued expenses and other liabilities	9,197		(356)
Deferred revenue	(1,403)		385
Net cash provided by (used in) operating activities	1,737		(5,397)
Cash flows from investing activities:




Capital expenditures	(1,374)		(1,114)
Net cash used in investing activities	(1,374)		(1,114)
Cash flows from financing activities:
Payments on mortgage note payable	(5,500)		—


Common stock issuance proceeds	—		3,352
Dividends paid on common stock	(2,670)		(2,562)

Repurchase of common stock	—		(183)
Distributions to non-controlling interest holders	(80)		(80)
Net cash (used in) provided by financing activities	(8,250)		527
Net change in cash, cash equivalents and restricted cash	(7,887)		(5,984)
Cash, cash equivalents and restricted cash, beginning of period	28,428		39,994
Cash, cash equivalents and restricted cash, end of period	$	20,541	$	34,010

Cash and cash equivalents	$	8,097	$	23,875
Restricted cash	12,444		10,135
Cash, cash equivalents and restricted cash, end of period	$	20,541	$	34,010




Non-Cash Investing and Financing Activities:

Common stock issued to directors in lieu of cash for board fees	$	121	$	—
Accrued capital expenditures	504		158
Common stock issued to the Advisor	2,321		—

Nine Months Ended September 30,
2017 2016
Cash flows from operating activities:
Net loss $ (16,025 ) $ (14,175 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization 21,349
16,776
Amortization of deferred financing costs 964
1,823
Accretion of below- and amortization of above-market lease liabilities and assets, net (1,570 ) (1,868 )
Share-based compensation 36
49
Gain on sale of investment securities (24 ) —
Changes in assets and liabilities:
Prepaid expenses, other assets and deferred costs (7,236 ) (6,323 )
Accounts payable, accrued expenses and other liabilities 3,901
1,399
Deferred revenue 2,533
1,732
Restricted cash (1,549 ) —
Net cash provided by (used in) operating activities 2,379
(587 )
Cash flows from investing activities:
Investments in real estate —
(79,162 )
Purchase of investment securities, net —
(4 )
Proceeds from the sale of investment securities 491
—
Capital expenditures (8,084 ) (12,401 )
Net cash used in investing activities (7,593 ) (91,567 )
Cash flows from financing activities:
Proceeds from mortgage note payable 115,180
—
Payment of mortgage note payable (96,000 ) —
Payments of financing costs (2,931 ) (3,327 )
Distributions paid (20,898 ) (18,713 )
Repurchases of common stock (7,337 ) (12,490 )
Restricted cash —
(2,866 )
Net cash used in financing activities (11,986 ) (37,396 )
Net change in cash and cash equivalents (17,200 ) (129,550 )
Cash and cash equivalents, beginning of period 47,671
182,700
Cash and cash equivalents, end of period $ 30,471
$ 53,150

Supplemental Disclosures:
Cash paid for interest $ 6,976
$ 2,914
Non-Cash Investing and Financing Activities
Mortgage note payable used to acquire investments in real estate —
99,000
Distributions payable 3,873
3,800
Accrued capital expenditures 140
284
Other liabilities assumed in real estate transactions —
353
Common stock issued through distribution reinvestment plan 14,170
16,098
Mortgage notes payable proceeds classified as restricted cash 24,820
—

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

Table of Contents

~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)

Note 1 — Organization

~~American Realty Capital~~ New York City REIT, Inc. (including, ~~as required by context,~~ New York City Operating Partnership L.P., (the ~~"OP"~~“OP”), and its subsidiaries, the “Company”) ~~was formed~~is an externally managed entity that has qualified to be taxed as a real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”). We invest ~~its assets~~primarily in office properties inlocated exclusively within the five boroughs of New York City, ~~with a focus on~~primarily Manhattan. The Company ~~may~~has also ~~purchase for investment purposes~~purchased certain real estate ~~investment~~ assets that accompany office properties, including retail spaces and amenities, ~~as well as~~and may purchase hospitality assets, residential assets and other property types also located exclusively inwithin the five boroughs of New York City. ~~All such properties may be acquired and owned by the Company alone or jointly with another party.~~ As of ~~September~~June 30, ~~2017,~~2022, the Company owned ~~six~~eight properties consisting of ~~1.1~~1.2 million rentable square feet, acquired for an aggregate purchase price of ~~$686.1~~$790.7 million. At our 1140 Avenue of the Americas property, in the third quarter of 2021 we began operating Innovate NYC, a co-working company that is specific to this property only, that offers move-in ready private offices, virtual offices, and meeting space on bespoke terms to clients.

The Company was incorporated on December 19, 2013 as a Maryland corporation and elected and qualified to be taxed as a real estate investment trust for U.S. federal income tax purposes (“REIT”) beginning with its taxable year ended December 31, 2014. Substantially all of the Company’s business is conducted through the ~~OP.~~

~~On April 24, 2014, the Company commenced~~OP and its initial public offering (the "IPO") on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million.wholly-owned subsidiaries. The Company closed its IPO on May 31, 2015. As of September 30, 2017, the Company had 31.2 million shares of common stock outstanding, including unvested restricted shares of common stock ("restricted shares") and shares issued pursuant to a distribution reinvestment plan (the "DRIP"), and had received total gross proceeds from the IPO of $771.6 million, inclusive of $60.1 million from the DRIP and net of repurchases.

~~The Company first established an estimated net asset value per share of its common stock (“Estimated Per-Share NAV”) in 2016. On October 24, 2016, the~~ Company’s board of directors approved an Estimated Per-Share NAV as of June 30, 2016 (the “2016 Estimated Per-Share NAV”), which was published on October 26, 2016 (the “NAV Pricing Date”). Prior to the NAV Pricing Date, the Company had offered shares pursuant to the DRIP and had repurchased shares pursuant to the Share Repurchase Program (“SRP”) at a price based on $23.75 per share, the offering price in the IPO. Beginning with the NAV Pricing Date, the Company began to offer shares pursuant to the DRIP and repurchase shares pursuant to its SRP at a price based on Estimated Per-Share NAV.

On October 25, 2017, the Company's board of directors approved an Estimated Per-Share NAV as of June 30, 2017 (the "2017 Estimated Per-Share NAV"), which was published on October 26, 2017. This is the first annual update of Estimated Per-Share NAV the Company has published. The Company intends to publish subsequent valuations of Estimated Per-Share NAV at least once annually, at the discretion of the Company’s board of directors.

~~The Company has no employees.~~advisor, New York City Advisors, LLC (the ~~"Advisor"~~“Advisor”) ~~has been retained by~~, manages the ~~Company to manage~~Company’s day-to-day business with the ~~Company's affairs on a day to-day basis. The Company has retained~~assistance of the Company’s property manager, New York City Properties, LLC (the “Property Manager”) ~~to serve as the Company's property manager.~~. The Advisor and Property Manager are under common control with AR Global Investments, LLC ~~(the successor business~~(“AR Global”) and these related parties receive compensation and fees for providing services to ~~AR Capital, LLC, "AR Global"),~~ the ~~parent~~Company. The Company also reimburses these entities for certain expenses they incur in providing these services.

Restatement and Revision of Previously Issued Consolidated Interim Financial Statements

In connection with the preparation of the ~~Company's sponsor, American Realty Capital III, LLC (the "Sponsor"),~~consolidated financial statements for the third quarter September 30, 2022, the Company identified errors in its previously filed unaudited quarterly consolidated financial statements for the first two quarterly periods of 2022. The prior period errors related to unrecorded expenses directly related to its 2022 annual meeting which involved a contested proxy solicitation, as well as other administrative and operating expenses. In connection with these errors, the Company is (i) restating its previously issued unaudited condensed consolidated financial statements of the Company as of and for the three and six month periods ended June 30, 2022, as filed in the Company’s Quarterly Report on Form 10-Q filed on August 12, 2022 and (ii) revising its previously issued unaudited condensed consolidated financial statements of the Company as of and for the three month period ended March 31, 2022, as filed in the Company’s Quarterly Report on Form 10-Q filed on May 13, 2022.

Restatement of the Three and Six Months Ended June 30, 2022

As described above, the Company identified errors related to unrecorded expenses directly related to its 2022 contested proxy, as well as other administrative and operating expenses. As a result of ~~which they are related~~the failure to accrue these expenses due to third parties, (i) property operating expenses, general and ~~each~~administrative expenses and total operating expenses were understated and (ii) Operating loss, net loss and comprehensive loss were understated in the three and six month periods ended June 30, 2022 by $1.7 million and $2.3 million, respectively. Management has evaluated these errors and determined the Company’s financial statements included in its Quarterly Report on Form 10-Q for the three and six months ended June 30, 2022 were materially misstated. The Company’s financial statements for the three and six months ended ended June 30, 2022 included in this Form 10-Q/A have been restated to include the effects of these ~~entities has received or will receive compensation, fees and expense reimbursements for services related~~expenses to correct the ~~IPO and the investment and management of the Company's assets.~~errors as follows:

The Company is the sole general partner and holds substantially all of the units of limited partner interests in the OP (“OP units”). The Advisor contributed $2,020 to the OP in exchange for 90 OP units, which represents a nominal percentage of the aggregate OP ownership. A holder of OP units has the right to convert OP units for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, in accordance with the limited partnership agreement of the OP, provided, however, that such OP units must have been outstanding for at least one year. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.

Consolidated Balance Sheet:


	As of June 30, 2022
	As Previously Reported		Adjustments	As Restated
Total Assets	$	805,941	—	$	805,941
Accounts payable, accrued expenses and other liabilities	$	15,377	2,335	$	17,712
Total liabilities	$	470,798	2,335	$	473,133
Distributions in excess of accumulated earnings	$	(375,837)	(2,335)	$	(378,172)
Total stockholders’ equity	$	318,813	(2,335)	$	316,478
Total equity	$	335,143	(2,335)	$	332,808

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~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)

Consolidated Statements of Operations and Comprehensive Loss:


	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
(In thousands)	As Previously Reported		Adjustments		As Restated		As Previously Reported		Adjustments		As Restated
Revenue from tenants	$	16,231	$	—	$	16,231	$	31,877	$	—	$	31,877

Operating expenses:
Asset and property management fees to related parties	1,785		—		1,785		3,707		—		3,707
Property operating	8,270		59		8,329		16,848		78		16,926




Equity-based compensation	2,201		—		2,201		4,321		—		4,321
General and administrative	3,506		1,669		5,175		5,904		2,257		8,161
Depreciation and amortization	7,041		—		7,041		14,022		—		14,022
Total operating expenses	22,803		1,728		24,531		44,802		2,335		47,137
Operating loss	(6,572)		(1,728)		(8,300)		(12,925)		(2,335)		(15,260)
Other income (expense):
Interest expense	(4,703)		—		(4,703)		(9,418)		—		(9,418)
Other income (expense)	2		—		2		(35)		—		(35)
Total other expense	(4,701)		—		(4,701)		(9,453)		—		(9,453)


Net loss and Net loss attributable to common stockholders	(11,273)		(1,728)		(13,001)		(22,378)		(2,335)		(24,713)

Other comprehensive income (loss):
Change in unrealized gain on derivative	622		—		622		2,372		—		2,372
Other comprehensive income	622		—		622		2,372		—		2,372
Comprehensive loss	(10,651)		(1,728)		(12,379)		(20,006)		(2,335)		(22,341)



Weighted-average shares outstanding — Basic and Diluted	13,433,690				13,433,690		13,367,040				13,367,040
Net loss per share attributable to common stockholders — Basic and Diluted	(0.84)		(0.13)		(0.97)		(1.68)		(0.17)		(1.85)

Consolidated Statements of Changes in Equity:


	Three Months Ended June 30, 2022					Six Months Ended June 30, 2022
(In thousands)	As Previously Reported		Adjustments	As Restated		As Previously Reported		Adjustments		As Restated
Distributions in excess of accumulated earnings, Beginning of the period	$	(363,183)	(607)	$	(363,790)	$	(350,709)	$	—	$	(350,709)
Total Stockholders equity, beginning of the period	$	329,360	(607)	$	328,753	$	338,989	$	—	$	338,989
Total equity, Beginning of the period	$	343,599	(607)	$	342,992	$	351,136	$	—	$	351,136
Net loss	$	(11,273)	(1,728)	$	(13,001)	$	(22,378)	$	(2,335)	$	(24,713)
Distributions in excess of accumulated earnings, end of the period	$	(375,837)	(2,335)	$	(378,172)	$	(375,837)	$	(2,335)	$	(378,172)
Total Stockholders equity, end of the period	$	318,813	(2,335)	$	316,478	$	318,813	$	(2,335)	$	316,478
Total equity, end of the period	$	335,143	(2,335)	$	332,808	$	335,143	$	(2,335)	$	332,808

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Consolidated Statements of Cash Flows:


	Six Months Ended June 30, 2022
(In thousands)	As Previously Reported		Adjustments	As Restated
Net loss	$	(22,378)	(2,335)	$	(24,713)
Changes in assets and liabilities:
Accounts payable, accrued expenses and other liabilities	$	6,862	2,335	$	9,197

Revision of the Three Months Ended March 31, 2022

In addition to the restatement described above, this Form 10-Q/A includes adjustments to the Company’s income statement and consolidated balance sheet as of and for the three month period ended March 31, 2022 in order to correct the following immaterial errors. As a result of the failure to accrue these expenses due to third parties, (i) property operating expenses, general and administrative expenses and total operating expenses were understated and (ii) operating loss, net loss and comprehensive loss were understated in the three month ended March 31, 2022 by $0.6 million. Management has evaluated these errors and determined the Company’s financial statements included in its Quarterly Report on Form 10-Q for the three months ended March 31, 2022 were not materially misstated. However, in order to correctly state income for the six month period ended June 30, 2022 and the March 31, 2022 equity in this restated Form 10-Q/A, the March 31, 2022 financial statements will be revised to correct these errors when presented as part of the Company’s Form 10-Q filing for the quarter ended March 31, 2023, as follows:

Consolidated Balance Sheet:


	As of March 31, 2022
(In thousands)	As Previously Reported		Adjustments	As Revised
Total Assets	$	810,182	—	$	810,182
Accounts payable, accrued expenses and other liabilities	$	10,141	607	$	10,748
Total liabilities	$	466,583	607	$	467,190
Distributions in excess of accumulated earnings	$	(363,183)	(607)	$	(363,790)
Total stockholders’ equity	$	329,360	(607)	$	328,753
Total equity	$	343,599	(607)	$	342,992

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Consolidated Statements of Operations and Comprehensive Loss:


	Three Months Ended March 31, 2022
(In thousands)	As Previously Reported		Adjustments		As Revised
Revenue from tenants	$	15,646	$	—	$	15,646

Operating expenses:
Asset and property management fees to related parties	1,922		—		1,922
Property operating	8,578		19		8,597




Equity-based compensation	2,120		—		2,120
General and administrative	2,398		588		2,986
Depreciation and amortization	6,981		—		6,981
Total operating expenses	21,999		607		22,606
Operating loss	(6,353)		(607)		(6,960)
Other income (expense):
Interest expense	(4,715)		—		(4,715)
Other income (expense)	(37)		—		(37)
Total other expense	(4,752)		—		(4,752)


Net loss and Net loss attributable to common stockholders	$	(11,105)	$	(607)	$	(11,712)

Other comprehensive income (loss):
Change in unrealized gain on derivative	1,750		—		1,750
Other comprehensive income	1,750		—		1,750
Comprehensive loss	$	(9,355)	(607)		$	(9,962)



Weighted-average shares outstanding — Basic and Diluted	13,299,650				13,299,650
Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.84)	(0.04)		$	(0.88)

Consolidated Statements of Changes in Equity:


	Three Months Ended March 31, 2022
(In thousands)	As Previously Reported		Adjustments	As Revised
Distributions in excess of accumulated earnings, Beginning of the period	$	(350,709)	—	$	(350,709)
Total Stockholders equity, beginning of the period	$	338,989	—	$	338,989
Total equity, Beginning of the period	$	351,136	—	$	351,136
Net loss	$	(11,105)	(607)	$	(11,712)
Distributions in excess of accumulated earnings, end of the period	$	(363,183)	(607)	$	(363,790)
Total Stockholders equity, end of the period	$	329,360	(607)	$	328,753
Total equity, end of the period	$	343,599	(607)	$	342,992

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Consolidated Statements of Cash Flows:


	Three Months Ended March 31, 2022
(In thousands)	As Previously Reported		Adjustment	As Revised
Net loss	$	(11,105)	(607)	$	(11,712)
Changes in assets and liabilities:
Accounts payable, accrued expenses and other liabilities	$	1,384	607	$	1,991

Note 2 — Summary of Significant Accounting Policies

The accompanying consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America ~~("GAAP"~~(“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair ~~presentation~~statement of results for the interim periods. The results of operations for the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2022 and 2021 are not necessarily indicative of the results for the entire year or any subsequent interim period.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, ~~2016,~~2021, which are included in the ~~Company's~~Company’s Annual Report on Form 10-K filed with the ~~SEC~~Securities and Exchange Commission (the “SEC”) on March ~~28, 2017. There~~18, 2022. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the ~~Company's~~Company’s significant accounting policies during the ~~nine~~three and six months ended ~~September~~June 30, ~~2017,~~2022.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. The Company has determined the OP is a VIE of which the Company is the primary beneficiary.

The preparation of financial statements in conformity with GAAP 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable.

Non-controlling Interests

The non-controlling interests represent the portion of the equity in the OP that is not owned by the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and presented as net loss attributable to non-controlling interests on the consolidated statements of operations and comprehensive loss. Non-controlling interests are allocated a share of net loss based on their share of equity ownership. During the second quarter of 2021, 13,100 units of limited partnership designated as “Class A Units” (“Class A Units”), which represented a non-controlling interest in the OP, were redeemed for an equal number of shares of Class A common stock. These Class A Units were held by a third party.

In addition, under the multi-year outperformance agreement with the Advisor (the “2020 OPP”), the OP issued a class of units of limited partnership designated as LTIP Units (“LTIP Units”) during 2020, which are also reflected as part of non-controlling interest as of June 30, 2022 and December 31, 2021 (see Note 7 - Stockholders’ Equity and Note 11 - Equity-Based Compensation for additional information).

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Impacts of the COVID-19 Pandemic

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. During the first quarter of 2020, the global COVID-19 pandemic that has spread around the world and to every state in the United States commenced. The impact of the COVID-19 pandemic has evolved rapidly and resulted in a decrease in economic activity particularly in the New York City area. Measures such as “shelter-in-place” or “stay-at-home” orders issued by relevant governmental authorities for much of 2020 and early part of 2021 and required social distancing measures had resulted in closure and limitations on the operations of many businesses. While strict “shelter-in-place” and similar orders have generally been lifted, continued limitations on indoor occupancy or other restrictions applicable to in-person operations may in the future be re-instituted along with other steps such as mandatory vaccination as rates of infection increase, including in light of the current spread of the Omicron variant and other potentially more contagious variants of the SARS-CoV-2 virus. On March 7, 2022, New York City lifted its indoor mask and vaccine mandates. Some of the Company’s tenants operate businesses that require in-person interactions, such as retail stores, gyms, fitness studios and parking garages. Even for businesses that have not closed or have closed and reopened, concern regarding the transmission of COVID-19 has impacted, and will likely continue to impact, the willingness of persons to engage in in-person commerce which has and may continue to impact the revenues generated by the Company’s tenants.

The Company considered the impact of COVID-19 on the assumptions and estimates underlying its consolidated financial statements and believes the estimates and assumptions are reasonable and supportable based on the information available as of June 30, 2022. However, given the rapid evolution of the COVID-19 pandemic and the global response to curb its spread, these estimates and assumptions as of June 30, 2022 are inherently less certain than they would be absent the ~~updates described below:~~actual and potential impacts of the COVID-19 pandemic. Actual results may ultimately differ from those estimates.

~~Recent Accounting Pronouncements~~New York City, where all the Company’s properties are located, has been among the hardest hit locations in the country and has recently fully reopened on March 7, 2022. The Company’s properties remain accessible to all tenants, although, even as operating restrictions have expired, not all tenants have resumed in person operations. In addition, one of the Company’s tenants, Knotel, Inc. (“Knotel”), which was a tenant at the Company’s 123 William Street and 9 Times Square properties, declared bankruptcy in early 2021 and its leases with the Company were terminated. Management has already re-leased a portion of the vacant space formerly occupied by Knotel at its 123 William Street building, and other previously vacant space at 123 William Street, and is working on securing additional new leases to replace Knotel’s former space at it 9 Times Square building. Also, the leases with the original tenant of the garages at both the 200 Riverside Boulevard property and 400 E. 67th Street - Laurel Condominium property were terminated on October 26, 2021 and the Company received a lease termination fee of $1.4 million in the fourth quarter of 2021 for these two terminations. Concurrently, the Company simultaneously entered into six month license agreements with a new operator at both garage properties, and subsequently extended these agreements, set to expire at the end of October 2022, in April 2022. Subsequently in July 2022, the previous short-term extensions noted above were terminated, and commenced new leases that expire in June 2037. There can be no assurance, however, that the Company will be able to lease all or any portion of the currently vacant space at any property on acceptable or favorable terms, or at all.

~~In May 2014,~~The financial stability and overall health of tenants is critical to the Company’s business. The negative effects that the global pandemic has had on the economy includes the closure or reduction in activity for many retail operations such as some of those operated by the Company’s tenants. This did impact the ability of some of the Company’s tenants to pay their monthly rent either temporarily or in the long term. As a result, the Company did experience delays in rent collections during 2021, however this trend has not continued into the first half of 2022. Also, there is only one tenant for which we are recording rent on a cash basis as of June 30, 2022. The Company did take a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, in 2020 and 2021, the Company executed different types of lease amendments. These agreements included deferrals and abatements and, in some cases, extensions to the term of the leases. During the year ended December 31, 2021, the Company executed lease amendments with multiple tenants, which include deferrals, abatements, extensions to the terms of the lease, and in one instance, a reduction of the lease term. The Company did not enter into any new deferral or abatement agreements in the first half of 2022.

As a result of the financial difficulties of the Company’s tenants during 2020 and 2021, and early lease terminations during 2020 and 2021, the Company has had breaches of debt covenants on mortgages secured by its 9 Times Square, 1140 Avenue of Americas, Laurel/Riverside and 8713 Fifth Avenue properties under the non-recourse mortgages for those properties. These breaches caused cash trap events that continued into the second quarter of 2022 (except for the Laurel/Riverside property), but were not events of default. The Company is now no longer in breach of the covenants for the Laurel/Riverside property because

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

it satisfied the required debt service coverage for the property for each of the two consecutive quarters ended on December 31, 2021 and March 31, 2022 and continued to satisfy the required debt service coverage for the quarter ended June 30, 2022. See Note 4 — Mortgage Notes Payable, Net for further details regarding the current status, as of June 30, 2022, of the debt covenants under the mortgages secured by these properties.

For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which does not apply to leases subsequently modified). However, in light of the COVID-19 pandemic in which many leases are being modified, the Financial Accounting Standards Board (“FASB”) ~~issued an update (“ASU 2014-09”~~and U.S Securities and Exchange Commission (the “SEC”) ~~establishing Accounting Standards Codification (“ASC”) Topic 606,~~ ~~Revenue from Contracts with Customers~~ ~~(“ASC 606”). ASU 2014-09,~~have provided relief that allows companies to make a policy election as ~~amended by subsequent ASUs on~~to whether they treat COVID-19 related lease amendments as a provision included in the ~~topic, establishes~~pre-concession arrangement, and therefore, not a ~~comprehensive model for entities~~lease modification, or to ~~use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects~~treat the ~~consideration to which the entity expects~~lease amendment as a modification. In order to be ~~entitled in exchange~~considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. For COVID-19 relief qualified changes, there are two methods to potentially account for ~~those goods~~such rent deferrals or ~~services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply~~abatements under the ~~amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity~~relief, (1) as ofif the beginning of the fiscal year of adoption or a full retrospective approach. The Company will adopt this guidance effective January 1, 2018 and currently expects to utilize the modified retrospective approach upon adoption and does not expect that this will result in a significant cumulative-effect adjustment to equity.

~~The Company has progressed in its project plan in evaluating its various revenue streams in order to identify any differences~~changes were originally contemplated in the ~~timing, measurement~~lease contract or ~~presentation of revenue recognition under ASC 606 and ASC Topic 842,~~ ~~Leases~~ ~~(“ASC 842”). Based on~~(2) as if the ~~Company’s evaluation of its various revenue streams,~~deferred payments are variable lease payments contained in the ~~Company believes~~lease contract. For all other lease changes that gains on sales of real estate could be impacted by adoption of ASC 606. The Company expects that this standard could have an impact on the timing of gains on certain sales of real estate as a result of more transactions generally qualifying as sales of real estate and revenue being recognized at an earlier date than under current accounting guidance. Specifically, the Company expects that this would impact partial sales of real estate in situations where the Company no longer retains a controlling financial interest. If the Company were to enter into partial sales of real estate,did not qualify for FASB relief, the Company would ~~derecognize~~be required to apply modification accounting including assessing classification under ASC 842.

Some, but not all of the Company’s lease modifications qualify for the FASB relief. In accordance with the relief provisions, instead of treating these qualifying leases as modifications, the Company has elected to treat the modifications as if previously contained in the lease and recast rents receivable prospectively (if necessary). Under that accounting, for modifications that were deferrals only, there would be no impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease.

For leases not qualifying for this relief, the Company applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.

The Company’s revenues, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. As of June 30, 2022, these leases had a weighted-average remaining lease term of 7.1 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires that the Company record a receivable for, and include in revenue from tenants, unbilled rent receivables that the Company will receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses (recorded in total revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. To the extent such costs exceed the applicable tenant’s base year, many but not all of the Company’s leases require the tenant to pay its allocable share of increases in operating expenses, which may include common area maintenance costs, real estate ~~asset consistent with~~taxes and insurance. Under ASC 842, the ~~principles outlined in ASC 606 and any retained non-controlling ownership interest would be measured at fair value consistent with the guidance on noncash consideration in ASC 606. The~~ Company has ~~not entered into any partial sales of real estate.~~

~~The Company is continuing~~elected to ~~evaluate any differences~~report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the ~~timing, measurement, or presentation of revenue recognition and the impact on the Company's consolidated financial statements and internal accounting processes resulting from ASC 606 as well as~~tenant, under both ASC 842 ~~Leases~~ ~~as discussed below.~~

~~In January 2016,~~and 840, the FASB issued an update that amends the recognition and measurement of financial instruments. The new guidance revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is not permitted for most of the amendments in the update. The Company ~~is currently evaluating the impact of the new guidance.~~

In February 2016, the FASB issued an update to ASU 2016-02 establishing ASC 842, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASC 842 supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. ASC 842 will impact the lease accounting model for both lessees and lessors. The Company will adopt this guidance effective January 1, 2019.

has reflected them on a net basis.

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~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)

The Company ~~is a lessee for a property~~continually reviews receivables related to rent and unbilled rents receivable and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under the leasing standard adopted on January 1, 2019, the Company is required to assess, based on credit risk, if it ~~has a ground lease as of September 30, 2017. For this lease,~~is probable that the Company will ~~be required to record a right-of-use asset and lease liability equal to the present value~~collect virtually all of the ~~remaining~~ lease payments ~~upon adoption~~at the lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. In fiscal year ended 2021, this ~~update. The~~assessment has included consideration of the impacts of the COVID-19 pandemic on the Company’s tenant’s ability to pay rents in accordance with their contracts. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that it is probable that it will collect virtually all of the lease payments (base rent and additional rent), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and the straight line rent receivable accrued will be written off, as well as any accounts receivable, where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants in accordance with current accounting rules, on the accompanying consolidated statements of operations and comprehensive loss in the period the related costs are incurred, as applicable.

In accordance with lease accounting rules the Company records uncollectible amounts as reductions in revenue from tenants. During the six months ended June 30, 2022 and 2021, the Company had no such reductions in revenue which excludes rents from tenants on a cash basis not collected.

Accounting for Leases

As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.

For lessees, the accounting standard requires ~~lessees to apply~~the application of a dual lease classification approach, classifying leases as either ~~finance~~operating or ~~operating~~finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. ~~This classification will determine whether~~Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method ~~or on a straight line basis~~ over the term of the ~~lease, respectively. A lessee is also required to record~~lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. ~~Leases with a term~~Further, certain transactions where at inception of ~~12 months or less will be~~the lease the buyer-lessor accounted for ~~similar~~the transaction as a purchase of real estate and a new lease, may now be required to ~~existing guidance~~have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, ~~today.~~see Note 8- Commitments and Contingencies.

~~From a lessor perspective the Company expects that the new standard will impact the presentation~~Recently Issued Accounting Pronouncements

Adopted as of lease and non-lease components of revenue such as rent, and operating expense reimbursements including common area maintenance, taxes, and insurance from leases for which the Company is a lessor. The Company does not expect this guidance to impact its existing lessor revenue recognition pattern. The Company anticipates that it will elect the following practical expedients, which must be elected as a package and applied consistently by an entity to all of its leases, which allow the Company to not have to reassess the following upon adoption: (i) whether any expired or existing contract contains a lease, (ii) lease classification related to expired or existing leases, or (iii) whether costs incurred on existing leases qualify as initial direct costs. The Company is continuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of the new lessee accounting model on the Company’s consolidated financial position, results of operations and disclosures.January 1, 2021

In August ~~2016,~~2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815). The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance ~~on how certain transactions should be classified~~for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance.

In November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance.

~~In May 2017, the FASB issued guidance that clarifies which changes~~makes targeted improvements to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, does not change as a result of the modification. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for reporting periods for which financial statements have not yet been issued. The Company is currently evaluating the impact of this newrelated earnings per share guidance.

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~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~

~~(Unaudited)~~

~~Recently Adopted Accounting Pronouncements~~

In October 2016, the FASB issued guidance where a reporting entity will need to evaluate if it should consolidate a variable interest entity ("VIE"). The amendments change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the provisions of this guidance beginning January 1, 2017 and determined that there is no impact to the Company's consolidated financial position, results of operations and cash flows.

In January 2017, the FASB issued guidance that revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single asset or group of similar assets, the assets acquired (or disposed of) would not be considered a business. The revised guidance is effective for reporting periods beginning after December 15, 2017, and the amendments will be applied prospectively. Early application is permitted only for transactions that have not previously been reported in issued financial statements. The Company has assessed this revised guidance and expects, based on historical acquisitions, future properties acquired to qualify as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. The Company adopted ~~this~~the new guidance ~~for the nine months ended September 30, 2017. The adoption of this guidance~~on January 1, 2021 and determined it did not have a material impact on ~~the Company's~~its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period from March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that the Company’s hedged forecasted transactions remain probable and (ii) the

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~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)

assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of the Company’s derivatives, which will be consistent with the Company’s past presentation. The Company will continue to evaluate the impact of the guidance and may apply other elections, as applicable, as additional changes in the market occur.

Note 3 — Real Estate Investments

There were no real estate assets acquired or liabilities assumed during the ~~nine~~three months and six months ended ~~September~~June 30, ~~2017. On~~2022 or 2021. Also, there were no dispositions of real estate during the three months and six months ended June ~~15, 2016,~~30, 2022 or 2021. However, the Company ~~through a wholly-owned subsidiary~~is evaluating its options for its 421 W. 54th Street - Hit Factory property, which includes marketing the property for sale. As no buyer has been identified for the property, it does not qualify to be classified as held for sale on the consolidated balance sheet as of the OP, completed its acquisition of the leasehold interest in an institutional-quality office building located at 1140 Avenue of the Americas in Manhattan, New York ("1140 Avenue of the Americas"). 1140 Avenue of the Americas comprises 249,703 square feet and is subject to a ground lease held by 1140 Sixth Avenue LLC. The contract purchase price for 1140 Avenue of the Americas was $180.0 million, exclusive of closing costs.

~~The following table presents the allocation of the real estate assets acquired and liabilities assumed during the nine months ended September~~June 30, ~~2016:~~

~~Future Minimum Cash Rent~~

The following table presents future minimum base cash rental payments due to the Company subsequent to September 30, 2017. These amounts exclude contingent rent payments, as applicable, that may be collected 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 Rent Payments
2017 $ 11,180
2018 48,411
2019 47,063
2020 43,039
2021 39,069
Thereafter 139,430
$ 328,192

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~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~

~~(Unaudited)~~

Significant ~~Tenant~~Tenants

As of ~~September~~June 30, ~~2017~~2022 and ~~2016,~~December 31, 2021, there were no tenants whose annualized rental income on a straight-line basis, based on leases ~~signed,~~commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.

~~Intangible Assets and Liabilities~~

~~Acquired intangible assets and lease liabilities consist of the following as of September 30, 2017 and December 31, 2016:~~

The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Amortization of in-place leases and other intangibles⁽¹⁾
$ 2,877
$ 3,607
$ 9,113
$ 8,642
Amortization and (accretion) of above- and below-market leases, net⁽²⁾
$ (512 ) $ (631 ) $ (1,607 ) $ (1,882 )
Amortization of below-market ground lease⁽³⁾
$ 13
$ 14
$ 37
$ 14

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~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~

~~(Unaudited)~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
In-place leases (1)	$	1,326	$	1,361	$	2,606	$	2,866
Other intangibles	177		291		354		583
Total included in depreciation and amortization	$	1,503	$	1,652	$	2,960	$	3,449

Above-market lease intangibles	$	263	$	273	$	526	$	538
Below-market lease liabilities	(326)		(488)		(652)		(1,003)
Total included in revenue from tenants	$	(63)	$	(215)	$	(126)	$	(465)

Below-market ground lease, included in property operating expenses	$	12	$	12	$	25	$	25

The following table provides the projected amortization expense and adjustments to revenues for the next five years as of ~~September~~June 30, ~~2017:~~2022:


(In thousands)	2022 (remainder)		2023		2024		2025		2026
In-place leases	$	1,945	$	3,333	$	2,425	$	1,366	$	673
Other intangibles	354		708		708		708		708
Total to be included in depreciation and amortization	$	2,299	$	4,041	$	3,133	$	2,074	$	1,381

Above-market lease assets	$	448	$	825	$	495	$	206	$	138
Below-market lease liabilities	(519)		(949)		(890)		(502)		(183)
Total to be included in revenue from tenants	$	(71)	$	(124)	$	(395)	$	(296)	$	(45)

(In thousands) October 1, 2017- December 31, 2017 2018 2019 2020 2021
In-place leases $ 2,576
$ 9,372
$ 8,588
$ 6,718
$ 5,332
Other intangibles 291
1,165
1,165
1,165
937
Total to be included in depreciation and amortization $ 2,867
$ 10,537
$ 9,753
$ 7,883
$ 6,269

Above-market lease assets $ (366 ) $ (1,369 ) $ (1,305 ) $ (1,164 ) $ (1,064 )
Below-market lease liabilities 874
3,435
3,092
2,679
2,371
Total to be included in rental income $ 508
$ 2,066
$ 1,787
$ 1,515
$ 1,307
Write-off of Deferred Leasing Commissions

~~Note 4 — Investment Securities~~

~~As of September 30, 2017,~~In January 2021, the Company’s former tenant, Knotel, filed for bankruptcy and all leases with the Company ~~had no investment in equity securities.~~were terminated effective January 31, 2021. As a result of ~~December 31, 2016,~~these terminations, the Company ~~had an investment in an equity security with a fair value~~wrote-off $1.3 million of $0.5 million. This investment was considered to be an available-for-sale security and therefore increases or decreases in the fair value of this investment were recorded in accumulated other comprehensive income (loss) as a component of equity on the consolidated balance sheets unless the security was considered to be other-than-temporarily impaired, at which time the losses would be reclassified to expense. In addition, the unrealized gain or loss recorded in accumulated other comprehensive income (loss) were reversed on the date of the sale. On June 15, 2017, the Company redeemed its investment in equity securities at approximately $491,000 with a cost basis of approximately $467,000 and realized approximately $24,000 gain as of September 30, 2017.

~~The following table details the unrealized gains and losses on the investment security by security type as of December 31, 2016:~~deferred leasing

(In thousands) Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
December 31, 2016
Equity security $ 467
$ 10
$ —
$ 477

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~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)

costs in the first quarter of 2021, which are included in depreciation and amortization expense in our consolidated statement of operations for the six months ended June 30, 2021.

Note 54 — Mortgage Notes Payable, Net

The ~~Company's~~Company’s mortgage notes payable, net as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 are as follows:


		Outstanding Loan Amount
Portfolio	Encumbered Properties	June 30, 2022		December 31, 2021		Effective Interest Rate		Interest Rate		Maturity
		(In thousands)		(In thousands)
123 William Street (1)	1	$	140,000	$	140,000	4.73	%	Fixed		Mar. 2027
1140 Avenue of the Americas (2)	1	99,000		99,000		4.17	%	Fixed		Jul. 2026
400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage (2)	2	50,000		50,000		4.58	%	Fixed		May 2028
8713 Fifth Avenue (2)	1	10,000		10,000		5.04	%	Fixed		Nov. 2028
9 Times Square (2) (3)	1	49,500		55,000		3.72	%	Fixed	(4)	Apr. 2024
196 Orchard Street	1	51,000		51,000		3.90	%	Fixed		Aug. 2029
Mortgage notes payable, gross	7	399,500		405,000		4.35	%
Less: deferred financing costs, net (5)		(6,112)		(6,883)
Mortgage notes payable, net		$	393,388	$	398,117

Outstanding Loan Amount
Portfolio Encumbered Properties September 30,
2017 December 31,
2016 Effective Interest Rate Interest Rate Maturity
(In thousands) (In thousands)
123 William Street⁽¹⁾
1 $ 140,000
$ 96,000
4.73 % Fixed Mar. 2027
1140 Avenue of the Americas 1 99,000
99,000
4.17 % Fixed Jul. 2026
Less: deferred financing costs, net (5,639 ) (3,672 )
Mortgage note payable, net of deferred financing costs 2 $ 233,361
$ 191,328
4.61 %
_______

~~_____________________~~

(1)As of June 30, 2022, $1.6 million was in escrow in accordance with the conditions under the loan agreement and presented as part of restricted cash on the unaudited consolidated balance sheet. The escrow amount will be released to fund leasing activity, tenant improvements and leasing commissions related to this property.

~~(1)~~

The Company entered into a loan agreement with Barclays Bank PLC, in the amount of $140.0 million, on March 6, 2017. A portion of the proceeds from the loan was used to repay the outstanding principal balance of approximately $96.0 million on the existing mortgage loan secured by the property. At closing, the lender placed $24.8 million of the proceeds in escrow, to be released to the Company in accordance with the conditions under the loan, in connection with leasing activity, tenant improvements, leasing commissions and free rent obligations related to this property. As of September 30, 2017, the $24.8 million of the proceeds remained in escrow and is included in restricted cash on the unaudited consolidated balance sheet.

(2)Due to covenant breaches resulting in cash traps for these properties, all cash generated from operating these properties is being held in a segregated account, and the Company no longer has access to the excess cash flows. As of June 30, 2022 an aggregate of $7.7 million is held in cash management accounts pursuant to these cash traps, which is included in restricted cash on the balance sheet. See “Debt Covenants” section below for additional details. For Laurel/Riverside, as of June 30, 2022, the Company was neither in covenant breach nor in cash traps based on current results.

(3)The Company made a $5.5 million in principal payment in March 2022 pursuant to a waiver and amendment of the loan on the Company’s 9 Times Square property. See “Debt Covenants” section below for additional details.

(4)Fixed as a result of the Company having entered into a “pay-fixed” interest rate swap agreement, which is included in derivatives, at fair value on the consolidated balance sheet as of June 30, 2022 (see Note 6 — Derivatives and Hedging Activities for additional information).

(5)Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.

Collateral and Principal Payments

Real estate assets and intangible assets of ~~$447.5~~$835.9 million, at cost (net of below-market lease liabilities), at ~~September~~June 30, ~~2017~~2022 have been pledged as collateral to the ~~Company's~~Company’s mortgage ~~note~~notes payable and are not available to satisfy the ~~Company's~~Company’s other obligations unless first satisfying the mortgage note payable on the property. The Company is required to make payments of interest on its mortgage ~~note~~notes payable on a monthly basis.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

The following table summarizes the scheduled aggregate principal payments subsequent to June 30, 2022:


(In thousands)	Future Minimum Principal Payments
2022 (remainder)	$	—
2023	—
2024	49,500
2025	—
2026	99,000
Thereafter	251,000
Total	$	399,500

Debt Covenants

9 Times Square

The Company breached both a debt service coverage and a debt yield covenant under the non-recourse mortgage loan secured by 9 Times Square for each of the quarters in the year ended December 31, 2020, through December 31, 2021. The debt service coverage and debt yield covenants are calculated quarterly using the 12 preceding months. The principal amount of the loan was $49.5 million as of June 30, 2022. The breaches, through the fourth consecutive quarter (September 31, 2021), while not events of default, required the Company to enter into a cash management period requiring all rents and other revenue of the property, if any, to be held in a segregated account as additional collateral under the loan. Thereafter, the contract provided for specific financial remedies to be completed or the loan would be in default. As of December 31, 2021 there was $4.3 million cash trapped under the loan being held in the cash management account, which was classified in restricted cash on the Company’s consolidated balance sheet as of December 31, 2021.

On March 2, 2022 the Company entered into a waiver and amendment to this mortgage loan, under which the lender agreed to waive any potential existing default that may have existed under the loan, subject to the Company paying $5.5 million of the principal amount under the loan. To fund the payment, which was made on March 3, 2022, the Company was permitted to use $5.5 million that was being held in a cash management account as of that date, $4.3 million of which was part of the Company’s restricted cash balance on its consolidated balance sheet as of December 31, 2021.

Other significant changes from the waiver and amendment include: (1) revision of how the “debt service coverage ratio” is calculated by reducing the hypothetical interest rate used in this calculation to the actual interest rate on the loan; (2) a reduction the "debt yield" covenant to 7.5% from 8.0%; and (3) permits the Company to include free rent periods (subject to maximum limits) in calculating compliance with the debt service and debt yield covenants. The waiver and amendment also replaces the LIBOR rate provisions to provide for a successor benchmark using the Secured Overnight Financing Rate (“SOFR”) effective with the second quarter of 2022 and amends the spreads to 1.60% from 1.50%, per annum. The previously existing “pay-fixed” interest swap that was designated as a cash flow hedge on the 9 Times Square mortgage was terminated in conjunction with the modification described above. A new swap was entered into for a notional value that aligns with the remaining principal balance owed on the mortgage using a new SOFR effective rate (see Note 6 — Derivatives and Hedging Activities).

With the waiver as of September 30, ~~2017:~~

(In thousands) Future Minimum Principal Payments
2017 $ —
2018 —
2019 —
2020 —
2021 —
Thereafter 239,000
Total $ 239,000

2021, the Company is permitted to be in breach for up to four consecutive quarters without causing an event of default. While the Company also breached the debt service coverage and debt yield covenant as of December 31, 2021 and March 31, 2022, the Company expects that it will not be in breach as of June 30, 2022 and September 30, 2022. As a result, the Company will have two consecutive quarters that it will not be in breach and, at such time, the Company will be able to request to exit the cash trap. The ~~Company's mortgage notes payable require compliance~~maintenance of the separate cash management account described above will remain a requirement until the Company is able to comply with ~~certain property-level debt~~all of the applicable covenants. As of June 30, 2022, there was $2.5 million held in a cash management account which was part of the Company’s restricted cash balance on its consolidated balance sheet.

The Company expects that it will not be in breach as of June 30, 2022 and September 30, ~~2017,~~2022, however if it were in breach, the Company may remain in breach of the covenants through the reporting of third quarter of 2022 results at which time, if the Company remains in breach, the Company will again enter the “right sizing” period which would require (1) repaying a portion of the loan or (ii) provide the lenders with additional collateral in the form of cash or a letter of credit, in each case in an amount sufficient to cure the covenant breaches when applied as a reduction of the loan balance. There is no assurance that the Company will be able to cure the breaches before such time, which could result in the lender accelerating the principal amount due under the loan and exercising other remedies including foreclosing on the property. Further, funding any

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

substantial principal repayment would significantly impact the Company’s capital resources which could have a material adverse effect on the Company’s ability to fund its operating expenses (including debt service obligations), acquisitions, capital expenditures and dividends to the holders of shares of our Class A common stock. The agreement governing this loan requires the Company to maintain $10.0 million in liquid assets, which includes cash and cash equivalents and restricted cash, which totaled $20.5 million as of June 30, 2022.

1140 Avenue of the Americas

The Company has breached both a debt service coverage provision and a reserve fund provision under its non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last eight quarters ended June 30, 2022. The debt service coverage covenant is calculated quarterly using the 12 preceding months. The principal amount of the loan was $99.0 million as of June 30, 2022. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after paying operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured if the Company satisfies the required debt service coverage ratio for two consecutive quarters, whereupon the additional collateral will be released. The Company can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications. As of June 30, 2022, the Company has $5.2 million in cash that is retained by the lender and maintained in restricted cash on the Company’s consolidated balance sheet.

400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage

The Company breached a debt service coverage covenant under the non-recourse mortgage loan secured by 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage in the first, second and third quarters of 2021. The Company satisfied the debt service coverage covenant for the quarter ended December 31, 2021, March 31, 2022 and June 30, 2022. The debt service coverage covenant is calculated quarterly using the 12 preceding months.

The principal amount of the loan was $50.0 million as of June 30, 2022. The two previous parking garage tenants at this property had not paid rent in accordance with their lease agreements for 19 months and were placed on a cash basis in the fourth quarter of 2020. On October 26, 2021, the Company signed a termination agreement with the original tenants of the garages at both the 200 Riverside Boulevard property and 400 E. 67th Street - Laurel Condominium property, which required the tenants to pay a $1.4 million termination payment to the Company, which was received during the fourth quarter of 2021. The $1.4 million in cash received for the lease termination fee was deposited into a cash management account and was originally classified in restricted cash on the Company’s consolidated balance sheet as of December 31, 2021, and it was subsequently reclassified to cash and cash equivalents on the Company’s consolidated balance sheet in the first quarter of 2022 (see below for more information). Also, upon the signing of the termination agreement, the Company simultaneously entered into six-month license agreements with a new operator at both garage properties, and subsequently, in July 2022, the Company terminated the six-month license agreements and commenced new leases that expire in June 2037.

The Company’s breaches of the debt services coverage covenant were not events of default but rather required the Company to enter into a cash management period requiring all rents and other revenue of the property, if any, to be held in a segregated account as additional collateral under the loan, whereby it could have remained subject to this reserve requirement through maturity of the loan without further penalty or ramifications. However, the Company is now no longer in breach of the covenants for Laurel/Riverside because it satisfied the required debt service coverage for the property for each of the two consecutive quarters ended on December 31, 2021 and March 31, 2022, which ended the cash management period. The Company also satisfied the debt service coverage for the period June 30, 2022. Accordingly, the $1.4 million, which was classified in restricted cash on the Company’s consolidated balance sheet as of December 31, 2021, was reclassified to cash and cash equivalents on the Company’s consolidated balance sheet in the first quarter of 2022.

8713 Fifth Avenue

The Company breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue during the second, third and fourth quarters of 2021 and the first and second quarters of 2022, respectively. The debt service coverage covenant is calculated quarterly using the 12 preceding months. The principal amount for the loan was $10.0 million as of June 30, 2022. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period. The Company has the ability to avoid the excess cash flow sweep period by electing to fund a reserve in the amount of $125,000 of additional collateral in cash or as a letter of credit. As of June 30, 2022, the Company had not yet determined whether it will do so. The Company also has the ability to continue to avoid an excess cash flow sweep period by funding an additional $125,000 each quarter until the covenant breaches are cured in accordance with the terms of the loan agreement. If the Company does not elect to continue to fund the $125,000 additional collateral in a subsequent quarter, then the excess flow sweep period would commence in such quarter and continue until the covenant breaches are cured in accordance with the terms of the loan agreement. Additionally, in the event that the debt service coverage ratio covenant

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

remains in breach at or below the current level for two consecutive calendar quarters and the lender reasonably determines that such breach is due to the property not being prudently managed by the current manager, the lender has the right, but not the obligation, to require that the Company replace the current manager with a third party manager chosen by the Company. As of June 30, 2022, no cash was trapped related to this property. The Company signed a lease with a new tenant at this property in November 2021 and expects the new tenant to occupy the space in the third quarter of 2022, which will bring the occupancy at this property back to 100%.

Other Debt Covenants

The Company was in compliance with the ~~debt~~remaining covenants under its other mortgage ~~note agreements.~~notes payable as of June 30, 2022, however, it continues to monitor compliance with those provisions. If the Company experiences additional lease terminations, due to tenant bankruptcies or otherwise, or tenants placed on a cash basis continue to not pay rent, it is possible that certain of the covenants on other loans may be breached and the Company may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, the Company’s other mortgages also contain cash management provisions that are not considered events of default, and as such, acceleration of principal would only occur upon an event of default.

LIBOR Transition

The Company had a mortgage loan agreement and a related derivative agreement for a “pay-fixed” interest swap that had terms that were previously based on LIBOR. However, in March of 2022, effective with the 9 Times Square loan modification and the termination and replacement of the “pay-fixed” swaps, both the mortgage loan and agreement and the current “pay-fixed” interest swaps are now based on SOFR.

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~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~

~~(Unaudited)~~

Note 65 — Fair Value of Financial Instruments

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the instrument. This alternative approach also reflects the contractual terms of the instrument, as applicable, including the period to maturity, and may use observable market-based inputs, including interest rate curves and implied volatilities, and unobservable inputs, such as expected volatility. The guidance defines three levels of inputs that may be used to measure fair ~~value.~~

value:



Level 1	—	Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2	—	Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3	—	Unobservable inputs that reflect the ~~entity's~~entity’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

~~See Note 4 — Investment Securities. The Company redeemed its investment in an equity security~~

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Financial Instruments Measured at Fair Value on ~~June 15, 2017. As of December 31, 2016, the Company had an investment in~~ a real estate income fund that was traded in active markets and therefore, due to the availability of quoted market prices in active markets, classified this investment as Level 1 in the fair value hierarchy.Recurring Basis

Derivative Instruments

The ~~following table presents information about the Company's assets~~Company’s derivative instruments are measured at fair value on a recurring ~~basis as~~basis. Although the Company has determined that the majority of ~~December 31, 2016, aggregated by~~ the ~~level in the fair~~inputs used to value ~~hierarchy~~its derivatives fall within ~~which that instrument falls.~~

Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable Inputs
(In thousands) Level 1 Level 2 Level 3 Total
December 31, 2016
Investment Securities $ 477
$ —
$ —
$ 477

~~There were no transfers between levels~~Level 2 of the fair value hierarchy, ~~during 2016.~~the credit valuation adjustments associated with this derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparty. However, as of June 30, 2022, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivatives valuation in its entirety is classified in Level 2 of the fair value hierarchy.

The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.


(In thousands)	Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
June 30, 2022
Interest rate “Pay - Fixed” swaps - assets	$	—	$	776	$	—	$	776
Total	$	—	$	776	$	—	$	776

December 31, 2021
Interest rate “Pay - Fixed” swaps - liabilities	$	—	$	(1,553)	$	—	$	(1,553)
Total	$	—	$	(1,553)	$	—	$	(1,553)

Financial ~~instruments~~Instruments that are not ~~carried~~Reported at ~~fair value~~Fair Value

The Company is required to disclose at least annually the fair value of financial instruments for which it is practicable to estimate the value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other assets, accounts payable and distributions payable approximates their carrying value on the consolidated balance sheets due to their short-term nature. The fair value of the variable mortgage note payable is deemed to be equivalent to its carrying value because it bears interest at a variable rate that fluctuates with the market and there has been no significant change in the credit risk or credit markets since origination.

The fair values of the ~~Company's~~Company’s financial instruments that are not reported at fair value on the consolidated balance sheet are reported below:

September 30, 2017 December 31, 2016
(In thousands) Level Gross Principal Balance Fair Value Gross Principal Balance Fair Value
Mortgage note payable — 123 William Street 3 $ 140,000
$ 145,483
* *
Mortgage note payable — 1140 Avenue of the Americas 3 $ 99,000
$ 98,721
$ 99,000
$ 98,000

* The fair value of the mortgage note payable is estimated to be equivalent to its carrying value because it bears interest at a variable rate that fluctuates with market and there has been no significant change in the credit risk. This mortgage note payable was repaid on March 6, 2017.

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~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)


		June 30, 2022				December 31, 2021
(In thousands)	Level	Gross Principal Balance		Fair Value		Gross Principal Balance		Fair Value
Mortgage note payable — 123 William Street	3	$	140,000	$	132,465	$	140,000	$	145,827
Mortgage note payable — 1140 Avenue of the Americas	3	99,000		92,354		99,000		100,616
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage	3	50,000		46,319		50,000		51,750
Mortgage note payable — 8713 Fifth Avenue	3	10,000		9,450		10,000		10,633
Mortgage note payable — 9 Times Square	3	49,500		48,123		55,000		53,654
Mortgage note payable — 196 Orchard Street	3	51,000		44,380		51,000		50,423
Total		$	399,500	$	373,091	$	405,000	$	412,903

Note 6 — Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company currently uses derivative financial instruments, including an interest rate swap, and may in the future use others, including 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 intend to utilize derivatives for speculative or other 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 are not able to perform under the agreements. To mitigate this risk, the Company endeavors to only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Company’s consolidated balance sheets as of June 30, 2022 and December 31, 2021.

(In thousands)

Balance Sheet Location

June 30,
2022

December 31, 2021

Derivatives designated as hedging instruments:

Interest Rate “Pay-fixed” Swap

Derivative asset (liability), at fair value

776

(1,553)

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate collars designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract and payments of variable-rate amounts if interest rates fall below the floor strike rate on the contract.

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the six months ended June 30, 2022 and year ended December 31, 2021, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. In connection with the modification and partial paydown of the Company’s mortgage loan on its 9 Times Square property (see Note 4 — Mortgage Notes Payable, Net), the Company terminated its existing $55.0 million notional, LIBOR based “pay-fixed” interest rate swap and replaced it with a new $49.5 million notional, SOFR based “pay-fixed” interest rate swap. In connection with this termination/replacement of the swap derivatives, the Company reflected as a charge (associated with the reduced notional amount) of approximately $38,338 in Other Income (Expense) on the Company’s Statement of Operations for the six month period ended June 30, 2022. At the time of the modification a net carrying amount reflecting the amount paid and the off market value rolled into the new swap and remained in Accumulated Other Comprehensive Income (“AOCI”). The amount will be amortized into interest expense over the term of the hedged item. The unamortized amount as of June 30, 2022 was $43,000.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates that $0.5 million will be reclassified from other comprehensive income (loss) as an increase to interest expense.

As of June 30, 2022 and December 31, 2021, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk.

June 30, 2022

December 31, 2021

Interest Rate Derivative

Number of
Instruments

Notional Amount

Number of
Instruments

Notional Amount

(In thousands)

Interest Rate “Pay-fixed” Swap

49,500

55,000

The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the periods indicated.


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2022		2021		2022		2021
Amount of gain (loss) recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)	$	454	$	(54)	$	1,878	$	253
Amount of loss reclassified from accumulated other comprehensive loss into income as interest expense	$	(168)	$	(287)	$	(494)	$	(568)
Total interest expense recorded in consolidated statements of operations and comprehensive loss	$	4,703	$	4,763	$	9,418	$	9,476

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of June 30, 2022 and December 31, 2021. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Balance Sheet.


									Gross Amounts Not Offset on the Balance Sheet
(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts of Recognized (Liabilities)		Gross Amounts Offset on the Balance Sheet		Net Amounts of Assets (Liabilities) Presented on the Balance Sheet		Financial Instruments		Cash Collateral Received (Posted)		Net Amount
June 30, 2022	$	776	$	—	$	—	$	776	$	—	$	—	776
December 31, 2021	$	—	$	(1,553)	$	—	$	(1,553)	$	—	$	—	(1,553)

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparty that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

As of June 30, 2022, the fair value of derivatives in a net asset position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $0.7 million. As of June 30, 2022, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $0.7 million.

Note 7 — ~~Common Stock~~Stockholders’ Equity

As of ~~September~~June 30, ~~2017,~~2022 and December 31, 2021, the Company had ~~31.2~~ 13.6 million and 13.3 million shares of common stock outstanding, respectively, including unvested restricted ~~shares and shares issued pursuant to the DRIP, and had received total proceeds from public offerings of $771.6 million, inclusive of $60.1 million from the DRIP and net of repurchases.~~shares. As of ~~December 31, 2016,~~June 30, 2022, all of the ~~Company had 30.9 million~~Company’s shares of common stock outstanding was Class A common stock, including unvested restricted shares.

During the first six months of 2022 and during the year ended December 31, 2021, the Company paid dividends to common stockholders in the amount of $0.40 per share ($0.10 per share, per quarter) of common stock per year, payable to holders of record on a single quarterly record date. On July 1, 2022, the Company announced that it suspended its policy regarding dividends paid on its Class A common stock, beginning with the dividend that would have been payable for the quarter ended June 30, 2022.

During the three and six months ended June 30, 2022, in accordance with the Side Letter (as defined in Note 9 — Related Party Transactions and Arrangements), the Advisor reinvested base management fees, aggregating approximately $1.5 million and $2.5 million, in shares of the Company’s Class A common stock respectively. The number of shares purchased was based on a 10-day trading average price subject to a “Minimum Price” as defined in Section 312.04(h) of the New York Stock Exchange Listed Company Manual (the “Listed Company Manual”) computed upon executing the side letter to be $10.55 per share. As a result the side letter, during the first six months of 2022, the Company issued 45,372, 43,508, 38,786, 40,247 and 47,393 shares of its Class A common stock in February, March 2022, April, May and June 2022, respectively, in connection with the monthly base management fee earned by the Advisor. For accounting purposes, these shares are treated as issued using the closing price on date of issue and the related expense for the year are reflected as $1.3 million and $2.3 million for the three and six months ended June 30, 2022, respectively.

During the three months ended March 31, 2022, the Company’s independent board of directors made an election to receive stock in lieu of cash for board services rendered during the fourth quarter 2021 and accordingly, the expense was recorded in the fourth quarter of 2021. Also, during the three months ended June 30, 2022, the Company’s independent board of directors

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

made an election to receive stock in lieu of cash for board services rendered during the first quarter of 2022, and accordingly, the expense was recorded in the first quarter of 2022. As a result of these elections, the Company issued:

•5,192 shares of its Class A common stock to the Company’s independent board of directors in the first quarter of 2022 (for services rendered in the fourth quarter 2021), and

•4,851 shares of its Class A common stock to the Company’s independent board of directors in the second quarter of 2022 (for services rendered in the first quarter of 2022).

The Company paid all directors fees in cash during the second quarter of 2022.

Equity Offerings

Class A Common Stock

On October 1, 2020, the Company entered into an Equity Distribution Agreement, pursuant to which the ~~DRIP,~~Company may, from time to time, offer, issue and ~~had received~~sell to the public, through its sales agents, shares of Class A common stock having an aggregate offering price of up to $250.0 million in an “at the market” equity offering program (the “Common Stock ATM Program”).

During the three and six months ended June 30, 2022 and 2021, the Company did not sell any shares of Class A common stock through the Common Stock ATM Program.

Repurchase Program

The Company’s directors adopted a resolution authorizing consideration of share repurchases of up to $100 million of shares of Class A common stock over a long-term period following the listing of the Company’s Class A common stock on the NYSE (the “Listing”). Actual repurchases would be reviewed and approved by the Company’s board of directors based on management recommendations taking into consideration all information available at the specific time including the Company’s available cash resources (including the ability to borrow), market capitalization, trading price of the Company’s Class A common stock, state law considerations and other contractual or regulatory limitations and capital availability. Repurchases, if approved by the Company’s board of directors, would typically be made on the open market in accordance with SEC rules creating a safe harbor for issuer repurchases but may also occur in privately negotiated transactions. The Company’s board of directors has not considered or authorized any repurchases since the adoption of the initial resolution.

Tender Offer

On December 28, 2020, in response to an unsolicited offer to the Company’s stockholders, the Company commenced a tender offer, (as amended, the “December Offer”) to purchase up to 65,000 shares of Class B common stock for cash at a purchase price equal to $7.00 per share. The December Offer expired on January 27, 2021 and, in accordance with the terms of the December offer, the Company purchased 26,236 shares of Class B common stock for a total ~~gross proceeds~~cost of ~~$764.8~~approximately $0.2 million, ~~inclusive of $46.0 million from~~including fees and expenses relating to the ~~DRIP and net of repurchases.~~tender offer, with cash on hand in February 2021.

Stockholder Rights Plan

In May 2014, the board of directors of the Company authorized, and the Company began paying, a monthly distribution equivalent to $1.5125 per annum, per share of common stock. The distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.

The Company has a Share Repurchase Program ("SRP") that enables stockholders, subject to certain conditions and limitations, to sell their shares to the Company. Under the SRP stockholders may request that the Company repurchase all or any portion of their shares of common stock, if such repurchase does not impair the Company's capital or operations.

On January 25, 2016, the Company's board of directors approved an amendment of the SRP to supersede and replace the existing SRP effective beginning on February 28, 2016. Under the SRP, as amended, repurchases of shares of the Company's common stock, when requested, are at the sole discretion of the Company's board of directors and generally will be made semiannually (each six-month period ending June 30 or December 31, a "fiscal semester").

~~On October 24, 2016, the Company's board of directors approved the 2016 Estimated Per-Share NAV, and, on October 25, 2017, the Company's board of directors approved the 2017 Estimated Per-Share NAV.~~

~~On June 14, 2017,~~2020, the Company announced that its board of directors had ~~adopted~~approved a stockholder rights plan, but did not take actions to declare a dividend for the plan to become effective. In August 2020, in connection with the Listing and the related bifurcation of common stock into Class A and Class B common stock, the Company entered into an ~~amendment and restatement of the SRP that superseded and replaced the existing SRP effective as of July 14, 2017. Under the~~ amended and restated ~~SRP, subject to certain conditions, only repurchase requests made following~~rights agreement, which amended and restated the ~~death or qualifying disability~~stockholders rights plan approved in May 2020 and declared a dividend payable in August 2020, of ~~stockholders that purchased shares~~one Class A right for and on each share of ~~the Company’s~~Class A common stock ~~or received their shares~~and one Class B right for and on each share of Class B common stock, in each case, outstanding on the close of business on August 28, 2020 to the stockholders of record on that date. Each right entitles the registered holder to purchase from the Company ~~(directly or indirectly) through~~ one ~~or more non-cash transactions would be considered for repurchase. Other terms and provisions~~one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”), of the ~~amended and restated SRP remained consistent with~~Company at a price of $55.00 per one one-thousandth of a share of Series A Preferred Stock, represented by a right, subject to adjustment. On August 12, 2021 the ~~existing SRP.~~expiration date of these rights was extended from August 16, 2021 to August 16, 2022. On August 9, 2022 the expiration date of these rights was extended again from August 16, 2022 to August 18, 2025.

~~In cases~~Distribution Reinvestment Plan

Until August 28, 2020, the Company had a distribution reinvestment plan (“DRIP”), pursuant to which, stockholders may elect to reinvest distributions paid in cash in additional shares of ~~requests for death and disability,~~common stock. The Company had the ~~repurchase price is equal~~right to then-current Estimated Per-Share NAV at the time of repurchase. Prior to the establishment of Estimated Per-Share NAV, the repurchase price in these circumstances was equal to the price paid to acquire the shares.

Prior to the establishment of Estimated Per-Share NAV, the purchase price per share for requests other than for death or disability under the SRP depended on the length of time investors had held such shares as follows (in each case, as adjusted foramend any ~~stock distributions, combinations, splits and recapitalizations):~~

~~after one year from the purchase date - the lower of $23.13 and 92.5%~~aspect of the ~~amount they actually paid for each share; and,~~

~~after two years from~~DRIP or terminate the ~~purchase date - the lower of $23.75 and 95.0% of the amount they actually paid for each share.~~

Following the establishment of Estimated Per-Share NAV, the purchase price per share for requests other than for death or disability under the SRP depended on the length of time investors had held such shares as follows (in each case, as adjusted for any stock distributions, combinations, splits and recapitalizations):

~~after one year from the purchase date - 92.5% of the Estimated Per-Share NAV;~~

~~after two years from the purchase date - 95.0% of the Estimated Per-Share NAV;~~

~~after three years from the purchase date - 97.5% of the Estimated Per-Share NAV; and,~~

~~after four years from the purchase date - 100.0% of the Estimated Per-Share NAV.~~

DRIP with ten days’ notice to participants.

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~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)

~~Repurchases for any fiscal semester are limited to a maximum of 2.5%~~An amendment and restatement of the ~~weighted average number~~DRIP (the “A&R DRIP”) in connection with the Listing became effective on August 28, 2020. The A&R DRIP allows stockholders who have elected to participate to have dividends paid with respect to all or a portion of their shares of Class A common stock ~~outstanding during~~and Class B common stock reinvested in additional shares of Class A common stock. Shares received by participants in the ~~previous fiscal year, with a maximum for any fiscal year of 5.0%~~A&R DRIP will represent shares that are, at the election of the ~~weighted average number of shares of common stock outstanding on December 31st of the previous calendar year. In addition,~~Company, either (i) acquired directly from the Company, ~~is only authorized to repurchase~~which would issue new shares, inat a given fiscal semester up to the amount of proceeds received from the DRIP in that same fiscal semester, as well as any reservation of funds the Company's board of directors, may, in its sole discretion, make available for this purpose. If the establishment of an Estimated Per-Share NAV occurs during any fiscal semester, any repurchase requests received during such fiscal semester will be paid at the Estimated Per-Share NAV applicable on the last day of the fiscal semester.

~~When a stockholder requests a repurchase and the repurchase is approved by the Company's board of directors, the Company will reclassify such obligation from equity to a liability~~price based on the ~~value~~average of the ~~obligation.~~ high and low sales prices of Class A common stock on the NYSE on the date of reinvestment, or (ii) acquired through open market purchases by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with proceeds from reinvested dividends to participants for the related quarter, less a per share processing fee.

Shares ~~purchased under~~issued by the ~~SRP will have~~Company pursuant to the ~~status of authorized but unissued shares. The following table reflects~~DRIP or the ~~number of~~A&R DRIP were or are recorded within stockholders’ equity in the consolidated balance sheets in the period dividends or other distributions are declared. During the six months ended June 30, 2022, any DRIP transactions were settled through open market transactions and no shares ~~repurchased cumulatively through September 30, 2017.~~were issued by the Company.

Numbers of Shares Repurchased Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2016 645,335
$ 23.63
Nine months ended September 30, 2017⁽¹⁾
359,458
20.41
Cumulative repurchases as of September 30, 2017 1,004,793
$ 22.48

~~_____________________~~

~~(1)~~

Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13.7 thousand at a weighted average price per share of $23.68 and (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.

Note 8 — Commitments and Contingencies

Lessee Arrangement - Ground Lease

The Company entered into a ground lease agreement in 2016 related to the acquisition of 1140 Avenue of the Americas under a leasehold interest ~~arrangement.~~ arrangement and recorded an ROU asset and lease liability related to this lease upon adoption of ASU 2016-02 during the year ended December 31, 2019. The ground lease is considered an operating lease. In computing the lease liabilities, the Company discounts future lease payments at an estimated incremental borrowing rate at adoption or acquisition if later. The term of the Company’s ground lease is significantly longer than the term of borrowings available to the Company on a fully-collateralized basis. The Company’s estimate of the incremental borrowing rate required significant judgment.

As of June 30, 2022, the Company’s ground lease had a weighted-average remaining lease term of 44.5 years and a discount rate of 8.6%. As of June 30, 2022, the Company’s balance sheet includes an ROU asset and liability of $55.1 million and $54.7 million, respectively, which are included in operating lease right-of-use asset and operating lease liability, respectively, on the consolidated balance sheet. For the three and six months ended June 30, 2022, the Company paid cash of $1.2 million and $2.4 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million and $2.4 million, respectively, on a straight-line basis in accordance with the standard. For the three and six months ended June 30, 2021, the Company paid cash of $1.2 million and $2.4 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million and $2.4 million, respectively, on a straight-line basis in accordance with the standard.

The lease expense is recorded in property operating expenses in the consolidated statements of operations and comprehensive loss. The Company did not enter into any additional ground leases as lessee during the six months ended June 30, 2022 and 2021.

The following table reflects the ~~minimum base cash rental~~ground lease rent payments due from the Company ~~over~~and a reconciliation to the ~~next five years~~net present value of those payments as of June 30, 2022:


(In thousands)	Future Base Rent Payments
2022 (remainder)	$	2,373
2023	4,746
2024	4,746
2025	4,746
2026	4,746
Thereafter	197,754
Total lease payments	219,111
Less: Effects of discounting	(164,367)
Total present value of lease payments	$	54,744

Litigation and ~~thereafter:~~

(In thousands) Future Minimum Base Cash Rent Payments- Ground Lease
2017 1,187
2018 4,746
2019 4,746
2020 4,746
2021 4,746
Thereafter 221,484
Total $ 241,655

The Company incurred ground rent expense of $1.2 million and $3.6 million during the three and nine months ended September 30, 2017, respectively. The Company incurred ground rent expense of $1.2 million and $1.4 million during the three and nine months ended September 30, 2016, respectively.

Regulatory Matters

Table of Contents

~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)

~~Litigation and Regulatory Matters~~

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

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. As of ~~September~~June 30, ~~2017,~~2022, 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 results of operations.

Note 9 — Related Party Transactions and Arrangements

As of ~~September~~June 30, ~~2017, an entity~~2022 and December 31, 2021, entities wholly owned by ~~the Sponsor~~AR Global owned ~~8,888~~215,306 and 56,091 shares, respectively, of the Company’s outstanding common stock.

~~Realty~~Cash Management Plan

To potentially enhance the Company’s cash resources to fund operating and capital needs, Bellevue Capital ~~Securities,~~Partners, LLC, ~~(the "Former Dealer Manager"~~which is an entity that controls the Advisor (“Bellevue”) ~~served~~has expressed a desire to invest additional capital in the Company. Although no agreement exists, the Shares would likely be purchased by Bellevue from time to time at its discretion directly from the Company through block trades executed under the Company’s Common Stock ATM Program. The Company’s board of directors has authorized the issuance of up to 1,000,000 shares its Class A common stock for these purposes although there is no assurance as to the number of shares of the Company’s Class A common stock, if any, that Bellevue may seek to purchase. The Advisor and Property Manager likewise have told the Company that one or both of them, each in their sole discretion, may be willing to accept shares of the Company’s Class A common stock in lieu of cash as payment for certain fees or expense reimbursements. To facilitate the potential investments, Bellevue, the Advisor and the Property Manager (referred to collectively as the ~~dealer manager~~“AR Parties”) proposed, and the Company agreed, to amend the Waiver Agreements and the Company decided to lower the ownership limit applicable to all other stockholders. For additional information on the amendments to the Waiver Agreements and ownership limit changes, see Note 13 — Subsequent Events.

Fees and Participations Incurred in Connection with the Operations of the ~~IPO,~~Company

Summary of Advisory Agreement

Pursuant to the advisory agreement with the Advisor (as amended from time to time, the “Advisory Agreement”), the Advisor manages the Company’s day-to-day operations. The initial term of the Advisory Agreement ends in July 2030, and will automatically renew for successive five-year terms unless either party gives written notice of its election not to renew at least 180 days prior to the then-applicable expiration date. The Company may only elect not to renew the Advisory Agreement on this basis with the prior approval of at least two-thirds of the Company’s independent directors, and no change of control fee (as defined in the Advisory Agreement) is payable if the Company makes this election.

Asset Management Fees and Variable Management/Incentive Fees

The Company pays the Advisor a base asset management fee on the first business day of each month equal to (x) $0.5 million plus (y) a variable amount equal to (a)1.25% of the equity proceeds received after November 16, 2018, divided by (b) 12. The base asset management fee is payable in cash, shares of common stock, units of limited partnership interest in the OP, or a combination thereof, at the Advisor’s election. Equity proceeds are defined as, with respect to any period, cumulative net proceeds of all common and preferred equity and equity-linked securities issued by the Company and its subsidiaries during the period, including: (i) any equity issued in exchange or conversion of exchangeable notes based on the stock price at the date of issuance and convertible equity; (ii) any other issuances of equity, including but not limited to units in the OP (excluding equity-based compensation but including issuances related to an acquisition, investment, joint-venture or partnership); and (iii) effective following the time the Company commences paying a dividend of at least $0.05 per share per annum to its stockholders, (which occurred in October 2020), any cumulative Core Earnings (as defined in the Advisory Agreement) in excess of cumulative distributions paid on the Company’s common stock since November 16, 2018, the effective date of the most recent amendment and restatement of the Advisory Agreement.

The Advisory Agreement also entitles the Advisor to an incentive variable management fee. Currently and during the year ended December 31, 2021, the variable management fee is equal to (i) the product of (a) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by(b) 15.0% multiplied by (c) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.1458, plus (ii) the product of (x) the diluted weighted-

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (y) 10.0% multiplied by (z) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.1944. The variable management fee is payable quarterly in arrears in cash, shares of common stock, units of limited partnership interest in the OP or a combination thereof, at the Advisor’s election. No incentive variable management fees were earned during the three months ended June 30, 2022 or2021.

On February 4, 2022, the Company entered into a side letter (the “Side Letter”) with the Advisor to the Advisory Agreement pursuant to which the Advisor agreed to, from the date of the Side Letter until August 4, 2022, immediately invest all fees received by the Advisor under Section 10(c)(i)-(ii) of the Advisory Agreement in shares of the Company’s Class A common stock, par value $0.01 per share (the “Shares”), in an amount aggregating no more than $3.0 million. The price of the Shares was ~~ongoing~~determined, at each issuance, in accordance with Section 10(c)(iii) of the Advisory Agreement and was not less than the “Minimum Price” as defined in Section 312.04(h) of the New York Stock Exchange Listed Company Manual (the “Listed Company Manual”), which minimum price was $10.55 per share. The Advisor’s obligation to invest its fee in Shares under the Side Letter was in consideration of, and subject to the provisions of the Waiver Agreements (defined below). In addition, the Company was not required to issue any Shares under the Side Letter if doing so would have required the Company to seek shareholder approval under Section 312 of the Listed Company Manual or any subsequent rules and regulations of the New York Stock Exchange.

On February 4, 2022, concurrently with the execution of the Side Letter, the Company’s board of directors granted (i) a waiver from ~~April 2014~~the Aggregate Share Ownership Limit, as defined and contained in Section 5.7 of the Company’s charter, to ~~May 2015,~~permit each of Bellevue, the Advisor, entities controlled by Bellevue, Edward M. Weil. Jr, who is an officer and director of the Company, an officer of the Advisor and a holder of a non-controlling interest in Bellevue, and their respective affiliates and certain other entities and individuals who would be treated as Beneficially Owning or Constructively Owning (each as defined in the Charter) Shares held by either or both of Bellevue and the Advisor, including Mr. Weil, to Beneficially Own or Constructively Own Shares in an amount up to 20% of the outstanding Shares (subject to certain constraints for each such entity and individual on the total actual ownership of Shares by such entities and individuals), to the extent and on the terms set forth in each ownership limit waiver agreement (collectively, the “Charter Ownership Limit Waiver Agreements”); and (ii) a waiver from the provisions contained in Section 1.1 of the Amended and Restated Rights Agreement, dated August 17, 2020 (as amended by Amendment No. 1 dated August 12, 2021, the “Rights Plan”), to permit each party to the Charter Ownership Limit Waiver Agreements to Beneficially Own (as defined in the Rights Plan) Shares to the maximum extent allowed by the Charter Ownership Limit Waiver Agreements without being deemed an “Acquiring Person” under Section 1.1 of the Rights Plan, subject to the terms set forth in the rights plan waiver agreement (the “Rights Plan Waiver Agreement,” and together with ~~its affiliates, continued to provide~~ the ~~Company with various services through December 31, 2015. RCS Capital Corporation ("RCAP"),~~Charter Ownership Limit Waiver Agreements, the ~~parent company~~“Waiver Agreements”). The terms and conditions of the ~~Former Dealer Manager~~Charter Ownership Limit Waiver Agreements entered into with each of these entities or individuals are the same except for the actual number of Shares the entities or individuals may own or acquire. All other terms and ~~certain of its affiliates that provided services~~conditions contained in the Company’s charter will otherwise continue to apply to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Global, the parent of the Sponsor. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc. On March 8, 2017, the creditor trust established in connection with the RCAP bankruptcy filed suit against AR Global, the Advisor, advisors of other entities sponsored by AR Global, and AR Global’s principals (including Mr. Weil, the Company's Executive Chairman, Chief Executive Officer, President and Secretary). The suit alleges, among other things, certain breaches of duties to RCAP. The Company is not named in the suit, nor are there allegations related to the services the Advisor provides to the Company. On May 26, 2017, the defendants moved to dismiss. The Advisor has informed the CompanyShares that the ~~Advisor believes the suit is without merit~~entities or individuals may own or acquire.

The Company paid $1.3 million and ~~intends to defend against it vigorously.~~

~~As of June 30, 2016, the Company had $0.5~~$2.8 million ~~invested~~ in a mutual fund managed by an affiliate of the Sponsor. There is no obligation to purchase any additional shares and the shares can be sold at any time. The Company sold its investment in a mutual fund during the fourth quarter of 2016. The Company recognized income from investment securities managed by an affiliate of the Sponsor of approximately $4,000cash base asset management fees during the three and six months ended June 30, ~~2016.~~

~~Fees~~2022, respectively, and ~~Participations Paid in Connection With the Operations of the Company~~

The Advisor is paid an acquisition fee of 1.5% of (A) the contract purchase price of each acquired property and (B) the amount advanced for a loan or other investment. The Advisor is also reimbursed for expenses incurred related to selecting, evaluating and acquiring assets on the Company's behalf, regardless of whether the Company actually acquires the related assets. These acquisition expenses may also include insourced expenses for services performed by the Advisor or its affiliates. Such insourced expenses are fixed initially atpaid $1.5 million and may not exceed 0.50% of the contract purchase price of each property and 0.50% of the amount advanced for each loan or other investment, which is paid at the closing of each such investment. The Advisor is also reimbursed for legal expenses incurred in the process of acquiring properties, in an amount not to exceed 0.10% of the contract purchase price. In addition, the Company also pays third parties, or reimburses the Advisor for any investment-related expenses due to third parties. In no event will the total of all acquisition fees, acquisition expenses and any financing coordination fees (as described below) payable with respect to the Company's portfolio of investments exceed 4.5% of (A) the contract purchase price or (B) the amount advanced for all loans or other investments. Once the proceeds from the primary offering have been fully invested, the aggregate amount of acquisition fees and any financing coordination fees may not exceed 1.5% of (A) the contract purchase price and (B) the amount advanced for a loan or other investment, as applicable, for all the assets acquired. The Company incurred no acquisition fees and acquisition expense reimbursements to the Advisor during the three and nine months ended September 30, 2017. The Company incurred no acquisition fees and acquisition expense reimbursements to the Advisor during the three months ended~~September 30, 2016 and $3.6~~$3.0 million ~~during the nine months ended September 30, 2016.~~

If the Advisor provides services in connection with the origination or refinancing of any debt that the Company obtains and uses to acquire properties or to make other permitted investments, or that is assumed, directly or indirectly, in connection with the acquisition of properties, the Company pays the Advisor a financing coordination fee equal to 0.75% of the amount made available or outstanding under such financing, subject to certain limitations.

~~Table of Contents~~

~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~

~~(Unaudited)~~

Until September 30, 2015, for its asset management services, the Company issued to the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the board of directors) to the Advisor performance-based, restricted, forfeitable partnership units in the OP designated as “Class B Units” on a quarterly basis in an amount equal to: (i) the product of (y) 0.1875% multiplied by (z) the cost of the Company's assets divided by (ii) the value of one share of common stock as of the last day of such calendar quarter, which is equal initially to $22.50 (the primary offering price minus selling commissions and dealer manager fees). The Class B Units are intended to be profits interests and will vest, and no longer be subject to forfeiture, at such time as: (a) the value of the OP's assets plus all distributions made by the Company to its stockholders equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pretax, non-compounded annual return thereon, or the "economic hurdle;" (b) any one of the following events occurs concurrently with or subsequently to the achievement of the economic hurdle described above: (i) a listing of the Company's common stock on a national securities exchange; (ii) a transaction to which the Company or the OP is a party, as a result of which OP units or the Company's common stock are or will be exchanged for or converted into the right, or the holders of such securities will otherwise be entitled, to receive cash, securities or other property or any combination thereof; or (iii) the termination of the advisory agreement without cause by an affirmative vote of a majority of the Company's independent directors after the economic hurdle has been met; and (c) the Advisor pursuant to the advisory agreement is providing services to the Company immediately prior to the occurrence of an event of the type described in clause (b) above (the "performance condition"). The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the performance condition to be probable. As of September 30, 2017, the Company cannot determine the probability of achieving the performance condition. The Advisor receives distributions on Class B Units, whether vested or unvested, at the same rate as distributions received on the Company's common stock. Such distributions on issued Class B Units are expensed in the consolidated statements of operations and comprehensive loss until the performance condition is considered probable to occur. As of September 30, 2017, the Company's board of directors had approved the issuance of 159,159 Class B Units in connection with the arrangement. Beginning on October 1, 2015, and in lieu of the asset management subordinated participation, the Company began paying an asset management fee in cash to the Advisor or its assignees as compensation for services rendered in connection with the management of the Company’s assets. The asset management fee is payable on the first business day of each month in the amount of 0.0625% multiplied by (i) the cost of the Company's assets for the preceding monthly period or (ii) during the period of time after the Company publishes Estimated Per-Share NAV, the lower of the cost of assets and the estimated fair market value of the Company’s assets as reported in the applicable periodic or current report filed with the SEC disclosing the fair market value. The Company paid $1.4 million and $4.1 million in cashbase asset management fees during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, respectively. ~~The~~There were no variable management fees incurred in any of these periods. In accordance with the Side Letter, the Advisor reinvested base management fees, aggregating $1.0 million and $1.5 million, in shares of the Company’s Class A common stock in the first and second quarters of 2022, respectively. As a result, the Company ~~paid~~issued 45,372, 43,508, 38,786, 40,247 and 47,393 shares of its Class A common stock in February, March, April, May and June 2022 in connection with the monthly base management fee earned by the Advisor. For accounting purposes, these shares were issued using the closing price on date of issue and the related expense for the year are reflected as $1.3 million and ~~$3.3~~$2.3 million ~~in cash asset management fees during~~for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022, respectively.

~~Unless~~Property Management Fees

Pursuant to the Property Management and Leasing Agreement (the “PMA”), as most recently amended on November 16, 2018, except in certain cases where the Company contracts with a third party, the Company pays the Property Manager a property management fee equal to: (i) for non-hotel properties, ~~4.0%~~3.25% of gross revenues from the properties managed, plus market-based leasing commissions; and (ii) for hotel properties, a market-based fee based on a percentage of gross revenues. The term of the PMA is coterminous with the term of the Advisory Agreement.

Table of Contents

NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Pursuant to the PMA, the Company ~~also~~ reimburses the Property Manager for property-level expenses. These reimbursements are not limited in amount and may include reasonable salaries, bonuses, and benefits of individuals employed by the Property Manager, except for the salaries, bonuses, and benefits of individuals who also serve as one of the Company’s executive officers or as an executive officer of the Property Manager or any of its affiliates. The Property Manager may also 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 contracts for these services.

On April 13, 2018, in connection with the loan for its 400 E. 67th Street - Laurel Condominium and 200 Riverside Boulevard properties, the Company entered into a new property management agreement with the Property Manager (the “April 2018 PMA”) to manage the properties secured by the loan. With respect to these properties, the substantive terms of the April 2018 PMA are identical to the terms of the PMA, except that the property management fee for non-hotel properties is 4.0% of gross revenues from the properties managed, plus market-based leasing commissions. The April 2018 PMA has an initial term of one year that is automatically extended for an unlimited number of successive one-year terms at the end of each year unless any party gives 60 days’ written notice to the other parties of its intention to terminate.

The Company incurred approximately ~~$145,000~~$0.5 million and ~~$470,000~~$0.9 million in property management fees during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, respectively. The~~2022, respectively, and the Company incurred ~~$183,000~~$0.3 million and ~~$345,000~~$0.8 million in property management fees during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2021, respectively.

Professional Fees and Other Reimbursements

The Company pays directly or reimburses the ~~Advisor’s costs of providing administrative~~Advisor monthly in arrears, for all the expenses paid or incurred by the Advisor or its affiliates in connection with the services it provides to the Company under the Advisory Agreement, subject to the ~~limitation that~~following limitations:

•With respect to administrative and overhead expenses of the ~~Company will~~Advisor, including administrative and overhead expenses of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services but not ~~reimburse~~including their salaries, wages, and benefits, these costs may not exceed in any fiscal year,

(i) $0.4 million, or

(ii) if the Asset Cost (as defined in the Advisory Agreement) as of the last day of the fiscal quarter immediately preceding the month is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal quarter multiplied by (y) 0.10%.

•With respect to the salaries, wages, and benefits of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services (including the Company’s executive officers), these amounts must be comparable to market rates and reimbursements may not exceed, in any fiscal year,

(i) $2.6 million, or

(ii) if the Asset Cost as of the last day of the fiscal year is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal year multiplied by (y) 0.30%.

Professional fees and other reimbursements for the three and six months ended June 30, 2022 were $1.2 million and $2.7 million, respectively, and were $1.0 million and $2.4 million for the three and six months ended June 30, 2021, respectively. These amounts include reimbursements to the Advisor for ~~any~~administrative, overhead and personnel services, which are subject to the limits noted above, as well as costs associated with directors and officers insurance which are not subject to those limits.

The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by ~~which the Company’s operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets~~ and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairments or other similar non-cash expenses and excluding any gain from the sale of assets for that period, unless the Company's independent directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, in which case the excess amount may be reimbursed to the Advisor in subsequent periods. Additionally, the Company reimburses the Advisor for personnel costs in connection with other services; however, the Company may not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives acquisition fees, acquisition expense reimbursements or real estate commissions and no reimbursement shall be made for salaries, bonuses or benefits to be paid to the Company's executive officer. Total reimbursement of costs and expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 were ~~$1.0~~$0.9 million and $2.1 million, respectively, of which $0.1 million and ~~$2.5~~$0.4 million, ~~respectively. Total reimbursement~~respectively, related to administrative and overhead expenses and $0.7 million and $1.7 million, respectively, were for salaries, wages, and benefits. As of ~~costs~~June 30, 2022 we have reached our annual limit of $0.4 million for professional fees and other reimbursements related to administrative, overhead and personnel service expenses paid to the Advisor.

The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2021 were ~~$0.5~~$0.7 million and ~~$1.3~~$1.9 million, ~~respectively.~~respectively, of which $0.1 million and $0.4 million, respectively, related to administrative and overhead expenses and $0.7 million and $1.6 million, respectively, were for salaries, wages, and benefits.

Summary of Fees, Expenses and Related Payables

Table of Contents

~~AMERICAN REALTY CAPITAL~~ NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2017~~2022

(Unaudited)

The predecessor to the parent of the Sponsor was party to a services agreement with RCS Advisory Services, LLC ("RCS Advisory"), a subsidiary of RCAP, pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by the Sponsor with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. The predecessor to the parent of the Sponsor instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory.

The Company was also party to a transfer agency agreement with American National Stock Transfer, LLC ("ANST"), a subsidiary of RCAP, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end Internal Revenue Service ("IRS") reporting and other services), and supervisory services overseeing the transfer agency services performed by DST Systems, Inc. ("DST"), a third-party transfer agent. The Sponsor received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. DST continued to provide the Company with transfer agency services and, on March 10, 2016, the Company entered into a definitive agreement with DST to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). For the three and nine months ended September 30, 2017 and 2016, the fees for services from DST are included in general and administrative expenses on the consolidated statements of operations and comprehensive loss during the period in which the service was provided.

The following table details amounts incurred in connection with the ~~Company's~~Company’s operations-related services described above as of and for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,				Payable (receivable) as of
(In thousands)	2022		2021		2022		2021		June 30, 2022		December 31, 2021



Ongoing fees:
Asset and property management fees to related parties	$	1,785	$	1,847	3,707		3,754		$	214	$	141
Professional fees and other reimbursements (1)	1,223		975		2,739		2,367		—		—

Total related party operation fees and reimbursements	$	3,008	$	2,822	$	6,446	$	6,121	$	214	$	141

Three Months Ended September 30, Nine Months Ended September 30, Payable (receivable) as of
(In thousands) 2017 2016 2017 2016 September 30, 2017 December 31, 2016
Acquisition fees and reimbursements:
Acquisition fees and related cost reimbursements $ —
$ —
$ —
$ 3,600
$ —
$ (646 )
Financing coordination fees —
—
1,050
743
—
—
Ongoing fees:

Operating fees incurred from related parties 1,515
1,525
4,566
3,676
(77 )
⁽¹⁾
(24 )
Professional fees and other reimbursements 988
460
2,644
1,286
66
⁽²⁾
167
Distributions on Class B units 61
60
180
180
—
—
Total related party operation fees and reimbursements $ 2,564
$ 2,045
$ 8,440
$ 9,485
$ (11 ) $ (503 )
________

~~_____________________~~

~~(1)~~

Represents a receivable balance of approximately $83,000 related to property management fees, offset with a payable balance of approximately $6,000 related to asset management fees. The receivable balance is included in prepaid expenses and other assets on the unaudited consolidated balance sheet. The payable balance is included in accounts payable, accrued expense and other liabilities on the unaudited consolidated balance sheet.

~~(2) The payable balance is~~(1)Amounts for the three and six months ended June 30, 2022 and 2021 are included in ~~accounts payable, accrued expense~~general and ~~other liabilities on~~administrative expenses in the unaudited consolidated ~~balance sheet.~~statements of operations and comprehensive loss.

Listing Arrangements

Listing Note

Pursuant to the limited partnership agreement of the OP, which was amended and restated in connection with the effectiveness of the Listing on the Listing Date (as so amended and restated, the “A&R OP Agreement”), in the event the Company’s shares of common stock was listed on a national exchange, the OP was obligated to distribute to the Special Limited Partner a promissory note in an aggregate amount (the “Listing Amount”) equal to 15.0% of the difference (to the extent the result is a positive number) between:

•the sum of (i) (A) the average closing price of the shares of Class A common stock over the Measurement Period (as defined below) multiplied by the number of shares of common stock issued and outstanding as of the Listing, plus (B) the sum of all distributions or dividends (from any source) paid by the Company to its stockholders prior to the Listing; and (ii) (X) the aggregate purchase price (without deduction for organization and offering expenses or any other underwriting discount, commissions or offering expenses) of the initial public offering of the Company’s common stock, plus (Y) the total amount of cash that, if distributed to the stockholders who purchased shares of the Company’s common stock in the initial public offering, would have provided those stockholders with a 6.0% cumulative, non-compounded, pre-tax annual return on the aggregate purchase price of shares sold in the initial public offering through the listing, minus any distributions of net sales proceeds made to the Special Limited Partner prior to the end of the Measurement Period (as defined below).

Effective at the Listing, the OP entered into a listing note agreement with respect to this obligation (the “Listing Note”) with the Special Limited Partner. The Listing Note evidences the OP’s obligation to distribute to the Special Limited Partner the Listing Amount, which will be calculated based on the Market Value of the Company’s common stock. The measurement period used to calculate the average Market Value of the Company’s Class A common stock was from February 9, 2022 to March 23, 2022, the end of the 30 consecutive trading dates commencing on February 9, 2022, which is the 180th day after August 13, 2021, which was the day all of the shares of the Company’s Class B common stock fully converted into shares of Class A common stock and began trading on the NYSE. Based on the actual Market Value during the measurement period, the Listing Amount was zero, and the Company has no distribution obligation to the Special Limited Partner related to the Listing Note. The final fair value of the Listing Note is zero, and the fair value of the Listing Note was nominal at issuance. The fair value at issuance was determined using a Monte Carlo simulation, which used a combination of observable and unobservable inputs.

Termination Fees ~~and Participations Paid in Connection with Liquidation or Listing~~

~~The Company will pay~~Payable to the Advisor ~~an annual subordinated performance~~

The Advisory Agreement requires the Company to pay a termination fee ~~calculated on~~to the ~~basis~~Advisor in the event the Advisory Agreement is terminated prior to the expiration of the ~~Company’s return~~initial term in certain limited scenarios. The termination fee will be payable to ~~stockholders, payable annually~~the Advisor if either the Company or the Advisor exercises the right to terminate the Advisory Agreement in ~~arrears, such that~~connection with the consummation of the first change of control (as defined in the Advisory Agreement). The termination fee is equal to

•$15 million plus an amount equal to the product of

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(Unaudited)

(i) three (if the termination was effective on or prior to June 30, 2020) or four (if the termination is effective after June 30, 2020), multipliedby

(ii) applicable Subject Fees.

The “Subject Fees” are equal to (i) the product of

•(a) 12, multiplied by (b) the actual base management fee for ~~any year~~the month immediately prior to the month in which ~~investors receive payment~~the Advisory Agreement is terminated, plus

(ii) the product of ~~6.0% per annum,~~(x) four multiplied by (y) the actual variable management fee for the quarter immediately prior to the quarter in which the Advisory Agreement is terminated, plus,

(iii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity issued by the Company and its subsidiaries in respect of the fiscal quarter immediately prior to the fiscal quarter in which the Advisory Agreement is terminated.

In connection with the termination or expiration of the Advisory Agreement, the Advisor will be entitled to ~~15.0% of the excess return, provided that the amount paid~~receive (in addition to any termination fee) all amounts then accrued and owing to the Advisor, does not exceed 10.0% of the aggregate return for such year, and that the amount paid to the Advisor will not be paid unless investors receive a return of capital contributions. This fee will be paid only upon the sale of assets, distributions or other event which results in the return on stockholders’ capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three and nine months ended September 30, 2017 and 2016.

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~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~

~~(Unaudited)~~

The Company will pay a brokerage commission to the Advisor or its affiliates on the sale of properties, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third party broker is also involved; provided, however, that in no event may the real estate commissions paid to the Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Advisor if the Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. No such fees were incurred during the three and nine months ended September 30, 2017 and 2016.

~~Upon a liquidation or sale of all or substantially all assets,~~ including through a merger or sale of stock of the Company, the Special Limited Partner will be entitled to receive a subordinated distribution from the OP equal to 15.0% of remaining net sale proceeds after return of capital contributions to investors plus payment to investors of an annual 6.0% cumulative, pre-tax non-compounded return on the capital contributed by investors. The Special Limited Partner will not be entitled to the subordinated participation in net sale proceeds unless the Company’s investors have received a return of their capital plus a 6.0% cumulative non-compounded annual return on their capital contributions. No such participation in net sales proceeds became due and payable during the three and nine months ended September 30, 2017 and 2016.

If the Company’s shares of common stock are listed on a national exchange, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right receive subordinated incentive listing distributions from the OP equal to 15.0% of the amount by which the Company’s market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated incentive listing distributions unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distributions were incurred during the three and nine months ended September 30, 2017 and 2016.

~~Upon termination or non-renewal of the advisory agreement with or without cause, the Special Limited Partner will be entitled to receive a promissory note as evidence~~then-present fair market value of its ~~right to receive subordinated termination distributions from the OP equal to 15.0% of the amount, calculated as of the termination date, by which the sum~~shares of the Company’s ~~market value plus distributions exceeds~~common stock and interest in the sum of the aggregate capital contributed by investors plus an amount equal to an annual 6.0% cumulative, pre-tax, non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. The Special Limited Partner may elect to defer its right to receive the subordinated termination distribution until either a listing on a national securities exchange or other liquidity event occurs, subsequently, in which case the Company's market value will be calculated as of the date of the applicable listing or liquidity event. No such distributions were incurred during the three and nine months ended September 30, 2017 and 2016.OP.

~~The Special Limited Partner and its affiliates can earn only one of the subordinated distribution from the OP described above.~~

Note 10 — Economic Dependency

Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the 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 services and investor relations.

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

Note 11 — ~~Share-Based~~Equity-Based Compensation

Equity Plans

Restricted Share Plan

~~The~~Prior to the Listing, the Company ~~has~~had an employee and director incentive restricted share plan (as amended, ~~to date,~~ the “RSP”). ~~Until an amendment to the RSP in August 2017 (the “RSP Amendment”), the~~The RSP provided for the automatic grant of ~~1,333 restricted shares of common stock (“restricted shares”) to each of the independent directors. Following the RSP Amendment,~~ the number of restricted shares ~~to be issued automatically in those circumstances is~~ equal to $30,000 divided by the then-current Estimated

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~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~

~~(Unaudited)~~

Per-Share ~~NAV. In November 2017, the RSP was amended and restated to reflect the RSP Amendment and certain clarifying changes.~~

~~These automatic grants are~~NAV, which were made without any further approval by the Company’s board of directors or the stockholders, after initial election to the board of directors and after each annual stockholder meeting, with such restricted shares vesting annually over a five-year period following the grant date in increments of 20.0% per annum. The RSP ~~provides~~also provided the Company with the ability to grant awards of restricted shares to the ~~Company's~~Company’s board of directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.

2020 Equity Plan

Effective at the Listing, the Company’s independent directors approved an equity plan for the Advisor (the “Advisor Plan”) and an equity plan for individuals (the “Individual Plan” and together with the Advisor Plan, the “2020 Equity Plan”). The ~~total number~~Advisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Awards under the Individual Plan are open to the Company’s directors, officers and employees (if the Company ever has employees), employees, officers and directors of ~~shares~~the Advisor and as a general matter, employees of affiliates of the Advisor that provide services to the Company. Awards under the Advisor Plan may only be granted asto the Advisor and its affiliates (including any person to whom the Advisor subcontracts substantially all of responsibility for directing or performing the day-to-day business affairs of the Company).

The 2020 Equity Plan succeeded and replaced the existing RSP. Following the effectiveness of the 2020 Equity Plan at the Listing, no further awards have been or will be granted under the RSP; provided, however, any outstanding awards under the RSP, ~~shall not exceed 5.0%~~such as unvested restricted shares held by the Company’s independent directors, will remain in effect in accordance with

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(Unaudited)

their terms and the terms of the RSP, until all those awards are exercised, settled, forfeited, canceled, expired or otherwise terminated. The Company accounts for forfeitures when they occur. While the RSP provided only for awards of restricted shares, the 2020 Equity Plan has been expanded to also permit awards of restricted stock units, stock options, stock appreciation rights, stock awards, LTIP Units and other equity awards. In addition, the 2020 Equity Plan eliminates the “automatic grant” provisions of the RSP that dictated the terms and amount of the annual award of restricted shares to independent directors. Grants to independent directors after the Listing are made in accordance with the Company’s new director compensation program, as described below under “—Director Compensation.” The 2020 Equity Plan has a term of 10 years, expiring August 18, 2030. The number of shares of the Company’s capital stock that may be issued or subject to awards under the 2020 Equity Plan, in the aggregate, is equal to 20.0% of the Company’s outstanding shares of common stock on a fully diluted basis at any ~~time~~time. Shares subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a one-for-one basis and vice versa.

Director Compensation

Effective on the Listing Date, the Company’s independent directors approved a change to the Company’s director compensation program. Starting with the annual award of restricted shares made in ~~any event will not exceed 1.5 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).~~connection with the Company’s 2021 annual meeting of stockholders, the amount of the annual award was increased from $30,000 to $65,000. No other changes have been made to the Company’s director compensation program.

Restricted Shares

Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time. For restricted share awards granted prior to July 1, 2015, such awards would typically be forfeited with respect to the unvested restricted shares upon the termination of the recipient's employment or other relationship with the Company. For restricted share awards granted on or after July 1, 2015, such awards provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient's 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 ~~distributions~~dividends on the same basis as ~~distributions~~dividends paid on shares of common stock, if any, prior to the time that the restrictions on the restricted shares have lapsed and thereafter. Any ~~distributions~~dividends payable in shares of common stock ~~will be~~are subject to the same restrictions as the underlying restricted shares.

In March 2022, the compensation committee delegated authority to the Company’s chief executive officer to award up to 200,000 restricted shares to employees of the Advisor or its affiliates who are involved in providing services to the Company, including the Company’s chief financial officer, subject to certain limits and restrictions imposed by the compensation committee. The compensation committee remains responsible for approving and administering all grants of awards to the Company’s chief financial officer or any other executive officer of the Company, including any award of restricted shares recommended by the Company’s chief executive officer. No awards under the 2020 Equity Plan may be made pursuant to this delegation of authority to anyone who is also a partner, member or equity owner of the parent of the Advisor. As of June 30, 2022 there have been no shares awarded.

Restricted share awards that have been granted to the Company’s directors provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient’s voluntary termination or the failure to be re-elected to the Company’s board of directors.

During the second quarter of 2022, the Company granted 109,875 restricted shares to employees of the Advisor. The restricted shares granted to employees of the Advisor or its affiliates will vest in 25% increments on each of the first four anniversaries of the grant date. Except in connection with a change in control (as defined in the award agreement) of the Company, any unvested restricted shares will be forfeited if the holder’s employment with the Advisor terminates for any reason. Upon a change in control of the Company, 50% of the unvested restricted shares will immediately vest and the remaining unvested restricted shares will be forfeited.

The following table displays restricted share award activity during the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2022:


	Number of Restricted Shares	Weighted-Average Issue Price
Unvested, December 31, 2021	25,172	$	15.00
Granted	135,702	10.96
Vested	(5,406)	17.20

Unvested June 30, 2022	155,468	11.40

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(Unaudited)

Number of
Restricted Shares Weighted-Average Issue Price
Unvested, December 31, 2016 9,065
$ 22.50
Granted —
—
Vested (2,133 ) 22.50
Forfeited —
—
Unvested, September 30, 2017
6,932
$ 22.50

As of ~~September~~June 30, ~~2017,~~2022, the Company ~~had $0.1~~had $0.4 million of unrecognized compensation cost related to unvested restricted share awards granted ~~under the RSP. That cost~~and is expected to be recognized over a weighted-average period of ~~3.1~~4.2 years. Restricted share ~~awards~~awards are expensed in accordance with the service period required. Compensation expense related to restricted share awards was ~~approximately $12,000~~approximately $109,516 and ~~$36,000~~$137,262 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, respectively. Compensation expense related to restricted share awards was approximately $29,000~~2022, respectively, and ~~$49,000~~$27,843 and $51,035 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2021, respectively. Compensation expense related to restricted share awards is recorded as ~~general and administrative expense~~equity-based compensation in the accompanying unaudited consolidated statements of operations and comprehensive loss.

Multi-Year Outperformance Award

On the Listing Date, the Company, the Company, the OP and the Advisor entered into the 2020 OPP pursuant to which a performance-based equity award was granted to the Advisor. The award was based on the recommendation of the Company’s compensation consultant, and approved by the Company’s independent directors, acting as a group.

Initially, the award under the 2020 OPP was in the form of a single Master LTIP Unit. On September 30, 2020, the 30th trading day following the Listing Date, in accordance with its terms, the Master LTIP Unit automatically converted into 4,012,841 LTIP Units, the quotient of $50.0 million divided by $12.46, representing the average closing price of one share of one share of Class A common stock over the ten consecutive trading days immediately prior to September 30, 2020. This number of LTIP Units represents the maximum number of LTIP Units that may be earned by the Advisor during a performance period ending on the earliest of (i) August 18, 2023, (ii) the effective date of any Change of Control (as defined in the 2020 OPP) and (iii) the effective date of any termination of the Advisor’s service as advisor of the Company.

For accounting purposes, July 19, 2020 is treated as the grant date (the “Grant Date”), because the Company’s independent directors approved the 2020 OPP and the award made thereunder on that date. The Company engaged third party specialists, who used a Monte Carlo simulation, to calculate the fair value as of the date the Master LTIP Unit converted (September 30, 2020), on which date the fair value was also fixed. The total fair value of the LTIP Units of $25.8 million is being recorded over the requisite service period of 3.07 years beginning on the Grant Date and ending on the third anniversary of the Listing Date (August 18, 2023). As a result, during the three and six months ended June 30, 2022, the Company recorded equity-based compensation expense related to the LTIP Units of $2.1 million and $4.2 million, respectively, and $2.1 million and $4.2 million during the three and six months ended June 30, 2021, respectively. Equity-based compensation expense related to the LTIP Units is recorded in equity-based compensation in the consolidated statements of operations and comprehensive loss. As of June 30, 2022, the Company had $9.5 million of unrecognized compensation expense related to the LTIP Units, which is expected to be recognized over a period of 1.1 years.

LTIP Units/Distributions/Redemption

The rights of the Advisor as the holder of the LTIP Units are governed by the terms of the LTIP Units set forth in the agreement of limited partnership of the OP. Holders of LTIP Units are entitled to distributions on the LTIP Units equal to 10% of the distributions made per Class A Unit (other than distributions of sale proceeds) until the LTIP Units are earned. Distributions paid on a Class A Unit are equal to dividends paid on a share of Class A common stock. Distributions paid on LTIP Units are not subject to forfeiture, even if the LTIP Units are ultimately forfeited. The Advisor is entitled to a priority catch-up distribution on each earned LTIP Unit equal to 90% of the aggregate distributions paid on Class A Units during the applicable performance period. Any LTIP Units that are earned become entitled to receive the same distributions paid on the Class A Units. If and when the Advisor’s capital account with respect to an earned LTIP Unit is equal to the capital account balance of a Class A Unit, the Advisor, as the holder of the earned LTIP Unit, in its sole discretion, is entitled to convert the LTIP Unit into a Class A Unit, which may in turn be redeemed on a one-for-one basis for, at the Company’s election, a share of Class A common stock or the cash equivalent thereof. On July 1, 2022, the Company announced that it temporarily suspended its policy regarding dividends paid on its Class A common stock, beginning with the dividend that would have been payable for the quarter ended June 30, 2022. Thus, the Board did not declare a dividend payable for the quarter ended June 30, 2022

For each of the three and six month periods ended June 30, 2022 and 2021, the Company paid $40,000 and $80,000, respectively, of distributions related to the LTIP units.

Performance Measures

With respect to one-half of the LTIP Units granted under the 2020 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the Company’s achievement of absolute total stockholder return (“TSR”) levels as shown in the table below.

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(Unaudited)


Performance Level	Absolute TSR				Percentage of LTIP Units Earned
Below Threshold	Less than	12%			0	%
Threshold		12%			25	%
Target		18	%		50	%
Maximum		24	%	or higher	100	%

If the Company’s absolute TSR is more than 12% but less than 18%, or more than 18% but less than 24%, the percentage of the Absolute TSR LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively.

With respect to the remaining one-half of the LTIP Units granted under the 2020 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period base on the difference (expressed in terms of basis points, whether positive or negative, as shown in the table below) between the Company’s absolute TSR on the last day of the performance period relative to the average TSR of a peer group consisting of Empire State Realty Trust, Inc., Franklin Street Properties Corp., Paramount Group, Inc. and Clipper Realty Inc. as of the last day of the performance period.


Performance Level	Relative TSR Excess			Percentage of LTIP Units Earned
Below Threshold	Less than	-600	basis points	0	%
Threshold		-600	basis points	25	%
Target		0	basis points	50	%
Maximum		+600	basis points	100	%

If the relative TSR excess is between -600 basis points and zero basis points, or between zero basis points and +600 basis points, the number of LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively.

Other Terms

In the case of a Change of Control or a termination of the Advisor without Cause (as defined in the Advisory Agreement), the number of LTIP Units that become earned will be calculated based on actual performance through the last trading day prior to the effective date of the Change of Control or termination (as applicable), with the hurdles for calculating absolute TSR prorated to reflect a performance period of less than three years but without prorating the number of LTIP Units that may become earned to reflect the shortened performance period.

In the case of a termination of the Advisor for Cause, the number of LTIP Units that become earned will be calculated based on actual performance through the last trading day prior to the effective date of the termination, with the hurdles for calculating absolute TSR and the number of LTIP Units that may become earned each prorated to reflect a performance period of less than three years.

The award of LTIP Units under the 2020 OPP is administered by the Company’s compensation committee, provided that any of the compensation committee’s powers can be exercised instead by the Company’s board of directors if the board of directors so elect. Promptly following the performance period, the compensation committee will determine the number of LTIP Units earned, (if any) based on a calculations prepared by an independent consultant engaged by the Committee and as approved by the compensation committee in its reasonable and good faith discretion. The compensation committee also must approve the transfer of any LTIP Units or any Class A Units into which LTIP Units may be converted in accordance with the terms of the A&R OP Agreement. Any LTIP Units that are not earned will automatically be forfeited effective as of the end of the performance period and neither the Company nor the OP will be required to pay any future consideration in respect thereof.

Other Share-Based Compensation

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(Unaudited)

The Company may issue common stock in lieu of cash to pay fees earned by the ~~Company's~~Company’s board of directors at the respective ~~director's~~director’s election. There are no restrictions on the shares issued. During the three months ended March 31, 2022, the Company’s independent board of directors made an election to receive stock in lieu of cash for board services rendered during the fourth quarter 2021 and accordingly, the expense was recorded in the fourth quarter of 2021. Also, during the three months ended June 30, 2022, the Company’s independent board of directors made an election to receive stock in lieu of cash for board services rendered during the first quarter of 2022 and accordingly, the expense was recorded in the first quarter of 2022. As a result, the Company issued 5,192 and 4,851 shares of its Class A common stock to the Company’s independent board of directors in the first and second quarters of 2022, respectively, relating to services rendered and expenses recorded in the immediately preceding quarterly period. There were no shares of common stock issued in lieu of cash during the ~~three and nine~~six months ended ~~September~~June 30, ~~2017 or 2016.~~2021.

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~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017~~

~~(Unaudited)~~

Note 12 — Net Loss Per Share

The following is a summary of the basic and diluted net loss per share computation for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except share and per share data)	2022		2021		2022		2021
	As Restated (Note 1)				As Restated (Note 1)
Net loss attributable to common stockholders (in thousands)	$	(13,001)	$	(11,052)	$	(24,713)	$	(24,587)
Adjustments to net loss attributable to common stockholders	(40)		(40)		(80)		(80)
Adjusted net loss attributable to common stockholders	$	(13,041)	$	(11,092)	$	(24,793)	$	(24,667)
Weighted average shares outstanding — Basic and Diluted	13,433,690		12,799,703		13,367,040		12,789,919
Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.97)	$	(0.87)	$	(1.85)	$	(1.93)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net loss (in thousands)
$ (5,877 ) $ (4,369 ) $ (16,025 ) $ (14,175 )
Basic and diluted weighted average shares outstanding 31,106,250
30,556,494
30,956,152
30,634,400
Basic and diluted net loss per share $ (0.19 ) $ (0.14 ) $ (0.52 ) $ (0.46 )
Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted shares, Class A Units and unearned LTIP Units contain rights to receive distributions considered to be non-forfeitable, except in certain limited circumstances, and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share above adjusts net loss to exclude the distributions to the unvested restricted shares, Class A Units and the unearned LTIP Units that were issued under the 2020 OPP from the numerator.

Diluted net income per share assumes the conversion of all Common Stock share equivalents into an equivalent number of shares of Common Stock, unless the effect is anti-dilutive. The Company ~~had the~~considers unvested restricted shares, Class A Units and unvested LTIP Units to be common share equivalents. The following ~~potentially dilutive securities as of September 30, 2017 and 2016, which~~table shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted ~~net loss~~earnings per share ~~attributable to stockholders~~ as ~~the~~their effect would have been ~~antidilutive:~~antidilutive for the periods presented.


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Unvested restricted shares (1)	111,122	15,107	68,384	10,311
Class A Units (2)	—	8,205	—	10,639
LTIP Units (3)	4,012,841	4,012,841	4,012,841	4,012,841
Total weighted-average anti-dilutive common share equivalents	4,123,963	4,036,153	4,081,225	4,033,791

_______

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Nine Months Ended September 30,
2017 2016
Unvested restricted shares 6,932
10,131
OP units 90
90
Class B units 159,159
159,159
Total potentially dilutive securities 166,181
169,380
(1) There were 155,468 and 26,946 unvested restricted shares outstanding as of June 30, 2022and2021, respectively.

(2) Formerly known as OP Units. As of June 30, 2022 or 2021, there were no Class A Units outstanding.

(3) There were 4,012,841 LTIP Units outstanding as of June 30, 2022and2021, respectively (see Note 11 — Equity-Based Compensation for additional information).

If dilutive, conditionally issuable shares relating to the 2020 OPP award (see Note 11 — Equity-Based Compensation for additional information) would be included, as applicable, in the computation of fully diluted EPS on a weighted-average basis for the three and six month periods ended June 30, 2022 based on shares that would be issued if the applicable balance sheet date was the end of the measurement period. No LTIP Unit share equivalents were included in the computation for the three and six month periods ended June 30, 2022 because (i) no LTIP Units would have been earned based on the trading price of Class A common stock including any cumulative dividends paid (since inception of the 2020 OPP) at December 31, 2021 and 2020 or (ii) the Company recorded a net loss to common stockholders for all periods presented, any shares conditionally issuable under the LTIPs would be anti-dilutive.

Note 13 — Subsequent Events

~~The~~Quarterly Dividend

On July 1, 2022, the Company ~~has evaluated subsequent events through~~announced that it suspended its policy regarding dividends paid on its Class A common stock, beginning with the ~~filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred~~dividend that would ~~require adjustments to disclosures in the consolidated financial statements, except for the following disclosures:~~

~~Election of Katie P. Kurtz as Chief Financial Officer and Treasurer~~

On October 5, 2017, Nicholas Radesca notified the Company's board of directors that he intends to retire and therefore resign from his positions as chief financial officer and treasurer of the Company, the Advisor and the Property Manager. Mr. Radesca's resignations will be effective on the later of (i) November 15, 2017 and (ii) the day after the Company files its Quarterly Report on Form 10-Qhave been payable for the quarter ended ~~September~~June 30, ~~2017. There were no disagreements between Mr. Radesca and~~2022.

Side Letter to the Advisory Agreement

In accordance with the Side Letter, the Advisor reinvested base management fees, aggregating $0.5 million, in shares of the Company’s Class A common stock in July 2022. As a result, the Company orissued 47,393 shares of its Class A common stock using the ~~Advisor.~~$10.55 minimum price in July 2022 in connection with the monthly base management fee earned by the Advisor (see Note 9 — Related Party Transactions and Arrangements).

OnAugust 2022 Asset Management Fees

In August 2022, the Advisor elected to receive 124,685 shares of the Company’s Class A common stock in lieu of cash for the August 2022 management fee using the 10-day average price of $4.01 per share which was greater than the minimum price under NYSE rules. This issuance was completed at the Advisor’s election as permitted under Advisory Agreement.

New Leases - 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard

In July 2022, the Company terminated the six-month license agreements which were set to expire in October ~~9, 2017,~~2022 at the ~~Company's~~parking garages at its 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard properties and commenced new leases that expire in June 2037.

Cash Management Plan

To potentially enhance the Company’s cash resources to fund operating and capital needs, Bellevue has expressed a desire to invest additional capital in the Company. Although no agreement exists, the Shares would likely be purchased by Bellevue from time to time at its discretion directly from the Company through block trades executed under the Company’s Common Stock ATM Program. The Company’s board of directors ~~unanimously elected Katie P. Kurtz~~has authorized the issuance of up to 1,000,000 shares its Class A common stock for these purposes although there is no assurance as ~~chief financial officer and treasurer~~to the number of shares of the Company’s Class A common stock, if any, that Bellevue may seek to purchase. The Advisor and Property Manager likewise have told the Company ~~effective upon~~that one or both of them, each in their sole discretion, may be willing to accept shares of the ~~effectiveness~~Company’s Class A common stock in lieu of ~~Mr. Radesca’s resignation. Ms. Kurtz has also been appointed~~cash as ~~chief financial officer and treasurer of~~payment for certain fees or expense reimbursements. To facilitate the potential investments, Bellevue, the Advisor and the Property Manager ~~effective upon~~(referred to collectively as the ~~effectiveness~~“AR Parties”) proposed, and the Company agreed, to amend the Waiver Agreements as discussed below and the Company decided to lower the ownership limit applicable to all other stockholders as discussed below.

As part of ~~Mr. Radesca's resignation.~~

the discussions, the Company advised the AR Parties, that any shares of its Class A common stock purchased directly from the Company by Bellevue through block trades executed under the Company’s Common Stock ATM Program would be sold at a per share price equal to the greater of (i) the closing market price of the shares on the NYSE on the most recent trading day prior to an issuance or (ii) the “Minimum Price” as defined in Section 312.04(h) of the Listed Company Manual; provided, however, that the Company would not sell any shares of its Class A common stock to Bellevue if doing so would otherwise require the Company to seek shareholder approval under Section 312 of the Listed Company Manual or any subsequent rules and regulations of the NYSE. Additionally, the Company agreed to (1) amend the Charter Ownership Limit Waiver Agreements to (i) immediately increase the Excepted Holder Limit (as defined therein) to 21%, and (ii) prospectively

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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

increase the Excepted Holder Limit to up to 25% if the Company is advised by Proskauer Rose LLP, outside counsel to the Company, that Proskauer Rose LLP is prepared to render an opinion that, among other things, the Company’s actual and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a real estate investment trust under Sections 856 through 860 of the Code notwithstanding the increase in the Excepted Holder Limit to up to 25%, there being no assurance, however, that an opinion will be rendered (the “Charter Waiver Agreement Amendments”), and (2) amend the Rights Plan Waiver Agreement to implement corresponding changes. Concurrent with these amendments, the Company’s board of directors reduced the Series Limit and the Overall Limit (each as defined in the Charter Ownership Limit Waiver Agreements) to 6% for all stockholders of the Company that are not otherwise Bellevue, the Advisor, their respective affiliates or persons who would be treated as Beneficially Owning or Constructively Owning (each as defined in the Company’s charter) shares of the Company’s Class A common stock held by either or both of Bellevue and the Advisor (the “Excluded Persons”). As of August 12, 2022, the Excluded Persons owned 13.7% of the outstanding Class A common shares in the aggregate, which includes Class A common shares issued to the Advisor in July 2022 pursuant to the Side Letter and Shares issued to the Advisor in August 2022 in lieu of cash payments for advisory fees.

The Company also advised the AR Parties that to the extent that the Advisor or the Property Manager decided to accept shares of its Class A common stock in lieu of cash payments for fees or the reimbursement of expenses, the Company would not issue shares of its Class A common stock exceeding the number permitted to be Beneficially Owned or Constructively Owned by the Excluded Persons pursuant to the Charter Waiver Agreement Amendments (as may be amended from time to time) and any issuance would be at a per share price equal to the greater of (i) the price as determined in accordance with Section 10(c)(iii) of the Advisory Agreement or (ii) the Minimum Price; provided, that no issuance would be permitted if the issuance of shares of Class A common stock in lieu of fees due to the Advisor or the Property Manager, as applicable, would not be permitted under that certain 2020 Advisor Omnibus Incentive Compensation Plan of the Company (the “Advisor Plan”); provided further that, in the event that any shares of the Company’s Class A common stock to be issued in lieu of cash for reimbursement of operating expenses or in lieu of advisory or property management fees are not so issuable under the Advisor Plan, the Company may issue shares of its Class A common stock but only after complying with all NYSE requirements including, but not limited to, the filing with, and approval by, the NYSE of a supplemental listing application or applications, as the case may be, and only if the issuance would not otherwise require the Company to seek shareholder approval under Section 312 of the Listed Company Manual or any subsequent rules and regulations of the NYSE.

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

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form ~~10-Q~~10-Q/A are forward-looking ~~statements. Those~~ statements ~~include~~including statements regarding the intent, belief or current expectations of ~~American Realty Capital~~ New York City REIT, Inc. (including, as required by context, New York City Operating Partnership, L.P. (the ~~"OP"~~“OP”) and its subsidiaries, ~~the "Company," "we," "our"~~“we,” “our” or ~~"us"~~“us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as ~~"may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should"~~“may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

~~The following~~These forward-looking statements are ~~some~~subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking ~~statements:~~

~~We have a limited operating history which makes our future performance difficult to predict;~~

~~All~~statements are set forth in the Risk Factors section of our executive officers are also officers, managers or holders of a direct or indirect controlling interest in our advisor, New York City Advisors, LLC (our "Advisor") and other entities affiliated with AR Global Investments, LLC (the successor business to AR Capital, LLC, "AR Global"); as a result, our executive officers, our Advisor and its affiliates face conflicts of interest, including significant conflicts created by our Advisor's compensation arrangements with us and other investor entities advised by AR Global affiliates and conflicts in allocating time among these entities and us, which could negatively impact our operating results;

~~We depend~~Annual Report on ~~tenants~~Form 10-K for ~~our revenue and, accordingly, our revenue is dependent upon~~ the ~~success and economic viability of our tenants;~~

~~We may not be able to achieve our rental rate objectives on new and renewal leases~~year ended December 31, 2021, this 10-Q/A and our ~~expenses could be greater, which may impact operations;~~other Quarterly Repots on Form 10-Q and our other filings with the Securities and Exchange Commission.

We do not expect to generate sufficient cash flow from operations in 2017 to fund distributions at our current level. There can be no assurance that additional liquidity will be available to us on favorable terms, or at all, in sufficient amounts to maintain distributions at our current levels. There can be no assurance we will be able to continue paying cash distributions at our current level or at all;

~~Our properties may be adversely affected by economic cycles and risks inherent to the New York metropolitan statistical area, especially New York City;~~Overview

We are ~~obligated to pay fees, which may be substantial, to our Advisor and its affiliates;~~

~~We may fail to continue to qualify~~an externally managed entity that has qualified to be ~~treated~~taxed as a real estate investment trust for ~~United States federal~~U.S. Federal income tax purposes ~~("REIT"~~(“REIT”);

Because investment opportunities that are suitable for us may also be suitable for other AR Global-advised programs or investors, our Advisor and its affiliates may face conflicts of interest relating to the purchase of. We invest primarily in office properties ~~and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders;~~

~~No public market currently exists, or may ever exist, for shares of our common stock and our shares are, and may continue to be, illiquid;~~

~~Our stockholders are limited in their ability to sell their shares pursuant to our share repurchase program (the “SRP”) and may have to hold their shares for an indefinite period of time;~~

~~If we and our Advisor are unable to find suitable investments, then we may not be able to achieve our investment objectives, or pay distributions with cash flows from operations;~~

~~We may be deemed to be an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and thus subject to regulation under the Investment Company Act; and~~

~~As of September 30, 2017, we owned only six properties and therefore have limited diversification.~~

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~~Overview~~

~~We were formed to invest our assets in properties in~~located exclusively within the five boroughs of New York City, ~~with a focus on~~primarily Manhattan. We ~~may~~have also ~~purchase~~purchased certain real estate assets that accompany office properties, including retail spaces and amenities, ~~as well as~~and may purchase hospitality assets, residential assets and other property types also located exclusively inwithin the five boroughs of New York City. As of ~~September~~June 30, ~~2017,~~2022, we owned ~~six~~eight properties consisting of ~~1,085,084~~1.2 million rentable square feet, acquired for an aggregate purchase price of ~~$686.1~~$790.7 million. At our 1140 Avenue of the Americas property, in the third quarter of 2021 we began operating Innovate NYC, a co-working company that is specific to this property only, that offers move-in ready private offices, virtual offices, and meeting space on bespoke terms to clients.

~~We were incorporated on December 19, 2013 as a Maryland corporation and elected and qualified to be taxed as a REIT beginning with our taxable year ended December 31, 2014.~~ Substantially all of our business is conducted through the ~~OP.~~

~~On April 24, 2014, we commenced~~OP and its wholly-owned subsidiaries. New York City Advisors, LLC (our “Advisor”) manages our initial public offering ("IPO") on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million. We closed our IPO on May 31, 2015. As of September 30, 2017, we had 31.2 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO and the DRIP of $771.6 million, inclusive of $60.1 million from the DRIP and net of repurchases.

We first established an estimated net asset value per share of our common stock (“Estimated Per-Share NAV”) in 2016. On October 24, 2016, our board of directors approved an Estimated Per-Share NAV of $21.25 as of June 30, 2016 (the “2016 Estimated Per-Share NAV”), which was published on October 26, 2016 (the “NAV Pricing Date”). Prior to the NAV Pricing Date, we had offered shares pursuant to the DRIP and had repurchased shares pursuant to the Share Repurchase Program (“SRP”) at a price based on $23.75 per share, the offering price in the IPO. Beginningday-to-day business with the ~~NAV Pricing Date, we began to offer shares pursuant to the DRIP and repurchase shares pursuant to its SRP at a price based on Estimated Per-Share NAV.~~

~~On October 25, 2017, our board~~assistance of directors approved an Estimated Per-Share NAV of $20.26 as of June 30, 2017 (the "2017 Estimated Per-Share NAV"), based on an estimated fair value of our assets less the estimated fair value of our liabilities, divided by 31,029,865 shares of common stock outstanding on a fully diluted basis as of June 30, 2017, which was published on October 26, 2017. We intend to publish subsequent valuations of Estimated Per-Share NAV at least once annually. We offer shares pursuant to the DRIP and repurchase shares pursuant to our SRP at a price based on Estimated Per-Share NAV.

~~We have no employees. Our Advisor manages our affairs on day-to-day basis. We have retained~~ New York City Properties, LLC (our ~~"Property Manager"~~“Property Manager”) ~~to serve as our property manager. The~~. Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.

Management Update on the ~~parent~~Impacts of the COVID-19 Pandemic

New York City, where all of our ~~Sponsor,~~properties are located, has been among the hardest hit locations in the country and has recently fully reopened on March 7, 2022. Our properties remain accessible to all tenants, although, even as the operating restriction have now expired, not all tenants have fully resumed operations and some tenants have vacated or left due to bankruptcy or did not renew their lease. The COVID-19 global pandemic has created several risks and uncertainties that have affected and may continue to impact our business, including our financial condition, future results of operations and our liquidity. We have experienced an increase in non-reimbursable property operating expenses and general and administrative expenses for legal fees associated with litigation against tenants that have not paid amounts contractually due under their leases and tenant lease amendment negotiations. We expect that continued vaccination efforts will result in a continued progression towards a “return to normalcy” in 2022; however, there can be no assurance in this regard due to, among other factors, the ongoing vaccine hesitancy and resistance in certain segments of the population and the recent spread of more transmissible COVID -19 variants, which could result in restrictions being re-imposed or otherwise disrupt the reopening plans of some offices and businesses.

The negative impacts of the COVID-19 pandemic during 2020 and 2021 caused and may in the future cause certain of our tenants to be unable to make rent payments to us timely, or at all. However, this trend has not continued into the first half of 2022. During the quarter ended March 31, 2021, we experienced one large termination due to the termination of leases within two of our buildings, 123 William Street and 9 Times Square, with our former tenant, Knotel, after declaring bankruptcy in January 2021, and an expiration without a renewal. A portion of the vacant space formerly occupied by Knotel at its 123 William Street, and other previously vacant space at 123 William Street, has been re-leased and we are working on securing additional new leases to replace Knotel’s former space at our 9 Times Square building. However, the annualized straight-line rent per square foot for the leases we have entered into to replace Knotel is lower than the annualized straight-line rent per square foot under Knotel’s leases. Also, the leases with the original tenant of the garages at both the 200 Riverside Boulevard property and 400 E. 67th Street - Laurel Condominium property were terminated on October 26, 2021 and received a lease termination fee of $1.4 million in the fourth quarter of 2021 for these two terminations. Concurrently, we simultaneously entered into six-month license agreements with a new operator at both garage properties, and subsequently extended these

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agreements, set to expire in October 2022, in April 2022. Subsequently, in July 2022, the tenant terminated the six-month leases and commenced new leases that expire in June 2037. There can be no assurance, however, that the Company will be able to lease all or any portion of the currently vacant space at any property on acceptable or favorable terms, or at all. There can be no assurance we will be able to lease all or any portion of our currently vacant space at any property on acceptable or favorable terms, or at all, or experience additional terminations. The impact of COVID-19 on our tenants led to early lease terminations and expirations without renewals that has caused cash trap events, currently on three of our mortgages aggregating $164.0 million in principal amount, all as described in detail further below in the Liquidity and Capital Resources section and Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021.

We have taken several steps to mitigate the impact of the pandemic on our business. We have been in direct contact with our tenants since the crisis began, continuing to cultivate open dialogue and deepen the fundamental relationships that we have carefully developed through prior transactions and historic operations. We have taken a proactive approach to achieve mutually agreeable solutions with our tenants and in some cases, in 2020 and 2021, we executed different types of lease amendments, including rent deferrals and abatements and, in some cases, extensions to the term of the leases. Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our cash rent collections during this pandemic. A deferral or abatement agreement is an executed or approved amendment to an existing lease to defer a certain portion of cash rent due to a future period or grant the tenant a rent credit for some portion of cash rent due. The rent credit is generally coupled with an extension of the lease. The terms of the lease amendments providing for rent credits differ by tenant in terms of length and amount of the credit and may also provide for payments of additional amounts to us if the tenant’s gross sales exceed a certain threshold.

During the year ended December 31, 2021, we entered into 12 approved abatement or deferral agreements that commenced during the year ended December 31, 2021. The total amount deferred for the year ended December 31, 2021 under these approved agreements was $0.6 million. The total amounts of abatements (i.e. rent credits) during the year ended December 31, 2021 was $0.9 million. We did not enter into any additional deferral or abatement agreements during the first and second quarter of 2022.

Our portfolio is primarily comprised of office and retail tenants. We have collected 98% of original cash rent due across our entire portfolio for the second quarter of 2022, including 100% of original cash rent due from our top ten tenants (based on annualized straight-line rent as of June 30, 2022). The original cash rent received across our entire portfolio was consistent with the fourth quarter of 2021 in which ~~they~~we reported total portfolio original cash rent collections of 98% and 97% due for the first quarter of 2022 and fourth quarter of 2021, respectively. We expect our cash rent collections will stay at current levels, however there can be no assurance that we will be able to collect cash rent at these levels in the future. The cash rent collections for the second quarter of 2022 includes cash receipts through July 31, 2022 and therefore is inclusive of cash received in July for rent due in the second quarter of 2022. Such cash receipts are ~~related parties~~not included in cash and ~~each~~cash equivalents on our June 30, 2022 consolidated balance sheet. “Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in their originally executed lease agreement at inception or as amended, prior to any rent deferral agreement. We calculate “original cash rent collections” by comparing the total amount of ~~these entities has~~rent collected during the period to the original cash rent due. Total rent collected during the period includes both original cash rent due and payments made by tenants pursuant to rent deferral agreements.

Also, during the year ended December 31, 2021, we entered into percentage rent leases with a new tenant at our Laurel/Riverside garages which expired in June 2022. In April of 2022, the tenant extended the percentage rent deal that would have expired in October 2022. These percentage rent deals provided us with the opportunity to capture more of the original cash rent due as New York City began rebounding from the COVID-19 pandemic, as compared to executing a flat deferral or abatement agreement. As of July 2022, we have subsequently entered into new leases with the tenant which expire in June of 2037.

We may receive requests from tenants for future rent deferrals and abatements. Generally, for tenants with which we have entered into abatement and deferral agreements, we received ~~or will~~the deferred amounts when due. During the year ended December 31, 2021, we did not collect any cash rent due from any of the tenants that were moved to a cash basis in 2020, however, we did receive ~~compensation, fees and expense reimbursements for services related~~a lease termination fee of $1.4 million in the fourth quarter 2021 relating to our ~~IPO and, the investment and management of our assets. We are the sole general partner and hold substantially all~~two garages lease to one of the ~~units~~tenants that was placed on a cash basis in 2020. We only had one tenant on a cash basis during the first and second quarters of ~~limited partner interests~~2022 at our 8713 Fifth Avenue property that consisted of 2,000 square feet.

Our cash rent collections may not be indicative of any future period and remain subject to changes based ongoing collection efforts and negotiation of additional agreements. Moreover, there is no assurance that we will be able to collect the cash rent that is due in future months including the ~~OP, entitled "OP units" (“OP units”).~~deferred 2021 rent amounts that we expect to receive during the remainder of 2022 under deferral agreements we have entered into with our tenants. The ~~Advisor contributed $2,020 to the OP in exchange for 90 OP units, which represents a nominal percentage~~impact of the ~~aggregate OP ownership. A holder of OP units has the right to convert OP units for the cash value of a corresponding number of shares of~~COVID-19 pandemic on our ~~common stock or, at the option of the OP, a corresponding number of shares of~~tenants and thus our common stock, in accordance with the limited partnership agreement of the OP, provided, however, that such OP units must have been outstanding for at least one year. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to ~~replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.~~collect rents in future periods cannot be determined at present.

Significant Accounting Estimates and Critical Accounting Policies

~~Set forth below is~~For a ~~summary of the~~discussion about our significant accounting estimates and critical accounting policies, ~~that management believes are important to~~see the ~~preparation~~“Significant Accounting Estimates and Critical Accounting Policies” section of our ~~consolidated financial statements. Certain~~2021 Annual Report on Form 10-K. Except for those

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required by new 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,~~pronouncements discussed below, there have been no material changes from these ~~estimates are subject to a degree of uncertainty. These~~ significant accounting estimates and critical accounting ~~policies include:~~policies.

Recently Issued Accounting Pronouncements

See~~Table~~Note 2 — Summary of ~~Contents~~

~~Offering and Related Costs~~

All offering costs incurred by us, our Advisor and its affiliates on our behalf are charged to additional paid-in capital on the consolidated balance sheets. Offering and related costs include all expenses incurred in connection with our IPO. Offering costs (other than selling commissions and the dealer manager fees) include costs that may be paid by the Advisor, the Former Dealer Manager or their affiliates on our behalf. These costs include but are not limited to (i) legal, accounting, printing, mailing, and filing fees; (ii) escrow service related fees; (iii) reimbursement of the Former Dealer Manager for amounts it may pay to reimburse itemized and detailed due diligence expenses of broker-dealers; and (iv) reimbursement to the Advisor for a portion of the costs of its employees and other costs in connection with preparing supplemental sales materials and related offering activities. We are obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on our behalf, provided that the Advisor is obligated to reimburse us to the extent organization and offering costs (excluding selling commissions and the dealer manager fee) incurred by us in our IPO exceeded 2.0% of gross offering proceeds in the IPO. As a result, these costs are our liability to the extent aggregate selling commissions, the dealer manager fee and other organization and offering costs are less than 12.0% of the gross proceeds determined at the end of the IPO. As of the end of the IPO, aggregate selling commissions, dealer manager fees and other offering costs did not exceed 12.0% of the gross proceeds received in the IPO.

~~Revenue Recognition~~

Our revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Because many of our leases provide for rental increases at specified intervals, accounting principles generally accepted in the United States ("GAAP") require us to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. We defer the revenue related to lease payments received from tenants in advance of their due dates. When we acquire a property, the acquisition date is considered to be the commencement date for the purposes of this calculation.

Rental revenue recognition commences when the tenant takes possession of or controls the physical use of the leased space. For the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, we evaluate whether we own or if the tenant owns the tenant improvements. When we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such improvements are substantially complete. When we conclude that the tenant is the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space.

When we conclude that we are the owner of tenant improvements, we capitalize the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants. When we conclude that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred leasing costs, net on the consolidated balance sheets and amortized as a reduction to rental income on a straight-line basis over the term of the lease.

We continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, we will record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our consolidated statements of operations.

We may 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. As the lessor to the aforementioned leases, we defer the recognition of contingent rental income until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. If we own certain properties with leases that include these provisions, contingent rental income will be included in rental income on the consolidated statements of operations and comprehensive loss.

~~Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.~~

~~Investments in Real Estate~~

We evaluate the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statement of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.

We allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and non-controlling interests based on their respective estimated fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets or liabilities may include the value of in-place leases, above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics.

The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases is recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and our estimate of the comparable fair market lease rate, measured over the remaining term of the lease. The fair value of other intangible assets, such as real estate tax abatements and signage rights, are recorded based on the present value of the expected benefit and amortized over the expected useful life including any below-market fixed rate renewal options for below-market leases.

Fair values of assumed mortgages, if applicable, are recorded as debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates.

~~Non-controlling interests in property owning entities are recorded based on the fair value of units issued at the date of acquisition, as determined by the terms of the applicable agreement.~~

We use a number of sources in making our estimates of fair values for purposes of allocating purchase price, including real estate valuations prepared by independent valuation firms. We also consider information and other factors including: market conditions, the industry in which the tenant operates, characteristics of the real estate such as location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business.

Disposals of real estate investments that represent a strategic shift in operations that will have a major effect on our operations and financial results are presented as discontinued operations in the consolidated statements of operations and comprehensive loss for all periods presented; otherwise, we continue to report these properties' operations within continuing operations. Properties that are intended to be sold will be designated as "held for sale" on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs for all periods presented when they meet specific criteria to be presented as held for sale. Properties are no longer depreciated when they are classified as held for sale.

~~Restricted cash consists of mortgage lender required reserves for maintenance, real estate tax, structural, debt service, lease, tenant improvement and leasing commission cost.~~

~~Depreciation and Amortization~~

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

Acquired above-market leases are amortized as a reduction of rental income over the remaining terms of the respective leases. Acquired below-market leases are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.

The value of in-place leases, exclusive of the value of above and below-market in-place leases, is amortized to depreciation and amortization expense over the remaining periods of the respective leases.

~~Assumed mortgage premiums or discounts, if applicable, are amortized as a reduction or increase to interest expense over the remaining term of the respective mortgages.~~

~~Impairment of Long Lived Assets~~

When circumstances indicate the carrying value of a property may not be recoverable, we review the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If such estimated cash flows are less than the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is based on the adjustment to estimated fair value less estimated cost to dispose of the asset. Generally, we determine estimated fair value for properties held for sale based on the agreed-upon selling price of an asset. These assessments may result in the immediate recognition of an impairment loss resulting in a reduction to net income (loss).

~~Recent~~Significant Accounting ~~Pronouncement~~

~~In May 2014, the Financial~~Policies - Recently Issued Accounting ~~Standards Board (“FASB”) issued an update (“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606,~~ ~~Revenue from Contracts with Customers~~ ~~(“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes~~ ~~a comprehensive model for entities~~ Pronouncements to ~~use in accounting for revenue arising from contracts with customers~~. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. We will adopt this guidance effective January 1, 2018 and currently expect to utilize the modified retrospective approach upon adoption and do not expect that this will result in a significant cumulative-effect adjustment to equity.

We have progressed in our project plan in evaluating our various revenue streams in order to identify any differences in the timing, measurement or presentation of revenue recognition under ASC 606 and ASC Topic 842, ~~Leases~~ (“ASC 842”). Based on our evaluation of our various revenue streams, we believe that gains on sales of real estate could be impacted by adoption of ASC 606. We expect that this standard could have an impact on the timing of gains on certain sales of real estate as a result of more transactions generally qualifying as sales of real estate and revenue being recognized at an earlier date than under current accounting guidance. Specifically, we expect that this would impact partial sales of real estate in situations where we no longer retain a controlling financial interest. If we were to enter into partial sales of real estate, we would derecognize the real estate asset consistent with the principles outlined in ASC 606 and any retained non-controlling ownership interest would be measured at fair value consistent with the guidance on noncash consideration in ASC 606.

~~We are continuing to evaluate any differences in the timing, measurement, or presentation of revenue recognition and the impact on~~ our consolidated financial statements ~~and internal accounting processes resulting from ASC 606 as well as ASC 842, Leases as discussed below.~~in this Quarterly Report on Form 10-Q/A for further discussion.

In January 2016, the FASB issued an update that amends the recognition and measurement of financial instruments. The new guidance revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is not permitted for most of the amendments in the update. We are currently evaluating the impact of the new guidance.

In February 2016, the FASB issued an update to ASU 2016-02 establishing ASC 842, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASC 842 supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. ASC 842 will impact the lease accounting model for both lessees and lessors. We will adopt this guidance effective January 1, 2019.

We are a lessee for a property in which we have a ground lease as of September 30, 2017. For this lease, we will be required to record a right-of-use asset and lease liability equal to the present value of the remaining lease payments upon adoption of this update. The new standard requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today.

From a lessor perspective we expect that the new standard will impact the presentation of lease and non-lease components of revenue such as rent, and operating expense reimbursements including common area maintenance, taxes, and insurance from leases for which we are a lessor. We do not expect this guidance to impact its existing lessor revenue recognition pattern. We anticipate that it will elect the following practical expedients, which must be elected as a package and applied consistently by an entity to all of its leases, which allow us to not have to reassess the following upon adoption: (i) whether any expired or existing contract contains a lease, (ii) lease classification related to expired or existing leases, or (iii) whether costs incurred on existing leases qualify as initial direct costs. We are continuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of the new lessee accounting model on our consolidated financial position, results of operations and disclosures.

In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of this new guidance.

In November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of this new guidance.

In May 2017, the FASB issued guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, does not change as a result of the modification. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for reporting periods for which financial statements have not yet been issued. We are currently evaluating the impact of this new guidance.

~~Recently Adopted Accounting Pronouncements~~

In October 2016, the FASB issued guidance where a reporting entity will need to evaluate if it should consolidate a variable interest entity ("VIE"). The amendments change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. We adopted the provisions of this guidance beginning January 1, 2017 and determined that there is no impact to our consolidated financial position, results of operations and cash flows.

In January 2017, the FASB issued guidance that revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset or group of similar assets, the assets acquired would not be considered a business. The revised guidance is effective for reporting periods beginning after December 15, 2017, and the amendments will be applied prospectively. Early application is permitted only for transactions that have not previously been reported in issued financial statements. We have assessed this revised guidance and expect, based on historical acquisitions, future properties acquired to qualify as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. We adopted this guidance for the nine months ended September 30, 2017 and have had no acquisition to apply the new standard.

The following table presents certain information about the investment properties we owned as of ~~September~~June 30, ~~2017:~~2022:

Portfolio Acquisition Date Rentable Square Feet Occupancy
Remaining Lease Term⁽¹⁾
421 W. 54th Street - Hit Factory Jun. 2014 12,327
100.0 % 3.0
400 E. 67th Street - Laurel Condominium Sept. 2014 58,750
100.0 % 6.5
200 Riverside Boulevard - ICON Garage Sept. 2014 61,475
100.0 % 20.0
9 Times Square Nov. 2014 167,390
57.9 % 5.3
123 William Street Mar. 2015 542,676
92.1 % 8.0
1140 Avenue of the Americas Jun. 2016 242,466
89.1 % 4.5
1,085,084
87.1 % 6.4

Remaining Lease Term (1)

(1) ~~Remaining lease term in years as of September 30, 2017, calculated~~Calculated on a weighted-average basis as of June 30, 2022, as applicable.

(2)The leases with the original tenant of the garages at both the 200 Riverside Boulevard property and 400 E. 67th Street - Laurel Condominium property were terminated on October 26, 2021 and we simultaneously entered into six-month license agreements with a new operator at the garages at both properties. In October 2021, we signed a termination agreement with the original tenants, which required the tenants to pay an aggregate of $1.4 million in termination fees to us, which was all received during the fourth quarter of 2021. In July 2022, the parties terminated the six-month license agreements and commenced new leases that expire in June 2037.

(3)In January 2021, our former tenant, Knotel, filed for bankruptcy and the leases with this tenant were terminated effective January 31, 2021, which impacted two of our properties. These terminations and new leasing activity in the first half of 2022 represented a net decline of 14.4% in the occupancy of 9 Times Square as of June 30, 2022 compared to December 31, 2020. After taking into account the former Knotel space that has been re-leased as of June 30, 2022, occupancy of 123 William Street has increased 2.0% from December 31, 2020 to June 30, 2022.

(4)Occupancy at 8713 Fifth Avenue as of June 30, 2022 has declined by 11.5% occupied compared to December 31, 2021 as the result of a termination. We signed a new lease in November 2021 and the tenant will occupy the space in the third quarter of 2022 that will partially replace some of the vacated space.

Results of Operations

As of ~~September~~June 30, ~~2017~~2022 and September 30, 2016, we owned six properties, comprising five properties purchased prior to January 1, 2016 (our "Initial Five Properties"), and one property we acquired in June 2016 located at 1140 Avenue of the Americas in Manhattan, New York (our "1140 Property"). Due to our 1140 Property, our results of operations for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, reflect significant increases in most categories.

~~As of September 30, 2017,~~2021, our overall portfolio occupancy was ~~87.1% notwithstanding the fact that occupancy at our property located at 9 Times Square was57.9%~~84.6% and ~~56.0% as of September 30, 2017 and December 31, 2016,~~84.5%, respectively. In August, we entered into a lease with a tenant for three full floors at 9 Times Square totaling approximately 26,000 square feet. Terms for two of the three floors representing approximately 18,000 square feet had not commenced as of September 30, 2017, and, as a result were not included in our occupancy as of that date. However, if the term for the 18,000 square feet comprising these two floors had commenced during the quarter ended September 30, 2017, the occupancy for 9 Times Square as of September 30, 2017 would have been 68.4%.

During the three months ended September 30, 2017, six leases with six different tenants totaling approximately 51,000 square feet expired, although a new lease was executed by one of those tenants with respect to approximately 41,000 square feet in connection with the expiration of the existing lease.

The following table is a summary of our quarterly leasing activity for the ~~nine~~three months ended ~~September~~March 31, 2022 and June 30, ~~2017:~~

Q3 2017 Q2 2017 Q1 2017
Leasing activity:
Lease executed 2
3
2
Total square feet leased 9,983
23,579
21,701
Annualized straight-line rent⁽¹⁾
$ 80.95
$ 49.65
$ 44.78
Weighted average lease term (years) 10.74
9.2
5.8

Replacement leases:⁽²⁾

Replacement leases executed 2
2
2
Square feet 48,519
19,639
21,701

Tenant improvements on replacement leases per square foot⁽³⁾
$ 40.00
$ 60.00
$ 14.04
Leasing commissions on replacement leases per square foot⁽³⁾
$ 36.04
$ 19.73
$ 14.42

2022. There were no replacement leases during the quarter ended March 31, 2022 or June 30, 2022.


	Q1 2022		Q2 2022
Leasing activity:
New leases:
New leases commenced	1		1
Total square feet leased	3,940		3,416
Annualized straight-line rent per square foot (1)	$	52.72	$	48.02
Weighted-average lease term (years) (2)	5.3		3







Terminated or expired leases: (4)
Number of leases terminated or expired	—		2
Square feet	—		10,293
Annualized straight-line rent per square foot (2)	$	—	$	60.34

(1)Represents the GAAP basis ~~weighted average~~annualized straight-line rent ~~per square feet~~ that is recognized over the term on the respective leases, which includes free rent, ~~and~~ periodic rent increases, and excludes recoveries.

(2) ~~Replacement leases are for spaces that were leased during the period and also have been leased at some time during the prior twelve months.~~The weighted-average remaining lease term (years) is based on annualized straight-line rent.


			Page
PART I - FINANCIAL INFORMATION

			~~Page~~
~~PART I - FINANCIAL INFORMATION~~

Item 1. Financial Statements

Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2022 (Unaudited) and December 31, ~~2016~~2021			3
Consolidated Statements of Operations and Comprehensive Loss for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (Unaudited)			4
Consolidated ~~Statement~~Statements of Changes in Equity for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2022 (Unaudited)			5
Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2021 (Unaudited)			6
Consolidated Statements of Cash Flows for the ~~Three and Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (Unaudited)			67
Notes to Consolidated Financial Statements (Unaudited)			78

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2438

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4053

Item 4. Controls and Procedures			4154

PART II - OTHER INFORMATION			4255

Item 1. Legal Proceedings			4255

Item 1A. Risk Factors			4255

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4257

Item 3. Defaults Upon Senior Securities			4357

Item 4. Mine Safety Disclosures			4357

Item 5. Other Information			4457

Item 6. Exhibits			4458

Signatures			4560



	Nine Months Ended September 30,
	2016
(Dollar amounts in thousands)	Total Assets Acquired
Real estate investments, at cost:
Land	$	—
Building and improvements	148,647
Total tangible assets	148,647
Acquired intangibles:
In-place leases	27,433
Above-market lease assets	5,230
Other intangibles	—
Below-market lease liabilities	(5,277		)
Below-market ground lease asset	2,482
Total intangible assets, net	29,868
Total assets acquired, net	178,515
Mortgage notes payable used to acquire real estate investments	(99,000		)
Premiums on mortgages assumed	—
Other assets acquired	—
Other liabilities assumed	(353		)
Cash paid for acquired real estate investment	$	79,162
Number of properties purchased	1



	September 30, 2017
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets:
In-place leases	$	63,177	$	19,918	$	43,259
Other intangibles	31,447		3,475		27,972
Below-market ground lease	2,482		64		2,418
Above-market leases	10,025		2,719		7,306
Acquired intangible assets	$	107,131	$	26,176	$	80,955
Intangible liabilities:
Below-market lease liabilities	$	34,069	$	8,249	$	25,820



	December 31, 2016
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets:
In-place leases	$	65,544	$	14,045	$	51,499
Other intangibles	31,447		2,601		28,846
Below-market ground lease	2,482		27		2,455
Above-market leases	10,025		1,618		8,407
Acquired intangible assets	$	109,498	$	18,291	$	91,207
Intangible liabilities:
Below-market lease liabilities	$	34,471	$	5,943	$	28,528


		OR
☐		OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Rental income	$	13,345		$	13,441		$	40,009		$	30,759
Operating expense reimbursements and other revenue	1,130			967			3,554			2,208
Total revenues	14,475			14,408			43,563			32,967

Operating expenses:
Property operating	6,848			6,357			19,882			13,871
Operating fees incurred from related parties	1,515			1,525			4,566			3,676
Acquisition and transaction related	—			24			6			4,327
General and administrative	2,066			1,268			5,634			3,770
Depreciation and amortization	7,125			7,272			21,349			16,776
Total operating expenses	17,554			16,446			51,437			42,420
Operating loss	(3,079		)	(2,038		)	(7,874		)	(9,453		)
Other income (expense):
Interest expense	(2,866		)	(2,387		)	(8,365		)	(5,027		)
Income from investment securities and interest	68			56			190			305
Gain on sale of investment securities	—			—			24			—
Total other expense	(2,798		)	(2,331		)	(8,151		)	(4,722		)
Net loss	$	(5,877	)	$	(4,369	)	$	(16,025	)	$	(14,175	)

Other comprehensive income (loss):
Unrealized gain on investment securities	—			10			—			32
Reversal of accumulated unrealized gain on investment securities	—			—			(10		)	—
Comprehensive loss	$	(5,877	)	$	(4,359	)	$	(16,035	)	$	(14,143	)

Basic and diluted weighted average shares outstanding	31,106,250			30,556,494			30,956,152			30,634,400
Basic and diluted net loss per share	$	(0.19	)	$	(0.14	)	$	(0.52	)	$	(0.46	)
Dividends declared per common share	$	0.39		$	0.38		$	1.13		$	1.13



(In thousands)	Future Minimum Base Cash Rent Payments
2017	$	11,180
2018	48,411
2019	47,063
2020	43,039
2021	39,069
Thereafter	139,430
	$	328,192


~~(1)~~	~~Reflected within depreciation and amortization expense.~~



(In thousands)	October 1, 2017- December 31, 2017			2018			2019			2020			2021
In-place leases	$	2,576		$	9,372		$	8,588		$	6,718		$	5,332
Other intangibles	291			1,165			1,165			1,165			937
Total to be included in depreciation and amortization	$	2,867		$	10,537		$	9,753		$	7,883		$	6,269

Above-market lease assets	$	(366	)	$	(1,369	)	$	(1,305	)	$	(1,164	)	$	(1,064	)
Below-market lease liabilities	874			3,435			3,092			2,679			2,371
Total to be included in rental income	$	508		$	2,066		$	1,787		$	1,515		$	1,307



(In thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2016
Equity security	$	467	$	10	$	—	$	477



	Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
December 31, 2016
Investment Securities	$	477	$	—	$	—	$	477



	Numbers of Shares Repurchased	Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2016	645,335	$	23.63
Nine months ended September 30, 2017⁽¹⁾	359,458	20.41
Cumulative repurchases as of September 30, 2017	1,004,793	$	22.48



(In thousands)	Future Minimum Base Cash Rent Payments- Ground Lease
2017	1,187
2018	4,746
2019	4,746
2020	4,746
2021	4,746
Thereafter	221,484
Total	$	241,655



	Number of Restricted Shares		Weighted-Average Issue Price
Unvested, December 31, 2016	9,065		$	22.50
Granted	—		—
Vested	(2,133	)	22.50
Forfeited	—		—
Unvested, September 30, 2017	6,932		$	22.50



Portfolio	Acquisition Date	Rentable Square Feet	Occupancy		Remaining Lease Term⁽¹⁾
421 W. 54th Street - Hit Factory	Jun. 2014	12,327	100.0	%	3.0
400 E. 67th Street - Laurel Condominium	Sept. 2014	58,750	100.0	%	6.5
200 Riverside Boulevard - ICON Garage	Sept. 2014	61,475	100.0	%	20.0
9 Times Square	Nov. 2014	167,390	57.9	%	5.3
123 William Street	Mar. 2015	542,676	92.1	%	8.0
1140 Avenue of the Americas	Jun. 2016	242,466	89.1	%	4.5
		1,085,084	87.1	%	6.4


Portfolio	Acquisition Date	Number of Properties	Rentable Square Feet	Occupancy			Remaining Lease Term (1)

421 W. 54th Street - Hit Factory	Jun. 2014	1	12,327	—	%		—
400 E. 67th Street - Laurel Condominium	Sept. 2014	1	58,750	100.0	%	(2)	5.0
200 Riverside Boulevard - ICON Garage	Sept. 2014	1	61,475	100.0	%	(2)	15.0
9 Times Square	Nov. 2014	1	167,390	64.3	%	(3)	6.7
123 William Street	Mar. 2015	1	542,676	92.3	%	(3)	6.2
1140 Avenue of the Americas	Jun. 2016	1	242,646	76.1	%		6.1
8713 Fifth Avenue	Oct. 2018	1	17,500	57.1	%	(4)	8.6
196 Orchard Street	Jul. 2019	1	60,297	100.0	%		12.9
		8	1,163,061	84.6	%		7.1



	Q3 2017		Q2 2017		Q1 2017
Leasing activity:
Lease executed	2		3		2
Total square feet leased	9,983		23,579		21,701
Annualized straight-line rent⁽¹⁾	$	80.95	$	49.65	$	44.78
Weighted average lease term (years)	10.74		9.2		5.8

Replacement leases:⁽²⁾
Replacement leases executed	2		2		2
Square feet	48,519		19,639		21,701

Tenant improvements on replacement leases per square foot⁽³⁾	$	40.00	$	60.00	$	14.04
Leasing commissions on replacement leases per square foot⁽³⁾	$	36.04	$	19.73	$	14.42



	Three Months Ended									Nine Months Ended
(In thousands)	March 31, 2017			June 30, 2017			September 30, 2017			September 30, 2017
Net loss (in accordance with GAAP)	$	(4,786	)	$	(5,362	)	$	(5,877	)	$	(16,025	)
Depreciation and amortization	6,997			7,227			7,125			21,349
FFO	2,211			1,865			1,248			5,324
Acquisition and transaction related	6			—			—			6
Accretion of below- and amortization of above-market lease liabilities and assets, net	(539		)	(532		)	(499		)	(1,570		)
Straight-line rent	(618		)	(603		)	(1,365		)	(2,586		)
Straight-line ground rent	27			27			28			82
Loss on extinguishment of debt	131			—			—			131
Gain on sale of investment securities	$	—		$	(24	)	$	—		$	(24	)
MFFO	$	1,218		$	733		$	(588	)	$	1,363


	Three Months Ended				Three Months Ended				Six Months Ended
	March 31, 2022				June 30, 2022				June 30, 2022
(In thousands)			Percentage of Dividends				Percentage of Dividends						Percentage of Dividends
Dividends and Distributions:
Dividends to holders of common stock	$	1,329			$	1,341				$	2,670
Distributions to holders of LTIP Units	40				40					80
Total dividends and distributions	$	1,369			$	1,381				$	2,750

Source of dividend coverage:
Cash flows provided by operations	$	1,369	100	%	$	—	—	%		$	1,737	(1)	63	%
Available cash on hand	—		—	%	1,381		100	%		1,013		(1)	37	%
Total sources of dividend and distribution coverage	$	1,369	100	%	$	1,381	100	%		$	2,750		100	%

Cash flows provided by operations (GAAP basis) (2)	$	2,178			$	(441)				$	1,737

Net loss attributable to common stockholders (in accordance with GAAP) (As Restated) (3)	$	(11,712)			$	(13,001)				$	(24,713)



					Years Ended December 31,
(In thousands)	Total		October 1, 2017 — December 31, 2017		2018 — 2019		2020 — 2021		Thereafter
Mortgage note payable:
Principal payments	$	239,000	$	—	$	—	$	—	$	239,000
Interest payments	99,372		2,680		21,496		21,525		53,671
Total debt obligations	$	338,372	$	2,680	$	21,496	$	21,525	$	292,671



	Year Ended December 31,
(In thousands)	2015		2014
Selling commissions and dealer manager fees	$	22,374	$	46,997
Other offering costs	6,050		8,628
Total offering costs	$	28,424	$	55,625



	~~AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.~~
	~~By:~~	~~/s/ Edward M. Weil, Jr.~~
		~~Edward M. Weil, Jr.~~
		~~Executive Chairman, Chief Executive Officer, President and Secretary~~ ~~(Principal Executive Officer)~~

	~~By:~~	~~/s/ Nicholas Radesca~~
		~~Nicholas Radesca~~
		~~Interim Chief Financial Officer and Treasurer~~ ~~(Principal Financial Officer and Principal Accounting Officer)~~



Exhibit No.		Description
3.1(1)		Articles of Amendment and Restatement
3.2 (2)		Articles of Amendment relating to corporate name change
3.3 (1)		Amended and Restated Bylaws of New York City REIT, Inc.
3.4(3)		Amendment to Amended and Restated Bylaws of New York City REIT, Inc.
3.5(4)		Articles of Amendment relating to reverse stock split
3.6(4)		Articles of Amendment relating to par value decrease and common stock name change
3.7(4)		Articles Supplementary classifying and designating Class B common stock
3.8(5)		Articles Supplementary classifying and designating Series A Preferred Stock
3.9(6)		Articles Supplementary reclassifying Class B common stock into Class A common stock
3.10(7)		Second Amendment to Amended and Restated Bylaws of ~~American Realty Capital~~ New York City REIT, Inc.
~~10.1~~4.1⁽²⁾ (8)		~~First~~ Amendment, dated as of August 12, 2021, to ~~Employee~~the Amended and ~~Director Incentive Restricted Share Plan~~Restated Rights Agreement, dated as of ~~American Realty Capital~~August 17, 2020, between New York City REIT, Inc. and Computershare Trust Company, N.A. as Rights Agent





~~10.2~~31.1 *		~~Amended and Restated Employee and Director Incentive Restricted Share Plan of American Realty Capital New York City REIT, Inc.~~
~~10.3~~ *	~~Indemnification Agreement between the Company and Katie P. Kurtz, dated as of November 13, 2017.~~
~~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~~101.INS *		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *		Inline XBRL Taxonomy Extension Schema Document.
101.CAL *		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 *			Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL ~~(eXtensible Business Reporting Language). The following materials from American Realty Capital New York City REIT, Inc.'s Quarterly Report on Form 10-Q for~~tags are embedded within the three months ended September 30, 2017, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.Inline XBRL document.


			NEW YORK CITY REIT, INC.

			By:			/s/ Edward M. Weil, Jr.
						Edward M. Weil, Jr.
						Executive Chairman, Chief Executive Officer, President and Secretary (Principal Executive Officer)

			By:			/s/ Christopher J. Masterson
						Christopher J. Masterson
						Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)