UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20202021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number: 001-39448
nycr-20210930_g1.jpg
New York City REIT, Inc.
(Exact name of registrant as specified in its charter)
Maryland  46-4380248
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer Identification No.)
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
Securities registered pursuant to section 12(b) of the Act: None.
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.01 par value per shareNYCNew York Stock Exchange
Class A Preferred Stock Purchase RightsNew 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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐
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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐ Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☒
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of November 9, 2020,8, 2021, the registrant had 12,802,69013,277,739 shares of common stock outstanding, comprised of 3,234,99613,277,739 shares of Class A common stock and 9,567,694 shares ofstock. All Class B common stock.stock have been converted to Class A common stock and there are no remaining Class B common stock outstanding.


NEW YORK CITY REIT, INC.

INDEX TO FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets as of September 30, 20202021 (Unaudited) and December 31, 20192020
3
Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 20202021 and 20192020 (Unaudited)
4
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 20202021 (Unaudited)
5
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 20192020 (Unaudited)
6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20202021 and 20192020 (Unaudited)
7
Notes to Consolidated Financial Statements (Unaudited)
8
3635
4951
4951
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5052
5553
5554
5554
5554
5554
5655


2

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.

NEW YORK CITY REIT, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
September 30,
2020		December 31,
2019
ASSETS(Unaudited) 
Real estate investments, at cost:
Land$193,658 $193,658 
Buildings and improvements568,134 565,829 
Acquired intangible assets98,412 103,121 
Total real estate investments, at cost860,204 862,608 
Less accumulated depreciation and amortization(132,418)(114,322)
Total real estate investments, net727,786 748,286 
Cash and cash equivalents39,088 51,199 
Restricted cash9,700 7,098 
Operating lease right-of-use asset55,427 55,579 
Prepaid expenses and other assets (includes amounts due from related parties of $407 and $0 at September 30, 2020 and December 31, 2019, respectively)11,080 8,602 
Straight-line rent receivable25,231 21,649 
Deferred leasing costs, net9,643 8,943 
Total assets$877,955 $901,356 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Mortgage notes payable, net$396,188 $395,031 
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $167 and $222 at September 30, 2020 and December 31, 2019, respectively)6,831 7,033 
Operating lease liability54,832 54,866 
Below-market lease liabilities, net14,517 18,300 
Derivative liability, at fair value3,722 1,327 
Deferred revenue5,490 4,250 
Total liabilities481,580 480,807 
Preferred stock, $0.01 par value, 50,000,000 shares authorized, NaN issued and outstanding at September 30, 2020 and December 31, 20190 0 
Common stock, $0.01 par value, 300,000,000 shares authorized, 12,802,690 and 12,755,099 (1) shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
129 128 
Additional paid-in capital686,690 686,026 
Accumulated other comprehensive loss(3,722)(1,327)
Distributions in excess of accumulated earnings(288,640)(264,278)
Total stockholders’ equity394,457 420,549 
Non-controlling interests1,918 0 
Total equity396,375 420,549 
Total liabilities and equity$877,955 $901,356 
_____
(1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).
September 30,
2021		December 31,
2020
ASSETS(Unaudited) 
Real estate investments, at cost:
Land$193,357 $193,658 
Buildings and improvements570,355 568,861 
Acquired intangible assets97,375 98,118 
Total real estate investments, at cost861,087 860,637 
Less accumulated depreciation and amortization(160,217)(139,666)
Total real estate investments, net700,870 720,971 
Cash and cash equivalents23,169 30,999 
Restricted cash11,611 8,995 
Operating lease right-of-use asset55,219 55,375 
Prepaid expenses and other assets (includes amounts due from related parties of $0 and $435 at September 30, 2021 and December 31, 2020, respectively)7,398 12,953 
Straight-line rent receivable24,817 22,050 
Deferred leasing costs, net9,059 10,503 
Total assets$832,143 $861,846 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Mortgage notes payable, net$397,731 $396,574 
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $33 and $0 at September 30, 2021 and December 31, 2020, respectively)6,535 6,916 
Operating lease liability54,783 54,820 
Below-market lease liabilities, net12,362 14,006 
Derivative liability, at fair value2,330 3,405 
Deferred revenue4,784 4,558 
Total liabilities478,525 480,279 
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2021 and December 31, 2020— — 
Common stock, $0.01 par value, 300,000,000 shares authorized, 13,277,738 and 12,802,690 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively133 129 
Additional paid-in capital691,344 686,715 
Accumulated other comprehensive loss(2,330)(3,404)
Distributions in excess of accumulated earnings(345,584)(305,882)
Total stockholders’ equity343,563 377,558 
Non-controlling interests10,055 4,009 
Total equity353,618 381,567 
Total liabilities and equity$832,143 $861,846 

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

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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 September 30,Nine Months Ended September 30,
2020201920202019
Revenue from tenants$16,997 $18,643 $53,035 $52,219 
Operating expenses:   
Asset and property management fees to related parties1,879 1,962 5,721 5,382 
Property operating8,300 8,026 23,533 22,651 
Acquisition, transaction and other costs0 0 0 18 
Listing expenses1,299 0 1,299 0 
Vesting and conversion of Class B Units1,153 0 1,153 0 
Equity-based compensation1,711 24 1,758 64 
General and administrative1,234 1,176 5,727 4,929 
Depreciation and amortization8,639 7,804 24,070 22,771 
Total operating expenses24,215 18,992 63,261 55,815 
Operating loss(7,218)(349)(10,226)(3,596)
Other income (expense):
Interest expense(5,089)(4,681)(14,915)(12,310)
Other income19 221 779 686 
Total other expense(5,070)(4,460)(14,136)(11,624)
Net loss attributable to common stockholders$(12,288)$(4,809)$(24,362)$(15,220)
Other comprehensive income (loss):
Change in unrealized gain (loss) on derivative264 (547)(2,395)(1,877)
    Other comprehensive income (loss)264 (547)(2,395)(1,877)
Comprehensive income (loss)$(12,024)$(5,356)$(26,757)$(17,097)
Weighted-average shares outstanding — Basic and Diluted (1)
12,772,176 12,749,456 12,757,376 12,748,674 
Net loss per share attributable to common stockholders — Basic and Diluted (1)
$(0.96)$(0.38)$(1.91)$(1.19)
_____
 Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenue from tenants$15,848 $16,997 $46,011 $53,035 
Operating expenses:   
Asset and property management fees to related parties1,862 1,879 5,616 5,721 
Property operating8,029 8,300 25,088 23,533 
Impairment of real estate investments413 — 413 — 
Acquisition, transaction and other costs— — — — 
Listing expenses— 1,299 — 1,299 
Vesting and conversion of Class B Units— 1,153 — 1,153 
Equity-based compensation2,121 1,711 6,356 1,758 
General and administrative1,884 1,234 6,600 5,727 
Depreciation and amortization7,851 8,639 23,400 24,070 
Total operating expenses22,160 24,215 67,473 63,261 
Operating loss(6,312)(7,218)(21,462)(10,226)
Other income (expense):
Interest expense(4,803)(5,089)(14,279)(14,915)
Other income5 19 44 779 
Total other expense(4,798)(5,070)(14,235)(14,136)
Net loss(11,110)(12,288)(35,697)(24,362)
Income tax expense(14)— (14)— 
Net loss attributable to common stockholders$(11,124)$(12,288)$(35,711)$(24,362)
Other comprehensive income (loss):
Change in unrealized gain (loss) on derivative252 264 1,074 (2,395)
    Other comprehensive income (loss)252 264 1,074 (2,395)
Comprehensive loss$(10,872)$(12,024)$(34,637)$(26,757)
Weighted-average shares outstanding — Basic and Diluted13,093,486 12,772,176 12,892,382 12,757,376 
Net loss per share attributable to common stockholders — Basic and Diluted$(0.85)$(0.96)$(2.78)$(1.91)
(1)
Prior period amounts retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for share data)
(Unaudited)


Nine Months Ended September 30, 2020
Common Stock
Number of
Shares		Par ValueAdditional
Paid-in
Capital		Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, December 31, 201912,755,099 (1)$128 (1)$686,026 (1)$(1,327)$(264,278)$420,549 $0 $420,549 
Redemption of fractional shares of common stock and restricted shares(6,672)— (328)— — (328)— (328)
Vesting and conversion of Class B Units52,398 1 921 — — 922 231 1,153 
Redemption of Class A Units37 — — — — — — — 
Equity-based compensation1,828 — 71 — — 71 1,687 1,758 
Net loss— — — — (24,362)(24,362)— (24,362)
  Other comprehensive loss— — — (2,395)— (2,395)— (2,395)
Balance, September 30, 202012,802,690 $129 $686,690 $(3,722)$(288,640)$394,457 $1,918 $396,375 

Nine Months Ended September 30, 2021
Common Stock
Number of
Shares		Par ValueAdditional
Paid-in
Capital		Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, December 31, 202012,802,690 $129 $686,715 $(3,404)$(305,882)$377,558 $4,009 $381,567 
Proceeds from sale of common stock, net466,651 4 4,502 — — 4,506 — 4,506 
Repurchase and cancellation of common stock(26,236)— (183)— — (183)— (183)
Redemption of fractional shares of common stock and restricted shares(13)— — — — — — — 
Redemption of Class A Units13,100 — 230 — — 230 (230)— 
Equity-based compensation21,546 — 80 — — 80 6,276 6,356 
Dividends declared on common stock, $0.10 per share— — — — (3,871)(3,871)— (3,871)
Distributions paid to non-controlling interest holders— — — — (120)(120)— (120)
Net loss— — — — (35,711)(35,711)— (35,711)
  Other comprehensive income— — — 1,074 — 1,074 — 1,074 
Balance, September 30, 202113,277,738 $133 $691,344 $(2,330)$(345,584)$343,563 $10,055 $353,618 

Three Months Ended September 30, 2020
Common Stock
Number of
Shares		Par ValueAdditional
Paid-in
Capital		Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, June 30, 202012,756,927 (1)$128 (1)$686,073 (1)$(3,986)$(276,352)$405,863 $0 $405,863 
Redemption of fractional shares of common stock and restricted shares(6,672)— (328)— — (328)— (328)
Vesting and conversion of Class B Units52,398 1 921 — — 922 231 1,153 
Redemption of Class A Units37 — — — — — — — 
Equity-based compensation— — 24 — — 24 1,687 1,711 
Net loss— — — — (12,288)(12,288)— (12,288)
  Other comprehensive income (loss)— — — 264 — 264 — 264 
Balance, September 30, 202012,802,690 $129 $686,690 $(3,722)$(288,640)$394,457 $1,918 $396,375 

_____

(1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).

Three Months Ended September 30, 2021
Common Stock
Number of
Shares		Par ValueAdditional
Paid-in
Capital		Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, June 30, 202113,065,696 $132 $689,653 $(2,582)$(333,111)$354,092 $7,963 $362,055 
Proceeds from sale of common stock, net212,049 1 1,662 — — 1,663 — 1,663 
Repurchase and cancellation of common stock— — — — — — — — 
Redemption of fractional shares of common stock and restricted shares(7)— — — — — — — 
Equity-based compensation— — 29 — — 29 2,092 2,121 
Dividends declared on common stock, $0.10 per share— — — — (1,309)(1,309)— (1,309)
Distributions paid to non-controlling interest holders— — — — (40)(40)— (40)
Net loss— — — — (11,124)(11,124)— (11,124)
  Other comprehensive income— — — 252 — 252 — 252 
Balance, September 30, 202113,277,738 $133 $691,344 $(2,330)$(345,584)$343,563 $10,055 $353,618 


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


5
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NEW YORK CITY REIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for share data)
(Unaudited)


Nine Months Ended September 30, 2019
Common Stock
Number of
Shares (1)
Par Value(1)
Additional
Paid-in
Capital (1)
Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders' Equity
Balance, December 31, 201812,753,271 $128 $685,940 $0 $(242,388)$443,680 
Equity-based compensation1,828 — 64 — — 64 
Net loss— — — — (15,220)(15,220)
  Other comprehensive loss— — — (1,877)— (1,877)
Balance, September 30, 201912,755,099 $128 $686,004 $(1,877)$(257,608)$426,647 

Nine Months Ended September 30, 2020
Common Stock
Number of
Shares		Par ValueAdditional
Paid-in
Capital		Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders' EquityNon-controlling InterestsTotal Equity
Balance, December 31, 201912,755,099 $128 $686,026 $(1,327)$(264,278)$420,549 $— $420,549 
Redemption of fractional shares of common stock and restricted shares(6,672)— (328)— — (328)— (328)
Vesting and conversion of Class B Units52,398 1 921 — — 922 231 1,153 
Redemption of Class A Units37 — — — — — — — 
Equity-based compensation1,828 — 71 — — 71 1,687 1,758 
Net loss— — — — (24,362)(24,362)— (24,362)
 Other comprehensive loss— — — (2,395)— (2,395)— (2,395)
Balance, September 30, 202012,802,690 $129 $686,690 $(3,722)$(288,640)$394,457 $1,918 $396,375 

Three Months Ended September 30, 2019
Common Stock
Number of
Shares (1)
Par Value(1)
Additional
Paid-in
Capital (1)
Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders' Equity
Balance, June 30, 201912,755,099 $128 $685,980 $(1,330)$(252,799)$431,979 
Equity-based compensation— — 24 — — 24 
Net loss— — — — (4,809)(4,809)
  Other comprehensive loss— — — (547)— (547)
Balance, September 30, 201912,755,099 $128 $686,004 $(1,877)$(257,608)$426,647 
_____
Three Months Ended September 30, 2020
Common Stock
Number of
Shares		Par ValueAdditional
Paid-in
Capital		Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders' EquityNon-controlling InterestsTotal Equity
Balance, June 30, 202012,756,927 $128 $686,073 $(3,986)$(276,352)$405,863 $— $405,863 
Redemption of fractional shares of common stock and restricted shares(6,672)— (328)— — (328)— (328)
Vesting and conversion of Class B Units52,398 1 921 — — 922 231 1,153 
Redemption of Class A Units37 — — — — — — — 
Equity-based compensation— — 24 — — 24 1,687 1,711 
Net loss— — — — (12,288)(12,288)— (12,288)
  Other comprehensive loss— — — 264 — 264 — 264 
Balance, September 30, 202012,802,690 $129 $686,690 $(3,722)$(288,640)$394,457 $1,918 $396,375 
(1)
Retroactively adjusted for the effects of the Reverse Stock Split (see
Note 1).


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




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NEW YORK CITY REIT, INC.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,Nine Months Ended September 30,
2020201920212020
Cash flows from operating activities:Cash flows from operating activities:  Cash flows from operating activities:  
Net lossNet loss$(24,362)$(15,220)Net loss$(35,711)$(24,362)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Adjustments to reconcile net loss to net cash (used in) operating activities:Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortizationDepreciation and amortization24,070 22,771 Depreciation and amortization23,400 24,070 
Amortization of deferred financing costsAmortization of deferred financing costs1,157 919 Amortization of deferred financing costs1,157 1,157 
Accretion of below- and amortization of above-market lease liabilities and assets, netAccretion of below- and amortization of above-market lease liabilities and assets, net(2,807)(1,459)Accretion of below- and amortization of above-market lease liabilities and assets, net(807)(2,807)
Equity-based compensationEquity-based compensation1,758 64 Equity-based compensation6,356 1,758 
Impairments of real estate investmentsImpairments of real estate investments413 — 
Vesting and conversion of Class B UnitsVesting and conversion of Class B Units1,153 0 Vesting and conversion of Class B Units— 1,153 
Changes in assets and liabilities:Changes in assets and liabilities:Changes in assets and liabilities:
Straight-line rent receivableStraight-line rent receivable(3,582)(4,207)Straight-line rent receivable(2,816)(3,582)
Straight-line rent payableStraight-line rent payable82 82 Straight-line rent payable82 82 
Prepaid expenses, other assets and deferred costsPrepaid expenses, other assets and deferred costs(4,232)198 Prepaid expenses, other assets and deferred costs3,891 (4,232)
Accounts payable, accrued expenses and other liabilitiesAccounts payable, accrued expenses and other liabilities(496)(3,060)Accounts payable, accrued expenses and other liabilities(502)(496)
Deferred revenueDeferred revenue1,240 (544)Deferred revenue226 1,240 
Net cash used in operating activitiesNet cash used in operating activities(6,019)(456)Net cash used in operating activities(4,311)(6,019)
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Investments in real estate0 (38,265)
Capital expendituresCapital expenditures(3,162)(5,567)Capital expenditures(1,998)(3,162)
Net cash used in investing activitiesNet cash used in investing activities(3,162)(43,832)Net cash used in investing activities(1,998)(3,162)
Cash flows from financing activities:Cash flows from financing activities:  Cash flows from financing activities:  
Proceeds from mortgage note payable0 55,000 
Payments of financing costs0 (3,948)
Common stock issuance proceeds, netCommon stock issuance proceeds, net5,269 — 
Dividends paid on common stockDividends paid on common stock(3,871)— 
Redemption of fractional shares of common stock and restricted sharesRedemption of fractional shares of common stock and restricted shares(328)0 Redemption of fractional shares of common stock and restricted shares— (328)
Net cash used in financing activities(328)51,052 
Repurchase of common stockRepurchase of common stock(183)— 
Distributions to non-controlling interest holdersDistributions to non-controlling interest holders(120)— 
Net cash provided by (usd in) financing activitiesNet cash provided by (usd in) financing activities1,095 (328)
Net change in cash, cash equivalents and restricted cashNet change in cash, cash equivalents and restricted cash(9,509)6,764 Net change in cash, cash equivalents and restricted cash(5,214)(9,509)
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period58,297 54,801 Cash, cash equivalents and restricted cash, beginning of period39,994 58,297 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$48,788 $61,565 Cash, cash equivalents and restricted cash, end of period$34,780 $48,788 
Cash and cash equivalentsCash and cash equivalents$39,088 $53,818 Cash and cash equivalents$23,169 $39,088 
Restricted cashRestricted cash9,700 7,747 Restricted cash11,611 9,700 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$48,788 $61,565 Cash, cash equivalents and restricted cash, end of period$34,780 $48,788 
Non-Cash Investing and Financing Activities:Non-Cash Investing and Financing Activities:Non-Cash Investing and Financing Activities:
Accrued capital expendituresAccrued capital expenditures294 837 Accrued capital expenditures121 294 
Proceeds from mortgage notes payable used to fund acquisition of real estate0 51,000 
Mortgage notes payable released in connection with acquisition of real estate0 (51,000)

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20202021
(Unaudited)

Note 1 — Organization
New York City REIT, Inc. (including, New York City Operating Partnership L.P., (the “OP”) and its subsidiaries, the “Company”) is aan externally managed real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”) that owns a portfolio of high-quality commercial real estateinvests primarily in office properties located exclusively within the five boroughs of New York City, primarily Manhattan. The Company was formed to invest in office properties and has also purchased certain real estate assets that accompany office properties, including retail spaces and amenities, 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 30, 2020,2021, the Company owned 8 properties consisting of 1.2 million rentable square feet, acquired for an aggregate purchase price of $790.7 million.
TheIn the third quarter of 2021, the Company was incorporated on December 19, 2013 aslaunched Innovate NYC, a Maryland corporation and elected 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 allco-working company, at 1140 Avenue of the Company’s business is conducted throughAmericas, diversifying its strategy into a growing segment of the OP.
The Company has 0 employees. New York City Advisors, LLC (the “Advisor”) manages the Company’s affairs on a day-to-day basis and New York City Properties, LLC (the “Property Manager”) manages the Company’s properties. The Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”), and these entities receive compensation, fees and expense reimbursements for services related to the investment and management of the Company’s assets.real estate market.
On August 5,18, 2020 in anticipation(the “Listing Date”), the Company listed shares of the listing of the Company’s Class A common stock on the New York Stock Exchange (”(“NYSE”) under the symbol “NYC” (the “Listing”),. In anticipation of the Listing, the Company implemented a series of corporate actions involving a 9.72-to-1 reverse stock split, renamed itswhich resulted in the bifurcation of the Company’s common stock asinto Class A common stock and paid a stock dividend of 3 shares of Class B common stock for every one share of Class A common stock outstanding after the reverse stock split, which resultedand in a net reduction of 2.43 shares for every one share of common stock outstanding prior to these corporate actions (the “Reverse Stock Split”). All references made to share or per share amounts as of dates prior to August 5, 2020 in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Reverse Stock Split on that date. For additional information related to these corporate actions, see Note 7 – Stockholders’ Equity.
On August 18, 2020 (the “Listing Date”), the Company completed the Listing. To effect the Listing, and to address the potential for selling pressure that may have existed at the outset of listing,the Listing, the Company listed only shares of Class A common stock, which represented approximately 25% of itsthe Company’s outstanding shares of common stock, on the NYSE on the Listing Date.when trading commenced. The Company’s other class of outstanding stock iswas Class B common stock, which comprised approximately 75% of the Company’sits outstanding shares of common stock at that timtimee.. The outstandingfirst of three equal tranches of shares of Class B common stock will automatically convertthat were not listed on the NYSE on the Listing Date converted into 3,189,204 shares of Class A common stock to beand the shares were listed on the NYSE in three equal tranches on December 16, 2020,2020. On February 26, 2021, the Company’s board of directors approved an advancement of the automatic conversion date for the second tranche of shares of Class B common stock from April 15, 2021 to March 1, 2021. Accordingly, the second tranche of shares of Class B common stock converted into 3,176,127 shares of Class A common stock and were listed on the NYSE on March 1, 2021. Following a determination by our board of directors, third and final tranche of shares of Class B common stock converted into 3,176,114 shares of Class A common stock and were listed on the NYSE on August 13, 2020, unless earlier converted in accordance with their terms.2021. For additional information, see Note 7 – Stockholders’ EquityEquity. .
In connection with the Listing, the Company incurred expenses of $1.3 million for the three and nine months ended September 30, 2020 for financial advisory and other professional fees and expenses. In addition, various other impacts to the Company’s financial statements occurred in connection with the Listing which are discussed throughout these financial statements, including:
•The vesting, conversion and redemption of partnership units in the OP designated as “Class B Units” (“Class B Units”) held by the Advisor for shares of Class A common stock (seeNote 7 – Stockholders’ Equity and Note 9 – Related Party Transactions).
•The redemption of units of limited partnership in the OP designated as “Class A Units,” which were formerly known as OP Units (”Class A Units”), held by the Advisor, for shares of Class A common stock (seeNote 7 – Stockholders’ Equity and Note 9 – Related Party Transactions).
•The Company entered into the Listing Note (as defined herein) with the Advisor (see Note 9 – Related Party Transactions).
•The advisory agreement with the Advisor was amended to lower the quarterly thresholds the Company must reach on a quarterly basis for the Advisor to receive a variable management fee (see Note 9 – Related Party Transactions – “Asset Management Fees and Variable Management/Incentive Fees”).
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September 30, 2020
(Unaudited)
•The issuance of an equity award to the Advisor under the 2020 OPP (as defined herein) (see Note 11 - Equity-Based Compensation, and Note 12 - Net Loss Per Share).
•The amendment and restatementSubstantially all of the Company’s distribution reinvestment plan (see Note 7 – Stockholders’ Equity).
•business is conducted through the OP and its wholly-owned subsidiaries. The amendment and restatementCompany’s advisor, New York City Advisors, LLC (the “Advisor”), manages the Company’s day-to-day business with the assistance of the limited partnership agreement ofCompany’s property manager, New York City Properties, LLC (the “Property Manager”). The 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 the OP (as so amended and restated, the “A&R OP Agreement”) (see Note 9 – Related Party Transactions).Company. The Company also reimburses these entities for certain expenses they incur in providing these services.
Note 2 — Summary of Significant Accounting Policies
Basis of Accounting
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”) 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 statement of results for the interim periods. The results of operations for the three and nine months ended September 30, 20202021 and 20192020 are not necessarily indicative of the results for the entire year or any subsequent interim period.
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September 30, 2021
(Unaudited)
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, 2019,2020, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 19, 2020.29, 2021. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2020.2021.
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.
Use of Estimates
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.
Out-of-period adjustments
During the fourth quarter of 2020, the Company recorded an adjustment to reduce interest expense by approximately $0.6 million related to certain historical errors that occurred in the first, second and third quarters of 2020. The amounts, which totaled $0.1 million, $0.2 million, and $0.3 million for the first, second, and third quarters of 2020, respectively, were incorrectly calculated, resulting in an overstatement of interest expense in those periods. The Company concluded that the errors noted above were not material to the current period or any historical periods presented and, accordingly, the Company adjusted the amounts on a cumulative basis in the fourth quarter of 2020.
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. Prior to the Listing, the Advisor held 37 units of limited partnership designated as “Class A Units” (“Class A Units,Units”), after giving effect to the Reverse Stock Split, which represented a nominal percentage of the aggregate OP ownership. These Class A Units were redeemed for an equal number of shares of Class A common stock on the Listing Date. As of December 31, 2020, 13,100 Class A Units held by a third party were still outstanding and represented a non-controlling interest in the OP. During the second quarter of 2021, the 13,100 Class A Units that were held by a third party were redeemed for an equal number of shares of Class A common stock.
In addition, under the multi-year outperformance agreement with the Advisor (the “2020 OPP”), the OP issued a new 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 September 30, 2021 and December 31, 2020. See Note 7 - Stockholders’ Equity and Note 11 - Equity-Based Compensation for additional information on amounts recorded in non-controlling interests during the thirdfirst quarter of 2020.
Reclassifications
Certain amounts have been reclassified to conform to the current period presentation:
•The Company currently presents equity-based compensation on its own line item in the consolidated statements of operations, which was previously presented in general and administrative expenses.
•In the third quarter of 2020, the Company reclassified professional fees related to the Listing of $0.1 million, which were previously recorded in general and administrative expenses in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, to listing expenses in the Company’s consolidated statements of operations. For additional information on total listing expenses, see Note 1 — Organization.
•In the third quarter of 2020, the Company reclassified professional fees related to potential equity offerings of $0.2 million, which were previously recorded in general and administrative expenses in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, to prepaid expenses and other assets in the Company’s
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September 30, 2020
(Unaudited)
consolidated balance sheets. For additional information on potential equity offerings, see Note 7 — Stockholders’ Equity.
•The Company currently presents straight-line rent receivable and straight-line rent payable on its own line items in the consolidated statement of cash flows and consolidated balance sheets, which was previously included within prepaid expenses and other assets.2021.
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, there was athe global outbreak of COVID-19 which became a global pandemic that has spread around the world and to every state in the United States.States commenced. The pandemic has had and could continue to have an adverse impact on economic and market conditions and triggered a period of global economic slowdown. The ongoing vaccine hesitancy and resistance in certain segments of the population and the recent spread of more transmissible COVID -19 variants could result in restrictions being re-imposed or otherwise disrupt the reopening plans of some offices and businesses. The continued rapid development and
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September 30, 2021
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fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions.
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 September 30, 2020.2021. However, given the rapid evolution of the COVID-19 pandemic and the global response to curb its spread, these estimates and assumptions as of September 30, 20202021 are inherently less certain than they would be absent the actual and potential impacts of the COVID-19 pandemic. Actual results may ultimately differ from those estimates.
New York City, where all the Company’s properties are located, has been among the hardest hit locations in the country andcountry. Although New York City has lifted most COVID-19 restrictions on businesses, many offices have not yet fully reopened. The Company’s properties remain accessible to all tenants, although, even as operating restrictions expire,have expired, not all tenants have resumed in person operations. In addition, as operating restrictions expire, operating costs may begin to rise, including for services, labor and personal protective equipment and other supplies, as the Company’s property managers take appropriate actions to protect tenants and property management personnel. Some of these costs may be recoverable through reimbursement from tenants but others will be borne by the Company. 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. In the fourth quarter of 2020, the Company put Knotel on a cash basis of accounting and fully reserved all receivables from Knotel with the exception of security deposits held, which was reflected as a reduction in revenue from tenants during the period ended December 31, 2020. 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. 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.
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 has impacted the ability of some of the Company’s tenants to pay their monthly rent either temporarily or in the long term. During the year ended December 31, 2020, the Company reduced revenue from tenants by $8.5 million for reserves recorded during the period on receivables for which the related tenants have been put on a cash basis. The Company has experiencedcontinued to experience delays in rent collections induring 2021. In the second and third quartersfirst nine months of 2020.2021, there has been no rental income received from any of the tenants that were previously placed on a cash basis. The Company has taken a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, in the second2020 and third quarters of 2020,2021, the Company has executed different types of lease amendments. These agreements includeincluded deferrals and abatements and, also may includein some cases, extensions to the term of the leases. In the first nine months of 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.
As a result of the financial difficulties of the Company’s tenants and early lease terminations, the Company is in breach of debt covenants on mortgages secured by its 1140 Avenue of Americas, 9 Times Square, Laurel/Riverside and 8713 Fifth Avenue properties under the non-recourse mortgages for those properties. These breaches caused cash trap events, but not events of default. The Company believes that it has breached certain covenants related to its 9 Times Square property for the quarter ended September 30, 2021, however the formal reporting to the lender will not occur until late November 2021. See Note 4 - Mortgage Notes Payable, Net for further details regarding these breaches.
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 FASB and SEC have provided relief that allows companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification. In order to be 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 such rent deferrals or abatements under the relief, (1) as if the changes were originally contemplated in the lease contract or (2) as if the deferred payments are variable lease payments contained in
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September 30, 2021
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the lease contract. For all other lease changes that did not qualify for FASB relief, the Company would 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 has applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.
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Revenue Recognition
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 September 30, 2020,2021, these leases had a weighted-average remaining lease termterm of 7.5 years. Because6.8 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. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For comparative purposes, the Company reflected prior revenue and reimbursements reported under ASC 842 also on a single line. For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.    
The Company 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 is probable that itthe Company will collect virtually all of the lease payments 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 2020 and 2021, this 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 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 the lease accounting rules the Company records uncollectable amounts as reductions in revenue from tenants. During the three and nine months ended September 30, 2021, the Company had no such reductions in revenue which excludes rents from tenants on a cash basis not collected. During the three and nine months ended September 30, 2020, the Company reduced lease incorevenue from tenantsme by $0.4 million and $0.5 million, respectively, for amounts deemed uncollectable during the period. There were 0 such reductionsreserves recorded during the three orperiod on receivables for which the related tenants have been put on a cash basis (see accounting policy above). During the year ended December 31, 2020, the Company reduced revenue from tenants by $8.5 million for reserves recorded during the period on receivables for which the related tenants have been put on a cash basis. In the first nine months ended of 2021, no rental income was received from any of the tenants that were previously placed on a cash basis.


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September 30, 2019.2021
(Unaudited)
Accounting for Leases
Lessor Accounting
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.
Lessee Accounting
For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. 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 over the term of the 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. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the
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September 30, 2020
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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, see Note 8 - Commitments and Contingencies.
Recently Issued Accounting Pronouncements
Adopted as of January 1, 2020:2020
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the amended standard requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. The new guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amended guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): FacilitationPending Adoption as of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate (“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 derivatives consistent with past presentation. We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.September 30, 2021
In August 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 for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The standardASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The standard allows for either modified or full retrospective transition methods. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.
Note 3 — Real Estate Investments
There were no real estate assets acquired or liabilities assumed duringIn March 2020, the three or nine monthsFASB 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 March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the year ended September 30, 2020. In July 2019,December 31, 2020, the Company acquiredelected to apply the property commonly known as “196 Orchard Street.” The following table presents allocationhedge accounting expedients related to (i) the assertion that the Company’s hedged forecasted transactions remain probable and (ii) the assessments of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2019.
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September 30, 20202021
(Unaudited)
(Dollar amounts in thousands)Nine Months Ended September 30, 2019
Real Estate investments, at cost:
Land$55,548 
Buildings and improvements24,324 
Total tangible assets79,872 
Acquired intangible assets (1) :
In-place leases and other intangible assets7,852 
Market lease intangibles1,541 
Total intangible assets9,393 
Total assets acquired89,265 
Mortgage note payable used to acquireeffectiveness 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 investment
(51,000)
Cash paid for acquired real estate investment$38,265 
(1) Weighted-average remaining amortization periods for in-place leases and market lease and other intangible assets acquired or liabilities assumed during the three and nine months ended September 30, 20192021 or 2020. Also, there were 13.4 yearsno dispositions of real estate during the three and 13.4 years, respectively, as of the acquisition date.
Included in other income for the nine month periodmonths ended September 30, 2020,2021 or 2020. However, the Company is approximately $0.6evaluating 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 September 30, 2021. However, during the third quarter of 2021, the Company recorded an impairment charge of $0.4 million in income related to for this property as it was determined that the retentioncarrying value exceeded the Company’s most recent estimate of a deposit forfeited by the buyer in the potential salefair market value of the property commonly known as the “HIT Factory” under a purchase agreement which expired in April 2020.of September 30, 2021.
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Significant Tenants
As of September 30, 20202021 and December 31, 2019,2020, there were no tenants whose annualized rental income on a straight-line basis, based on leases commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.
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,Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2020201920202019
2021202020212020
In-place leases (1)
In-place leases (1)
$2,569 $2,288 $6,567 $6,761 
In-place leases (1)
$1,848 $2,569 $4,714 $6,567 
Other intangiblesOther intangibles291 291 874 874 Other intangibles177 291 760 874 
Total included in depreciation and amortizationTotal included in depreciation and amortization$2,860 $2,579 $7,441 $7,635 Total included in depreciation and amortization$2,025 $2,860 $5,474 $7,441 
Above-market lease intangibles (1)
Above-market lease intangibles (1)
$369 $344 $939 $1,016 
Above-market lease intangibles (1)
$262 $369 $800 $939 
Below-market lease liabilities (1)
Below-market lease liabilities (1)
(936)(922)(3,783)(2,511)
Below-market lease liabilities (1)
(642)(936)(1,644)(3,783)
Total included in revenue from tenantsTotal included in revenue from tenants$(567)$(578)$(2,844)$(1,495)Total included in revenue from tenants$(380)$(567)$(844)$(2,844)
Below-market ground lease, included in property operating expensesBelow-market ground lease, included in property operating expenses$12 $12 $37 $36 Below-market ground lease, included in property operating expenses$12 $12 $37 $37 
(1)During the nine months ended September 30, 2021, in connection with three leases that were terminated during the third quarter of 2021, the Company wrote off approximately $0.7 million of in-place lease intangibles related to one of the leases that was terminated, which was included in depreciation and amortization expense in the consolidated statement of operations. Additionally, in connection with the same lease terminations, the Company wrote off approximately $0.2 million of below-market lease intangibles for nine months ended September 30, 2021, which was included in revenue from tenants in the consolidated statement of operations.
During the three and nine months ended September 30, 2020, in connection with 3 leases that were terminated during the third quarter of 2020, the Company wrote off approximately $3.2 million of in-place lease intangibles, which was included in depreciation and amortization expense in the consolidated statement of operations. Additionally, in connection with the same lease terminations, the Company wrote off approximately $1.9 million of below-market lease intangibles and $0.2 million of above-market lease intangibles during the three and nine months ended September 30, 2020, which was included in revenue from tenants in the consolidated statement of operations. During
In addition, during the nine months ended September 30, 2020, in connection with a lease that was terminated during the second quarter of 2020, the Company also wrote off approximately $0.6 million of in-place lease intangibles, which was included in depreciation and
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September 30, 2020
(Unaudited)
amortization expense in the consolidated statement of operations, and $2.3$2.3 million of below-market lease intangibles, which was included in revenue from tenants in the consolidated statement of operations.

The following table provides the projected amortization expense and adjustments to revenues for the next five years as of September 30, 2020:
(In thousands)2020 (remainder)2021202220232024
In-place leases$1,722 $5,867 $4,751 $3,513 $2,762 
Other intangibles291 937 708 708 708 
Total to be included in depreciation and amortization$2,013 $6,804 $5,459 $4,221 $3,470 
Above-market lease assets$285 $1,079 $991 $842 $512 
Below-market lease liabilities(605)(2,168)(1,677)(1,452)(1,422)
Total to be included in revenue from tenants$(320)$(1,089)$(686)$(610)$(910)
2021:
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September 30, 2021
(Unaudited)
(In thousands)2021 (remainder)2022202320242025
In-place leases$1,297 $4,592 $3,354 $2,603 $1,469 
Other intangibles177 708 708 708 708 
Total to be included in depreciation and amortization$1,474 $5,300 $4,062 $3,311 $2,177 
Above-market lease assets$262 $974 $825 $495 $206 
Below-market lease liabilities(454)(1,657)(1,427)(1,397)(1,024)
Total to be included in revenue from tenants$(192)$(683)$(602)$(902)$(818)
Write-off of Deferred Leasing Commissions
In January 2021, the Company’s former tenant, Knotel, filed for bankruptcy and all leases with the Company were terminated effective January 31, 2021. As a result of these terminations, the Company wrote-off $1.3 million of deferred leasing costs in the first quarter of 2021, which are included in depreciation and amortization expense in our consolidated statement of operations for the nine months ended September 30, 2021.
Write-off of Tenant Improvements
During the third quarter of 2021, a tenant on the health club business terminated a lease at the Company’s 9 Times Square property. As a result, The Company determined that certain of the improvements no longer had any value in connection with any foreseeable replacement tenant and wrote off approximately $0.3 million which is recorded in depreciation and amortization expense in the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2021.
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September 30, 20202021
(Unaudited)






Note 4 — Mortgage Notes Payable, Net
The Company’s mortgage notes payable, net as of September 30, 20202021 and December 31, 20192020 are as follows:
Outstanding Loan AmountOutstanding Loan Amount
PortfolioPortfolioEncumbered PropertiesSeptember 30,
2020		December 31,
2019		Effective Interest RateInterest RateMaturityPortfolioEncumbered PropertiesSeptember 30,
2021		December 31,
2020		Effective Interest RateInterest RateMaturity
(In thousands)(In thousands)(In thousands)(In thousands)
123 William Street (1)
123 William Street (1)
1$140,000 $140,000 4.74 %FixedMar. 2027
123 William Street (1)
1$140,000 $140,000 4.73 %FixedMar. 2027
1140 Avenue of the Americas(2)1140 Avenue of the Americas(2)199,000 99,000 4.18 %FixedJul. 20261140 Avenue of the Americas(2)199,000 99,000 4.17 %FixedJul. 2026
400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage(2)400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage(2)250,000 50,000 4.59 %FixedMay 2028400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage(2)250,000 50,000 4.58 %FixedMay 2028
8713 Fifth Avenue(2)8713 Fifth Avenue(2)110,000 10,000 5.05 %FixedNov. 20288713 Fifth Avenue(2)110,000 10,000 5.04 %FixedNov. 2028
9 Times Square(2)9 Times Square(2)155,000 55,000 3.73 %Fixed(2)Apr. 20249 Times Square(2)155,000 55,000 3.72 %Fixed(3)Apr. 2024
196 Orchard Street196 Orchard Street151,000 51,000 3.91 %FixedAug. 2029196 Orchard Street151,000 51,000 3.90 %FixedAug. 2029
Mortgage notes payable, grossMortgage notes payable, gross7405,000 405,000 4.35 %Mortgage notes payable, gross7405,000 405,000 4.35 %
Less: deferred financing costs, net (3)(4)
Less: deferred financing costs, net (3)(4)
(8,812)(9,969)
Less: deferred financing costs, net (3)(4)
(7,269)(8,426)
Mortgage notes payable, netMortgage notes payable, net$396,188 $395,031 Mortgage notes payable, net$397,731 $396,574 
_____________________
(1)As of September 30, 2020, $2.52021, $2.7 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.
(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. See “Collateral and Interest Payments” section below for additional details.
(3)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 September 30, 20202021 (see Note 6 — Derivatives and Hedging Activities).
(3)(4)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.

Nationwide Life Insurance Company Loan
On July 17, 2019, the Company, through the OP, entered into a loan agreement with Nationwide Life Insurance Company for a $51.0 million loan in connection with the acquisition of 196 Orchard Street. The loan bears interest at a fixed rate of 3.85% and matures on August 1, 2029. The loan requires monthly interest-only payments, with the principal balance due on the maturity date, and is secured by, among other things, a first mortgage on the property. The Company has guaranteed, (i) at all times, certain enumerated recourse liabilities of the borrower under the agreement, and (ii) from and after certain events of defaults and other breaches under the agreement and other loan documents (including bankruptcies or similar events), payment of all amounts due to the lender in respect of the loan.
Capital One Loan
On April 26, 2019, the Company, through the OP, entered into a term loan agreement with Capital One, National Association, as administrative agent, and the other lenders party thereto for a $55.0 million loan with an interest rate fixed at 3.67% by a swap agreement. The loan has a maturity date of April 26, 2024, and requires monthly interest-only payments, with the principal balance due on the maturity date. The loan is secured by, among other things, a mortgage lien on the Company’s previously unencumbered 9 Times Square property. The Company has guaranteed certain enumerated recourse liabilities of the borrower under the agreement and the guaranty requires the Company to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets of $10.0 million.
Collateral and Principal Payments
Real estate assets and intangible assets of $827.8$829.3 million,, at cost (net of below-market lease liabilities), at September 30, 20202021 have been pledged as collateral to the Company’s mortgage notes payable and are not available to satisfy the Company’s other obligations unless first satisfying the mortgage note payable on the property. The Company is required to make payments of interest on its mortgage notes payable on a monthly basis.
The following table summarizes the scheduled aggregate principal payments subsequent to September 30, 2021:
(In thousands)Future Minimum Principal Payments
2021 (remainder)$— 
2022— 
2023— 
202455,000 
2025— 
Thereafter350,000 
Total$405,000 



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20202021
(Unaudited)

Debt Covenants





9 Times Square
The following table summarizesCompany has breached both a debt service coverage and a debt yield covenant under the scheduled aggregatenon-recourse mortgage loan secured by 9 Times Square for each of the quarters ended December 31, 2020, March 31, 2021 and June 30, 2021. The principal payments subsequent toamount of the loan was $55.0 million as of September 30, 2020:2021. The breaches, while not events of default, have 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.
(In thousands)Future Minimum Principal Payments
2020 (remainder)$0 
20210 
20220 
20230 
202455,000 
Thereafter350,000 
Total$405,000 

The Company also believes that it has breached these covenants for the quarter ended September 30, 2021, however the formal reporting to the lender will not occur until late November 2021. If the lender then determines at that time that Company has breached the covenants during the quarter ended September 30, 2021, as the Company anticipates the lender will determine, the quarter ended September 30, 2021 would be the fourth consecutive quarter the Company has been in breach. This would cause an event of default to occur if the Company does not “right size” the loan by either (i) repaying a significant portion of the loan or (ii) providing 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.
The Company has actively engaged in discussions with the lender to seek relief in relation to the “right size” requirement in the loan and the associated default. There is no assurance the Company will be able to reach a satisfactory agreement with the lender or make a significant repayment of principal (the exact amount of which cannot be estimated presently) 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 substantial principal repayment would significantly impact the Company’s mortgage notes payable require compliance with certain property-levelcapital resources which could have a material adverse effect on the Company’s ability to fund its operating expenses (including debt covenants. service obligations), acquisitions, capital expenditures and dividends to the holders of shares of the Company’s Class A common stock.
1140 Avenue of the Americas
The Company is currently in breach ofhas breached both a debt service coverage provision and a reserve fund reserve provision under its non-recourse mortgage secured by the 1140 Avenue of the Americas property.property in each of the last five quarters. The principal amount of the loan was $99.0 million as of September 30, 2021. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after payment ofpaying 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 September 30, 2021, the Company has $5.2 million in cash that is retained by the lender and maintained in restricted cash.
400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage
The Company has 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 principal amount of the loan was $50.0 million as of September 30, 2021. The two parking garage tenants at this property have not paid rent in accordance with their lease agreements for 18 months and were placed on a cash basis in the fourth quarter of 2020. The Company’s breaches of the debt services coverage covenant are not events of default but rather require 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. The covenant may be cured after achieving two consecutive quarters when the required debt service coverage for the property is maintained, whereupon the additional collateral will be released. Currently, the Company has not cured the breaches through any other means. maintained. The Company can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications.
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 and third quarters of 2021. The principal amount for the loan was in compliance with the remaining covenants under its mortgage notes payable$10.0 million as of September 30, 2020.


2021. 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. The Company has 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 remains in breach at or below the current
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September 30, 20202021
(Unaudited)
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.
Other Debt Covenants
The Company was in compliance with the remaining covenants under its other mortgage notes payable as of September 30, 2021, 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
In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline, announcing that it will cease the publication of the one-week and two-month USD LIBOR settings immediately following December 31, 2021. The remaining USD LIBOR settings will continue to be published through June 30, 2023. The Company is not able to predict when there will be sufficient liquidity in the SOFR market. The Company is monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate. While the Company expects LIBOR to be available in substantially its current form until at least June 30, 2023, it is possible that LIBOR will become unavailable prior to that time. This could occur, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator.
The Company has a mortgage loan agreement and a related derivative agreement for a “pay-fixed” swap that have terms based on LIBOR. Those agreements have alternative rates already contained in the agreements, and the Company anticipates that it will either utilize the alternative rates contained in the agreements or negotiate a replacement reference rate for LIBOR with the lenders and derivative counterparties.
Note 5 — 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:
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 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)
Financial Instruments CarriedMeasured at Fair Value on a Recurring Basis
Derivative Instruments
The following table presents information about the Company’s assets and liabilitiesderivative instruments are measured at fair value on a recurring basis. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, 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 September 30, 20202021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and December 31, 2019.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.
(In thousands)Quoted Prices
in Active
Markets
Level 1		Significant Other
Observable
Inputs
Level 2		Significant
Unobservable
Inputs
Level 3		Total
September 30, 2020    
Interest rate “Pay - Fixed” swaps - liabilities$0 $(3,722)$0 $(3,722)
Total$0 $(3,722)$0 $(3,722)
December 31, 2019
Interest rate “Pay - Fixed” swaps - liabilities$0 $(1,327)$0 $(1,327)
Total$0 $(1,327)$0 $(1,327)
The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.
(In thousands)Quoted Prices
in Active
Markets
Level 1		Significant Other
Observable
Inputs
Level 2		Significant
Unobservable
Inputs
Level 3		Total
September 30, 2021    
Interest rate “Pay - Fixed” swaps - liabilities$— $(2,330)$— $(2,330)
Total$— $(2,330)$— $(2,330)
December 31, 2020
Interest rate “Pay - Fixed” swaps - liabilities$— $(3,405)$— $(3,405)
Total$— $(3,405)$— $(3,405)

Financial Instruments Not Carriedthat are not Reported at 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 may differ fromis deemed to be equivalent to its carrying value due to wideningbecause 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)
The fair values of the Company’s financial instruments that are not reported at fair value on the consolidated balance sheet are reported below:
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September 30, 2020
(Unaudited)
September 30, 2020December 31, 2019
(In thousands)LevelGross Principal Balance Fair ValueGross Principal BalanceFair Value
Mortgage note payable — 123 William Street3$140,000 $148,946 $140,000 $151,428 
Mortgage note payable — 1140 Avenue of the Americas399,000 102,114 99,000 103,340 
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage350,000 52,876 50,000 53,951 
Mortgage note payable — 8713 Fifth Avenue310,000 10,908 10,000 11,175 
Mortgage note payable — 9 Times Square355,000 51,916 55,000 54,759 
Mortgage note payable — 196 Orchard Street351,000 49,181 51,000 52,369 
Total$405,000 $415,941 $405,000 $427,022 

September 30, 2021December 31, 2020
(In thousands)LevelGross Principal Balance Fair ValueGross Principal BalanceFair Value
Mortgage note payable — 123 William Street3$140,000 $146,759 $140,000 $149,733 
Mortgage note payable — 1140 Avenue of the Americas399,000 101,332 99,000 102,849 
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage350,000 51,868 50,000 53,087 
Mortgage note payable — 8713 Fifth Avenue310,000 10,650 10,000 10,937 
Mortgage note payable — 9 Times Square355,000 53,322 55,000 52,504 
Mortgage note payable — 196 Orchard Street351,000 50,259 51,000 49,250 
Total$405,000 $414,190 $405,000 $418,360 
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.
On March 28, 2019, the Company entered into a forward starting five-year interest rate swap which became effective on May 1, 2019. The Company entered into this derivative in order to lock-in and swap the floating rate interest on its term loan encumbering the Company’s 9 Times Square property to a fixed rate. Upon entering into the swap, the Company paid a deposit of $0.8 million which was refunded at the closing of the new financing for the 9 Times Square property effective as of April 26, 2019.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance SheetCompany’s consolidated balance sheets as of September 30, 20202021 and December 31, 2019.2020.
(In thousands)(In thousands)Balance Sheet LocationSeptember 30,
2020		December 31, 2019(In thousands)Balance Sheet LocationSeptember 30,
2021		December 31, 2020
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Interest Rate “Pay-fixed” SwapInterest Rate “Pay-fixed” SwapDerivative liability, at fair value$(3,722)$(1,327)Interest Rate “Pay-fixed” SwapDerivative liability, at fair value$(2,330)$(3,405)
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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(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 three and nine months ended September 30, 20202021 and year ended December 31, 2019,2020, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)
Amounts reported in accumulated other comprehensive 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 $1.1$1.1 million will be reclassified from other comprehensive loss as an increase to interest expense.
As of September 30, 20202021 and December 31, 2019,2020, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk.
September 30, 2020December 31, 2019
Interest Rate DerivativeNumber of
Instruments		Notional AmountNumber of
Instruments		Notional Amount
(In thousands)(In thousands)
Interest Rate “Pay-fixed” Swap1$55,000 1$55,000 

September 30, 2021December 31, 2020
Interest Rate DerivativeNumber of
Instruments		Notional AmountNumber of
Instruments		Notional Amount
(In thousands)(In thousands)
Interest Rate “Pay-fixed” Swap1$55,000 1$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 September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)(In thousands)2020201920202019(In thousands)2021202020212020
Amount of loss recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)$(18)$(537)$(2,978)$(1,840)
Amount of loss reclassified from accumulated other comprehensive loss into income as interest expense$(283)$10 $(583)$37 
Amount of gain (loss) recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)Amount of gain (loss) recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)$(40)$(18)$213 $(2,978)
Amount of gain (loss) reclassified from accumulated other comprehensive loss into income as interest expenseAmount of gain (loss) reclassified from accumulated other comprehensive loss into income as interest expense$(292)$(283)$(861)$(583)
Total interest expense recorded in consolidated statements of operations and comprehensive lossTotal interest expense recorded in consolidated statements of operations and comprehensive loss$5,089 $4,681 $14,915 $12,310 Total interest expense recorded in consolidated statements of operations and comprehensive loss$4,803 $5,089 $14,279 $14,915 
Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 20202021 and December 31, 2019.2020. 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 AssetsGross Amounts of Recognized (Liabilities)Gross Amounts Offset on the Balance SheetNet Amounts of Assets (Liabilities) Presented on the Balance SheetFinancial InstrumentsCash Collateral Received (Posted)Net Amount
September 30, 2020$0 $(3,722)$0 $(3,722)$0 $0 (3,722)
December 31, 2019$0 $(1,327)$0 $(1,327)$0 $0 (1,327)
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September 30, 2020
(Unaudited)
Gross Amounts Not Offset on the Balance Sheet
(In thousands)Gross Amounts of Recognized AssetsGross Amounts of Recognized (Liabilities)Gross Amounts Offset on the Balance SheetNet Amounts of Assets (Liabilities) Presented on the Balance SheetFinancial InstrumentsCash Collateral Received (Posted)Net Amount
September 30, 2021$— $(2,330)$— $(2,330)$— $— (2,330)
December 31, 2020$— $(3,405)$— $(3,405)$— $— (3,405)
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.
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September 30, 2021
(Unaudited)
As of September 30, 2020,2021, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $3.7 million.$2.5 million. As of September 30, 2020,2021, 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 $3.7 million.$2.5 million.
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September 30, 2020
(Unaudited)
Note 7 — Stockholders’ Equity
As of September 30, 20202021 and December 31, 2019,2020, the Company had 13.3 million and 12.8 million shares of common stock outstanding, after giving effect to the Reverse Stock Split (see Note 1 — Organization for additional details),respectively, including unvested restricted shares and shares issued pursuant to the DRIP.shares. As of September 30, 2020, following a series2021, all of corporate actions duringthe Company’s shares of common stock outstanding was Class A common stock, including unvested restricted shares. On August 202013, 2021, all of the remaining shares of Class B common stock were converted into shares of Class A common stock and were listed on the NYSE, resulting in no Class B common stock outstanding as described in more detail below,of September 30, 2021.
As of December 31, 2020, the Company’s shares of common stock outstanding was comprised of 3.26.4 million shares of Class A common stock, including unvested restricted shares, and 9.66.4 million shares of Class B common stock, including unvested restricted shares. Except with respect to listing and conversion as described in Note 1 - Organization, shares of Class B common stock havehad identical preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption as the shares of Class A common stock. Accordingly, the shares of Class A common stock and the Class B common stock are reflected collectively as “common stock” on a combined basis in the financial statements.statements as of December 31, 2020.
On February 27, 2018, the Company’s board of directors unanimously authorized a suspension of the distributions that the Company pays to holders of the Company’s common stock, effective as of March 1, 2018. As a result, the Company did not pay distributions during the year ended December 31, 2019 or the three or nine months ended September 30, 2020. In connection withFollowing the Listing, the Company announced its board of directors’ intention to reinstatereinstated distributions to the Company’s common stockholders in the amount of $0.40 per share ($0.10 per share, per quarter) of common stock per year. The reinstated distributions are to be year, payable as dividends in arrears on a quarterly basis to holders of record on a single quarterly record date. The first dividend was declared on October 1, 2020 and paid on October 15, 2020 in a partial quarterly amount equal to $0.04889 per share of common stock covering the period from the Listing Date through September 30, 2020 (see Note 13 —2020. Subsequent Events).dividends have been declared and paid in the quarterly amount of $0.10 per share.
Corporate Actions
In order to effect the Listing, the Company took the following corporate actions on August 5, 2020, which resulted in a net reduction of 2.43 for every one share of common stock:
•amended its charter to effect a 9.72-to-1 reverse stock split combining every 9.72 shares of the Company’s common stock, par value $0.01 per share, into one share of common stock, par value $0.0972 per share;
•amended its charter to reduce the par value of the shares of common stock outstanding after the reverse stock split from $0.0972 per share to $0.01 per share and rename the common stock “Class A common stock;”
•reclassified 9,750,000 authorized but unissued shares of Class A common stock (equal to approximately three times the number of shares of Class A common stock then issued and outstanding) into shares of Class B common stock, par value $0.01 per share; and
•declared and paid a stock dividend of 3 shares of Class B common stock to every holder of record of Class A common stockstock.
In connection with the Listing, the Company repurchased 6,672 fractional shares of common stock for $0.3 million.
Listing Impacts
On the Listing Date, the following events impacted the Company’s common shares outstanding:
•65,498 Class B Units were converted into Class A Units, of which 52,398 of these Class A Units then held by the Advisor, were subsequently redeemed for an equal number of shares of Class A common stock (see Note 9 — Related Party Transactions and Arrangements for additional information on the Class B Units). As a result, the Company recorded expense of $1.2 million, resulting in an increase to total stockholders’ equity of $0.9 million and an increase to non-controlling interests of $0.2 million with respect to the remaining 13,100 Class A Units that were still held by a third party and not redeemed as of September 30,December 31, 2020. The remaining Class A Units were subsequently submittedredeemed for an equal
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September 30, 20202021
(Unaudited)
redemption for an equal number of shares of Class A common stock during the second quarter of 2021, resulting in October 2020 that are scheduleda decrease to be issued in November 2020.non-controlling interests of $0.2 million.
•37 Class A Units, which were held by the Advisor, were redeemed for an equal number of shares of Class A common stock.stock at year ended December 31, 2020.
Equity Offerings
Class A Common Stock
On October 1, 2020, the Company entered into an Equity Distribution Agreement, under which the Company may, from time to time, offer, issue and 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”). Under SEC rules, as long as
During the aggregate market value of outstanding Class A common stock held by non-affiliates, or public float, remains below $75.0 million, the maximum aggregate offering amount of the shares sold pursuant to the Common Stock ATM Program will be $18.7 million. The Company will be able to offer and sell shares in excess of $18.7 million once the Company’s public float has increased orthree months ended September 30, 2021, the Company is no longer subject to this limit.
The Company has not yet sold any212,049 shares of Class A common stock through the CommonCommon Stock ATM Program however, duringfor gross proceeds of $1.9 million, before commissions paid of $19,000 and issuance costs of $0.3 million. During the nine months ended September 30, 2020,2021, the Company incurredsold 466,651 shares of Class A common stock through the Common Stock ATM Program for gross proceeds of $5.3 million, before commissions paid of $53,000 and issuance costs of $0.8 million.
In total, the Company had incurred $1.0 million in costs related to the establishment of the Common Stock ATM Program. Since no proceeds have been received under the Common Stock ATM Program as of September 30, 2020, these costs are currently being deferred, and arewhich were all initially recorded in prepaid expenses and other assets on our consolidated balance sheet. Upon receiving proceeds under the Common Stock ATM Program in the second and third quarters of 2021, the Company reclassified $0.5 million and $0.3 million of these prepaid costs to additional paid in capital during the second and third quarters of 2021, respectively, in the Company’s consolidated balance sheetstatement of changes in equity as a reduction of September 30, 2020.the gross proceeds received under the Common Stock ATM Program. The Company will continue to assess the probability of receiving proceeds under the Common Stock ATM Program each reporting period and if it becomes probable that no proceeds will reclassbe received, it will expense the prepaid balance to additional paid in capital in the Company’s consolidated statement of changes equity, in the period in which proceeds are received, as a reduction of the gross proceeds received under the Common Stock ATM Program.remaining amounts deferred.
Authorized Repurchase Program
The Company’s directors has 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. 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 and alternative uses such as acquisitions. Repurchases 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. NaNNo shares have been repurchased duringsince the three and nine months ended September 30, 2020.Company’s directors adopted the resolution.
Terminated Share Repurchase ProgramTender Offer
The Company had a share repurchase program (the “SRP”) that enabled qualifying stockholders, subjectOn December 28, 2020, in response to certain conditions and limitations, to sell their sharesan unsolicited offer to the Company.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 Company suspended the SRP effective September 25, 2018. In connection with the Listing, the SRP automatically terminatedDecember Offer expired on January 27, 2021 and, in accordance with its terms. Thethe terms of the December offer, the Company had repurchased 518,409purchased 26,236 shares (adjustedof Class B common stock for a total cost of approximately $0.2 million, including fees and expenses relating to the Reverse Stock Split) at a weighted-average price per share of $53.53 (adjusted for the Reverse Stock Split)tender offer, with cash on a cumulative basis under the SRP.hand in February 2021.
Stockholder Rights Plan
In May 2020, the Company announced that its board of directors had 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 amended and restated rights agreement, which amended and restated the stockholders rights plan approved in May 2020 and declared a dividend payable in August 2020, of one Class A right for and on each share of Class A common stock 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 one one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”), of the 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 expiration date of these rights was extended from August 16, 2021 to August 16, 2022.

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September 30, 20202021
(Unaudited)
Distribution Reinvestment Plan
Until August 28, 2020, the Company had a distribution reinvestment plan (“DRIP”), pursuant to which, stockholders couldmay elect to reinvest distributions paid in cash in additional shares of common stock. The Company had the right to amend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants.
An amendment and restatement of the 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 and Class B common stock reinvested in additional shares of Class A common stock. Shares received by participants in the A&R DRIP will represent shares that are, at the election of the Company, either (i) acquired directly from the Company, which would issue new shares, at a price based on the average of the 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 issuedissued by the Company pursuant to the DRIP or the 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 three nine months ended September 30, 2020,2021, any DRIP transactions were settled through open market transactions and no shares were issued by the Company as there were no dividends or other distributions paid during the periods.

Company.








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September 30, 2020
(Unaudited)
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 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 September 30, 2020,2021, the Company’s operating ground lease has a weighted-average remaining lease term including assumed renewals, of 46.345.3 years and a discount rate of 8.6%. As of September 30, 2020,2021, the Company’s balance sheet includes an ROU asset and liability of $55.4of $55.2 million and $54.8 million, respectively,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 nine months ended September 30, 2020,2021, the Company paid cash of $1.2 million and $3.6 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million and $3.6 million, respectively,respectively, on a straight-line basis in accordance with the standard. The Company paid cash of $1.2 million and $3.6 million and incurred ground rent expense of $1.2 million and $3.6 million duringFor the three and nine months ended September 30, 2019, respectively.2020, the Company paid cash of $1.2 million and $3.6 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million and $3.6 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 three and nine months ended September 30, 2021 and 2020.
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September 30, 2021
(Unaudited)
The following table reflects the ground lease rent payments due from the Company and a reconciliation to the net present value of those payments as of September 30, 2020:2021:
(In thousands)(In thousands)Future Base Rent Payments(In thousands)Future Base Rent Payments
2020 (remainder)$1,187 
20214,746 
2021 (remainder)2021 (remainder)$1,187 
202220224,746 20224,746 
202320234,746 20234,746 
202420244,746 20244,746 
202520254,746 
ThereafterThereafter207,246 Thereafter202,500 
Total lease paymentsTotal lease payments$227,417 Total lease payments222,671 
Less: Effects of discountingLess: Effects of discounting(172,585)Less: Effects of discounting(167,888)
Total present value of lease paymentsTotal present value of lease payments$54,832 Total present value of lease payments$54,783 
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 30, 2020,2021, 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.
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September 30, 2020
(Unaudited)
Note 9 — Related Party Transactions and Arrangements
As of September 30, 20202021 and December 31, 2019, an entity2020, entities wholly owned by AR Global owned 61,28656,091 shares of the Company’s outstanding common stock.
Fees and Participations Incurred in Connection with the Operations of the Company
Summary of Advisory Agreement
On November 16, 2018,Pursuant to the members of a special committee of the Company’s board of directors approved an amendment and restatement of the Company’s advisory agreement with the Advisor (the(as amended from time to time, the “Advisory Agreement”). The Company also entered into a related amendment (the “November 2018 PMA Amendment”) to, the Advisor manages the Company’s Property Management and Leasing Agreement with the Property Manager. The Advisory Agreement and the November 2018 PMA Amendment both took effect on November 16, 2018.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 Advisory Agreement changedCompany pays the calculation of theAdvisor a base asset management fee to a fixed amount of (x) $0.5 million payable 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, however the Advisor may elect to receive OP units orshares of common stock, units of limited partnership interest in the Company,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(which occurred in October 2020,2020), any cumulative Core Earnings (as defined in the Advisory Agreement) in excess of cumulative distributions paid on the Company’s common stock.stock since November 16, 2018, the effective date of the most recent amendment and restatement of the Advisory Agreement.
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September 30, 2021
(Unaudited)
The Advisory Agreement also entitles the Advisor to aan incentive variable management fee, payable quarterly in arrears.fee. In August 2020, the Company entered into an amendment to the Advisory Agreement to adjust the quarterly thresholds of Core Earnings Per Adjusted Share (as defined in the Advisory Agreement) the Company must reach on a quarterly basis for the Advisor to receive the variable management fee to reflect the impact of the Reverse Stock Split. Prior to this amendment, the variable management fee was 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 $0.06, plus (ii) the product of (x) 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 (y) 10.0% multiplied by (z) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.08. Following the amendments,August 2020 amendment, the quarterly thresholds of Core Earnings Per Adjusted Share increased from$0.06 and $0.08 to $0.1458 and $0.1944. The variable management fee is payable quarterly in arrears in cash, shares of the Company’s common stock, units of limited partnership interest in the OP units or a combination thereof, at the Advisor’s election. No incentive variable management fees were earned during the three months ended

September 30, 2021 orSeptember 30, 2020.
The Company paid cash ofpaid $1.5 million and $1.5 million forin cash base asset management fees during the three months ended September 30, 20202021 and September 30, 2019, respectively, and $4.5 million2020, and $4.5 million during the nine months ended September 30, 20202021 and September 30, 2019, respectively.2020. There were no variable management fees incurred in eithe

r of these periods.
Prior to October 1, 2015, for its asset management services provided under the advisory agreement, the Company caused the OP to issue to the Advisor 65,498 Class B Units (52,398 of which were still held by the Advisor at the time of the Listing), after giving effect to the Reverse Stock Split (see Note 1 — Organization for additional details), in connection with the arrangement.. The Class B Units were intended to be profits interests that would vest, and no longer 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 equaled or exceeded the total amount of capital contributed by investors plus a 6.0% cumulative, pretax, non-compounded annual return thereon, (the “Economic Hurdle”); (b) any one of the following events occurred concurrently with or subsequently to the achievement of the Economic Hurdle: (i) a listing of the Company’s common stock on a national securities exchange; (ii) a transaction to which the Company or the OP was a party, as a
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September 30, 2020
(Unaudited)
result of which OP units or the Company’s common stock were 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 had been met; and (c) the Advisor pursuant to the advisory agreement was providing services to the Company immediately prior to the occurrence of an event of the type described in clause (b) above (the “performance condition”).
Pursuant to the terms of the limited partnership agreement toof the OP, the Advisor was entitled to receive distributions on Class B Units, whether vested or unvested, at the same rate as distributions, if any, received on the Company’s common stock. Such distributions on issued Class B Units, if any, were expensed in the consolidated statements of operations and comprehensive loss until the performance condition was considered probable to occur. As a result of the Listing, which satisfied the performance condition, and the prior determination by the Company’s independent directors that the Economic Hurdle had been satisfied, the Class B Units vested in accordance with their terms and were converted into an equal number of Class A Units. In addition, effective at the Listing following this conversion and as approved by the Company’s independent directors, 52,398 of these Class A Units, which were then held by the Advisor, were redeemed for an equal number of newly issued shares of Class A common stock consistent with the redemption provisions contained in the A&R OP Agreement. As a result of the conversion of all 65,498 Class B Units into Class A Units, the Company recorded a non-cash expense of approximately $1.2 million which iswas recorded in vesting and conversion of Class B Units in the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2020. The remaining Class A Units which were still held by a third party and not redeemed as of September 30, 2020, were subsequently submitted for redemption for an equal number of shares of Class A common stock in October 2020 that are scheduled to be issued in November 2020.during the second quarter of 2021.
Property Management Fees
Pursuant to the Property Management and Leasing Agreement, dated as of April 24, 2014 (the “PMA”) and prior to the November 2018 PMA Amendment effective on November 16, 2018,, except in certain cases where the Company contractedcontracts with a third party, the Company paidpays 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)
Pursuant to the PMA, the Company 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 thea loan the Company entered into in April 2018, the borrowers 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 April 2018 PMA does not include provisions related to the management of hotels. On April 13, 2018, concurrently with entering into the April 2018 PMA, the Company and the Property Manager entered into an amendment to the PMA (the “April 2018 PMA Amendment”). Prior to this amendment, the Property Manager had been retained by the Company, pursuant to the PMA, to manage, operate and maintain all the Company’s properties. Following the April 2018 PMA Amendment, any of the Company’s properties that are or become subject to a separate property management agreement with the Property Manager (including the properties secured by the loan, which are subject to the April 2018 PMA) are not subject to the PMA.
On November 16, 2018, the effective date of the November 2018 PMA Amendment, the property management fees the Company pays the Property Managerfee for non-hotel properties decreased to 3.25%is 4.0% of gross revenues from the properties managed, plus market-based leasing commissions. The NovemberApril 2018 PMA Amendment also amended thehas an initial term of one year that is automatically extended for an unlimited number of successive one-year terms at the PMAend of each year unless any party gives 60 days’ written notice to make it coterminous with the termother parties of the Advisory Agreement.its intention to terminate.
The Company incurred approximatelyapproximately $0.4 million and $0.5 million in property management fees during each of the three months ended September 30, 2021 and 2020, and September 30, 2019, respectively,$1.1 million and $1.2 million and $0.9 million during the nine months ended September 30, 2021 and 2020, and September 30, 2019, respectively.
Professional Fees and Other Reimbursements
Prior to the effectiveness of the Advisory Agreement on November 16, 2018, theThe Company reimbursed the Advisor’s costs of providing administrative services, subject to the limitation that the Company would not reimbursepays directly or reimburses the Advisor monthly in arrears, for any amountall the expenses paid or incurred by which the Company’s operating expenses at the end of the four preceding fiscal quarters exceeded 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 determined that such excess was justified based on unusual and nonrecurring factors which they deemed sufficient, in
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September 30, 2020
(Unaudited)
which case the excess amount would have been reimbursed to the Advisor in subsequent periods. This reimbursement included reasonable overhead expenses for employees of the Advisor or its affiliates directly involved in connection with the performance of services on behalf ofit provides to the Company including the reimbursement of rent expense at certain properties that are both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor. Additionally, prior to the effectiveness ofunder the Advisory Agreement, the Company reimbursed the Advisor for personnel costs in connection with other services; however, the Company did not reimburse the Advisor for personnel costs in connection with services for which the Advisor received acquisition fees, acquisition expense reimbursements or real estate commissions and no reimbursement was made for salaries, bonuses or benefits paidsubject to the Company’s executive officers.
The Advisory Agreement eliminated the previously existing limits on reimbursement by the Company of the Advisor’s expenses and costs based on total operating expenses and added new administrative expense reimbursement limits as follows:following limitations:
•With respect to administrative and overhead expenses of the 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 including their salaries, wages, and benefits, (which may not exceed comparable market rates), 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%.
The Company began implementingProfessional fees and other reimbursements for the three months ended September 30, 2021 and 2020 were $1.1 million and $1.0 million, respectively, and $3.4 million and $3.3 million for the nine months ended September 30, 2021 and 2020, respectively. These amounts include reimbursements to the Advisor for administrative, overhead and personnel services, which are subject to the limits noted above, inas 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 and reimbursed to the monthAdvisor for the three and nine months ended September 30, 2021 were $0.8 million and $2.8 million, respectively, of December 2018. which $31,000 and $0.4 million, respectively, related to administrative and overhead expenses and $0.8 million and $2.4 million, respectively, were for salaries, wages, and benefits.
Total reimbursement expenses for administrative and personnel services provided by and reimbursed to the Advisor during the three months ended September 30, 2020 were $0.5 million, which were all related to salaries, wages, and benefits. For the three months ended September 30, 2019, total reimbursement expenses for administrative and personnel services provided by the Advisor were $0.6 million, which were all related to salaries, wages and benefits.
Total reimbursement expenses for administrative and personnel services provided by the Advisor during the nine months ended September 30, 2020 were $0.5 million and $2.5 million, respectively, of which none and $0.4 million, respectively, related to administrative and overhead expenses and $0.5 million and $2.1 million, respectively, were for salaries, wages, and benefits. As a result, the Company has met the administrative and overhead expenses limit as described above. For the nine months ended September 30, 2019, total reimbursement expenses for administrative and personnel services provided by the Advisor were $2.4 million, of which $0.4 million were related to administrative and overhead expenses and $2.0 million were related to salaries, wages, and benefits.
As part of this reimbursement, with respect to the salaries, wages, and benefits of all employees of the Advisor or its affiliates, the Company paid approximately $0.9 million in 2019 to the Advisor or its affiliates as reimbursement for bonuses of
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September 30, 2021
(Unaudited)
employees of the Advisor or its affiliates who provided administrative services during such calendar year, prorated for the time spent working on matters relating to the Company. The Company does not reimburse the Advisor or its affiliates for any bonus amounts relating to time dedicated to the Company by Edward M. Weil, Jr., the Company’s Chief Executive Officer. The Advisor formally awarded 2019 bonuses to employees of the Advisor or its affiliates in September 2020 (the “2019 Bonus Awards”). The original $0.9 million estimate for bonuses recorded and paid to the Advisor in 2019 exceeded the cash portion of the 2019 Bonus Awards to be paid to employees of the Advisor or its affiliates by $0.4 million and that were to be reimbursed by the Company. As a result, during the three months ended September 30, 2020, the Company recorded a receivable from the Advisor of $0.4 million in prepaid expenses and other assets on the consolidated balance sheet and a corresponding reduction in general and administrative expenses. Pursuant to authorization by the Company’s independentboard of directors, the $0.4 million receivable iswas payable to the Company over a 10-month period from November 2020January 2021 through AugustOctober 2021. During the nine months ended September 30, 2021, approximately $0.4 million was received.
Reimbursements for the cash portion of 2020 bonuses to employees of the Advisor or its affiliates were expensed and reimbursed on a monthly basis during 2020, and 2021 bonuses continue to be expensed and reimbursed on a monthly basis during 20202021 in accordance with the cash bonus estimates provided by the Advisor. Generally, prior to the 2019 Bonus Awards, employee bonuses have been formally awarded to employees of the Advisor or its affiliates in March as an all-cash award and paid out by the Advisor in the year subsequent to the year in which services were rendered to the Company.
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September 30, 2020
(Unaudited)

Summary of Fees, Expenses and Related Payables
The following table details amounts incurred in connection with the Company’s operations-related services described above as of and for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,Payable (receivable) as ofThree Months Ended September 30,Nine Months Ended September 30,Payable (receivable) as of
(In thousands)(In thousands)2020201920202019September 30, 2020December 31, 2019(In thousands)2021202020212020September 30, 2021December 31, 2020
Acquisition fees and reimbursements:
Acquisition fees and related cost reimbursements$0 $0 $0 $0 $0 $0 
Financing coordination fees and leasing commissions (1)
0 0 0 6 0 0 
Ongoing fees:Ongoing fees: Ongoing fees: 
Asset and property management fees to related parties (2)
Asset and property management fees to related parties (2)
1,879 1,962 5,721 5,382 15 (6)(4)
Asset and property management fees to related parties (2)
$1,862 $1,879 5,616 5,721 $74 (2)$(28)(3)
Professional fees and other reimbursements (3)(1)
Professional fees and other reimbursements (3)(1)
627 717 2,855 2,672 152 228 (4)
Professional fees and other reimbursements (3)(1)
1,064 1,034 3,431 3,262 — (2)— 
Professional fee credit due from the Advisor (3)
Professional fee credit due from the Advisor (3)
(407)0 (407)0 (407)0 (5)
Professional fee credit due from the Advisor (3)
— (407)— (407)(41)(4)(407)(4)
Total related party operation fees and reimbursementsTotal related party operation fees and reimbursements$2,099 $2,679 $8,169 $8,060 $(240)$222 Total related party operation fees and reimbursements$2,926 $2,506 $9,047 $8,576 $33 $(435)
________
(1)Financing coordination fees are included as deferred financing costs within mortgage notes payable, net and leasing commissions are included within deferred leasing costs, net on the consolidated balance sheets, respectively.
(2)Beginning on April 1, 2019, property management fees due to the Property Manager are no longer adjusted for reimbursable expenses paid by the Company to third-party property managers.
(3)Amounts for the three and nine months ended September 30, 20202021 and 20192020 are included in general and administrative expenses in the unaudited consolidated statements of operations and comprehensive loss.
(4)(2)Included in accounts payable, accrued expense and other liabilities on the consolidated balance sheet.
(5)(3) Included in prepaid expenses and other assets on the consolidated balance sheet.

(4) Included in general and administrative expenses. The $0.4 million relates to overpayment of the 2019 Bonus Awards, of which $0.4 million was received during the nine months ended September 30, 2021.
Listing Arrangements
Listing Note
Pursuant to the Alimited 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, as defined below,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
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September 30, 2021
(Unaudited)
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).
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September 30, 2020
(Unaudited)
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. Until the end of the 30 consecutive trading dates commencing on February 9, 2022 (the “Measurement Period”), 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 have fully converted into shares of Class A common stock and are eligible forbegan trading on the NYSE (the “Measurement Period”), the final value of the Listing Note will not be determinable. Until the amount of the Listing Note can be determined, the Listing Note will be considered a liability which will be marked to fair value at each reporting date, with changes in the fair value recorded in the consolidated statements of operations and comprehensive loss. The fair value of the Listing Note at issuance on the Listing Date (August 18, 2020) and at September 30, 20202021 was nominal and was determined using a Monte Carlo simulation, which uses a combination of observable and unobservable inputs. The fair value of the Listing Note, if any, will be paid at the end of the Measurement Period. The Special Partner has the right to receive distributions of Net Sales Proceeds (as defined in the Listing Note), until the Listing Note is paid in full; provided that, the Special Limited Partner has the right, but not the obligation, to convert its entire special limited partnership interest in the OP into Class A Units.
Multi-Year Outperformance Agreement
On the Listing Date, the limited partnership agreement of the OP was amended and restated in connection with the effectiveness of the Listing (as so amended and restated, the “A&R OP Agreement”). The amendments effected to the limited partnership agreement of the OP pursuant to the A&R OP Agreement generally reflect provisions more consistent with the agreements of limited partnership of other operating partnerships controlled by real estate investment trusts with securities that are publicly traded and listed and make other changes in light of the transactions entered into by the Company in connection with the Listing. The A&R OP Agreement sets forth the terms of a new class of units of limited partnership designated as “LTIP Units” (“the LTIP Units”),Units, which includes the Master LTIP Unit (the “Master LTIP Unit”) issued to the Advisor on August 18, 2020 pursuant to a multi-year outperformance award agreement entered into with the Advisor (the “2020 OPP”).
In addition, the A&R OP Agreement describes the procedures pursuant to which holders of units of limited partnership designated as “Class A Units” (“Class A Units”)Units may redeem all or a portion of their Class A Units on a one-for-one basis for, at the Company’s election, shares of Class A common stock or the cash equivalent thereof. The A&R OP Agreement also requires the Company, upon the request of a holder of Class A Units but subject to certain conditions and limitations, to register under the Securities Act, the issuance or resale of the shares of Class A common stock issuable upon redemption of Class A Units in accordance with the A&R OP Agreement.
On the Listing Date, 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. Initially, the award under the 2020 OPP was in the form of a single Master LTIP Unit. On September 30, 2020, the Master LTIP Unit automatically converted into 4,012,841 LTIP Units in accordance with its terms. For additional information on the 2020 OPP, see Note 11 – Equity-Based Compensation.
Termination Fees Payable to the Advisor
The Advisory Agreement requires the Company to pay a termination fee to the Advisor in the event the Advisory Agreement is terminated prior to the expiration of the initial term in certain limited scenarios. The termination fee will be payable to the Advisor if either the Company or the Advisor exercises the right to terminate the Advisory Agreement in 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
(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), multiplied by
(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 the month immediately prior to the month in which the Advisory Agreement is terminated, plus 
(ii) the product of (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,
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September 30, 2021
(Unaudited)
(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.
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September 30, 2020
(Unaudited)
In connection with the termination or expiration of the Advisory Agreement, the Advisor will be entitled to receive (in addition to any termination fee) all amounts then accrued and owing to the Advisor, including an amount equal to then-present fair market value of its shares of the Company’s common stock and interest in the OP.
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September 30, 2020
(Unaudited)
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 — Equity-Based Compensation
Equity Plans
Restricted Share Plan
Prior to the Listing, the Company had an employee and director incentive restricted share plan (as amended, the “RSP”). The RSP provided for the automatic grant of the number of restricted shares equal to $30,000 divided by the then-current Estimated Per-Share 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 also provided the Company with the ability to grant awards of restricted shares to the 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 acting as a group adoptedapproved 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 Advisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Awards under the Individual Plan isare open to the Company’s directors, officers and employees (if the Company ever has employees), employees, officers and directors of 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 to 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, such as unvested restricted shares held by the Company’s independent directors, will remain in effect in accordance with 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. Going forward, grantsGrants to independent directors will beafter 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. Shares subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a 1-for-one basis and vice versa.
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September 30, 2021
(Unaudited)
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 to be made in connection with the Company’s 2021 annual meeting of stockholders, the amount of the annual award will bewas increased from $30,000 to $65,000. No other changes werehave been made to the Company’s director compensation program.
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September 30, 2020
(Unaudited)
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. 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. There have not been any grants of restricted shares to other individuals as permitted under the 2020 Equity Plan.

Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares receive cash dividends on the same basis as 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 dividends payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

The following table displays restricted share award activity during the nine months ended September 30, 2020 and has been retroactively adjusted to reflect the Reverse Stock Split (see Note 1 — Organization for additional details):2021:
Number of
Restricted Shares		Weighted-Average Issue PriceNumber of
Restricted Shares		Weighted-Average Issue Price
Unvested, December 31, 20195,433 $51.03 
Unvested, December 31, 2020Unvested, December 31, 20205,516 $50.20 
GrantedGranted1,828 49.23Granted21,546 9.05
VestedVested(1,738)51.78Vested(1,884)49.97
Fractional share redemption (1)
Fractional share redemption (1)
(7)49.16
Fractional share redemption (1)
(6)9.81
Unvested September 30, 20205,516 50.20
Unvested September 30, 2021Unvested September 30, 202125,172 15.00
(1) Represents fractional shares redeemed in connection with the Reverse Stock Split (see Note 7 – Stockholders’ Equity for additional information).conversion of the second tranche of shares of Class B common stock to shares of Class A common stock that occurred on March 1, 2021.
As of September 30, 2020,2021, the Company had $0.3$0.3 million of unrecognized compensation cost related to unvested restricted share awards granted and is expected to be recognized over a weighted-average period of 3.34.0 years. RestrictedRestricted share awards are expensed in accordance with the service period required. Compensation expense related to restricted share awards was approximatelyapproximately $29,100 and $24,383 and $22,494 for the three months ended September 30, 20202021 and September 30, 2019,2020, respectively, and $71,354$80,135 and $63,546 f$71,354or for the nine months ended September 30, 2021 and 2020, and September 30, 2019, respectively. Compensation expense related to restricted share awards is recorded as 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, (the “Effective 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. TheThis number of LTIP Units representrepresents 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 Effective Date,date the Master LTIP Unit converted (September 30,
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September 30, 2021
(Unaudited)
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 nine months ended September 30, 2021, the Company recorded equity-based compensation expense related to the LTIP Units of $2.1 million and $6.3 million, respectively, and during the three and nine months ended September 30, 2020, the Company recorded equity-based compensation expense related to the LTIP Units of $1.7 million, whichmillion. 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 September 30, 2020,2021, the Company had $24.1$15.7 million of unrecognized compensation expense related to the LTIP Units, which is expected to be recognized over a period of 2.871.9 years.
LTIP Units/Distributions/Redemption
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September 30, 2020
(Unaudited)
Halfthe Advisor as the holder of the LTIP Units (the “Absolute TSRare governed by the terms of the LTIP Units”)Units set forth in the agreement of limited partnership of the OP. Holders of LTIP Units are eligibleentitled 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.
For the three and nine months ended September 30, 2021, the Company paid $40,000 and $120,000 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 ifbased on the Company achievesCompany’s achievement of absolute total stockholder return (“TSR”) measured on an absolute basis forlevels as shown in the performance period as follows:table below.
Performance LevelPerformance LevelAbsolute TSRPercentage of LTIP Units EarnedPerformance LevelAbsolute TSRPercentage of LTIP Units Earned
Below ThresholdBelow ThresholdLess than12%0 %Below ThresholdLess than12%0 %
ThresholdThreshold12%25 %Threshold12%25 %
TargetTarget18%50 %Target18 %50 %
MaximumMaximum24%or higher100 %Maximum24 %or higher100 %

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 earned is determined using linear interpolation as between those tiers, respectively.
HalfWith respect to the remaining one-half of the LTIP Units (the “Relative TSRgranted under the 2020 OPP, the number of LTIP Units”) are eligible toUnits that become earned (if any) will be earneddetermined as of the last day of the performance period ifbase on the amount, expresseddifference (expressed in terms of basis points, whether positive or negative, by whichas shown in the table below) between the Company’s absolute TSR foron the last day of the performance period exceedsrelative to the average TSR for the performance period of a peer group consisting of Empire State Realty Trust, Inc., Franklin Street Properties Corp., Paramount Group, Inc. and Clipper Realty Inc. as follows:
Performance LevelRelative TSR ExcessPercentage of LTIP Units Earned
Below ThresholdLess than-600basis points0 %
Threshold-600basis points25 %
Target0basis points50 %
Maximum+600basis points100 %

If the relative TSR excess is more than -600 bps but less than 0 bps, or more than 0 bps but less than +600 bps, the percentage of the Relative TSR LTIP Units earned is determined using linear interpolation as between those tiers, respectively.
Until an LTIP Unit is earned in accordance with the provisions of the 2020 OPP, the holder of the LTIP Unit will be entitled to distributions on the LTIP Unit equal to 10% of the distributions made per Class A Unit (other than distribution of sale proceeds). Distributions paid with respect to an LTIP Unit are not subject to forfeiture, even if the LTIP Unit is ultimately forfeited because it is not earned in accordance with the 2020 OPP. In light of the automatic conversion feature of the Master LTIP Unit, the Advisor was entitled to receive a distribution equal to the product of 10% of the distributions made per Class A Unit during the period from the Listing Date (August 18, 2020) to September 30, 2020 (if any) multiplied by the number of LTIP Units issued when the Master LTIP Unit automatically converted into LTIP Units, however no distributions were paid on Class A Units during this period. For the three and nine months ended September 30, 2020, the Company did not record any distributions related to the LTIP Units. After an LTIP Unit is earned, the holder will be entitled to a priority catch-up distribution per earned LTIP Unit equal to the aggregate distributions paid on a Class A Unit during the performance period, less the aggregate distributions paid on the LTIP Unit during the performance period. As of the last day of the performance period, the earned LTIP Units will become entitled to receive the same distributions as are paid on Class A Units. At the time the Advisor’s capital account with respect to an LTIP Unit that is earned and vested is economically equivalent to the average capital account balance of a Class A Unit, the Advisor, as the holder of the LTIP Unit in its sole discretion, will, in accordance with the A&R OP Agreement, be 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.
If the last day of the performance period is the effective date of a Change of Control or a termination of the Advisor without Cause (as defined in the Advisory Agreement), then calculations relating to the number of LTIP Units earned pursuant to the 2020 OPP will be performed based on actual performance as of (and including) the effective date of the Change of Control or termination (as applicable), with the hurdles for calculating absolute TSR pro-rated to reflect that the performance period lasted less than three years but without pro-rating the number of Absolute TSR LTIP Units or Relative TSR LTIP Units the Advisor would be eligible to earn to reflect the shortened period.
If the last day of the performance period is the effective date of a termination of the Advisor with Cause, then calculations relating to the number of LTIP Units earned pursuant to the 2020 OPP will also be performed based on actual performance as of
Performance LevelRelative TSR ExcessPercentage of LTIP Units Earned
Below ThresholdLess than-600basis points0 %
Threshold-600basis points25 %
Target0basis points50 %
Maximum+600basis points100 %

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September 30, 20202021
(Unaudited)
(and including)If the relative TSR excess is more than -600 basis points but less than zero basis points, or more than zero basis points but less than +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 theactual performance through the last trading day prior to the effective date of the termination, with the hurdles for calculating absolute TSR pro-ratedand the number of LTIP Units that may become earned each prorated to reflect that thea performance period lastedof less than three years and with the number of Absolute TSR LTIP Units or Relative TSR LTIP Units the Advisor would be eligible to earn also pro-rated to reflect the shortened period.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 elects. Following the last day ofelect. Promptly following the performance period, the Compensation Committee is responsible for determiningcompensation committee will determine the number of Absolute TSR LTIP Units and Relative TSR LTIP Units earned, as calculated(if any) based on a calculations prepared by an independent consultant engaged by the compensation committeeCommittee and as approved by the compensation committee in its reasonable and good faith discretion. The valuation model used to calculate the fair value utilizes several significant assumptions, such as stock price volatility, dividend yield, and correlation estimate. The compensation committee also must approve the transfer of any Absolute TSR LTIP Units and Relative TSR LTIP Units (oror any Class A Units into which theyLTIP Units may be converted in accordance with the terms of the A&R OP Agreement).
LTIP Units earned as of the last day of the performance period will also become vested as of the last day of the performance period.Agreement. Any LTIP Units that are not earned and vested after the compensation committee makes the required determination will automatically and without notice be forfeited without the payment of any consideration by the Company or the OP, effective as of the last dayend of the performance period.period and neither the Company nor the OP will be required to pay any future consideration in respect thereof.
Other Share-Based Compensation
The Company may issue common stock in lieu of cash to pay fees earned by the Company’s board of directors at the respective director’s election. There are no restrictions on the shares issued. There were 0no shares of common stock issued in lieu of cash during the three and nine months ended September 30, 20202021 or September 30, 2019.2020.
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 and has been retroactively adjusted to reflect the Reverse Stock Split (see Note 1 — Organization for additional details):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net loss attributable to common stockholders (in thousands)
$(12,288)$(4,809)$(24,362)$(15,220)
Basic and diluted weighted average shares outstanding12,772,176 12,749,456 12,757,376 12,748,674 
Basic and diluted net loss per share$(0.96)$(0.38)$(1.91)$(1.19)
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands, except share and per share data)2021202020212020
Net loss attributable to common stockholders (in thousands)
$(11,124)$(12,288)$(35,711)$(24,362)
Adjustments to net loss attributable to common stockholders(40)— (120)— 
Adjusted net loss attributable to common stockholders$(11,164)$(12,288)$(35,831)$(24,362)
Weighted average shares outstanding — Basic and Diluted13,093,486 12,772,176 12,892,382 12,757,376 
Net loss per share attributable to common stockholders — Basic and Diluted$(0.85)$(0.96)$(2.78)$(1.91)
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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)
Diluted net loss per share assumes the vesting or conversion of restricted shares and Class A Units into an equivalent number of unrestricted shares of Class A common stock, unless the effect is antidilutive. Conditionally issuable shares relating to the 2020 OPP (see Note 1111 — Equity-Based Compensation for additional information) would be included in the computation of fully diluted EPS on a weighted-average basis for the three and nine months ended September 30, 20202021 and 20192020 based on shares that would be issued if the balance sheet date were the end of the measurement period, unlessperiod. No LTIP Unit share equivalents were included in the effect is antidilutive.computation for the three and nine months ended September 30, 2021 or 2020 because 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 September 30, 2021 or 2020. There was also no impact from any of the Company’s other potentially dilutive securities during the three and nine months ended September 30, 2021 or 2020 due to the net losses in both periods.
The Company had the following weighted-average common share equivalents for the periods indicated, which were excluded from the calculation of diluted net loss per share attributable to stockholders as the effect would have been anti-dilutive. The amounts in the table below have been retroactively adjusted to reflect the Reverse Stock Split (see Note 1 — Organization for additional details):
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NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
20202019202020192021202020212020
Unvested restricted shares (1)
Unvested restricted shares (1)
5,694 6,110 5,634 6,110 
Unvested restricted shares (1)
25,343 5,694 15,216 5,634 
Class A Units (2)
Class A Units (2)
6,285 37 2,135 37 
Class A Units (2)
— 6,285 7,054 2,135 
Class B Units (3)
Class B Units (3)
34,173 65,498 54,980 65,498 
Class B Units (3)
— 34,173 — 54,980 
LTIP Units (4)
LTIP Units (4)
43,618 0 14,645 0 
LTIP Units (4)
4,012,841 43,618 4,012,841 14,645 
Total weighted-average anti-dilutive common share equivalentsTotal weighted-average anti-dilutive common share equivalents89,770 71,645 77,394 71,645 Total weighted-average anti-dilutive common share equivalents4,038,184 89,770 4,035,111 77,394 
__________
(1) There were 5,51625,172 and 5,4335,516 unvested restricted shares outstanding as of September 30, 2021andSeptember 30, 2020, and September 30, 2019, respectively.
(2) Formerly known as OP Units. ThereAs of September 30, 2021, there were no Class A Units outstanding. As ofSeptember 30, 2020, there were 13,100 and 37 Class A Units outstanding as of(see September 30, 2020 and Note 7September 30, 2019, respectively. — Stockholders’ Equity for additional information).
(3) There were 0 and 65,498no Class B Units outstanding as of September 30, 2021 andSeptember 30, 2020, and September 30, 2019, respectively (see NoteNote 7 — Stockholders’ Equity, for additional information).
(4) There were 4,012,841 and 0 LTIP Units outstanding as of September 30, 2020 and 2021September 30, 2019,and2020, respectively (see Note 11 — Equity-Based Compensation for additional information).
Note 13 — Subsequent Events
Quarterly Dividend Declaration
On October 1, 2020,2021, the Company declared a dividend equal to $0.04889of $0.10 per share on each share of the Company’sits Class A common stock and Class B common stock. The dividend was calculated to cover the period from August 18, 2020, the date on which shares of Class A common stock commenced trading on the NYSE, through September 30, 2020, based on the previously-announced cash dividend rate equal to $0.40 per share per year. TheThis dividend was paid on October 15, 2020 to holders2021 in the aggregate amount of record of shares of the Company’s Class A common stock and Class B common stock as of the close of business on October 12, 2020.approximately $1.3 million.



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Item 2. 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 are forward-looking statements including statements regarding the intent, belief or current expectations of New York City REIT, Inc. (including, as required by context, New York City Operating Partnership, L.P. (the “OP”) and its subsidiaries, “we,” “our” or “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” 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.
These forward-looking statements are 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 are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, and Part II. Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Overview
We are aan externally managed real estate investment trust for U.S. Federal income tax purposes (“REIT”) that owns a portfolio of high-quality commercial real estateinvests primarily in office properties located exclusively within the five boroughs of New York City, primarily Manhattan. We were formed to invest in office properties and have also purchased certain real estate assets that accompany office properties, including retail spaces and amenities, 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 30, 2020,2021, we owned eight properties consisting of 1.2 million rentable square feet, acquired for an aggregate purchase price of $790.7 million.
We were incorporated on December 19, 2013 asIn the third quarter of 2021, we launched Innovate NYC, a Maryland corporation and elected to be taxed asco-working company, at 1140 Avenue of the Americas, diversifying our strategy into a real estate investment trust for U.S. federal income tax purposes (“REIT”) beginning with its taxable year ended December 31, 2014. Substantially allgrowing segment of our business is conducted through the OP.
We have no employees. Our advisor, New York City Advisors, LLC (our “Advisor”), manages our affairs on a day-to-day basis and New York City Properties, LLC (our “Property Manager”) manages our properties. Our Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”), and these related parties receive compensation, fees and expense reimbursements for their services.real estate market.
On August 5,18, 2020, in anticipation of the listingwe listed shares of our Class A common stock on the New York Stock Exchange (“NYSE”) under the symbol “NYC” (the “Listing”),. In anticipation of the listing, we implemented a series of corporate actions which resulted in a bifurcation of our common stock into Class A common stock and Class B common stock and in a net reduction of 2.43 shares for every one share of common stock outstanding prior to these corporate actions, (the “Reversewhich we refer to as the Reverse Stock Split”).Split. All references made to share or per share amounts as of dates prior to August 5, 2020 in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Reverse Stock Split on that date. For additional information related to these corporate actions, see Note 7 – Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q.
On August 18, 2020 (the “Listing Date”), we completed the Listing. To effect the Listing,listing, and to address the potential for selling pressure that may have existed at the outset of listing, we listed only shares of Class A common stock, which represented approximately 25% of our outstanding shares of common stock, on the NYSE on the Listing Date.when trading commenced. Our other class of outstanding stock is Class B common stock, which comprised approximately 75% of our outstanding shares of common stock at that time. The outstandingfirst of three equal tranches of shares of Class B common stock arethat were not listed on the NYSE but will automatically converton the listing date converted into 3,189,204 shares of Class A common stock to beand the shares were listed on the NYSE in three equal tranches on December 16, 2020, April 15, 20212020. Following a determination by our board of directors, the second tranche of shares of Class B common stock converted into 3,176,127 shares of Class A common stock and were listed on the NYSE on March 1, 2021. Following a determination by our board of directors, third and final tranche of shares of Class B common stock converted into 3,176,114 shares of Class A common stock and the shares were listed on the NYSE on August 13, 2020, unless earlier converted in accordance with their terms.2021. For additional information, see Note 7 – Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q.
Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries. New York City Advisors, LLC (our “Advisor”) manages our day-to-day business with the assistance of New York City Properties, LLC (our “Property Manager”). 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.
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Management Update on the Impacts of the COVID-19 Pandemic
The economic uncertainty created by 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. A pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global pandemic of COVID-19 affecting New York City, where we and our tenants operate could have material and adverse effects on our business, financial condition, results of operations and cash flows. The ultimate impact on our results of operations, our liquidity and the ability of our tenants to continue to pay us rent will depend on numerous factors including the overall length and severity of the COVID-19 pandemic. Management is unable to predict the nature and scope of any of these factors. These factors include the following, among others:
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•The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all. However, we have taken proactive steps with regard to rent collections to mitigate the impact on our business (see “—Management Actions” below).
•There may be a decline in the demand for tenants to lease real estate, as well as a negative impact on rental rates. As of September 30, 2020, our portfolio had a high occupancy level of 88.6%, the weighted-average remaining term of our leases was 7.5 years (based on annualized straight-line rent).
•New York City, where all of our properties are located, has been among the hardest hitmost affected locations in the country and untilcountry. Until it began its phased reopening in June 2020, New York City operated under a mandatory order under which tenants were required to cease all non-essential in-office functions. Although New York City has lifted most COVID-19 restrictions on businesses, many offices have not yet reopened. Our properties remain accessible to all tenants, although, even as operating restrictions expire, not all tenants have resumed in person operations. In addition, as New York’s phased opening continues, and occupants continue to return to our properties, operating costs may begin to rise, including for services, labor, and personal protective equipment and other supplies, as our property managers take appropriate actions to protect tenants and property management personnel. Some of these costs may be recoverable through reimbursement from tenants but others will be borne by us. We have experienced an increase in non-reimburseable 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 “return to normalcy” in the fourth quarter of 2021 and will support an increase in office usage and leasing trends by the end of 2021 and through 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 has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all. During the year ended December 31, 2020, we reduced revenue from tenants by $8.5 million for reserves recorded during the period on receivables for which the related tenants have been put on a cash basis or there were early lease terminations. In the first nine months of 2021, there has been no rental income received from any of the tenants that were previously placed on a cash basis. 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. We had previously written off any contract and straight line rent receivables net of any security deposits associated with this tenant as of December 31, 2020 as they were deemed to be uncollectible. Management has already re-leased a portion of the vacant space formerly occupied by Knotel at its 123 William Street, and other previously vacant space at 123 William Street, and is 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. Although management is currently working on securing additional new leases, 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 on four of our mortgages aggregating $214.0 million in principal amount and may cause an event of default under one of those loans, all as described further below and in Capital market volatility and a tightening of credit standards could negatively impact our ability to obtain debt financing. We do not have any significant debt principal repayments due until 2024.
•Item 1A. Risk Factors in this Quarterly Report on Form 10-Q. The negative impact of the pandemic on our results of operations and cash flows could continue to impact our ability to comply with covenants in our loans.loans, and we may also experience additional covenant violations on our mortgages at other properties.
•The potential negativeultimate impact on our results of operations, our liquidity and the health of personnelability of our Advisor, particularly if a significant numbertenants to continue to pay us rent will depend on numerous factors including the overall length and severity of the Advisor’s employees are impacted, could result inCOVID-19 pandemic. For a deterioration in our ability to ensure business continuity.
For additional information onfurther discussion of the risks and uncertainties associated with the impact of the COVID-19 pandemic, pleaseon us, see Item 1A. “RiskRisk Factors — We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, which has caused severe disruptions in the U.S. and global economy and financial markets and has had adverse effects and may worsen” included in this Quarterlyour Annual Report on Form 10-Q10-K for the quarteryear ended September 30,December 31, 2020.
The Advisor has responded to the challenges resulting from the COVID-19 pandemic. Beginning in early March, the Advisor took proactive steps to prepare for and actively mitigate the inevitable disruption COVID-19 would cause, such as, enacting safety measures, both required or recommended by relevant government authorities, including remote working policies, cooperation with localized closure or curfew directives, and social distancing measures at all of our properties. Additionally, there has been no material adverse impact on our financial reporting systems or internal controls and procedures and the Advisor’s ability to perform services for us. In light of the current COVID-19 pandemic, we are supplementing the historical discussion of our results of operations for the third quarter of 2020 with a current update on the measures we have taken to mitigate the negative impacts of the pandemic on our business and future results of operations.
Management’s Actions
We have taken several steps to mitigate the impact of the pandemic on our business. For rent collections, weWe 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.
Our portfolio is primarily comprised of office retail, bank, and restaurant industryretail tenants with 81%75% and 18%24% of third quarter 2021 original cash rent due from office and retail tenants, respectively. We have collected 91%collected 97% of third quarter 2021 original cash rent due from our office tenants, 61%77% of original cash rent due from our retail tenants and 85%92% of original cash rent due across our entire portfolio, including 85%95% of original cash rent due from our top ten tenants (based on annualized straight-line rent as of September 30, 2020)2021). The original cash rent received across our entire portfolio was consistent withan improvement from the second quarter of 2021 in which we reported total portfolio original cash rent collections of 85%89% due for the second quarter 2021 as of July 31, 2020,2021, which has improved to 86% of second quarter’s original cash rent collectedis 91% as of October 31, 2020.
The table below presents additional information on2021. This improvement reflected, in part, a lower amount of original cash rent deferred or abated during the period, and was also an improvement from our third quarteroriginal cash rent collection status and is based on available information aspercentages of October 31, 2020. Rent collections in October 2020 were materially consistent with87% for the third quarter of 2020 and we expect this trend to continue; however, the cash rent status below may not be indicative of any future period and remains subject to changes based ongoing collection efforts and negotiation of additional agreements. Moreover, certain tenants that have entered into agreements with us with respect to second or third quarter rents have, following the expiration of those agreements, sought to enter into new agreements deferring or abating rent in future periods. There can be no assurance additional tenants will not similarly seek future rent relief or that we will be able to collect the cash rent that is due in future months including the deferred 2020 rent amounts due during 2021 under deferral agreements we have entered into with ourfirst
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tenants. The impactquarter of 2021, 82% for the COVID-19 pandemic onfourth quarter of 2020 and 86% for the second and third quarter of 2020. Fourth quarter 2020 rent collections were particularly impacted by the Knotel bankruptcy and a lease amendment with one of our tenants that granted a rent credit of $0.6 million over the fourth quarter of 2020 and thusthe first quarter of 2021 in exchange for a 24-month lease extension. We expect our cash rent collections will stay at current levels and could potentially decline until the New York City economy fully reopens and recovers sufficiently for our tenants ability to collect rents in future periods cannotpay rent to improve, although there can be determined at present.no assurance how long this will take.
Third Quarter 2020 Cash Rent StatusTotal Portfolio
Third quarter cash rent paid (1)
85 %
Approved agreements (2)
8 %
Agreement negotiation (3)
6 %
Other (4)
1 %
100 %
____________
(1) Represents total of all“Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in thetheir originally executed lease agreementsagreement at inception or any lease amendments thereafteras amended, prior to any rent deferral agreement. We calculate “original cash rent collections” by comparing the total amount of 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. Eliminating the impact of deferred rent paid, we collected 85%, 89% and 92% of original cash rent for the first, second and third quarters of 2021, respectively.
A deferral or abatement agreement is an executed or approved agreement.
(2) Includes deferral agreements as well as amendments grantingamendment 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. A deferral agreement is an executed or approved amendmentcredit and may also provide for payments of additional amounts to an existing lease to deferus if the tenant’s gross sales exceed a certain portionthreshold. We completed four deferral or abatement agreements during the second quarter of 2021 that provide a rent deferral or credit for some original cash rent due. The most common arrangements represent deferraldue with deferred rent to be paid during 2022 to 2024. We entered into one new abatement agreement in the third quarter of some2021.
During the year ended December 31, 2020, we granted rent deferrals for an aggregate of $1.5 million or allapproximately 7% of theoriginal cash rent due for the secondyear. Those deferred amounts are or third quarter ofwere scheduled for repayment during 2020 with such amounts to be paid inor 2021.
(3) Represents active tenant discussions where no approved agreement has yet been reached. There can be no assurance that these negotiations will be successful and will lead to formal agreements on favorable terms, or at all.
(4) Consists of tenants who have made a partial payment and/or tenants without active communication on a potential approved agreement. There can be no assurance that such cash rent will be collected.

We have entered into 1512 approved abatement or deferral agreements, outside of the new and replacement leases included in the “Results of Operations” section below, that commenced during the nine months ended September 30, 2020, representing 11 different tenants.2021. The total amount deferred for nine months ended September 30, 2021 under these approved agreements was $0.6 million. There were no new deferral agreements entered into through September 30, 2020, for deferral agreements, was $0.6 million and $1.2 million forin the third quarter of 2021. The total amount of abatements (i.e., rent credits) entered into during the three and nine months ended September 30, 2021 was $31,000 and $0.9 million, respectively. Under agreements entered into during 2020, respectively. Thethe total amountsamount of rent credits (i.e., abatements), for abatement agreements entered into through September 30, 2020 was $0.1 million and $0.7 million for the three and nine months ended September 30, 2021.
The cash rent collections for the third quarter of 2021 includes cash receipts through October 31, 2021 and therefore is inclusive of cash received in October for rent due in the third quarter of 2021. Such cash receipts are not included in cash and cash equivalents on our September 30, 2021 consolidated balance sheet.
Certain tenants that have entered into agreements with us to defer or abate rent in earlier periods have, following the expiration of those agreements, sought to enter into, and entered into, new agreements further deferring or abating rent for additional periods. There can be no assurance that these or additional tenants will not similarly seek future rent deferrals and abatements. Generally, for tenants with which we have entered into abatement and deferral agreements, we have been receiving the rent when it comes due, giving effect to the abatements and deferrals. During the nine months ended September 30, 2021, we did not collect any cash rent due from any of the tenants that were moved to a cash basis in 2020.
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 deferred 2020 respectively.

or 2021 rent amounts due during 2021 under deferral agreements we have entered into with our tenants. The impact of the COVID-19 pandemic on our tenants and thus our ability to collect rents in future periods cannot be determined at present.
Significant Accounting Estimates and Critical Accounting Policies
For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our 20192020 Annual Report on Form 10-K. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.
Recently Issued Accounting Pronouncements
See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
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Properties
The following table presents certain information about the investment properties we owned as of September 30, 2020:2021:
PortfolioPortfolioAcquisition DateNumber of PropertiesRentable Square FeetOccupancy
Remaining Lease Term (1)
PortfolioAcquisition DateNumber of PropertiesRentable Square FeetOccupancy
Remaining Lease Term (1)
421 W. 54th Street - Hit Factory421 W. 54th Street - Hit FactoryJun. 2014112,327 — %0421 W. 54th Street - Hit FactoryJun. 2014112,327 — %0
400 E. 67th Street - Laurel Condominium400 E. 67th Street - Laurel CondominiumSept. 2014158,750 100.0 %5.6400 E. 67th Street - Laurel CondominiumSept. 2014158,750 100.0 %(2)3.1
200 Riverside Boulevard - ICON Garage200 Riverside Boulevard - ICON GarageSept. 2014161,475 100.0 %17200 Riverside Boulevard - ICON GarageSept. 2014161,475 100.0 %(2)16
9 Times Square9 Times SquareNov. 20141167,390 81.0 %7.99 Times SquareNov. 20141167,390 61.3 %(3)7.5
123 William Street123 William StreetMar. 20151542,676 91.0 %6.2123 William StreetMar. 20151542,676 90.8 %(3)5.2
1140 Avenue of the Americas1140 Avenue of the AmericasJun. 20161242,646 84.0 %6.81140 Avenue of the AmericasJun. 20161242,646 84.2 %6.7
8713 Fifth Avenue8713 Fifth AvenueOct. 2018117,500 100.0 %4.78713 Fifth AvenueOct. 2018117,500 68.6 %(4)2.3
196 Orchard Street196 Orchard StreetJul. 2019160,297 100.0 %14.3196 Orchard StreetJul. 2019160,297 100.0 %13.6
81,163,061 88.6 %7.581,163,061 85.3 %6.8
______
(1)Calculated on a weighted-average basis as of September 30, 2021, as applicable.
(2)Approximately 22% of the rent due for the 400 E. 67th Street property was recorded on a cash basis only as of September 30, 2021. All of the rent for the 200 Riverside Boulevard property was recorded on a cash basis only as of September 30, 2021. We have not received any rent from tenants that were put on a cash basis in the fourth quarter of 2020. The leases with the original tenant in 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 license agreements with a new operator at both properties.
(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 third quarter of 2021 represented a net decline of 17.4% in the occupancy of 9 Times Square as of September 30, 2021 compared to December 31, 2020. After taking into account the former Knotel space that has been re-leased as of September 30, 2021, occupancy of 123 William Street has increased 0.5% from December 31, 2020 to September 30, 2021.
(4)Occupancy at 8713 Fifth Avenue as of September 30, 2021 decreased 31.4% compared to December 31, 2020 as applicable.a result of one lease termination. The Company expects to have the space re-leased in the fourth quarter of 2021.

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Results of Operations
As of September 30, 20202021 and 2019,2020, our overall portfolio occupancy was 88.6%85.3% and 92.4%88.6%, respectively. The following table is a summary of our quarterly leasing activity for the three months ended March 31, 2020, three months ended June 30, 2020, and the three months ended September 30, 2020:2021:
Q1 2020Q2 2020Q3 2020Q1 2021Q2 2021Q3 2021
Leasing activity:Leasing activity:Leasing activity:
New leases: (1)
New leases: (1)
New leases: (1)
New leases commencedNew leases commenced4 4 5 New leases commenced4 4 4 
Total square feet leasedTotal square feet leased4,227 15,349 56,454 Total square feet leased30,271 20,454 35,414 
Annualized straight-line rent per square foot (2)
Annualized straight-line rent per square foot (2)
$160.44 $104.35 $108.31 
Annualized straight-line rent per square foot (2)
$50.16 $50.56 $55.78 
Weighted-average lease term (years) (3)
Weighted-average lease term (years) (3)
6.7 6.2 11.8 
Weighted-average lease term (years) (3)
2.9 6.3 7.3 
Replacement leases: (4)
Replacement leases: (4)
Replacement leases: (4)
Replacement leases commencedReplacement leases commenced3 3 4 Replacement leases commenced2 — 2 
Square feetSquare feet4,227 15,349 43,796 Square feet23,429 — 41,702 
Annualized straight-line rent per square foot (2)
Annualized straight-line rent per square foot (2)
$162.64 $104.44 $116.02 
Annualized straight-line rent per square foot (2)
$49.12 $— $53.56 
Weighted-average lease term (years) (3)
Weighted-average lease term (years) (3)
6.8 6.2 12.1 
Weighted-average lease term (years) (3)
1.0 — 2.3 
Terminated leases: (5)
Number of leases terminated2 3 5 
Terminated or expired leases: (5)
Terminated or expired leases: (5)
Number of leases terminated or expiredNumber of leases terminated or expired3 — 3 
Square feetSquare feet8,376 17,127 37,274 Square feet78,952 — 27,030 
Annualized straight-line rent per square foot (2)
Annualized straight-line rent per square foot (2)
$39.27 $52.79 $48.20 
Annualized straight-line rent per square foot (2)
$66.14 $— $22.91 
Tenant improvements on replacement leases per square foot (6)
Tenant improvements on replacement leases per square foot (6)
$— $— $— 
Tenant improvements on replacement leases per square foot (6)
$— $— $— 
Leasing commissions on replacement leases per square foot (6)
Leasing commissions on replacement leases per square foot (6)
$— $22.93 $23.14 
Leasing commissions on replacement leases per square foot (6)
$2.63 $— $5.52 
___________
(1)Includes new and replacement (for which additional information is provided below) leases commenced during the quarter. This excludes lease renewals, amendments, and lease modifications for deferrals/abatements in responses to COVID-19 negotiations which qualify for FASB relief. For more information - see Management Update on Impacts of the COVID-19 Pandemic.
(2)Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries (see “— Management Actions” above).recoveries.
(3)The weighted-average remaining lease term (years) is based on annualized straight-line rent.
(4)Represents leases commenced for spaces that had been previously leased in the prior twelve months, including spaces that were vacant at the time of the lease.
(5)Calculated as of the date of termination for terminated leases and expiration for those leases that have expired.
(6)Presented as if tenant improvements and leasing commissions were incurred in the period in which the lease commenced, which may be different than the period in which these amounts are actually paid. Does not include tenant improvements and leasing commissions on new leases that are not replacement leases.

In addition to the comparative period-over-period discussions below, please see the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s responses.
Comparison of Three Months Ended September 30, 20202021 and 20192020
As of September 30, 2020,2021, we owned eight properties, comprisingall of seven propertieswhich were acquired prior to January 1, 2019 and one property acquired in July 2019 (“196 Orchard Street”).2020. Our results of operations for the three months ended September 30, 20202021 as compared to the three months ended September 30, 20192020 primarily reflect a decrease due to changes in occupancy and changes due to leasing activity.certain tenants being placed on a cash basis during 2020.
Revenue from Tenants
Revenue from tenants decreased $1.6decreased $1.1 million to $17.0 million for the three months ended September 30, 2020, from $18.6$15.8 million for the three months ended September 30, 2019. 2021, from $17.0 million for the three months ended September 30, 2020. Approximately $1.2$1.0 million of the decrease is attributable to the terminationstermination of several leases during the quarterincluding those with our former tenant, Knotel, as well as the impactimpacts of a COVID-related rent abatement agreementlease terminations and tenants that commencedwere placed on cash basis at the end of 2020. These decreases were partially offset by higher revenue from increased leasing activity (primarily at 123 William Street, 1140 Avenue of the Americas and 9 Times Square) during the three months ended September 30, 2020. The remaining decrease of $0.4 million resulted from a decrease in reimbursable operating expenses, such as electricity and other operating costs, due to fewer tenants working in the building during the three months September 30, 2020 compared to the three months ended September 30, 2019.2021.


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Asset and Property Management Fees to Related Parties
Fees for asset and property management services frompaid to our Advisor and Property Manager decreased $0.1were $1.9 million to $1.9 million for the three months ended September 30, 2021 and 2020, from $2.0 million for the three months ended September 30, 2019. This is primarily due to property management fees being calculated based on cash receipts, which decreased during the three months ended September 30, 2020 as a result of the COVID-19 pandemic.respectively. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager.
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Property Operating Expenses
Property operating expenses increaseddecreased $0.3 million to $8.0 million for the three months ended September 30, 2021 from $8.3 million for the three months ended September 30, 2020. This is due to decreased legal fees associated with tenant lease amendment negotiations primarily during 2020 from $8.0 millionthat are non-reimbursable to us, partially offset by an increase in other non-reimbursable expenses, such as real estate taxes which were the responsibility of certain tenants prior to being put on a cash basis at the end of 2020. As a result, these taxes for the cash-basis tenants have been paid by us during 2021.
Impairments of Real Estate Investments
During the three months ended September 30, 2019,2021, we recorded impairment charges of $0.4 million related to our 421 W. 54th Street - Hit Factory property. We have been evaluating our options for this property, which is mainly dueincludes marketing the property for sale. As no buyer has been identified for the property, it does not qualify to higher non-reimbursable expenses, suchbe classified as increased real estate taxes.held for sale on the consolidated balance sheet as of September 30, 2021. However, during the third quarter of 2021, we recorded impairment charges for this property as it was determined that the carrying value exceeded our estimate of the net sale price of the property as of September 30, 2021.
Listing Expenses
During the three months ended September 30, 2020, we incurred $1.3 million of expenses associated with the Listing. This amount includes the reclassification of $0.1 million of legal expenses which were previously classified as general and administrative expenses in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.2021. There were no new listing expenses in the three months ended September 30, 2021.
Vesting and Conversion of Class B Units
During the three months ended September 30, 2020, we recorded a non-cash expense of $1.2 million related to the vesting and conversion of Class B Units. The vesting conditions relating to the Class B Units were fully satisfied upon completion of the Listing. On the Listing Date, 65,498 Class B Units were converted into units of limited partnership in the OP designated as “Class A Units,” which were formerly known as OP Units, (“Class A Units”), of which 52,398 held by the Advisor were subsequently redeemed for an equal number of shares of Class A common stock.stock during the third quarter of 2020 and the remaining were redeemed for an equal number of shares of Class A common stock during the second quarter of 2021. See Note 9 - Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
Equity-basedEquity-Based Compensation
Equity-based compensation increased to $2.1 million for the three months ended September 30, 2021 from $1.7 million for the three months ended September 30, 2020 from $24,000 for the three months ended September 30, 2019.2020. This increase is related to the amortization of our multi-year outperformance agreement entered into withaward granted to the Advisor in August 2020 (the “2020 OPP”) as a result of the Listing,, for which $1.6$2.1 million and $1.7 million of expense was recorded during the three months ended September 30, 2020.2021 and 2020, respectively. Approximately $29,000 and $24,000 of expense was also recorded during the three months ended September 30, 2021 and 2020, respectively, for the amortization of restricted shares of common stock. See Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and restricted shares of common stock.
General and Administrative Expenses
General and administrative expenses increased to $1.9 million remained consistent at $1.2 million forfor the three months ended September 30, 20202021 from $1.2 million for three months ended September 30, 2019. This2020. The increase was primarily due to an increase of $0.7$0.3 million related due to audit feeshigher reimbursement expenses for administrative and investor communications costs, which were offsetpersonnel services provided by the reimbursementAdvisor. In the three months ended September 30, 2020 a reduction to general and administrative expenses of approximately $0.4$0.4 million as a receivable from the advisor was recorded in relation to overpayment of the 2019 Bonus Awards to the Advisor for employees of the overpayment of 2019 bonuses. Advisor or its affiliates. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details. Also, the increase in certain general and administrative expenses were offset by the reclassification of $0.1 million and $0.2 million to listing expenses and prepaid expenses and other assets, respectively, during the third quarter of 2020. For additional information on amounts recorded in prepaid expenses and other assets related to potential equity offerings, see Note 7 — Stockholders’ Equityto our consolidated financial statements included in this Quarterly Report on Form 10-Q.
Total reimbursement expenses for administrative and personnel services provided by the Advisor during the three months ended September 30, 2020 2021 wewere $0.5re $0.8 million, of which were all$31,000 related to administrative and overhead expenses and $0.8 million related to salaries, wages, and benefits. Pursuant to our advisory agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to an annual limit. Duringlimits, which were reached as of September 30, 2021. Total reimbursement expenses for administrative and personnel services provided by the Advisor during the three months ended JuneSeptember 30, 2020 were $0.5 million, which were all related to salaries, wages, and benefits, since the annual limit on reimbursement for administrative and overhead expenses was reached. Ashad been reached as of SeptemberJune 30, 2020, the annual limit on reimbursements for salaries, wages, and benefits was on pace to be reached before the end of the year. This limit will be evaluated without regard to the Company’s bonus reimbursement from the Advisor. 2020.
See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
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Depreciation and Amortization
Depreciation and amortization expense increasedexpense decreased $0.8 million to $8.6 million for the three months ended September 30, 2020 from $7.8$7.9 million for the three months ended September 30, 2019,2021 from $8.6 million for the three months ended September 30, 2020, which is mainly attributable to higher write-offs of tenant improvement write-offscosts included in depreciation and amortization expense of $0.8 million associated with lease terminations recorded during the three months ended September 30, 2020.  
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Interest Expense
Interest expense increased $0.4 million to $5.1 million for the three months ended September 30, 2020, as compared to $4.7$0.3 million for the three months ended September 30, 2019. whic2021. These write-offs increased depreciation and expenses during the periods. The decrease was also due to a lower depreciable asset base during the three months ended September 30, 2021 as a result of intangible write-offs in the third and fourth quarters of 2020. There have been no new acquisitions during the nine months ended September 30, 2021 that would increase the depreciable base.
Interest Expense
Interest exph is mainly attributable to the $51.0ense was $4.8 million loan entered into in July 2019 in connection with the acquisition of 196 Orchard Street (see Note 4 - Mortgage Notes Payable, Netfor the three months ended September 30, 2021, compared to our consolidated financial statements in this Quarterly Report on Form 10-Q$5.1 million for additional information). the three months ended September 30, 2020. During the three months ended September 30, 2021 and 2020, our weighted averageweighted-average outstanding debt balance was $405.0 million and had a weighted-average effective interest rate of 4.35%. During in each period. As more fully discussed in Note 2 — Summary of Significant Accounting Policies, interest expense for the three month period ended September 30, 2020, was over stated by $0.3 million due to an error which was corrected in the fourth quarter of 2020.
Other Income
Other income decreased by approximately $14,000 to $5,000 for the three months ended September 30, 2019,2021, compared to $19,000 for the weighted average outstanding balance of our debt was $395.0 million and had a weighted-average effective interest rate of 4.35%.

three months ended September 30, 2020.
Comparison of Nine Months Ended September 30, 20202021 and 20192020
As of September 30, 2020,2021, we owned eight properties, comprising seven propertiesall of which were acquired prior to January 2019 and our 196 Orchard Street property acquired in July 2019.1, 2020. Our results of operations for the nine months ended September 30, 20202021 as compared to the nine months ended September 30, 20192020 primarily reflectdue to a decrease in occupancy and changes due to leasing activity and the impact of our acquisition 196 Orchard Street properties.certain tenants being placed on cash basis.
Revenue from Tenants
Revenue from tenants increased $0.8decreased $7.0 million to $46.0 million for the nine months ended September 30, 2021, from $53.0 million for the nine months ended September 30, 2020, from $52.22020. Approximately $3.0 million for the nine months ended September 30, 2019 primarily due to anof th increase of $2.6 million relatede decrease is attributable to the acquisitiontermination of 196 Orchard Street in July 2019 and another increase of $1.3 million related to the write-off of below-market leases in connection with several leases terminated duringincluding those with our former tenant, Knotel, as well the current year.impact of abatements (rent credits), lease terminations and tenants that were placed on cash basis at the end of 2020. These increasesdecreases were partially offset by decreases of approximately $0.5 millionhigher revenue from lease termination fees recorded in the prior year period, a $0.3 million decrease in reimbursable operating expenses due to fewer tenants working at the properties, and a $2.3 million decrease due to reducedincreased leasing activity, and the termination of several leasesprimarily at 123 William Street, during the nine months ended September 30, 2020.2021.
Asset and Property Management Fees to Related Parties
Fees for asset and property management services frompaid to our Advisor and Property Manager increased $0.3were $5.6 million toand $5.7 million for the nine months ended September 30, 2021 and 2020, from $5.4 million for the nine months ended September 30, 2019. This is primarily related to the impact of property management fees due to the Property Manager that are no longer adjusted for reimbursable expenses paid by us to third-party property managers beginning on April 1, 2019. The increase was partially offset by a decrease in property management fees due to the calculation being based on cash receipts, which decreased during the nine months ended September 30, 2020 as a result of the COVID-19 pandemic.respectively. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager.
Property Operating Expenses
Property operating expenses increased $0.9$1.6 million to $25.1 million for the nine months ended September 30, 2021 from $23.5 million for the nine months ended September 30, 2020 from $22.7 million2020. This is due to an increase in other non-reimbursable expenses, such as real estate taxes which were the responsibility of certain tenants prior to being put on a cash basis at the end of 2020. As a result, these taxes for the cash-basis tenants have been paid by us during 2021. The increase was partially offset by lower legal fees in the current period due to higher activity in the prior year period related to tenant lease amendment negotiations that are non-reimbursable to us.
Impairments of Real Estate Investments
During the nine months ended September 30, 2019. This increase was primarily due2021, we recorded impairment charges of $0.4 million related to our 421 W. 54th Street - Hit Factory property. We have been evaluating our options for this property, which includes marketing the acquisition of 196 Orchard Street in July 2019 and the increased costs of maintaining our properties, as well as higher non-reimbursable costs such as condo and legal fees.
Acquisition and Transaction Related Expenses
We incurredproperty for sale. As no acquisition and transaction related expensesbuyer has been identified for the nine months endedproperty, it does not qualify to be classified as held for sale on the consolidated balance sheet as of September 30, 2020 and $18,0002021. However, during the third quarter of acquisition and transaction related expenses2021, we recorded impairment charges for this property as it was determined that the nine months endedcarrying value exceeded our estimate of the net selling price of the property as of September 30, 2019.2021.
Listing Expenses
During the nine months ended September 30, 2020, we paidincurred $1.3 million of expenses associated with the Listing. There were no listing expenses for nine months ended September 30, 2021.
Vesting and Conversion of Class B Units
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During the nine months ended September 30, 2020, we recorded a non-cash expense of $1.2 million related to the vesting and conversion of Class B Units. The vesting conditions relating to the Class B Units were fully satisfied upon completion of the Listing. On the Listing Date 65,498 Class B Units were converted into Class A Units, of which 52,398 held by the Advisor were subsequently redeemed for an equal number of shares of Class A common stock during the third quarter of 2020 and the remaining were redeemed for an equal number of shares of Class A common stock during the second quarter of 2021. See Note 9 - Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
Equity-Based Compensation
Equity-based compensationcompensation increased $1.7 $4.6 million to $6.4 million for the nine months ended September 30, 2021 from $1.8 million for the nine months ended September 30, 2020. This increase is related to the amortization of our multi-year outperformance award granted to the Advisor in August 2020 from $64,000(the “2020 OPP”), for which $6.3 million and $1.7 million of expense was recorded during the nine months ended September 30, 2019 due to the recording of $1.6 million of expense related to the2021 and 2020, OPP as well as amortization related to restricted shares of common stock.respectively. Approximately $0.1 million$80,000 and $71,000 of expense was also recorded
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during the three months ended September 30, 2021 and 2020, respectively, for the amortization of restricted shares of common stock. See Note 11 -— Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and restricted shares of common stock.
General and Administrative Expenses
General and administrative expenses increased $0.8increased $0.9 million to $6.6 million for the nine months ended September 30, 2021 compared to $5.7 million for the nine months ended September 30, 2020 compared to $4.9 million2020. General and administrative expenses were materially consistent for the nine months ended September 30, 2019, primarily due to increased legal2021 and audit fees, partially offset2020, including reimbursement expenses for administrative and personnel services provided by the Advisor which were $2.8 million and $2.5 million, respectively . $0.4In the three months ended September 30, 2020 a reduction to general and administrative expenses of $0.4 million reimbursementas a receivable from the Advisor relatedadvisor was recorded in relation to the overpayment2019 Bonus Awards to be paid to employees of 2019 bonuses for the Company.Advisor or its affiliates. See Note 9 -— Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
Total reimbursement expenses for administrative and personnel services provided by the Advisor during the nine months ended September 30, 2021 were $2.8 million, of which $0.4 million related to administrative and overhead expenses and $2.4 million were related to salaries, wages, and benefits. During the nine months ended September 30, 2020 total reimbursement expenses for administrative and personnel services provided by the Advisor were $2.5 million, of which $0.4 million related to administrative and overhead expenses and $2.1 million were related to salaries, wages, and benefits.
Pursuant to our advisory agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to an annual limit. During the nine months ended September 30, 2021 and 2020 the annual limit on reimbursement for administrative and overhead expenses was reached. As of September 30, 2020,reached but the annual limit on reimbursementsof reimbursement for salaries, wages, and benefitbenefits was on pace to be reached before the end of the year. This limit will be evaluated without regard to the Company’s bonus reimbursement from the Advisor.not reached. See Note 9 -— Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details. for further details.
Depreciation and Amortization
Depreciation and amortization expense increased $1.3decreased $0.7 million to $23.4 million for the nine months ended September 30, 2021, compared to $24.1 million for the nine months ended September 30, 2020 comparedprimarily due a lower depreciable asset base during the three months ended September 30, 2021 as a result of intangible write-offs in the third and fourth quarters of 2020. There have been no new acquisitions as of September 30, 2021 that would increase the depreciable base. The decrease was partially offset by a deferred leasing commission write-off of $1.3 million associated with lease terminations recorded during the nine months ended September 30, 2021 and a write -off of tenant improvements of approximately $0.3 million.
Interest Expense
Interest expense decreased $0.6 million to $22.8$14.3 million for the nine months ended September 30, 2019 primarily due to a higher depreciable asset base as a result of the 196 Orchard Street acquisition completed in July 2019 and $1.1 million of tenant improvement write-offs associated with lease terminations recorded during the current year.
Interest Expense
Interest expense increased $2.6 million to2021, from $14.9 million for the nine months ended September 30, 2020, from $12.3 million for2020. During the nine months ended September 30, 2019. The increase was primarily due to the loans we entered into in April 2019 secured by 9 Times Square2021 and July 2019 in connection with the acquisition of 196 Orchard Street (see Note 4 - Mortgage Notes Payable, Net to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information). During the nine months ended September 30, 2020, our weighted average outstanding debt balance was $405.0 million and had a weighted-average effective interest rate of 4.35%. DuringThe decrease was due to historical errors recorded in the first and second quarters of 2020, which were subsequently corrected in the fourth quarter of 2020. As more fully discussed inNote 2 —Summary of Significant Accounting Polices to our consolidated financial statements included in this Quarterly Report on Form 10-Q, interest expense for the nine monthsmonth period ended September 30, 2019, our weighted average outstanding debt balance2020 was $344.7overstated by $0.6 million with a weighted-average effective interest ratedue to an error which was corrected in the 4th quarter of 4.35%.2020.

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Other Income
Other income increaseddecreased by approximately $0.1$0.7 million to $0.8 million$44,000 for the nine months ended September 30, 2020,2021, compared to $0.7$0.8 million for the nine months ended September 30, 2020. Approximately $0.6 million of the other income in the 2020 period isdecrease related to the recognition of income in the nine months ended September 30, 2020 from the retention of a deposit forfeited by the buyer on the potential sale of the property commonly known as the “HIT Factory”HIT Factory under a purchase agreement which expired in April 2020. This increase was partially offset by a decline in interest income on invested cash due to a decline in rates.

Cash Flows from Operating Activities
The level of cash flows used in or provided by operating activities is affected by the volume of acquisition activity, the restricted cash we are required to maintain, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses.
Net cash used in operating activities was $4.3 million during the nine months ended September 30, 2021 and consisted primarily of a net loss of $35.7 million, adjusted for non-cash items of $30.5 million, including depreciation and amortization of tangible and intangible real estate assets, amortization of deferred financing costs, accretion/amortization of below market and above market lease liabilities and assets and equity-based compensation. Net cash used in operating activities also included a decrease in prepaid expenses and other assets of $3.9 million which reflects both a reduction due to property taxes paid in 2020 that applied to first half of 2021 and an increase, or outflow, for second-half 2021 taxes that were paid in June 2021. In addition, net cash used in operating activities included a decrease related to accounts payable and accrued expenses associated with operating activities of $0.5 million, an increase in deferred revenue (prepaid rent) of $0.2 million and an increase in straight-line receivable of $2.7 million.
Net cash used in operating activities was $6.0 million during the nine months ended September 30, 2020 and consisted primarily of a net loss of $24.4 million, adjusted for non-cashnoncash items of $25.3 million, including depreciation and amortization of tangible and intangible real estate assets, amortization of deferred financing costs, accretion/amortization of below market and above market lease liabilities and assets and share-based compensation, as well the vesting and conversion of Class B Units.equity-based compensation. Net cash used in operating activities also included an increase in prepaid expenses and other assets of $4.2 million, and an increase in straight-line receivable of $3.5 million, which was partially offset by decreases related to accounts payable and accrued expenses associated with operating activities of $0.5 million and by increases relating to additional deferred revenue (prepaid rent) received of $1.2 million.
Net cash used in operating activities was $0.5 million during the nine months ended September 30, 2019 and consisted primarily of a net loss of $15.2 million, adjusted for noncash items of $22.3 million, including depreciation and amortization of tangible and intangible real estate assets, amortization of deferred financing costs, accretion/amortization of below market and
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above market lease liabilities and assets and share-based compensation. Net cash provided by operating activities also included a decrease in prepaid expenses and other assets of $0.2 million. These decreases were partially offset by an increase in straight-line rent receivable of $4.1 million, a decrease in deferred revenue of $0.5$3.5 million and a decrease related to accounts payable and accrued expenses associated with operating activities of $3.1$0.5 million, which was partially offset by an increase relating to deferred revenue (prepaid rent) received of $1.2 million.
Cash Flows from Investing Activities
Net cash used in investing activities of $2.0 million during the nine months ended September 30, 2021 related to the funding of capital expenditures relating to tenant and building improvements at 123 William Street and 1140 Avenue of the Americas.
Net cash used in investing activities of $3.2 million during the nine months ended September 30, 2020 related to the funding of capital expenditures relating to tenant and building improvements at 9 Times Square, 123 William Street and 1140 Avenue of the Americas.
Cash Flows from Financing Activities
Net cash used in investingprovided by financing activities of $43.8was $1.1 million during the nine months ended September 30, 20192021 related to net proceeds from the net cash paid forissuance of common stock of $5.3 million, partially offset by the acquisitionpayment of our 196 Orchard Street propertydividends on common stock of $38.3$3.9 million with a deposit and the fundingrepurchase of capital expenditures relating to tenant improvements at 9 Times Square and 123 William Streetcommon stock as part of $5.6the tender offer completed in January 2021 of $0.2 million.
Cash Flows from Financing Activities
Net cash used in financing activities was $0.3 million during the nine months ended September 30, 2020 related to the redemption of fractional shares of common stock and restricted shares following the Reverse Stock Split that occurred on August 5, 2020. Refer to Note 7 -— Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
Net cash provided by financing activities was $51.1 million during the nine months ended September 30, 2019 related to proceeds from mortgage notes payable of $55.0 million, partially offset by payments of financing costs of $3.9 million.
Liquidity and Capital Resources
Our principal demands for cash are to fund our operating and administrative expenses (including debt service obligations), capital expenditures (including tenant improvement and leasing commission costs related to our properties,properties), dividends to the holders of shares of our debt service obligationsClass A common stock and, subject to capital availability, acquisitions and share repurchases.acquisitions.

As of September 30, 2020,2021, we had cash and cash equivalents of $39.1of $23.2 million as compared to $23.9 million as compared to $51.2of June 30, 2021, $29.4 million as of March 31, 2021 and $31.0 million as of December 31, 2019.2020. Under the guarantee of certain enumerated recourse liabilities of the borrower under one of our mortgage loans, we are required to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million.
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Our principal sources of cash in recent periods have been the net cash, if any, provided by our current property operations, and cash on hand consisting primarilyand, commencing in the second quarter of 2021, proceeds from financings of then-unencumbered assets.our Common Stock ATM Program (defined below). In some recent periods, including the third quarter of 2020 and 2021 to date, the net cash provided by our property operations has not alone been sufficient to fund operating expenses and other capital needs.requirements. The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, which has had, and could continue to have, an adverse effect on the amount of cash we receive from our operations and therefore our ability to fund operating expenses and other capital needs,requirements, which, beginning in October 2020, include dividends to our common stockholders. In addition toDuring the discussion below, please seethird and fourth quarters of 2020 and the “Overview - Management Update onfirst nine months of 2021, the Impactsoperating results at 1140 Avenue of the COVID-19 Pandemic” section above for additional information on the risksAmericas, 9 Times Square, 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard Garage and uncertainties associated with8713 Fifth Avenue properties were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages for those properties to be triggered and management’s actions takenmay cause an event of default at the loan secured by our 9 Times Square property, as described below. Specifically for these properties, there were early lease terminations, expirations without renewal and a tenant bankruptcy for a significant tenant in response. Duethe 9 Times Square property (Knotel). As a result, at these properties, which together represent 47% of the rentable square feet in our portfolio as of September 30, 2021, we will not be able to use excess cash flow from the properties to fund operating expenses at our other properties and other capital requirements until the breaches have been cured. See “Item 1A. Risk Factors — We have been in breach of several of our mortgage loans for multiple quarters and anticipate that our ongoing breach of one of those loans, which is secured by our 9 Times Square property, may lead to an event of default under the loan in the quarter ended September 30, 2021” for more details.
We continue to focus on increasing occupancy of the portfolio by seeking replacement tenants for leases that had expired or otherwise have been terminated. We believe that certain market tenant incentives we have used and expect to continue to use, including free rent periods and tenant improvements, will support our occupancy rate and extend the average duration of our leases upon commencement of executed leases. While we do not receive cash during initial free rent periods, which has impacted and may continue to impact the net cash provided by our property operations in recent periods adversely, we believe this helps position us to negotiate longer, more attractive lease terms by having the flexibility to include such a feature. Our ability to generate net cash from our property operations depends, in part on the amount of additional cash we are able to generate through our leasing initiatives, which is not assured, and on our ability to access any excess cash we are able to generate from properties that are encumbered by mortgages where a cash trap event has occurred (see below for more details), which also is not assured.
Cash flow from operating activities in the third quarter of 2021 was negative, primarily due to rent deferrals, vacancies and the other impacts of COVID-19, as well as the terms of our leases,and we anticipate we maythe need to continue to fund a portion of our operating expenses and other capital needsrequirements with cash on hand untilthrough at least the first quarterend of 2021. We do not have any significant debt principal repayments due until 2024 (except we may be required to repay a significant amount of principal if an event of default occurs under the loan secured by our 9 Times Square property, as described below), and we believe that we will have sufficient cash flowavailable to us to meet our operating needscash requirements over the next year. We expect to fund our future capital needs including for acquisitionsprimarily through proceeds from our Common Stock ATM Program or share repurchases, if authorized,other future equity offerings. We may also fund our future capital needs through a combination of net cash, if any, provided by our current property operations, or the operations of properties that we may acquire in the future, proceeds from property dispositions and proceeds from our Common Stock ATM Program (as defined below) or other future equity offerings(if any) and debt financings.
There can be no assurance, however, that capital sufficient to meet our capital needs will be available to us on favorable terms, or at all.
Please see Item 1.A.See “Item 1A. Risk Factors. -Factors — Our ability to fund our capital needsrequirements, including potential payments of principal on mortgage loans, will depend on, among other things, the amount of cash we are able to generate from our operations which is dependent on, among other things, the impact of the COVID-19 pandemic on our tenants and other factors outside of our control, and our ability to access capital from outside sources, which may not be available on acceptable or favorable terms, or at all.all.”
Mortgage Loans
We have usedAs of September 30, 2021, we had six mortgage financing to fund a portion of the purchase priceloans secured by seven of our acquisitions and have also incurred mortgage loans on previously unencumberedeight properties resulting in a total of six mortgage loans with an aggregate balance of $405.0 million as of September 30, 2020 withmillion. These mortgage loans require us to pay interest at a weighted-average effective interest rate of 4.35%. Based on debt outstanding per annum and otherwise comply with the terms of the agreements governing the loans. As described below in more detail, we have breached covenants under certain of these loan agreements which has resulted in any excess cash generated by these properties being maintained in separate, segregated accounts as of September 30, 2020, weadditional collateral for the loans and may, in one case, require us to make a substantial principal payment that would significantly impact our capital resources. We do not have principal payments due on our mortgage notes payable for the remainder of 2020a corporate-level revolving credit facility or the year ending December 31, 2021. We do not currently anticipate incurring additionalany other corporate-level indebtedness, secured by our existing properties, however, despite a tightening of the credit markets,and there can be no assurance we expect towould be able to continue to use debtobtain corporate-level financing as a
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source of capital to the extent we acquire additional propertieson favorable terms, or repurchase shares, if authorized.at all. Our only asset that is not serving as collateral for a mortgage is 421 W. 54th Street - Hit Factory, which is unoccupied and therefore unlikely to be accepted as collateral for a new mortgage loan. See “-Acquisitions and Dispositions” section below for further detail on this property. We do not currently anticipate incurring additional indebtedness secured by our existing properties, however, we expect to be able to continue to use debt financing as a source of capital to the extent we acquire additional properties.


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9 Times Square
We 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 ended December 31, 2020, March 31, 2021 and June 30, 2021. The principal amount of the loan was $55.0 million as of September 30, 2021. The breaches, while not events of default, have required us 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.
We also believe that we have breached these covenants for the quarter ended September 30, 2021, however the formal reporting to the lender will not occur until late November 2021. If the lender then determines at that time that we have breached the covenants during the quarter ended September 30, 2021, as we anticipate the lender will determine, the quarter ended September 30, 2021 would be the fourth consecutive quarter we have been in breach. This would cause an event of default to occur if we do not “right size” the loan by either (i) repaying a significant portion of the loan or (ii) providing 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.
We have actively engaged in discussions with the lender to seek relief in relation to the “right size” requirement in the loan and the associated default. There is no assurance that we will be able to reach a satisfactory agreement with the lender or make a significant repayment of principal (the exact amount of which cannot be estimated presently) 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 substantial principal repayment would significantly impact our capital resources which could have a material adverse effect on our ability to fund our operating expenses (including debt service obligations), acquisitions, capital expenditures and dividends to the holders of shares of our Class A common stock.
1140 Avenue of the Americas
We breached both a debt service coverage provision and a reserve fund provision under our non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last five quarters. The principal amount of the loan was $99.0 million as of September 30, 2021. 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 we satisfy the required debt service coverage ratio for two consecutive quarters, whereupon the additional collateral will be released. We can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications. As of September 30, 2021, we have $5.2 million in cash that is retained by the lender and maintained in restricted cash.
400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage
We 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 principal amount of the loan was $50.0 million as of September 30, 2021. The two parking garage tenants at this property have not paid rent in accordance with their lease agreements for 18 months and were placed on a cash basis in the fourth quarter of 2020. Our breaches of the debt services coverage covenant are not events of default but rather require us 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. The covenant may be cured after achieving two consecutive quarters when the required debt service coverage for the property is maintained. We can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications.
8713 Fifth Avenue
We breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue during the second and third quarters of 2021. The principal amount for the loan was $10.0 million as of September 30, 2021. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period. We have 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. We have not yet determined whether we will do so. We also have 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 we do 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 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 we replace the current manager with a third party manager chosen by us.
We entered into new leases at 123 William Street that collectively represent over 60,000 square feet during the nine months ended September 30, 2021, and we are working to find new tenants to replace the portion of the space previously leased to Knotel that has not yet been re-leased and to increase the rental income at our 1140 Avenue of the Americas and 9 Times Square properties through leasing activity. There can be no assurance, however, that we will be able to lease all or any portion
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of our currently vacant space at any property on acceptable or favorable terms, or at all, or that we will not experience further terminations. Unless we are able to increase the occupancy at the properties described herein on terms that allow us to cure the covenant breaches described above, we will be unable to access excess cash flow from those properties and the lenders may be able to exercise additional remedies including foreclosing at 9 Times Square.
As of September 30, 2021, we have $5.2 million of cash that is maintained in a restricted cash account as a result of covenant breaches described above, all of which relates to the loan secured by our 1140 Avenue of the Americas property. This restricted cash is not available to be used for other corporate purposes. There is no assurance that we will be able to cure these breaches. Moreover, if we experience 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 we may also become restricted from accessing excess cash flows from those properties. We were in compliance with the remaining covenants under our mortgage notes payable as of September 30, 2021.
Common Stock ATM Program
On October 1, 2020, we entered into an equity distribution agreement, pursuant to which we may, from time to time, offer, issue and sell to the public, through our 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 months ended September 30, 2021, we sold 212,049 shares of Class A common stock through the Common Stock ATM Program for gross proceeds of $1.9 million, before commissions paid of $19,000 and issuance costs of $0.3 million. During the nine months ended September 30, 2021, we 466,651 shares of Class A common stock through the Common Stock ATM Program for gross proceeds of $5.3 million, before commissions paid of $53,000 and issuance costs of $0.8 million. The issuance costs were paid during the year ended December 31, 2020 and were re-classed to additional-paid-in capital upon the initial sales under Common Stock ATM Program in the second quarter of 2021 and upon additional sales made in the third quarter of 2021.
Repurchase Program
Our board of directors adopted a resolution authorizing consideration of share repurchases of up to $100.0 million of shares of Class A common stock over a long-term period following the listing of our Class A common stock on the NYSE. Actual repurchases would be reviewed and approved by our board of directors based on management recommendations taking into consideration all information available at the specific time including our available cash resources (including the ability to borrow), market capitalization, trading price and alternative uses such as acquisitions. Repurchases 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. As of September 30, 2021 no shares had been repurchased by the Company under this program. As of September 30, 2021, we also had cash and cash equivalents of approximately $23.2 million. We are also subject to a covenant under one of our mortgage loans requiring us to maintain minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million.
Tender Offer
On December 28, 2020, in response to an unsolicited offer to our stockholders, we commenced a tender 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 offer expired on January 27, 2021, and we purchased 26.236 shares of Class B common stock for a total cost of approximately $0.2 million, including fees and expenses relating to the tender offer, with cash on hand in February 2021.
Leasing Activity/Occupancy
We had an occupancy level of 85.3% across our portfolio as of September 30, 2021, as compared to 87.0% as of December 31, 2020. The significant occupancy changes were as follows:
•Occupancy at 9 Times Square declined to 61.3% as of September 30, 2021, compared to 78.7% as of December 31, 2020. The decrease was due to the termination of our leases with Knotel, which represented over 32,000 occupied square feet at this property as of December 31, 2020, with one new lease signed during the three and nine months ended September 30, 2021.
•Occupancy at 123 William Street increased to 90.8% as of September 30, 2021, compared to 90.3% as of December 31, 2020. The increase was due to new leases signed in the first nine months of 2021, which more than offset the termination of our leases with Knotel and the expiration of another lease.
As of December 31, 2020, occupancy included the leased space occupied by one of our former tenants, Knotel (6.2%), which was a tenant at both our 9 Times Square and 123 William Street properties. In January 2021, Knotel filed for bankruptcy and all leases were terminated effective January 31, 2021. If Knotel was not included in the occupancy calculation as of December 31, 2020, occupancy across our portfolio would have been 80.8%. In addition, during the year ended December 31, 2020, we put certain tenants on a cash basis and fully reserved certain receivables and reflected this as a reduction in revenue from tenants during the period. Approximately 22% of the rent due for the 400 E. 67th Street property is recorded on a cash basis only as of September 30, 2021. All of the rent for the 200 Riverside Boulevard property is recorded on a cash basis only
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as of September 30, 2021. We have not received any rent from tenants that were put on a cash basis in the fourth quarter of 2020. For additional information on our accounting policy related to revenue recognition, see Note 2 — Summary of Significant Accounting Polices to our consolidated financial statements included in this Quarterly Report on Form 10-Q. Also, wefor a discussion of overall impact on our result of operations for this and other reserves and write-offs for tenant receivables recorded in 2021 and for additional information on leasing activity during the three and nine months ended September 30, 2021, see the “Results of Operations” section.
Acquisitions and Dispositions
We had no acquisitions or dispositions during the nine months ended September 30, 2021.
We also continue to evaluate our strategic alternatives for our 421 W. 54th Street - Hit Factory property, where the sole tenant terminated its lease early and vacated the space during the second quarter of 2018. During the three months ended March 31, 2020 we entered into a purchase and sale agreement to dispose of this property for a contract price of $7.1 million. During the three months ended June 30, 2020, the buyer terminated the transaction and we retained the security deposit of $0.7 million. There can be no assurance we will be able to find a replacement buyer or a new tenant or as to how much, if any, liquidity we will be able to generate from this property. Moreover, because the property is unoccupied, it does not generate any revenues that offset the cost of owning and maintaining the property.
Our mortgage notes payable require compliance with certain property-level debt covenants. We are currently in breach of a debt service coverage provision and a reserve fund reserve provision under our non-recourse mortgage secured by the 1140 Avenue of the Americas property. These breaches are not events of default, rather they require excess cash (after payment of operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants may be cured after two quarters when the required debt service coverage is maintained, whereupon the additional collateral will be released. Until these breaches have been cured, we will not be able to use excess cash flow from this property to fund operating expenses and other capital needs. We were in compliance with the remaining covenants under our mortgage notes payable as of September 30, 2020.
Common Stock ATM Program
On October 1, 2020, we entered into an Equity Distribution Agreement, pursuant to which we may, from time to time, offer, issue and sell to the public, through our 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”). Under SEC rules, as long as the aggregate market value of our outstanding Class A common stock held by non-affiliates, or public float, remains below $75.0 million, the maximum aggregate offering amount of the shares sold pursuant to the Common Stock ATM Program will be $18.7 million. We will be able to offer and sell shares in excess of $18.7 million once our public float has increased or we are no longer subject to these limits. We have not yet sold any shares of Class A common stock through the Common Stock ATM Program.
Authorized Repurchase Program
Our board of directors has adopted a resolution authorizing consideration of share repurchases of up to $100.0 million of shares of Class A common stock over a long-term period following the Listing. Actual repurchases would be reviewed and approved by our board of directors based on management recommendations taking into consideration all information available at the specific time including our available cash resources (including the ability to borrow), market capitalization, trading price and alternative uses such as acquisitions. Repurchases 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. As of September 30, 2020, no shares had been repurchased by the Company under this program. As of September 30, 2020, we also had cash and cash equivalents of approximately $39.1 million and had total principal amount of debt outstanding of approximately 46% of our total assets. We are also subject to a covenant under one of our mortgage loans requiring us to maintain minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million. See Item 1.A. “Risk Factors — “Our ability to fund our capital needs will depend on, among other things, the amount of cash we are able to generate from our operations, which is dependent on, among other things, the impact of the COVID-19 pandemic on our tenants and other factors outside of our control, and our ability to access capital from outside sources, which may not be available on favorable terms, or at all.”
Leasing Activity
We had an occupancy level of 88.6% across our portfolio as of September 30, 2020, as compared to 89.6% as of December 31, 2019. Specifically, the occupancy level at 9 Times Square declined from 90.1% as of December 31, 2019 to 81.0% as of September 30, 2020, due to the expiration and termination of leases during the nine months ended September 30, 2020, which was offset by the occupancy level at 1140 Avenue of the Americas increasing from 79.0% as December 31, 2019 to 84.0% as of September 30, 2020 due to in part to the commencement of a lease during the second quarter of 2020 of a property that had been vacant for less than 12 months. See —Results of Operations for additional information on leasing activity during the three months ended September 30, 2020.
During the third quarter of 2020, a lease amendment was executed for a tenant located at 1140 Avenue of the Americas which extends the term of the original lease by 10 years (assuming the tenant does not exercise an option to terminate extension of the term after five years (in 2028) upon payment of a termination fee) and increases the annual rent in comparison to the original agreement. We continue to focus on increasing occupancy of the portfolio by seeking replacement tenants for leases that had expired or otherwise have been terminated. We believe that certain market tenant incentives we have used and expect to continue to use, including free rent periods and tenant improvements, will drive occupancy rates higher and have extended the average duration of our leases upon commencement of executed leases. While we do not receive cash during initial free rent periods, which has impacted and may continue to impact the net cash provided by our property operations in recent periods
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adversely, we believe this helps position us to negotiate longer, more attractive lease terms by having the flexibility to include such a feature.
Capital Expenditures
For the nine months ended September 30, 2020,2021, we funded $3.2and aggregate of $2.0 million of capital expenditures primarily related to tenant and building improvements at 123 William Street 9 Times Square, and 1140 Avenue of the Americas, including $1.7 million related to 123 Williams Street.Americas. The capital expenditures for the nine months ended September 30, 20192020 of $5.6$3.2 million were primarily related to improvements at 9 Times Square and 123 William Street. For the year ended December 31, 2019, we funded $7.7 million of capital expenditures primarily for tenant improvements at our 123 William Street, 9 Times Square and 1140 Avenue of the Americas properties. We may invest in additional capital expenditures to further enhance the value of our investments.properties. Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances. We expect theThe amount we invest in capital expenditures during 2020,the full year 2021, including amounts we are, or expect to be, contractually obligated to fund under new or replacement leases, will likely be less than $3.8 million, the amount invested in 2019 but not materially higher than that amount.2020. We funded our capital expenditures during the three nine months ended September 30, 2021 from cash on hand consisting of proceeds from financings and expect to fund any future capital expenditures with available cash on hand. The recent economic uncertainty created by the COVID-19 global pandemic has impacted and could continue to impact our decisions on the amount and timing of future capital expenditures.
Non-GAAP Financial Measures
This section discusses the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”) and Cash Net Operating Income (“Cash NOI”). A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income (loss), is provided below.

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Funds from Operations and Core Funds from Operations
Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from sales of certain real estate assets, gain and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated partially-owned entities (including our OP) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a
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more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, rent collection rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Core Funds from Operations
Beginning in the third quarter 2020, following the Listing,listing of our Class A common stock on the NYSE, we are nowbegan presenting Core FFO, as a non-GAAP metric. We believehave presented prior periods on a comparable basis so that the metric is useful to the users of our financial statements. Our presentation of Core FFO is utilizedmay not be comparable to Core FFO reported by other publicly-traded REITs and as such, is a more useful and comparable metric to our new peer group.that define Core FFO differently. In calculating Core FFO, we start with FFO, then we exclude the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating items include acquisition and transaction related costs for dead deals, debt extinguishment costs, listing related costs and expenses (including the vesting and conversion of Classpartnership units in the OP designated as “Class B UnitsUnits” and cash expenses and fees which are non-recurring in nature incurred in connection with the Listinglisting of our Class A common stock on the NYSE and related transactions), and non-cash equity-based compensation. We add back non-cash write-offs of deferred financing costs and prepayment penalties incurred with the early extinguishment of debt which are included in net income but are considered financing cash flows when paid in the statement of cash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of operations. By excluding expensed acquisition and transaction dead deal costs as well as non-operating costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.
Accounting Treatment of Rent Deferrals
The majority of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information on second quarter 2020 lease amendments)information). As a result of relief granted by the FASB and the SEC related to lease modification accounting, we do not expect rental revenue used to calculate Net Income, and NAREIT FFO and Core FFO have not been, and we do not expect it to be, significantly impacted by these types of deferrals. For a detailed discussion of our revenue recognition policy, including details related to the relief granted by the FASB and SEC, see Note 2 — Significant Accounting Polices to our consolidated financial statements in this Quarterly Report on Form 10-Q.
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The table below reflects the items deducted or added to net loss in our calculation of FFO and Core FFO for the periods presented.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20202019
2020 (1)
2019
Net loss attributable to common stockholders (in accordance with GAAP)$(12,288)$(4,809)$(24,362)$(15,220)
   Depreciation and amortization8,639 7,804 24,070 22,771 
FFO (As defined by NAREIT) attributable to common stockholders(3,649)2,995 (292)7,551 
   Acquisition and transaction related— — — 18 
   Listing expenses (2)
1,299 — 1,299 — 
   Vesting and conversion of Class B Units1,153 — 1,153 — 
   Equity-based compensation1,711 24 1,758 64 
   Loss on extinguishment of debt— — — — 
Core FFO attributable to common stockholders$514 $3,019 $3,918 $7,633 
___________
(1) Included in Net loss, FFO and Core FFO for the nine months ended September 30, 2020 is other income of approximately $0.6 million related to the recognition of income from the retention of a deposit forfeited by the potential buyer on the potential sale of the property commonly known as the HIT Factory pursuant to a purchase agreement which expired in April 2020.
(2) Listing expenses include financial advisory and other professional fees and other expenses incurred in connection with the Listing in August 2020. These costs are non-recurring and are not part of the operations of our real estate portfolio as they were incurred only as a result of our decision to list our Class A common stock on the NYSE.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Net loss attributable to common stockholders (in accordance with GAAP)$(11,124)$(12,288)$(35,711)$(24,362)
Impairment of real estate investments413 — 413 — 
   Depreciation and amortization7,851 8,639 23,400 24,070 
FFO (deficit) (As defined by NAREIT) attributable to common stockholders(2,860)(3,649)(11,898)(292)
   Listing expenses— 1,299 — 1,299 
   Vesting and conversion of Class B Units— 1,153 — 1,153 
   Equity-based compensation2,121 1,711 6,356 1,758 
Core FFO (deficit) attributable to common stockholders$(739)$514 $(5,542)$3,918 


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Cash Net Operating Income
Cash NOI is a non-GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, less income from investment securities and interest, plus general and administrative expenses, acquisition and transaction-related expenses, depreciation and amortization, other non-cash expenses and interest expense. In calculating Cash NOI, we also eliminate the effects of straight-lining of rent and the amortization of above- and below-market leases. Cash NOI should not be considered an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity.
We use Cash NOI internally as a performance measure and believe Cash NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe Cash NOI is a useful measure for evaluating the operating performance of our real estate assets and to make decisions about resource allocations. Further, we believe Cash NOI is useful to investors as performance measures because, when compared across periods, Cash NOI reflects the impact on operations from trends in occupancy rates, rental rates, rent collection rates, operating costs and acquisition activity on an unlevered basis. Cash NOI excludes certain components from net income in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not linked to the operating performance of a real estate asset and Cash NOI is not affected by whether the financing is at the property level or corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. Cash NOI presented by us may not be comparable to Cash NOI reported by other REITs that define Cash NOI differently. We believe that in order to facilitate a clear understanding of our operating results, Cash NOI is not an alternative to, and should be examined in conjunction with net income (loss) as presented in our consolidated financial statements.
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The table below reflects the items deducted or added to net loss in our calculation of Cash NOI for the periods presented.
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)(In thousands)2020201920202019(In thousands)2021202020212020
Net loss (in accordance with GAAP)Net loss (in accordance with GAAP)$(12,288)$(4,809)$(24,362)$(15,220)Net loss (in accordance with GAAP)$(11,124)$(12,288)$(35,711)$(24,362)
Other incomeOther income(19)(221)(779)(686)Other income(5)(19)(44)(779)
General and administrativeGeneral and administrative1,234 1,176 5,727 4,929 General and administrative1,884 1,234 6,600 5,727 
Asset and property management fees to related partiesAsset and property management fees to related parties1,879 1,962 5,721 5,382 Asset and property management fees to related parties1,862 1,879 5,616 5,721 
Impairment of real estate investmentsImpairment of real estate investments413 — 413 — 
Acquisition and transaction relatedAcquisition and transaction related— — — 18 Acquisition and transaction related— — — — 
Listing expensesListing expenses1,299 — 1,299 — Listing expenses— 1,299 — 1,299 
Vesting and conversion of Class B UnitsVesting and conversion of Class B Units1,153 — 1,153 — Vesting and conversion of Class B Units— 1,153 — 1,153 
Equity-based compensationEquity-based compensation1,711 24 1,758 64 Equity-based compensation2,121 1,711 6,356 1,758 
Depreciation and amortizationDepreciation and amortization8,639 7,804 24,070 22,771 Depreciation and amortization7,851 8,639 23,400 24,070 
Income tax provisionIncome tax provision14 — 14 — 
Interest expenseInterest expense5,089 4,681 14,915 12,310 Interest expense4,803 5,089 14,279 14,915 
Accretion of below- and amortization of above-market lease liabilities and assets, netAccretion of below- and amortization of above-market lease liabilities and assets, net(555)(566)(2,807)(1,459)Accretion of below- and amortization of above-market lease liabilities and assets, net(367)(555)(807)(2,807)
Straight-line rent (revenue as a lessor)Straight-line rent (revenue as a lessor)(2,107)(1,267)(3,582)(4,207)Straight-line rent (revenue as a lessor)(1,738)(2,107)(2,816)(3,582)
Straight-line ground rent (expense as lessee)Straight-line ground rent (expense as lessee)28 28 82 82 Straight-line ground rent (expense as lessee)28 28 82 82 
Cash NOICash NOI$6,063 $8,812 $23,195 $23,984 Cash NOI$5,742 $6,063 $17,382 $23,195 
Dividends
We are required to distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains. A tax loss for a particular year eliminates the need to distribute REIT taxable income to meet the 90% distribution requirement for that year and may minimize or eliminate the need to pay distributions in order to meet the distribution requirement in one or more subsequent years. We had a loss for tax purposes in 20192020 and therefore there was no REIT taxable income requiring distribution to maintain our qualification as a REIT in 2019.2020.
On February 27, 2018, our board of directors unanimously authorized a suspension of the distributions we pay to holders of our common stock, effective as of March 1, 2018, and we did not pay distributions during the year ended December 31, 2019 or the three or nine months ended September 30, 2020. In connection with the Listing, we announced that our board of directors intended to reinstate distributions in the form of dividends to our common stockholders in the amount of $0.40 per share of common stock per year. On October 1, 2020, we declared a dividend equal to $0.04889 $0.04889 per share on each share of common stock.stock, which was paid on October 15, 2020. The dividend was calculated to covercovered the period from August 18, 2020, the date on which shares of Class A common stock commenced trading on the NYSE, through September 30, 2020, based on the previously-announced cash dividend rate equal to $0.40$0.40 per share per year. Dividends authorizedIn January, April, July and October of 2021 we also declared and paid a dividend equal to $0.10 per share on each share of common stock.
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Decisions regarding the frequency and amount of any future dividends we pay on our common stock will remain at all times entirely at the discretion of our board of directors, which reserves the right to change our dividend policy at any time and for any reason. Our ability to pay dividends in the future depends on our ability to operate profitably and to generate sufficient cash flows from the operations of our existing properties and any properties we may acquire. We cannot guarantee that we will be able to pay dividends on a regular basis on our common stock or any other class or series of stock we may issue in the future. Our board of directors previously suspended and then reinstituted dividends. There is no assurance we will continue to pay dividends at the current rate, or at all. The amount of dividends payable to our stockholders is determined by our board of directors and declared by us are payable as dividends in arrearsis dependent on a quarterly basisnumber of factors, including funds available for dividends, our financial condition, provisions in our loans and any agreement we are party to holders of record on a single quarterly record date. The actual amount and timing of any dividend we ultimately pay cannot be assured and remain subject to authorization fromthat may restrict our board of directors. Our ability to pay dividends or repurchase shares, capital expenditure requirements, as applicable, requirements of Maryland law and other distributions in the future will depend in part on the amount of cash we are ableannual distribution requirements needed to generate frommaintain our operations. The amount of cash available for dividends is affected by many factors, suchstatus as capital availability, rental income from acquired properties and our operating expense levels, among others.a REIT. Our net cash used in operating activities was approximately $6.0$4.3 million for the nine months ended September 30, 2020. There is no assurance that rents2021. During this period, we paid dividends of $3.9 million. These dividend payments were funded from cash on hand.
The following table shows the properties we own or may acquire insources for the future will increase our cash or that sufficient cash will be available for us to paypayment of dividends to our stockholder atholders of common stock and distributions to holders of LTIP Units for the current rate, or at all.periods indicated:
Three Months EndedThree Months EndedThree Months EndedNine Months Ended
March 31, 2021June 30, 2021September 30, 2021September 30, 2021
(In thousands)Percentage of DividendsPercentage of DividendsPercentage of DividendsPercentage of Dividends
Dividends and Distributions:
Dividends to holders of common stock$1,280 $1,282 $1,309 $3,871 
Distributions to holders of LTIP Units40 40 40 120 
Total dividends and distributions$1,320 $1,322 $1,349 $3,991 
Source of dividend coverage:
Cash flows provided by operations$1,320 100 %$— — %$1,086 $— $— (1)— %
Available cash on hand— — %1,322 100 %263 100 %3,991 (1)100 %
Total sources of dividend and distribution coverage$1,320 100 %$1,322 100 %$1,349 100 %$3,991 100 %
Cash flows provided by (used in) operations (GAAP basis)$2,145 $(7,542)$1,086 $(4,311)
Net loss attributable to common stockholders (in accordance with GAAP)$(13,535)$(11,052)$(11,124)$(35,711)

(1) Year-to-date totals do not equal the sum of the quarters. Each quarter and year-to-date period is evaluated separately for purposes of this table.
Contractual Obligations
There were no material changes in our contractual obligations as of September 30, 2020,2021, as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Election as a REIT 
    We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), effective for our taxable year ended December 31, 2014. We believe that, commencing with such taxable year, we have been organized and have operated in a manner so that we qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner but can provide no assurances that we will operate in a manner so as to remain qualified for taxation as a REIT. To continue to qualify as a REIT,
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we must distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard for the deduction for dividends paid and excluding
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net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify as a REIT, we generally will not be subject to U.S. federal corporate income tax on thatthe portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify as a REIT, we may be subject to certain state and local taxes on our income and properties as well as U.S. federal income and excise taxes on our undistributed income. A tax loss for a particular year eliminates the need to distribute REIT taxable income to meet the 90% distribution requirement for that year and may minimize or eliminate the need to pay distributions in order to meet the distribution requirement in one or more subsequent years. We had a loss for tax purposes in 20192020 and therefore there was no REIT taxable income requiring distribution to maintain our qualification as a REIT.REIT in 2020.
Inflation
Many of our leases contain provisions designed to mitigate the adverse impact of inflation. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions. In addition, our net leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in operating expenses resulting from inflation.
Related-Party Transactions and Agreements
See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There has been no material change in our exposure to market risk during the nine months ended September 30, 2020.2021. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.2020.
Item 4. Controls and Procedures.
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of such period, that our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.
No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended September 30, 20202021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to any material pending legal proceedings.
Item 1A. Risk Factors.

Except as set forthdescribed below, there have been no material changes to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 20192020 and we direct your attention to those risk factors, in addition to the new summary section we are including belowand our risk factor on COVID-19 and other similar disruptions.factors.

Summary Risk FactorsWe have been in breach of several of our mortgage loans for multiple quarters and anticipate that our ongoing breach of one of those loans, which is secured by our 9 Times Square property, may lead to an event of default under the loan in the quarter ended September 30, 2021.

The following is a summaryAs of someSeptember 30, 2021, we were in breach of covenants under four separate mortgage loans aggregating $214.0 million in principal amount, which are secured by four of our properties - 1140 Avenue of the risksAmericas, 9 Times Square, 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - Icon Garage and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presentedby 8713 Fifth Avenue. These properties represent, in the aggregate, 47% of the total rentable square feet in our forward-looking statements,portfolio. These breaches, which have been ongoing at certain of these properties for several quarters are described in more detail in “Management’s Discussion and representAnalysis of Financial Condition and Results of Operation — Liquidity and Capital Resources — Mortgage Loans” are not events of default, but rather require us to hold any excess cash generated by the properties, if any, in a summarysegregated account as additional collateral under the loans. As of September 30, 2021, an aggregate of $5.2 million in cash is held in these accounts and not otherwise available to us.
We 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 principal factorsquarters ended December 31, 2020, March 31, 2021 and June 30, 2021. During the quarter ended September 30, 2021, we also believe we breached these covenants and expect to deliver our formal reporting to the lender in late November 2021. We anticipate the lender will determine that makewe have breached the covenants for the quarter ended September 30, 2021 and an investmentevent of default would occur if we do not “right size” the loan by either (i) repaying a significant portion of the loan or (ii) providing the lenders with additional collateral in us speculativethe form of cash or risky:

•Alla letter of our executive officers are also officers, managers or holders of a direct or indirect controlling interestcredit, in our Advisor and other entities affiliated with AR Global;each case in an amount sufficient to cure the covenant breaches when applied as a result, our executive officers, our Advisorreduction of the loan balance.
We have actively engaged in discussions with the lender to seek relief in relation to the “right size” requirement in the loan 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 on tenants for our revenue and, accordingly, our revenuethe associated default. There is dependent upon the success and economic viability of our tenants;
•We may notno assurance that we will be able to achieve our rental rate objectives on new and renewal leases and our expensesreach a satisfactory agreement with the lender or make a significant repayment of principal (the exact amount of which cannot be estimated presently) which could be greater, which may impact operations;
•The actual amount and timing of any dividends we may payresult in the future cannot be assured.
•lender accelerating the principal amount due under the loan and exercising other remedies including foreclosing on the property. Further, funding any substantial principal repaymOur properties may be adversely affected by economic cycles and risks inherent to New York City;
•ent We are obligated to pay fees,would significantly impact our capital resources which may be substantial, to our Advisor and its affiliates;
•We may fail to continue to qualify to be treated ascould have a REIT;
•We are subject to risks associated with civil unrest, a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, including negative impactsmaterial adverse effect on our tenantsability to fund our operating expenses (including debt service obligations), acquisitions, capital expenditures and their respective businesses;
•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 relatingdividends to the purchaseholders of 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;
•The trading priceshares of our Class A common stock may fluctuate significantly and the volatility could increase as shares of our Class B common stock convert to Class A common stock;stock.
•Our ability to fund our capital needsrequirements, including potential payments of principal on mortgage loans, will depend on, among other things, the amount of cash we are able to generate from our operations which is dependent on, among other things, the impact of the COVID-19 pandemic on our tenants and other factors outside of our control, and our ability to access capital from outside sources, which may not be available on favorable terms,acceptable or at all;
•If we and our Advisor are unable to find suitable investments, then we may not be able to achieve our investment objectives or pay dividends; and
•As of September 30, 2020, we owned only eight properties and therefore have limited diversification.

We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, which has caused severe disruptions in the New York City, U.S. and global economy and financial markets and has had adverse effects and may worsen.

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The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across many sectors and areas of the global economy and financial markets, leading to significant adverse impacts on economic activity as well as significant volatility and negative pressure in financial markets.
The impact of the COVID-19 pandemic has been rapidly evolving. In New York City, where our tenants operate their businesses and where our properties are located, preventative measures have been taken to alleviate the public health crisis, initially including “shelter-in-place” or “stay-at-home” orders issued by local and state authorities under which tenants were required to cease all “non-essential” in-office functions. These measures have had and continue to have a significant adverse impact on businesses. In June 2020, New York began its re-opening process by easing restrictions that were initially imposed and provided for a phased-in approach towards reopening that would enable businesses to operate.Due to recent increases in COVID-19 cases in certain New York City neighborhoods, businesses in those neighborhoods must temporarily close or have limited in-person services. Areas of New York City have been designated in zones based on their number of cases, and each type of zone has different restrictions. A number of our tenants operate businesses that require in-person interactions. Even for businesses that have not been forced to close or have been permitted to reopen, 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 our tenants which may further impact the ability of our tenants to pay their rent obligations to us when due. Furthermore, certain categories of tenants, including retail and certain types of office tenants, such as those that utilize share spaces and co-working, are particularly hard hit by COVID-19 and the resulting economic disruption. Our office tenants have also had to make adaptions in response to these orders and current and future limitations on in-person work environments could lead to a sustained shift away from in-person work environments and have an adverse effect on the overall demand for office space across our portfolio. This could make it difficult for us to renew or re-lease our properties at rental rates equal to or above historical rates. We could also incur more significant re-leasing costs, and the re-leasing process with respect to both anticipated and unanticipated vacancies could take longer.
The COVID-19 pandemic has triggered a decrease in global economic activity that has resulted in a global recession. A sustained downturn in the U.S. economy due to the prolonged existence and threat of the COVID-19 pandemic could further impact the ability of certain of our tenants to pay their rent when due. Our ability to lease space and negotiate and maintain favorable rents could also be negatively impacted by a prolonged recession in the economy. Moreover, the significant downturn in the New York City economy and resulting job losses could substantially reduce the demand for leasing space in our properties which could result in a decline in our occupancy percentage and reduction in rental revenues.
In addition, the COVID-19 pandemic has also led to disruptions in operations at manufacturing facilities and distribution centers in many countries, which could impact supply chains and the operations of certain of our tenants, further impacting their revenues and ability to pay rent when due.
Our tenants may also be negatively impacted if the outbreak of COVID-19 occurs within their workforce or otherwise disrupts their management. Further, certain of our tenants may not have been eligible for or may not have been successful in securing stimulus funds under the Coronavirus Aid, Relief, and Economic Security Act of 2020 and may similarly be unsuccessful in securing funds under any other government stimulus programs in the future.
As a result of these and other factors, certain tenants have been, or may be in the future, unwilling or unable to pay rent in full or on a timely basis due to bankruptcy, lack of liquidity, lack of funding, operational failures, or for other reasons. Our portfolio is primarily comprised of office, retail, bank, and restaurant industry tenants with 81% and 18% of third quarter 2020 cash rent due from office and retail tenants, respectively. During the third quarter 2020, we have collected 91% of cash rent due from our office tenants, 61% of cash rent due from our retail tenants and 85% of cash rent due across our entire portfolio, including 85% of cash rent due from our top ten tenants (based on annualized straight-line rent as of September 30, 2020). The cash rent received across our entire portfolio was consistent with the second quarter in which we reported total portfolio original cash rent collections of 85% due for the second quarter as of July 31, 2020, which has improved to 86% of second quarter’s original cash rent collected as of October 31, 2020.
We also entered into rent deferral and abatement agreements representing approximately 8% of the third quarter 2020 cash rent that would have been due in third quarter 2020. The most common agreements permit these tenants to defer paying some or all of third quarter cash rent due with such amounts to be paid in 2021. As of September 30, 2020, we have entered into 15 approved agreements that commenced during the nine months ended September 30, 2020, representing 11 different tenants. The total amount deferred under the approved agreements, for deferral agreements entered into through September 30, 2020, was $0.6 million and $1.2 million for the three and nine months ended September 30, 2020, respectively. The total amounts of rent credits (i.e. abatements), for abatement agreements entered into was $0.1 million and $0.7 million for the three and nine months ended September 30, 2020, respectively. The impact of the COVID-19 pandemic on the amount of cash rent that we collect going forward cannot be determined at present and the third quarter 2020 results may not be indicative of any future period. Moreover, certain tenants that have entered into agreements with us with respect to second or third quarter rents have, following the expiration of those agreements, sought to enter into new agreements deferring or abating rent in future periods. There can be no assurance additional tenants will not similarly seek future rent relief or that we will be able to collect the cash rent that is due
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in future months including the deferred 2020 rent amounts due during 2021 or 2022 under deferral agreements we have entered into with our tenants.
Any failure of our tenants to properly implement or deploy their business continuity plans, or the ineffectiveness of those plans, could have a material, adverse effect on our tenants’ businesses and thus our ability to collect rents in future periods cannot be determined at present. We have faced and may continue to face defaults, terminations and additional requests for rent deferrals or abatements or other allowances. Furthermore, if we declare any tenants in default for non-payment of rent or other potential breaches of their leases with us, we might not be able to fully recover and may experience delays and additional costs in enforcing our rights as landlord to recover amounts due to us. Our ability to recover amounts under the terms of our leases may also be restricted or delayed due to an any future moratorium on evictions of commercial tenants experiencing hardship due to the COVID-19 pandemic, similar to those previously implemented in New York State. If any of our tenants, or any guarantor of a tenant’s lease obligations files for bankruptcy, we could be further adversely affected due to loss of revenue but also because the bankruptcy may also make it more difficult for us to lease the remainder of the property or properties in which the bankrupt tenant operates.
Because substantially all of our income is derived from rentals of commercial real property, our business, income, cash flow, results of operations, financial condition, liquidity, prospects, and our ability to pay dividends and other distributions, service our debt obligations and to fund our ongoing other capital requirements would be adversely affected if a significant number of tenants are unable to meet their obligations to us.
In addition to the impacts on us related to the impacts on our tenants described above, the COVID-19 pandemic has also impacted us in other ways and could have a significant adverse effect on our business, financial condition and results of operations due to, among other factors:
•difficulty accessing debt and equity capital on favorable terms, or at all, due to the severe disruption and instability in the global financial markets or deteriorations in our ongoing capital requirements and financing conditions may affect our access to capital, or increase the cost of capital, necessary to fund our capital requirements, such as refinancing maturing liabilities on a timely basis, or at all, and may have similar effects on our tenants and their ability to fund their business operations and meet their obligations to us;
•disruption and instability in the global financial markets or deteriorations in credit and financing conditions could have an impact on the overall amount of capital being invested in real estate and could result in price or value decreases for real estate assets, which could negatively impact the value of our assets and may result in future acquisitions generating lower overall economic returns;
•we may not be able to acquire properties in the future;
•if we are unable to comply with financial covenants and other obligations under of our loans, we could default under those agreements which could potentially result in the occurrence of a cash trap event, an acceleration of our indebtedness or foreclosure on our properties and could otherwise negatively impact our liquidity;
•we may recognize impairment charges on our assets;
•one or more counterparties to our derivative financial instruments could default on their obligations to us or could fail, increasing the risk that we may not realize the benefits of utilizing these instruments;
•with respect to our leases, we may be required to record reserves on previously accrued amounts in cases where it is subsequently concluded that collection is not probable;
•as operating restrictions on our tenants expire, operating costs may begin to rise, including for services, labor and personal protective equipment and other supplies, as our property managers take appropriate actions to protect tenants and property management personnel and not all of these costs will be recoverable through reimbursement from tenants;
•difficulties completing capital improvements at our properties on a timely basis, on budget or at all, could affect the value of our properties;
•our ability to ensure business continuity in the event our Advisor’s continuity of operations plan is not effective or is improperly implemented or deployed during a disruption; and
•increased operating risks resulting from changes to our Advisor’s operations and remote work arrangements, including the potential effects on our financial reporting systems and internal controls and procedures, cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events.
The extent to which the COVID-19 pandemic, or a future pandemic, impacts our operations and those of our tenants will depend on future developments, including the scope, severity and duration of the pandemic, one or more resurgences of the virus which could result in further government restrictions, the efficacy of any vaccines or other remedies developed, the
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actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others, which are highly uncertain and cannot be predicted with confidence but could be material. The situation is rapidly changing and additional impacts to the business may arise that we are not aware of currently. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic, but a prolonged or resurgent outbreak as well as related mitigation efforts could continue to have a material impact on our revenues and could materially and adversely affect our business, results of operations and financial condition. In addition to the risk factors contained herein, many risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 should be interpreted as heightened risks as a result of the impact of the COVID-19 pandemic.

The trading price of our Class A common stock may fluctuate significantly.
The trading price of our Class A common stock may be volatile and subject to significant price and volume fluctuations in response to market and other factors, many of which are out of our control. Current economic conditions caused by the COVID-19 pandemic create heightened uncertainty and could increase the impact of one or more of these factors. Among the factors that could affect trading price are:
•our financial condition and performance;
•our ability to grow through property acquisitions, the terms and pace of any acquisitions we may make and the availability and terms of financing or other capital for those acquisitions;
•the financial condition of our tenants, including tenant bankruptcies or defaults;
•actual or anticipated quarterly fluctuations in our operating results and financial condition;
•future conversions of our Class B common stock could adversely affect the market price of our Class A common stock;
•because there was no established market for shares of our common stock prior to the Listing, there may be substantial downward pressure in trading price resulting from stockholders desiring to sell or the perception that sales might occur;
•the amount and frequency of our dividend payments;
•additional sales of equity securities, including Class A common stock, or the perception that additional sales may occur;
•the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, and fixed income debt securities;
•our reputation and the reputation of AR Global and its affiliates or other entities advised by AR Global and its affiliates;
•uncertainty and volatility in the equity and credit markets;
•fluctuations in interest rates;
•changes in revenue or earnings estimates, if any, or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
•failure to meet analyst revenue or earnings estimates;
•strategic actions by us or our competitors, such as acquisitions or restructurings;
•the extent of investment in our shares by institutional investors;
•the extent of short-selling of our shares;
•general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate related companies;
•failure to maintain our REIT status;
•changes in tax laws;
•economic factors unrelated to our performance; and
•all other risk factors addressed elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019 and other filings we make with the SEC.
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Our ability to fund our capital needs will depend on, among other things, the amount of cash we are able to generate from our operations, which is dependent on, among other things, the impact of the COVID-19 pandemic on our tenants and other factors outside of our control, and our ability to access capital from outside sources, which may not be available on favorable terms, or at all.
As of September 30, 2020,2021, we had cash and cash equivalents of $39.1$23.2 million as compared to $51.2$23.9 million as of June 30, 2021, $29.4 million as of March 31, 2021 and $31.0 million as of December 31, 2019. We2020. Under the guarantee of certain recourse liabilities under one of our mortgage loans, we are required to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets (i.e. cash and cash equivalents) of $10.0 millionmillion. This minimum net worth and cash requirement may impact our ability to fund our other cash needs including potentially the payment obligations under the loans secured by our loan agreement9 Times Square property discussed above. In 2020 and 2021 to date, the net cash provided by our property operations has not alone been sufficient to fund operating expenses and other capital requirements. We anticipate the need to continue funding a portion of our operating expenses and other capital requirements with Capital One, National Association.cash on hand through at least the end of 2021. Our principal sources of cash in recent periods have been the net cash, if any, provided by our current property operations, and cash on hand consisting primarilyand, commencing in the second quarter of 2021, proceeds from financingsour Common Stock ATM Program. The negative impacts of then-unencumbered assets. In some recent periods, including the third quarterCOVID-19 pandemic have caused and may continue to cause certain of 2020,our tenants to be unable to make rent payments to us timely, or at all, which has had, and could continue to have, an adverse effect on the netamount of cash provided bywe receive from our property operations has not been sufficientand therefore our ability to fund operating expenses and other capital needs. Duerequirements, including dividends to rent deferrals and the other impacts of COVID-19, as well as the termsholders of our leases, we anticipate we may continue to fund a portion ofClass A common stock. Funding our operating expenses and other capitalcash needs withfrom cash on hand until at leastor the first quarter of 2021. Funding these needs with cash on handother sources mentioned above reduces the amount of capital available for other uses, which could adversely impact our businessincluding acquisitions, capital expenditures and dividends to the valueholders of an investment inshares of our Class A common stock, and our ability to fund dividends to holders of our common stock.
Consistent with the intention of our board of directors to reinstate distributions in the form of dividends to our common stockholders in the amount of $0.40 per share of common stock per year, we paid our common stockholders a dividend during October 2020, but there can be no assurance we will continue to pay dividends at the current rate, or at all. The amount of dividends payable to our stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends,which limits our financial condition, provisions in any agreement we are party to that may restrictand operational flexibility and could adversely affect our ability to pay dividends, capital expenditure requirements, as applicable, requirementsbusiness.
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Table of Maryland law and annual distribution requirements needed to maintain our status as a REIT. In addition, our board of directors has 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. Actual repurchases would be reviewed and approved by our board of directors based on management recommendations taking into consideration all information available at the specific time including our available cash resources (including the ability to borrow), market capitalization, trading price and alternative uses such as acquisitions. The dividend payment in October 2020 was funded from cash on hand, and we expect that any future dividend payments or share repurchases, if completed, would also be funded from cash on hand unless we are able to use a different source to fund our future capital needs.Contents
Our ability to increase the amount of cash we generate from property operations depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and our business. Since the COVID-19 pandemic commenced, we have not collected all of the rent due to us from our tenants. 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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Management Update on the Impacts of the COVID-19 Pandemic” for further information on our rent collections and the impact of these rent deferrals and abatements. We are currentlyhave also experienced lease terminations, including the terminations due to the January 2021 bankruptcy of Knotel, a co-working company that was previously the second largest tenant in breachour portfolio based on annualized straight-line rent as of September 30, 2020 and occupied several floors at both our 9 Times Square and 123 William Street properties. During the year ended December 31, 2020, we reduced revenue from tenants by $8.5 million for reserves recorded during the period on receivables for which the related tenants (including Knotel) have been put on a debt service coverage provisioncash basis or there were early lease terminations. In the first nine months of 2021, there has been no rental income received from any of the tenants that were previously placed on a cash basis.
As of September 30, 2021, we have $5.2 million cash maintained in segregated and a reserve fund reserve provision underrestricted cash accounts resulting from the breaches described above, all of which is cash from our non-recourse mortgage secured by the 1140 Avenue of the Americas property,property. In addition, due to the covenant breaches resulting in cash traps, all cash generated from our Laurel/Riverside and until these breaches have been cured,8713 Fifth Avenue properties is required to be held in a segregated account and we will not have access to any excess cash flows, if any, generated from these properties. As of period ended September 30, 2021 we did not have any excess cash trapped for these properties and we are not funding any shortfalls. If we experience additional lease terminations, due to tenant bankruptcies or otherwise, or tenants placed on cash basis continue to not pay rent, it is possible that certain of the covenants on other loans may be breached and we may also become restricted from accessing excess cash flows from those properties. Breaches of loan covenants has reduced the cash available to us and further breaches will limit our ability to access cash generated by these properties. As noted above, we may be required make a substantial repayment of principal (the exact amount of which cannot be estimated presently) under the mortgage loan secured by our 9 Times Square property due to covenant breaches under that loan, which would significantly impact our capital resources. See “—We have been in breach of several of our mortgage loans for multiple quarters and anticipate that our ongoing breach of one of those loans, which is secured by our 9 Times Square property, may lead to an event of default under the loan in the quarter ended September 30, 2021.”
There is no assurance we will be able to use excess cash flow from this property to fund operating expenses and other capital needs. Equity and debt capital may not be availablecure the breaches of any of our mortgage loans on favorable terms or at all. Moreover,all and access the excess cash generated by these properties, if any. Our ability to increase the cash flow from our properties in amounts necessary to cure the covenant breaches described above and otherwise generate excess cash from our properties that may be used to satisfy our capital needs will depend on the success of our leasing initiatives, which is not assured. We may not be able to lease all or any portion of our currently vacant space, and we may experience additional terminations or renewals or new leases may be at lower rental rates. For example, the annualized straight-line rent per square foot for the leases we have entered into to replace a portion of the space that was vacated by Knotel in the first nine months of 2021 is lower than the annualized straight-line rent per square foot under Knotel’s leases.
If we are not able to generate sufficient cash from our property operations, there can be no assurance the amount of capital we are able to generate from other sources will be sufficient to meet our capital needs, which could adversely impact our business, the value of an investment in our common stock and our ability to pay dividends to holders of our common stock. We may only incur additional indebtedness on all of our properties except the Hit Factory (which is unoccupied and being marketed for sale) with the consent of the existing lenders, whichrequirements. Equity or debt capital may not be grantedavailable to us on favorable terms, or at all. We do not currently have a commitment for a corporate-level revolving credit facility or any other corporate-level indebtedness, and there can be no assurance we willwould be able to obtain corporate-levelcorporate -level financing on favorable terms, or at all. Our only asset that is not serving as collateral for a mortgage is 421 W. 54th Street - Hit Factory, which is unoccupied and therefore unlikely to be accepted as collateral for a new mortgage loan. Any future indebtedness we may incur may impose restrictions on us that affect our ability to pay dividends and other distributions as well as other restrictions, including financial covenants, thatwhich would decrease our operating and financial flexibility and our ability to achieve our operating objectives. There can be no assurance we will be able to raise additional equity capital on acceptable terms, or at all. The amount of proceeds we are able to raise in the Common Stock ATM Program is subject to, among other things, market conditions and the operation of General Instruction I.B.6. of Form S-3, which limits the amounts that we may sell under the Common Stock ATM Program.
The issuance of additional shares of our Class A common stock, including pursuant to our Common Stock ATM Program, could dilute the interests of the holders of our common stock, and any issuance of shares of preferred stock senior to our common stock with respect to dividends, or any incurrence of additional indebtedness, could affect our ability to pay dividends on our common stock. The issuance of shares of preferred stock, including preferred stock convertible into shares of our Class common stock, could dilute the interests of the holders of common stock.
The stockholder rights plan adopted by our board of directors may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
Our board of directors has adopted a stockholder rights plan that will expire August 2021 or sooner under certain circumstances. If a person or entity, together with its affiliates and associates, acquires beneficial ownership of 4.9% or more of our then outstanding common stock, subject to certain exceptions, each right would entitle its holder (other than the acquirer, its affiliates and associates) to purchase additional shares of our Class A common stock at a substantial discount to the public
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market price. In addition, under certain circumstances, we may exchange the rights (other than rights beneficially owned by the acquirer, its affiliates and associates), in whole or in part, for shares of Class A common stock on a one-for-one basis. The stockholder rights plan could make it more difficult for a third party to acquire us or a large block of our common stock without the approval of our board or directors, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders. These rights may be exercised if, in the judgment of our board of directors based on the advice of counsel, the exercise could result in us failing to qualify as a REIT.
Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, other than actions arising under federal securities laws, (b) any Internal Corporate Claim, as such term is defined in the Maryland General Corporation Law (the “MGCL”), or any successor provision thereof, including, without limitation, (i) any action asserting a claim of breach of any duty owed by any of our director, officer or other employee to us or to our stockholders or (ii) any action asserting a claim against us or any of our director or officer or other employee arising pursuant to any provision of the MGCL, our charter or our bylaws, or (c) any other action asserting a claim against us or any of our director or officer or other employee that is governed by the internal affairs doctrine. Our bylaws also provide that, unless we consent in writing, none of the foregoing actions, claims or proceedings may be brought in any court sitting outside the State of Maryland and the federal district courts are, to the fullest extent permitted by law, the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable. Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving these matters in other jurisdictions.stock.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities.
Recent Sales of Unregistered Securities
We did not complete any sales of unregistered equity securities during the three months ended September 30, 2020 that were not disclosed in a Current Report on Form 8-K.None.
Use of Proceeds from Sales of Registered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
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In August 2020, we repurchased approximately 6,672 fractional sharesTable of Class A common stock at a price of $49.16 perContents
None.
share in connection with the Listing. See Note 7 — Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NEW YORK 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)

Dated: November 12, 2020
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EXHIBITS INDEX
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the three months ended September 30, 20202021 (and are numbered in accordance with Item 601 of Regulation S-K).
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
4.1 (5)(6)
Amended and Restated Agreement of Limited Partnership of New York City Operating Partnership, L.P.,Amendment, dated as of August 18, 2020
4.2(5)
Amended and Restated Distribution Reinvestment Plan of New York City REIT, Inc.
4.3(5)
12, 2021, to the Amended and Restated Rights Agreement, dated as of August 17, 2020, between New York City REIT, Inc. and Computershare Trust Company, N.A., as Rights Agent
10.1(5)
Listing Note Agreement, dated as of August 18, 2020, between New York City Operating Partnership, L.P. and New York City Special Limited Partnership, LLC
10.2(5)
First Amendment, dated as of August 18, 2020, to Second Amended and Restated Advisory Agreement among New York City REIT, Inc., New York City Operating Partnership, L.P. and New York City Advisors, LLC
10.3(5)
Advisor Multi-Year Outperformance Award Agreement, dated as of August 18, 2020, among New York City REIT, Inc., New York City Operating Partnership, L.P. and New York City Advisors, LLC
10.4(5)
2020 Advisor Omnibus Incentive Compensation Plan of New York City REIT, Inc.
10.5(5)
2020 Omnibus Incentive Compensation Plan of New York City REIT, Inc.
10.6(6)
Equity Distribution Agreement, dated October 1, 2020, among New York City REIT, Inc., New York City Operating Partnership, L.P., Truist Securities, Inc. and B. Riley Securities, Inc.
14.1(5)
Amended and Restated Code of Business Conduct and Ethics of New York City REIT, Inc.
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.
 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.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 tags are embedded within the Inline XBRL document.
_______
* Filed herewith
(1) Filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on August 14, 2018.
(2) Filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on March 15, 2019.
(3) Filed as an exhibit to our Form 8-K filed with the SEC on May 19, 2020.
(4) Filed as an exhibit to our Form 8-K filed with the SEC on August 5, 2020.
(5) Filed as an exhibit to our Form 8-K filed with the SEC on August 18, 2020.
(6) Filed as an exhibit to our Quarterly Report on Form 8-K10-Q filed with the SEC on October 1, 2020.August 12, 2021.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NEW YORK 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)

Dated: November 12, 2021
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