New York REIT Announces Results for First Quarter 2018

NEW YORK, May 9, 2018 /PRNewswire/ -- New York REIT, Inc. (NYSE: NYRT) (the "Company" or "NYRT"), which is liquidating and winding down pursuant to a plan of liquidation, announced today its financial results for the first quarter ended March 31, 2018.  All per share amounts have been restated to reflect the effect of the 1-for-10 reverse stock split which was completed on March 15, 2018.

Liquidation Status

As of May 9, 2018, the Company has sold all of its properties except for the remaining 50.1% interest in Worldwide Plaza and the Viceroy Hotel.  The Company has no debt outstanding other than its pro-rata share of the non-recourse debt on Worldwide Plaza.  Inclusive of the $4.85 per share to be paid on May 18, 2018, the Company has paid aggregate cash liquidating distributions of $55.55 per share.

Financial Results

Liquidation Basis of Accounting

Following NYRT's shareholder approval of the plan of liquidation on January 3, 2017, effective January 1, 2017, in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company began reporting its financial results on the liquidation basis of accounting.  Accordingly, on January 1, 2017 the carrying value of the Company's investments in real estate were adjusted to their liquidation value, which represents the estimated amount of cash that the Company will collect on disposal of assets as it carries out its liquidation activities under the Liquidation Plan.  The current estimate of net assets in liquidation as of March 31, 2018 has been estimated based on undiscounted cash flow projections assuming that all of the properties will be sold by July 31, 2018 except for the remaining interest in Worldwide Plaza.  The actual timing of sales for the two remaining properties has not yet been determined and is subject to future events and uncertainties and the estimates are subject to change based on the actual timing of future asset sales and other factors.  The liquidation value of the Company's investments in real estate is presented on an undiscounted basis.  Estimated costs to dispose of assets and revenues expected to be earned as management carries out its liquidation activities through the end of the projected liquidation period have been presented separately from the related assets.  Liabilities are carried at their contractual amounts due as adjusted for the impact of timing of the planned liquidation. 

Based on the liquidation basis of accounting, the current estimate of net assets in liquidation at March 31, 2018 results in estimated future liquidating distributions of approximately $29.94 per share, of which $4.85 per share will be distributed on May 18, 2018.

For financial statement presentation purposes, Worldwide Plaza has been valued at $1.725 billion, based on the recent market transaction associated with the Company's sale of a 48.7% interest in the property on October 18, 2017.  The Worldwide Plaza value also includes an additional $90.7 million which is classified as restricted cash and has been set aside to fund the Company's share of potential future leasing and capital costs at Worldwide Plaza.  To the extent the full $90.7 million reserve is not used, the balance is expected to be available for distribution to shareholders.  The Company's plan to hold the investment in Worldwide Plaza beyond its original estimated liquidation period and to make further capital investment to release and reposition the property are all actions that are outside the scope of normal liquidation activities.  Accordingly, the estimated accretion in future market value will be reflected in the financial results as the specific actions related to the repositioning have been completed and such increases in market value can be observed.  Any assets held longer than the two-year period following the shareholder approval of the Plan of Liquidation must be transferred to a non-traded entity for the remainder of the holding period, however, such transfer may be completed at any time prior to the two year anniversary of the approval of the Plan of Liquidation.  The Company currently projects that the remaining interest in Worldwide Plaza will be sold by November 1, 2021.

Management believes that implementation of the business plan for Worldwide Plaza will take at least two years and may take up to four years given the size of the building, the scope and nature of the capital investment and the time needed to allow for the critical milestones in leasing and asset repositioning to take place.  Management estimates that once these actions are implemented and come to fruition, the value of the property could be in the range of $1.9 billion to $2.2 billion on an undiscounted basis.  Assuming additional investment in Worldwide Plaza of $64.0 million from the Company's reserve, plus a corresponding investment from the Company's joint venture partners, a future value for Worldwide Plaza between $2.0 billion and $2.2 billion would produce a residual value between $21.99 and $27.69 per share, an increase of $3.30 to $8.99 per share over the Company's current carrying value.  In addition, there are contractual rents at Worldwide Plaza that generate predictable cash flow during the estimated three and a half year hold period which, net of expenses, we estimate would be $4.74 per share versus the $1.16 per share currently accrued based on a 12-month hold period assumed for liquidation accounting purposes.  Management's estimate, and the estimates below, like any estimate or projection, are subject to various assumptions and uncertainties including the joint venture's ability to execute on the business plan, tenants paying their rental obligations, the equity capital and financing markets and New York City market conditions generally.  There is no assurance that the joint venture will be successful in taking these various actions and that these actions will, in fact, result in the estimated increase in the value of the property.

If our future cash flow projections and residual value estimates are realized, this would result in an estimate of future liquidating distributions, inclusive of the $4.85 per share to be paid in May 2018, of between $36.82 and $42.51 per share.  The difference between the higher per share estimate of future value and the reported $29.94 per share estimate is derived from an increase ranging from $3.30 to $8.99 per share in the estimated future value of Worldwide Plaza, plus an additional $3.58 per share of net cash flow generated by holding Worldwide Plaza for an additional two and a half year hold period beyond what is recognized in the financial statements.

First Quarter Activity

Sales Activity

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

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

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

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

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

Distributions

On January 26, 2018, the Company paid a cash liquidating distribution of $20.00 per share to shareholders of record as of January 19, 2018.

2018 Subsequent Events

Sales Activity

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

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

• 2067 – 2073 Coney Island Avenue – property sale – On May 1, 2018, the Company sold to an independent third party the 2067-2073 Coney Island Avenue retail property in Brooklyn, New York for a gross sales price of $30.5 million.  The property was encumbered by a $15.8 million mortgage note payable which was satisfied in full at closing.   After satisfaction of debt, pro-rations and closing costs, the Company received net proceeds of approximately $13.7 million.  The estimated liquidation value of the property was $30.5 million at March 31, 2018 and December 31, 2017.

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

 Loan Activity

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

Distribution Declaration

On May 1, 2018, the Company declared a cash liquidating distribution of $4.85 per share to be paid on May 18, 2018 to shareholders of record as of May 11, 2018.

About NYRT

NYRT is a publicly traded real estate investment trust listed on the NYSE that owns income-producing commercial real estate, including office and retail properties, located in New York City.  NYRT's shareholders recently adopted a plan of liquidation pursuant to which NYRT is liquidating and winding down and, in connection therewith, is seeking to sell its assets in an orderly fashion to maximize shareholder value.  For more information, please visit our website at www.nyrt.com.

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995.  The statements in this release state the Company's and management's hopes, intentions, beliefs, expectations or projections of the future and are forward-looking statements for which the Company claims the protections of the safe harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995.  It is important to note that future events and the Company's actual results could differ materially from those described in or contemplated by such forward-looking statements.  Such forward looking statements include, but are not limited to, statements about potential increases in liquidating distributions if the joint venture is able to complete targeted capital improvements, critical tenant lease renewals and reposition this asset.  Factors that could cause actual results to differ materially from current expectations include, but are not limited to, (i) general economic conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or general downturn in their business, (iii) local real estate conditions, (iv) increases in interest rates, (v) increases in operating costs and real estate taxes, (vi) changes in accessibility of debt and equity capital markets and (vii) the timing of asset sales.  Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company's filings with the Securities and Exchange Commission, copies of which may be obtained from the Company or the Securities and Exchange Commission.  The Company refers you to the documents filed by the Company from time to time with the Securities and Exchange Commission, specifically the section titled "Risk Factors" in the Company's most recent Annual Report on Form 10-K, as may be updated or supplemented in the Company's Form 10-Q filings, which discuss these and other factors that could adversely affect the Company's results.

Further details regarding the Company's results of operations, properties, joint ventures and tenants are available in the Company's Form 10-Q for the quarter ended March 31, 2018 which will be filed with the Securities and Exchange Commission and will be available for download at the Company's website www.nyrt.com or at the Securities and Exchange Commission website www.sec.gov.

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SOURCE New York REIT, Inc.