Form 10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

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

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

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

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

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

As of October 31, 2017, the registrant had 167,928,730 shares of common stock, $0.01 par value per share, outstanding.

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

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

The Company purchased its first property and commenced active operations in June 2010. As of September 30, 2017, the Company owned 18 properties, aggregating 4.2 million rentable square feet, with an average occupancy of 94.8%. The Company’s portfolio primarily consists of office and retail properties, representing 89% and 8%, respectively, of rentable square feet as of September 30, 2017. The Company also owns a hotel and several parking garages. Properties other than office and retail spaces represent 3% of rentable square feet.

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

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

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

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

The Liquidation Plan, as amended by the Board of Directors in accordance with the terms of the Liquidation Plan, provides for an orderly sale of the Company’s assets, payment of the Company’s liabilities and other obligations and the winding up of operations and final dissolution of the Company. The Company is not permitted to make any new investments except to exercise its option (the “WWP Option”) to purchase additional equity interests in its WWP Holdings, LLC venture (“Worldwide Plaza”), enter into the transaction relating to Worldwide Plaza pursuant to the Membership Interest Purchase Agreement with a purchaser, a joint venture between an affiliate of SL Green Realty Corp. and a private equity fund sponsored by RXR Realty LLC or to make protective acquisitions or advances with respect to its existing assets (see Note 6). The Company is permitted to satisfy any existing contractual obligations and fund required tenant improvements and capital expenditures at its real estate properties, including real estate properties owned by joint ventures in which the Company owns an interest.

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

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

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

The Board may terminate the Liquidation Plan without stockholder approval only (i) if the Board approves the Company entering into an agreement involving the sale or other disposition of all or substantially all of the assets or common stock by merger, consolidation, share exchange, business combination, sale or other transaction involving the Company or (ii) if the Board determines, in exercise of its duties under Maryland law, after consultation with the Winthrop Advisor, if applicable, or other third party experts familiar with the market for Manhattan office properties, that an adverse change in the market for Manhattan office properties has occurred and reasonably would expect it to adversely affect continuing with the Liquidation Plan. Notwithstanding approval of the Liquidation Plan by the stockholders, the Board may amend the Liquidation Plan without further action by the stockholders to the extent permitted under the current law.

The accompanying unaudited consolidated interim 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 the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation.

These consolidated financial statements should be read in conjunction with the historical comparative audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2016, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2017.

As a result of the approval of the Liquidation Plan by the stockholders, the Company adopted the liquidation basis of accounting as of January 1, 2017 and for the periods subsequent to December 31, 2016 in accordance with GAAP. Accordingly, on January 1, 2017, the carrying value of the Company’s assets were adjusted to their liquidation value, which represents the estimated amount of cash that the Company will collect on disposal of assets as it carries out its liquidation activities under the Liquidation Plan. The current estimate of net assets in liquidation has been calculated based on undiscounted cash flow projections that all the properties will be sold by March 31, 2018 except for the remaining interest in Worldwide Plaza.

The Company projects that the remaining interest in Worldwide Plaza will be sold approximately during the fourth quarter of 2021. The actual timing of sales has not yet been determined and is subject to future events and uncertainties. These estimates are subject to change based on the actual timing of future asset sales. The liquidation value of the Company’s investment in real estate is based on expected sales proceeds presented on an undiscounted basis. Estimated costs to dispose of assets have been presented separately from the related assets. Liabilities are carried at their contractual amounts due as adjusted for the timing and other assumptions related to the liquidation process.

The Company accrues costs and revenues that it expects to incur and earn as it carries out its liquidation activities through the end of the projected liquidation period to the extent it has a reasonable basis for estimation. Estimated costs expected to be incurred through the end of the liquidation period include budgeted property expenses and corporate overhead, costs to dispose of the properties, mortgage interest expense, costs associated with satisfying known and contingent liabilities and other costs associated with the winding up and dissolution of the Company. Revenues are based on in-place leases plus management’s estimates of revenue upon re-lease based on current market assumptions. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets. Actual costs and revenues may differ from amounts reflected in the financial statements due to the inherent uncertainty in estimating future events. These differences may be material. See Note 4 for further discussion. Actual costs incurred but unpaid as of September 30, 2017 are included in accounts payable, accrued liabilities and other liabilities on the Consolidated Statement of Net Assets.

Investments in real estate at September 30, 2017 are based on estimated sales values and presented on an undiscounted basis and excludes any future market value increase in from the planned capital improvement investments in Worldwide Plaza during the period prior to the commencement of liquidation activities. The Company’s current estimate of the liquidation value of investments in real estate includes WorldWide Plaza at 1.725 billion which is based on a current market transaction associated with the Company’s sale of a 48.7% interest in the property on October 18, 2017 as discussed in Note (6). Pursuant to the Company’s joint venture agreement with SL Green Corp and RXR Realty LLC, the Company and its partners have committed to additionally invest approximately $165 million on a prorata basis to fund capital improvement budget as determined in the agreement.

As a result of the change to the liquidation basis of accounting, the Company no longer presents a Consolidated Balance Sheet, a Consolidated Statement of Operations and Comprehensive Income, a Consolidated Statement of Changes in Equity or a Consolidated Statement of Cash Flows. These statements are only presented for prior year periods.

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

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

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

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

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

The liquidation value of investments in real estate is based on a number of factors including discounted cash flow and direct capitalization analyses, detailed analysis of current market comparables and broker opinions of value, and binding purchase offers to the extent available. The liquidation value for our remaining investment in Worldwide Plaza, subsequent to October 18, 2017, is based on the value of the Company’s recent sale of a 48.7% interest in the property.

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

The Company uses derivative financial instruments to hedge the interest rate risk associated with a portion of its borrowings. The principal objective of such agreements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions.

Restricted cash primarily consists of maintenance, real estate tax, structural and debt service reserves.

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

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

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

Upon transition to the liquidation basis of accounting on January 1, 2017, the Company accrued the following revenues and expenses expected to be earned or incurred during liquidation (in thousands):

The change in the liability for estimated costs in excess of estimated receipts during liquidation as of September 30, 2017 is as follows (in thousands):

The following is a reconciliation of Total Equity under the going concern basis of accounting as of December 31, 2016 to net assets in liquidation presented on an undiscounted basis under the liquidation basis of accounting as of January 1, 2017 (in thousands):

Net assets in liquidation, which are presented on an undiscounted basis, decreased by $215.4 million and $221.3 million during the three and nine months ended September 30, 2017. The current net assets in liquidation includes Worldwide Plaza valued at $1.725 billion. The decrease during the quarter ended September 30, 2017 is primarily the result of (i) a $75.5 million net decrease in liquidation values due to the realized sales of 245-249 West 17^th Street (“Twitter”), 218 West 18^th Street (“Red Bull”), 229 West 36^th Street and 256 West 38^th Street and a signed contract for sale for 1440 Broadway, (ii) a $63.7 million net decrease in estimated liquidation values of the remaining portfolio, (iii) a $75.5 million decrease in the Company’s investment in Worldwide Plaza which includes estimated debt defeasance costs of $108.3 million, net of mortgage debt premium of $22.0 million and changes in estimated cash flow during the holding period recognized in the financial statements of $10.8 million, and (iv) a net decrease of $0.7 million related to other cumulative adjustments related to changes in debt costs and adjustments to holding periods.

The decrease during the nine months ended September 30, 2017 is primarily the result of (i) a $78.0 million net decrease in liquidation values due to the realized sales of 50 Varick Street, 245-249 West 17^th Street (Twitter), 218 West 18^th Street (Red Bull), 229 West 36^th Street and 256 West 38^th Street and a signed contract for sale for 1440 Broadway, (ii) a $63.7 million net decrease in estimated liquidation values of the remaining portfolio, (iii) a $75.5 million decrease in the Company’s investment in Worldwide Plaza which includes estimated debt defeasance costs of $108.3 million net of mortgage debt premium amortization of $22.0 million and changes in estimated cash flow during the holding period of $10.8 million, and (v) a net decrease of $4.1 million related to other cumulative adjustments related to changes in debt costs and adjustments to holding periods.

A summary of the change in net asset value for the nine months ended September 30, 2017 is as follows:

The net assets in liquidation at September 30, 2017, presented on an undiscounted basis, include Worldwide Plaza of $1.725 billion based a recent sale of a 48.7% interest in the property discussed in Note 6. There is inherent uncertainty with these projections, and they could change materially based on the timing of the sales, the performance of the underlying assets and any changes in the underlying assumptions of the projected cash flows.

50 Varick — property sale – On August 7, 2017, the Company sold to an independent third party our 50 Varick Street office property in Manhattan, New York for a gross sales price of $135.0 million. The property was part of the collateral for the $760.0 million POL Loans (see Note 7). In connection with the sale, the Company paid down $78.1 million of debt as required under the POL Loans. After satisfaction of debt, pro-rations and closing costs the Company received net proceeds of approximately $49.1 million. The estimated liquidation value of the property was $137.5 million at January 1, 2017 and was adjusted to $135.0 million at June 30, 2017 based on the contract sale price.

245-249 West 17^th Street and 218 West 18^th Street – property sale – On September 25, 2017, the Company entered into a contract to sell to an independent third party the 245-249 West 17^th Street (Twitter) and 218 West 18^th Street (Red Bull) office properties in Manhattan, New York for a gross sales price of $514.1 million. The sale was completed on October 11, 2017. The properties were part of the collateral for the $760.0 million POL Loans. In connection with the sale, the Company paid down $347.9 million of debt as required under the POL Loans (see Note 7). After satisfaction of debt, pro-rations and closing costs the Company received net proceeds of approximately $146.2 million. The estimated liquidation values of the properties were $532.6 million at January 1, 2017 and June 30, 2017. The estimated liquidation value of these properties were adjusted down to $514.1 million as of September 30, 2017 to reflect the contracts for sale.

229 West 36^th Street and 256 West 38^th Street – contract for sale – Subsequent to September 30, 2017, the Company entered into a contract to sell to an independent third party the 229 West 36^th Street and 256 West 38^th Street office properties in Manhattan, New York for a gross sales price of $155.9 million. The sale was completed on November 6, 2017. The 229 West 36^th Street property is part of the collateral for the $760.0 million POL Loans. In connection with the sale, the Company paid down $66.1 million of debt as required under the POL Loans (see Note 7). The 256 West 38^th Street property is also encumbered by $24.5 million mortgage loan which was satisfied in full upon the sale of the property. After pay down of debt under the POL Loans, satisfaction of the mortgage debt, pro-rations and closing costs, the Company received net proceeds of approximately $58.8 million. The estimated liquidation value of the properties were $152.4 million at January 1, 2017 and June 30, 2017 and were adjusted to $155.9 million at September 30, 2017 based on the contract sale price.

1440 Broadway – contract for sale – Subsequent to September 30, 2017, the Company entered into a contract to sell to an independent third party the 1440 Broadway office property in Manhattan, New York for a gross sales price of $520.0 million. The 1440 Broadway property is encumbered by $305.0 million mortgage loan which will be satisfied in full upon the sale of the property. The estimated liquidation value of the property was $582.8 million at January 1, 2017 and June 30, 2017 and was adjusted to $520.0 million at September 30, 2017 based on the contract sale price. If consummated, the sale of the property is expected to close in the fourth quarter of 2017.

On October 30, 2013, the Company purchased a 48.9% equity interest in Worldwide Plaza for a contract purchase price of $220.1 million, based on the property value at that time for Worldwide Plaza of $1.3 billion less $875.0 million of debt on the property.

On June 1, 2017, the Company acquired an additional 49.9% equity interest on exercise of the WWP Option pursuant to the Company’s rights under the joint venture agreement of Worldwide Plaza for a contract purchase price of $276.7 million, based on the option price of approximately $1.4 billion less $875.0 million of debt on the property. The Company’s joint venture partner exercised its right to retain 1.2% of the aggregate membership interests in Worldwide Plaza. Following the exercise of the option, the Company now owns a total equity interest of 98.8% in Worldwide Plaza. As a result, the Company consolidates Worldwide Plaza as of June 1, 2017. In accordance with GAAP, the Company initially recorded the Worldwide Plaza debt at its fair value of $897.0 million on its consolidated statement of net assets.

On October 18, 2017, the Company sold a 48.7% interest in Worldwide Plaza to a joint venture managed by SL Green Realty Corp. and RXR Realty LLC based on the underlying property value of $1.725 billion. In conjunction with the equity sale, there was a concurrent $1.2 billion refinancing of the existing Worldwide Plaza debt. The Company received cash at closing of approximately $446.5 million from the sale and excess proceeds from the financing, net of closing costs, including, $108.3 million of defeasance and prepayment costs. The new debt on Worldwide Plaza bears interest at a blended rate of approximately 3.98% per annum, requires monthly payments of interest only and matures in November 2027. The Company has set aside $90.7 million of the proceeds in a separate account to fund future capital improvements to Worldwide Plaza.

The following table presents future minimum base cash rental payments due to the Company, subsequent to September 30, 2017. These amounts exclude contingent rental payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items.

Based on the Company’s anticipated holding period for each property, the Company has accrued approximately $69.6 million, of the contractual base cash rental payments, excluding reimbursements.

The following table lists the tenants whose annualized cash rent represented greater than 10% of total annualized cash rent as of September 30, 2017 and 2016:

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

Under the liquidation basis of accounting, intangible assets and liabilities are considered in the liquidation value of investments in real estate and are no longer amortized. Acquired intangible assets and liabilities as of December 31, 2016 consisted of the following:

The following table discloses amounts recognized within the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2016 (on a going concern basis) related to amortization of in-place leases and other intangibles, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization of above-market ground lease, for the period presented:

During the nine months ended September 30, 2016, the Company sold its properties located at 163-30 Cross Bay Boulevard in Queens, New York (“Duane Reade”), 1623 Kings Highway in Brooklyn, New York (“1623 Kings Highway”) and 2061-2063 86th Street in Brooklyn, New York (“Foot Locker”). The following table summarizes the properties sold during the nine months ended September 30, 2016.

The disposal of Duane Reade, 1623 Kings Highway and Foot Locker did not represent a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the results of operations of these properties were classified within continuing operations for the nine months ended September 30, 2016.

Mortgage notes payable are carried at their contractual amounts due under liquidation accounting. The Company had outstanding mortgage notes payable of $1.93 billion at September 30, 2017 and $1.13 billion at December 31, 2016. The mortgage notes payable are collateralized, directly or, in the case of the mezzanine note, indirectly, by the real estate held by the Company identified in the table below.

The Company’s mortgage notes payable as of September 30, 2017 and December 31, 2016 consist of the following (in thousands):

On August 1, 2017, the Company’s mortgage loan collateralized by the 1100 Kings Highway property was modified to extend the maturity date to April 1, 2018 and to allow for partial release of the collateral. The loan also requires a cash sweep starting January 1, 2018 unless the property is under contract for sale for an amount equal to or greater than 133% of the outstanding mortgage loan payable.

On December 20, 2016, the Company, through indirect wholly owned subsidiaries of the OP, entered into a mortgage loan (the “Mortgage Loan”) in the aggregate amount of $500.0 million and a mezzanine loan in the aggregate amount of $260.0 million (the “Mezzanine Loan” and, together with the Mortgage Loan, the “POL Loans”). The POL Loans are secured directly, in the case of the mortgage loan, and indirectly in the case of the mezzanine loan, by our properties located in New York, New York at 245-249 West 17th Street, 333 West 34th Street, 216-218 West 18th Street, 50 Varick Street (until the sale of the property in August 2017), 229 West 36th Street, 122 Greenwich Street, 350 West 42nd Street, 382-384 Bleecker Street, 350 Bleecker Street, 416-425 Washington Street, 33 West 56th Street and 120 West 57th Street (the “POL Loan Properties”).

At the closing of the POL Loans, a portion of the net proceeds after closing costs was used to repay the $485.0 million principal amount then outstanding under the Company’s credit facility. As of December 31, 2016, the $260.0 million proceeds from the Mezzanine Loan were held in an escrow account by the servicer of the POL Loans and were recorded as a receivable in the Company’s consolidated balance sheet. Subsequently, on January 9, 2017, the $260.0 million proceeds were deposited into an operating account for the purpose of purchasing the additional equity interests in Worldwide Plaza (see Note 6). Prior to the repayment in full of the credit facility, all of the POL Loan Properties were included as part of the borrowing base thereunder.

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

The POL Loans mature in December 2017. The POL Loans include one option to extend the maturity date for one year, if certain conditions are met including a debt yield test, and subject to a 0.25% increase in the applicable monthly interest rate payable.

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

In connection with a sale or disposition of an individual POL Loan Property to a third party, such POL Loan Property may be released from the collateral securing the Mortgage Loan, subject to certain conditions, by prepayment of a release price (the “Release Amount”) as defined in the Mortgage Loan agreements. In certain instances, 110% of the Release Amount will be required to be paid in order to release the property. Concurrently with the payment of the Release Amount, the borrower entity under the Mezzanine Loan is obligated to prepay a corresponding portion of the Mezzanine Loan, in accordance with the terms of the Mezzanine Loan, for which it will receive a release of a corresponding portion of the collateral under the Mezzanine Loan. Upon the sale of 50 Varick on August 7, 2017, the POL Loan was paid down $78.1 million and the property was released as security. Additionally, upon the sale of 245-249 West 17^th Street and 218 West 18^th Street on October 11, 2017, the POL Loan was paid down $347.9 million, and the properties were released as security. Upon the sale of 229 West 36^th Street on November 6, 2017, the POL Loan was paid down $66.1 million, and the property was released as security. The POL Loan balance was reduced to $267.9 million as a result of these sales.

Concurrently with the POL Loans, the Company entered into guaranty agreements with respect to the POL Loans that requires the Company to maintain, (i) on a consolidated basis, a minimum net worth of $300.0 million, which minimum net worth will be reduced pro rata with any prepayment of the POL Loans once the outstanding principal amount of the POL Loans is less than $300.0 million, but in no event will the minimum net worth be reduced below $150.0 million, and (ii) liquid assets having a market value of at least $25.0 million, which minimum market value of liquid assets may be reduced to $15.0 million in the event the outstanding amount under the POL Loans is equal to or less than $100.0 million.

On September 30, 2015, in connection with the mortgage notes payable secured by its property located at 1440 Broadway, the Company executed guarantees in favor of the lenders with respect to the costs of certain unfunded obligations of the Company related to tenant allowances, capital expenditures and leasing costs, which guarantees are capped at $5.3 million in the aggregate. The guarantees expire in October 2019, the maturity date of the 1440 Broadway mortgage. As of September 30, 2017, the Company has not been required to perform under the guarantees and has not recognized any assets or liabilities related to the guarantees.

Some of the Company’s mortgage note agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of September 30, 2017, the Company was in compliance with the financial covenants under its mortgage note agreements.

Prior to the adoption of liquidation accounting, the Company determined fair value of its financial instruments 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 reflected the contractual terms of the instruments, as applicable, including the period to maturity, and used 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:

The determination of where an asset or liability fell in the hierarchy required significant judgment and considered factors specific to the asset or liability. In instances where the determination of the fair value measurement was 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 fell was based on the lowest level input that was significant to the fair value measurement in its entirety.

The Company determined that the majority of the inputs used to value its derivatives, such as interest rate swaps and caps, fell within Level 2 of the fair value hierarchy, whereas the credit valuation adjustments associated with those derivatives utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of December 31, 2016, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of the Company’s derivatives. As a result, the Company determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy. See Note 9 — Interest Rate Derivatives and Hedging Activities.

The valuation of derivatives was determined using a discounted cash flow analysis on the expected cash flows. This analysis reflected 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 were incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.

The following table presents information about the Company’s derivatives that were presented net, measured at fair value on a recurring basis as of December 31, 2016, aggregated by the level in the fair value hierarchy within which those instruments fell:

There were no transfers between levels of the fair value hierarchy during the year ended December 31, 2016.

Under going concern accounting, the Company was required to disclose the fair value of financial instruments for which it was 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 dividends payable approximates their carrying value on the consolidated balance sheet due to their short-term nature. The carrying amount and fair value of the Company’s financial instruments that were not reported at fair value on the consolidated balance sheet are reported below.

The fair value of mortgage notes payable was estimated using a discounted cash flow analysis based on similar types of arrangements.

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

Under going concern accounting, the Company’s derivative financial instruments were classified as separate assets and liabilities on the balance sheet. As these instruments will not be converted to cash or other consideration, derivative financial instruments have been valued at $0 as of January 1, 2017 in accordance with liquidation accounting. The financial instruments are still in place and effective as of September 30, 2017. The Company has accrued the estimated monthly settlement amounts for its swap agreements. The amount is included in the liability for estimated costs in excess of estimated receipts during liquidation.

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 caps 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 caps designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract.

The effective portion of changes in the fair value of derivatives designated and that qualified as cash flow hedges was recorded in accumulated other comprehensive loss and was subsequently reclassified into earnings in the period that the hedged forecasted transaction affected earnings. The Company uses such derivatives to hedge the variable cash flows associated with variable-rate debt.

During the nine months ended September 30, 2016, the Company terminated one of its interest rate swaps as the related hedged debts were repaid, which made it probable that the forecasted transactions would not occur and, as a result, accelerated the reclassification of immaterial amounts in accumulated other comprehensive loss to earnings. The accelerated amounts resulted in a loss of approximately $24,000 for the nine months ended September 30, 2016.

Amounts reported in accumulated other comprehensive loss related to derivatives were reclassified to interest expense as interest payments were made on the Company’s variable-rate debt.

As of December 31, 2016, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks, but do not meet the strict hedge accounting requirements under GAAP. Changes in the fair value of derivatives not designated in hedging relationships were recorded directly in earnings, which resulted in an expense of $12,000 and $0.4 million during the three and nine months ended September 30, 2016, respectively, and included in loss on derivative instruments on the consolidated statement of operations and comprehensive loss.

As of December 31, 2016, the Company had the following outstanding interest rate derivatives that were not designated as hedges in qualified hedging relationships.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheet as of December 31, 2016:

The table below details the location in the financial statements of the income or loss recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2016, respectively:

The Company does not offset its derivatives on the accompanying consolidated balance sheet. The table below presents a gross presentation, the potential effects of offsetting, and a potential net presentation of the Company’s derivatives as of December 31, 2016. 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 accompanying consolidated balance sheet.

The Company has agreements with its derivative counterparties that contain a provision whereby if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of December 31, 2016, 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 $0.1 million.

As of December 31, 2016, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $0.1 million at December 31, 2016.

As of September 30, 2017 and December 31, 2016, the Company had 167.9 million and 167.1 million shares of common stock outstanding, respectively, including shares of unvested restricted common stock (“restricted shares”), but not including OP units or Long-term Incentive Plan units (“LTIP units”) which may in the future be converted into shares of common stock. On January 3, 2017, the Company issued 841,660 shares of its common stock upon redemption of 841,660 OP units held by certain individuals who are members of the Former Advisor or its affiliates. As of September 30, 2017, there were no OP units outstanding, other than OP units held by the Company, and no vested LTIP units outstanding. See Note 16 — Non-Controlling Interests.

From April 2014 through October 2016, the Board authorized, and the Company declared and paid, a monthly dividend at an annualized rate equal to $0.46 per share per annum. Dividends were paid to stockholders of record on the close of business on the 8th day of each month, payable on the 15th day of such month. In October 2016, the Company announced that, in light of the Liquidation Plan, which was then subject to stockholder approval, the Board determined that the Company would not pay a regular dividend for the month of November 2016 and did not expect to pay a regular monthly dividend for the month of December 2016 or thereafter. Because the Liquidation Plan was approved by the Company’s stockholders, the Company will not resume paying monthly dividends. In lieu of regular monthly dividends, the Company expects to make periodic liquidating distributions out of net proceeds of asset sales, subject to satisfying its liabilities, obligations and debt covenants. There can be no assurance as to the actual amount or timing of liquidating distributions stockholders will receive.

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

Total rental expense related to operating leases was $1.9 million and $5.8 million, respectively, for the three and nine months ended September 30, 2016. During the three and nine months ended September 30, 2016, interest expense related to capital leases was approximately $16,000 and $48,000, respectively. The following table discloses assets recorded under capital leases and the accumulated amortization thereon as of December 31, 2016:

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

In October 2016, Berney Harris (the “Plaintiff”) filed a derivative complaint (the “Harris Complaint”) on behalf of the Company against certain current and former members of the Company’s board of directors (the “director defendants”), the Former Advisor, and certain affiliates of the Former Advisor (together with the Former Advisor, the “Former Advisor defendants”). The Complaint was filed in the Supreme Court of the State of New York, New York County on October 13, 2016. The Harris Complaint alleges, among other things, that the director defendants breached their fiduciary duties by putting the interests of the Former Advisor defendants before those of the public stockholders, which breach was aided and abetted by the Former Advisor defendants. The Harris

Complaint also asserts claims of corporate waste against the director defendants and unjust enrichment against certain of the Former Advisor defendants. On December 16, 2016, the defendants filed motions to dismiss on the basis of a provision in the Company’s bylaws providing that the state or federal courts of Maryland are the sole and exclusive forum for derivative claims such as those raised in the Harris Complaint. On April 6, 2017. an Evaluation Committee of the Board of Directors (the “EC”) consisting of three independent, disinterested directors was appointed by the Board of Directors to evaluate what actions should be taken by the Company in connection with the Harris Complaint and a demand letter sent by a different shareholder to the Company dated March 27, 2017. The EC filed a memorandum of law on August 4, 2017 in support of the motion to dismiss based on the forum selection clause in the Company’s bylaws. On August 10, 2017, the Court issued an Order granting the Company’s and the director defendants’ motion to dismiss and also granted the motion to dismiss of one of the Former Advisor defendants. At the same time, the Court requested additional briefing as to the other Former Advisor defendants’ motion to dismiss, which the Court neither granted nor denied at the time and which is still pending before the Court. On September 15, 2017, the EC filed a motion seeking to stay Plaintiff’s suit pending the conclusion of its evaluation process and the Former Advisor defendants who had not been dismissed filed a memorandum of law in further support of their motion to dismiss. On October 3, 2017, Plaintiff filed a motion seeking to modify the Court’s August 10, 2017 Order to the extent that it dismissed the Company as a nominal defendant. On October 18, 2017, Plaintiff filed a notice of appeal of the Court’s Order dismissing the Company, the director defendants, and one Former Advisor defendant. At this time it is unclear how the Court will rule on whether or where the Harris Complaint will proceed and the EC has not yet completed its investigation, the result of which may bear on the merits of any potential claims the Company might have.

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

The Former Advisor, individual members of the Former Advisor, and employees or former employees of the Former Advisor held interests in the OP. See Note 16 — Non-Controlling Interests.

The following table details revenues from related parties at the Viceroy Hotel. The Company did not have any receivables from related parties as of September 30, 2017 or December 31, 2016.

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

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

Beginning on March 1, 2017, the Company pays Winthrop Advisor an asset management fee equal to 0.325% per annum of the cost of assets (as defined in the Services Agreement) up to $3.0 billion and 0.25% per annum of the cost of assets in excess of $3.0 billion. In connection with the adoption of liquidation accounting, the Company accrues costs it expects to incur through the end of liquidation. The Company has accrued asset management fees of $3.6 million payable to the Winthrop Advisor, of which $2.2 million relates to the existing contract amount and the remainder is management’s estimate of future asset management cost to final liquidation, provided that there is no assurance that the contract will in fact be extended on those terms, if it all. This amount is included in liabilities for estimated costs in excess of estimated receipts during liquidation. Actual fees incurred may differ significantly from these estimates due to inherent uncertainty in estimating future events.

In connection with the payment of (i) any distributions of money or other property by the Company to its stockholders during the term of the Services Agreement and (ii) any other amounts paid to the Company’s stockholders on account of their shares of common stock in connection with a merger or other change in control transaction pursuant to an agreement with the Company entered into after March 8, 2017 (such distributions and payments, the “Hurdle Payments”), in excess of $11.00 per share (the “Hurdle Amount”), when taken together with all other Hurdle Payments, the Company will pay an incentive fee to the Winthrop Advisor in an amount equal to 10.0% of such excess (the “Incentive Fee”). The Hurdle Amount will be increased on an annualized basis by an amount equal to the product of (a) the Treasury Rate plus 200 basis points and (b) the Hurdle Amount minus all previous Hurdle Payments. Based on the current estimated undiscounted net assets in liquidation, the Winthrop Advisor would not be entitled to receive any such incentive fee.

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

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

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

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

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

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

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

The Former Advisor agreed to waive certain fees, including property management fees, during the three and nine months ended September 30, 2016. The fees that were waived were not deferrals and accordingly, were not and will not be paid to the Former Advisor.

In connection with the sale of one or more properties, for which the Former Advisor provided a substantial amount of services as determined by the Company’s independent directors, the Company was required to pay the Former Advisor a property disposition fee not to exceed the lesser of 2.0% of the contract sale price of the property

or 50% of the competitive real estate commission paid if a third party broker was also involved; provided, however that in no event could the property disposition fee paid to the Former Advisor when added to real estate commissions paid to unaffiliated third parties exceed the lesser of 6.0% of the contract sale price and a competitive real estate commission. For purposes of the foregoing, “competitive real estate commission” meant a real estate brokerage commission for the purchase or sale of a property which was reasonable, customary and competitive in light of the size, type and location of the property. The Company incurred and paid $0.2 million in property disposition fees to the Former Advisor during the nine months ended September 30, 2016 related to the sale of certain properties. No such fees were incurred or paid during the three months ended September 30, 2016.

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

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

The Company has a stock option plan (the “Plan”) which authorizes the grant of nonqualified stock options to the Company’s independent directors, officers, advisors, consultants and other personnel, subject to the absolute discretion of the board of directors and the applicable limitations of the Plan. The exercise price for all stock options granted under the Plan is equal to the fair market value of a share on the date of grant. Upon a change in control, unvested options will become fully vested and any performance conditions imposed with respect to the options will be deemed to be fully achieved. A total of 0.5 million shares have been authorized and reserved for issuance under the Plan. As of September 30, 2017 and December 31, 2016, no stock options were issued under the Plan.

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

Under the RSP, the annual amount granted to the independent directors is determined by the board of directors. The maximum number of shares of stock granted under the RSP cannot exceed 10% of the Company’s outstanding shares of common stock, par value $0.01 per share, on a fully diluted basis at any time. Restricted shares issued to independent directors generally vest over a three-year period in increments of 33.3% per annum. Generally, such awards provide for accelerated vesting of (i) all unvested restricted shares upon a change in control or a termination without cause and (ii) the portion of the unvested restricted shares scheduled to vest in the year of voluntary termination or the failure to be reelected to the board. The restricted stock award agreements provide that the shares will vest on the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction or series of transactions within a period of twelve months), which could occur as a result of the Liquidation 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 and other distributions (including any liquidating distributions made pursuant to the Liquidation Plan) prior to the time that the restrictions on the restricted shares have lapsed. Any dividends payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

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

Under going concern accounting, the Company measured stock-based compensation expense at each reporting date for any changes in the fair value and recognized the expense prorated for the portion of the requisite service period completed. Accordingly, the Company recognized $0.1 million and $0.5 million in non-cash compensation expense for the three and nine months ended September 30, 2016, respectively. Under liquidation accounting, compensation expense is no longer recorded as the vesting of the restricted shares does not result in cash outflow for the Company.

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

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

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

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

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

* The “Peer Group” was comprised of the companies in the SNL US REIT Office Index as of the Effective Date.

The potential outperformance award was calculated at the end of each One-Year Period, the Two-Year Period and the Three-Year Period. The award earned for the Three-Year Period was based on the formula in the table above less any awards earned for the Two-Year Period and One-Year Periods, but not less than zero; the award earned for the Two-Year Period was based on the formula in the table above less any award earned for the first and second One-Year Period, but not less than zero. Any LTIP Units that were unearned at the end of any performance period have been forfeited.

After an LTIP Unit was earned, the holder of such LTIP Unit was entitled to a catch-up distribution and thereafter the same distributions as paid to the holder of an OP Unit.

The following table presents information about the Company’s OPP, which was measured at fair value on a recurring basis as of December 31, 2016, aggregated by the fair value hierarchy within which the instrument falls:

The following table provides quantitative information about significant Level 3 input used:

Expected volatility is a measure of the variability in possible returns for an instrument, parameter or market index given how much the particular instrument, parameter or index changes in value over time. Generally, the higher the expected volatility of the underlying instrument, the wider the range of potential future returns. An increase in expected volatility, in isolation, would generally result in an increase in the fair value measurement of an instrument. For the relationship described above, the inverse relationship would also generally apply.

Prior to the adoption of the liquidation basis of accounting, share based compensation related to the OPP was recorded as part of general and administrative expenses and non-controlling interest, a component of equity. Under liquidation basis accounting, since no cash outflow is associated with the OPP, the value of the converted OP units is incorporated in the estimated liquidating distributions per share.

Prior to the adoption of liquidation basis accounting, the Company determined basic earnings per share on the weighted average number of common shares outstanding during the period. The Company computed diluted earnings per share based on the weighted average number of common shares outstanding combined with the incremental weighted average effect for all outstanding potentially dilutive instruments.

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

Diluted net income per share assumes the conversion of all common share equivalents into an equivalent number of common shares, unless the effect is anti-dilutive. The Company considers unvested restricted shares, OP units and LTIP units to be common share equivalents.

Under going concern accounting, consolidated joint ventures are recorded on a gross basis with an allocation of equity to non-controlling interest holders.

The Company is the sole general partner of the OP, and the Company and a subsidiary of the Company hold all of the OP units as of September 30, 2017. As of December 31, 2016, the Former Advisor or members, employees or former employees of the Former Advisor held 841,660 OP units and 7,707,841 unvested LTIP units. On January 3, 2017, the Company issued 841,660 shares of its common stock upon redemption of 841,660 OP units following which no OP units remained outstanding other than OP units held by the Company corresponding to shares of the Company common stock. There were $0 and $1.8 million of distributions paid to OP unit and LTIP unit holders during the nine months ended September 30, 2017 and 2016, respectively.

A holder of OP units has the right to distributions on the same basis as a holder of shares of the Company’s common stock, and has the right to redeem OP units for the cash value of a corresponding number of shares of the Company’s common stock or a corresponding number of shares of the Company’s common stock, at the election of the OP, in accordance with the limited partnership agreement of the OP. The remaining rights of the holders of OP units are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

Under liquidation accounting, consolidated joint ventures will be presented on a gross basis with a payable to the non-controlling interest holder which is reflected on the Consolidated Statement of Net Assets as liability for non-controlling interests.

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

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

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

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “would,” “may” or similar expressions in this Quarterly Report on Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. Factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those set forth in our Annual Report on Form 10-K for the year ended December 31, 2016 under “Forward Looking Statements” and “Item 1A – Risk Factors,” as well as our other filings with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on forward-looking statements, which are based on information, judgments and estimates at the time they are made, to anticipate future results or trends.

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

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

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

The Liquidation Plan enables us to sell any and all of our assets without further approval of the stockholders and provides that liquidating distributions be made to the stockholders as determined by the Board. Pursuant to applicable REIT rules, we must complete the disposition of our assets by January 3, 2019, two years

after the date the Liquidation Plan was approved by the stockholders, in order to deduct liquidating distributions as dividends. In order to comply with applicable tax laws, any of our assets not sold by January 3, 2019 will be distributed into a liquidating entity. If we transfer our assets to a liquidating entity, holders of our common shares will receive beneficial interests in the liquidating entity equivalent to those held in the Company. Holders of our common shares should note that unlike our common shares, which are freely transferable, beneficial interests in the liquidating entity will generally not be transferable except by will, intestate succession or operation of law. Therefore, the recipients of the interests in the liquidating entity will not have the ability to realize any value from these interests except from distributions made by the liquidating entity, the timing of which will be solely in the discretion of the liquidating entity’s trustees. As compared to the Company which is required to comply with all of the filing requirements of the Securities and Exchange Commission for publicly traded entities, based on current guidance provided by the staff of the Securities and Exchange Commission applicable to liquidating trusts, the liquidating entity may not be required to file only annual reports containing unaudited financial statements on Form 10-K and current reports on Form 8-K with the Securities and Exchange Commission.

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

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

On June 1, 2017 we closed on our acquisition of the additional interest in Worldwide Plaza, which is further discussed below. We have begun marketing for sale, all of the remaining properties other than the remaining interest in Worldwide Plaza. Our current estimates of net assets in liquidation presented on an undiscounted basis are based on an expectation that all of our properties will be sold by March 31, 2018 except for the remaining interest in Worldwide Plaza. We project that the remaining interest in Worldwide Plaza will be sold by the 4th quarter of 2021. These estimates are subject to change based on the actual timing of future asset sales.

The net assets in liquidation at September 30, 2017 are presented on an undiscounted basis and does not include management’s estimated future increase in value from the planned investment in the repositioning of Worldwide Plaza. Our current estimate of the liquidation value of investments in real estate includes Worldwide Plaza at 1.725 billion which was based on a current market transaction associated with our sale of a 48.7% interest in the property on October 18, 2017 discussed in Note 6. Our venture partners have jointly developed and recommended a capital budget, which we have agreed to. The capital plan includes targeted capital improvements aimed at maintaining the institutional quality of the building and an appropriate allocation to allow for critical tenant lease renewals and rolls. In addition, capital will be available for new management to focus on repositioning the property as a more modern asset, with a corresponding program to rebrand and likely rename the building as well as energizing and maximizing the potential of the retail and concourse space. We have set aside approximately $90.7 million from the refinancing proceeds to cover an estimate of our share of potential future leasing and capital costs at the property. Our joint venture partners have committed to contribute their pro-rata share of the budgeted capital investment.

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

Management believes that if these actions are successful, the estimated value of the property could increase to between $1.9 billion and $2.2 billion by November 2021, our estimated sale date of this investment. Assuming a $2.0 billion future value for Worldwide Plaza would produce a residual value of $2.19 per share, an increase of $0.32 per share over our current carrying value. In addition, we have contractual rents which generate a predictable cash flow from Worldwide Plaza during the estimated four year hold period which, net of expenses, we estimate would produce an additional $0.42 per share over the four year hold period versus the $0.13 currently accrued. These estimates of potential future cash flow are undiscounted. Management’s estimate, like any estimate or projection, is subject to various assumptions and uncertainties including the joint venture’s ability to execute on the business plan, tenants paying their rental obligations, the equity capital and financing markets and New York City market conditions generally. There is no assurance that the joint venture will be successful in taking these various actions and that these actions will, in fact, result in the estimated increase in the value of the property.

50 Varick – property sale – On August 7, 2017, we sold to an independent third party our 50 Varick Street office property in Manhattan, New York for a gross sales price of $135.0 million. The property was part of the collateral for our $760.0 million POL Loans. In connection with the sale, we paid down $78.1 million of debt as required under the POL Loans. After satisfaction of debt, pro-rations and closing costs we received net proceeds of approximately $49.1 million. The estimated liquidation value of the property was $137.5 million at January 1, 2017 and was adjusted to $135.0 million at June 30, 2017 based on the contract sale price.

245-249 West 17^th Street and 218 West 18^th Street – property sale – On September 25, 2017, we entered into a contract to sell to an independent third party our 245-249 West 17^th Street (Twitter) and 218 West 18^th Street (Red Bull) office properties in Manhattan, New York for a gross sales price of $514.1 million. The sale was completed on October 11, 2017. The properties were part of the collateral for our $760.0 million POL Loans. In connection with the sale, we paid down $347.9 million of debt as required under the POL Loans. After satisfaction of debt, pro-rations and closing costs we received net proceeds of approximately $146.2 million. The estimated liquidation values of the properties were $532.6 million at January 1, 2017 and June 30, 2017. The estimated liquidation value of these properties were adjusted down to $514.1 million as of September 30, 2017 to reflect the contracts for sale.

229 West 36^th Street and 256 West 38^th Street – contract for sale – Subsequent to September 30, 2017, we entered into a contract to sell to an independent third party our 229 West 36^th Street and 256 West 38^th Street office properties in Manhattan, New York for a gross sales price of $155.9 million. The sale was completed on November 6, 2017. 229 West 36^th Street is part of the collateral for our $760.0 million POL Loans. In connection with the sale, we paid down $66.1 million of debt as required under the POL Loans and $24.5 million of other debt related to 256 West 38^th Street. After satisfaction of the mortgage debt, pro-rations and closing costs we received net proceeds of approximately $58.8 million. The estimated liquidation value of the properties were $152.4 million at January 1, 2017 and June 30, 2017 and were adjusted to $155.9 million at September 30, 2017 based on the contract sale price.

Worldwide Plaza – sale of interests and refinancing – On October 18, 2017, we sold a 48.7% interest in Worldwide Plaza to a joint venture managed by SL Green Realty Corp. and RXR Realty LLC based on the agreed upon value of the property of $1.725 billion. In conjunction with the equity sale, there was a concurrent $1.2 billion refinancing of the existing Worldwide Plaza debt. We received cash at closing of approximately $355 million from the sale and excess proceeds from the financing, which is net of certain closing costs, including $109.0 million of defeasance and prepayment costs, and a $90.7 million capital reserve. The new debt on Worldwide Plaza bears interest at a blended rate of approximately 3.98% per annum, requires monthly payments of interest only and matures in November 2027.

As of September 30, 2017, we had cash and cash equivalents of $93.3 million. Our total assets and undiscounted net assets in liquidation were $3.5 billion and $1.3 billion, respectively, at September 30, 2017. Our ability to meet our obligations is contingent upon the disposition of our assets in accordance with our Liquidation Plan. We estimate that the proceeds from our Liquidation Plan will be adequate to pay our obligations, however, we cannot provide any assurance as to the prices or net proceeds we will receive from the disposition of our assets.

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

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

On December 20, 2016, we entered into a mortgage loan (the “Mortgage Loan”) in the aggregate amount of $500.0 million and a mezzanine loan in the aggregate amount of $260.0 million (the “Mezzanine Loan” and, together with the Mortgage Loan, the “POL Loans”), which are secured directly, in the case of the mortgage loan, and indirectly in the case of the mezzanine loan, by our properties located in New York, New York at 245-249 West 17th Street, 333 West 34th Street, 216-218 West 18th Street, 50 Varick Street (until the sale of the property in August 2017), 229 West 36th Street, 122 Greenwich Street, 350 West 42nd Street, 382-384 Bleecker Street, 350 Bleecker Street, 416-425 Washington Street, 33 West 56th Street and 120 West 57th Street (the “POL Loan Properties”). At the closing of the POL Loans, a portion of the net proceeds was used to repay the $485.0 million principal amount then outstanding under our credit facility. As of December 31, 2016, the $260.0 million proceeds from the Mezzanine Loan was held in an escrow account by the servicer of the POL Loans and was considered a receivable in our consolidated balance sheet. Subsequently, on January 10, 2017, the $260.0 million proceeds were deposited into an operating account. These funds were used by us to purchase the additional equity interests in Worldwide Plaza in connection with our exercise of the WWP Option.

Upon the sale of 50 Varick on August 7, 2017, $78.1 million was paid toward the POL Loans, and the property was released as security. Additionally, upon the sale of 245-249 West 17^th Street and 218 West 18^th Street on October 11, 2017, $347.9 million was paid down on the POL Loans, and the properties were released as security. Upon the sale of 229 West 39^th Street on November 6, 2017, the POL was paid down $66.1 million, and the property was released as security. The POL Loan balance was reduced to $267.9 million as a result of these sales.

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

Prior to our acquisition of the additional interest in Worldwide Plaza, during the five months ended May 31, 2017, we received net distributions of $6.4 million in respect of our interest in Worldwide Plaza. After our acquisition, Worldwide Plaza is included in our consolidated financial statements.

As of September 30, 2017, we owned 18 properties. In connection with the leasing of our properties, we have entered into and will continue to enter into agreements with our tenants to provide allowances for tenant improvements. These allowances require us to fund capital expenditures up to amounts specified in our lease agreements. We intend to fund tenant improvement allowances with cash on hand and cash flows from operations. We funded $6.4 million in capital expenditures during the nine months ended September 30, 2017, which was funded primarily from cash on hand. We currently estimate that we will fund approximately $4.3 million of capital expenditures from operating cash flow during the remainder of 2017 for tenant improvements and improvements required by applicable law on our consolidated real estate portfolio.

On October 30, 2013, we purchased a 48.9% equity interest in Worldwide Plaza for a contract purchase price of $220.1 million, based on the property value for Worldwide Plaza of $1.3 billion less $875.0 million of debt on the property.

On March 30, 2017, we exercised the WWP Option pursuant to our rights under the joint venture agreement for Worldwide Plaza subject to our joint venture partner’s rights to retain up to 1.2% of the aggregate membership interest, which the joint venture partner has elected to retain. On June 1, 2017, we acquired an additional 49.9% equity interest for a contract purchase price of $276.7 million, based on the option price of approximately $1.4 billion less $875.0 million of debt on the property. Following the exercise of the option, we now own a total equity interest of 98.8% in Worldwide Plaza. Beginning June 1, 2017 the Worldwide Plaza property is included in our consolidated financial statements.

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

As of September 30, 2017, we had consolidated mortgage notes payable of $1.9 billion, including the mortgage debt of Worldwide Plaza, which was consolidated beginning second quarter 2017. As of September 30, 2017, the consolidated mortgage notes payable had a weighted average interest rate of 4.4%.

On August 1, 2017, our mortgage loan collateralized by the 1100 Kings Highway property was modified to extend the maturity date to April 1, 2018 and to allow for partial release of the collateral. The loan also requires a cash sweep starting January 1, 2018 unless the property is under contract for sale for an amount equal to or greater than 133% of the outstanding mortgage loan payable.

The payment terms of our mortgage loan obligations require principal and interest amounts payable monthly. Some of our mortgage note agreements require us to comply with specific reporting covenants. As of September 30, 2017, we were in compliance with the financial covenants under our mortgage note agreements.

Our level of liquidity based upon cash and cash equivalents increased by approximately $47.8 million from $45.5 million at December 31, 2016 to $93.3 million at September 30, 2017. The increase in cash and cash equivalents was primarily the result of the sale of 50 Varick. The common stockholders approved the Liquidation Plan on January 3, 2017, and we adopted the liquidation basis of accounting effective January 1, 2017.

Our primary source of non-operating cash flow for the nine months ended September 30, 2017 was $135 million of proceeds from the sale of our 50 Varick Street property.

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

The following is a summary of our contractual debt obligations as of September 30, 2017:

All debt maturing during 2017 is expected to either be paid in full with proceeds from property sales or are to be extended as provided for in the loan agreement.

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

Under going concern accounting, the comparability of financial data from period to period was affected by several items including (i) the timing of our property acquisition and leasing activity; (ii) the timing of property sales; (iii) when material impairment losses on assets are taken; and (iv) fluctuations in the fair value of our OP units and restricted shares.

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

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

As of September 30, 2017, our consolidated portfolio was 94.8% leased, compared to 93.4% as of December 31, 2016. Occupancy is inclusive of leases signed but not yet commenced. See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Significant Accounting Estimates and Critical Accounting Policies below for accounting policies relating to revenue recognition.

Period from January 1, 2017 through September 30, 2017 and three months ended September 30, 2017

Net assets in liquidation, which are presented on an undiscounted basis, decreased by $215.4 million and $221.3 million during the three and nine months ended September 30, 2017. The current net assets in liquidation includes Worldwide Plaza valued at $1.725 billion. The decrease during the quarter ended September 30, 2017 is primarily the result of (i) a $75.5 million net decrease in liquidation values due to the realized sales of 245-249 West 17^th Street (“Twitter”), 218 West 18^th Street (“Red Bull”), 229 West 36^th Street and 256 West 38^th Street and a signed contract for sale for 1440 Broadway, (ii) a $63.7 million net decrease in estimated liquidation values of the remaining portfolio, (iii) a $75.5 million decrease in the Company’s investment in Worldwide Plaza which includes debt defeasance costs net of mortgage debt premium amortization and changes in estimated cash flow, and (iv) a net decrease of $0.7 million related to other cumulative adjustments related to changes in debt costs and adjustments to holding periods.

The decrease during the nine months ended September 30, 2017 is primarily the result of (i) a $78.0 million net decrease in liquidation values due to the realized sales of 50 Varick Street, 245-249 West 17^th Street (Twitter), 218 West 18^th Street (Red Bull), 229 West 36^th Street and 256 West 38^th Street and a signed contract for sale for 1440 Broadway, (ii) a $63.7 million net decrease in estimated liquidation values of the remaining portfolio, (iii) a $75.5 million decrease in the Company’s investment in Worldwide Plaza which includes estimated debt defeasance costs net of mortgage debt premium amortization and changes in estimated cash flow, and (v) a net decrease of $4.1 million related to other cumulative adjustments related to changes in debt costs and adjustments to holding periods.

A summary of the change in net asset value for the nine months ended September 30, 2017 is as follows:

The net assets in liquidation at September 30, 2017, which are presented on an undiscounted basis, includes Worldwide Plaza valued at $1.725 billion which is based on the recent sale of a 48.7% interest in the property as discussed in Note 6 and excludes management’s estimate of the future increase in value from the planned investment in the repositioning of Worldwide Plaza, result in liquidating distributions of approximately $7.93 per common share. This estimate of liquidating distributions includes projections of costs and expenses to be incurred during the period required to complete the Liquidation Plan. As of October 18, 2017, Worldwide Plaza is managed by a joint venture of SL Green and RXR Realty, two of the largest owner operators in New York City. We, along with our new joint venture partners, are committed to investing significant additional capital into Worldwide Plaza to further improve and reposition the asset which we believe included embedded opportunities to roll leases to increase the value of the property. We believe that once these actions are implemented and come to fruition, the value of Worldwide Plaza will range from $1.9 billion to $2.2 billion by our anticipated sale date of November 2021. The increase in the future market value of Worldwide Plaza will be reflected in the Statement of Net Assets in liquidation as the specific actions related to the repositioning have been completed and such increase in market value can be observed. Assuming a future value of $2.0 billion in November 2021, would result in an increase to our net assets in liquidation of approximately $0.59 per share, which would result in estimated net assets in liquidation, on an undiscounted basis, of $8.52 per share. Management’s estimate, like any estimate or projection, is subject to various assumptions and uncertainties including the joint venture’s ability to execute on the business plan, tenants paying their rental obligations, the equity capital and financing markets and New York City market conditions generally. There is no assurance that the joint venture will be successful in taking these various actions and that these actions will, in fact, result in the estimated increase in the value of the property.

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

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

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

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

All significant subsequent events have been discussed throughout this Management’s Discussion and Analysis.

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

Prior to the adoption of the Liquidation Plan, we accounted for our leases with tenants as operating leases with rental revenue recognized on a straight-line basis over the initial term of the lease. Because many of our leases provide for rental increases at specified intervals, generally accepted accounting principles (“GAAP”) required us to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that we would only receive if the tenant made all rent payments required through the expiration of the initial term of the lease. We deferred the revenue related to lease payments received from tenants in advance of their due dates. When we acquired a property, the acquisition date was considered to be the commencement date for purposes of this calculation.

Rental revenue recognition commenced when the tenant took possession or control of the physical use of the leased space. For the tenant to take possession, the leased space had to be substantially ready for its intended use. To determine whether the leased space was substantially ready for its intended use, we evaluated whether we, or the tenant, owned the tenant improvements. When we were the owner of tenant improvements, rental revenue recognition began when the tenant took possession of the finished space, which was when such improvements were substantially complete. When we concluded that the tenant was the owner of tenant improvements, rental revenue recognition began when the tenant took possession of or controlled the space.

When we concluded that we are the owner of tenant improvements, we capitalized the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants. When we concluded that the tenant was the owner of tenant improvements for accounting purposes, we recorded our contribution towards those improvements as a lease incentive, which was included in deferred leasing costs, net on the consolidated balance sheet as of December 31, 2016 and amortized as a reduction to rental income on a straight-line basis over the term of the lease.

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

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

Under going concern accounting, unbilled rent receivable included the difference between straight line rent and contractual amounts due. We reviewed unbilled rent receivables monthly for collectability. Unbilled rent receivable is not contemplated under liquidation accounting. We accrue rental revenue based on contractual amounts expected to be collected during liquidation.

We own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. As the lessor to the aforementioned leases, under going concern accounting we deferred the recognition of contingent rental income until the specified target that triggered the contingent rental income was achieved, or until such sales upon which percentage rent is based were known. Contingent rental income earned was included in rental income on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2016. Contingent rental income is not contemplated under liquidation accounting unless we have a reasonable basis to estimate future receipts.

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

Our hotel revenues are recognized as earned and are derived from room rentals and other sources such as charges to guests for telephone service, movie and vending commissions, meeting and banquet room revenue and laundry services.

Prior to the adoption of the Liquidation Plan, we evaluated the inputs, processes and outputs of each asset acquired to determine if the transaction was a business combination or asset acquisition. If an acquisition qualified as a business combination, the related transaction costs were recorded as an expense in the consolidated statement of operations. If an acquisition qualified as an asset acquisition, the related transaction costs were generally capitalized and subsequently amortized over the useful life of the acquired assets.

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

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

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

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

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

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

Under going concern accounting, depreciation was computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests. Under liquidation accounting, investments in real estate are no longer depreciated.

Under going concern accounting, acquired above-market leases were amortized as a reduction of rental income over the remaining terms of the respective leases. Acquired below-market leases were amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods. Acquired above-market ground leases were amortized as a reduction of property operating expense over the remaining term of the respective leases. Acquired below-market ground leases were amortized as an increase to property operating expense over the remaining term of the respective leases and expected below-market renewal option period. The value of in-place leases, exclusive of the value of above- and below-market in-place leases, was amortized to depreciation and amortization expense over the remaining periods of the respective leases. Assumed mortgage premiums or discounts, if applicable, were amortized as a reduction or increased to interest expense over the remaining term of the respective mortgages. Under liquidation accounting, intangible assets and liabilities are included in the liquidation value of investments in real estate and are no longer amortized.

Under going concern accounting, when circumstances indicated the carrying value of a property may not be recoverable, we reviewed the asset for impairment. This review was based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates considered factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If such estimated cash flows were less than the carrying value of a property, an impairment loss was recorded to the extent that the carrying value exceeded the estimated fair value of the property.

We use derivative financial instruments to hedge the interest rate risk associated with a portion of our borrowings. The principal objective of such agreements is to minimize the risks and costs associated with our operating and financial structure as well as to hedge specific anticipated transactions.

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

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

As these instruments will not be converted into cash or other consideration, derivative financial instruments have been valued at $0 as of January 1, 2017 in accordance with liquidation accounting. These financial instruments are still in place and effective as of September 30, 2017. We have accrued the estimated monthly amounts for our swap agreements which are included in the liability for estimated costs in excess of estimated receipts during liquidation.

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

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

As of September 30, 2017, our debt consisted of both fixed and variable-rate debt. We had fixed-rate secured mortgage notes payable with an aggregate carrying value of $899.5 million and a fair value of $878.8 million. Changes in market interest rates on our fixed-rate debt impact the fair value of the notes, but it has no impact on interest due on the notes. For instance, if interest rates rise 100 basis points and our fixed rate debt balance remains constant, we expect the fair value of our obligation to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed–rate debt assumes an immediate 100 basis point move in interest rates from their September 30, 2017 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt by $40.9 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt by $84.1 million.

As of September 30, 2017, our variable-rate debt had a carrying and fair value of $1.0 billion. Interest rate volatility associated with this variable rate debt affects interest expense incurred and cash flow. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their September 30, 2017 levels, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate debt would increase or decrease our interest expense by $10.3 million annually.

These amounts were determined by considering the impact of hypothetical interest rates changes on our borrowing costs, and assuming no other changes in our capital structure. As the information presented above includes only those exposures that existed as of September 30, 2017, it does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

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

As of September 30, 2017 an evaluation was performed under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 30, 2017.

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

The information related to litigation and regulatory matters contained in Note 12 — Commitments and Contingencies of our notes to the consolidated financial statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1. Except as set forth therein, as of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.

Set forth below are material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016:

We are dependent on our joint venture partner, which is the administrative member, and has day-to-day control over the Worldwide Plaza, and there can be no assurance as to the timing of a sale of Worldwide Plaza or that we will realize our estimated value.

Our largest investment, representing 2.0 million of the 4.1 million rentable square feet in our portfolio as of September 30, 2017, is our 50.1% equity interest in the joint venture that owns Worldwide Plaza. We estimate holding this investment through November 2021. While we own a majority of the membership interests in Worldwide Plaza, under the Worldwide Plaza joint venture agreement, our joint venture partner, which is a joint venture between an affiliate of SL Green Realty Corp. and a private equity fund sponsored by RXR Realty LLC, is the manager of the joint venture and is responsible for day-to-day management of Worldwide Plaza. While major decisions, such as the approval of the annual budget, require the consent of the Board of Managers, including the consent of Wendy Silverstein who is our designee on the Board of Managers, we do not have control of the decisions to be made by Worldwide Plaza, we are dependent on our joint venture partners and there is a risk of impasse. Investments in joint ventures under certain circumstances, involve risks not present were a third party not involved. Our joint venture partner may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Disputes between us and our joint venture partner may result in litigation. Consequently, actions by or disputes with our joint venture partner might result in subjecting us to additional risk. In addition, we may in certain circumstances we may be liable for the actions of our joint venture partner or subject to dilution of our interest if we fail to make required capital contributions to the venture.

We have a right to transfer our membership interests in Worldwide Plaza to purchasers meeting certain qualifications, subject to a right of first offer to our joint venture partner. If our interest is not sold prior to, commencing January 18, 2022, we and our joint venture partner also have the right to require the joint venture to market the property owned by it for sale, subject to a right of first offer to our joint venture partner.

Any transferee of our interest would acquire an interest subject to the same limitations on participation in the management of Worldwide Plaza that are applicable to us. There can be no assurance these limitations will not affect our ability to sell our interest in Worldwide Plaza or the amount we would receive on a sale. In addition, we may determine that a sale of the property rather than our interest in Worldwide Plaza is the best way to maximize the value of our interest in Worldwide Plaza. Because we do not have a right to initiate a sale of the property until 2022, a sale of the property could substantially delay the timing of our complete liquidation. In addition, we may be required to transfer our remaining assets to a liquidating entity by January 3, 2019, and the interests in the liquidating entity will generally not be transferable by our shareholders. Additionally, the existence of the right of first offers may delay our ability to sell the Worldwide Plaza property or our interest in Worldwide Plaza on terms and in the timeframe of our choosing and may diminish the price we receive on a sale.

Our management has estimated that the value of Worldwide Plaza could increase to between $1.9 billion and $2.2 billion by November 2021, our estimated sale date of this investment, as a result of actions to be taken through our joint venture. Our venture partners have jointly developed and recommended a capital budget, which we have agreed to. The capital plan includes targeted capital improvements aimed at maintaining the institutional quality of the building and an appropriate allocation to allow for critical tenant lease renewals and rolls. In addition, capital will be available for new management to focus on repositioning the property as a more modern asset, with a corresponding program to rebrand and likely rename the building as well as energizing and maximizing the potential of the retail and concourse space. We have set aside approximately $90.7 million from the refinancing proceeds to cover an estimate of our share of potential future leasing and capital costs at the property. Our joint venture partners have committed to contribute their pro-rata share of the budgeted capital investment. Management’s estimate, like any estimate or projection, is subject to various assumptions and uncertainties including the joint venture’s ability to execute on the business plan, tenants paying their rental obligations, the equity capital and financing markets and New York City market conditions generally. There is no assurance that the joint venture will be successful in taking these various actions and that these actions will, in fact, result in the estimated increase in the value of the property.

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (and are numbered in accordance with Item 601 of Regulation S-K).

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


NEW YORK REIT, INC.

By:		/s/ Wendy Silverstein
		Wendy Silverstein

		Chief Executive Officer and President
		(Principal Executive Officer)

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


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

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


	Page
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Consolidated Statement of Net Assets (Liquidation Basis) as of September 30, 2017		3

Consolidated Balance Sheet (Going Concern Basis) as of December 31, 2016		4

Consolidated Statements of Changes in Net Assets (Liquidation Basis) for the Three and Nine Months Ended September 30, 2017		5

Consolidated Statements of Operations and Comprehensive Loss (Going Concern Basis) for the Three and Nine Months Ended September 30, 2016		6

Consolidated Statement of Changes in Equity (Going Concern Basis) for the Nine Months Ended September 30, 2016		7

Consolidated Statement of Cash Flows (Going Concern Basis) for the Nine Months Ended September 30, 2016		8

Notes to Consolidated Financial Statements		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		36

Item 3. Quantitative and Qualitative Disclosures About Market Risk		46

Item 4. Controls and Procedures		46

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		47

Item 1A. Risk Factors		47

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		48

Item 3. Defaults Upon Senior Securities		48

Item 4. Mine Safety Disclosures		48

Item 5. Other Information		48

Item 6. Exhibits		48

Signatures		49


	September 30, 2017
Assets
Investments in real estate (see Note 3 – Liquidation Basis of Accounting)	$	3,401,961
Cash and cash equivalents		93,300
Restricted cash held in escrow		20,478
Accounts receivable		7,722
Other assets		500

Total Assets	$	3,523,961

Liabilities
Mortgage notes payable (see Note 7)	$	1,925,767
Liability for estimated costs in excess of estimated receipts during liquidation		234,720
Liability for non-controlling interests		8,605
Accounts payable, accrued expenses and other liabilities		23,200
Related party fees payable		49

Total Liabilities		2,192,341

Commitments and Contingencies
Net assets in liquidation	$	1,331,620


	December 31, 2016
Assets
Real estate investments, at cost:
Land	$	477,171
Buildings, fixtures and improvements		1,176,152
Acquired intangible assets		132,348

Total real estate investments, at cost		1,785,671
Less accumulated depreciation and amortization		(210,738	)

Total real estate investments, net		1,574,933
Cash and cash equivalents		45,536
Restricted cash		3,058
Investment in unconsolidated joint venture		190,585
Derivatives, at fair value		165
Tenant and other receivables		3,904
Receivable for mortgage proceeds		260,000
Unbilled rent receivables		52,620
Prepaid expenses and other assets		15,061
Deferred costs, net		6,518

Total assets	$	2,152,380

Liabilities and Equity
Mortgage notes payable, net of deferred financing costs	$	1,107,526
Market lease intangibles, net		65,187
Derivatives, at fair value		74
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $455 as of December 31, 2016)		33,364
Deferred revenue		4,548
Dividend payable		12

Total liabilities		1,210,711
Preferred stock, $0.01 par value; 40,866,376 shares authorized, none issued and outstanding		—
Convertible preferred stock, $0.01 par value; 9,133,624 shares authorized, none issued and outstanding		—
Common stock, $0.01 par value; 300,000,000 shares authorized, 167,066,364 shares issued and outstanding at December 31, 2016		1,671
Additional paid-in capital		1,445,092
Accumulated other comprehensive loss		(713	)
Accumulated deficit		(515,073	)

Total stockholders’ equity		930,977
Non-controlling interests		10,692

Total equity		941,669

Total liabilities and equity	$	2,152,380


	Three Months Ended			Nine Months Ended
	September 30, 2017			September 30, 2017
Net assets in liquidation, beginning of period, July 1, 2017 and January 1, 2017, respectively	$	1,547,052		$	1,552,926
Changes in net assets in liquidation (See Note 5):
Changes in liquidation value of investments in real estate		(142,230	)		(144,730	)
Remeasurement of assets and liabilities		(74,029	)		(77,283	)
Remeasurement of non-controlling interest		827			707

Changes in net assets in liquidation		(215,432	)		(221,306	)

Net assets in liquidation, end of period	$	1,331,620		$	1,331,620


	Three Months Ended			Nine Months Ended
	September 30, 2016			September 30, 2016
Revenues:
Rental income	$	30,267		$	89,045
Hotel revenue		7,098			18,487
Operating expense reimbursement and other revenue		3,895			10,360

Total revenue		41,260			117,892

Operating expenses:
Property operating		11,539			31,994
Hotel operating		6,856			19,710
Operating fees incurred from the Advisor		3,500			9,624
Transaction related		11,623			18,233
Impairment loss on real estate investment		27,911			27,911
General and administrative		1,760			(975	)
Depreciation and amortization		16,305			50,117

Total operating expenses		79,494			156,614

Operating loss		(38,234	)		(38,722	)
Other income (expenses):
Interest expense		(8,875	)		(27,913	)
Income from unconsolidated joint venture		711			2,556
Income from preferred equity investment		3			24
Gain on sale of real estate investments, net		—			6,630
Loss on derivative instruments		(12	)		(370	)

Total other expenses		(8,173	)		(19,073	)

Net loss		(46,407	)		(57,795	)
Net loss attributable to non-controlling interests		1,140			1,475

Net loss attributable to stockholders	$	(45,267	)	$	(56,320	)

Other comprehensive income (loss):
Unrealized gain (loss) on derivatives	$	660		$	(318	)

Total other comprehensive income (loss)		660			(318	)

Comprehensive loss attributable to stockholders	$	(44,607	)	$	(56,638	)

Basic and diluted weighted average common shares outstanding		165,384,074			164,700,025

Basic and diluted net loss per share attributable to stockholders	$	(0.27	)	$	(0.34	)

Dividends declared per common share	$	0.12		$	0.35


	Common Stock							Accumulated
	Number					Additional		Other						Total			Non-
	of			Par		Paid-In		Comprehensive			Accumulated			Stockholders’			controlling			Total
	Shares			Value		Capital		Loss			Deficit			Equity			Interests			Equity
Balance, December 31, 2015		162,529,811		$	1,626	$	1,403,624	$	(1,237	)	$	(369,273	)	$	1,034,740		$	57,529		$	1,092,269
OP units converted to common stock		3,336,430			33		30,765		—			—			30,798			(30,798	)		—
Equity-based compensation and redemption of vested shares		(11,015	)		—		255		—			—			255			(10,892	)		(10,637	)
Dividends declared on common stock and distributions to non-controlling interest holders		—			—		—		—			(56,917	)		(56,917	)		(1,824	)		(58,741	)
Net loss		—			—		—		—			(56,320	)		(56,320	)		(1,475	)		(57,795	)
Other comprehensive loss		—			—		—		(318	)		—			(318	)		—			(318	)

Balance, September 30, 2016		165,855,226		$	1,659	$	1,434,644	$	(1,555	)	$	(482,510	)	$	952,238		$	12,540		$	964,778


	Nine Months Ended
	September 30, 2016
Cash flows from operating activities:
Net loss	$	(57,795	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		50,117
Amortization of deferred financing costs		6,627
Accretion of below- and amortization of above-market lease liabilities and assets, net		(4,908	)
Equity-based compensation		(10,467	)
Loss on derivative instruments		370
Income from unconsolidated joint venture		(2,556	)
Gain on sale of real estate investment, net		(6,630	)
Impairment loss on real estate		27,911
Bad debt expense		262
Changes in assets and liabilities:
Tenant and other receivables		(1,454	)
Unbilled rent receivables		(8,338	)
Prepaid expenses, other assets and deferred costs		(1,659	)
Accrued unbilled ground rent		2,058
Accounts payable and accrued expenses		2,663
Deferred revenue		790

Net cash used in operating activities		(3,009	)

Cash flows from investing activities:
Proceeds from sale of real estate investments and redemption of preferred equity investment		35,429
Capital expenditures		(15,979	)
Distributions from unconsolidated joint venture		27,509

Net cash provided by investing activities		46,959

Cash flows from financing activities:
Payments on mortgage notes payable		(19,069	)
Payment of financing costs		(1,647	)
Dividends paid		(56,927	)
Distributions to non-controlling interest holders		(1,824	)
Redemption of restricted shares		(170	)
Restricted cash		(3,076	)

Net cash used in financing activities		(82,713	)

Net decrease in cash and cash equivalents		(38,763	)
Cash and cash equivalents, beginning of period		98,604

Cash and cash equivalents, end of period	$	59,841

Supplemental disclosures:
Cash paid for interest	$	21,221

Non-cash investing and financing activities:
Dividends payable	$	17

Accrued capital expenditures	$	860

Conversion of OP units to common stock	$	30,798


	Amount
Rents and reimbursements	$	102,309
Hotel revenues		25,261
Property operating expenses		(27,006	)
Hotel operating expense		(21,467	)
Interest expense		(39,756	)
General and administrative expenses		(40,124	)
Capital expenditures		(8,274	)
Sales costs		(69,524	)

Liability for estimated costs in excess of estimated receipts during liquidation	$	(78,581	)


				Net Change			Remeasurement
				in Working			of Assets and
	January 1, 2017			Capital (1)			Liabilities			Consolidation (2)			September 30, 2017
Assets:
Estimated net inflows from investments in real estate	$	58,303		$	(73,071	)	$	(77,736	)	$	(1,572	)	$	(94,076	)
Liabilities:
Sales costs		(69,524	)		4,708			3,972			(57,334	)		(118,178	)
Corporate expenditures		(67,360	)		48,413			(3,519	)		—			(22,466	)

		(136,884	)		53,121			453			(57,334	)		(140,644	)

Total liability for estimated costs in excess of estimated receipts during liquidation	$	(78,581	)	$	(19,950	)	$	(77,283	)	$	(58,906	)	$	(234,720	)


Total Equity as of December 31, 2016	$	941,669
Increase due to estimated net realizable value of investments in real estate		382,985
Increase due to estimated net realizable value of investments in unconsolidated joint venture		319,548
Decrease due to write off of unbilled rent receivables		(52,620	)
Increase due to write off of market lease intangibles		65,187
Decrease due to write-off of assets and liabilities		(25,262	)
Liability for estimated costs in excess of estimated receipts during liquidation		(78,581	)

Adjustment to reflect the change to the liquidation basis of accounting		611,257

Estimated value of net assets in liquidation as of January 1, 2017	$	1,552,926


Property sales and signed contracts for property sales	$	(77,958	)
Property value changes due to softening of market		(63,730	)
Worldwide Plaza		(75,534	)
Adjustments for closing costs, debt costs and holding periods		(4,084	)

Change in net asset value	$	(221,306	)


	Future Minimum
(In thousands)	Base Cash Rental Payments
October 1, 2017 - December 31, 2017	$	56,002
2018		223,899
2019		219,700
2020		222,546
2021		217,461
Thereafter		1,234,961

Total	$	2,174,569


		September 30,
Property Portfolio	Tenant	2017			2016
Worldwide Plaza	Cravath, Swaine & Moore, LLP		25	%		16	%(1)
Worldwide Plaza	Nomura Holdings America, Inc.		16	%		11	%(1)


	December 31, 2016
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets:
In-place leases	$	108,253	$	36,645	$	71,608
Other intangibles		3,804		750		3,054
Above-market leases		20,291		5,036		15,255

Total acquired intangible assets	$	132,348	$	42,431	$	89,917

Intangible lease liabilities:
Below-market leases	$	75,484	$	26,864	$	48,620
Above-market ground lease liability		17,968		1,401		16,567

Total market lease intangibles	$	93,452	$	28,265	$	65,187


Property	Borough		Disposition Date		Contract Sales Price		Gain on Sale (1) (2)
					(in thousands)		(in thousands)
Duane Reade		Queens		February 2, 2016	$	12,600	$	126
1623 Kings Highway		Brooklyn		February 17, 2016		17,000		4,293
Foot Locker		Brooklyn		March 30, 2016		8,400		2,211

					$	38,000	$	6,630


			Outstanding Loan Amount
	Encumbered							Effective
Portfolio	Properties		September 30, 2017		December 31, 2016			Interest Rate			Interest Rate			Maturity
Mortgage Loan (1)		11	$	448,641	$	500,000			3.2	%		Variable	(2)		Dec 2017
Mezzanine Loan (1)		11		233,293		260,000			6.5	%		Variable	(2)		Dec 2017
256 West 38th Street		1		24,500		24,500			3.1	%		Fixed	(5)		Dec 2017
1100 Kings Highway		1		20,200		20,200			3.4	%		Variable			Apr 2018
1440 Broadway (3)		1		305,000		305,000			4.3	%		Variable	(2)		Oct 2019
Design Center		1		19,133		19,380			6.3	%		Variable	(4)		Dec 2021
Worldwide Plaza (6) (8)		1		875,000		—			4.6	%		Fixed			Mar 2023

Mortgage notes payable, gross principal amount				1,925,767		1,129,080

Less: deferred financing costs, net						(21,554	)

Mortgage notes payable, net of deferred financing costs					$	1,107,526			4.4	%(7)


		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.


			December 31, 2016
(In thousands)	Level		Carrying Amount		Fair Value
Mortgage notes payable		3	$	1,129,080	$	1,138,576


	December 31, 2016
	Number of		Notional Amount
Interest Rate Derivative	Instruments		(In thousands)
Interest rate swaps		2	$	44,700


(In thousands)	Balance Sheet Location	December 31, 2016
Derivatives designated as hedging instruments:
Interest rate swaps	Derivative liablities, at fair value	$	(74	)

Derivatives not designated as hedging instruments:
Interest rate caps	Derivative assets, at fair value	$	165


	Future Minimum
	Base Rent Payments
(In thousands)	Ground Leases
October 1, 2017 - December 31, 2017	$	1,248
2018		5,175
2019		5,432
2020		5,432
2021		5,633
Thereafter		244,051

Total minimum lease payments	$	266,971


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Hotel revenues	$	—	$	7	$	5	$	36


	Three Months Ended September 30,				Nine Months Ended September 30,				Payable (Receivable) as of
	2017		2016		2017		2016		September 30,		December 31,
(In thousands)	Incurred		Incurred		Incurred		Incurred		2017		2016
Asset management fees	$	2,511	$	—	$	6,181	$	—	$	—	$	—
Property management fees		166		—		430		—		49		—

Total related party operational fees and reimbursements	$	2,677	$	—	$	6,611	$	—	$	49	$	—


	Number of Restricted			Weighted-Average Issue
	Shares			Price per Share
Unvested, December 31, 2016		268,780		$	10.50
Vested		(172,314	)	$	10.46
Forfeited		(22,979	)	$	10.30

Unvested, September 30, 2017		73,487		$	10.30


	Performance Period	Annual Period	Interim Period
Absolute Component: 4% of any excess Total Return if total stockholder return attained above an absolute hurdle measured from the beginning of such period:	21%	7%	14%
Relative Component: 4% of any excess Total Return attained above the Total Return for the performance period of the Peer Group*, subject to a ratable sliding scale factor as follows based on achievement of cumulative Total Return measured from the beginning of such period:
• 100% will be earned if total stockholder return achieved is at least:	18%	6%	12%
• 50% will be earned if total stockholder return achieved is:	0%	0%	0%
• 0% will be earned if total stockholder return achieved is less than:	0%	0%	0%
• a percentage from 50% to 100% calculated by linear interpolation will be earned if the cumulative Total Return achieved is between:	0% - 18%	0% - 6%	0% - 12%


	Three Months Ended			Nine Months Ended
(In thousands, except share and per share data)	September 30, 2016			September 30, 2016
Basic and diluted net loss attributable to stockholders	$	(45,267	)	$	(56,320	)

Weighted average shares outstanding, basic and diluted		165,384,074			164,700,025

Net loss per share attributable to stockholders, basic and diluted	$	(0.27	)	$	(0.34	)


					Years Ended December 31,
			October 1, 2017 -
(In thousands)	Total		December 31, 2017		2018 - 2019		2020 - 2021		Thereafter
Principal payment due:
Mortgage notes payable [1]	$	1,925,767	$	706,520	$	325,930	$	18,317	$	875,000

Interest payments due:
Mortgage notes payable [1]	$	360,403	$	26,162	$	144,207	$	117,806	$	72,228


[1] The mezzanine loan is classified as mortgage notes payable on the Consolidated Statement of Net Assets and is included in this table.


Exhibit No.		Description

2.1**		Amendment to Plan of Liquidation

10.1**		Membership Interest Purchase Agreement, dated as of September 14, 2017, between ARC NYWWPJV001, LLC and WWPJV LLC

10.2**		Consent Agreement, dated as of September 14, 2017 between New York REIT, Inc. and WWP Sponsor LLC

10.3*		Contract of Sale between ARC NY1440BWY1, LLC and CIM Group Acquisitions, LLC, dated November 1, 2017

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

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

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

101*		XBRL (eXtensible Business Reporting Language). The following materials from New York REIT, Inc.‘s Quarterly Report on Form 10-Q for the nine months ended September 30, 2017, formatted in XBRL: (i) the Consolidated Balance Sheet, (ii) the Consolidated Statement of Operations and Comprehensive Income (Loss), (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statement of Cash Flows and (v) the Notes to the Consolidated Financial Statements.