x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES | |
EXCHANGE ACT OF 1934 |
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES | |
EXCHANGE ACT OF 1934 |
Maryland | 46-4380248 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
405 Park Ave., 3rd Floor, New York, NY | 10022 | |
(Address of principal executive offices) | (Zip Code) |
(212) 415-6500 |
(Registrant’s telephone number, including area code) |
American Realty Capital New York City REIT, Inc. |
(former name or former address, if changed since last report) |
Securities registered pursuant to section 12(b) of the Act: None |
Securities registered pursuant to section 12 (g) of the Act: Common stock, $0.01 par value per share (Title of class) |
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer x | Smaller reporting company x |
Emerging growth company x |
Page | ||
• | All of our executive officers are also officers, managers or holders of a direct or indirect controlling interest in our advisor, New York City Advisors, LLC (our “Advisor”) and other entities affiliated with AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”); as a result, our executive officers, our Advisor and its affiliates face conflicts of interest, including significant conflicts created by our Advisor’s compensation arrangements with us and other investor entities advised by AR Global affiliates, and conflicts in allocating time among these entities and us, which could negatively impact our operating results; |
• | We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants; |
• | We may not be able to achieve our rental rate objectives on new and renewal leases and our expenses could be greater, which may impact operations; |
• | Effective March 1, 2018, we ceased paying distributions. There can be no assurance we will be able to resume paying distributions at our previous level or at all; |
• | Our properties may be adversely affected by economic cycles and risks inherent to the New York metropolitan statistical area (“MSA”), especially New York City; |
• | We are obligated to pay fees, which may be substantial, to our Advisor and its affiliates; |
• | We may fail to continue to qualify to be treated as a real estate investment trust for United States federal income tax purposes (“REIT”); |
• | Because investment opportunities that are suitable for us may also be suitable for other AR Global-advised programs or investors, our Advisor and its affiliates may face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders; |
• | No public market currently exists, or may ever exist, for shares of our common stock and our shares are, and may continue to be, illiquid; |
• | Our stockholders are limited in their ability to sell their shares pursuant to our share repurchase program (the “SRP”) which is currently suspended and may have to hold their shares for an indefinite period of time; |
• | If we and our Advisor are unable to find suitable investments, then we may not be able to achieve our investment objectives, or pay distributions; and |
• | As of December 31, 2018, we owned only seven properties and therefore have limited diversification. |
• | New York City Focus - Acquire high-quality commercial real estate located in the five boroughs of New York City, and in particular, Manhattan; |
• | Cash Flow Generating Properties - Invest primarily in properties with 80% or greater occupancy at the time of purchase; |
• | Potential for Appreciation - Purchase properties valued using current market rents with potential for appreciation and endeavor to acquire properties below replacement cost; |
• | Low Leverage - Limit our borrowings to 40% - 50% of the aggregate fair market value of our assets; |
• | Diversified Tenant Mix - Lease to a diversified group of tenants with a bias toward lease terms of five years or greater; |
• | Pay Monthly Distributions - Pay monthly distributions. On February 27, 2018, we suspended distributions we pay to holders of our common stock and our board of directors will continue to evaluate our performance and assess our distribution policy; however, there can be no assurance as to when, or if, we will be able to resume paying distributions or the level at which we pay them; and |
• | Maximize Total Returns - Maximize total returns to our stockholders through a combination of realized appreciation and current income. |
• | we have invested all of the net proceeds from our IPO, so this source of capital is no longer available to us to pursue acquisitions; |
• | our board of directors suspended our distributions to stockholders effective March 1, 2018 in part to help generate liquidity needed to pursue acquisitions, but the ongoing suspension of distributions, or, if we are able to commence paying distributions again, the perception that future suspensions may occur, could make raising capital by selling shares of our common stock more difficult, and there can be no assurance we will be able to generate sufficient cash from operations, or obtain the necessary debt or equity financing on favorable terms, or at all, in order to consummate an acquisition; |
• | we may acquire properties that are not accretive and not successfully managed and leased to meet our expectations; |
• | we may need to spend more than budgeted amounts to make necessary improvements or renovations to acquired properties; |
• | agreements to acquire properties are typically subject to customary conditions to closing, and we may spend significant time and money on potential acquisitions that we do not consummate; |
• | the process of acquiring or pursuing a new property may divert the attention of our management team from our existing business operations; |
• | we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations; |
• | market conditions may result in future vacancies and lower-than expected rental rates; and |
• | we may acquire properties without recourse, or with only limited recourse, for liabilities, whether known or unknown. |
Tenant | % of Annualized Straight-Line Rent | |
City National Bank | 7.4% | |
Knotel, Inc. | 5.9% | |
Planned Parenthood Federation of America, Inc. | 5.7% |
• | result in misstated financial reports, violations of loan covenants, missed reporting deadlines and/or missed permitting deadlines; |
• | affect our ability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; |
• | result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information (including information about tenants), which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; |
• | result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space; |
• | require significant management attention and resources to remedy any damages that result; |
• | subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or |
• | adversely impact our reputation among our tenants and investors generally. |
• | any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock; or |
• | an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of, directly or indirectly, 10% or more of the voting power of the then outstanding stock of the corporation. |
• | 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and |
• | two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. |
• | changes in general, economic or local conditions; |
• | changes in supply of or demand for similar or competing properties in an area; |
• | increases in operating expenses; |
• | vacancies and inability to lease or sublease space; |
• | changes in interest rates and availability of mortgage financing on favorable terms, or at all; |
• | changes in tax, real estate, environmental and zoning laws; and |
• | the possibility that one or more of our tenants will be unable to pay their rental obligations. |
• | risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans |
• | increased competition from entities engaged in mortgage lending and, or investing in our target assets; |
• | deterioration in the performance of properties securing our investments may cause deterioration in the performance of |
• | fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other |
• | difficulty in redeploying the proceeds from repayments of our existing loans and investments; |
• | the illiquidity of certain of these investments; |
• | lack of control over certain of our loans and investments; |
• | the potential need to foreclose on certain of the loans we originate or acquire, which could result in losses and additional risks, including the risks of the securitization process, posed by investments in CMBS and other similar structured finance investments, as well as those we structure, sponsor or arrange; use of leverage may create a mismatch with the duration and interest rate of the investments that we financing; and |
• | the need to structure and select our investments such that we continue to maintain our qualification as a REIT and our exemption from registration under the Investment Company Act of 1940, as amended. |
Portfolio | Acquisition Date | Number of Properties | Rentable Square Feet | Occupancy | Remaining Lease Term (1) | ||||||
421 W. 54th Street - Hit Factory | Jun. 2014 | 1 | 12,327 | —% | — | ||||||
400 E. 67th Street - Laurel Condominium | Sept. 2014 | 1 | 58,750 | 100.0% | 7.4 | ||||||
200 Riverside Boulevard - ICON Garage | Sept. 2014 | 1 | 61,475 | 100.0% | 18.8 | ||||||
9 Times Square (2) | Nov. 2014 | 1 | 167,390 | 84.3% | 8.1 | ||||||
123 William Street | Mar. 2015 | 1 | 542,676 | 98.3% | 7.1 | ||||||
1140 Avenue of the Americas | Jun. 2016 | 1 | 242,466 | 91.3% | 3.7 | ||||||
8713 Fifth Avenue | Oct. 2018 | 1 | 17,500 | 100.0% | 6.5 | ||||||
7 | 1,102,584 | 93.7% | 6.3 |
(1) | Remaining lease term in years as of December 31, 2018, calculated on a weighted-average basis, as applicable. |
(2) | This property was formerly known as 570 Seventh Avenue. |
(In thousands) | Future Minimum Base Rent Payments | |||
2019 | $ | 53,347 | ||
2020 | 51,404 | |||
2021 | 47,237 | |||
2022 | 44,018 | |||
2023 | 35,920 | |||
2024 | 30,889 | |||
2025 | 24,128 | |||
2026 | 21,533 | |||
2027 | 18,763 | |||
2028 | 15,698 | |||
Thereafter | 39,215 | |||
Total | $ | 382,152 |
Year of Expiration | Number of Leases Expiring | Expiring Annualized Cash Rent (1) | Expiring Annualized Cash Rent as a Percentage of the Total Portfolio | Leased Rentable Square Feet | Percentage of Portfolio Leased Rentable Square Feet Expiring | ||||||||||
(In thousands) | |||||||||||||||
2019 | 11 | $ | 4,389 | 6.8 | % | 89,727 | 8.7 | % | |||||||
2020 | 14 | 3,737 | 5.8 | % | 70,684 | 6.8 | % | ||||||||
2021 | 6 | 5,684 | 8.8 | % | 83,000 | 8.0 | % | ||||||||
2022 | 10 | 7,313 | 11.3 | % | 142,081 | 13.7 | % | ||||||||
2023 | 6 | 7,624 | 11.8 | % | 73,856 | 7.1 | % | ||||||||
2024 | 5 | 5,988 | 9.3 | % | 88,831 | 8.6 | % | ||||||||
2025 | 10 | 7,458 | 11.6 | % | 121,261 | 11.7 | % | ||||||||
2026 | 2 | 1,217 | 1.9 | % | 19,000 | 1.8 | % | ||||||||
2027 | 2 | 2,655 | 4.1 | % | 46,124 | 4.5 | % | ||||||||
2028 | 10 | 5,210 | 8.1 | % | 72,849 | 7.0 | % | ||||||||
Total | 76 | $ | 51,275 | 79.5 | % | 807,413 | 77.9 | % |
(1) | Expiring annualized cash rent represents contractual cash base rents at the time of lease expiration, excluding operating expense reimbursements and free rent. |
Tenant | Rented Square Feet | Rented Square Feet as a % of Total 123 William Street | Lease Expiration | Remaining Lease Term (1) | Renewal Options | Annualized Rental Income (2 ) | |||||||||
(In thousands) | |||||||||||||||
Planned Parenthood Federation of America, Inc. | 65,242 | 12.2% | Jul. 2031 | 12.6 | 1 - 5 year option | $ | 3,324 |
(1) | Remaining lease term in years as of December 31, 2018. |
(2) | Annualized rental income as of December 31, 2018 on a straight-line basis, which includes tenant concessions such as free rent, as applicable. |
Tenant | Rented Square Feet | Rented Square Feet as a % of Total 9 Times Square | Lease Expiration | Remaining Lease Term (1) | Renewal Options | Annualized Rental Income (2 ) | |||||||||
(In thousands) | |||||||||||||||
Knotel 200 W 41st, LLC | 26,340 | 18.7% | Oct. 2028 | 9.8 | 1 - 5 year option | $ | 1,455 | ||||||||
9TS Gifts LLC | 7,479 | 5.3% | May 2034 | 15.4 | None | $ | 1,898 |
(1) | Remaining lease term in years as of December 31, 2018. |
(2) | Annualized rental income as of December 31, 2018 on a straight-line basis, which includes tenant concessions such as free rent, as applicable. |
Tenant | Rented Square Feet | Rented Square Feet as a % of Total 1140 Avenue of the Americas | Lease Expiration | Remaining Lease Term (1) | Renewal Options | Annualized Rental Income (2 ) | |||||||||
(In thousands) | |||||||||||||||
City National Bank | 35,643 | 16.1% | Jun. 2023 | 4.5 | 2 - 5 year options | $ | 4,299 | ||||||||
Waterfall Asset Management, LLC | 25,500 | 11.5% | Aug. 2022 | 3.7 | 1 - 5 year option | $ | 2,019 |
(1) | Remaining lease term in years as of December 31, 2018. |
(2) | Annualized rental income as of December 31, 2018 on a straight-line basis, which includes tenant concessions such as free rent, as applicable. |
Outstanding Loan Amount | |||||||||||||
Portfolio | Encumbered Properties | December 31, 2018 | Effective Interest Rate | Interest Rate | Maturity | ||||||||
(In thousands) | |||||||||||||
123 William Street (1) | 1 | $ | 140,000 | 4.73 | % | Fixed | Mar. 2027 | ||||||
1140 Avenue of the Americas | 1 | 99,000 | 4.17 | % | Fixed | Jul. 2026 | |||||||
400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - ICON Garage | 2 | 50,000 | 4.58 | % | Fixed | May 2028 | |||||||
8713 Fifth Avenue | 1 | 10,000 | 5.04 | % | Fixed | Nov. 2028 | |||||||
Mortgage notes payable, gross | 5 | $ | 299,000 | 4.54 | % |
(1) | We entered into a loan agreement with Barclays Bank PLC, in the amount of $140.0 million, on March 6, 2017. A portion of the proceeds from the loan was used to repay the outstanding principal balance of approximately $96.0 million on the existing mortgage loan secured by the property. At closing, the lender placed $24.8 million of the proceeds in escrow, to be released to us in accordance with the conditions under the loan, in connection with leasing activity, tenant improvements, leasing commissions and free rent obligations related to this property. As of December 31, 2018 and 2017, $2.5 million and $4.9 million, respectively, of the proceeds remained in escrow and are included in restricted cash on the consolidated balance sheet. |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) | ||||||||
(a) | (b) | (c) | |||||||||
Equity Compensation Plans approved by security holders | — | $ | — | 1,480,663 | (1) | ||||||
Equity Compensation Plans not approved by security holders | — | — | — | ||||||||
Total | — | $ | — | 1,480,663 |
(1) | The total number of shares granted as awards under the RSP shall not exceed 5.0% of our outstanding shares of common stock on a fully diluted basis at any time The total number of shares that may be issued under or subject to awards under the RSP is 5.0% of our outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 1.5 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events). As of December 31, 2018, we had 31,149,697 shares of our common stock issued and outstanding on a fully diluted basis, and 19,337 shares of our common stock had been issued under or were subject to awards under the RSP. |
Number of Shares Repurchased | Weighted-Average Price per Share | ||||||
Year ended December 31, 2014 | — | $ | — | ||||
Year ended December 31, 2015 | 183,780 | 23.63 | |||||
Year ended December 31, 2016 | 461,555 | 23.62 | |||||
Year ended December 31, 2017 (1) | 359,458 | 20.41 | |||||
Year ended December 31, 2018 (2) | 254,941 | 20.26 | |||||
Cumulative repurchases as of December 31, 2018 | 1,259,734 | 22.03 |
December 31, | ||||||||||||||||||||
Balance sheet data (In thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Total real estate investments, at cost | $ | 774,494 | $ | 753,793 | $ | 744,945 | $ | 550,369 | $ | 270,083 | ||||||||||
Total assets | 773,742 | 760,450 | 773,604 | 726,415 | 458,565 | |||||||||||||||
Mortgage notes payable, net | 291,653 | 233,517 | 191,328 | 93,176 | — | |||||||||||||||
Total liabilities | 330,062 | 278,966 | 233,413 | 130,276 | 21,159 | |||||||||||||||
Total stockholders’ equity | 443,680 | 481,484 | 540,191 | 596,139 | 437,406 |
Operating data (In thousands, except share and per share data) | Year Ended December 31 | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Total revenues | $ | 62,399 | $ | 58,384 | $ | 47,607 | $ | 26,436 | $ | 2,851 | ||||||||||
Total operating expenses | 73,661 | 70,496 | 60,312 | 38,849 | 9,386 | |||||||||||||||
Operating loss | (11,262 | ) | (12,112 | ) | (12,705 | ) | (12,413 | ) | (6,535 | ) | ||||||||||
Total other (expenses) income | (12,850 | ) | (10,961 | ) | (7,060 | ) | (3,372 | ) | 16 | |||||||||||
Net loss | $ | (24,112 | ) | $ | (23,073 | ) | $ | (19,765 | ) | $ | (15,785 | ) | $ | (6,519 | ) | |||||
Other data: | ||||||||||||||||||||
Cash flows (used in) provided by operations | $ | (7,080 | ) | $ | 2,282 | $ | 4,128 | $ | (5,194 | ) | $ | (4,965 | ) | |||||||
Cash flows used in investing activities | (14,935 | ) | (10,340 | ) | (95,880 | ) | (169,164 | ) | (256,567 | ) | ||||||||||
Cash flows provided by (used in) financing activities | 29,600 | 5,453 | (41,127 | ) | 172,717 | 445,873 | ||||||||||||||
Per share data: | ||||||||||||||||||||
Basic and diluted net loss per common share | $ | (0.77 | ) | $ | (0.74 | ) | $ | (0.64 | ) | $ | (0.57 | ) | $ | (0.95 | ) | |||||
Distributions declared per common share | $ | 0.25 | $ | 1.51 | $ | 1.51 | $ | 1.51 | $ | 0.84 | ||||||||||
Basic and diluted weighted-average number of common shares outstanding | 31,228,941 | 31,042,307 | 30,668,238 | 27,599,363 | 6,849,166 |
Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | |||||||||||||
Leasing activity: | ||||||||||||||||
New Leases:(1) | ||||||||||||||||
New leases commenced | 2 | 4 | 4 | 9 | ||||||||||||
Total square feet leased | 34,789 | 52,425 | 19,813 | 53,507 | ||||||||||||
Annualized straight-line rent (2) | $ | 43.13 | $ | 63.70 | $ | 98.93 | $ | 138.54 | ||||||||
Weighted-average lease term (years)(3) | 12.7 | 6.8 | 11.7 | 11.5 | ||||||||||||
Replacement leases:(4) | ||||||||||||||||
Replacement leases commenced | 2 | 2 | 1 | 1 | ||||||||||||
Square feet | 30,349 | 20,216 | 4,312 | 12,658 | ||||||||||||
Terminated Leases:(5) | ||||||||||||||||
Number of leases terminated | 1 | 1 | 2 | — | ||||||||||||
Square feet | 12,658 | 12,327 | 9,765 | — | ||||||||||||
Annualized straight-line rent(2) | $ | 55.08 | $ | 49.31 | $ | 48.48 | $ | — | ||||||||
Tenant improvements on replacement leases per square foot(6) | $ | 23.39 | $ | — | $ | — | $ | — | ||||||||
Leasing commissions on replacement leases per square foot(6) | $ | 7.49 | $ | 8.93 | $ | — | $ | 25.47 |
Year Ended December 31, | ||||||||||||
(In thousands) | 2018 | 2017 | 2016 | |||||||||
Net loss (in accordance with GAAP) | $ | (24,112 | ) | $ | (23,073 | ) | $ | (19,765 | ) | |||
Depreciation and amortization | 29,690 | 29,539 | 25,586 | |||||||||
FFO | 5,578 | 6,466 | 5,821 | |||||||||
Acquisition and transaction related | 407 | 6 | 3,695 | |||||||||
Accretion of below- and amortization of above-market lease liabilities and assets, net | (2,044 | ) | (2,247 | ) | (2,376 | ) | ||||||
Straight-line rent adjustment | (4,544 | ) | (3,498 | ) | (4,515 | ) | ||||||
Straight-line ground rent adjustment | 109 | 109 | 2,454 | |||||||||
Loss on extinguishment of debt | — | 131 | — | |||||||||
(Gain) loss on sale of investment securities | — | (24 | ) | 5 | ||||||||
MFFO | $ | (494 | ) | $ | 943 | $ | 5,084 |
Year Ended December 31, | ||||||||||||
(In thousands) | 2018 | 2017 | 2016 | |||||||||
Net loss (in accordance with GAAP) | $ | (24,112 | ) | $ | (23,073 | ) | $ | (19,765 | ) | |||
Income from Investment Securities and Interest | (444 | ) | (245 | ) | (344 | ) | ||||||
General and administrative | 8,975 | 8,087 | 4,933 | |||||||||
Asset and property management fees to related parties | 6,211 | 6,039 | 5,179 | |||||||||
Acquisition and transaction related | 407 | 6 | 3,695 | |||||||||
Depreciation and amortization | 29,690 | 29,539 | 25,586 | |||||||||
Interest Expense | 13,294 | 11,230 | 7,404 | |||||||||
Gain on sale of investment securities | — | (24 | ) | — | ||||||||
Accretion of below- and amortization of above-market lease liabilities and assets, net | (2,044 | ) | (2,247 | ) | (2,376 | ) | ||||||
Straight-line rent adjustment | (4,544 | ) | (3,498 | ) | (4,515 | ) | ||||||
Straight-line ground rent adjustment | 109 | 109 | 2,454 | |||||||||
Cash NOI | $ | 27,542 | $ | 25,923 | $ | 22,251 |
Number of Shares Repurchased | Weighted-Average Price per Share | ||||||
Year ended December 31, 2014 | — | $ | — | ||||
Year ended December 31, 2015 | 183,780 | 23.63 | |||||
Year ended December 31, 2016 | 461,555 | 23.62 | |||||
Year ended December 31, 2017 (1) | 359,458 | 20.41 | |||||
Year ended December 31, 2018 (2) | 254,941 | 20.26 | |||||
Cumulative repurchases as of December 31, 2018 | 1,259,734 | 22.03 |
Years Ended December 31, | ||||||||||||||||||||
(In thousands) | Total | 2019 | 2020-2021 | 2022-2023 | Thereafter | |||||||||||||||
Mortgage notes payable: | ||||||||||||||||||||
Principal payments | $ | 299,000 | $ | — | $ | — | $ | — | $ | 299,000 | ||||||||||
Interest payments | 124,557 | 13,541 | 27,119 | 27,082 | 56,815 | |||||||||||||||
Ground lease payments | 235,722 | 4,746 | 9,492 | $ | 9,492 | 211,992 | ||||||||||||||
Total | $ | 659,279 | $ | 18,287 | $ | 36,611 | $ | 36,574 | $ | 567,807 |
1) | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; |
2) | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and |
3) | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements. |
Exhibit No. | Description | |
3.1 (1) | Articles of Amendment and Restatement for American Realty Capital New York City REIT, Inc. | |
3.2 * | Articles of Amendment for American Realty Capital New York City REIT, Inc., dated March 13, 2019 | |
3.3 (1) | Amended and Restated Bylaws of American Realty Capital New York City REIT, Inc. | |
4.1 (2) | Agreement of Limited Partnership of New York City Operating Partnership, L.P., dated as of April 24, 2014 | |
4.2 (3) | First Amendment to Agreement of Limited Partnership of New York City Operating Partnership, L.P., dated as of November 5, 2015 | |
4.3 (4) | Amended and Restated Distribution Reinvestment Plan | |
10.1 (5) | Second Amended and Restated Advisory Agreement, dated as of November 16, 2018, by and among American Realty Capital New York City REIT, Inc., New York City Operating Partnership, L.P. and New York City Advisors, LLC | |
10.2 (2) | Property Management and Leasing Agreement, dated as of April 24, 2014, by and among American Realty Capital New York City REIT, Inc., New York City Operating Partnership, L.P. and New York City Properties, LLC | |
10.3 (6) | First Amendment, dated as of April 13, 2018, to Property Management and Leasing Agreement, dated as of April 24, 2014, by and among American Realty Capital New York City REIT, Inc., New York City Operating Partnership, L.P. and New York City Properties, LLC | |
10.4 (5) | Second Amendment, dated as of November 16, 2018, to Property Management and Leasing Agreement, dated as of April 24, 2014, by and among American Realty Capital New York City REIT, Inc., New York City Operating Partnership, L.P. and New York City Properties, LLC | |
10.5 (6) | Property Management and Leasing Agreement, dated as of April 13, 2018, by and among New York City Properties, LLC and the other parties thereto | |
10.6 (7) | Amended and Restated Employee and Director Incentive Restricted Share Plan of American Realty Capital New York City REIT, Inc., effective as of November 8, 2017 | |
10.7 (8) | Indemnification Agreement, dated as of December 31, 2014, between the Company and William M. Kahane, Elizabeth K. Tuppeny, Robert T. Cassato, Nicholas S. Schorsch, Michael A. Happel, Gregory W. Sullivan, and RCS Capital Corporation | |
10.8 (9) | Indemnification Agreement, dated as of June 5, 2015, between the Company and Nicholas Radesca | |
10.9 (10) | Indemnification Agreement, dated as of June 22, 2015, between the Company and Patrick O’Malley | |
10.10 (1) | Form of Indemnification Agreement | |
10.11 (11) | Loan Agreement, dated as of June 15, 2016, between ARC NYC1140SIXTH, LLC and Ladder Capital Finance I LLC | |
10.12 (11) | Form of Restricted Stock Award Agreement | |
10.13 (12) | Loan Agreement, dated as of March 6, 2017, between Barclays Bank PLC, as lender, and ARC NYC123WILLIAM, LLC, as borrower | |
10.14 (12) | Limited Recourse Guaranty, dated as of March 6, 2017, made by New York City Operating Partnership, L.P., as guarantor, in favor of Barclays Bank PLC, as lender | |
10.15 (12) | Environmental Indemnity Agreement, dated as of March 6, 2017, made by ARC NYC123WILLIAM, LLC, as borrower, and New York City Operating Partnership, L.P., as principal, in favor of Barclays Bank PLC, as indemnitee | |
10.16 (13) | Settlement Agreement dated as of February 9, 2018, by and among American Realty Capital New York City REIT, Inc., Cove Partners III LLC and the other signatories thereto | |
10.17 (1) | Loan Agreement, dated as of April 13, 2018, by and among ARC NYC400E67, LLC and ARC NYC200RIVER01, LLC, as borrowers, and Societe Generale, as lender | |
10.18 (1) | Guaranty of Recourse Obligations made by New York City Operating Partnership, L.P., as guarantor, in favor of Societe Generale, dated as of April 13, 2018 | |
21.1 * | List of Subsidiaries of New York City REIT, Inc. | |
23.1 * | Consent of KPMG LLP | |
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. | |
99.1 (14) | Second Amended and Restated Share Repurchase Program effective as of July 14, 2017. | |
99.2 (15) | Amendment to Second Amended and Restated Share Repurchase Program effective as of August 25, 2018. | |
101 * | XBRL (eXtensible Business Reporting Language). The following materials from New York City REIT, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements. |
(1) | Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2018. |
(2) | Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2014. |
(3) | Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015. |
(4) | Filed as Appendix A to the Company’s Registration Statement on Form S-3 filed with the SEC on May 22, 2015. |
(5) | Filed as an exhibit to the Company’s Form 8-K filed with the SEC on November 19, 2018. |
(6) | Filed as an exhibit to the Company’s Tender Offer Statement on Schedule TO filed with the SEC on June 15, 2018. |
(7) | Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2017. |
(8) | Filed as an exhibit to the Company’s Pre-Effective Amendment No. 1 to Post-Effective Amendment No. 4 to Form S-11 filed with the SEC on January 7, 2015. |
(9) | Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on June 8, 2015. |
(10) | Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 12, 2015. |
(11) | Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 12, 2016. |
(12) | Filed as an exhibit to the Company’s Form 8-K filed with the SEC on March 10, 2017. |
(13) | Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 14, 2018. |
(14) | Filed as an exhibit to the Company’s Form 8-K filed with the SEC on June 14, 2017. |
(15) | Filed as an exhibit to the Company’s Form 8-K filed with the SEC on August 24, 2018. |
NEW YORK CITY REIT, INC. | ||
By: | /s/ EDWARD M. WEIL | |
EDWARD M. WEIL | ||
EXECUTIVE CHAIRMAN, CHIEF EXECUTIVE OFFICER, PRESIDENT AND SECRETARY |
Name | Capacity | Date | ||
/s/ Edward M. Weil, Jr. | Executive Chairman, Chief Executive Officer, President and Secretary (Principal Executive Officer) | March 15, 2019 | ||
Edward M. Weil, Jr. | ||||
/s/ Katie P. Kurtz | Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) | March 15, 2019 | ||
Katie P. Kurtz | ||||
/s/ Lee M. Elman | Independent Director, Audit Committee Chair, Conflicts Committee Chair | March 15, 2019 | ||
Lee M. Elman | ||||
/s/ Elizabeth K. Tuppeny | Independent Director | March 15, 2019 | ||
Elizabeth K. Tuppeny | ||||
/s/ Abby M. Wenzel | Independent Director | March 15, 2019 | ||
Abby M. Wenzel |
Page | |
Financial Statement Schedule: | |
December 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Real estate investments, at cost: | |||||||
Land | $ | 138,110 | $ | 133,380 | |||
Buildings and improvements | 533,099 | 514,459 | |||||
Acquired intangible assets | 103,285 | 105,954 | |||||
Total real estate investments, at cost | 774,494 | 753,793 | |||||
Less accumulated depreciation and amortization | (90,235 | ) | (64,926 | ) | |||
Total real estate investments, net | 684,259 | 688,867 | |||||
Cash and cash equivalents | 47,952 | 39,598 | |||||
Restricted cash | 6,849 | 7,618 | |||||
Prepaid expenses and other assets (including amounts due from related parties of $158 and $39 at December 31, 2018 and December 31, 2017, respectively) | 26,010 | 17,721 | |||||
Deferred leasing costs, net | 8,672 | 6,646 | |||||
Total assets | $ | 773,742 | $ | 760,450 | |||
LIABILITIES AND EQUITY | |||||||
Mortgage notes payable, net | $ | 291,653 | $ | 233,517 | |||
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $204 and $364 at December 31, 2018 and December 31, 2017, respectively) | 11,127 | 11,406 | |||||
Below-market lease liabilities, net | 21,514 | 24,753 | |||||
Deferred revenue | 5,768 | 5,255 | |||||
Distributions payable | — | 4,035 | |||||
Total liabilities | 330,062 | 278,966 | |||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at December 31, 2018 and December 31, 2017 | — | — | |||||
Common stock, $0.01 par value, 300,000,000 shares authorized, 30,990,448 and 31,382,120 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively | 310 | 314 | |||||
Additional paid-in capital | 685,758 | 691,775 | |||||
Accumulated other comprehensive income | — | — | |||||
Accumulated deficit | (242,388 | ) | (210,605 | ) | |||
Total stockholders’ equity | 443,680 | 481,484 | |||||
Total liabilities and equity | $ | 773,742 | $ | 760,450 |
Year Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Revenues: | ||||||||||||
Rental income | $ | 57,132 | $ | 53,930 | $ | 44,223 | ||||||
Operating expense reimbursements and other revenue | 5,267 | 4,454 | 3,384 | |||||||||
Total revenues | 62,399 | 58,384 | 47,607 | |||||||||
Operating expenses: | ||||||||||||
Asset and property management fees to related parties | 6,211 | 6,039 | 5,179 | |||||||||
Property operating | 28,378 | 26,825 | 20,919 | |||||||||
Acquisition and transaction related | 407 | 6 | 3,695 | |||||||||
General and administrative | 8,975 | 8,087 | 4,933 | |||||||||
Depreciation and amortization | 29,690 | 29,539 | 25,586 | |||||||||
Total operating expenses | 73,661 | 70,496 | 60,312 | |||||||||
Operating loss | (11,262 | ) | (12,112 | ) | (12,705 | ) | ||||||
Other income (expenses): | ||||||||||||
Interest expense | (13,294 | ) | (11,230 | ) | (7,404 | ) | ||||||
Income from investment securities and interest | 444 | 245 | 344 | |||||||||
Gain on sale of investment securities | — | 24 | — | |||||||||
Total other expenses | (12,850 | ) | (10,961 | ) | (7,060 | ) | ||||||
Net loss | (24,112 | ) | (23,073 | ) | (19,765 | ) | ||||||
Other comprehensive income (loss): | ||||||||||||
Reversal of accumulated unrealized gain on investment securities | — | (10 | ) | — | ||||||||
Unrealized gain on investment securities | — | — | 10 | |||||||||
Comprehensive loss | $ | (24,112 | ) | $ | (23,083 | ) | $ | (19,755 | ) | |||
Basic and diluted weighted average shares outstanding | 31,228,941 | 31,042,307 | 30,668,238 | |||||||||
Basic and diluted net loss per share | $ | (0.77 | ) | $ | (0.74 | ) | $ | (0.64 | ) | |||
Distributions declared per common share | $ | 0.25 | $ | 1.51 | $ | 1.51 |
Common Stock | ||||||||||||||||||||||
Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||
Balance, December 31, 2015 | 30,410,467 | $ | 304 | $ | 670,279 | $ | — | $ | (74,444 | ) | $ | 596,139 | ||||||||||
Common stock issued through distribution reinvestment plan | 902,597 | 9 | 21,037 | — | — | 21,046 | ||||||||||||||||
Common stock repurchases | (461,555 | ) | (4 | ) | (10,901 | ) | — | — | (10,905 | ) | ||||||||||||
Share-based compensation | 5,332 | — | 61 | — | — | 61 | ||||||||||||||||
Distributions declared | — | — | — | — | (46,395 | ) | (46,395 | ) | ||||||||||||||
Net loss | — | — | — | — | (19,765 | ) | (19,765 | ) | ||||||||||||||
Unrealized gain on investment securities | — | — | — | 10 | — | 10 | ||||||||||||||||
Balance, December 31, 2016 | 30,856,841 | 309 | 680,476 | 10 | (140,604 | ) | 540,191 | |||||||||||||||
Common stock issued through distribution reinvestment plan | 880,504 | 9 | 18,558 | — | — | 18,567 | ||||||||||||||||
Common stock repurchases | (359,458 | ) | (4 | ) | (7,333 | ) | — | — | (7,337 | ) | ||||||||||||
Share-based compensation | 4,233 | — | 74 | — | — | 74 | ||||||||||||||||
Distributions declared | — | — | — | — | (46,928 | ) | (46,928 | ) | ||||||||||||||
Net loss | — | — | — | — | (23,073 | ) | (23,073 | ) | ||||||||||||||
Reversal of unrealized gain upon realization of investment securities | — | — | — | (10 | ) | — | (10 | ) | ||||||||||||||
Balance, December 31, 2017 | 31,382,120 | 314 | 691,775 | — | (210,605 | ) | 481,484 | |||||||||||||||
Common stock issued through distribution reinvestment plan | 208,836 | 1 | 4,230 | — | — | 4,231 | ||||||||||||||||
Common stock repurchases | (604,948 | ) | (5 | ) | (10,264 | ) | — | — | (10,269 | ) | ||||||||||||
Share-based compensation | 4,440 | — | 17 | — | — | 17 | ||||||||||||||||
Distributions declared | — | — | — | — | (7,671 | ) | (7,671 | ) | ||||||||||||||
Net loss | — | — | — | — | (24,112 | ) | (24,112 | ) | ||||||||||||||
Balance, December 31, 2018 | 30,990,448 | $ | 310 | $ | 685,758 | $ | — | $ | (242,388 | ) | $ | 443,680 |
Year Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (24,112 | ) | $ | (23,073 | ) | $ | (19,765 | ) | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||||||
Depreciation and amortization | 29,690 | 29,539 | 25,586 | |||||||||
Amortization of deferred financing costs | 792 | 1,120 | 2,479 | |||||||||
Accretion of below- and amortization of above-market lease liabilities and assets, net | (2,044 | ) | (2,247 | ) | (2,376 | ) | ||||||
Share-based compensation | 17 | 74 | 61 | |||||||||
(Gain) loss on sale of investment securities | — | (24 | ) | 5 | ||||||||
Changes in assets and liabilities: | ||||||||||||
Prepaid expenses, other assets and deferred costs | (11,184 | ) | (8,603 | ) | (6,038 | ) | ||||||
Accounts payable, accrued expenses and other liabilities | (752 | ) | 3,265 | 2,803 | ||||||||
Deferred revenue | 513 | 2,231 | 1,373 | |||||||||
Net cash provided by (used in) operating activities | (7,080 | ) | 2,282 | 4,128 | ||||||||
Cash flows from investing activities: | ||||||||||||
Investments in real estate | (5,948 | ) | — | (79,162 | ) | |||||||
Proceeds from the sale of investment securities | — | 491 | — | |||||||||
Capital expenditures | (8,987 | ) | (10,831 | ) | (16,718 | ) | ||||||
Net cash used in investing activities | (14,935 | ) | (10,340 | ) | (95,880 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from mortgage note payable | 50,000 | 140,000 | — | |||||||||
Payment of mortgage note payable | — | (96,000 | ) | — | ||||||||
Payments of financing costs | (2,656 | ) | (2,931 | ) | (3,327 | ) | ||||||
Distributions paid | (7,475 | ) | (28,279 | ) | (25,312 | ) | ||||||
Repurchases of common stock | (10,269 | ) | (7,337 | ) | (12,488 | ) | ||||||
Net cash provided by (used in) financing activities | 29,600 | 5,453 | (41,127 | ) | ||||||||
Net change in cash, cash equivalents and restricted cash | 7,585 | (2,605 | ) | (132,879 | ) | |||||||
Cash, cash equivalents and restricted cash, beginning of period | 47,216 | 49,821 | 182,700 | |||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 54,801 | $ | 47,216 | $ | 49,821 | ||||||
Supplemental Disclosures: | ||||||||||||
Cash paid for interest | $ | 12,272 | $ | 9,655 | $ | 4,622 | ||||||
Non-Cash Investing and Financing Activities: | ||||||||||||
Mortgage note payable used to acquire investments in real estate | 10,000 | — | 99,000 | |||||||||
Distributions payable | — | 4,035 | 3,953 | |||||||||
Accrued capital expenditures | 408 | 1,561 | 118 | |||||||||
Other assets acquired or (liabilities assumed) in real estate transactions, net | (66 | ) | — | (353 | ) | |||||||
Common stock issued through distribution reinvestment plan | 4,231 | 18,567 | 21,046 |
Year Ended December 31, | ||||||||
(Dollar amounts in thousands) | 2018 | 2016 | ||||||
Real estate investments, at cost: | ||||||||
Land | $ | 4,730 | $ | — | ||||
Building and improvements | 9,245 | 148,647 | ||||||
Total tangible assets | 13,975 | 148,647 | ||||||
Acquired intangibles: | ||||||||
In-place leases | 2,166 | 27,433 | ||||||
Above-market lease assets | 165 | 5,230 | ||||||
Below-market lease liabilities | (292 | ) | (5,277 | ) | ||||
Below-market ground lease asset | — | 2,482 | ||||||
Total intangible assets, net | 2,039 | 29,868 | ||||||
Total assets acquired, net | 16,014 | 178,515 | ||||||
Mortgage notes payable used to acquire real estate investments | (10,000 | ) | (99,000 | ) | ||||
Other liabilities assumed | (66 | ) | (353 | ) | ||||
Cash paid for acquired real estate investment | $ | 5,948 | $ | 79,162 | ||||
Number of properties purchased | 1 | 1 |
(In thousands) | Future Minimum Base Rent Payments | |||
2019 | $ | 53,347 | ||
2020 | 51,404 | |||
2021 | 47,237 | |||
2022 | 44,018 | |||
2023 | 35,920 | |||
Thereafter | 150,226 | |||
$ | 382,152 |
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||
(In thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Intangible assets: | ||||||||||||||||||||||||
In-place leases | $ | 59,542 | $ | 27,535 | $ | 32,007 | $ | 62,142 | $ | 22,147 | $ | 39,995 | ||||||||||||
Other intangibles | 31,447 | 4,932 | 26,515 | 31,447 | 3,767 | 27,680 | ||||||||||||||||||
Below-market ground lease | 2,482 | 126 | 2,356 | 2,482 | 76 | 2,406 | ||||||||||||||||||
Above-market leases | 9,815 | 4,160 | 5,655 | 9,883 | 2,955 | 6,928 | ||||||||||||||||||
Acquired intangible assets | $ | 103,286 | $ | 36,753 | $ | 66,533 | $ | 105,954 | $ | 28,945 | $ | 77,009 | ||||||||||||
Intangible liabilities: | ||||||||||||||||||||||||
Below-market lease liabilities | $ | 33,397 | $ | 11,883 | $ | 21,514 | $ | 34,068 | $ | 9,315 | $ | 24,753 |
Year Ended December 31, | ||||||||||||
(In thousands) | 2018 | 2017 | 2016 | |||||||||
Amortization of in-place leases and other intangibles (1) | $ | 11,319 | $ | 12,669 | $ | 13,247 | ||||||
Amortization and (accretion) of above- and below-market leases, net (2) | $ | (2,094 | ) | $ | (2,296 | ) | $ | (2,403 | ) | |||
Amortization of below-market ground lease (3) | $ | 50 | $ | 49 | $ | 27 |
(In thousands) | 2019 | 2020 | 2021 | 2022 | 2023 | |||||||||||||||
In-place leases | $ | 8,510 | $ | 6,759 | $ | 5,549 | $ | 4,163 | $ | 2,924 | ||||||||||
Other intangibles | 1,165 | 1,165 | 937 | 708 | 708 | |||||||||||||||
Total to be included in depreciation and amortization | $ | 9,675 | $ | 7,924 | $ | 6,486 | $ | 4,871 | $ | 3,632 | ||||||||||
Above-market lease assets | $ | 1,283 | $ | 1,164 | $ | 1,091 | $ | 874 | $ | 725 | ||||||||||
Below-market lease liabilities | (3,082 | ) | (2,669 | ) | (2,339 | ) | (1,798 | ) | (1,597 | ) | ||||||||||
Total to be included in rental income | $ | (1,799 | ) | $ | (1,505 | ) | $ | (1,248 | ) | $ | (924 | ) | $ | (872 | ) |
Outstanding Loan Amount | |||||||||||||||||
December 31, | |||||||||||||||||
Portfolio | Encumbered Properties | 2018 | 2017 | Effective Interest Rate | Interest Rate | Maturity | |||||||||||
(In thousands) | (In thousands) | ||||||||||||||||
123 William Street (1) | 1 | $ | 140,000 | $ | 140,000 | 4.73 | % | Fixed | Mar. 2027 | ||||||||
1140 Avenue of the Americas | 1 | 99,000 | 99,000 | 4.17 | % | Fixed | Jul. 2026 | ||||||||||
400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard - ICON Garage | 2 | 50,000 | — | 4.58 | % | Fixed | May 2028 | ||||||||||
8713 Fifth Avenue | 1 | 10,000 | — | 5.04 | % | Fixed | Nov. 2028 | ||||||||||
Mortgage notes payable, gross | 5 | 299,000 | 239,000 | 4.54 | % | ||||||||||||
Less: deferred financing costs, net (2) | (7,347 | ) | (5,483 | ) | |||||||||||||
Mortgage notes payable, net | $ | 291,653 | $ | 233,517 |
(1) | The Company entered into a loan agreement with Barclays Bank PLC, in the amount of $140.0 million, on March 6, 2017. A portion of the proceeds from the loan was used to repay the outstanding principal balance of approximately $96.0 million on the existing mortgage loan secured by the property. At closing, the lender placed $24.8 million of the proceeds in escrow, to be released to the Company in accordance with the conditions under the loan, in connection with leasing activity, tenant improvements, leasing commissions and free rent obligations related to this property. As of December 31, 2018, $2.5 million of the proceeds remained in escrow and is included in restricted cash on the consolidated balance sheet. |
(2) | Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close. |
(In thousands) | Future Minimum Principal Payments | |||
2019 | $ | — | ||
2020 | — | |||
2021 | — | |||
2022 | — | |||
2023 | — | |||
Thereafter | 299,000 | |||
Total | $ | 299,000 |
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, | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
(In thousands) | Level | Gross Principal Balance | Fair Value | Gross Principal Balance | Fair Value | |||||||||||||
Mortgage note payable — 123 William Street | 3 | $ | 140,000 | $ | 142,874 | $ | 140,000 | $ | 147,531 | |||||||||
Mortgage note payable — 1140 Avenue of the Americas | 3 | $ | 99,000 | $ | 97,448 | $ | 99,000 | $ | 100,036 | |||||||||
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage | 3 | $ | 50,000 | $ | 50,424 | $ | — | $ | — | |||||||||
Mortgage note payable — 8713 Fifth Avenue | 3 | $ | 10,000 | $ | 10,446 | $ | — | $ | — |
• | after one year from the purchase date - 92.5% of the Estimated Per-Share NAV; |
• | after two years from the purchase date - 95.0% of the Estimated Per-Share NAV; |
• | after three years from the purchase date - 97.5% of the Estimated Per-Share NAV; and, |
• | after four years from the purchase date - 100.0% of the Estimated Per-Share NAV. |
Numbers of Shares Repurchased | Weighted-Average Price per Share | ||||||
Cumulative repurchases as of December 31, 2014 | — | $ | — | ||||
Year ended December 31, 2015 | 183,780 | 23.63 | |||||
Year ended December 31, 2016 | 461,555 | 23.62 | |||||
Year ended December 31, 2017 (1) | 359,458 | 20.41 | |||||
Year ended December 31, 2018 (2) | 254,941 | 20.26 | |||||
Cumulative repurchases as of December 31, 2018 | 1,259,734 | 22.03 |
(In thousands) | Future Minimum Base Rent Payments | |||
2019 | $ | 4,746 | ||
2020 | 4,746 | |||
2021 | 4,746 | |||
2022 | 4,746 | |||
2023 | 4,746 | |||
Thereafter | 211,992 | |||
Total | $ | 235,722 |
• | With respect to administrative and overhead expenses of the Advisor, including administrative and overhead expenses of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services but not including their salaries, wages, and benefits (which may not exceed comparable market rates), these costs may not exceed for any year, |
• | With respect to the salaries, wages, and benefits of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services (including the Company’s executive officers), the amount reimbursed must be comparable to market rates and may not exceed, for any year, |
Year Ended December 31, | Payable (Receivable) | ||||||||||||||||||||||||||||||||
(In thousands) | 2018 | 2017 | 2016 | December 31, | |||||||||||||||||||||||||||||
Incurred | Waived | Incurred | Waived | Incurred | Waived | 2018 | 2017 | ||||||||||||||||||||||||||
Acquisition fees and reimbursements: | |||||||||||||||||||||||||||||||||
Acquisition fees and related cost reimbursements | $ | 278 | $ | 239 | $ | — | $ | — | $ | 3,600 | $ | 646 | $ | 39 | (3) | $ | — | ||||||||||||||||
Financing coordination fees and leasing commissions (1) | 501 | 75 | 1,050 | — | 743 | — | 51 | (3) | — | ||||||||||||||||||||||||
Ongoing fees: | |||||||||||||||||||||||||||||||||
Asset and property management fees to related parties | 6,211 | — | 6,039 | — | 5,179 | — | 16 | (3) | (18 | ) | (3) | ||||||||||||||||||||||
Professional fees and other reimbursements (2) | 4,636 | — | 4,019 | — | 1,795 | — | (59 | ) | (4) | 323 | (4) | ||||||||||||||||||||||
Distributions on Class B units (2) | 39 | — | 241 | — | 241 | — | — | 20 | (5) | ||||||||||||||||||||||||
Total related party operation fees and reimbursements | $ | 11,665 | $ | 314 | $ | 11,349 | $ | — | $ | 11,558 | $ | 646 | $ | 47 | $ | 325 |
(1) | Financing coordination fees are included as deferred financing costs within mortgage notes payable, net and leasing commissions are included within the deferred leasing costs, net on the consolidated balance sheets, respectively. |
(2) | Amounts for the year ended December 31, 2018 and 2017, respectively, are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. |
(3) | Included in prepaid expenses and other assets on the consolidated balance sheets, respectively. |
(4) | Represents a payable balance of approximately $204,000 included in accounts payable, accrued expense and other liabilities due to American National Stock Transfer, LLC, a subsidiary of RCS Capital Corporation (“RCAP”), offset with a receivable balance of approximately $263,000 due from Advisor included in prepaid expenses and other assets on the consolidated balance sheet as of December 31, 2018. As of December 31, 2017, the payable balance represents approximately $364,000, offset with a receivable balance of approximately $21,000. Payable balances for each respective period represent costs which were incurred and accrued due to RCAP which, prior to its bankruptcy filing, was under common control with the Advisor. |
(5) | Included in accounts payable, accrued expense and other liabilities on the consolidated balance sheets, respectively. |
• | (a) 12, multiplied by (b) the actual base management fee for the month immediately prior to the month in which the Second Advisory Agreement is terminated, plus |
Number of Restricted Shares | Weighted-Average Issue Price | ||||||
Unvested, December 31, 2015 | 4,799 | $ | 22.50 | ||||
Granted | 5,332 | 22.50 | |||||
Vested | (1,066 | ) | 22.50 | ||||
Unvested, December 31, 2016 | 9,065 | 22.50 | |||||
Granted | 4,233 | 21.25 | |||||
Vested | (2,133 | ) | 22.50 | ||||
Unvested, December 31, 2017 | 11,165 | 22.14 | |||||
Granted | 4,440 | 20.26 | |||||
Vested | (2,979 | ) | 22.14 | ||||
Unvested, December 31, 2018 | 12,626 | 21.48 |
Year Ended December 31, | ||||||||||||
(In thousands, except share and per share data) | 2018 | 2017 | 2016 | |||||||||
Net loss | $ | (24,112 | ) | $ | (23,073 | ) | $ | (19,765 | ) | |||
Basic and diluted weighted average shares outstanding | 31,228,941 | 31,042,307 | 30,668,238 | |||||||||
Basic and diluted net loss per share | $ | (0.77 | ) | $ | (0.74 | ) | $ | (0.64 | ) |
Year Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Unvested restricted stock | 12,626 | 11,165 | 9,065 | ||||||
OP Units | 90 | 90 | 90 | ||||||
Class B Units | 159,159 | 159,159 | 159,159 | ||||||
Total weighted-average anti-dilutive common share equivalents | 171,875 | 170,414 | 168,314 |
Quarters Ended | ||||||||||||||||
(In thousands, except share and per share data) | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | ||||||||||||
Total revenues | $ | 15,229 | $ | 15,196 | $ | 15,741 | $ | 16,233 | ||||||||
Net loss | $ | (6,584 | ) | $ | (6,529 | ) | $ | (5,865 | ) | $ | (5,134 | ) | ||||
Weighted average shares outstanding | 31,431,555 | 31,330,779 | 31,180,373 | 30,977,822 | ||||||||||||
Basic and diluted net loss per share | $ | (0.21 | ) | $ | (0.21 | ) | $ | (0.19 | ) | $ | (0.17 | ) |
Quarters Ended | ||||||||||||||||
(In thousands, except share and per share data) | March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | ||||||||||||
Total revenues | $ | 14,583 | $ | 14,545 | $ | 14,475 | $ | 14,821 | ||||||||
Net loss | $ | (4,786 | ) | $ | (5,362 | ) | $ | (5,877 | ) | $ | (7,048 | ) | ||||
Weighted average shares outstanding | 30,814,927 | 30,944,077 | 31,106,250 | 31,297,963 | ||||||||||||
Basic and diluted net loss per share | $ | (0.16 | ) | $ | (0.17 | ) | $ | (0.19 | ) | $ | (0.23 | ) |
Initial Costs | Costs Capitalized Subsequent to Acquisition | |||||||||||||||||||||||||||
Portfolio | State | Acquisition Date | Encumbrances at December 31, 2018 | Land | Building and Improvements | Building and Improvements | Gross Amount at December 31, 2018 (1) (2) | Accumulated Depreciation (3) (4) | ||||||||||||||||||||
421 W. 54th Street - Hit Factory | NY | 6/13/2014 | $ | — | $ | 4,723 | $ | 1,757 | $ | 9 | $ | 6,489 | $ | 202 | ||||||||||||||
400 E. 67th Street - Laurel Condominiums | NY | 9/5/2014 | 44,610 | 10,653 | 55,682 | 86 | 66,421 | 6,052 | ||||||||||||||||||||
200 Riverside Blvd - ICON Garage | NY | 9/24/2014 | 5,390 | 13,787 | 5,510 | — | 19,297 | 585 | ||||||||||||||||||||
9 Times Square | NY | 11/5/2014 | — | 54,153 | 76,454 | 22,009 | 152,616 | 13,971 | ||||||||||||||||||||
123 William Street | NY | 3/27/2015 | 140,000 | 50,064 | 182,917 | 26,939 | 259,920 | 22,516 | ||||||||||||||||||||
1140 Avenue of the Americas | NY | 6/15/2016 | 99,000 | — | 148,647 | 3,845 | 152,492 | 10,084 | ||||||||||||||||||||
8713 Fifth Avenue | NY | 10/17/2018 | 10,000 | 4,730 | 9,245 | — | 13,975 | 39 | ||||||||||||||||||||
$ | 299,000 | $ | 138,110 | $ | 480,212 | $ | 52,888 | $ | 671,210 | $ | 53,449 |
(1) | Acquired intangible assets allocated to individual properties in the amount of $103.3 million are not reflected in the table above. |
(2) | The gross tax basis of aggregate land, buildings and improvements as of December 31, 2018 is $700.1 million (unaudited). |
(3) | The accumulated depreciation column excludes $36.8 million of amortization associated with acquired intangible assets. |
(4) | Each of the properties has a depreciable life of: 40 years for buildings, 15 years for land improvements and five to seven years for fixtures. |
December 31, | ||||||||||||
(In thousands) | 2018 | 2017 | 2016 | |||||||||
Real estate investments, at cost: | ||||||||||||
Balance at beginning of year | $ | 647,839 | $ | 635,447 | $ | 469,962 | ||||||
Additions-acquisitions | 13,975 | — | 148,647 | |||||||||
Capital expenditures | 9,396 | 12,392 | 16,838 | |||||||||
Disposals | — | — | — | |||||||||
Balance at end of the year | $ | 671,210 | $ | 647,839 | $ | 635,447 | ||||||
Accumulated depreciation: | ||||||||||||
Balance at beginning of year | $ | 35,982 | $ | 19,598 | $ | 7,966 | ||||||
Depreciation expense | 17,467 | 16,384 | 11,632 | |||||||||
Disposals | — | — | — | |||||||||
Balance at the end of the year | $ | 53,449 | $ | 35,982 | $ | 19,598 |
ATTEST: | AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC. |
Title: Chief Financial Officer and Treasurer | Title: Chief Executive Officer, President and Secretary |
Name | Jurisdiction | |
New York City Operating Partnership, L.P. | Delaware | |
ARC NYC421W54, LLC | Delaware | |
ARC NYC400E67, LLC | Delaware | |
ARC NYC200RIVER01, LLC | Delaware | |
ARC NYC123WILLIAM, LLC | Delaware | |
ARC NYC570SEVENTH, LLC | Delaware | |
ARC NYC1140SIXTH, LLC | Delaware | |
ARG NYC8713FIFTH, LLC | Delaware |
1. | I have reviewed this Annual Report on Form 10-K of New York City REIT, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated this 15th day of March, 2019 | /s/ Edward M. Weil, Jr. | |
Edward M. Weil, Jr. | ||
Executive Chairman, Chief Executive Officer, President and Secretary | ||
(Principal Executive Officer) |
1. | I have reviewed this Annual Report on Form 10-K of New York City REIT, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated this 15th day of March, 2019 | /s/ Katie P. Kurtz | |
Katie P. Kurtz | ||
Chief Financial Officer and Treasurer | ||
(Principal Financial Officer and Principal Accounting Officer) |
/s/ Edward M. Weil, Jr. | |
Edward M. Weil, Jr. | |
Executive Chairman, Chief Executive Officer, President and Secretary | |
(Principal Executive Officer) | |
/s/ Katie P. Kurtz | |
Katie P. Kurtz | |
Chief Financial Officer and Treasurer | |
(Principal Financial Officer and Principal Accounting Officer) |
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Mar. 06, 2019 |
Jun. 30, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NEW YORK CITY REIT, INC. | ||
Entity Central Index Key | 0001595527 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Emerging Growth Company | true | ||
Entity Small Business | true | ||
Entity Ex Transition Period | true | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 30,990,448 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0.0 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Due from related parties | $ 158 | $ 39 |
Due to related parties | $ 204 | $ 364 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 30,990,448 | 31,382,120 |
Common stock, shares outstanding (in shares) | 30,990,448 | 31,382,120 |
Organization |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization New York City REIT, Inc. (including, New York City Operating Partnership L.P., (the “OP”) and its subsidiaries, the “Company”) was formed to invest its assets in properties in the five boroughs of New York City, with a focus on Manhattan. The Company may also purchase for investment purposes certain real estate investment assets that accompany office properties, including retail spaces and amenities, as well as hospitality assets, residential assets and other property types exclusively in New York City. All such properties may be acquired and owned by the Company alone or jointly with another party. As of December 31, 2018, the Company owned seven properties consisting of 1.1 million rentable square feet, acquired for an aggregate purchase price of $702.0 million. The Company was incorporated on December 19, 2013 as a Maryland corporation and elected to be taxed as a real estate investment trust for U.S. federal income tax purposes (“REIT”) beginning with its taxable year ended December 31, 2014. Substantially all of the Company’s business is conducted through the OP. On April 24, 2014, the Company commenced its initial public offering (the “IPO”) on a “reasonable best efforts” basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million. The Company closed its IPO on May 31, 2015, and continued to accept subscriptions in process as of that date. As of December 31, 2018, the Company had 31.0 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the dividend reinvestment plan (“DRIP”). In addition, from inception through December 31, 2018, we had raised net proceeds of $769.9 million, including $68.8 million of distributions to our shareholders which were reinvested in our common stock through DRIP. On October 25, 2017, the Company’s board of directors approved an Estimated Per-Share NAV as of June 30, 2017 (the “2017 Estimated Per-Share NAV”) which was published on October 26, 2017, and, on October 23, 2018, the Company’s board of directors approved an estimated net asset value per share of its common stock as of June 30, 2018 (the “2018 Estimated Per-Share NAV”), which was published on October 25, 2018. The Company intends to publish subsequent valuations of Estimated Per-Share NAV at least once annually, at the discretion of the Company’s board of directors. In March 2019, the Company changed its name from American Realty Capital New York City REIT, Inc. to New York City REIT, Inc. See Note 13 — Subsequent Events. The Company has no employees. New York City Advisors, LLC (the “Advisor”) has been retained by the Company to manage the Company’s affairs on a day-to-day basis. The Company has retained New York City Properties, LLC (the “Property Manager”) to serve as the Company’s property manager. The Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC “AR Global”), and these entities receive compensation, fees and expense reimbursements for services related to the investment and management of the Company’s assets. The Company is the sole general partner and holds substantially all of the units of limited partner interests in the OP (“OP Units”). The Advisor contributed $2,020 to the OP in exchange for 90 OP Units, which represents a nominal percentage of the aggregate OP ownership. A holder of OP Units has the right to convert OP Units for the cash value of a corresponding number of shares of the Company’s common stock or, at the option of the OP, a corresponding number of shares of the Company’s common stock, in accordance with the limited partnership agreement of the OP, provided, however, that such OP Units must have been outstanding for at least one year. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets. |
Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Accounting The accompanying consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Reclassifications The presentation of prior year restricted cash on the Company’s consolidated statements of cash flows, related to the adoption of a new accounting standard (see “Recently Issued Accounting Pronouncements” below for additional information) has been changed to conform to the current year presentation. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary. The Company had no investments in joint ventures or variable interest entities as of December 31, 2018, 2017 or 2016. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable. Investments in Real Estate Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. The Company evaluates each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and non-controlling interests based on their respective estimated fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets or liabilities may include the value of in-place leases, above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics. The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases is recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and the Company’s estimate of the comparable fair market lease rate for the corresponding in-place lease, measured over the remaining term of the lease, including any below-market fixed rate renewal options for below-market leases. The fair value of other intangible assets, such as real estate tax abatements, are recorded based on the present value of the expected benefit and amortized over the expected useful life. Fair values of assumed mortgages, if applicable, are recorded as debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates. Non-controlling interests in property owning entities are recorded based on the fair value of units issued at the date of acquisition, as determined by the terms of the applicable agreement. The Company utilizes a number of sources in making its estimates of fair values for purposes of allocating purchase price, including real estate valuations prepared by independent valuation firms. The Company also considers information and other factors including: market conditions, the industry in which the tenant operates, characteristics of the real estate such as location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business. Disposals of real estate investments that represent a strategic shift in operations that will have a major effect on the Company’s operations and financial results are presented as discontinued operations in the consolidated statements of operations and comprehensive loss for all periods presented; otherwise, the Company continues to report results of these properties’ operations within continuing operations. Properties that are intended to be sold will be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale. Properties are no longer depreciated when they are classified as held for sale. The Company did not have any properties held for sale as of December 31, 2018 or 2017. Depreciation and Amortization Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests. Acquired above-market leases are amortized as a reduction of rental income over the remaining terms of the respective leases. Acquired below-market leases are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods. The value of in-place leases, exclusive of the value of above- and below-market in-place leases, is amortized to depreciation and amortization expense over the remaining periods of the respective leases. The value of other acquired intangibles is amortized to depreciation and amortization expense over the remaining expected useful life. Assumed mortgage premiums or discounts, if applicable, are amortized as a reduction or increase to interest expense over the remaining term of the respective mortgages. Impairment of Long Lived Assets When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If such estimated cash flows are less than the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is based on the adjustment to estimated fair value less estimated cost to dispose of the asset. Generally, the Company determines estimated fair value for properties held for sale based on the estimated selling price of the asset. These assessments may result in the immediate recognition of an impairment loss, resulting in a reduction of net income (loss). The Company did not recognize any impairment charges for the years ended December 31, 2018, 2017 or 2016. Cash and Cash Equivalents Cash and cash equivalents includes cash in bank accounts as well as investments in highly liquid money market funds with original maturities of three months or less. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit. At December 31, 2018 and 2017, the Company had cash and cash equivalents and restricted cash of $54.8 million and $47.2 million, of which $53.1 million and $46.5 million, respectively, were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result. Restricted Cash Restricted cash primarily consists of ground rent, real estate tax, structural, leasing commissions, free rent and insurance reserves. Investment Securities The Company did not own any debt or equity investment securities as of December 31, 2018 and 2017. The Company did own investment securities prior to June 15, 2017. On June 15, 2017, the Company redeemed its investment in equity securities at approximately $491,000 with a cost basis of approximately $467,000 and realized approximately $24,000 gain in the year ended December 31, 2017. Deferred Leasing Costs, Net Deferred leasing costs, net consist primarily of lease commissions and professional fees incurred, and are deferred and amortized to depreciation and amortization expense over the term of the related lease. Share Repurchase Program The Company has a Share Repurchase Program (“SRP”) that enables stockholders to sell their shares to the Company. Under the SRP, stockholders may request that the Company redeem all or any portion of their shares, subject to certain minimum conditions, if such repurchase does not impair the Company’s capital or operations. When a stockholder requests redemption and the redemption is approved, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation. Shares purchased under the SRP will have the status of authorized but unissued shares. The SRP is currently suspended and will remain in effect until the Company announces that it will resume paying regular cash distributions to its stockholders. See Note 6 — Common Stock. Distribution Reinvestment Plan Pursuant to the DRIP, stockholders may elect to reinvest distributions by purchasing shares of common stock in lieu of receiving cash. No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP. Participants purchasing shares pursuant to the DRIP have the same rights and are treated in the same manner as if such shares were issued pursuant to the IPO. The board of directors may designate that certain cash or other distributions be excluded from the DRIP. The Company has the right to amend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants. Shares issued under the DRIP are recorded to equity in the accompanying balance sheets in the period distributions are declared. See Note 6 — Common Stock. Revenue Recognition The Company’s revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Because many of the Company’s leases provide for rental increases at specified intervals, GAAP requires that the Company record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that it will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. Rental revenue recognition commences when the tenant takes possession of or controls the physical use of the leased space. For the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, the Company evaluates whether the Company owns or if the tenant owns the tenant improvements. When the Company is the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such improvements are substantially complete. When the tenant is the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. When the Company concludes that it is the owner of tenant improvements, the Company capitalizes the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants. When the Company concludes that the tenant is the owner of tenant improvements for accounting purposes, the Company records its contribution towards those improvements as a lease incentive, which is included in deferred leasing costs, net on the consolidated balance sheets and amortized as a reduction to rental income on a straight-line basis over the term of the lease. The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectibility by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectibility of a receivable is in doubt, the Company will record an increase in its allowance for uncollectible accounts or record a direct write-off of the receivable in its consolidated statements of operations and comprehensive loss. Certain tenants have provided letters of credit in lieu of cash security deposit required per the respective lease agreements. The Company may own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets, which may be monthly, quarterly or annual targets. As the lessor to the aforementioned leases, the Company defers the recognition of contingent rental income until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. If the Company owns certain properties with leases that include provisions for the tenant to pay contingent rental income, contingent rental income will be included in rental income on the consolidated statements of operations and comprehensive loss. The Company recognized $0.2 million contingent rental income for the year ended December 31, 2018. The Company did not recognize any contingent rental income for the years ended December 31, 2017 or 2016. Cost recoveries from tenants are included in operating expense reimbursements and other revenue in the period the related costs are incurred, as applicable. Offering and Related Costs All offering costs incurred by the Company, its Advisor and its affiliates on behalf of the Company are charged to additional paid-in capital on the consolidated balance sheets. Offering and related costs include all expenses incurred in connection with the Company’s IPO. Offering costs (other than selling commissions and the dealer manager fees) of the Company may be paid by the Advisor, the Former Dealer Manager or their affiliates on behalf of the Company. These costs include but are not limited to (i) legal, accounting, printing, mailing, and filing fees; (ii) escrow service related fees; (iii) reimbursement of the Former Dealer Manager for amounts it may pay to reimburse the bona fide due diligence expenses of broker-dealers; and (iv) reimbursement to the Advisor for a portion of the costs of its employees and other costs in connection with preparing supplemental sales materials and related offering activities. The Company is obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on behalf of the Company, provided that the Advisor is obligated to reimburse the Company to the extent organization and offering costs (excluding selling commissions and the dealer manager fees) incurred by the Company in its offering exceed 2.0% of gross offering proceeds and to the extent that the total of these costs plus selling commissions, the dealer manager fees and the other organization and offering expenses borne by the Company exceed 12.0% of the gross proceeds determined at the end of the IPO. See Note 8 — Related Party Transactions and Arrangements for additional information. Share-Based Compensation The Company has a stock-based incentive award plan, which is accounted for under the guidance for employee share based payments. The expense for such awards are included in general and administrative expenses and are recognized over the vesting period or when the requirements for exercise of the award have been met. See Note 10 — Share-Based Compensation. Income Taxes The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with its taxable year ended December 31, 2014. If the Company continues to qualify for taxation as a REIT, it generally will not be subject to federal corporate income tax to the extent it distributes annually all of its REIT taxable income to its stockholders, determined without regard for the deduction for dividends paid and excluding net capital gains. REITs are subject to a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. The Company had no REIT taxable income requiring distribution for each of the years ended December 31, 2018, 2017 and 2016. Accordingly, from a U.S. federal income tax perspective, 100% of distributions, or $0.25 per share for the year ended December 31, 2018 and $1.51 per share for the years ended December 31, 2017 and 2016 represented a return of capital. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. As of December 31, 2018, the Company had no material uncertain tax positions. The tax years subsequent to and including December 31, 2015 remain open to examination by the major taxing jurisdictions to which the Company is subject. Per Share Data The Company calculates basic income (loss) per share of common stock by dividing net income (loss) for the period by the weighted-average shares of its common stock outstanding for the respective period. Diluted income per share takes into account the effect of dilutive instruments, such as OP Units, Class B units and unvested restricted stock (assuming such units are not antidilutive), based on, the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. See Note 11 — Net Loss Per Share for additional information. Reportable Segments The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company’s investments in real estate generate rental revenue and other income through the leasing and management of properties. Management evaluates the operating performance of the Company’s investments in real estate at the individual property level. Recently Issued Accounting Pronouncements Adopted as of January 1, 2018: In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued several additional amendments thereto (collectively referred to herein as “ASC 606”). ASC 606 establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. The Company adopted this guidance effective January 1, 2018, under the modified retrospective approach. The new guidance did not have an impact on the Company’s consolidated financial statements, primarily as a result of revenue being sourced from lease arrangements that are outside the scope of ASC 606 until the new lease standard was adopted (see below). In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10), that amends the recognition and measurement of financial instruments. The new guidance revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this guidance on January 1, 2018 and there was no impact on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The Company adopted this new guidance effective January 1, 2018, and it did not have an impact on the Company’s consolidated statement of cash flows. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single asset or group of similar assets, the assets acquired (or disposed of) would not be considered a business. The Company has assessed this revised guidance and expects, based on historical acquisitions, future properties acquired to qualify as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. The Company adopted this guidance on January 1, 2017, which would apply to prospective acquisitions. On October 17, 2018, the Company closed on an acquisition of a property which was determined to be an asset acquisition based on this new guidance. Apart from the aforementioned, there were no other acquisitions during the year ended December 31, 2018 or the year ended December 31, 2017. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, does not change as a result of the modification. The Company adopted this guidance effective January 1, 2018 and it did not have an impact on the Company’s consolidated financial statements. The Company expects that any future modifications to its issued share-based awards will be accounted for using modification accounting, unless the modification meets all of the exception criteria noted above. As a result, the modification would be treated as an exchange of the original award for a new award, with any incremental fair value being treated as additional compensation cost. Pending Adoption as of December 31, 2018: ASU No. 2016-02 — Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02"). The most significant changes in ASU 2016-02 is recognition of right-of-use ("ROU") assets and lease liabilities by lessees for those leases classified as operating leases, with less significant changes for lessors. Also, beginning in the first quarter of 2019, the new guidance requires additional disclosures that help enable users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company elected the practical expedient package that allows the Company: (a) to not reassess whether any expired or existing contracts entered into prior to January 1, 2019 are or contain leases; (b) to not reassess the lease classification for any expired or existing leases entered into prior to January 1, 2019; and (c) to not reassess initial direct costs for any expired or existing leases entered into prior to January 1, 2019. In addition, the Company elected to not record on its consolidated balance sheets leases whose term is less than 12 months at lease inception. ASU 2016-02 originally required a modified retrospective method of adoption, however, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements ("ASU 2018-11"), provides companies with an additional transition option that would permit the application of ASU 2016-02 as of the adoption date rather than to all periods presented. The Company assessed the impact of adoption from both a lessor and lessee perspective, which is discussed in more detail below, and adopted the new guidance prospectively on January 1, 2019, as allowed under ASU 2018-11. Lessor Accounting ASU 2016-02 originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however, ASU 2018-11 allows lessors a practical expedient, which we elected as of January 1, 2019, by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. Upon adoption, the new guidance did not impact the Company's revenue recognition pattern or have any other impacts on its leases in place as of January 1, 2019 in which it is the lessor. Lessee Accounting Under ASU 2016-02, companies are required to record a ROU asset and a lease liability for all leases with a term greater than 12 months equal to the present value of the remaining lease payments as of the adoption date of the new standard. Since our leases do not provide an implicit rate, we will use our incremental borrowing rate in determining the present value of lease payments. The new standard also requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively, as well as the balance sheet classification of the ROU asset. Leases with a term of 12 months or less will be accounted for similar to previous guidance for operating leases. The Company is a lessee for a property in which it has a ground lease as of December 31, 2018. Since the Company has elected the practical expedients described above, it determined that this lease would continue to be classified as an operating lease under the new standard. As a result, the Company expects to record a ROU asset and lease liability of approximately $50.0 million to $55.7 million, equal to the present value of the remaining lease payments as of January 1, 2019. Future lease expenses after adoption will continue to be recorded on a straight-line basis as required for operating leases. Other Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. The new guidance is effective for reporting periods beginning after December 15, 2019, with early adoption permitted for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance. In June 2018, the FASB issued ASU 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting as an amendment and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. The new guidance is effective for the Company in annual periods beginning after December 15, 2018, and interim periods within those annual periods. As of December 31, 2018, the Company did not have any nonemployee awards outstanding that would be impacted by the new guidance, however the Company will apply this new guidance prospectively to grants of nonemployee awards, if any. |
Real Estate Investments |
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Real Estate Investments, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investments | Real Estate Investments Acquisitions The following table presents the allocation of real estate assets acquired and liabilities assumed during the years ended December 31, 2018 and 2016. There were no acquisitions during the year ended December 31, 2017.
Future Minimum Base Cash Rental Payments The following table presents future minimum base cash rental payments due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.
Significant Tenants As of December 31, 2018 and 2017 there were no tenants whose annualized rental income on a straight-line basis, based on leases commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis. Intangible Assets and Liabilities Acquired intangible assets and lease liabilities consisted of the following as of December 31, 2018 and 2017:
The following table discloses the amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:
________________ (1) Reflected within depreciation and amortization expenses. (2) Reflected within rental income. (3) Reflected within property operating expenses. The following table provides the projected amortization expenses and adjustments to revenues for the next five years as of December 31, 2018:
During the second quarter of 2018, the sole tenant in the Company’s 421 W. 54th Street property terminated its lease early and vacated the space. As a result, the Company accelerated the amortization expense on the in-place lease intangible asset associated with this tenant and recorded additional amortization expense of $0.3 million for the year ended December 31, 2018. |
Mortgage Notes Payable, Net |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Notes Payable, Net | Mortgage Notes Payable, Net The Company’s mortgage notes payable as of December 31, 2018 and 2017 are as follows.
New Loan Agreement On April 13, 2018, two wholly owned subsidiaries (the “Borrowers”) of the OP, entered into a loan agreement (the “Loan Agreement”) with Societe Generale (the “Lender”). The Loan Agreement provides for a $50.0 million loan with a fixed interest rate of 4.516% and a maturity date of May 1, 2028 (the “April 2018 Loan”). The April 2018 Loan requires monthly interest-only payments, with the principal balance due on the maturity date. The April 2018 Loan is secured by, among other things, mortgage liens on two of the Company’s previously unencumbered properties, the retail condominiums located at 400 E. 67th Street, New York, New York (the “Laurel Condominium”) and a parking garage condominium unit located at 200 Riverside Boulevard, New York, New York (the “Riverside Garage,” together with the Laurel Condominium, the “Mortgaged Properties” and individually a “Mortgaged Property”). The Loan Agreement permits the Lender to securitize the April 2018 Loan or any portion thereof. At the closing of the April 2018 Loan, the net proceeds after accrued interest and closing costs were used to fund approximately $0.6 million in deposits into reserve accounts required to be made at closing under the Loan Agreement, with approximately $47.1 million in net proceeds remaining available to the Company to be used for general corporate purposes, including to make future acquisitions. From and after May 1, 2019, the April 2018 Loan may be prepaid at any time in whole, but not in part (unless a Mortgaged Property is released from the April 2018 Loan), subject to certain conditions and limitations, including payment of a yield maintenance prepayment premium for any prepayments made prior to the March 2028 monthly payment date. From and after May 1, 2019, any Mortgaged Property may, subject to certain conditions and limitations, be released from the April 2018 Loan in connection with a sale or disposition of the Mortgaged Property to a bona-fide third party by prepayment of an amount equal to 115% of the portion of the April 2018 Loan allocated to the Mortgaged Property sold or disposed, plus any applicable yield maintenance prepayment premium. In addition, from and after May 1, 2019 and prior to May 1, 2028, the Riverside Garage (but not the Laurel Condominium) may be released from the April 2018 Loan, subject to certain conditions and limitations, by simultaneously substituting another property (or properties) for the Riverside Garage. The OP has guaranteed, pursuant to a guaranty in favor of the Lender (the “Guaranty”), certain enumerated recourse liabilities of the Borrowers under the Loan Agreement and, from and after certain events of defaults and other breaches under the Loan Agreement as well as bankruptcies or similar events, payment of all amounts due to the Lender in respect of the April 2018 Loan. The Guaranty also requires the OP to maintain a minimum net worth of $57.5 million and minimum liquid assets of $3.0 million. Real estate assets and intangible assets of $553.4 million, at cost (net of below-market lease liabilities), at December 31, 2018 have been pledged as collateral to the Company’s mortgage notes payable and are not available to satisfy the Company’s other obligations unless first satisfying the mortgage note payable on the property. The Company is required to make payments of interest on its mortgage note payable on a monthly basis. The following table summarizes the scheduled aggregate principal payments subsequent to December 31, 2018:
The Company’s mortgage notes payable require compliance with certain property-level debt covenants. As of December 31, 2018, the Company was in compliance with the debt covenants under its mortgage note agreements. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the instrument. This alternative approach also reflects the contractual terms of the instrument, as applicable, including the period to maturity, and may use observable market-based inputs, including interest rate curves and implied volatilities, and unobservable inputs, such as expected volatility. The guidance defines three levels of inputs that may be used to measure fair value:
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Financial instruments Carried at Fair Value As of December 31, 2018 and 2017, the Company did not have any financial instruments measured at fair value on a recurring basis. Financial instruments Not Carried at Fair Value The Company is required to disclose at least annually the fair value of financial instruments for which it is practicable to estimate the value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other assets, accounts payable and distributions payable approximates their carrying value on the consolidated balance sheet due to their short-term nature. The fair value of the variable mortgage note payable is deemed to be equivalent to its carrying value because it bears interest at a variable rate that fluctuates with market and there has been no significant change in the credit risk or credit markets since origination. The fair values of the Company’s financial instruments that are not reported at fair value on the consolidated balance sheet are reported below:
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Common Stock |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock As of December 31, 2018 and 2017, the Company had 31.0 million and 31.4 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP. In May 2014, the board of directors of the Company authorized, and the Company began paying, a monthly distribution equivalent to $1.5125 per annum, per share of common stock. The distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. On February 27, 2018, the Company’s board of directors unanimously authorized a suspension of the distributions that the Company pays to holders of the Company’s common stock, effective as of March 1, 2018. The Company first established an estimated net asset value per share of its common stock (“Estimated Per-Share NAV”) in 2016. On October 24, 2016, the Company’s board of directors approved an Estimated Per-Share NAV as of June 30, 2016 (the “2016 Estimated Per-Share NAV”), which was published on October 26, 2016 (the “NAV Pricing Date”). Prior to the NAV Pricing Date, the Company had offered shares pursuant to the DRIP and had repurchased shares pursuant to the SRP at a price based on $23.75 per share, the offering price in the IPO. Beginning with the NAV Pricing Date, the Company began to offer shares pursuant to the DRIP and repurchase shares pursuant to the SRP at a price based on Estimated Per-Share NAV. On October 25, 2017, the Company’s board of directors approved the 2017 Estimated Per-Share NAV as of June 30, 2017, which was published on October 26, 2017, and, on October 23, 2018, the Company’s board of directors approved the 2018 Estimated Per-Share NAV as of June 30, 2018, which was published on October 25, 2018. The Company intends to publish subsequent valuations of Estimated Per-Share NAV at least once annually, at the discretion of the Company’s board of directors. Tender Offers On February 6, 2018, in response to an unsolicited offer to the Company’s stockholders, the Company commenced a tender offer, which was subsequently amended on February 22, 2018 and March 6, 2018 (as amended, the “February Offer”). The Company made the February Offer in order to deter an unsolicited bidder and other potential future bidders that may try to exploit the illiquidity of the Company’s common stock and acquire it from stockholders at prices substantially below the then-current Estimated Per-Share NAV. Under the February Offer, the Company offered to purchase up to 140,000 shares of its common stock for cash at a purchase price equal to $17.03 per share. The February Offer expired on March 20, 2018 and, in accordance with the terms of the February Offer, the Company accepted for purchase 139,993 shares of common stock for a total cost of approximately $2.4 million, which was paid in April 2018. On June 15, 2018, in response to an unsolicited offer to the Company’s stockholders, the Company commenced a tender offer (the “June Offer”) to purchase up to 500,000 shares of its common stock for cash at a purchase price equal to $12.95 per share. The Company made the June Offer in order to deter an unsolicited bidder and other potential future bidders that may try to exploit the illiquidity of the Company’s common stock and acquire it from stockholders at prices substantially below the then-current Estimated Per-Share NAV. The June Offer expired on July 24, 2018 and, in accordance with the terms of the June Offer, the Company accepted for purchase 210,014 shares of common stock for a total cost of approximately $2.7 million, which was paid in July 2018. Share Repurchase Program The Company has a SRP that enables stockholders, subject to certain conditions and limitations, to sell their shares to the Company. Under the SRP, stockholders may request that the Company repurchase all or any portion of their shares of common stock, if such repurchase does not impair the Company’s capital or operations. On January 25, 2016, the Company’s board of directors approved an amendment of the SRP to supersede and replace the existing SRP effective beginning on February 28, 2016. Under the SRP, as amended, repurchases of shares of the Company’s common stock, when requested, are at the sole discretion of the Company’s board of directors and generally will be made semiannually (each six-month period ending June 30 or December 31, a “fiscal semester”). On June 14, 2017, the Company announced that its board of directors had adopted an amendment and restatement of the SRP that superseded and replaced the existing SRP effective as of July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of the Company’s common stock or received their shares from the Company (directly or indirectly) through one or more non-cash transactions would be considered for repurchase. Other terms and provisions of the amended and restated SRP remained consistent with the existing SRP. In cases of requests for death and disability, the repurchase price is equal to the then-current Estimated Per-Share NAV at the time of repurchase. Prior to the establishment of Estimated Per-Share NAV, the repurchase price in these circumstances was equal to the price paid to acquire the shares. Prior to the amendment and restatement of the SRP, the repurchase price per share for requests other than for death or disability under the SRP depended on the length of time investors had held such shares as follows (in each case, as adjusted for any stock distributions, combinations, splits and recapitalizations):
Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average number of shares of common stock outstanding on December 31st of the previous calendar year. In addition, the Company is only authorized to repurchase shares in a given fiscal semester up to the amount of proceeds received from the DRIP in that same fiscal semester, as well as any reservation of funds the Company’s board of directors, may, in its sole discretion, make available for this purpose. If the establishment of an Estimated Per-Share NAV occurs during any fiscal semester, any repurchase requests received during such fiscal semester will be paid at the Estimated Per-Share NAV applicable on the last day of the fiscal semester. In connection with the February Offer, the Company’s board of directors suspended the SRP during the pendency of the February Offer. On April 26, 2018 the Company’s board of directors reactivated the SRP. In connection with the June Offer, the Company’s board of directors suspended the SRP during the pendency of the June Offer. On August 23, 2018, the Company’s board of directors unanimously reactivated the SRP for a period commencing August 25, 2018 and ending on September 24, 2018 (the “2018 Reactivation Period”). Prior to the end of the third quarter of 2018, the Company’s board of directors approved repurchase requests made during the 2018 Reactivation period as well as requests made in the period from January 1, 2018 until the suspension of the SRP on February 6, 2018 and the period commencing with the reactivation of the SRP on April 26, 2018 until the suspension of the SRP on June 15, 2018 (the “2018 Active Period”). The board of directors also approved a related amendment to the SRP, effective August 25, 2018, and a subsequent suspension of the SRP commencing immediately following the 2018 Reactivation Period which will remain in effect until the Company announces that it will resume paying regular cash distributions to its stockholders. On October 9, 2018, the Company repurchased a total of 145,627 shares of common stock for approximately $3.0 million, at a weighted-average price per share of $20.26 with respect to the 2018 Reactivation Period and the 2018 Active Period. When a stockholder requests a repurchase and the repurchase is approved by the Company’s board of directors, the Company will reclassify such obligation from equity to a liability based on the value of the obligation. Shares purchased under the SRP will have the status of authorized but unissued shares. The following table reflects the number of shares repurchased cumulatively through December 31, 2018.
____________________ (1) Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13,700 at a weighted average price per share of $23.68, (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the Company’s board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP. (2) In January 2018, the Company’s board of directors approved the repurchase requests made pursuant to the SRP during the period from July 1, 2017 to December 31, 2017, which resulted in the repurchase of 99,131 shares for approximately $2.0 million at a weighted-average price per share of $20.26 and 10,183 shares were repurchased from an individual stockholder in a privately negotiated transaction during January 2018 for approximately $0.2 million at a weighted-average price per share of $20.26. During the third quarter of 2018, the Company’s board of directors approved the repurchase requests made during the 2018 Active Period and 2018 Reactivation Period which resulted in the repurchase of 145,627 shares for approximately $3.0 million at a weighted-average price per share of $20.26. |
Commitments and Contingencies |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Ground Lease The Company entered into a ground lease agreement related to the acquisition of 1140 Avenue of the Americas under a leasehold interest arrangement. The following table reflects the minimum base cash rental payments due from the Company over the next five years and thereafter:
The Company incurred ground rent expense of $4.9 million, $4.9 million and $2.6 million during the years ended December 31, 2018, 2017 and 2016, respectively. Litigation and Regulatory Matters In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of December 31, 2018, the Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations. |
Related Party Transactions and Arrangements |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions and Arrangements | As of December 31, 2018 and 2017, an entity wholly owned by AR Global owned 8,888 shares of the Company’s outstanding common stock. During the year ended December 31, 2016, the Company sold its investment in a mutual fund managed by an affiliate of AR Global. The Company recognized income from investment securities managed by an affiliate of AR Global of approximately $6,000 during the year ended December 31, 2016. There was no income or loss recorded investment securities recorded during the year ended December 31, 2018 or 2017. Fees Paid in Connection with the IPO The Former Dealer Manager was paid fees and compensation in connection with the sale of the Company’s common stock in the IPO. The Former Dealer Manager was paid a selling commission of up to 7.0% of the per share purchase price of offering proceeds before reallowance of commissions earned by participating broker-dealers. In addition, the Former Dealer Manager was paid up to 3.0% of the gross proceeds from the sale of shares as a dealer manager fee. The Former Dealer Manager was able to reallow its dealer manager fee to participating broker-dealers. A participating broker-dealer had the option to elect to receive a fee equal to 7.5% of the gross proceeds from the sale of shares (not including selling commissions and dealer manager fees) by such participating broker-dealer, with 2.5% thereof paid at the time of such sale and 1.0% thereof paid on each anniversary of the closing of such sale up to and including the fifth anniversary of the closing of such sale. If this option was elected, the dealer manager fee would have been reduced to 2.5% of gross proceeds (not including selling commissions and dealer manager fees). There were no selling commissions and dealer manager fees incurred from the Former Dealer Manager in 2018, 2017 or 2016 and there were no amounts payable as of December 31, 2018 and 2017. The Advisor and its affiliates were paid compensation and reimbursement for services relating to the IPO, including transfer agent services and other professional services provided by an affiliate of the Former Dealer Manager. All offering costs incurred by the Company, the Advisor and affiliated entities of the Advisor on behalf of the Company were charged to additional paid-in capital on the accompanying consolidated balance sheets through the end of the IPO. Subsequent to the closing of the IPO, transfer agent and other professional fees are recognized as a component of general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss. There were no fees and expense reimbursements from the Advisor and affiliates of Former Dealer Manager in 2018, 2017 or 2016 and there were no amounts receivable as of December 31, 2018 and 2017. As of December 31, 2018 and 2017, cumulative offering costs, including selling commissions and dealer manager fees, were $84.0 million, respectively. The Company was responsible for paying offering and related costs from the IPO, excluding commissions and dealer manager fees, up to a maximum of 2.0% of gross proceeds received from the IPO, measured at the end of the IPO. Offering costs, excluding commissions and dealer manager fees, in excess of the 2.0% cap as of the end of the IPO are the Advisor’s responsibility. During the year ended December 31, 2016, the Advisor paid the Company the total amount owed to the Company related to excess offering and related costs. During the year ended December 31, 2018 and 2017, there were no additional costs incurred or reimbursed related to the IPO. Fees and Participations Paid in Connection With the Operations of the Company On November 16, 2018, the members of a special committee of the Company’s board of directors approved certain amendments to the Amended and Restated Advisory Agreement (the “Original Advisory Agreement”) with the Advisor (the “Second Advisory Agreement”). Also the Company entered into a related amendment (the “November 2018 PMA Amendment”) to the Company’s Property Management and Leasing Agreement with the Property Manager. The Second Advisory Agreement, which superseded the Original Advisory Agreement, took effect on November 16, 2018. The initial term of the Second Advisory Agreement ends in July 2030, and will automatically renew for successive five-year terms unless either party gives written notice of its election not to renew at least 180 days prior to the then-applicable expiration date. The Company may only elect not to renew the Second Advisory Agreement on this basis with the prior approval of at least two-thirds of the Company’s independent directors, and no change of control fee (as defined in the Second Advisory Agreement) is payable if the Company makes this election. Acquisition Fees Under the Original Advisory Agreement and until November 16, 2018, the Advisor was paid an acquisition fee of 1.5% of (A) the contract purchase price of each acquired property and (B) the amount advanced for a loan or other investment. The Advisor was also reimbursed for expenses incurred related to selecting, evaluating and acquiring assets on the Company’s behalf, regardless of whether the Company actually acquired the related assets. These acquisition expenses may have also included insourced expenses for services performed by the Advisor or its affiliates. The insourced expenses were fixed at, and were not to exceed, 0.5% of the contract purchase price of each property and 0.5% of the amount advanced for each loan or other investment, which is paid at the closing of the investment. The Advisor was also reimbursed for legal expenses incurred in the process of acquiring properties, in an amount not to exceed 0.10% of the contract purchase price. In addition, the Company also paid third parties, or reimbursed the Advisor for any reasonable investment-related expenses due to third parties. In no event was the total of all acquisition fees, acquisition expenses and any financing coordination fees (as described below) payable with respect to the Company’s portfolio of investments to exceed 4.5% of (A) the contract purchase price or (B) the amount advanced for all loans or other investments. Once the proceeds from the primary offering were fully invested in 2017, the aggregate amount of acquisition fees and any financing coordination fees were not to exceed 1.5% of (A) the contract purchase price and (B) the amount advanced for a loan or other investment, as applicable, for all the assets acquired. The Second Advisory Agreement does not provide for an acquisition fee, however the Advisor may continue to be reimbursed for acquisition-related expenses and insourced acquisition expenses which are subject to limitations on administrative and overhead expenses (see the “Professional Fees and Other Reimbursements” section below for additional information on limitations on administrative and overhead expenses). During the year ended December 31, 2018, in connection with the Company’s acquisition of a property in October 2018, the Company incurred an acquisition fee to the Advisor of $0.2 million which was subsequently waived by Advisor as a result of the Second Advisory Agreement. During the year ended December 31, 2017, the Company incurred no acquisition fees and acquisition expense reimbursements to the Advisor. During the year ended December 31, 2016, the Company incurred acquisition fees and acquisition expense reimbursements of $3.6 million, which is net of $0.6 million in acquisition expense reimbursements which were waived by the Advisor. Financing Coordination Fees Under the Original Advisory Agreement, the Company was required to pay a financing coordination fee to the Advisor or its assignees in connection with the financing of any investment in real estate assets, real estate related loans or any other asset, assumption of any loans with respect to any investment or refinancing of any loan in an amount equal to 0.75% of the amount made available or outstanding under the loan, including any assumed loan. The Second Advisory Agreement eliminates financing coordination fees payable to the Advisor. During the year ended December 31, 2018, in connection with the Company’s acquisition of a property in October 2018, the Company incurred a finance coordination fee to the Advisor of $0.1 million which was subsequently waived by Advisor as a result of the Second Advisory Agreement. For the years ended December 31, 2017 and 2016, the Company incurred financing coordination fees of $1.1 million and $0.7 million, respectively. Asset Management Fees and Variable Management/Incentive Fees Until September 30, 2015, for its asset management services, the Company issued to the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the board of directors) to the Advisor performance-based, restricted, forfeitable partnership units in the OP designated as “Class B Units” on a quarterly basis in an amount equal to: (i) the product of (y) 0.1875% multiplied by (z) the cost of the Company’s assets divided by (ii) the value of one share of common stock as of the last day of such calendar quarter, which was equal initially to $22.50 (the primary offering price minus selling commissions and dealer manager fees). The Class B Units are intended to be profits interests and will vest, and no longer be subject to forfeiture, at such time as: (a) the value of the OP’s assets plus all distributions made by the Company to its stockholders equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pretax, non-compounded annual return thereon, or the “economic hurdle;” (b) any one of the following events occurs concurrently with or subsequently to the achievement of the economic hurdle described above: (i) a listing of the Company’s common stock on a national securities exchange; (ii) a transaction to which the Company or the OP is a party, as a result of which OP Units or the Company’s common stock are or will be exchanged for or converted into the right, or the holders of such securities will otherwise be entitled, to receive cash, securities or other property or any combination thereof; or (iii) the termination of the advisory agreement without cause by an affirmative vote of a majority of the Company’s independent directors after the economic hurdle has been met; and (c) the Advisor pursuant to the advisory agreement is providing services to the Company immediately prior to the occurrence of an event of the type described in clause (b) above (the “performance condition”). The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the performance condition to be probable. As of December 31, 2018, the Company cannot determine the probability of achieving the performance condition. The Advisor receives distributions on Class B Units, whether vested or unvested, at the same rate as distributions received on the Company’s common stock. Such distributions on issued Class B Units are expensed in the consolidated statements of operations and comprehensive loss until the performance condition is considered probable to occur. As of December 31, 2018, the Company’s board of directors had approved the issuance of 159,159 Class B Units in connection with the arrangement. Beginning on October 1, 2015, and in lieu of the asset management subordinated participation, the Company began paying a base asset management fee in cash to the Advisor or its assignees as compensation for services rendered in connection with the management of the Company’s assets. The base asset management fee was payable on the first business day of each month in the amount of 0.0625% multiplied by (i) the cost of the Company’s assets for the preceding monthly period or (ii) during the period of time after the Company publishes Estimated Per-Share NAV, the lower of the cost of assets and the estimated fair market value of the Company’s assets as reported in the applicable periodic or current report filed with the SEC disclosing the fair market value. The Second Advisory Agreement changed the calculation of the base asset management fee to a fixed amount of (x) $0.5 million payable on the first business day of each month plus (y) a variable amount equal to (a) 1.25% of the equity proceeds received after November 16, 2018, divided by (b) twelve. The base asset management fee will be payable in cash, however the Advisor may elect to receive OP Units or common stock of the Company, or a combination thereof, at its discretion. Equity proceeds are defined as, with respect to any period, cumulative net proceeds of all common and preferred equity and equity-linked securities issued by the Company and its subsidiaries during the period, including: (i) any equity issued in exchange or conversion of exchangeable notes based on the stock price at the date of issuance and convertible equity; (ii) any other issuances of equity, including but not limited to units in the OP (excluding equity-based compensation but including issuances related to an acquisition, investment, joint-venture or partnership); and (iii) effective following the time the Company commences paying a dividend of at least $0.05 per share per annum to its stockholders (although the Company is not currently paying distributions to its stockholders), any cumulative Core Earnings (as defined in the Second Advisory Agreement) in excess of cumulative distributions paid on the Company’s common stock. The Second Advisory Agreement also entitles the Advisor to a variable management fee, payable quarterly in arrears, equal to (i) the product of (a) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (b) 15.0% multiplied by (c) the excess of Core Earnings Per Adjusted Share (as defined in the Second Advisory Agreement) for the previous three-month period in excess of $0.06, plus (ii) the product of (x) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (y) 10.0% multiplied by (z) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.08. The variable management fee will be paid in cash, however the Advisor may elect to receive shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at its discretion. The Company paid $5.6 million, $5.5 million and $4.7 million in cash asset management fees during the years ended December 31, 2018, 2017 and 2016, respectively. Property Management Fees Pursuant to the Property Management and Leasing Agreement, dated as of April 24, 2014 (the “2014 PMA”) and prior to the November 2018 PMA Amendment effective on November 16, 2018, unless the Company contracted with a third party, the Company paid the Property Manager a property management fee equal to: (i) for non-hotel properties, 4.0% of gross revenues from the properties managed, plus market-based leasing commissions; and (ii) for hotel properties, a market-based fee based on a percentage of gross revenues. The Company also reimbursed the Property Manager for property-level expenses. The Property Manager may subcontract the performance of its property management and leasing services duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services. On April 13, 2018, in connection with the April 2018 Loan, the Borrowers entered into a new property management agreement with the Property Manager (the “April 2018 PMA”) with respect to the Mortgaged Properties. With respect to these properties, the substantive terms of the April 2018 PMA are identical to the terms of the 2014 PMA, except that the April 2018 PMA does not include provisions related to the management of the hotels. On April 13, 2018, concurrently with entering into the April 2018 PMA, the Company and the Property Manager entered into an amendment to the 2014 PMA (the “April 2018 PMA Amendment”). Prior to this amendment, the Property Manager had been retained, pursuant to the 2014 PMA, to manage, operate and maintain all the Company’s properties. Following the April 2018 PMA Amendment, any of the Company’s properties that are or become subject to a separate property management agreement with the Property Manager (including the Mortgaged Properties, which are subject to the April 2018 PMA) are not subject to the 2014 PMA. On November 16, 2018, the effective date of the November 2018 PMA Amendment, the property management fees the Company pays the Property Manager for non-hotel properties decreased to 3.25% of gross revenues from the properties managed, plus market-based leasing commissions. The November 2018 PMA Amendment terminates at the same time as the Second Advisory Agreement terminates. The Company incurred approximately $0.6 million, $0.6 million and $0.5 million in property management fees during the years ended December 31, 2018, 2017 and 2016, respectively. Professional Fees and Other Reimbursements Under the Original Advisory Agreement, and prior to the Advisory Agreement effective November 16, 2018, the Company reimbursed the Advisor’s costs of providing administrative services, subject to the limitation that the Company would not reimburse the Advisor for any amount by which the Company’s operating expenses at the end of the four preceding fiscal quarters exceeded the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairments or other similar non-cash expenses and excluding any gain from the sale of assets for that period, unless the Company’s independent directors determined that such excess was justified based on unusual and nonrecurring factors which they deemed sufficient, in which case the excess amount would have been reimbursed to the Advisor in subsequent periods. This reimbursement includes reasonable overhead expenses for employees of the Advisor or its affiliates directly involved in the performance of services on behalf of the Company, including the reimbursement of rent expense at certain properties that are both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor. Additionally, under the Original Advisory Agreement, the Company reimbursed the Advisor for personnel costs in connection with other services; however, the Company did not reimburse the Advisor for personnel costs in connection with services for which the Advisor received acquisition fees, acquisition expense reimbursements or real estate commissions and no reimbursement was made for salaries, bonuses or benefits paid to the Company’s executive officers. The Second Advisory Agreement replaced the existing limits on reimbursement by the Company of the Advisor’s expenses and costs for providing administrative services and personnel with new limits.
(i) $0.4 million, or (ii) if the Asset Cost (as defined in the Second Advisory Agreement) as of the last day of the fiscal quarter immediately preceding the month is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal quarter multiplied by (y) 0.10%.
(i) $2.6 million, or (ii) if the Asset Cost as of the last day of the fiscal year is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal year multiplied by (y) 0.30%. The Company applied the above mentioned reimbursement limits on a prospective basis beginning in the month of December 2018. Accordingly, expenses incurred through November 30, 2018 were subject to limits under the Original Advisory Agreement. For expenses incurred in December 2018, the Company pro-rated the annual caps noted above to determine the 2018 limits under the Second Advisory Agreement. As a result, approximately $0.1 million exceeded pro-rated 2018 limits and therefore were not reimbursed to the Advisor for the year ended December 31, 2018. Total reimbursement expenses for administrative and personnel services provided by the Advisor for the years ended December 31, 2018, 2017 and 2016 were $4.6 million, $4.0 million and $1.8 million, respectively. The following table details amounts incurred, waived and payable in connection with the Company’s operations-related services described above as of and for the periods presented:
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Fees and Participations Paid in Connection with Liquidation or Listing Annual Subordinated Performance Fees Under the Original Advisory Agreement, until this requirement was eliminated in the Second Advisory Agreement effective November 16, 2018, the Company was required to pay the Advisor an annual subordinated performance fee calculated on the basis of the Company’s return to stockholders, payable annually in arrears, such that for any year in which investors received payment of 6.0% per annum, the Advisor was to be entitled to 15.0% of the excess return, provided that the amount paid to the Advisor did not exceed 10.0% of the aggregate return for such year, and that the amount paid to the Advisor was not paid unless investors received a return of capital contributions. This fee was be paid only upon the sale of assets, distributions or other event which resulted in the return on stockholders’ capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the years ended December 31, 2018, 2017 or 2016. Brokerage Commissions Under the Original Advisory Agreement, until this requirement was eliminated in the Second Advisory Agreement effective November 16, 2018, the Company was required to pay a brokerage commission to the Advisor or its affiliates on the sale of properties, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third party broker was also involved; provided, however, that in no event could the real estate commissions paid to the Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Advisor if the Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. No such fees were incurred during the years ended December 31, 2018, 2017 or 2016. Subordinated Participation in Real Estate Sales Upon a liquidation or sale of all or substantially all assets, including through a merger or sale of stock of the Company, an affiliate of the Advisor that is special limited partner of the OP, New York City Special Limited Partnership, LLC (the “Special Limited Partner”) will be entitled to receive a subordinated distribution from the OP equal to 15.0% of remaining net sale proceeds after return of capital contributions to investors plus payment to investors of an annual 6.0% cumulative, pre-tax noncompounded return on the capital contributed by investors. The Special Limited Partner will not be entitled to the subordinated participation in net sale proceeds unless the Company’s investors have received a return of their capital plus a 6.0% cumulative non-compounded annual return on their capital contributions. No such participation in net sales proceeds became due and payable during the years ended December 31, 2018, 2017 or 2016. Subordinated Participation in Connection with a Listing If the Company’s shares of common stock are listed on a national exchange, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right receive subordinated incentive listing distributions from the OP equal to 15.0% of the amount by which the Company’s market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated incentive listing distributions unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distributions were incurred during the years ended December 31, 2018, 2017 or 2016. Neither the Special Limited Partner nor any of its affiliates can earn both the subordinated participation in net sales proceeds and the subordinated incentive listing distribution. Termination Payments Subordinated Participation in Connection with a Termination of the Advisory Agreement Upon termination or non-renewal of the advisory agreement with or without cause, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0% of the amount, calculated as of the termination date, by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to an annual 6.0% cumulative, pre-tax, non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated termination distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. The Special Limited Partner may elect to defer its right to receive the subordinated termination distribution until either a listing on a national securities exchange or other liquidity event occurs, subsequently, in which case the Company’s market value will be calculated as of the date of the applicable listing or liquidity event. No such distributions were incurred during the years ended December 31, 2018, 2017 or 2016. The Special Limited Partner and its affiliates can earn only one of the subordinated participation described above. Termination Fees Payable to the Advisor The Second Advisory Agreement requires the Company to pay a termination fee to the Advisor in the event the Advisory Agreement is terminated prior to the expiration of the initial term in certain limited scenarios. The termination fee will be payable to the Advisor if either the Company or the Advisor exercises the right to terminate the Advisory Agreement in connection with the consummation of the first change of control (as defined in the Second Advisory Agreement). The termination fee is equal to •$15.0 million plus an amount equal to the product of (i) three (if the termination is effective on or prior to June 30, 2020) or four (if the termination is effective after June 30, 2020), multiplied by (ii) applicable Subject Fees. The “Subject Fees” are equal to (i) the product of
(ii) the product of (x) four multiplied by (y) the actual variable management fee for the quarter immediately prior to the quarter in which the Second Advisory Agreement is terminated, plus, (iii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity raised in respect of the fiscal quarter immediately prior to the fiscal quarter in which the Second Advisory Agreement is terminated. In connection with the termination or expiration of the Second Advisory Agreement, the Advisor will be entitled to receive (in addition to any termination fee) all amounts then accrued and owing to the Advisor, including an amount equal to then-present fair market value of its shares of the Company’s common stock and interest in the OP. |
Economic Dependency |
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Dec. 31, 2018 | |
Economic Dependency [Abstract] | |
Economic Dependency | Economic Dependency Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services, transaction management services and investor relations. As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation Restricted Share Plan The Company has an employee and director incentive restricted share plan (the “RSP”). Until an amendment to the RSP in August 2017, (the “RSP Amendment”), the RSP provided for the automatic grant of 1,333 restricted shares of common stock (“restricted shares”) to each of the independent directors. Following the RSP Amendment, the number of restricted shares to be issued automatically in those circumstances is equal to $30,000 divided by the then-current Estimated Per-Share NAV. In November 2017, the RSP was amended and restated to reflect the RSP Amendment and certain clarifying changes. These automatic grants are made without any further approval by the Company’s board of directors or the stockholders, after initial election to the board of directors and after each annual stockholder meeting, with such restricted shares vesting annually over a five-year period following the grant date in increments of 20.0% per annum. The RSP provides the Company with the ability to grant awards of restricted shares to the Company’s board of directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company. The total number of shares granted as awards under the RSP shall not exceed 5.0% of the Company’s outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 1.5 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events). Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time. For restricted share awards granted prior to July 1, 2015, such awards would typically be forfeited with respect to the unvested restricted shares upon the termination of the recipient’s employment or other relationship with the Company. For restricted share awards granted on or after July 1, 2015, such awards provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient’s voluntary termination or the failure to be re-elected to the Company’s board of directors. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares receive cash distributions on the same basis as distributions paid on shares of common stock prior to the time that the restrictions on the restricted shares have lapsed and thereafter. Any distributions payable in shares of common stock will be subject to the same restrictions as the underlying restricted shares. The following table displays restricted share award activity during the years ended December 31, 2018, 2017 and 2016:
As of December 31, 2018 and 2017, the Company had $0.3 million and $0.2 million of unrecognized compensation cost related to unvested restricted share awards granted under the Company’s RSP. The cost is expected to be recognized over a weighted-average period of 3.6 years, respectively. Restricted share awards are expensed in accordance with the service period required. Compensation expense related to restricted share awards was approximately $17,000, $74,000 and $61,000 for the years ended December 31, 2018, 2017 and 2016, respectively. Compensation expense related to restricted share awards is recorded as general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss. Other Share-Based Compensation The Company may issue common stock in lieu of cash to pay fees earned by the Company’s board of directors at the respective director’s election. There are no restrictions on the shares issued. There were no shares of common stock issued in lieu of cash during the years ended December 31, 2018, 2017 and 2016. |
Net Loss Per Share |
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Net Loss Per Share | Net Loss Per Share The following is a summary of the basic and diluted net loss per share computation for the periods presented:
The Company had the following potentially weighted-average dilutive securities as of December 31, 2018, 2017 and 2016, which were excluded from the calculation of diluted net loss per share attributable to stockholders as the effect would have been anti-dilutive:
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Quarterly Results (Unaudited) |
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Quarterly Results (Unaudited) | Quarterly Results (Unaudited) Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2018 and 2017.
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Subsequent Events |
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Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Change of Corporate Name On March 13, 2019, the Company filed an amendment to its charter changing its name from American Realty Capital New York City REIT, Inc. to New York City REIT, Inc. with the Maryland State Department of Assessments and Taxation, which became effective upon filing. |
Real Estate and Accumulated Depreciation - Schedule III |
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SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule III -Real Estate and Accumulated Depreciation |
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A summary of activity for real estate and accumulated depreciation for the year ended December 31, 2018, 2017 and 2016:
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Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
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Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
Reclassifications | Reclassifications The presentation of prior year restricted cash on the Company’s consolidated statements of cash flows, related to the adoption of a new accounting standard (see “Recently Issued Accounting Pronouncements” below for additional information) has been changed to conform to the current year presentation. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable. |
Investments in Real Estate | Investments in Real Estate Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. The Company evaluates each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and non-controlling interests based on their respective estimated fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets or liabilities may include the value of in-place leases, above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics. The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases is recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and the Company’s estimate of the comparable fair market lease rate for the corresponding in-place lease, measured over the remaining term of the lease, including any below-market fixed rate renewal options for below-market leases. The fair value of other intangible assets, such as real estate tax abatements, are recorded based on the present value of the expected benefit and amortized over the expected useful life. Fair values of assumed mortgages, if applicable, are recorded as debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates. Non-controlling interests in property owning entities are recorded based on the fair value of units issued at the date of acquisition, as determined by the terms of the applicable agreement. The Company utilizes a number of sources in making its estimates of fair values for purposes of allocating purchase price, including real estate valuations prepared by independent valuation firms. The Company also considers information and other factors including: market conditions, the industry in which the tenant operates, characteristics of the real estate such as location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business. Disposals of real estate investments that represent a strategic shift in operations that will have a major effect on the Company’s operations and financial results are presented as discontinued operations in the consolidated statements of operations and comprehensive loss for all periods presented; otherwise, the Company continues to report results of these properties’ operations within continuing operations. Properties that are intended to be sold will be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale. Properties are no longer depreciated when they are classified as held for sale. |
Depreciation and Amortization | Depreciation and Amortization Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests. Acquired above-market leases are amortized as a reduction of rental income over the remaining terms of the respective leases. Acquired below-market leases are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods. The value of in-place leases, exclusive of the value of above- and below-market in-place leases, is amortized to depreciation and amortization expense over the remaining periods of the respective leases. The value of other acquired intangibles is amortized to depreciation and amortization expense over the remaining expected useful life. Assumed mortgage premiums or discounts, if applicable, are amortized as a reduction or increase to interest expense over the remaining term of the respective mortgages. |
Impairment of Long Lived Assets | Impairment of Long Lived Assets When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If such estimated cash flows are less than the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is based on the adjustment to estimated fair value less estimated cost to dispose of the asset. Generally, the Company determines estimated fair value for properties held for sale based on the estimated selling price of the asset. These assessments may result in the immediate recognition of an impairment loss, resulting in a reduction of net income (loss). |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents Cash and cash equivalents includes cash in bank accounts as well as investments in highly liquid money market funds with original maturities of three months or less. The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit. At December 31, 2018 and 2017, the Company had cash and cash equivalents and restricted cash of $54.8 million and $47.2 million, of which $53.1 million and $46.5 million, respectively, were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result. Restricted Cash Restricted cash primarily consists of ground rent, real estate tax, structural, leasing commissions, free rent and insurance reserves |
Investments Securities | Investment Securities The Company did not own any debt or equity investment securities as of December 31, 2018 and 2017. The Company did own investment securities prior to June 15, 2017. |
Deferred Leasing Costs, Net | Deferred Leasing Costs, Net Deferred leasing costs, net consist primarily of lease commissions and professional fees incurred, and are deferred and amortized to depreciation and amortization expense over the term of the related lease. |
Share Repurchase Program | Share Repurchase Program The Company has a Share Repurchase Program (“SRP”) that enables stockholders to sell their shares to the Company. Under the SRP, stockholders may request that the Company redeem all or any portion of their shares, subject to certain minimum conditions, if such repurchase does not impair the Company’s capital or operations. When a stockholder requests redemption and the redemption is approved, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation. Shares purchased under the SRP will have the status of authorized but unissued shares. |
Distribution Reinvestment Plan | Distribution Reinvestment Plan Pursuant to the DRIP, stockholders may elect to reinvest distributions by purchasing shares of common stock in lieu of receiving cash. No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP. Participants purchasing shares pursuant to the DRIP have the same rights and are treated in the same manner as if such shares were issued pursuant to the IPO. The board of directors may designate that certain cash or other distributions be excluded from the DRIP. The Company has the right to amend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants. Shares issued under the DRIP are recorded to equity in the accompanying balance sheets in the period distributions are declared. |
Revenue Recognition | Revenue Recognition The Company’s revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Because many of the Company’s leases provide for rental increases at specified intervals, GAAP requires that the Company record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that it will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. Rental revenue recognition commences when the tenant takes possession of or controls the physical use of the leased space. For the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, the Company evaluates whether the Company owns or if the tenant owns the tenant improvements. When the Company is the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such improvements are substantially complete. When the tenant is the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. When the Company concludes that it is the owner of tenant improvements, the Company capitalizes the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants. When the Company concludes that the tenant is the owner of tenant improvements for accounting purposes, the Company records its contribution towards those improvements as a lease incentive, which is included in deferred leasing costs, net on the consolidated balance sheets and amortized as a reduction to rental income on a straight-line basis over the term of the lease. The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectibility by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectibility of a receivable is in doubt, the Company will record an increase in its allowance for uncollectible accounts or record a direct write-off of the receivable in its consolidated statements of operations and comprehensive loss. Certain tenants have provided letters of credit in lieu of cash security deposit required per the respective lease agreements. The Company may own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets, which may be monthly, quarterly or annual targets. As the lessor to the aforementioned leases, the Company defers the recognition of contingent rental income until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. If the Company owns certain properties with leases that include provisions for the tenant to pay contingent rental income, contingent rental income will be included in rental income on the consolidated statements of operations and comprehensive loss. The Company recognized $0.2 million contingent rental income for the year ended December 31, 2018. The Company did not recognize any contingent rental income for the years ended December 31, 2017 or 2016. Cost recoveries from tenants are included in operating expense reimbursements and other revenue in the period the related costs are incurred, as applicable. |
Offering and Related Costs | Offering and Related Costs All offering costs incurred by the Company, its Advisor and its affiliates on behalf of the Company are charged to additional paid-in capital on the consolidated balance sheets. Offering and related costs include all expenses incurred in connection with the Company’s IPO. Offering costs (other than selling commissions and the dealer manager fees) of the Company may be paid by the Advisor, the Former Dealer Manager or their affiliates on behalf of the Company. These costs include but are not limited to (i) legal, accounting, printing, mailing, and filing fees; (ii) escrow service related fees; (iii) reimbursement of the Former Dealer Manager for amounts it may pay to reimburse the bona fide due diligence expenses of broker-dealers; and (iv) reimbursement to the Advisor for a portion of the costs of its employees and other costs in connection with preparing supplemental sales materials and related offering activities. The Company is obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on behalf of the Company, provided that the Advisor is obligated to reimburse the Company to the extent organization and offering costs (excluding selling commissions and the dealer manager fees) incurred by the Company in its offering exceed 2.0% of gross offering proceeds and to the extent that the total of these costs plus selling commissions, the dealer manager fees and the other organization and offering expenses borne by the Company exceed 12.0% of the gross proceeds determined at the end of the IPO. |
Share-based Compensation | Share-Based Compensation The Company has a stock-based incentive award plan, which is accounted for under the guidance for employee share based payments. The expense for such awards are included in general and administrative expenses and are recognized over the vesting period or when the requirements for exercise of the award have been met. |
Income Taxes | Income Taxes The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with its taxable year ended December 31, 2014. If the Company continues to qualify for taxation as a REIT, it generally will not be subject to federal corporate income tax to the extent it distributes annually all of its REIT taxable income to its stockholders, determined without regard for the deduction for dividends paid and excluding net capital gains. REITs are subject to a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. |
Per Share Data | Per Share Data The Company calculates basic income (loss) per share of common stock by dividing net income (loss) for the period by the weighted-average shares of its common stock outstanding for the respective period. Diluted income per share takes into account the effect of dilutive instruments, such as OP Units, Class B units and unvested restricted stock (assuming such units are not antidilutive), based on, the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. |
Reportable Segments | Reportable Segments The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company’s investments in real estate generate rental revenue and other income through the leasing and management of properties. Management evaluates the operating performance of the Company’s investments in real estate at the individual property level. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Adopted as of January 1, 2018: In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued several additional amendments thereto (collectively referred to herein as “ASC 606”). ASC 606 establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. The Company adopted this guidance effective January 1, 2018, under the modified retrospective approach. The new guidance did not have an impact on the Company’s consolidated financial statements, primarily as a result of revenue being sourced from lease arrangements that are outside the scope of ASC 606 until the new lease standard was adopted (see below). In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10), that amends the recognition and measurement of financial instruments. The new guidance revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this guidance on January 1, 2018 and there was no impact on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The Company adopted this new guidance effective January 1, 2018, and it did not have an impact on the Company’s consolidated statement of cash flows. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single asset or group of similar assets, the assets acquired (or disposed of) would not be considered a business. The Company has assessed this revised guidance and expects, based on historical acquisitions, future properties acquired to qualify as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. The Company adopted this guidance on January 1, 2017, which would apply to prospective acquisitions. On October 17, 2018, the Company closed on an acquisition of a property which was determined to be an asset acquisition based on this new guidance. Apart from the aforementioned, there were no other acquisitions during the year ended December 31, 2018 or the year ended December 31, 2017. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, does not change as a result of the modification. The Company adopted this guidance effective January 1, 2018 and it did not have an impact on the Company’s consolidated financial statements. The Company expects that any future modifications to its issued share-based awards will be accounted for using modification accounting, unless the modification meets all of the exception criteria noted above. As a result, the modification would be treated as an exchange of the original award for a new award, with any incremental fair value being treated as additional compensation cost. Pending Adoption as of December 31, 2018: ASU No. 2016-02 — Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02"). The most significant changes in ASU 2016-02 is recognition of right-of-use ("ROU") assets and lease liabilities by lessees for those leases classified as operating leases, with less significant changes for lessors. Also, beginning in the first quarter of 2019, the new guidance requires additional disclosures that help enable users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company elected the practical expedient package that allows the Company: (a) to not reassess whether any expired or existing contracts entered into prior to January 1, 2019 are or contain leases; (b) to not reassess the lease classification for any expired or existing leases entered into prior to January 1, 2019; and (c) to not reassess initial direct costs for any expired or existing leases entered into prior to January 1, 2019. In addition, the Company elected to not record on its consolidated balance sheets leases whose term is less than 12 months at lease inception. ASU 2016-02 originally required a modified retrospective method of adoption, however, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements ("ASU 2018-11"), provides companies with an additional transition option that would permit the application of ASU 2016-02 as of the adoption date rather than to all periods presented. The Company assessed the impact of adoption from both a lessor and lessee perspective, which is discussed in more detail below, and adopted the new guidance prospectively on January 1, 2019, as allowed under ASU 2018-11. Lessor Accounting ASU 2016-02 originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however, ASU 2018-11 allows lessors a practical expedient, which we elected as of January 1, 2019, by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. Upon adoption, the new guidance did not impact the Company's revenue recognition pattern or have any other impacts on its leases in place as of January 1, 2019 in which it is the lessor. Lessee Accounting Under ASU 2016-02, companies are required to record a ROU asset and a lease liability for all leases with a term greater than 12 months equal to the present value of the remaining lease payments as of the adoption date of the new standard. Since our leases do not provide an implicit rate, we will use our incremental borrowing rate in determining the present value of lease payments. The new standard also requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively, as well as the balance sheet classification of the ROU asset. Leases with a term of 12 months or less will be accounted for similar to previous guidance for operating leases. The Company is a lessee for a property in which it has a ground lease as of December 31, 2018. Since the Company has elected the practical expedients described above, it determined that this lease would continue to be classified as an operating lease under the new standard. As a result, the Company expects to record a ROU asset and lease liability of approximately $50.0 million to $55.7 million, equal to the present value of the remaining lease payments as of January 1, 2019. Future lease expenses after adoption will continue to be recorded on a straight-line basis as required for operating leases. Other Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. The new guidance is effective for reporting periods beginning after December 15, 2019, with early adoption permitted for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance. In June 2018, the FASB issued ASU 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting as an amendment and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. The new guidance is effective for the Company in annual periods beginning after December 15, 2018, and interim periods within those annual periods. As of December 31, 2018, the Company did not have any nonemployee awards outstanding that would be impacted by the new guidance, however the Company will apply this new guidance prospectively to grants of nonemployee awards, if any. |
Real Estate Investments (Tables) |
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Schedule of Business Acquisitions, by Acquisition | The following table presents the allocation of real estate assets acquired and liabilities assumed during the years ended December 31, 2018 and 2016. There were no acquisitions during the year ended December 31, 2017.
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Schedule of Future Minimum Rental Payments for Operating Leases | The following table presents future minimum base cash rental payments due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.
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Schedule of Intangible Assets and Goodwill | Acquired intangible assets and lease liabilities consisted of the following as of December 31, 2018 and 2017:
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Finite-lived Intangible Assets Amortization Expense | The following table discloses the amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:
________________ (1) Reflected within depreciation and amortization expenses. (2) Reflected within rental income. (3) Reflected within property operating expenses. |
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table provides the projected amortization expenses and adjustments to revenues for the next five years as of December 31, 2018:
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Mortgage Notes Payable, Net (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The Company’s mortgage notes payable as of December 31, 2018 and 2017 are as follows.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | The following table summarizes the scheduled aggregate principal payments subsequent to December 31, 2018:
|
Fair Value of Financial Instruments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Values of Financial Instruments | The fair values of the Company’s financial instruments that are not reported at fair value on the consolidated balance sheet are reported below:
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Common Stock (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Repurchased Shares | The following table reflects the number of shares repurchased cumulatively through December 31, 2018.
____________________ (1) Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13,700 at a weighted average price per share of $23.68, (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the Company’s board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP. (2) In January 2018, the Company’s board of directors approved the repurchase requests made pursuant to the SRP during the period from July 1, 2017 to December 31, 2017, which resulted in the repurchase of 99,131 shares for approximately $2.0 million at a weighted-average price per share of $20.26 and 10,183 shares were repurchased from an individual stockholder in a privately negotiated transaction during January 2018 for approximately $0.2 million at a weighted-average price per share of $20.26. During the third quarter of 2018, the Company’s board of directors approved the repurchase requests made during the 2018 Active Period and 2018 Reactivation Period which resulted in the repurchase of 145,627 shares for approximately $3.0 million at a weighted-average price per share of $20.26. |
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | The following table reflects the minimum base cash rental payments due from the Company over the next five years and thereafter:
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Related Party Transactions and Arrangements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amount Contractually Due and Forgiven in Connection With Operation Related Services | The following table details amounts incurred, waived and payable in connection with the Company’s operations-related services described above as of and for the periods presented:
____________________
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Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The following table displays restricted share award activity during the years ended December 31, 2018, 2017 and 2016:
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Net Loss Per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following is a summary of the basic and diluted net loss per share computation for the periods presented:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The Company had the following potentially weighted-average dilutive securities as of December 31, 2018, 2017 and 2016, which were excluded from the calculation of diluted net loss per share attributable to stockholders as the effect would have been anti-dilutive:
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Quarterly Results (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2018 and 2017.
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Real Estate Investments (Minimum Rental Payments) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Real Estate Investments, Net [Abstract] | |
2019 | $ 53,347 |
2020 | 51,404 |
2021 | 47,237 |
2022 | 44,018 |
2023 | 35,920 |
Thereafter | 150,226 |
Total | $ 382,152 |
Real Estate Investments (Summary of Amortization and Accretion of Market Lease Assets and Liabilities) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Amortization and (accretion) of above- and below-market leases, net | $ (2,044) | $ (2,247) | $ (2,376) |
Depreciation and Amortization | In-place leases and other intangibles | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangibles | 11,319 | 12,669 | 13,247 |
Rental Income | Above and Below Market Ground Lease | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization and (accretion) of above- and below-market leases, net | (2,094) | (2,296) | (2,403) |
Operating Expense | Below Market Ground Lease | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangibles | $ 50 | $ 49 | $ 27 |
Real Estate Investments (Narrative) (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
In-place leases | 421 W. 54th Street | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization of intangibles | $ 0.3 |
Mortgage Notes Payable, Net (Narrative) (Details) |
Apr. 13, 2018
USD ($)
subsidiary
|
Dec. 31, 2018
USD ($)
|
---|---|---|
Debt Instrument [Line Items] | ||
Debt instrument, collateral amount | $ 553,400,000 | |
Loans Payable | Subsidiaries | ||
Debt Instrument [Line Items] | ||
Number of subsidiaries that entered into a loan agreement | subsidiary | 2 | |
Loan amount | $ 50,000,000 | |
Fixed interest rate, percent | 4.516% | |
Escrow deposit | $ 600,000 | |
Proceeds from issuance of secured debt | $ 47,100,000 | |
Redemption price | 115.00% | |
Debt covenant, minimum net worth requirement | $ 57,500,000 | |
Debt covenant, minimum liquid assets requirement | $ 3,000,000 |
Mortgage Notes Payable, Net (Mortgage Principal Payments) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2019 | $ 0 |
2020 | 0 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
Thereafter | 299,000 |
Total | $ 299,000 |
Common Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 12 Months Ended | 60 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 24, 2018 |
Jun. 15, 2018 |
Mar. 20, 2018 |
Jul. 31, 2018 |
Apr. 30, 2018 |
Mar. 06, 2018 |
May 31, 2014 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2018 |
Oct. 24, 2016 |
Apr. 24, 2014 |
|
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Common stock, shares outstanding (in shares) | 30,990,448 | 31,382,120 | 30,990,448 | ||||||||||
Dividends declared per common share (in usd per share) | $ 1.5125 | $ 0.25 | $ 1.51 | $ 1.51 | |||||||||
Shares issued during period (in shares) | 210,014 | 500,000 | 139,993 | 140,000 | |||||||||
Stock price (in usd per share) | $ 12.95 | $ 17.03 | |||||||||||
Proceeds from issuance of common stock | $ 2.7 | $ 2.4 | $ 769.9 | ||||||||||
Common Stock | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Repurchase price (in usd per share) | $ 25.0 | ||||||||||||
Common Stock | Share Repurchase Program | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Repurchase price (in usd per share) | $ 23.75 |
Commitments and Contingencies (Future Minimum Lease Payments Due) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
2019 | $ 4,746 | ||
2020 | 4,746 | ||
2021 | 4,746 | ||
2022 | 4,746 | ||
2023 | 4,746 | ||
Thereafter | 211,992 | ||
Total | 235,722 | ||
Ground rent expense | $ 4,900 | $ 4,900 | $ 2,600 |
Related Party Transactions and Arrangements (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Related Party Transaction [Line Items] | |||
Common stock, shares outstanding (in shares) | 30,990,448 | 31,382,120 | |
Special Limited Partner | |||
Related Party Transaction [Line Items] | |||
Common stock, shares outstanding (in shares) | 8,888 | 8,888 | |
Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Investment income | $ 0 | $ 0 | $ 6,000 |
Share-Based Compensation (Narrative) (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Aug. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 17,000 | $ 74,000 | $ 61,000 | |
Restricted Share Plan | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted automatically upon election to board of directors (in shares) | 1,333 | |||
Shares granted automatically, value | 30,000 | |||
Vesting period | 5 years | |||
Periodic vesting percentage | 20.00% | |||
Maximum authorized amount as a percentage of shares authorized | 5.00% | |||
Number of shares authorized (in shares) | 1,500,000.0 | |||
Nonvested awards, compensation cost not yet recognized | $ 300,000 | 200,000 | ||
Nonvested awards, compensation cost not yet recognized, period for recognition | 3 years 7 months 12 days | |||
Share-based compensation | $ 17,000 | $ 74,000 | $ 61,000 |
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity [Abstract] | |||||||||||
Net loss | $ (5,134) | $ (5,865) | $ (6,529) | $ (6,584) | $ (7,048) | $ (5,877) | $ (5,362) | $ (4,786) | $ (24,112) | $ (23,073) | $ (19,765) |
Basic and diluted weighted average shares outstanding (in shares) | 30,977,822 | 31,180,373 | 31,330,779 | 31,431,555 | 31,297,963 | 31,106,250 | 30,944,077 | 30,814,927 | 31,228,941 | 31,042,307 | 30,668,238 |
Basic and diluted net loss per share (in usd per share) | $ (0.17) | $ (0.19) | $ (0.21) | $ (0.21) | $ (0.23) | $ (0.19) | $ (0.17) | $ (0.16) | $ (0.77) | $ (0.74) | $ (0.64) |
Net Loss Per Share (Shares Excluded From Calculation) (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 171,875 | 170,414 | 168,314 |
Unvested restricted stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 12,626 | 11,165 | 9,065 |
OP Units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 90 | 90 | 90 |
Class B Units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 159,159 | 159,159 | 159,159 |
Quarterly Results (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenues | $ 16,233 | $ 15,741 | $ 15,196 | $ 15,229 | $ 14,821 | $ 14,475 | $ 14,545 | $ 14,583 | $ 62,399 | $ 58,384 | $ 47,607 |
Net loss | $ (5,134) | $ (5,865) | $ (6,529) | $ (6,584) | $ (7,048) | $ (5,877) | $ (5,362) | $ (4,786) | $ (24,112) | $ (23,073) | $ (19,765) |
Weighted average shares outstanding (in shares) | 30,977,822 | 31,180,373 | 31,330,779 | 31,431,555 | 31,297,963 | 31,106,250 | 30,944,077 | 30,814,927 | 31,228,941 | 31,042,307 | 30,668,238 |
Basic and diluted net loss per share (in usd per share) | $ (0.17) | $ (0.19) | $ (0.21) | $ (0.21) | $ (0.23) | $ (0.19) | $ (0.17) | $ (0.16) | $ (0.77) | $ (0.74) | $ (0.64) |
Real Estate and Accumulated Depreciation - Schedule III (Changes in Accumulated Depreciation) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Real estate investments, at cost: | |||
Balance at beginning of year | $ 647,839 | $ 635,447 | $ 469,962 |
Additions-acquisitions | 13,975 | 0 | 148,647 |
Capital expenditures | 9,396 | 12,392 | 16,838 |
Disposals | 0 | 0 | 0 |
Balance at end of the year | 671,210 | 647,839 | 635,447 |
Accumulated depreciation: | |||
Balance at beginning of year | 35,982 | 19,598 | 7,966 |
Depreciation expense | 17,467 | 16,384 | 11,632 |
Disposals | 0 | 0 | 0 |
Balance at the end of the year | $ 53,449 | $ 35,982 | $ 19,598 |
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