falsedesktopNYCR2020-09-30000159552720000018{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Large accelerated filer\t☐\tAccelerated filer\t☐\nNon-accelerated filer\t☒\tSmaller reporting company\t☒\n\t\tEmerging growth company\t☐\n", "q10k_tbl_1": "\tPage\nPART I - FINANCIAL INFORMATION\t\nItem 1. Financial Statements\t\nConsolidated Balance Sheets as of September 30 2020 (Unaudited) and December 31 2019\t3\nConsolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30 2020 and 2019 (Unaudited)\t4\nConsolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30 2020 (Unaudited)\t5\nConsolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30 2019 (Unaudited)\t6\nConsolidated Statements of Cash Flows for the Nine Months Ended September 30 2020 and 2019 (Unaudited)\t7\nNotes to Consolidated Financial Statements (Unaudited)\t8\nItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations\t36\nItem 3. Quantitative and Qualitative Disclosures About Market Risk\t49\nItem 4. Controls and Procedures\t49\nPART II - OTHER INFORMATION\t50\nItem 1. Legal Proceedings\t50\nItem 1A. Risk Factors\t50\nItem 2. Unregistered Sales of Equity Securities and Use of Proceeds\t55\nItem 3. Defaults Upon Senior Securities\t55\nItem 4. Mine Safety Disclosures\t55\nItem 5. Other Information\t55\nItem 6. Exhibits\t55\nSignatures\t56\n", "q10k_tbl_2": "\tSeptember 30 2020\tDecember 31 2019\nASSETS\t(Unaudited)\t\nReal estate investments at cost:\t\t\nLand\t193658\t193658\nBuildings and improvements\t568134\t565829\nAcquired intangible assets\t98412\t103121\nTotal real estate investments at cost\t860204\t862608\nLess accumulated depreciation and amortization\t(132418)\t(114322)\nTotal real estate investments net\t727786\t748286\nCash and cash equivalents\t39088\t51199\nRestricted cash\t9700\t7098\nOperating lease right-of-use asset\t55427\t55579\nPrepaid expenses and other assets (includes amounts due from related parties of $407 and $0 at September 30 2020 and December 31 2019 respectively)\t11080\t8602\nStraight-line rent receivable\t25231\t21649\nDeferred leasing costs net\t9643\t8943\nTotal assets\t877955\t901356\nLIABILITIES AND STOCKHOLDERS' EQUITY\t\t\nMortgage notes payable net\t396188\t395031\nAccounts payable accrued expenses and other liabilities (including amounts due to related parties of $167 and $222 at September 30 2020 and December 31 2019 respectively)\t6831\t7033\nOperating lease liability\t54832\t54866\nBelow-market lease liabilities net\t14517\t18300\nDerivative liability at fair value\t3722\t1327\nDeferred revenue\t5490\t4250\nTotal liabilities\t481580\t480807\nPreferred stock $0.01 par value 50000000 shares authorized none issued and outstanding at September 30 2020 and December 31 2019\t0\t0\nCommon stock $0.01 par value 300000000 shares authorized 12802690 and 12755099 (1) shares issued and outstanding as of September 30 2020 and December 31 2019 respectively\t129\t128\nAdditional paid-in capital\t686690\t686026\nAccumulated other comprehensive loss\t(3722)\t(1327)\nDistributions in excess of accumulated earnings\t(288640)\t(264278)\nTotal stockholders' equity\t394457\t420549\nNon-controlling interests\t1918\t0\nTotal equity\t396375\t420549\nTotal liabilities and equity\t877955\t901356\n", "q10k_tbl_3": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nRevenue from tenants\t16997\t18643\t53035\t52219\nOperating expenses:\t\t\t\t\nAsset and property management fees to related parties\t1879\t1962\t5721\t5382\nProperty operating\t8300\t8026\t23533\t22651\nAcquisition transaction and other costs\t0\t0\t0\t18\nListing expenses\t1299\t0\t1299\t0\nVesting and conversion of Class B Units\t1153\t0\t1153\t0\nEquity-based compensation\t1711\t24\t1758\t64\nGeneral and administrative\t1234\t1176\t5727\t4929\nDepreciation and amortization\t8639\t7804\t24070\t22771\nTotal operating expenses\t24215\t18992\t63261\t55815\nOperating loss\t(7218)\t(349)\t(10226)\t(3596)\nOther income (expense):\t\t\t\t\nInterest expense\t(5089)\t(4681)\t(14915)\t(12310)\nOther income\t19\t221\t779\t686\nTotal other expense\t(5070)\t(4460)\t(14136)\t(11624)\nNet loss attributable to common stockholders\t(12288)\t(4809)\t(24362)\t(15220)\nOther comprehensive income (loss):\t\t\t\t\nChange in unrealized gain (loss) on derivative\t264\t(547)\t(2395)\t(1877)\nOther comprehensive income (loss)\t264\t(547)\t(2395)\t(1877)\nComprehensive income (loss)\t(12024)\t(5356)\t(26757)\t(17097)\nWeighted-average shares outstanding - Basic and Diluted (1)\t12772176\t12749456\t12757376\t12748674\nNet loss per share attributable to common stockholders - Basic and Diluted (1)\t(0.96)\t(0.38)\t(1.91)\t(1.19)\n", "q10k_tbl_4": "\tNine Months Ended September 30 2020\t\t\t\t\t\t\t\t\t\t\n\tCommon Stock\t\t\t\t\t\t\t\t\t\t\n\tNumber of Shares\t\tPar Value\t\tAdditional Paid-in Capital\t\tAccumulated Other Comprehensive Loss\tDistributions in excess of accumulated earnings\tTotal Stockholders' Equity\tNon-controlling Interests\tTotal Equity\nBalance December 31 2019\t12755099\t(1)\t128\t(1)\t686026\t(1)\t(1327)\t(264278)\t420549\t0\t420549\nRedemption of fractional shares of common stock and restricted shares\t(6672)\t\t0\t\t(328)\t\t0\t0\t(328)\t0\t(328)\nVesting and conversion of Class B Units\t52398\t\t1\t\t921\t\t0\t0\t922\t231\t1153\nRedemption of Class A Units\t37\t\t0\t\t0\t\t0\t0\t0\t0\t0\nEquity-based compensation\t1828\t\t0\t\t71\t\t0\t0\t71\t1687\t1758\nNet loss\t0\t\t0\t\t0\t\t0\t(24362)\t(24362)\t0\t(24362)\nOther comprehensive loss\t0\t\t0\t\t0\t\t(2395)\t0\t(2395)\t0\t(2395)\nBalance September 30 2020\t12802690\t\t129\t\t686690\t\t(3722)\t(288640)\t394457\t1918\t396375\n", "q10k_tbl_5": "\tThree Months Ended September 30 2020\t\t\t\t\t\t\t\t\t\t\n\tCommon Stock\t\t\t\t\t\t\t\t\t\t\n\tNumber of Shares\t\tPar Value\t\tAdditional Paid-in Capital\t\tAccumulated Other Comprehensive Loss\tDistributions in excess of accumulated earnings\tTotal Stockholders' Equity\tNon-controlling Interests\tTotal Equity\nBalance June 30 2020\t12756927\t(1)\t128\t(1)\t686073\t(1)\t(3986)\t(276352)\t405863\t0\t405863\nRedemption of fractional shares of common stock and restricted shares\t(6672)\t\t0\t\t(328)\t\t0\t0\t(328)\t0\t(328)\nVesting and conversion of Class B Units\t52398\t\t1\t\t921\t\t0\t0\t922\t231\t1153\nRedemption of Class A Units\t37\t\t0\t\t0\t\t0\t0\t0\t0\t0\nEquity-based compensation\t0\t\t0\t\t24\t\t0\t0\t24\t1687\t1711\nNet loss\t0\t\t0\t\t0\t\t0\t(12288)\t(12288)\t0\t(12288)\nOther comprehensive income (loss)\t0\t\t0\t\t0\t\t264\t0\t264\t0\t264\nBalance September 30 2020\t12802690\t\t129\t\t686690\t\t(3722)\t(288640)\t394457\t1918\t396375\n", "q10k_tbl_6": "\tNine Months Ended September 30 2019\t\t\t\t\t\n\tCommon Stock\t\t\t\t\t\n\tNumber of Shares (1)\tPar Value(1)\tAdditional Paid-in Capital (1)\tAccumulated Other Comprehensive Loss\tDistributions in excess of accumulated earnings\tTotal Stockholders' Equity\nBalance December 31 2018\t12753271\t128\t685940\t0\t(242388)\t443680\nEquity-based compensation\t1828\t0\t64\t0\t0\t64\nNet loss\t0\t0\t0\t0\t(15220)\t(15220)\nOther comprehensive loss\t0\t0\t0\t(1877)\t0\t(1877)\nBalance September 30 2019\t12755099\t128\t686004\t(1877)\t(257608)\t426647\n", "q10k_tbl_7": "\tThree Months Ended September 30 2019\t\t\t\t\t\n\tCommon Stock\t\t\t\t\t\n\tNumber of Shares (1)\tPar Value(1)\tAdditional Paid-in Capital (1)\tAccumulated Other Comprehensive Loss\tDistributions in excess of accumulated earnings\tTotal Stockholders' Equity\nBalance June 30 2019\t12755099\t128\t685980\t(1330)\t(252799)\t431979\nEquity-based compensation\t0\t0\t24\t0\t0\t24\nNet loss\t0\t0\t0\t0\t(4809)\t(4809)\nOther comprehensive loss\t0\t0\t0\t(547)\t0\t(547)\nBalance September 30 2019\t12755099\t128\t686004\t(1877)\t(257608)\t426647\n", "q10k_tbl_8": "\tNine Months Ended September 30\t\n\t2020\t2019\nCash flows from operating activities:\t\t\nNet loss\t(24362)\t(15220)\nAdjustments to reconcile net loss to net cash (used in) provided by operating activities:\t\t\nDepreciation and amortization\t24070\t22771\nAmortization of deferred financing costs\t1157\t919\nAccretion of below- and amortization of above-market lease liabilities and assets net\t(2807)\t(1459)\nEquity-based compensation\t1758\t64\nVesting and conversion of Class B Units\t1153\t0\nChanges in assets and liabilities:\t\t\nStraight-line rent receivable\t(3582)\t(4207)\nStraight-line rent payable\t82\t82\nPrepaid expenses other assets and deferred costs\t(4232)\t198\nAccounts payable accrued expenses and other liabilities\t(496)\t(3060)\nDeferred revenue\t1240\t(544)\nNet cash used in operating activities\t(6019)\t(456)\nCash flows from investing activities:\t\t\nInvestments in real estate\t0\t(38265)\nCapital expenditures\t(3162)\t(5567)\nNet cash used in investing activities\t(3162)\t(43832)\nCash flows from financing activities:\t\t\nProceeds from mortgage note payable\t0\t55000\nPayments of financing costs\t0\t(3948)\nRedemption of fractional shares of common stock and restricted shares\t(328)\t0\nNet cash used in financing activities\t(328)\t51052\nNet change in cash cash equivalents and restricted cash\t(9509)\t6764\nCash cash equivalents and restricted cash beginning of period\t58297\t54801\nCash cash equivalents and restricted cash end of period\t48788\t61565\nCash and cash equivalents\t39088\t53818\nRestricted cash\t9700\t7747\nCash cash equivalents and restricted cash end of period\t48788\t61565\nNon-Cash Investing and Financing Activities:\t\t\nAccrued capital expenditures\t294\t837\nProceeds from mortgage notes payable used to fund acquisition of real estate\t0\t51000\nMortgage notes payable released in connection with acquisition of real estate\t0\t(51000)\n", "q10k_tbl_9": "(Dollar amounts in thousands)\tNine Months Ended September 30 2019\nReal Estate investments at cost:\t\nLand\t55548\nBuildings and improvements\t24324\nTotal tangible assets\t79872\nAcquired intangible assets (1) :\t\nIn-place leases and other intangible assets\t7852\nMarket lease intangibles\t1541\nTotal intangible assets\t9393\nTotal assets acquired\t89265\nMortgage note payable used to acquire real estate investment\t(51000)\nCash paid for acquired real estate investment\t38265\n", "q10k_tbl_10": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands)\t2020\t2019\t2020\t2019\nIn-place leases (1)\t2569\t2288\t6567\t6761\nOther intangibles\t291\t291\t874\t874\nTotal included in depreciation and amortization\t2860\t2579\t7441\t7635\nAbove-market lease intangibles (1)\t369\t344\t939\t1016\nBelow-market lease liabilities (1)\t(936)\t(922)\t(3783)\t(2511)\nTotal included in revenue from tenants\t(567)\t(578)\t(2844)\t(1495)\nBelow-market ground lease included in property operating expenses\t12\t12\t37\t36\n", "q10k_tbl_11": "(In thousands)\t2020 (remainder)\t2021\t2022\t2023\t2024\nIn-place leases\t1722\t5867\t4751\t3513\t2762\nOther intangibles\t291\t937\t708\t708\t708\nTotal to be included in depreciation and amortization\t2013\t6804\t5459\t4221\t3470\nAbove-market lease assets\t285\t1079\t991\t842\t512\nBelow-market lease liabilities\t(605)\t(2168)\t(1677)\t(1452)\t(1422)\nTotal to be included in revenue from tenants\t(320)\t(1089)\t(686)\t(610)\t(910)\n", "q10k_tbl_12": "\t\tOutstanding Loan Amount\t\t\t\t\t\nPortfolio\tEncumbered Properties\tSeptember 30 2020\tDecember 31 2019\tEffective Interest Rate\tInterest Rate\t\tMaturity\n\t\t(In thousands)\t(In thousands)\t\t\t\t\n123 William Street (1)\t1\t140000\t140000\t4.74%\tFixed\t\tMar. 2027\n1140 Avenue of the Americas\t1\t99000\t99000\t4.18%\tFixed\t\tJul. 2026\n400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage\t2\t50000\t50000\t4.59%\tFixed\t\tMay 2028\n8713 Fifth Avenue\t1\t10000\t10000\t5.05%\tFixed\t\tNov. 2028\n9 Times Square\t1\t55000\t55000\t3.73%\tFixed\t(2)\tApr. 2024\n196 Orchard Street\t1\t51000\t51000\t3.91%\tFixed\t\tAug. 2029\nMortgage notes payable gross\t7\t405000\t405000\t4.35%\t\t\t\nLess: deferred financing costs net (3)\t\t(8812)\t(9969)\t\t\t\t\nMortgage notes payable net\t\t396188\t395031\t\t\t\t\n", "q10k_tbl_13": "(In thousands)\tFuture Minimum Principal Payments\n2020 (remainder)\t0\n2021\t0\n2022\t0\n2023\t0\n2024\t55000\nThereafter\t350000\nTotal\t405000\n", "q10k_tbl_14": "(In thousands)\tQuoted Prices in Active Markets Level 1\tSignificant Other Observable Inputs Level 2\tSignificant Unobservable Inputs Level 3\tTotal\nSeptember 30 2020\t\t\t\t\nInterest rate \"Pay - Fixed\" swaps - liabilities\t0\t(3722)\t0\t(3722)\nTotal\t0\t(3722)\t0\t(3722)\nDecember 31 2019\t\t\t\t\nInterest rate \"Pay - Fixed\" swaps - liabilities\t0\t(1327)\t0\t(1327)\nTotal\t0\t(1327)\t0\t(1327)\n", "q10k_tbl_15": "\t\tSeptember 30 2020\t\tDecember 31 2019\t\n(In thousands)\tLevel\tGross Principal Balance\tFair Value\tGross Principal Balance\tFair Value\nMortgage note payable - 123 William Street\t3\t140000\t148946\t140000\t151428\nMortgage note payable - 1140 Avenue of the Americas\t3\t99000\t102114\t99000\t103340\nMortgage note payable - 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage\t3\t50000\t52876\t50000\t53951\nMortgage note payable - 8713 Fifth Avenue\t3\t10000\t10908\t10000\t11175\nMortgage note payable - 9 Times Square\t3\t55000\t51916\t55000\t54759\nMortgage note payable - 196 Orchard Street\t3\t51000\t49181\t51000\t52369\nTotal\t\t405000\t415941\t405000\t427022\n", "q10k_tbl_16": "(In thousands)\tBalance Sheet Location\tSeptember 30 2020\tDecember 31 2019\nDerivatives designated as hedging instruments:\t\t\t\nInterest Rate \"Pay-fixed\" Swap\tDerivative liability at fair value\t(3722)\t(1327)\n", "q10k_tbl_17": "\tSeptember 30 2020\t\tDecember 31 2019\t\nInterest Rate Derivative\tNumber of Instruments\tNotional Amount\tNumber of Instruments\tNotional Amount\n\t\t(In thousands)\t\t(In thousands)\nInterest Rate \"Pay-fixed\" Swap\t1\t55000\t1\t55000\n", "q10k_tbl_18": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands)\t2020\t2019\t2020\t2019\nAmount of loss recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)\t(18)\t(537)\t(2978)\t(1840)\nAmount of loss reclassified from accumulated other comprehensive loss into income as interest expense\t(283)\t10\t(583)\t37\nTotal interest expense recorded in consolidated statements of operations and comprehensive loss\t5089\t4681\t14915\t12310\n", "q10k_tbl_19": "\t\t\t\t\tGross Amounts Not Offset on the Balance Sheet\t\t\n(In thousands)\tGross Amounts of Recognized Assets\tGross Amounts of Recognized (Liabilities)\tGross Amounts Offset on the Balance Sheet\tNet Amounts of Assets (Liabilities) Presented on the Balance Sheet\tFinancial Instruments\tCash Collateral Received (Posted)\tNet Amount\nSeptember 30 2020\t0\t(3722)\t0\t(3722)\t0\t0\t(3722)\nDecember 31 2019\t0\t(1327)\t0\t(1327)\t0\t0\t(1327)\n", "q10k_tbl_20": "(In thousands)\tFuture Base Rent Payments\n2020 (remainder)\t1187\n2021\t4746\n2022\t4746\n2023\t4746\n2024\t4746\nThereafter\t207246\nTotal lease payments\t227417\nLess: Effects of discounting\t(172585)\nTotal present value of lease payments\t54832\n", "q10k_tbl_21": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\tPayable (receivable) as of\t\t\n(In thousands)\t2020\t2019\t2020\t2019\tSeptember 30 2020\tDecember 31 2019\t\nAcquisition fees and reimbursements:\t\t\t\t\t\t\t\nAcquisition fees and related cost reimbursements\t0\t0\t0\t0\t0\t0\t\nFinancing coordination fees and leasing commissions (1)\t0\t0\t0\t6\t0\t0\t\nOngoing fees:\t\t\t\t\t\t\t\nAsset and property management fees to related parties (2)\t1879\t1962\t5721\t5382\t15\t(6)\t(4)\nProfessional fees and other reimbursements (3)\t627\t717\t2855\t2672\t152\t228\t(4)\nProfessional fee credit due from the Advisor (3)\t(407)\t0\t(407)\t0\t(407)\t0\t(5)\nTotal related party operation fees and reimbursements\t2099\t2679\t8169\t8060\t(240)\t222\t\n", "q10k_tbl_22": "\tNumber of Restricted Shares\tWeighted-Average Issue Price\nUnvested December 31 2019\t5433\t51.03\nGranted\t1828\t49.23\nVested\t(1738)\t51.78\nFractional share redemption (1)\t(7)\t49.16\nUnvested September 30 2020\t5516\t50.20\n", "q10k_tbl_23": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nNet loss attributable to common stockholders (in thousands)\t(12288)\t(4809)\t(24362)\t(15220)\nBasic and diluted weighted average shares outstanding\t12772176\t12749456\t12757376\t12748674\nBasic and diluted net loss per share\t(0.96)\t(0.38)\t(1.91)\t(1.19)\n", "q10k_tbl_24": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n\t2020\t2019\t2020\t2019\nUnvested restricted shares (1)\t5694\t6110\t5634\t6110\nClass A Units (2)\t6285\t37\t2135\t37\nClass B Units (3)\t34173\t65498\t54980\t65498\nLTIP Units (4)\t43618\t0\t14645\t0\nTotal weighted-average anti-dilutive common share equivalents\t89770\t71645\t77394\t71645\n", "q10k_tbl_25": "Portfolio\tAcquisition Date\tNumber of Properties\tRentable Square Feet\tOccupancy\tRemaining Lease Term (1)\n421 W. 54th Street - Hit Factory\tJun. 2014\t1\t12327\t-%\t0\n400 E. 67th Street - Laurel Condominium\tSept. 2014\t1\t58750\t100.0%\t5.6\n200 Riverside Boulevard - ICON Garage\tSept. 2014\t1\t61475\t100.0%\t17\n9 Times Square\tNov. 2014\t1\t167390\t81.0%\t7.9\n123 William Street\tMar. 2015\t1\t542676\t91.0%\t6.2\n1140 Avenue of the Americas\tJun. 2016\t1\t242646\t84.0%\t6.8\n8713 Fifth Avenue\tOct. 2018\t1\t17500\t100.0%\t4.7\n196 Orchard Street\tJul. 2019\t1\t60297\t100.0%\t14.3\n\t\t8\t1163061\t88.6%\t7.5\n", "q10k_tbl_26": "\tQ1 2020\tQ2 2020\tQ3 2020\nLeasing activity:\t\t\t\nNew leases: (1)\t\t\t\nNew leases commenced\t4\t4\t5\nTotal square feet leased\t4227\t15349\t56454\nAnnualized straight-line rent per square foot (2)\t160.44\t104.35\t108.31\nWeighted-average lease term (years) (3)\t6.7\t6.2\t11.8\nReplacement leases: (4)\t\t\t\nReplacement leases commenced\t3\t3\t4\nSquare feet\t4227\t15349\t43796\nAnnualized straight-line rent per square foot (2)\t162.64\t104.44\t116.02\nWeighted-average lease term (years) (3)\t6.8\t6.2\t12.1\nTerminated leases: (5)\t\t\t\nNumber of leases terminated\t2\t3\t5\nSquare feet\t8376\t17127\t37274\nAnnualized straight-line rent per square foot (2)\t39.27\t52.79\t48.20\nTenant improvements on replacement leases per square foot (6)\t0\t0\t0\nLeasing commissions on replacement leases per square foot (6)\t0\t22.93\t23.14\n", "q10k_tbl_27": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands)\t2020\t2019\t2020 (1)\t2019\nNet loss attributable to common stockholders (in accordance with GAAP)\t(12288)\t(4809)\t(24362)\t(15220)\nDepreciation and amortization\t8639\t7804\t24070\t22771\nFFO (As defined by NAREIT) attributable to common stockholders\t(3649)\t2995\t(292)\t7551\nAcquisition and transaction related\t0\t0\t0\t18\nListing expenses (2)\t1299\t0\t1299\t0\nVesting and conversion of Class B Units\t1153\t0\t1153\t0\nEquity-based compensation\t1711\t24\t1758\t64\nLoss on extinguishment of debt\t0\t0\t0\t0\nCore FFO attributable to common stockholders\t514\t3019\t3918\t7633\n", "q10k_tbl_28": "\tThree Months Ended September 30\t\tNine Months Ended September 30\t\n(In thousands)\t2020\t2019\t2020\t2019\nNet loss (in accordance with GAAP)\t(12288)\t(4809)\t(24362)\t(15220)\nOther income\t(19)\t(221)\t(779)\t(686)\nGeneral and administrative\t1234\t1176\t5727\t4929\nAsset and property management fees to related parties\t1879\t1962\t5721\t5382\nAcquisition and transaction related\t0\t0\t0\t18\nListing expenses\t1299\t0\t1299\t0\nVesting and conversion of Class B Units\t1153\t0\t1153\t0\nEquity-based compensation\t1711\t24\t1758\t64\nDepreciation and amortization\t8639\t7804\t24070\t22771\nInterest expense\t5089\t4681\t14915\t12310\nAccretion of below- and amortization of above-market lease liabilities and assets net\t(555)\t(566)\t(2807)\t(1459)\nStraight-line rent (revenue as a lessor)\t(2107)\t(1267)\t(3582)\t(4207)\nStraight-line ground rent (expense as lessee)\t28\t28\t82\t82\nCash NOI\t6063\t8812\t23195\t23984\n", "q10k_tbl_29": "Exhibit No.\tDescription\n3.1 (1)\tArticles of Amendment and Restatement\n3.2 (2)\tArticles of Amendment relating to corporate name change\n3.3 (1)\tAmended and Restated Bylaws of New York City REIT Inc.\n3.4 (3)\tAmendment to Amended and Restated Bylaws of New York City REIT Inc.\n3.5 (4)\tArticles of Amendment relating to reverse stock split\n3.6 (4)\tArticles of Amendment relating to par value decrease and common stock name change\n3.7 (4)\tArticles Supplementary classifying and designating Class B common stock\n3.8 (5)\tArticles Supplementary classifying and designating Series A Preferred Stock\n4.1 (5)\tAmended and Restated Agreement of Limited Partnership of New York City Operating Partnership L.P. dated as of August 18 2020\n4.2 (5)\tAmended and Restated Distribution Reinvestment Plan of New York City REIT Inc.\n4.3 (5)\tAmended and Restated Rights Agreement dated as of August 17 2020 between New York City REIT Inc. and Computershare Trust Company N.A. as Rights Agent\n10.1 (5)\tListing Note Agreement dated as of August 18 2020 between New York City Operating Partnership L.P. and New York City Special Limited Partnership LLC\n10.2 (5)\tFirst Amendment dated as of August 18 2020 to Second Amended and Restated Advisory Agreement among New York City REIT Inc. New York City Operating Partnership L.P. and New York City Advisors LLC\n10.3 (5)\tAdvisor Multi-Year Outperformance Award Agreement dated as of August 18 2020 among New York City REIT Inc. New York City Operating Partnership L.P. and New York City Advisors LLC\n10.4 (5)\t2020 Advisor Omnibus Incentive Compensation Plan of New York City REIT Inc.\n10.5 (5)\t2020 Omnibus Incentive Compensation Plan of New York City REIT Inc.\n10.6 (6)\tEquity Distribution Agreement dated October 1 2020 among New York City REIT Inc. New York City Operating Partnership L.P. Truist Securities Inc. and B. Riley Securities Inc.\n14.1 (5)\tAmended and Restated Code of Business Conduct and Ethics of New York City REIT Inc.\n31.1 *\tCertification 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.\n31.2 *\tCertification 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.\n32 *\tWritten 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.\n101.INS *\tInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.\n101.SCH *\tInline XBRL Taxonomy Extension Schema Document.\n101.CAL *\tInline XBRL Taxonomy Extension Calculation Linkbase Document.\n101.DEF *\tInline XBRL Taxonomy Extension Definition Linkbase Document.\n101.LAB *\tInline XBRL Taxonomy Extension Label Linkbase Document.\n101.PRE *\tInline XBRL Taxonomy Extension Presentation Linkbase Document.\n104 *\tCover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.\n"}{"bs": "q10k_tbl_2", "is": "q10k_tbl_3", "cf": "q10k_tbl_8"}None
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 415-6500
Securities registered pursuant to section 12(b) of the Act: None.
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock, $0.01 par value per share
NYC
New York Stock Exchange
Class A Preferred Stock Purchase Rights
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of November 9, 2020, the registrant had 12,802,690 shares of common stock outstanding, comprised of 3,234,996 shares of Class A common stock and 9,567,694 shares of Class B common stock.
(In thousands, except for share and per share data)
September 30, 2020
December 31, 2019
ASSETS
(Unaudited)
Real estate investments, at cost:
Land
$
193,658
$
193,658
Buildings and improvements
568,134
565,829
Acquired intangible assets
98,412
103,121
Total real estate investments, at cost
860,204
862,608
Less accumulated depreciation and amortization
(132,418)
(114,322)
Total real estate investments, net
727,786
748,286
Cash and cash equivalents
39,088
51,199
Restricted cash
9,700
7,098
Operating lease right-of-use asset
55,427
55,579
Prepaid expenses and other assets (includes amounts due from related parties of $407 and $0 at September 30, 2020 and December 31, 2019, respectively)
11,080
8,602
Straight-line rent receivable
25,231
21,649
Deferred leasing costs, net
9,643
8,943
Total assets
$
877,955
$
901,356
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net
$
396,188
$
395,031
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $167 and $222 at September 30, 2020 and December 31, 2019, respectively)
6,831
7,033
Operating lease liability
54,832
54,866
Below-market lease liabilities, net
14,517
18,300
Derivative liability, at fair value
3,722
1,327
Deferred revenue
5,490
4,250
Total liabilities
481,580
480,807
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2020 and December 31, 2019
—
—
Common stock, $0.01 par value, 300,000,000 shares authorized, 12,802,690 and 12,755,099(1) shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
129
128
Additional paid-in capital
686,690
686,026
Accumulated other comprehensive loss
(3,722)
(1,327)
Distributions in excess of accumulated earnings
(288,640)
(264,278)
Total stockholders’ equity
394,457
420,549
Non-controlling interests
1,918
—
Total equity
396,375
420,549
Total liabilities and equity
$
877,955
$
901,356
_____
(1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).
The accompanying notes are an integral part of these unaudited consolidated financial statements.
New York City REIT, Inc. (including, New York City Operating Partnership L.P., (the “OP”) and its subsidiaries, the “Company”) is a real estate investment trust that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City, primarily Manhattan. The Company was formed to invest in office properties and has also purchased certain real estate assets that accompany office properties, including retail spaces and amenities, and may purchase hospitality assets, residential assets and other property types located exclusively in New York City. As of September 30, 2020, the Company owned eight properties consisting of 1.2 million rentable square feet, acquired for an aggregate purchase price of $790.7 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.
The Company has no employees. New York City Advisors, LLC (the “Advisor”) manages the Company’s affairs on a day-to-day basis and New York City Properties, LLC (the “Property Manager”) manages the Company’s properties. The Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”), and these entities receive compensation, fees and expense reimbursements for services related to the investment and management of the Company’s assets.
On August 5, 2020, in anticipation of the listing of the Company’s Class A common stock on the New York Stock Exchange (”NYSE”) under the symbol “NYC” (the “Listing”), the Company implemented a series of corporate actions involving a 9.72-to-1 reverse stock split, renamed its common stock as Class A common stock and paid a stock dividend of three shares of Class B common stock for every one share of Class A common stock outstanding after the reverse stock split, which resulted in a net reduction of 2.43 shares for every one share of common stock outstanding prior to these corporate actions (the “Reverse Stock Split”). All references made to share or per share amounts as of dates prior to August 5, 2020 in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Reverse Stock Split on that date. For additional information related to these corporate actions, see Note 7 – Stockholders’ Equity.
On August 18, 2020 (the “Listing Date”), the Company completed the Listing. To effect the Listing, and to address the potential for selling pressure that may have existed at the outset of listing, the Company listed only shares of Class A common stock, which represented approximately 25% of its outstanding shares of common stock, on the NYSE on the Listing Date. The Company’s other class of outstanding stock is Class B common stock, which comprised approximately 75% of the Company’s outstanding shares of common stock at that time. The outstanding shares of Class B common stock will automatically convert into shares of Class A common stock to be listed on the NYSE in three equal tranches on December 16, 2020, April 15, 2021 and August 13, 2020, unless earlier converted in accordance with their terms. For additional information, see Note 7 – Stockholders’ Equity.
In connection with the Listing, the Company incurred expenses of $1.3 million for the three and nine months ended September 30, 2020 for financial advisory and other professional fees and expenses. In addition, various other impacts to the Company’s financial statements occurred in connection with the Listing which are discussed throughout these financial statements, including:
•The vesting, conversion and redemption of partnership units in the OP designated as “Class B Units” (“Class B Units”) held by the Advisor for shares of Class A common stock (seeNote 7 – Stockholders’ Equity and Note 9 – Related Party Transactions).
•The redemption of units of limited partnership in the OP designated as “Class A Units,” which were formerly known as OP Units (”Class A Units”), held by the Advisor, for shares of Class A common stock (seeNote 7 – Stockholders’ Equity and Note 9 – Related Party Transactions).
•The Company entered into the Listing Note (as defined herein) with the Advisor (see Note 9 – Related Party Transactions).
•The advisory agreement with the Advisor was amended to lower the quarterly thresholds the Company must reach on a quarterly basis for the Advisor to receive a variable management fee (see Note 9 – Related Party Transactions – “Asset Management Fees and Variable Management/Incentive Fees”).
•The issuance of an equity award to the Advisor under the 2020 OPP (as defined herein) (see Note 11 - Equity-Based Compensation, and Note 12 - Net Loss Per Share).
•The amendment and restatement of the Company’s distribution reinvestment plan (see Note 7 – Stockholders’ Equity).
•The amendment and restatement of the limited partnership agreement of the OP (as so amended and restated, the “A&R OP Agreement”) (see Note 9 – Related Party Transactions).
Note 2 — Summary of Significant Accounting Policies
Basis of Accounting
The accompanying consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. The results of operations for the three and nine months ended September 30, 2020 and 2019 are not necessarily indicative of the results for the entire year or any subsequent interim period.
These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 19, 2020. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2020.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. The Company has determined the OP is a VIE of which the Company is the primary beneficiary.
Non-controlling Interests
The non-controlling interests represent the portion of the equity in the OP that is not owned by the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and presented as net loss attributable to non-controlling interests on the consolidated statements of operations and comprehensive loss. Non-controlling interests are allocated a share of net loss based on their share of equity ownership. Prior to the Listing, the Advisor held 37 Class A Units, after giving effect to the Reverse Stock Split, which represented a nominal percentage of the aggregate OP ownership. These Class A Units were redeemed for an equal number of shares of Class A common stock on the Listing Date. See Note 7 - Stockholders’ Equity for additional information on amounts recorded in non-controlling interests during the third quarter of 2020.
Reclassifications
Certain amounts have been reclassified to conform to the current period presentation:
•The Company currently presents equity-based compensation on its own line item in the consolidated statements of operations, which was previously presented in general and administrative expenses.
•In the third quarter of 2020, the Company reclassified professional fees related to the Listing of $0.1 million, which were previously recorded in general and administrative expenses in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, to listing expenses in the Company’s consolidated statements of operations. For additional information on total listing expenses, see Note 1 — Organization.
•In the third quarter of 2020, the Company reclassified professional fees related to potential equity offerings of $0.2 million, which were previously recorded in general and administrative expenses in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, to prepaid expenses and other assets in the Company’s
consolidated balance sheets. For additional information on potential equity offerings, see Note 7 — Stockholders’ Equity.
•The Company currently presents straight-line rent receivable and straight-line rent payable on its own line items in the consolidated statement of cash flows and consolidated balance sheets, which was previously included within prepaid expenses and other assets.
Impacts of the COVID-19 Pandemic
The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. During the first quarter of 2020, there was a global outbreak of COVID-19, which became a global pandemic that has spread around the world and to every state in the United States. The pandemic has had and could continue to have an adverse impact on economic and market conditions and triggered a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company considered the impact of COVID-19 on the assumptions and estimates underlying its consolidated financial statements and believes the estimates and assumptions are reasonable and supportable based on the information available as of September 30, 2020. However, given the rapid evolution of the COVID-19 pandemic and the global response to curb its spread, these estimates and assumptions as of September 30, 2020 are inherently less certain than they would be absent the actual and potential impacts of the COVID-19 pandemic. Actual results may ultimately differ from those estimates.
New York City, where all the Company’s properties are located, has been among the hardest hit locations in the country and has not yet fully reopened. The Company’s properties remain accessible to all tenants, although, even as operating restrictions expire, not all tenants have resumed operations. In addition, as operating restrictions expire, operating costs may begin to rise, including for services, labor and personal protective equipment and other supplies, as the Company’s property managers take appropriate actions to protect tenants and property management personnel. Some of these costs may be recoverable through reimbursement from tenants but others will be borne by the Company.
The financial stability and overall health of tenants is critical to the Company’s business. The negative effects that the global pandemic has had on the economy includes the closure or reduction in activity for many retail operations such as some of those operated by the Company’s tenants. This has impacted the ability of some of the Company’s tenants to pay their monthly rent either temporarily or in the long term. The Company has experienced delays in rent collections in the second and third quarters of 2020. The Company has taken a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, in the second and third quarters of 2020, the Company has executed different types of lease amendments. These agreements include deferrals and abatements and also may include extensions to the term of the leases.
For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which does not apply to leases subsequently modified). However, in light of the COVID-19 pandemic in which many leases are being modified, the FASB and SEC have provided relief that allows companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification. In order to be considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. For COVID-19 relief qualified changes, there are two methods to potentially account for such rent deferrals or abatements under the relief, (1) as if the changes were originally contemplated in the lease contract or (2) as if the deferred payments are variable lease payments contained in the lease contract. For all other lease changes that did not qualify for FASB relief, the Company would be required to apply modification accounting including assessing classification under ASC 842.
Some, but not all of the Company’s lease modifications qualify for the FASB relief. In accordance with the relief provisions, instead of treating these qualifying leases as modifications, the Company has elected to treat the modifications as if previously contained in the lease and recast rents receivable prospectively (if necessary). Under that accounting, for modifications that were deferrals only, there would be no impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease.
For leases not qualifying for this relief, the Company has applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.
The Company’s revenues, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. As of September 30, 2020, these leases had a weighted-average remaining lease term of 7.5 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires that the Company record a receivable for, and include in revenue from tenants, unbilled rent receivables that the Company will receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses (recorded in total revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For comparative purposes, the Company reflected prior revenue and reimbursements reported under ASC 842 also on a single line. For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.
The Company continually reviews receivables related to rent and unbilled rents receivable and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under the leasing standard adopted on January 1, 2019, the Company is required to assess, based on credit risk, if it is probable that it will collect virtually all of the lease payments at lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. In fiscal 2020, this assessment has included consideration of the impacts of the COVID-19 pandemic on the Company’s tenant’s ability to pay rents in accordance with their contracts. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that it is probable it will collect virtually all of the lease payments (base rent and additional rent), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and the straight line rent receivable accrued will be written off where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants in accordance with current accounting rules, on the accompanying consolidated statements of operations and comprehensive loss in the period the related costs are incurred, as applicable.
In accordance with the lease accounting rules the Company records uncollectable amounts as reductions in revenue from tenants. During the three and nine months ended September 30, 2020, the Company reduced lease income by $0.4 million and $0.5 million, respectively, for amounts deemed uncollectable during the period. There were no such reductions recorded during the three or nine months ended September 30, 2019.
Accounting for Leases
Lessor Accounting
As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.
Lessee Accounting
For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the
transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 8 - Commitments and Contingencies.
Recently Issued Accounting Pronouncements
Adopted as of January 1, 2020:
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the amended standard requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. The new guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amended guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate (“LIBOR”) indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470)and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815). The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The standard allows for either modified or full retrospective transition methods. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.
Note 3 — Real Estate Investments
There were no real estate assets acquired or liabilities assumed during the three or nine months ended September 30, 2020. In July 2019, the Company acquired the property commonly known as “196 Orchard Street.” The following table presents allocation of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2019.
Mortgage note payable used to acquire real estate investment
(51,000)
Cash paid for acquired real estate investment
$
38,265
(1) Weighted-average remaining amortization periods for in-place leases and market lease and other intangible assets acquired during the nine months ended September 30, 2019 were 13.4 years and 13.4 years, respectively, as of the acquisition date.
Included in other income for the nine month period ended September 30, 2020, is approximately $0.6 million in income related to the retention of a deposit forfeited by the buyer in the potential sale of the property commonly known as the “HIT Factory” under a purchase agreement which expired in April 2020.
Significant Tenants
As of September 30, 2020 and December 31, 2019, there were no tenants whose annualized rental income on a straight-line basis, based on leases commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.
The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:
Three Months Ended September 30,
Nine Months Ended September 30,
(In thousands)
2020
2019
2020
2019
In-place leases (1)
$
2,569
$
2,288
$
6,567
$
6,761
Other intangibles
291
291
874
874
Total included in depreciation and amortization
$
2,860
$
2,579
$
7,441
$
7,635
Above-market lease intangibles (1)
$
369
$
344
$
939
$
1,016
Below-market lease liabilities (1)
(936)
(922)
(3,783)
(2,511)
Total included in revenue from tenants
$
(567)
$
(578)
$
(2,844)
$
(1,495)
Below-market ground lease, included in property operating expenses
$
12
$
12
$
37
$
36
(1)During the three months ended September 30, 2020, in connection with three leases that were terminated during the third quarter of 2020, the Company wrote off approximately $3.2 million of in-place lease intangibles, which was included in depreciation and amortization expense in the consolidated statement of operations. Additionally, in connection with the same lease terminations, the Company wrote off approximately $1.9 million of below-market lease intangibles and $0.2 million of above-market lease intangibles during the three months ended September 30, 2020, which was included in revenue from tenants in the consolidated statement of operations. During the nine months ended September 30, 2020, in connection with a lease that was terminated during the second quarter of 2020, the Company also wrote off approximately $0.6 million of in-place lease intangibles, which was included in depreciation and
amortization expense in the consolidated statement of operations, and $2.3 million of below-market lease intangibles, which was included in revenue from tenants in the consolidated statement of operations.
The following table provides the projected amortization expense and adjustments to revenues for the next five years as of September 30, 2020:
(In thousands)
2020 (remainder)
2021
2022
2023
2024
In-place leases
$
1,722
$
5,867
$
4,751
$
3,513
$
2,762
Other intangibles
291
937
708
708
708
Total to be included in depreciation and amortization