New York City REIT Announces First Quarter 2021 Results

Rhea-AI Summary

New York City REIT (NYSE: NYC) reported its Q1 2021 financial results, revealing revenue of $15.2 million, down from $17.5 million in Q1 2020, but an increase from $9.9 million in Q4 2020. The net loss attributable to common stockholders was $13.5 million, compared to $6.8 million in the prior year. The company's cash net operating income dipped to $5.6 million. Portfolio occupancy stood at 82.8%, with 85% of cash rent collected. Despite challenges, management expresses optimism about asset management strategies as NYC reopens.

Positive

• Executed new leases totaling 6,800 square feet and replacement leases of 23,400 square feet, totaling $1.5 million in annualized rent.
• Collected 85% of original cash rent due, improving from 82% in prior quarter.
• Conservative balance sheet with net leverage at 37.6% and no upcoming debt maturities for three years.

Negative

• Revenue decreased from $17.5 million in Q1 2020 to $15.2 million in Q1 2021.
• Net loss attributable to common stockholders increased to $13.5 million from $6.8 million in the prior year.
• Cash net operating income dropped to $5.6 million compared to $8.4 million in Q1 2020.

New York City REIT, Inc. (NYSE: NYC) (“NYC” or the “Company”), a real estate investment trust that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City, announced today its financial and operating results for the first quarter ended March 31, 2021.

First Quarter 2021 and Subsequent Event Highlights

• Revenue was $15.2 million as compared to $17.5 million for the first quarter 2020 and up from $9.9 million in fourth quarter 2020
• Net loss attributable to common stockholders was $13.5 million as compared to $6.8 million for the first quarter 2020 and $16.6 million in the quarter ended December 31, 2020
• Cash net operating income (“NOI”) was $5.6 million compared to $8.4 million for the first quarter 2020 and up from $4.1 million in prior quarter
• Funds from Operations (“FFO”) of $(5.0) million, compared to $0.7 million for the first quarter 2020 and up from $(8.9) million in fourth quarter, 2020
• Core Funds from Operations (“Core FFO”) of $(2.9) million compared to $0.8 million in the prior year first quarter, up from $(6.8) million last quarter
• Collected 85% of original cash rent due in first quarter 2021, including 89% among the top 10 tenants, growing from 82% in the fourth quarter, 2020^1,2
• Top 10 tenants are 73% investment grade or implied investment grade³ rated and have a weighted-average remaining lease term of 9.5 years
• Portfolio occupancy⁴ of 82.8% as of March 31, 2021 with weighted-average lease term⁵ of 6.9 years
• Executed two new leases totaling 6,800 square feet and two replacement leases encompassing 23,400 square feet that total $1.5 million in annualized straight line rent, partially offsetting lease terminations during the quarter
• Forward leasing pipeline⁶ of over 28,000 square feet that would increase occupancy to 85%, if signed non-binding letters of intent (“LOI’s”) lead to definitive agreements, which is not assured, and assuming no other terminations or expirations
• Conservative balance sheet with net leverage⁷ of 37.6%, no debt maturities in the next three years and a weighted average debt maturity of 5.9 years

“As New York City continues to move toward a full reopening, we are well-positioned to execute on our proactive asset management strategy by collecting substantial cash rent and aggressively leasing available space,” said Michael Weil, CEO of NYC. “We executed new or renewed leases or have signed LOIs to lease more than 58,000 square feet for the first quarter, including replacement leases for part of the space formerly leased to Knotel with terms in line with or better than the prior leases and with more robust tenants. We continue to be encouraged by the steps local, state and national leadership have taken to encourage vaccination efforts and position the city for reopening. We look forward to the return to offices and retail businesses, as workers, restaurants and the cultural institutions that contribute to making New York City a great place to live and work return to normal operation and begin to thrive once more.”

Financial Results

		Three Months Ended March 31,
(In thousands, except per share data)		2021				2020
Revenue from tenants		$	15,186			$	17,477
Net loss attributable to common stockholders		$	(13,535	)		$	(6,788	)
Net loss per common share (a)		$	(1.06	)		$	(0.53	)
FFO attributable to common stockholders		$	(5,009	)		$	731
FFO per common share (a)			(0.39	)		$	0.06
Core FFO attributable to common stockholders		$	(2,894	)		$	754
Core FFO per common share (a)		$	(0.23	)		$	0.06

(a)

All per share data based on 12,780,027 and 12,749,724 diluted weighted-average shares outstanding for the three months ended March 31, 2021 and 2020, respectively. 2020 values are retroactively adjusted for the effects of the reverse stock split in August 2020.

Real Estate Portfolio

The Company’s portfolio consisted of eight properties comprised of 1.2 million rentable square feet as of March 31, 2021. Portfolio metrics include:

• 82.8% leased, down from the prior quarter primarily due to leases with Knotel that were terminated in January 2021 when Knotel filed for bankruptcy
• 6.9 years remaining weighted-average lease term
• 73% of annualized straight-line rent from top 10 tenants derived from investment grade or implied investment grade tenants with 9.5 years of weighted-average remaining lease term
• Diversified portfolio, comprised of 20% financial services tenants, 18% government and public administration tenants, 15% non-profit and 47% all other industries, based on square feet.

Capital Structure and Liquidity Resources

As of March 31, 2021, the Company had $29.4 million of cash and cash equivalents.⁸ The Company’s net debt⁹ to gross asset value¹⁰ was 37.6%, with net debt of $375.6 million.

All of the Company’s debt was fixed-rate as of March 31, 2021. The Company’s total combined debt had a weighted-average interest rate of 4.4%.¹¹

Rent Collection Update

First Quarter of 2021

For the first quarter of 2021, NYC collected 85% of the original cash rents that were due across the portfolio, including 89% of the original cash rent payable from the top 10 tenants in the portfolio (based on annualized straight-line rent). Cash rent collected includes both contractual rents and deferred rents paid during the period.¹

Footnotes/Definitions

1		We calculate “original cash rent collections” by comparing original cash rent due under our lease agreements to the total amount of rent collected during the period, which includes both original cash rent due and payments of amounts deferred from prior periods. Eliminating the impact of deferred rent paid, we collected 85% of original cash rent for the first quarter of 2021 (88% for our top 10 tenants) and 82% of original cash rent for the fourth quarter of 2020. Top 10 tenants based on annualized straight-line rent. This information may not be indicative of future periods.
2		The impact of the COVID-19 pandemic on the Company’s future results of operations and liquidity will depend on the overall length and severity of the COVID-19 pandemic, which management is unable to predict.
3		As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term “parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of March 31, 2021. Based on annualized straight-line rent, top 10 tenants are 53% actual investment grade rated and 20% implied investment grade rated.
4		Represents percentage of square footage of which the tenant has taken possession of divided by the respective total rentable square feet as of the date or period end indicated.
5		The weighted-average remaining lease term (years) is based on annualized straight-line rent as of March 31, 2021.
6		Includes (i) all leases fully executed by both parties as of April 30, 2021, but after March 31, 2021 and (ii) all leases under negotiation with an executed LOI by both parties as of April 30, 2021. This represents one executed lease that commenced in the second quarter of 2021 totaling approximately 7,800 square feet and three LOI’s totaling 20,300 square feet. There have been no lease terminations or expirations since March 31, 2021. There can be no assurance that LOIs will lead to definitive leases that will commence on their current terms, or at all. Leasing pipeline should not be considered an indication of future performance.
7		Net leverage equals net debt to gross asset value
8		Under one of our mortgage loans, we are required to maintain minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million.
9		Total debt of $405.0 million less cash and cash equivalents of $29.4 million as of March 31, 2021. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents.
10		Defined as the carrying value of total assets of $851.2 million plus accumulated depreciation and amortization of $146.8 million as of March 31, 2021.
11		Weighted based on the outstanding principal balance of the debt.

Webcast and Conference Call

NYC will host a webcast and call on May 13, 2021 at 11:00 a.m. ET to discuss its financial and operating results. This webcast will be broadcast live over the Internet and can be accessed by all interested parties through the NYC website, www.newyorkcityreit.com, in the “Investor Relations” section.

Dial-in instructions for the conference call and the replay are outlined below.

To listen to the live call, please go to NYC’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the NYC website at www.newyorkcityreit.com.

Live Call
Dial-In (Toll Free): 1-888-317-6003
International Dial-In: 1-412-317-6061
Canada Dial-In (Toll Free): 1-866-605-3851
Participant Elite Entry Number: 2402508

Conference Replay*
Domestic Dial-In (Toll Free): 1-877-344-7529
International Dial-In: 1-412-317-0088
Canada Dial-In (Toll Free): 1-855-669-9658
Conference Number: 10155579
*Available one hour after the end of the conference call through August 13, 2021

About New York City REIT, Inc.

New York City REIT, Inc. (NYSE: NYC) is a publicly traded real estate investment trust listed on the NYSE that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City. Additional information about NYC can be found on its website at www.newyorkcityreit.com.

Supplemental Schedules

The Company will file supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of NYC’s website at www.newyorkcityreit.com and on the SEC website at www.sec.gov.

Important Notice

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties that could cause the outcome to be materially different. In addition, words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “would,” or similar expressions indicate a forward-looking statement, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements, including those set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of NYC’s most recent Annual Report on Form 10-K and NYC’s most recent Form 10-Q, as such Risk Factors may be updated from time to time in subsequent reports. Further, forward-looking statements speak only as of the date they are made, and NYC undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.

Accounting Treatment of Rent Deferrals

The majority of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable. As a result of relief granted by the FASB and the SEC related to lease modification accounting, rental revenue used to calculate Net Income, NAREIT FFO and Core FFO have not been, and we do not expect it to be, significantly impacted by these types of deferrals.

New York City REIT, Inc. Consolidated Balance Sheets (In thousands. except share and per share data)
		March 31, 2021				December 31, 2020
ASSETS		(Unaudited)
Real estate investments, at cost:
Land		$	193,658			$	193,658
Buildings and improvements			569,410				568,861
Acquired intangible assets			98,118				98,118
Total real estate investments, at cost			861,186				860,637
Less accumulated depreciation and amortization			(146,790	)			(139,666	)
Total real estate investments, net			714,396				720,971
Cash and cash equivalents			29,396				30,999
Restricted cash			11,197				8,995
Operating lease right-of-use asset			55,323				55,375
Prepaid expenses and other assets (includes amounts due from related parties of $0 and $435 at March 31, 2021 and December 31, 2020, respectively)			8,902				12,953
Straight-line rent receivable			22,690				22,050
Deferred leasing costs, net			9,264				10,503
Total assets		$	851,168			$	861,846
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net		$	396,959			$	396,574
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $199 and $0 at March 31, 2021 and December 31, 2020, respectively)			8,479				6,916
Operating lease liability			54,808				54,820
Below-market lease liabilities, net			13,503				14,006
Derivative liability, at fair value			2,816				3,405
Deferred revenue			5,370				4,558
Total liabilities			481,935				480,279
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at March 31, 2020 and December 31, 2020			—				—
Common stock, $0.01 par value, 300,000,000 shares authorized, 12,776,448 and 12,802,690 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively			129				129
Additional paid-in capital			686,555				686,715
Accumulated other comprehensive loss			(2,815	)			(3,404	)
Distributions in excess of accumulated earnings			(320,737	)			(305,882	)
Total stockholders’ equity			363,132				377,558
Non-controlling interests			6,101				4,009
Total equity			369,233				381,567
Total liabilities and equity		$	851,168			$	861,846

New York City REIT, Inc. Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data)
		Three Months Ended March 31,
		2021				2020
Revenue from tenants		$	15,186			$	17,477
Operating expenses:
Asset and property management fees to related parties			1,907				1,998
Property operating			8,736				8,016
Equity-based compensation			2,115				23
General and administrative			2,732				1,996
Depreciation and amortization			8,526				7,519
Total operating expenses			24,016				19,552
Operating loss			(8,830	)			(2,075	)
Other income (expense):
Interest expense			(4,713	)			(4,832	)
Other income			8				119
Total other expense			(4,705	)			(4,713	)
Net loss attributable to common stockholders		$	(13,535	)		$	(6,788	)
Net loss per share attributable to common stockholders — Basic and Diluted		$	(1.06	)		$	(0.53	)
Weighted-average shares outstanding — Basic and Diluted			12,780,027				12,749,724

New York City REIT, Inc. Quarterly Reconciliation of Non-GAAP Measures (Unaudited) (In thousands)
		Three Months Ended March 31,
		2021

FAQ

What were the financial results of New York City REIT for Q1 2021?

New York City REIT reported revenue of $15.2 million and a net loss of $13.5 million for Q1 2021.

How much rent did New York City REIT collect in Q1 2021?

The company collected 85% of the original cash rent due in Q1 2021.

What is the occupancy rate of New York City REIT's portfolio as of March 31, 2021?

The portfolio occupancy rate was 82.8% as of March 31, 2021.

Did New York City REIT experience any lease terminations in Q1 2021?

Yes, the company had lease terminations during the quarter, primarily due to leases with Knotel, which filed for bankruptcy.

What is the net leverage of New York City REIT?

New York City REIT reported a net leverage of 37.6% as of March 31, 2021.