– Strategic change involves expanding the nature and type of assets owned and operated –
– Expects to benefit from portfolio diversification and new income opportunities –
– Expects to generate greater growth and profitability by evolving business strategy –
NEW YORK, December 30, 2022–(BUSINESS WIRE)–New York City REIT, Inc. (NYSE: NYC) (“NYC” or the “Company”) announced today that it intends to expand the scope of assets and businesses that the Company may own and operate. By investing in other types of assets, the Company may generate income that would not otherwise constitute qualifying income for purposes of qualifying as a Real Estate Investment Trust or (“REIT”). As a result, the Company expects to change its REIT election and become a taxable C corporation. Elections, if and when made, will be effective as of January 1, 2023.
“We are excited to expand our NYC footprint beyond Manhattan real estate, which we believe will allow us to diversify our revenue streams and pursue opportunities that may not have been previously available to us. ,” said Michael Weil, CEO of NYC. “While we continue to believe in the long-term imperative of New York real estate, the pace of the office segment’s recovery since the COVID outbreak remains challenged. Despite the resilient performance of our portfolio over the past two years, portfolio growth has has been growing and we believe we will be able to generate greater growth and profitability by evolving NYC’s business strategy.”
In addition, NYC announced that its board approved a 1-for-8 reverse stock split pursuant to which each outstanding share of common stock will be converted into 0.125 shares of common stock (not fractional shares are issued). The reverse stock split is expected to be effective at 5:00 p.m. eastern time on January 11, 2023. Further, subject to the execution of the necessary documents and board approval, the Company intends to launch a rights offering to raise additional capital from existing shareholders.
Strategic and Financial Reasoning
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Diversification may offset New York City’s protracted office rebound: The pace of recovery in New York City’s office market from the COVID-19 pandemic continues to be challenged as rental and occupancy trends for the broader market have slowed, leading political, community and business leaders to propose repositioning plans for New York City office. assets.
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Additional opportunities for capital growth: NYC could potentially raise additional capital from existing shareholders and, in the future, from a broader base of new investors, who may not have been previously available to NYC, who seek companies with greater diversification of assets and business and invest potential income in income generating ventures.
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Increased diversification: By expanding the nature and type of assets NYC seeks to own and acquire, NYC can potentially reduce single asset class exposure and increase corporate flexibility and income generated.
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Potential to use Net Operating Losses: Even if NYC terminates its status as a REIT, the Company may be able to use existing or future net operating losses to limit taxation on any future income.
About New York City REIT, Inc.
New York City REIT, Inc. is a publicly traded REIT 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.
Forward-looking statements
Statements in this Current Report on Form 8-K that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially. The words “may”, “will”, “seeks”, “anticipates”, “believes”, “expects”, “estimates”, “projects”, “plans”, “intends”, “should” and similar expressions refer to purpose. to identify forward statements, although not all future statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are beyond the Company’s control, which could cause actual results to differ materially from the results anticipated by the forward-looking statements. These risks and uncertainties include (a) the anticipated benefits of the Company’s potential election to terminate its status as a REIT, (b) the expected benefits of potential reverse stock splits, (c) the Company’s ability to launch the offering of rights as expected, (d) whether registered shareholders will exercise their rights to purchase ordinary shares and the amount subscribed, (e) whether the Company will be able to successfully acquire new assets or businesses , (f) the potential adverse effects of (i) the global COVID-19 pandemic, including actions taken to control or treat COVID-19, (ii) geopolitical instability due to the ongoing military conflict between Russia and Ukraine, including related sanctions and other penalties imposed by the US and the European Union, and the related impact on the Company, the Company’s tenants and the global economy and financial markets, (iii) inflationary conditions d he higher interest rate environment, (g) the fact that we have had to restate or revise certain of our historical financial statements and have identified a material weakness in our internal controls, and (h) that any potential future acquisitions are subject to market conditions and the availability of capital and may not close on favorable terms or at all, and those risks and uncertainties set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed on March 18, 2022 and all other filings with the SEC after that date including but not limited to the Current Report on Form 8-K, Amendment Number One to the Quarterly Report on Form 10-Q through and for the period ended on June 30, 2022 and the Quarterly Report on Form 10-Q through and for the period ended on September 30, 2022 all as filed on November 14, 2022 after the risks of lla, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Forward-looking statements speak only as of the date made, and the Company does not undertake to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future results of operations, unless required to do so. by law.
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