Business Context and Reporting Period
This Form 8-K was filed on October 17, 2014, reporting an event that occurred on October 11, 2014. The registrant is American Realty Capital New York City REIT, Inc., a Maryland corporation. The filing discloses the entry into a material definitive agreement to acquire a commercial real estate asset.
Key Financial Metrics and Transaction Details
The Company entered into an agreement to acquire the fee simple interest in an institutional-quality office building at 570 Seventh Avenue in Times Square, Manhattan.
- Purchase Price: Approximately $170.3 million, exclusive of closing costs.
- Deposit: $17.0 million nonrefundable deposit has been made.
- Property Size: Approximately 170,000 rentable square feet.
- Current Occupancy: 56% leased.
- Projected Occupancy at Closing: Approximately 76% (following a new one-year lease for ~33,000 sq. ft. with the Seller).
- Funding Source: Intended to be funded by proceeds from the Company's ongoing initial public offering (IPO).
- Financing: The Company may seek additional financing from an unidentified lender at or after closing.
Major Tenant Information
| Tenant | Lease Commencement | Lease Termination | Rentable Sq. Ft. | Annualized Cash Base Rent ($000s) | Rental Escalations |
|---|---|---|---|---|---|
| NY Loves Us, Inc. | June 2014 | January 2015 | 2,510 | 624.0 | None |
| Klestadt & Winters, LLP | July 2010 | June 2021 | 8,780 | 301.6 | 5% increase after six years |
Material Changes and Unusual Items
This filing represents a material change in the Company's asset portfolio through the proposed acquisition of a new property. The transaction is subject to customary closing conditions, and there is no assurance that the acquisition will be consummated. The filing does not provide historical revenue, profit, cash flow, or debt metrics for the Company, as it is focused on this specific transaction event.
Guidance, Outlook, and Risks
Outlook: Management believes the acquisition is probable but explicitly states there can be no assurance of consummation.
Risks and Contingencies:
- Closing Conditions: The obligation to close is subject to customary conditions.
- Financing Risk: There is no assurance the Company will secure additional financing on favorable terms or at all.
- Lease Expiry: The largest tenant by rent (NY Loves Us, Inc.) has a lease terminating in January 2015, creating near-term vacancy risk.
Key Facts for Investor Verification
- Verify the status of the Company's ongoing IPO to confirm the availability of funds for the $170.3 million purchase price.
- Confirm the terms of the proposed one-year lease with the Seller intended to boost occupancy to 76%.
- Monitor the renewal status of the NY Loves Us, Inc. lease, which expires in January 2015 and represents a significant portion of current rent.
- Track the identification of a lender for potential post-closing financing.