Business Context and Reporting Period
This Form 8-K filing by New York City REIT, Inc. (the "Company") reports the determination of the Estimated Per-Share Net Asset Value ("Estimated Per-Share NAV") as of June 30, 2019. The report was filed on October 24, 2019, following the unanimous approval of the independent directors of the Board on that date. The Company is a non-listed REIT focused on real estate assets in New York City.
Key Financial Metrics
The filing details the components of the Estimated Per-Share NAV based on the fair value of assets and liabilities as of June 30, 2019.
| Component | Per Share Value (June 30, 2019) |
|---|---|
| Real Estate Assets | $29.29 |
| Other Assets | $3.41 |
| Fair Value of Debt | ($12.08) |
| Other Liabilities | ($0.36) |
| Estimated Per-Share NAV | $20.26 |
Additional Metrics:
- Total Real Estate Asset Value: $907.7 million (within a valuation range of $862.4 million to $937.1 million).
- Shares Outstanding: 30,994,977 (fully diluted basis as of June 30, 2019).
- Valuation Assumptions: Weighted average terminal capitalization rate of 4.68% and discount rate of 5.77%.
Material Changes Versus Prior Period
The Estimated Per-Share NAV remained flat at $20.26 compared to the June 30, 2018 value. This stability resulted from an increase in the fair value of Real Estate Assets (from $27.12 to $29.29 per share) being partially offset by an increase in the fair value of debt (from $9.21 to $12.08 per share) and distributions paid in excess of cash flows from operations.
- Asset Appreciation: The estimated value of Real Estate Assets reflects a 19.4% increase over the sum of original purchase prices ($703.5 million) and post-acquisition capital expenditures ($56.5 million).
- Recent Acquisition: On July 17, 2019, the Company acquired three condominium units for $88.8 million. The Advisor determined this acquisition would not materially impact the Estimated Per-Share NAV calculated as of June 30, 2019.
Guidance, Outlook, and Risks
Outlook and Programs:
- Distribution Status: Cash distributions to common stockholders remain suspended as of March 1, 2018.
- DRIP and SRP: The Distribution Reinvestment Plan (DRIP) and Share Repurchase Program (SRP) are currently suspended. If resumed, the price per share would be based on the $20.26 Estimated Per-Share NAV.
- Future Valuations: The Company anticipates publishing an updated Estimated Per-Share NAV on at least an annual basis.
Risks and Limitations:
- Valuation Sensitivity: The NAV is highly sensitive to discount rates. A sensitivity analysis showed a potential NAV range of $18.79 to $21.20 based on varying discount rates.
- Liquidity: The Estimated Per-Share NAV does not reflect a liquidity discount for the fact that shares are not traded on a national securities exchange.
- Market Fluctuation: Real estate values fluctuate, and the estimated values may not represent the price the Company would receive in a sale or liquidation.
- Incentive Fees: In a hypothetical liquidation at the current NAV, the Advisor would not be entitled to any incentive fees or performance-based units.
Key Facts for Investor Verification
- Verify the suspension status of cash distributions and the Share Repurchase Program.
- Confirm the specific valuation assumptions (discount rates and capitalization rates) used by the independent firm, Duff & Phelps, LLC.
- Review the impact of the $88.8 million acquisition on future NAV calculations, as it occurred after the June 30, 2019 valuation date.
- Understand that the $20.26 NAV is an estimate and does not guarantee the price at which shares could be sold or the proceeds from a liquidation.