Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Note 1 — Organization

New York REIT, Inc. (the “Company”) was incorporated on October 6, 2009 as a Maryland corporation that qualified as a real estate investment trust for U.S. federal income tax purposes (“REIT”) beginning with its taxable year ended December 31, 2010. On April 15, 2014, the Company listed its common stock on the New York Stock Exchange (“NYSE”) under the symbol “NYRT.”

The Company purchased its first property and commenced active operations in June 2010. As of September 30, 2017, the Company owned 18 properties, aggregating 4.2 million rentable square feet, with an average occupancy of 94.8%. The Company’s portfolio primarily consists of office and retail properties, representing 89% and 8%, respectively, of rentable square feet as of September 30, 2017. The Company also owns a hotel and several parking garages. Properties other than office and retail spaces represent 3% of rentable square feet.

Substantially all of the Company’s business is conducted through its operating partnership, New York Recovery Operating Partnership, L.P., a Delaware limited partnership (the “OP”). The Company’s only significant asset is the general partnership interests it owns in the OP and assets held by the Company for the use and benefit of the OP.

On August 22, 2016, the Company’s Board of Directors (the “Board”) approved a plan of liquidation to sell in an orderly manner all or substantially all of the assets of the Company and its OP and to liquidate and dissolve the Company and the OP (the “Liquidation Plan”), subject to stockholder approval. The Liquidation Plan was approved at a special meeting of stockholders on January 3, 2017.

The Company has no employees. Prior to March 8, 2017, the Company retained (i) New York Recovery Advisors, LLC (the “Former Advisor”) to manage its affairs on a day-to-day basis and (ii) New York Recovery Properties, LLC (the “ARG Property Manager”) to serve as the Company’s property manager, except for properties where services were performed by a third party. The Former Advisor and ARG Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”), (the “Sponsor”).

On March 8, 2017, the Company transferred all advisory duties from the Former Advisor to Winthrop REIT Advisors, LLC (the “Winthrop Advisor”) and property management services with respect to properties managed by ARG Property Manager were transferred to Winthrop Management, L.P. (the “Winthrop Property Manager”).

Note 2 — Liquidation Plan

The Liquidation Plan, as amended by the Board of Directors in accordance with the terms of the Liquidation Plan, provides for an orderly sale of the Company’s assets, payment of the Company’s liabilities and other obligations and the winding up of operations and final dissolution of the Company. The Company is not permitted to make any new investments except to exercise its option (the “WWP Option”) to purchase additional equity interests in its WWP Holdings, LLC venture (“Worldwide Plaza”), enter into the transaction relating to Worldwide Plaza pursuant to the Membership Interest Purchase Agreement with a purchaser, a joint venture between an affiliate of SL Green Realty Corp. and a private equity fund sponsored by RXR Realty LLC or to make protective acquisitions or advances with respect to its existing assets (see Note 6). The Company is permitted to satisfy any existing contractual obligations and fund required tenant improvements and capital expenditures at its real estate properties, including real estate properties owned by joint ventures in which the Company owns an interest.

The Liquidation Plan enables the Company to sell any and all of its assets without further approval of the stockholders and provides that liquidating distributions be made to the stockholders as determined by the Board. Pursuant to applicable REIT rules, the Company must complete the disposition of its assets by January 3, 2019, two years after the date the Liquidation Plan was approved by the stockholders, in order to deduct liquidating distributions as dividends. To the extent that all of the Company’s assets are not sold by such date, the Company intends to satisfy the requirement by transferring any remaining assets and liabilities to a liquidating entity.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

The dissolution process and the amount and timing of distributions to stockholders involves risks and uncertainties. Accordingly, it is not possible to predict the timing or aggregate amount which will be ultimately distributed to stockholders and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the Consolidated Statement of Net Assets.

The Company expects to continue to qualify as a REIT throughout the liquidation until such time as any remaining assets, if any, are transferred into a liquidating entity. The Board shall use commercially reasonable efforts to continue to cause the Company to maintain its REIT status, provided however, the Board may elect to terminate the Company’s status as a REIT if it determines that such termination would be in the best interest of the stockholders.

The Board may terminate the Liquidation Plan without stockholder approval only (i) if the Board approves the Company entering into an agreement involving the sale or other disposition of all or substantially all of the assets or common stock by merger, consolidation, share exchange, business combination, sale or other transaction involving the Company or (ii) if the Board determines, in exercise of its duties under Maryland law, after consultation with the Winthrop Advisor, if applicable, or other third party experts familiar with the market for Manhattan office properties, that an adverse change in the market for Manhattan office properties has occurred and reasonably would expect it to adversely affect continuing with the Liquidation Plan. Notwithstanding approval of the Liquidation Plan by the stockholders, the Board may amend the Liquidation Plan without further action by the stockholders to the extent permitted under the current law.

Note 3 — Summary of Significant Accounting Policies

Basis of Presentation

Pre Plan of Liquidation

The accompanying unaudited consolidated interim 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 the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). 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 presentation of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation.

These consolidated financial statements should be read in conjunction with the historical comparative audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2016, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2017.

Post Plan of Liquidation

Liquidation Basis of Accounting

As a result of the approval of the Liquidation Plan by the stockholders, the Company adopted the liquidation basis of accounting as of January 1, 2017 and for the periods subsequent to December 31, 2016 in accordance with GAAP. Accordingly, on January 1, 2017, the carrying value of the Company’s assets were adjusted to their liquidation value, which represents the estimated amount of cash that the Company will collect on disposal of assets as it carries out its liquidation activities under the Liquidation Plan. The current estimate of net assets in liquidation has been calculated based on undiscounted cash flow projections that all the properties will be sold by March 31, 2018 except for the remaining interest in Worldwide Plaza.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

The Company projects that the remaining interest in Worldwide Plaza will be sold approximately during the fourth quarter of 2021. The actual timing of sales has not yet been determined and is subject to future events and uncertainties. These estimates are subject to change based on the actual timing of future asset sales. The liquidation value of the Company’s investment in real estate is based on expected sales proceeds presented on an undiscounted basis. Estimated costs to dispose of assets have been presented separately from the related assets. Liabilities are carried at their contractual amounts due as adjusted for the timing and other assumptions related to the liquidation process.

The Company accrues costs and revenues that it expects to incur and earn as it carries out its liquidation activities through the end of the projected liquidation period to the extent it has a reasonable basis for estimation. Estimated costs expected to be incurred through the end of the liquidation period include budgeted property expenses and corporate overhead, costs to dispose of the properties, mortgage interest expense, costs associated with satisfying known and contingent liabilities and other costs associated with the winding up and dissolution of the Company. Revenues are based on in-place leases plus management’s estimates of revenue upon re-lease based on current market assumptions. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets. Actual costs and revenues may differ from amounts reflected in the financial statements due to the inherent uncertainty in estimating future events. These differences may be material. See Note 4 for further discussion. Actual costs incurred but unpaid as of September 30, 2017 are included in accounts payable, accrued liabilities and other liabilities on the Consolidated Statement of Net Assets.

Investments in real estate at September 30, 2017 are based on estimated sales values and presented on an undiscounted basis and excludes any future market value increase in from the planned capital improvement investments in Worldwide Plaza during the period prior to the commencement of liquidation activities. The Company’s current estimate of the liquidation value of investments in real estate includes WorldWide Plaza at 1.725 billion which is based on a current market transaction associated with the Company’s sale of a 48.7% interest in the property on October 18, 2017 as discussed in Note (6). Pursuant to the Company’s joint venture agreement with SL Green Corp and RXR Realty LLC, the Company and its partners have committed to additionally invest approximately $165 million on a prorata basis to fund capital improvement budget as determined in the agreement.

As a result of the change to the liquidation basis of accounting, the Company no longer presents a Consolidated Balance Sheet, a Consolidated Statement of Operations and Comprehensive Income, a Consolidated Statement of Changes in Equity or a Consolidated Statement of Cash Flows. These statements are only presented for prior year periods.

Use of Estimates

Certain of the Company’s accounting estimates are particularly important for an understanding of the Company’s financial position and results of operations and require the application of significant judgment by management. As a result, these estimates are subject to a degree of uncertainty. The Company is required to estimate all costs and revenue it expects to incur and earn through the end of liquidation including the estimated amount of cash it expects to collect on the disposal of its assets and the estimated costs to dispose of its assets. All of the estimates and evaluations are susceptible to change and actual results could differ materially from the estimates and evaluations.

Revenue Recognition

Under liquidation accounting, the Company has accrued all revenue that it expects to earn through the end of liquidation to the extent it has a reasonable basis for estimation. Revenues are accrued based on contractual amounts due under the leases in place over the estimated hold period of each asset. These amounts are classified in liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets.

In accordance with liquidation accounting, as of January 1, 2017, tenant and other receivables were adjusted to their net realizable values. Management continually reviews tenant and other receivables to determine collectability. Any changes in the collectability of the receivables is reflected in the net realizable value of the receivable.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

The Company owns certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. Contingent rental income is not contemplated under liquidation accounting unless there is a reasonable basis to estimate future receipts.

Investments in Real Estate

As of January 1, 2017, the investments in real estate were adjusted to their estimated net realizable value upon sale, or liquidation value, to reflect the change to the liquidation basis of accounting. The liquidation value represents the estimated amount of cash the Company expects to collect on the disposal of its assets as it carries out the liquidation activities of its Liquidation Plan. The liquidation value of the Company’s investments in real estate are presented on an undiscounted basis. Estimated revenue during the period following the commencement of liquidation through the expected sale date and costs to dispose of these assets are presented separately from the related assets. Subsequent to January 1, 2017, all changes in the estimated liquidation value of the investments in real estate are reflected as a change in the Company’s net assets in liquidation presented on an undiscounted basis.

The liquidation value of investments in real estate is based on a number of factors including discounted cash flow and direct capitalization analyses, detailed analysis of current market comparables and broker opinions of value, and binding purchase offers to the extent available. The liquidation value for our remaining investment in Worldwide Plaza, subsequent to October 18, 2017, is based on the value of the Company’s recent sale of a 48.7% interest in the property.

Amortization

Under liquidation accounting, intangible assets and liabilities are included in the liquidation value of investments in real estate and are no longer amortized.

Derivative Instruments

The Company uses derivative financial instruments to hedge the interest rate risk associated with a portion of its borrowings. The principal objective of such agreements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions.

As these instruments will not be converted into cash or other consideration, derivative financial instruments have been valued at $0 as of January 1, 2017 in accordance with liquidation accounting. These financial instruments are still in place and effective as of September 30, 2017.

Restricted Cash

Restricted cash primarily consists of maintenance, real estate tax, structural and debt service reserves.

Recent Accounting Pronouncement

There are no new accounting pronouncements that are applicable or relevant to the Company under the liquidation basis of accounting.

Note 4 — Liability for Estimated Costs in Excess of Estimated Receipts During Liquidation

The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation. The Company currently estimates that it will have costs in excess of estimated receipts during the liquidation. These amounts can vary significantly due to, among other things, the timing and estimates for executing and renewing leases, estimates of tenant improvement costs, the timing of property sales, direct costs incurred to complete the sales, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of operations. These costs are estimated and are anticipated to be paid out over the liquidation period.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Upon transition to the liquidation basis of accounting on January 1, 2017, the Company accrued the following revenues and expenses expected to be earned or incurred during liquidation (in thousands):

The change in the liability for estimated costs in excess of estimated receipts during liquidation as of September 30, 2017 is as follows (in thousands):

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Net assets in liquidation, which are presented on an undiscounted basis, decreased by $215.4 million and $221.3 million during the three and nine months ended September 30, 2017. The current net assets in liquidation includes Worldwide Plaza valued at $1.725 billion. The decrease during the quarter ended September 30, 2017 is primarily the result of (i) a $75.5 million net decrease in liquidation values due to the realized sales of 245-249 West 17 ^th Street (“Twitter”), 218 West 18 ^th Street (“Red Bull”), 229 West 36 ^th Street and 256 West 38 ^th Street and a signed contract for sale for 1440 Broadway, (ii) a $63.7 million net decrease in estimated liquidation values of the remaining portfolio, (iii) a $75.5 million decrease in the Company’s investment in Worldwide Plaza which includes estimated debt defeasance costs of $108.3 million, net of mortgage debt premium of $22.0 million and changes in estimated cash flow during the holding period recognized in the financial statements of $10.8 million, and (iv) a net decrease of $0.7 million related to other cumulative adjustments related to changes in debt costs and adjustments to holding periods.

The decrease during the nine months ended September 30, 2017 is primarily the result of (i) a $78.0 million net decrease in liquidation values due to the realized sales of 50 Varick Street, 245-249 West 17 ^th Street (Twitter), 218 West 18 ^th Street (Red Bull), 229 West 36 ^th Street and 256 West 38 ^th Street and a signed contract for sale for 1440 Broadway, (ii) a $63.7 million net decrease in estimated liquidation values of the remaining portfolio, (iii) a $75.5 million decrease in the Company’s investment in Worldwide Plaza which includes estimated debt defeasance costs of $108.3 million net of mortgage debt premium amortization of $22.0 million and changes in estimated cash flow during the holding period of $10.8 million, and (v) a net decrease of $4.1 million related to other cumulative adjustments related to changes in debt costs and adjustments to holding periods.

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NEW YORK REIT, INC.

Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

A summary of the change in net asset value for the nine months ended September 30, 2017 is as follows:

The net assets in liquidation at September 30, 2017, presented on an undiscounted basis, include Worldwide Plaza of $1.725 billion based a recent sale of a 48.7% interest in the property discussed in Note 6. There is inherent uncertainty with these projections, and they could change materially based on the timing of the sales, the performance of the underlying assets and any changes in the underlying assumptions of the projected cash flows.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Note 6 — Real Estate Investments

2017 Activity

50 Varick — property sale – On August 7, 2017, the Company sold to an independent third party our 50 Varick Street office property in Manhattan, New York for a gross sales price of $135.0 million. The property was part of the collateral for the $760.0 million POL Loans (see Note 7). In connection with the sale, the Company paid down $78.1 million of debt as required under the POL Loans. After satisfaction of debt, pro-rations and closing costs the Company received net proceeds of approximately $49.1 million. The estimated liquidation value of the property was $137.5 million at January 1, 2017 and was adjusted to $135.0 million at June 30, 2017 based on the contract sale price.

245-249 West 17 ^th Street and 218 West 18 ^th Street – property sale – On September 25, 2017, the Company entered into a contract to sell to an independent third party the 245-249 West 17 ^th Street (Twitter) and 218 West 18 ^th Street (Red Bull) office properties in Manhattan, New York for a gross sales price of $514.1 million. The sale was completed on October 11, 2017. The properties were part of the collateral for the $760.0 million POL Loans. In connection with the sale, the Company paid down $347.9 million of debt as required under the POL Loans (see Note 7). After satisfaction of debt, pro-rations and closing costs the Company received net proceeds of approximately $146.2 million. The estimated liquidation values of the properties were $532.6 million at January 1, 2017 and June 30, 2017. The estimated liquidation value of these properties were adjusted down to $514.1 million as of September 30, 2017 to reflect the contracts for sale.

229 West 36 ^th Street and 256 West 38 ^th Street – contract for sale – Subsequent to September 30, 2017, the Company entered into a contract to sell to an independent third party the 229 West 36 ^th Street and 256 West 38 ^th Street office properties in Manhattan, New York for a gross sales price of $155.9 million. The sale was completed on November 6, 2017. The 229 West 36 ^th Street property is part of the collateral for the $760.0 million POL Loans. In connection with the sale, the Company paid down $66.1 million of debt as required under the POL Loans (see Note 7). The 256 West 38 ^th Street property is also encumbered by $24.5 million mortgage loan which was satisfied in full upon the sale of the property. After pay down of debt under the POL Loans, satisfaction of the mortgage debt, pro-rations and closing costs, the Company received net proceeds of approximately $58.8 million. The estimated liquidation value of the properties were $152.4 million at January 1, 2017 and June 30, 2017 and were adjusted to $155.9 million at September 30, 2017 based on the contract sale price.

1440 Broadway – contract for sale – Subsequent to September 30, 2017, the Company entered into a contract to sell to an independent third party the 1440 Broadway office property in Manhattan, New York for a gross sales price of $520.0 million. The 1440 Broadway property is encumbered by $305.0 million mortgage loan which will be satisfied in full upon the sale of the property. The estimated liquidation value of the property was $582.8 million at January 1, 2017 and June 30, 2017 and was adjusted to $520.0 million at September 30, 2017 based on the contract sale price. If consummated, the sale of the property is expected to close in the fourth quarter of 2017.

Worldwide Plaza Transactions

On October 30, 2013, the Company purchased a 48.9% equity interest in Worldwide Plaza for a contract purchase price of $220.1 million, based on the property value at that time for Worldwide Plaza of $1.3 billion less $875.0 million of debt on the property.

On June 1, 2017, the Company acquired an additional 49.9% equity interest on exercise of the WWP Option pursuant to the Company’s rights under the joint venture agreement of Worldwide Plaza for a contract purchase price of $276.7 million, based on the option price of approximately $1.4 billion less $875.0 million of debt on the property. The Company’s joint venture partner exercised its right to retain 1.2% of the aggregate membership interests in Worldwide Plaza. Following the exercise of the option, the Company now owns a total equity interest of 98.8% in Worldwide Plaza. As a result, the Company consolidates Worldwide Plaza as of June 1, 2017. In accordance with GAAP, the Company initially recorded the Worldwide Plaza debt at its fair value of $897.0 million on its consolidated statement of net assets.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

On October 18, 2017, the Company sold a 48.7% interest in Worldwide Plaza to a joint venture managed by SL Green Realty Corp. and RXR Realty LLC based on the underlying property value of $1.725 billion. In conjunction with the equity sale, there was a concurrent $1.2 billion refinancing of the existing Worldwide Plaza debt. The Company received cash at closing of approximately $446.5 million from the sale and excess proceeds from the financing, net of closing costs, including, $108.3 million of defeasance and prepayment costs. The new debt on Worldwide Plaza bears interest at a blended rate of approximately 3.98% per annum, requires monthly payments of interest only and matures in November 2027. The Company has set aside $90.7 million of the proceeds in a separate account to fund future capital improvements to Worldwide Plaza.

The following table presents future minimum base cash rental payments due to the Company, subsequent to September 30, 2017. These amounts exclude contingent rental payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items.

Based on the Company’s anticipated holding period for each property, the Company has accrued approximately $69.6 million, of the contractual base cash rental payments, excluding reimbursements.

The following table lists the tenants whose annualized cash rent represented greater than 10% of total annualized cash rent as of September 30, 2017 and 2016:

The termination, delinquency or non-renewal of any of the above tenants may have a material adverse effect on the Company’s operations.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

The following table discloses amounts recognized within the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2016 (on a going concern basis) related to amortization of in-place leases and other intangibles, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization of above-market ground lease, for the period presented:

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

The disposal of Duane Reade, 1623 Kings Highway and Foot Locker did not represent a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the results of operations of these properties were classified within continuing operations for the nine months ended September 30, 2016.

Note 7 — Mortgage Notes Payable

Mortgage notes payable are carried at their contractual amounts due under liquidation accounting. The Company had outstanding mortgage notes payable of $1.93 billion at September 30, 2017 and $1.13 billion at December 31, 2016. The mortgage notes payable are collateralized, directly or, in the case of the mezzanine note, indirectly, by the real estate held by the Company identified in the table below.

The Company’s mortgage notes payable as of September 30, 2017 and December 31, 2016 consist of the following (in thousands):

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

On August 1, 2017, the Company’s mortgage loan collateralized by the 1100 Kings Highway property was modified to extend the maturity date to April 1, 2018 and to allow for partial release of the collateral. The loan also requires a cash sweep starting January 1, 2018 unless the property is under contract for sale for an amount equal to or greater than 133% of the outstanding mortgage loan payable.

On December 20, 2016, the Company, through indirect wholly owned subsidiaries of the OP, entered into a mortgage loan (the “Mortgage Loan”) in the aggregate amount of $500.0 million and a mezzanine loan in the aggregate amount of $260.0 million (the “Mezzanine Loan” and, together with the Mortgage Loan, the “POL Loans”). The POL Loans are secured directly, in the case of the mortgage loan, and indirectly in the case of the mezzanine loan, by our properties located in New York, New York at 245-249 West 17th Street, 333 West 34th Street, 216-218 West 18th Street, 50 Varick Street (until the sale of the property in August 2017), 229 West 36th Street, 122 Greenwich Street, 350 West 42nd Street, 382-384 Bleecker Street, 350 Bleecker Street, 416-425 Washington Street, 33 West 56th Street and 120 West 57th Street (the “POL Loan Properties”).

At the closing of the POL Loans, a portion of the net proceeds after closing costs was used to repay the $485.0 million principal amount then outstanding under the Company’s credit facility. As of December 31, 2016, the $260.0 million proceeds from the Mezzanine Loan were held in an escrow account by the servicer of the POL Loans and were recorded as a receivable in the Company’s consolidated balance sheet. Subsequently, on January 9, 2017, the $260.0 million proceeds were deposited into an operating account for the purpose of purchasing the additional equity interests in Worldwide Plaza (see Note 6). Prior to the repayment in full of the credit facility, all of the POL Loan Properties were included as part of the borrowing base thereunder.

The Mortgage Loan requires monthly interest payments at an initial weighted average interest rate of LIBOR plus 2.38% and the Mezzanine Loan requires monthly interest payments at an initial weighted average interest rate of LIBOR plus 5.65%. The LIBOR portions of the interest rates due under the POL Loans are capped at 3.0% pursuant to interest rate cap agreements.

The POL Loans mature in December 2017. The POL Loans include one option to extend the maturity date for one year, if certain conditions are met including a debt yield test, and subject to a 0.25% increase in the applicable monthly interest rate payable.

The POL Loans are recourse to the Company and may be accelerated only in the event of a default. The POL Loans may be prepaid, in whole or in part, without payment of any prepayment premium or spread maintenance premium or any other fee or penalty.

In connection with a sale or disposition of an individual POL Loan Property to a third party, such POL Loan Property may be released from the collateral securing the Mortgage Loan, subject to certain conditions, by prepayment of a release price (the “Release Amount”) as defined in the Mortgage Loan agreements. In certain instances, 110% of the Release Amount will be required to be paid in order to release the property. Concurrently with the payment of the Release Amount, the borrower entity under the Mezzanine Loan is obligated to prepay a corresponding portion of the Mezzanine Loan, in accordance with the terms of the Mezzanine Loan, for which it will receive a release of a corresponding portion of the collateral under the Mezzanine Loan. Upon the sale of 50 Varick on August 7, 2017, the POL Loan was paid down $78.1 million and the property was released as security. Additionally, upon the sale of 245-249 West 17 ^th Street and 218 West 18 ^th Street on October 11, 2017, the POL Loan was paid down $347.9 million, and the properties were released as security. Upon the sale of 229 West 36 ^th Street on November 6, 2017, the POL Loan was paid down $66.1 million, and the property was released as security. The POL Loan balance was reduced to $267.9 million as a result of these sales.

Concurrently with the POL Loans, the Company entered into guaranty agreements with respect to the POL Loans that requires the Company to maintain, (i) on a consolidated basis, a minimum net worth of $300.0 million, which minimum net worth will be reduced pro rata with any prepayment of the POL Loans once the outstanding principal amount of the POL Loans is less than $300.0 million, but in no event will the minimum net worth be reduced below $150.0 million, and (ii) liquid assets having a market value of at least $25.0 million, which minimum market value of liquid assets may be reduced to $15.0 million in the event the outstanding amount under the POL Loans is equal to or less than $100.0 million.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

On September 30, 2015, in connection with the mortgage notes payable secured by its property located at 1440 Broadway, the Company executed guarantees in favor of the lenders with respect to the costs of certain unfunded obligations of the Company related to tenant allowances, capital expenditures and leasing costs, which guarantees are capped at $5.3 million in the aggregate. The guarantees expire in October 2019, the maturity date of the 1440 Broadway mortgage. As of September 30, 2017, the Company has not been required to perform under the guarantees and has not recognized any assets or liabilities related to the guarantees.

Some of the Company’s mortgage note agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of September 30, 2017, the Company was in compliance with the financial covenants under its mortgage note agreements.

Note 8 — Fair Value of Financial Instruments

Prior to the adoption of liquidation accounting, the Company determined fair value of its financial instruments based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the instrument. This alternative approach also reflected the contractual terms of the instruments, as applicable, including the period to maturity, and used observable market-based inputs, including interest rate curves and implied volatilities, and unobservable inputs, such as expected volatility. The guidance defines three levels of inputs that may be used to measure fair value:

The determination of where an asset or liability fell in the hierarchy required significant judgment and considered factors specific to the asset or liability. In instances where the determination of the fair value measurement was based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement fell was based on the lowest level input that was significant to the fair value measurement in its entirety.

The Company determined that the majority of the inputs used to value its derivatives, such as interest rate swaps and caps, fell within Level 2 of the fair value hierarchy, whereas the credit valuation adjustments associated with those derivatives utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of December 31, 2016, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of the Company’s derivatives. As a result, the Company determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy. See Note 9 — Interest Rate Derivatives and Hedging Activities.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

The valuation of derivatives was determined using a discounted cash flow analysis on the expected cash flows. This analysis reflected the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments were incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.

The following table presents information about the Company’s derivatives that were presented net, measured at fair value on a recurring basis as of December 31, 2016, aggregated by the level in the fair value hierarchy within which those instruments fell:

There were no transfers between levels of the fair value hierarchy during the year ended December 31, 2016.

Financial instruments not carried at fair value

Under going concern accounting, the Company was required to disclose the fair value of financial instruments for which it was practicable to estimate the value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other assets, accounts payable and dividends payable approximates their carrying value on the consolidated balance sheet due to their short-term nature. The carrying amount and fair value of the Company’s financial instruments that were not reported at fair value on the consolidated balance sheet are reported below.

The fair value of mortgage notes payable was estimated using a discounted cash flow analysis based on similar types of arrangements.

Note 9 — Interest Rate Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company uses derivative financial instruments, including interest rate swaps and caps, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not utilize derivatives for speculative purposes or purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements will not perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties that the Company believes to have high credit ratings and with major financial institutions with which the Company and the Advisor and its affiliates may also have other financial relationships.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Under going concern accounting, the Company’s derivative financial instruments were classified as separate assets and liabilities on the balance sheet. As these instruments will not be converted to cash or other consideration, derivative financial instruments have been valued at $0 as of January 1, 2017 in accordance with liquidation accounting. The financial instruments are still in place and effective as of September 30, 2017. The Company has accrued the estimated monthly settlement amounts for its swap agreements. The amount is included in the liability for estimated costs in excess of estimated receipts during liquidation.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract.

The effective portion of changes in the fair value of derivatives designated and that qualified as cash flow hedges was recorded in accumulated other comprehensive loss and was subsequently reclassified into earnings in the period that the hedged forecasted transaction affected earnings. The Company uses such derivatives to hedge the variable cash flows associated with variable-rate debt.

During the nine months ended September 30, 2016, the Company terminated one of its interest rate swaps as the related hedged debts were repaid, which made it probable that the forecasted transactions would not occur and, as a result, accelerated the reclassification of immaterial amounts in accumulated other comprehensive loss to earnings. The accelerated amounts resulted in a loss of approximately $24,000 for the nine months ended September 30, 2016.

Amounts reported in accumulated other comprehensive loss related to derivatives were reclassified to interest expense as interest payments were made on the Company’s variable-rate debt.

As of December 31, 2016, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk.

Derivatives Not Designated as Hedges

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks, but do not meet the strict hedge accounting requirements under GAAP. Changes in the fair value of derivatives not designated in hedging relationships were recorded directly in earnings, which resulted in an expense of $12,000 and $0.4 million during the three and nine months ended September 30, 2016, respectively, and included in loss on derivative instruments on the consolidated statement of operations and comprehensive loss.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

As of December 31, 2016, the Company had the following outstanding interest rate derivatives that were not designated as hedges in qualified hedging relationships.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Offsetting Derivatives

The Company does not offset its derivatives on the accompanying consolidated balance sheet. The table below presents a gross presentation, the potential effects of offsetting, and a potential net presentation of the Company’s derivatives as of December 31, 2016. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying consolidated balance sheet.

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparties that contain a provision whereby if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of December 31, 2016, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $0.1 million.

As of December 31, 2016, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $0.1 million at    December 31, 2016.

Note 10 — Common Stock

As of September 30, 2017 and December 31, 2016, the Company had 167.9 million and 167.1 million shares of common stock outstanding, respectively, including shares of unvested restricted common stock (“restricted shares”), but not including OP units or Long-term Incentive Plan units (“LTIP units”) which may in the future be converted into shares of common stock. On January 3, 2017, the Company issued 841,660 shares of its common stock upon redemption of 841,660 OP units held by certain individuals who are members of the Former Advisor or its affiliates. As of September 30, 2017, there were no OP units outstanding, other than OP units held by the Company, and no vested LTIP units outstanding. See Note 16 — Non-Controlling Interests.

From April 2014 through October 2016, the Board authorized, and the Company declared and paid, a monthly dividend at an annualized rate equal to $0.46 per share per annum. Dividends were paid to stockholders of record on the close of business on the 8th day of each month, payable on the 15th day of such month. In October 2016, the Company announced that, in light of the Liquidation Plan, which was then subject to stockholder approval, the Board determined that the Company would not pay a regular dividend for the month of November 2016 and did not expect to pay a regular monthly dividend for the month of December 2016 or thereafter. Because the Liquidation Plan was approved by the Company’s stockholders, the Company will not resume paying monthly dividends. In lieu of regular monthly dividends, the Company expects to make periodic liquidating distributions out of net proceeds of asset sales, subject to satisfying its liabilities, obligations and debt covenants. There can be no assurance as to the actual amount or timing of liquidating distributions stockholders will receive.

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NEW YORK REIT, INC.

Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Note 11 — Commitments and Contingencies

Future Minimum Lease Payments

The Company entered into operating and capital lease agreements primarily related to certain properties under leasehold interest arrangements. The following table reflects the minimum contractual base cash payments, excluding reimbursements, due from the Company over the next five years and thereafter under these arrangements, including the present value of the net minimum payments due under capital leases. These amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes among other items.

Total rental expense related to operating leases was $1.9 million and $5.8 million, respectively, for the three and nine months ended September 30, 2016. During the three and nine months ended September 30, 2016, interest expense related to capital leases was approximately $16,000 and $48,000, respectively. The following table discloses assets recorded under capital leases and the accumulated amortization thereon as of December 31, 2016:

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no legal or regulatory proceedings pending or known to be contemplated against the Company from which the Company expects to incur a material loss.

Harris Derivative Suit

In October 2016, Berney Harris (the “Plaintiff”) filed a derivative complaint (the “Harris Complaint”) on behalf of the Company against certain current and former members of the Company’s board of directors (the “director defendants”), the Former Advisor, and certain affiliates of the Former Advisor (together with the Former Advisor, the “Former Advisor defendants”). The Complaint was filed in the Supreme Court of the State of New York, New York County on October 13, 2016. The Harris Complaint alleges, among other things, that the director defendants breached their fiduciary duties by putting the interests of the Former Advisor defendants before those of the public stockholders, which breach was aided and abetted by the Former Advisor defendants. The Harris

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Complaint also asserts claims of corporate waste against the director defendants and unjust enrichment against certain of the Former Advisor defendants. On December 16, 2016, the defendants filed motions to dismiss on the basis of a provision in the Company’s bylaws providing that the state or federal courts of Maryland are the sole and exclusive forum for derivative claims such as those raised in the Harris Complaint. On April 6, 2017. an Evaluation Committee of the Board of Directors (the “EC”) consisting of three independent, disinterested directors was appointed by the Board of Directors to evaluate what actions should be taken by the Company in connection with the Harris Complaint and a demand letter sent by a different shareholder to the Company dated March 27, 2017. The EC filed a memorandum of law on August 4, 2017 in support of the motion to dismiss based on the forum selection clause in the Company’s bylaws. On August 10, 2017, the Court issued an Order granting the Company’s and the director defendants’ motion to dismiss and also granted the motion to dismiss of one of the Former Advisor defendants. At the same time, the Court requested additional briefing as to the other Former Advisor defendants’ motion to dismiss, which the Court neither granted nor denied at the time and which is still pending before the Court. On September 15, 2017, the EC filed a motion seeking to stay Plaintiff’s suit pending the conclusion of its evaluation process and the Former Advisor defendants who had not been dismissed filed a memorandum of law in further support of their motion to dismiss. On October 3, 2017, Plaintiff filed a motion seeking to modify the Court’s August 10, 2017 Order to the extent that it dismissed the Company as a nominal defendant. On October 18, 2017, Plaintiff filed a notice of appeal of the Court’s Order dismissing the Company, the director defendants, and one Former Advisor defendant. At this time it is unclear how the Court will rule on whether or where the Harris Complaint will proceed and the EC has not yet completed its investigation, the result of which may bear on the merits of any potential claims the Company might have.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company maintains environmental insurance for its properties that provides coverage for potential environmental liabilities, subject to the policy’s coverage conditions and limitations. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the consolidated results of operations.

Note 12 — Related Party Transactions and Arrangements

The Former Advisor, individual members of the Former Advisor, and employees or former employees of the Former Advisor held interests in the OP. See Note 16 — Non-Controlling Interests.

Viceroy Hotel

The following table details revenues from related parties at the Viceroy Hotel. The Company did not have any receivables from related parties as of September 30, 2017 or December 31, 2016.

Winthrop Advisor and its Affiliates

On December 19, 2016 the Company entered into an agreement (the “Services Agreement”) with Winthrop Advisor, pursuant to which Winthrop Advisor served as the Company’s exclusive advisor with respect to all matters primarily related to any plan of liquidation and dissolution of the Company and as a consultant to the Board on certain other matters during the period from January 3, 2017 through March 7, 2017 and is serving as exclusive advisor to the Company from and after March 8, 2017.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

On each of January 3, 2017 and February 1, 2017, the Company paid Winthrop Advisor a fee of $500,000 in cash as compensation for advisory services and consulting services rendered prior to March 1, 2017.

Beginning on March 1, 2017, the Company pays Winthrop Advisor an asset management fee equal to 0.325% per annum of the cost of assets (as defined in the Services Agreement) up to $3.0 billion and 0.25% per annum of the cost of assets in excess of $3.0 billion. In connection with the adoption of liquidation accounting, the Company accrues costs it expects to incur through the end of liquidation. The Company has accrued asset management fees of $3.6 million payable to the Winthrop Advisor, of which $2.2 million relates to the existing contract amount and the remainder is management’s estimate of future asset management cost to final liquidation, provided that there is no assurance that the contract will in fact be extended on those terms, if it all. This amount is included in liabilities for estimated costs in excess of estimated receipts during liquidation. Actual fees incurred may differ significantly from these estimates due to inherent uncertainty in estimating future events.

In connection with the payment of (i) any distributions of money or other property by the Company to its stockholders during the term of the Services Agreement and (ii) any other amounts paid to the Company’s stockholders on account of their shares of common stock in connection with a merger or other change in control transaction pursuant to an agreement with the Company entered into after March 8, 2017 (such distributions and payments, the “Hurdle Payments”), in excess of $11.00 per share (the “Hurdle Amount”), when taken together with all other Hurdle Payments, the Company will pay an incentive fee to the Winthrop Advisor in an amount equal to 10.0% of such excess (the “Incentive Fee”). The Hurdle Amount will be increased on an annualized basis by an amount equal to the product of (a) the Treasury Rate plus 200 basis points and (b) the Hurdle Amount minus all previous Hurdle Payments. Based on the current estimated undiscounted net assets in liquidation, the Winthrop Advisor would not be entitled to receive any such incentive fee.

Effective March 2017, Winthrop Property Manager began providing property management services to those properties for which the ARG Property Manager had been providing property management services. The Company pays to Winthrop Property Manager 1.75% of gross revenues, inclusive of all third party property management fees, for property management services provided to the Company by the Winthrop Property Manager or any of its affiliates.

The following table details amounts incurred by the Company to the Winthrop Advisor and its affiliates in connection with the operations related services described above for the periods presented and any amounts payable to or due from the Winthrop Advisor as of the dates specified:

Former Advisor and its Affiliates

Prior to March 8, 2017, the Company paid to the Former Advisor an asset management fee equal to 0.50% per annum of the cost of assets up to $3.0 billion and 0.40% per annum of the cost of assets above $3.0 billion.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Prior to March 8, 2017, unless the Company contracted with a third party, the Company paid the ARG Property Manager a property management fee equal to: (i) for non-hotel properties, 4.0% of gross revenues from properties managed, plus market-based leasing commissions; and (ii) for hotel properties, a market based fee equal to a percentage of gross revenues. The Company also reimbursed the ARG Property Manager for property-level expenses. The ARG Property Manager was permitted to subcontract the performance of its property management and leasing services duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracted for these services. If the Company contracted directly with third parties for such services, the Company paid them customary market fees and paid the ARG Property Manager an oversight fee equal to 1.0% of the gross revenues of the applicable property.

The Company reimbursed the Former Advisor for costs and expenses paid or incurred prior to March 8, 2017 by the Former Advisor and its affiliates in connection with providing services to the Company (including reasonable salaries and wages, benefits and overhead of all employees directly involved with the performance of such services), although the Company did not reimburse the Former Advisor for personnel costs in connection with services for which the Former Advisor received a separate fee.

The Company was also party to a transfer agency agreement with American National Stock Transfer, LLC, a subsidiary of the parent company of the Former Dealer Manager (“ANST”), pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by DST Systems, Inc., a third-party transfer agent (“DST”). The Sponsor received written notice from ANST on February 10, 2016 that it would wind down operations by the end of February and would withdraw as the transfer agent effective February 29, 2016. DST continued to provide the Company with transfer agency services and, on March 10, 2016, the Company entered into a definitive agreement with DST to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). For the nine months ended September 30, 2016, fees for these services are included in general and administrative expenses on the consolidated statement of operations and comprehensive income (loss) during the period in which the service was provided.

The following table details amounts incurred and paid by the Company to, and amounts waived by, the Former Advisor and its affiliates in connection with the operations related services described above for the periods presented and any amounts payable to or due from the Former Advisor as of the dates specified:

The Former Advisor agreed to waive certain fees, including property management fees, during the three and nine months ended September 30, 2016. The fees that were waived were not deferrals and accordingly, were not and will not be paid to the Former Advisor.

In connection with the sale of one or more properties, for which the Former Advisor provided a substantial amount of services as determined by the Company’s independent directors, the Company was required to pay the Former Advisor a property disposition fee not to exceed the lesser of 2.0% of the contract sale price of the property

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

or 50% of the competitive real estate commission paid if a third party broker was also involved; provided, however that in no event could the property disposition fee paid to the Former Advisor when added to real estate commissions paid to unaffiliated third parties exceed the lesser of 6.0% of the contract sale price and a competitive real estate commission. For purposes of the foregoing, “competitive real estate commission” meant a real estate brokerage commission for the purchase or sale of a property which was reasonable, customary and competitive in light of the size, type and location of the property. The Company incurred and paid $0.2 million in property disposition fees to the Former Advisor during the nine months ended September 30, 2016 related to the sale of certain properties. No such fees were incurred or paid during the three months ended September 30, 2016.

Note 13 — Economic Dependency

Under various agreements, the Company has engaged or will engage Winthrop Advisor, its affiliates and entities under common control with Winthrop Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services, transaction management and investor relations.

As a result of these relationships, the Company is dependent upon Winthrop Advisor and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

Note 14 — Share-Based Compensation

Stock Option Plan

The Company has a stock option plan (the “Plan”) which authorizes the grant of nonqualified stock options to the Company’s independent directors, officers, advisors, consultants and other personnel, subject to the absolute discretion of the board of directors and the applicable limitations of the Plan. The exercise price for all stock options granted under the Plan is equal to the fair market value of a share on the date of grant. Upon a change in control, unvested options will become fully vested and any performance conditions imposed with respect to the options will be deemed to be fully achieved. A total of 0.5 million shares have been authorized and reserved for issuance under the Plan. As of September 30, 2017 and December 31, 2016, no stock options were issued under the Plan.

Restricted Share Plan

The Company’s employee and director incentive restricted share plan (“RSP”) provides the Company with the ability to grant awards of restricted shares to the Company’s directors, officers and employees (if the Company ever has employees), employees of the Former Advisor or the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Former Advisor or of entities that provide services to the Company, certain consultants to the Company and the Former Advisor and its affiliates or to entities that provide services to the Company.

Under the RSP, the annual amount granted to the independent directors is determined by the board of directors. The maximum number of shares of stock granted under the RSP cannot exceed 10% of the Company’s outstanding shares of common stock, par value $0.01 per share, on a fully diluted basis at any time. Restricted shares issued to independent directors generally vest over a three-year period in increments of 33.3% per annum. Generally, such awards provide for accelerated vesting of (i) all unvested restricted shares upon a change in control or a termination without cause and (ii) the portion of the unvested restricted shares scheduled to vest in the year of voluntary termination or the failure to be reelected to the board. The restricted stock award agreements provide that the shares will vest on the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction or series of transactions within a period of twelve months), which could occur as a result of the Liquidation Plan.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares receive cash dividends and other distributions (including any liquidating distributions made pursuant to the Liquidation Plan) prior to the time that the restrictions on the restricted shares have lapsed. Any dividends payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

The following table displays restricted share award activity during the nine months ended September 30, 2017:

Under going concern accounting, the Company measured stock-based compensation expense at each reporting date for any changes in the fair value and recognized the expense prorated for the portion of the requisite service period completed. Accordingly, the Company recognized $0.1 million and $0.5 million in non-cash compensation expense for the three and nine months ended September 30, 2016, respectively. Under liquidation accounting, compensation expense is no longer recorded as the vesting of the restricted shares does not result in cash outflow for the Company.

2014 Multi-Year Outperformance Agreement

On April 15, 2014 (the “Effective Date”), the Company entered into a multi-year outperformance agreement (the “OPP”) with New York Recovery Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”) and the Former Advisor. Under the OPP, the Former Advisor was issued 8,880,579 LTIP Units in the Operating Partnership with a maximum award value on the issuance date equal to 5.0% of the Company’s market capitalization (the “OPP Cap”). The LTIP Units are structured as profits interests in the Operating Partnership.

Prior to the OPP Side Letter dated December 19, 2016 (“OPP Side Letter”), subject to the Former Advisor’s continued service through each vesting date, one third of any earned LTIP Units would vest on each of the third, fourth and fifth anniversaries of the Effective Date.

On April 15, 2015 and 2016, in connection with the end of the One-Year Period and Two-Year Period, 367,059 and 805,679 LTIP Units, respectively, were earned by the Former Advisor under the terms of the OPP. Pursuant to the OPP Side Letter, these LTIP Units immediately vested upon approval by the Compensation Committee and converted on a one-for-one basis into unrestricted shares of the Company’s common stock.

Based on calculations for the Three-Year Period, the Former Advisor earned 43,685 LTIP Units under the terms of the OPP on April 15, 2017. Pursuant to the terms of the OPP Side Letter, these LTIP units were immediately vested on April 15, 2017, were converted on a one-for-one basis into unrestricted shares of the Company’s common stock on May 9, 2017, and issued to the Former Advisor on May 9, 2017. Following the issuance of the shares of common stock on May 9, 2017, the remaining 7,664,156 LTIP Units issued to the Former Advisor were forfeited.

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NEW YORK REIT, INC.

Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Under the OPP, the Former Advisor’s eligibility to earn a number of LTIP Units with a value equal to a portion of the OPP Cap upon the first, second and third anniversaries of the Effective Date was based on the Company’s achievement of certain levels of total return to the Company’s stockholders (“Total Return”), including both share price appreciation and common stock dividends, as measured against a peer group of companies, as set forth below, for the three-year performance period commencing on the Effective Date (the “Three-Year Period”); each 12-month period during the Three-Year Period (the “One-Year Period”); and the initial 24-month period of the Three-Year Period (the “Two-Year Period”), as follows:

* The “Peer Group” was comprised of the companies in the SNL US REIT Office Index as of the Effective Date.

The potential outperformance award was calculated at the end of each One-Year Period, the Two-Year Period and the Three-Year Period. The award earned for the Three-Year Period was based on the formula in the table above less any awards earned for the Two-Year Period and One-Year Periods, but not less than zero; the award earned for the Two-Year Period was based on the formula in the table above less any award earned for the first and second One-Year Period, but not less than zero. Any LTIP Units that were unearned at the end of any performance period have been forfeited.

After an LTIP Unit was earned, the holder of such LTIP Unit was entitled to a catch-up distribution and thereafter the same distributions as paid to the holder of an OP Unit.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

The following table presents information about the Company’s OPP, which was measured at fair value on a recurring basis as of December 31, 2016, aggregated by the fair value hierarchy within which the instrument falls:

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

Level 3 valuations

The following table provides quantitative information about significant Level 3 input used:

Expected volatility is a measure of the variability in possible returns for an instrument, parameter or market index given how much the particular instrument, parameter or index changes in value over time. Generally, the higher the expected volatility of the underlying instrument, the wider the range of potential future returns. An increase in expected volatility, in isolation, would generally result in an increase in the fair value measurement of an instrument. For the relationship described above, the inverse relationship would also generally apply.

Prior to the adoption of the liquidation basis of accounting, share based compensation related to the OPP was recorded as part of general and administrative expenses and non-controlling interest, a component of equity. Under liquidation basis accounting, since no cash outflow is associated with the OPP, the value of the converted OP units is incorporated in the estimated liquidating distributions per share.

Note 15 — Earnings Per Share

Prior to the adoption of liquidation basis accounting, the Company determined basic earnings per share on the weighted average number of common shares outstanding during the period. The Company computed diluted earnings per share based on the weighted average number of common shares outstanding combined with the incremental weighted average effect for all outstanding potentially dilutive instruments.

The following is a summary of the basic and diluted net loss per share computations for the periods presented:

Diluted net income per share assumes the conversion of all common share equivalents into an equivalent number of common shares, unless the effect is anti-dilutive. The Company considers unvested restricted shares, OP units and LTIP units to be common share equivalents.

Note 16 — Non-Controlling Interests

Under going concern accounting, consolidated joint ventures are recorded on a gross basis with an allocation of equity to non-controlling interest holders.

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Notes to Consolidated Financial Statements

September 30, 2017

(unaudited)

The Company is the sole general partner of the OP, and the Company and a subsidiary of the Company hold all of the OP units as of September 30, 2017. As of December 31, 2016, the Former Advisor or members, employees or former employees of the Former Advisor held 841,660 OP units and 7,707,841 unvested LTIP units. On January 3, 2017, the Company issued 841,660 shares of its common stock upon redemption of 841,660 OP units following which no OP units remained outstanding other than OP units held by the Company corresponding to shares of the Company common stock. There were $0 and $1.8 million of distributions paid to OP unit and LTIP unit holders during the nine months ended September 30, 2017 and 2016, respectively.

A holder of OP units has the right to distributions on the same basis as a holder of shares of the Company’s common stock, and has the right to redeem OP units for the cash value of a corresponding number of shares of the Company’s common stock or a corresponding number of shares of the Company’s common stock, at the election of the OP, in accordance with the limited partnership agreement of the OP. The remaining rights of the holders of OP units are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

Under liquidation accounting, consolidated joint ventures will be presented on a gross basis with a payable to the non-controlling interest holder which is reflected on the Consolidated Statement of Net Assets as liability for non-controlling interests.