UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number: 001-36416


NEW YORK REIT, INC.
(Exact name of registrant as specified in its charter)
Maryland
 
27-1065431
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
405 Park Ave., 14th Floor, New York, NY
 
10022
(Address of principal executive offices)
 
(Zip Code)
(212) 415-6500
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o  (Do not check if a smaller reporting company)
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ¨ Yes x No

As of October 30, 2015 , the registrant had 162,519,934 shares of common stock, $0.01 par value per share, outstanding.



NEW YORK REIT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


1
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
NEW YORK REIT, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)


 
 
September 30,
 
December 31,
 
 
2015
 
2014
ASSETS
 
(Unaudited)
 
 
Real estate investments, at cost:
 
 
 
 
Land
 
$
487,808

 
$
494,065

Buildings, fixtures and improvements
 
1,231,204

 
1,235,918

Acquired intangible assets
 
156,609

 
158,383

Total real estate investments, at cost
 
1,875,621

 
1,888,366

Less accumulated depreciation and amortization
 
(183,775
)
 
(124,178
)
Total real estate investments, net
 
1,691,846

 
1,764,188

Cash and cash equivalents
 
20,423

 
22,512

Funds held in escrow
 
48,768

 
—

Restricted cash
 
6,284

 
6,347

Investment securities, at fair value
 
243

 
4,659

Investments in unconsolidated joint venture
 
223,229

 
225,501

Real estate assets held for sale, net
 
27,482

 
—

Preferred equity investment
 
—

 
35,100

Derivatives, at fair value
 
371

 
205

Tenant and other receivables

5,519


4,833

Unbilled rent receivables

41,580


30,866

Prepaid expenses and other assets
 
8,558

 
13,195

Deferred costs, net
 
21,716

 
13,429

Total assets
 
$
2,096,019

 
$
2,120,835

LIABILITIES AND EQUITY
 
 

 
 

Mortgage notes payable
 
$
388,537

 
$
172,242

Credit facility
 
485,000

 
635,000

Market lease intangibles, net
 
75,385

 
84,220

Derivatives, at fair value
 
2,320

 
1,276

Accounts payable, accrued expenses and other liabilities (including amounts due to affiliates of $357 and $575 as of September 30, 2015 and December 31, 2014, respectively)
 
28,768

 
27,850

Deferred rent
 
3,839

 
4,550

Dividends payable
 
26

 
20

Total liabilities
 
983,875

 
925,158

Preferred stock, $0.01 par value; 40,866,376 shares authorized, none issued and outstanding
 
—

 
—

Convertible preferred stock, $0.01 par value; 9,133,624 shares authorized, none issued and outstanding
 
—

 
—

Common stock, $0.01 par value; 300,000,000 shares authorized, 162,519,934 and 162,181,939 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively
 
1,626

 
1,622

Additional paid-in capital
 
1,402,990

 
1,401,619

Accumulated other comprehensive loss
 
(2,301
)
 
(816
)
Accumulated deficit
 
(341,110
)
 
(255,478
)
Total stockholders' equity
 
1,061,205

 
1,146,947

Non-controlling interests
 
50,939

 
48,730

Total equity
 
1,112,144

 
1,195,677

Total liabilities and equity
 
$
2,096,019

 
$
2,120,835

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2
Table of Contents
NEW YORK REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
 
Rental income
 
$
32,510

 
$
30,246

 
$
97,171

 
$
83,521

Hotel revenue
 
7,054

 
6,051

 
18,626

 
15,498

Operating expense reimbursements and other revenue
 
5,044

 
4,217

 
13,390

 
11,036

Total revenues
 
44,608

 
40,514

 
129,187

 
110,055

Operating expenses:
 
 

 
 

 
 

 
 
Property operating
 
11,197

 
9,297

 
32,264

 
26,459

Hotel operating

6,525


6,260


18,690


17,182

Operating fees incurred from the Advisor
 
3,121

 
2,980

 
9,366

 
5,254

Acquisition and transaction related
 
2,850

 
4,436

 
3,071

 
16,082

Vesting of asset management fees
 
—

 
—

 
—

 
11,500

Change in fair value of listing promote
 
—

 
(24,700
)
 
—

 
13,400

General and administrative
 
6,519

 
3,339

 
15,672

 
7,458

Depreciation and amortization
 
20,484

 
21,657

 
63,370

 
62,892

Total operating expenses
 
50,696

 
23,269

 
142,433

 
160,227

Operating income (loss)
 
(6,088
)
 
17,245

 
(13,246
)
 
(50,172
)
Other income (expenses):
 
 

 
 

 
 

 
 
Interest expense
 
(7,172
)
 
(8,407
)
 
(19,129
)
 
(17,159
)
Income (loss) from unconsolidated joint venture
 
473

 
(85
)
 
1,278

 
(1,121
)
Income from preferred equity investment, investment securities and interest
 
141

 
769

 
1,079

 
2,070

Gain (loss) on derivative instruments
 
(540
)
 
—

 
(544
)
 
1

Total other expenses
 
(7,098
)
 
(7,723
)
 
(17,316
)
 
(16,209
)
Net income (loss)
 
(13,186
)
 
9,522

 
(30,562
)
 
(66,381
)
Net loss attributable to non-controlling interests
 
434

 
173

 
952

 
683

Net income (loss) attributable to stockholders
 
$
(12,752
)
 
$
9,695

 
$
(29,610
)
 
$
(65,698
)
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Unrealized gain (loss) on derivatives
 
$
(580
)
 
$
1,164

 
$
(1,246
)
 
$
3

Unrealized gain (loss) on investment securities
 
(151
)
 
(77
)
 
(239
)
 
251

Total other comprehensive income (loss)
 
(731
)
 
1,087

 
(1,485
)
 
254

Comprehensive income (loss) attributable to stockholders
 
$
(13,483
)
 
$
10,782

 
$
(31,095
)
 
$
(65,444
)
 
 
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
 
162,202,733

 
161,975,420

 
162,150,947

 
168,624,050

Basic net income (loss) per share attributable to stockholders
 
$
(0.08
)
 
$
0.06

 
$
(0.18
)
 
$
(0.39
)
Diluted weighted average common shares outstanding
 
162,202,733

 
162,181,209

 
162,150,947

 
168,624,050

Diluted net income (loss) per share attributable to stockholders
 
$
(0.08
)
 
$
0.05

 
$
(0.18
)
 
$
(0.39
)
Dividends declared per common share
 
$
0.12

 
$
0.12

 
$
0.35

 
$
0.35

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3
Table of Contents
NEW YORK REIT, INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Nine Months Ended September 30, 2015
(In thousands, except share data)
(Unaudited)


 
 
Common Stock
 
 
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
 
 
 
 
 
Number
of
Shares
 
Par
Value
 
Additional
Paid-In
Capital
 
 
Accumulated
Deficit
 
Total Stockholders'
Equity
 
Non-
controlling
Interests
 
Total
Equity
Balance, December 31, 2014
 
162,181,939

 
$
1,622

 
$
1,401,619

 
$
(816
)
 
$
(255,478
)
 
$
1,146,947

 
$
48,730

 
$
1,195,677

OP units converted to common stock
 
92,751

 
1

 
973

 
—

 
—

 
974

 
(974
)
 
—

Equity-based compensation
 
245,244

 
3

 
398

 
—

 
—

 
401

 
6,117

 
6,518

Distributions to non-controlling interest holders
 
—

 
—

 
—

 
—

 
—

 
—

 
(1,982
)
 
(1,982
)
Dividends declared
 
—

 
—

 
—

 
—

 
(56,022
)
 
(56,022
)
 
—

 
(56,022
)
Net loss
 
—

 
—

 
—

 
—

 
(29,610
)
 
(29,610
)
 
(952
)
 
(30,562
)
Other comprehensive loss
 
—

 
—

 
—

 
(1,485
)
 
—

 
(1,485
)
 
—

 
(1,485
)
Balance, September 30, 2015
 
162,519,934

 
$
1,626

 
$
1,402,990

 
$
(2,301
)
 
$
(341,110
)
 
$
1,061,205

 
$
50,939

 
$
1,112,144

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4
Table of Contents
NEW YORK REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
Nine Months Ended September 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net loss
$
(30,562
)
 
$
(66,381
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 

 
 

Depreciation and amortization
63,370

 
62,892

Amortization of deferred financing costs
4,539

 
6,533

 Accretion of below- and amortization of above-market lease liabilities and assets, net
(5,810
)
 
(7,015
)
Vesting of asset management fees
—

 
11,500

Equity-based compensation
6,518

 
4,548

Loss on fair value of the listing promote and other derivatives
120

 
13,399

   Loss (income) from unconsolidated joint venture
(1,278
)
 
1,121

Gain on sale of investment securities
(102
)
 
—

   Bad debt expense
760

 
—

Changes in assets and liabilities:
 

 
 

Tenant and other receivables
(724
)
 
(4,046
)
Unbilled rent receivables
(11,251
)
 
(11,973
)
Prepaid expenses, other assets and deferred costs
2,325

 
(96
)
Accrued unbilled ground rent
2,493

 
3,260

Accounts payable and accrued expenses
3,557

 
(7,671
)
Due from affiliated entities
—

 
(1,000
)
Deferred rent
(711
)
 
(4,007
)
Net cash provided by operating activities
33,244

 
1,064

Cash flows from investing activities:
 

 
 

Proceeds from sale of preferred equity investment
35,100

 
—

Investment in real estate and other assets
—

 
(316,206
)
Acquisition funds released from (held in) escrow
4,748

 
(8,428
)
Capital expenditures
(23,325
)
 
(5,842
)
Distributions from unconsolidated joint venture
3,550

 
5,177

Proceeds from sale of investment securities
4,357

 
—

Purchase of investment securities
(78
)
 
(3,035
)
Net cash provided by (used in) investing activities
24,352

 
(328,334
)
Cash flows from financing activities:
 

 
 

Proceeds from mortgage notes payable
305,000

 
—

Payments on mortgage notes payable
(88,705
)
 
(353
)
Payments of financing costs
(10,720
)
 
(7,293
)
Proceeds from credit facility
—

 
320,000

Payments on credit facility
(150,000
)
 
—

Proceeds from issuance of common stock
—

 
11,311

Proceeds from issuance of operating partnership units
—

 
750

Payments for purchase of derivative instruments
(488
)
 
—

Repurchases of common stock, inclusive of fees and expenses
—

 
(154,269
)
Payments of offering costs and fees related to stock issuances
—

 
(1,506
)
Increases in funds held in escrow related to financing transactions
(52,089
)
 
—

Dividends paid
(56,016
)
 
(47,464
)
Distributions to non-controlling interest holders
(1,982
)
 
(414
)
Restricted cash
(4,685
)
 
(758
)
Net cash provided by (used in) financing activities
(59,685
)
 
120,004

Net decrease in cash and cash equivalents
(2,089
)
 
(207,266
)
Cash and cash equivalents, beginning of period
22,512

 
233,377

Cash and cash equivalents, end of period
$
20,423

 
$
26,111


5
Table of Contents
NEW YORK REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
Nine Months Ended September 30,
 
2015
 
2014
Supplemental disclosures:
 
 
 
Cash paid for interest
$
14,932

 
$
10,496

Non-cash investing and financing activities:
 

 
 

Dividends payable
26

 
—

Accrued capital expenditures
1,418

 
—

Conversion of OP units to common stock
974

 
—

Common stock issued through distribution reinvestment plan
—

 
19,019

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)


Note 1 — Organization
New York REIT, Inc. (the "Company") focuses on acquiring and owning income-producing commercial real estate in New York City, primarily office and retail properties located in Manhattan. The Company may also acquire multifamily, industrial, hotel and other types of real properties as well as originate or acquire first mortgage loans, mezzanine loans, or preferred equity interests related to New York City real estate. The Company purchased its first property and commenced active operations in June 2010. As of September 30, 2015 , the Company owned 23 properties and real estate-related assets.
The Company, incorporated on October 6, 2009, is 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. The Company operated as a non-traded REIT through April 14, 2014. On April 15, 2014, the Company listed its common stock on the New York Stock Exchange ("NYSE") under the symbol "NYRT" (the "Listing").
Substantially all of the Company's business is conducted through New York Recovery Operating Partnership, L.P. (the "OP"), a Delaware limited partnership. The Company has no direct employees. The Company has retained New York Recovery Advisors, LLC (the "Advisor") to manage its affairs on a day-to-day basis. New York Recovery Properties, LLC (the "Property Manager") serves as the Company's property manager, unless services are performed by a third party for specific properties. Realty Capital Securities, LLC (the "Dealer Manager") served as the dealer manager of the initial public offering, which was ongoing from September 2010 to December 2013 (the "IPO") and, together with its affiliates, continues to provide the Company with various services. The Advisor, Property Manager and Dealer Manager are under common control with AR Capital, LLC ("ARC"), the parent of the Company's sponsor, American Realty Capital III, LLC (the "Sponsor"), as a result of which, they are related parties and receive compensation, fees and expense reimbursements for services related to the investment and management of the Company's assets.
Note 2 — Summary of Significant Accounting Policies
The accompanying consolidated 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. 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. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results for the entire year or any subsequent interim period.
These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of, and for the year ended December 31, 2014 , which are included in the Company's Annual Report on Form 10-K filed with the SEC on May 11, 2015 . There have been no significant changes to the Company's significant accounting policies during the three and nine months ended September 30, 2015 , other than the updates described below and in the subsequent notes.
Reclassifications
Certain prior quarter amounts have been reclassified to conform to the current quarter presentation, which did not have a material impact on the Company's financial statements.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued revised guidance relating to revenue recognition. Under the revised guidance, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revised guidance was to become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption was not permitted under GAAP. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. In July 2015, the FASB deferred the effective date of the revised guidance by one year to annual reporting periods beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as of the original effective date. The Company has not yet selected a transition method and is currently evaluating the impact of the new guidance.

7
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

In January 2015, the FASB issued updated guidance that eliminates extraordinary item classification from GAAP, which was the concept of an event or transaction that is unusual in nature and occurs infrequently being treated as an extraordinary item. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Any amendments may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company has opted to adopt this revised guidance early and has determined that there has been no impact to its financial position, results of operations and cash flows.
In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are variable interest entities ("VIEs") or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership and affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company has not yet selected a transition method and is currently evaluating the impact of the new guidance.
In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendment requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not previously been issued. The revised guidance is not expected to have a significant impact on the Company's financial position, results of operations or cash flows.
In September 2015, the FASB issued an update that eliminates the requirement to adjust provisional amounts from a business combination and the related impact on earnings by restating prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of measurement period adjustments on current and prior periods, including the prior period impact on depreciation, amortization and other income statement items and their related tax effects, shall be recognized in the period the adjustment amount is determined. The cumulative adjustment would be reflected within the respective financial statement line items affected. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company has elected to adopt the new guidance as of September 30, 2015. The adoption of this guidance had no impact on the Company's consolidated financial position, results of operations or cash flows.

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Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Note 3 — Real Estate Investments
The following table presents the allocation of the assets acquired and liabilities assumed during the nine months ended September 30, 2014 . There were no real estate assets acquired or liabilities assumed during the nine months ended September 30, 2015 .
 
 
Nine Months Ended
(In thousands)
 
September 30, 2014
Real estate investments, at cost:
 
 
Land
 
$
68,251

Buildings, fixtures and improvements
 
233,607

Total tangible assets
 
301,858

Acquired intangibles:
 
 
In-place leases
 
25,169

Other intangible
 
3,804

Above-market lease assets
 
3,707

Below-market lease liabilities
 
(23,705
)
Total acquired intangibles
 
8,975

Total assets acquired, net
 
310,833

Additional investment in unconsolidated joint venture
 
273

Preferred equity investment
 
5,100

Cash paid for acquired real estate investments and other assets
 
$
316,206

Number of properties and other investments purchased
 
1

The following table presents future minimum base cash rental payments due to the Company, excluding future minimum base cash rental payments related to unconsolidated joint ventures, subsequent to September 30, 2015 . 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.
(In thousands)
 
Future Minimum Base Cash Rental  Payments
October 1, 2015 - December 31, 2015
 
$
26,745

2016
 
99,361

2017
 
99,291

2018
 
97,216

2019
 
95,837

Thereafter
 
652,674

 
 
$
1,071,124

The following table lists the tenants whose annualized cash rent represented greater than 10% of total annualized cash rent as of September 30, 2015 and 2014 , including annualized cash rent related to the Company's unconsolidated joint venture:
 
 
 
 
September 30,
Property Portfolio
 
Tenant
 
2015
 
2014
Worldwide Plaza
 
Cravath, Swaine & Moore, LLP
 
16%
 
16%
Worldwide Plaza
 
Nomura Holdings America, Inc.
 
10%
 
11%
The termination, delinquency or non-renewal of any of the above tenants may have a material adverse effect on net income (loss).

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NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Real Estate Held For Sale
When assets are identified by management as held for sale, the Company stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company's estimate of the net sales price of the assets.
In September 2015, the Company entered into an agreement to sell its property located at 163 Washington Avenue in Brooklyn, NY for a contract purchase price of $37.7 million . Concurrently with entering into the agreement, the Company stopped recognizing depreciation and amortization expense and the real estate assets associated with 163 Washington Avenue were reclassified as held for sale on the Company's consolidated balance sheet as of September 30, 2015 . No impairment charges were required to be recognized on 163 Washington Avenue. On October 21, 2015, the Company closed on the sale of 163 Washington Avenue. See Note 20 — Subsequent Events.
The following table details the major classes of assets associated with 163 Washington Avenue that have been reclassified as held for sale as of September 30, 2015 :
(In thousands)
 
September 30, 2015
Real estate held for sale, at cost:
 
 
Land
 
$
6,257

Buildings, fixtures and improvements
 
25,122

Acquired intangible lease assets
 
49

Total real estate held for sale, at cost
 
31,428

Less accumulated depreciation and amortization
 
(3,946
)
Real estate assets held for sale, net
 
$
27,482

Note 4 — Investment in Unconsolidated Joint Venture
On October 30, 2013, the Company purchased a 48.9% equity interest in WWP Holdings, LLC ("Worldwide Plaza") for a contract purchase price of $220.1 million , based on the property value for Worldwide Plaza of $1,325.0 million less $875.0 million of debt on the property. As of September 30, 2015 , the Company's pro-rata portion of debt on Worldwide Plaza was $427.9 million . The debt on the property has a weighted average interest rate of 4.6% and matures in March 2023. The Company accounts for the investment in Worldwide Plaza using the equity method of accounting because the Company exercises significant influence over, but does not control, the entity.
Pursuant to the terms of the membership agreement governing the Company’s purchase of the 48.9% equity interest in Worldwide Plaza, the Company retains an option to purchase the balance of the equity interest in Worldwide Plaza beginning 38 months following the closing of the acquisition, or December 2016, at an agreed-upon property value of $1.4 billion , subject to certain adjustments, including, but not limited to, adjustments for certain loans that are outstanding at the time of exercise, adjustments for the percentage equity interest being acquired and any of the Company's preferred return in arrears. If the Company does not exercise its purchase option, it will be subject to a fee in the amount of $25.0 million .
At acquisition, the Company's investment in Worldwide Plaza exceeded the Company's share of the book value of the net assets of Worldwide Plaza by $260.6 million . This basis difference resulted from the excess of the Company's purchase price for its equity interest in Worldwide Plaza over the book value of Worldwide Plaza's net assets. Substantially all of this basis difference was allocated to the fair values of Worldwide Plaza's assets and liabilities. The Company amortizes the basis difference over the anticipated useful lives of the underlying tangible and intangible assets acquired and liabilities assumed. The basis difference related to the land will be recognized upon disposition of the Company's investment. As of September 30, 2015 and December 31, 2014 , the carrying value of the Company's investment in Worldwide Plaza was $223.2 million and $225.5 million , respectively.
The amounts reflected in the following tables (except for the Company’s share of equity and income) are based on the financial information of Worldwide Plaza. The Company does not record losses of the joint venture in excess of its investment balance because the Company is not liable for the obligations of the joint venture or is otherwise committed to provide financial support to the joint venture.

10
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

The condensed balance sheets as of September 30, 2015 and December 31, 2014 for Worldwide Plaza are as follows:
(In thousands)
 
September 30,
2015
 
December 31,
2014
 
 
(Unaudited)
 
 
Real estate assets, at cost
 
$
714,875

 
$
704,143

Less accumulated depreciation and amortization
 
(112,046
)
 
(97,181
)
Total real estate assets, net
 
602,829

 
606,962

Cash and cash equivalents
 
11,951

 
3,784

Other assets
 
258,529

 
252,000

Total assets
 
$
873,309

 
$
862,746

 
 
 
 
 
Debt
 
$
875,000

 
$
875,000

Other liabilities
 
17,240

 
12,442

Total liabilities
 
892,240

 
887,442

Deficit
 
(18,931
)
 
(24,696
)
Total liabilities and deficit
 
$
873,309

 
$
862,746

 
 
 
 
 
Company's basis
 
$
223,229

 
$
225,501

The condensed statements of operations for the three and nine months ended September 30, 2015 and 2014 for Worldwide Plaza are as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
 
2015
 
2014
 
2015
 
2014
Rental income
 
$
30,771

 
$
28,867

 
$
92,036

 
$
84,261

Other revenue
 
1,245

 
1,242

 
3,694

 
3,686

Total revenue
 
32,016

 
30,109

 
95,730

 
87,947

Operating expenses:
 
 
 
 
 
 
 
 
Operating expenses
 
11,812

 
11,407

 
35,780

 
33,699

Depreciation and amortization
 
6,945

 
6,261

 
20,659

 
18,889

Total operating expenses
 
18,757

 
17,668

 
56,439

 
52,588

Operating income
 
13,259

 
12,441

 
39,291

 
35,359

Interest expense
 
(10,102
)
 
(10,102
)
 
(29,976
)
 
(29,976
)
Net income
 
3,157

 
2,339

 
9,315

 
5,383

Preferred return
 
(3,936
)
 
(3,936
)
 
(11,681
)
 
(11,681
)
Net loss to members
 
$
(779
)
 
$
(1,597
)
 
$
(2,366
)
 
$
(6,298
)

11
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Net income (loss) related to Worldwide Plaza includes the Company's pro rata share of Worldwide Plaza net income (loss) to members as well as the Company's preferred return less depreciation and amortization expenses related to the amortization of the basis difference. The following table presents the components of the income (loss) related to the Company's investment in Worldwide Plaza for the periods presented, which is included in income (loss) from unconsolidated joint venture on the consolidated statements of operations and comprehensive income (loss).
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
 
2015
 
2014
 
2015
 
2014
Company's preferred return
 
$
3,936

 
$
3,936

 
$
11,681

 
$
11,681

Company's share of net loss from Worldwide Plaza
 
(381
)
 
(780
)
 
(1,157
)
 
(3,079
)
Amortization of basis difference
 
(3,082
)
 
(3,241
)
 
(9,246
)
 
(9,723
)
Company's income (loss) from Worldwide Plaza
 
$
473

 
$
(85
)
 
$
1,278

 
$
(1,121
)
Note 5 — Preferred Equity Investment
On March 27, 2015, the Company's preferred equity investment in a class A office building located at 123 William Street (the "Property") in the Financial District of downtown Manhattan was repaid as a result of the sale of the Property. The preferred equity investment carried a 6.0% current pay rate and a 2.0% accrual rate. Pursuant to the sale of the Property, the Company received $1.1 million in current and accrued interest income earned and $35.1 million for the return of all principal invested.
The preferred equity investment had a fixed return based on contributed capital, no participation in profits or losses of the real estate activities, and property foreclosure rights in the event of default. As such, the Company recorded returns earned in income from preferred equity investment, investment securities and interest income on the consolidated statements of operations and comprehensive income (loss).
Note 6 — Investment Securities
The Company's investment securities consist of an investment in redeemable preferred stock with a fair value of $0.2 million as of September 30, 2015 . As of December 31, 2014 , the Company's investment securities consisted of redeemable preferred stock and equity securities, with an aggregate fair value of $4.7 million . The equity securities, which were sold during the three months ended September 30, 2015, consisted of a real estate income fund managed by an affiliate of the Sponsor. See Note 14 — Related Party Transactions and Arrangements.
The Company's preferred stock investment is redeemable at the issuer's option after five years from issuance.
The following table details the unrealized gains and losses on investment securities as of September 30, 2015 and December 31, 2014 :
(In thousands)
 
Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
September 30, 2015
 
 
 
 
 
 
 
 
Redeemable preferred stock
 
$
238

 
$
5

 
$
—

 
$
243

December 31, 2014
 
 
 
 
 
 
 
 
Redeemable preferred stock
 
$
1,288

 
$
21

 
$
(12
)
 
$
1,297

Equity securities
 
3,127

 
235

 
—

 
3,362

Total
 
$
4,415

 
$
256

 
$
(12
)
 
$
4,659

As of September 30, 2015 , the Company did not have any securities in a continuous unrealized loss position. No other-than-temporary impairment charges were required to be recognized during the three and nine months ended September 30, 2015 and 2014 .

12
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Note 7 — Credit Facility
On April 14, 2014, the Company amended and restated its credit facility with Capital One, National Association (the "Credit Facility"). The Credit Facility allows for total borrowings of up to $705.0 million with a $305.0 million term loan and a $400.0 million revolving loan. The term loan component of the Credit Facility matures in August 2018 and the revolving loan component matures in August 2016. The Company has two options to extend the maturity date of the revolving loan component of the Credit Facility through August 2018. The Credit Facility contains an "accordion feature" to allow the Company, under certain circumstances, and with the consent of its lenders, to increase the aggregate loan borrowings to up to $1.0 billion of total borrowings.
On August 27, 2015, the Company entered into an amendment pursuant to which certain changes were made under the Credit Facility primarily to increase the borrowing base capacity including, among other changes, (i) the ability to add a hotel asset as a borrowing base asset and (ii) reducing the debt service coverage ratio test from 1.4 to 1.3 for draw downs on the Credit Facility. The Company incurred $6.3 million of fees related to the amendment of which $3.9 million have been capitalized and included in deferred costs on the consolidated balance sheets and $2.4 million are included in acquisition and transaction related expense on the consolidated statements of operations and comprehensive income (loss).
The Company has the option, based upon its corporate leverage, to have the Credit Facility priced at either: (a) LIBOR, plus an applicable margin that ranges from 1.50% to 2.25% ; or (b) the Base Rate plus an applicable margin that ranges from 0.50% to 1.25% . Base Rate is defined in the Credit Facility as the greater of (i) the fluctuating annual rate of interest announced from time to time by the lender as its “prime rate,” (ii) 0.50% above the federal funds effective rate and (iii) 1.00% above the applicable one-month LIBOR.
The Company repaid $150.0 million in advances on the revolving portion of its Credit Facility during the three months ended September 30, 2015 . The outstanding balance of the term and revolving portions of the Credit Facility was $305.0 million and $180.0 million , respectively, as of September 30, 2015 and $305.0 million and $330.0 million , respectively as of December 31, 2014 . The Credit Facility had a combined weighted average interest rate of 2.21% and 2.08% as of September 30, 2015 and December 31, 2014 , respectively, a portion of which is fixed with an interest rate swap. The Credit Facility includes an unused commitment fee per annum of (a) 0.15% if the unused balance of the facility is equal to or less than 50% of the available facility and (b) 0.25% if the unused balance of the facility exceeds 50% of the available facility. The unused borrowing capacity, based on the borrowing base properties as of September 30, 2015 , was $65.3 million . Availability of borrowings is based on a pool of eligible unencumbered real estate assets.
The Credit Facility provides for monthly interest payments for each Base Rate loan and periodic payments for each LIBOR loan, based upon the applicable LIBOR loan period, with all principal outstanding being due on the maturity date. The Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty. In the event of a default, the lenders have the right to terminate their obligations under the Credit Facility and to accelerate the payment on any unpaid principal amount of all outstanding loans.
The Credit Facility requires the Company to meet certain financial covenants, including the maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios) as well as the maintenance of a minimum net worth. As of September 30, 2015 , the Company was in compliance with the debt covenants under the Credit Facility.

13
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Note 8 — Mortgage Notes Payable
The Company's mortgage notes payable as of September 30, 2015 and December 31, 2014 consist of the following:
 
 
 
 
Outstanding Loan Amount
 
 
 
 
 
 
Portfolio
 
Encumbered
Properties
 
September 30,
2015
 
December 31,
2014
 
Effective
Interest Rate
 
Interest Rate
 
Maturity
 
 
 
 
(In thousands)
 
(In thousands)
 
 
 
 
 
 
Design Center
 
1
 
$
19,899

 
$
20,198

 
4.4
%
 
Fixed
 
Dec. 2021
Foot Locker
 
1
 
3,250

 
3,250

 
4.6
%
 
Fixed
 
Jun. 2016
Duane Reade
 
1
 
8,400

 
8,400

 
3.6
%
 
Fixed
 
Nov. 2016
1100 Kings Highway
 
1
 
20,200

 
20,200

 
3.4
%
 
Fixed
(1)  
Aug. 2017
1623 Kings Highway
 
1
 
7,288

 
7,288

 
3.3
%
 
Fixed
(1)  
Nov. 2017
256 West 38th Street
 
1
 
24,500

 
24,500

 
3.1
%
 
Fixed
(1)  
Dec. 2017
1440 Broadway (2)
 
1
 
305,000

 
—

 
3.8
%
 
Variable
(3)  
Oct. 2019
Bleecker Street
 

 
—

 
21,300

 


 

 

Regal Parking Garage
 

 
—

 
3,000

 


 

 

Washington Street Portfolio
 

 
—

 
4,741

 


 

 

One Jackson Square
 

 
—

 
13,000

 


 

 

350 West 42nd Street
 

 
—

 
11,365

 


 

 

229 West 36th Street
 

 
—

 
35,000

 


 

 

 
 
7
 
$
388,537

 
$
172,242

 
3.8
%
 
(4)  
 
 
______________________ 
(1)
Fixed through an interest rate swap agreement.
(2)
Total commitments of $325.0 million ; additional $20.0 million available, subject to lender approval, to fund certain tenant allowances, capital expenditures and leasing costs.
(3)
LIBOR portion is capped through an interest rate cap agreement.
(4)
Calculated on a weighted average basis for all mortgages outstanding as of September 30, 2015 .
During the three and nine months ended September 30, 2015 , the Company paid off six mortgage notes payable before the scheduled maturity dates. As a result, the Company incurred $1.8 million in expenses related to these transactions, which relates to prepayment penalties and the write-off of previously recorded deferred financing costs, of which $0.6 million is included in acquisition and transaction related expenses and $1.2 million is included in interest expense on the consolidated statements of operations and comprehensive income (loss).
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. The Company will be required to fund the guarantees if certain tenants exercise contractual renewal options outlined in their respective lease agreements. As of September 30, 2015 , the Company has not been required to perform under the guarantees and has not recognized any assets or liabilities related to the guarantees.
Real estate investments of $710.0 million , at cost, at September 30, 2015 have been pledged as collateral to their respective mortgages and are not available to satisfy the Company's corporate debts and obligations unless first satisfying the mortgage notes payable on the properties.

14
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

The following table summarizes the scheduled aggregate principal repayments subsequent to September 30, 2015 :
(In thousands)
 
Future Minimum Principal Payments
October 1, 2015 - December 31, 2015
 
$
101

2016
 
12,068

2017
 
55,533

2018
 
3,703

2019
 
308,869

Thereafter
 
8,263

Total
 
$
388,537

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, 2015 , the Company was in compliance with the financial covenants under its mortgage note agreements.
Note 9 — Subordinated Listing Distribution Derivative
Upon occurrence of the Listing, New York Recovery Special Limited Partnership, LLC (the "SLP") became entitled to begin receiving distributions of net sale proceeds pursuant to its special limited partner interest in the OP (the "SLP Interest") in an aggregate amount that was evidenced by the issuance of a note by the OP (the "Listing Note"). The Listing Note was equal to  15.0%  of the amount, if any, by which (a) the average market value of the Company’s outstanding common stock for the period  180  days to  210  days after the Listing, plus dividends paid by the Company prior to the Listing, exceeded (b) the sum of the total amount of capital raised from stockholders during the Company’s IPO and the amount of cash flow necessary to generate a  6.0%  annual cumulative, non-compounded return to such stockholders. Concurrently with the Listing, the Company, as general partner of the OP, caused the OP to enter into the Listing Note Agreement dated April 15, 2014 by and between the OP and the SLP, and caused the OP to issue the Listing Note. The Listing Note was evidence of the SLP's right to receive distributions of net sales proceeds from the sale of the Company's real estate and real estate-related assets up to an aggregate amount equal to the principal balance of the Listing Note. Pursuant to the terms of the Partnership Agreement, the SLP had the right, but not the obligation, to convert all or a portion of the SLP interest into limited partnership units of the OP ("OP units"), which are convertible into shares of the Company's common stock or the cash value of a corresponding number of shares, at the Company's election, in accordance with the limited partnership agreement of the OP.
The principal amount of the Listing Note was determined based, in part, on the actual market value of the Company’s outstanding common stock for the period  180  days to  210  days after the Listing. Until the final principal amount of the Listing Note was determined in November 2014, the Listing Note was considered to be a derivative which was marked to fair value at each reporting date, with changes in the fair value recorded in the consolidated statements of operations and comprehensive income (loss), which resulted in a gain of $24.7 million and a loss of $13.4 million , respectively, during the three and nine months ended September 30, 2014 .
The principal amount of the Listing Note was determined to be $33.5 million and was recorded as an expense in the consolidated statements of operations and comprehensive income (loss) during the year ended December 31, 2014. On November 21, 2014, at the request of the SLP, the Listing Note was converted into 3,062,512 OP units and the value of the Listing Note was reclassified from derivative liabilities to non-controlling interest on the consolidated balance sheets.

15
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Note 10 — Fair Value of Financial Instruments
The Company determines fair value 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 reflects the contractual terms of the instruments, as applicable, including the period to maturity, and may use 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:
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 — Unobservable inputs that reflect the entity's own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is 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 falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.
Although the Company has determined that the majority of the inputs used to value its derivatives, such as interest rate swaps and caps, fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize 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 September 30, 2015 and December 31, 2014 , the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company's derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. See Note 11 — Interest Rate Derivatives and Hedging Activities.
The valuation of derivatives is determined using a discounted cash flow analysis on the expected cash flows. This analysis reflects 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 are incorporated into the fair values to account for the Company's potential nonperformance risk and the performance risk of the counterparties.
The Company has investments in redeemable preferred stock as of September 30, 2015 and had investments in redeemable preferred stock and an equity security as of December 31, 2014 that are traded in active markets and therefore, due to the availability of quoted market prices in active markets, the Company classified these investments as Level 1 in the fair value hierarchy.
The following table presents information about the Company's assets and liabilities (including derivatives that are presented net) measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 , aggregated by the level in the fair value hierarchy within which those instruments fall:
(In thousands)
 
Quoted Prices in Active Markets
Level 1
 
Significant Other Observable Inputs
Level 2
 
Significant Unobservable Inputs
Level 3
 
Total
September 30, 2015
 
 
 
 
 
 
 
 
Derivatives, net
 
$
—

 
$
(1,949
)
 
$
—

 
$
(1,949
)
Investment securities
 
$
243

 
$
—

 
$
—

 
$
243

December 31, 2014
 
 
 
 
 
 
 
 
Derivatives, net
 
$
—

 
$
(1,071
)
 
$
—

 
$
(1,071
)
Investment securities
 
$
4,659

 
$
—

 
$
—

 
$
4,659


16
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. There were no transfers between levels of the fair value hierarchy during the three and nine months ended September 30, 2015 .
Financial instruments not carried at fair value
The Company is required to disclose the fair value of financial instruments for which it is 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, notes payable, accounts payable and dividends payable approximates their carrying value on the consolidated balance sheets due to their short-term nature. The fair values of the Company's financial instruments that are not reported at fair value on the consolidated balance sheet are reported below.
 
 
 
 
September 30, 2015
 
December 31, 2014
(In thousands)
 
Level
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Mortgage notes payable
 
3
 
$
388,537

 
$
390,897

 
$
172,242

 
$
174,468

Credit Facility
 
3
 
$
485,000

 
$
487,934

 
$
635,000

 
$
651,579

Preferred equity investment
 
3
 
$
—

 
$
—

 
$
35,100

 
$
34,800

The fair value of mortgage notes payable, the fixed-rate portions of term loans on the Credit Facility and the preferred equity investment are estimated using a discounted cash flow analysis based on similar types of arrangements. The Company's preferred equity investment was repaid in March 2015. See Note 5 — Preferred Equity Investment. Advances under the Credit Facility with variable interest rates and advances under the revolving portion of the Credit Facility are considered to be reported at fair value.
Note 11 — Interest Rate Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, collars, options, floors and other interest rate derivative contracts, 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 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 be able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships.
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 collars 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 collars designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract and payments of variable-rate amounts if interest rates fall below the floor strike rate on the contract.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company uses such derivatives to hedge the variable cash flows associated with variable-rate debt.
During the three and nine months ended September 30, 2015 , the Company terminated two of its interest rate swaps, which made it probable that the forecasted transactions would not occur and, as a result, accelerated the reclassification of amounts in accumulated other comprehensive loss to earnings. The accelerated amounts resulted in a loss of $0.2 million for the three and nine months ended September 30, 2015 , which is included in the gain (loss) on derivative instruments on the consolidated statements of operations and comprehensive income (loss).

17
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During the next 12 months , the Company estimates that an additional $1.4 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense.
As of September 30, 2015 and December 31, 2014 , the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk.
 
 
September 30, 2015
 
December 31, 2014
Interest Rate Derivative
 
Number of Instruments
 
Notional Amount
 
Number of Instruments
 
Notional Amount
 
 
 
 
(In thousands)
 
 
 
(In thousands)
Interest rate swaps
 
4
 
$
131,988

 
6
 
$
179,988

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 are recorded directly in earnings, which resulted in an expense of $0.3 million during the three and nine months ended September 30, 2015 and included in gain (loss) on derivative instruments on the consolidated statements of operations and comprehensive income (loss).
As of September 30, 2015 , the Company had the following outstanding interest rate derivatives that were not designated as hedges in qualified hedging relationships.
 
 
September 30, 2015
 
December 31, 2014
Interest Rate Derivative
 
Number of
Instruments
 
Notional Amount
 
Number of
Instruments
 
Notional Amount
 
 
 
 
(In thousands)
 
 
 
(In thousands)
Interest rate caps
 
1
 
$
265,000

 
—
 
$
—

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2015 and December 31, 2014 :
(In thousands)
 
Balance Sheet Location
 
September 30, 2015
 
December 31, 2014
Derivatives designated as hedging instruments:
 
 
 
 
Interest rate swaps
 
Derivative assets, at fair value
 
$
—

 
$
205

Interest rate swaps
 
Derivative liabilities, at fair value
 
$
(2,320
)
 
$
(1,276
)
Derivatives not designated as hedging instruments:
 
 
 
 
Interest rate caps
 
Derivative assets, at fair value
 
$
371

 
$
—


18
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Derivatives in Cash Flow Hedging Relationships
The table below details the location in the financial statements of the income or loss recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2015 and 2014 :
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
 
2015
 
2014
 
2015
 
2014
Amount of loss recognized in accumulated other comprehensive income (loss) from interest rate derivatives (effective portion)
 
$
(1,286
)
 
$
619

 
$
(3,005
)
 
$
(1,613
)
Amount of loss reclassified from accumulated other comprehensive income (loss) into income as interest expense (effective portion)
 
$
(706
)
 
$
(545
)
 
$
(1,759
)
 
$
(1,616
)
Amount of loss recognized in loss on derivative instruments (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing)
 
$
—

 
$
—

 
$
(4
)
 
$
1

Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of September 30, 2015 and December 31, 2014 . 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 sheets.
 
 
 
 
 
 
 
 
Gross Amounts Not Offset on the Balance Sheet
 
 
Derivatives  (In thousands)
 
Gross Amounts of Recognized Assets
 
Gross Amounts of Recognized Liabilities
 
Net Amounts of Assets (Liabilities) presented on the Balance Sheet
 
Financial Instruments
 
Cash Collateral Posted
 
Net Amount
September 30, 2015
 
$
371

 
$
(2,320
)
 
$
(1,949
)
 
$
—

 
$
—

 
$
(1,949
)
December 31, 2014
 
$
205

 
$
(1,276
)
 
$
(1,071
)
 
$
—

 
$
—

 
$
(1,071
)
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 September 30, 2015 , 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 $2.4 million . As of September 30, 2015 , the Company has not posted any collateral related to its 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 the aggregate termination value of $2.4 million at September 30, 2015 .
Note 12 — Common Stock
As of September 30, 2015 and December 31, 2014 , the Company had 162.5 million and 162.2 million shares of common stock outstanding, respectively, including shares of unvested restricted common stock ("restricted shares"), converted preferred shares and shares issued under the distribution reinvestment plan (the "DRIP"), but not including OP units or Long-term Incentive Plan units ("LTIP units") which may in the future be convertible into shares of common stock.

19
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

From December 2010 to April 2014, the Company declared and paid dividends at a dividend rate equal to $0.605 per annum per share of common stock. The dividends were paid by the fifth day following each month end to stockholders of record at the close of business each day during the prior month at a per share rate of 0.0016575342 per day. In April 2014, the Company's board of directors authorized, and the Company declared, a monthly dividend at an annualized rate equal to $0.46 per share per annum. Beginning in April 2014, dividends are 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. The Company's board of directors may reduce the amount of dividends paid or suspend dividend payments at any time and therefore dividend payments are not assured.
Note 13 — Commitments and Contingencies
Future Minimum Lease Payments
The Company entered into operating and capital lease agreements primarily related to certain acquisitions under leasehold interest arrangements. The following table reflects the minimum base cash payments 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.
 
 
Future Minimum Base Rent Payments
(In thousands)
 
Operating Leases
 
Capital Leases
October 1, 2015 - December 31, 2015
 
$
1,242

 
$
22

2016
 
4,958

 
86

2017
 
4,905

 
86

2018
 
5,089

 
86

2019
 
5,346

 
86

Thereafter
 
251,627

 
3,490

Total minimum lease payments
 
$
273,167

 
$
3,856

Less: amounts representing interest
 
 
 
(1,737
)
Total present value of minimum lease payments
 
 
 
$
2,119

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, 2015 and 2014 . During the three and nine months ended September 30, 2015 and 2014 , 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 September 30, 2015 and December 31, 2014 .
(In thousands)
 
September 30, 2015
 
December 31, 2014
Buildings, fixtures and improvements
 
$
11,783

 
$
11,783

Less accumulated depreciation and amortization
 
(1,563
)
 
(1,137
)
Total real estate investments, net
 
$
10,220

 
$
10,646

Litigation and Regulatory Matters
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company.
RXR Realty (“RXR”) initiated a suit against the Company alleging that it suffered “lost profits” in connection with the Company’s purchase of Worldwide Plaza in October 2013. On August 12, 2014, the Supreme Court of the State of New York dismissed all of RXR’s claims against the seller of Worldwide Plaza and dismissed RXR’s disgorgement claims against the Company, permitting only a limited, immaterial claim against the Company for RXR’s cost of producing due diligence-related material to proceed. RXR appealed the ruling and, on October 13, 2015, the appellate court upheld the previous decisions; however, the appellate court held that the trial court's exclusion of lost profit damages was premature and would have to be considered through a motion for summary judgment. The Company intends to move for summary judgment. The Company has not recognized a liability with respect to RXR's claim because the Company does not believe that it is probable that it will incur a related material loss.

20
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

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 14 — Related Party Transactions and Arrangements
The Advisor and the SLP each hold an interest in the OP. See Note 19 — Non-Controlling Interests.
During the nine months ended September 30, 2015 , the Company had investments in a real estate income fund managed by an affiliate of the Sponsor (see Note 6 — Investment Securities). There was no obligation to purchase any additional shares and the shares could have been sold at any time. The Company sold its investments in the real estate income fund during the three months ended September 30, 2015 . The Company recognized income on this investment of $0.1 million during the three and nine months ended September 30, 2015 , including the gain recognized on the sale of the investments. During the three and nine months ended September 30, 2014 , the Company recognized income of approximately $36,000 .
The following table details revenues and accounts receivable from related parties at the Viceroy Hotel.
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
Receivable as of
(In thousands)
 
2015
 
2014
 
2015
 
2014
 
September 30, 2015
 
December 31, 2014
Hotel revenues
 
$
25

 
$
164

 
$
110

 
$
318

 
$
—

 
$
23

Fees Paid in Connection With the Operations of the Company
Prior to October 12, 2014 (the "Termination Date"), the Advisor received an acquisition fee of 1.0% of the contract purchase price of each acquired property and 1.0% of the amount advanced for a loan or other investment and, if the Advisor provided services in connection with the origination or refinancing of any debt that the Company obtained and used to acquire assets, or that is assumed, directly or indirectly, in connection with the acquisition of assets, the Company paid the Advisor a financing coordination fee equal to 0.75% of the amount available or outstanding under such financing or such assumed debt. Additionally, the Company reimbursed the Advisor for expenses incurred by the Advisor for services provided by third parties and acquisition expenses incurred by the Advisor directly from third parties. The total of all acquisition fees, acquisition expenses and any financing coordination fees with respect to the Company's portfolio of investments or reinvestments did not exceed 4.5% of the contract purchase price of the Company's portfolio as measured as of the Company's last property acquisition.
On April 15, 2014, in conjunction with the Listing, the Company amended and restated its advisory agreement, by and among the Company, the OP and the Advisor, which, among other things, terminated the acquisition fee and financing coordination fee on the Termination Date, which was 180 days after the Listing. The Company amended and restated its advisory agreement again on June 26, 2015 (as amended from time to time, the "Advisory Agreement"), which, among other things, removed the 2%/25% Limitation (defined below).
In the future, if the Company acquires additional properties, the Company will reimburse the Advisor for expenses incurred by the Advisor for services provided by third parties and acquisition expenses incurred by the Advisor directly from third parties, but will not pay acquisition fees or financing coordination fees.

21
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Until the Listing, the Company paid the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the board of directors) to the Advisor a number of performance-based restricted, forfeitable partnership units of the OP designated as "Class B units" equal to a maximum 0.75% per annum of the cost of the Company's assets. The value of issued Class B units was determined and expensed when the vesting condition was met, which occurred as of the Listing. As of April 15, 2014, in aggregate, the board of directors had approved the issuance of 1,188,667 Class B units to the Advisor in connection with this arrangement. The Advisor received distributions on unvested Class B units equal to the per share dividends received on the Company's common stock. The vesting condition related to these Class B units was satisfied upon completion of the Listing, resulting in $11.5 million of expense on April 15, 2014, which was included in vesting of asset management fees expense in the consolidated statement of operations and comprehensive income (loss) and in non-controlling interest on the consolidated balance sheets. On April 15, 2014, the Class B units were converted to OP units on a one-to-one basis.
As of the Listing, the asset management subordinated participation is no longer applicable. Instead an asset management fee became payable to the Advisor 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 . The asset management fee may be paid in the form of cash, OP units, and shares of restricted common stock of the Company, or a combination thereof, at the Advisor’s election. During the three and nine months ended September 30, 2015 and the period from the Listing to September 30, 2014 , the asset management fee was paid in cash.
Unless the Company contracts with a third party, the Company pays the 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 based on a percentage of gross revenues. The Company also reimburses the Property Manager for property-level expenses. The Property Manager may 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 contracts for these services. If the Company contracts directly with third parties for such services, the Company will pay them customary market fees and pay the Property Manager an oversight fee equal to 1.0% of the gross revenues of the applicable property.
The Company reimburses the Advisor's costs and expenses of providing services. Previously, reimbursement of costs and expenses was subject to the limitation that the Company would not reimburse the Advisor for any amount by which the Company's total operating expenses (as defined in the Advisory Agreement) for the four preceding fiscal quarters exceeded the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt or other similar non cash reserves and excluding any gain from the sale of assets for that period (the "2%/25% Limitation"). Additionally, the Company will not reimburse the Advisor for personnel costs in connection with services for which the Advisor receives a separate fee. The 2%/25% Limitation was removed from the Advisory Agreement in connection with the amendment and restatement in June 2015.
The Dealer Manager and its affiliates also provide transfer agency services, as well as transaction management and other professional services. These fees are included in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss) during the period the service was provided.

22
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

The following table details amounts incurred, forgiven and contractually due in connection with the operations related services described above as of and for the periods presented:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
Payable as of
 
 
2015
 
2014
 
2015
 
2014
 
September 30,
 
December 31,
(In thousands)
 
Incurred
 
Forgiven
 
Incurred
 
Forgiven
 
Incurred
 
Forgiven
 
Incurred
 
Forgiven
 
2015
 
2014
Acquisition fees and related cost reimbursements
 
$
—

 
$
—

 
$
3,350

 
$
—

 
$
—

 
$
—

 
$
3,350

 
$
—

 
$
—

 
$
—

Financing coordination fees
 
—

 
—

 
—

 
—

 
—

 
—

 
2,363

 
—

 
—

 
—

Ongoing fees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
Asset management fees (1)
 
3,121

 
—

 
2,980

 
—

 
9,366

 
—

 
5,254

 
—

 
10

 
15

Transfer agent and other professional fees
 
448

 
—

 
392

 
—

 
902

 
—

 
2,019

 
—

 
347

 
560

Property management and leasing fees
 
—

 
727

 
—

 
431

 
—

 
1,946

 
—

 
1,218

 
—

 
—

Distributions on Class B units
 
—

 
—

 
—

 
—

 
—

 
—

 
107

 
—

 
—

 
—

Total related party operational fees and reimbursements
 
$
3,569

 
$
727

 
$
6,722

 
$
431

 
$
10,268

 
$
1,946

 
$
13,093

 
$
1,218

 
$
357

 
$
575

___________________________________________
(1)
Prior to the Listing, the Company caused the OP to issue to the Advisor restricted performance based Class B units for asset management services, which vested as of the Listing.
In order to improve operating cash flows and the ability to pay dividends from operating cash flows, the Advisor agreed to waive certain fees including property management fees during the three and nine months ended September 30, 2015 and 2014 . Because the Advisor waived certain fees, cash flow from operations that would have been paid to the Advisor was available to pay dividends to stockholders. The fees that were waived were not deferrals and accordingly, will not be paid to the Advisor in any subsequent periods. Additionally, to improve the Company's working capital, the Advisor may elect to absorb a portion of the Company's expenses. The following table details property operating and general and administrative expenses absorbed by the Advisor during the periods presented. These costs are presented net in the consolidated statements of operations and comprehensive income (loss).
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(In thousands)
 
2015
 
2014
 
2015
 
2014
Property operating expenses absorbed
 
$
—

 
$
623

 
$
—

 
$
623

General and administrative expenses absorbed
 
—

 
377

 
—

 
1,418

Total expenses absorbed
 
$
—

 
$
1,000

 
$
—

 
$
2,041

The Company had no receivables from the Advisor related to absorbed general and administrative expenses as of September 30, 2015 or December 31, 2014 .
Fees Paid in Connection with the Liquidation or Listing of the Company's Real Estate Assets
In December 2013, the Company entered into a transaction management agreement with RCS Advisory Services, LLC, an entity under common control with the Dealer Manager, to provide strategic alternatives transaction management services through the occurrence of a liquidity event and a-la-carte services thereafter. The Company paid $3.0 million pursuant to this agreement. The Company incurred $1.5 million of expenses pursuant to this agreement during the nine months ended September 30, 2014 and the year ended December 31, 2013, including amounts for services provided in preparation for the Listing, which are included in acquisition and transaction related costs in the consolidated statement of operations and comprehensive income (loss). The Company did not incur any expenses pursuant to this agreement during the three months ended September 30, 2014 or for the three and nine months ended September 30, 2015 . The Company does not owe the Dealer Manager any more fees pursuant to this agreement.

23
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

In December 2013, the Company entered into an information agent and advisory services agreement with the Dealer Manager and American National Stock Transfer, LLC, an entity under common control with the Dealer Manager, to provide in connection with a liquidity event, advisory services, educational services to external and internal wholesalers, communication support as well as proxy, tender offer or redemption and solicitation services. The Company paid $1.9 million pursuant to this agreement. For the nine months ended September 30, 2014 , the Company incurred $1.3 million of expenses pursuant to this agreement, which included amounts for services provided in preparation for the Company's tender offer in April 2014 (the "Tender Offer"), and are included in additional paid-in capital on the accompanying consolidated balance sheets. The Company incurred $0.6 million in fees pursuant to this arrangement during the year ended December 31, 2013 which were included in acquisition and transaction related costs in the consolidated statement of operations and comprehensive income (loss). The Company did not incur any expenses pursuant to this agreement during the three months ended September 30, 2014 or for the three and nine months ended September 30, 2015 . Thus, the Company does not owe the Dealer Manager any more fees pursuant to this agreement.
In December 2013, the Company entered into an agreement with RCS Capital, the investment banking and capital markets division of the Dealer Manager, for strategic and financial advice and assistance in connection with (i) a possible sale transaction involving the Company (ii) the possible listing of the Company’s securities on a national securities exchange, and (iii) a possible acquisition transaction involving the Company. The Dealer Manager was entitled to a transaction fee equal to 0.25% of the transaction value in connection with the possible sale transaction, listing or acquisition. In April 2014, in connection with the Listing, the Company incurred and paid $6.9 million in connection with this agreement which were included in acquisition and transaction related costs in the consolidated statement of operations and comprehensive income (loss). Thus, the Company does not owe the Dealer Manager any more fees pursuant to this agreement.
During the nine months ended September 30, 2014 , the Company incurred $0.6 million of expenses to affiliated entities of the Advisor pertaining to general legal, marketing and sales services provided in connection with the Listing. These expenses are included in acquisition and transaction related costs in the consolidated statement of operations and comprehensive income (loss). During the nine months ended September 30, 2014 , the Company also incurred approximately $9,000 of expenses to affiliated entities pertaining to general legal services provided in connection with the Tender Offer. The Company did not incur any expenses pursuant to this agreement during the three months ended September 30, 2014 or for the three and nine months ended September 30, 2015 . These expenses are included in additional paid-in capital on the accompanying consolidated balance sheets. As of September 30, 2015 and December 31, 2014 , there were no amounts payable to affiliated entities of the Advisor in accounts payable and accrued expenses on the accompanying consolidated balance sheets relating to the Listing or Tender Offer.
For substantial assistance in connection with the sale of properties, the Company will pay the Advisor a property disposition fee not to exceed the lesser of 2.0% of the contract sale price of the property and 50% of the competitive real estate commission paid if a third party broker is also involved; provided, however that in no event may the property disposition fee paid to the Advisor when added to real estate commissions paid to unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a competitive real estate commission. For purposes of the foregoing, "competitive real estate commission" means a real estate brokerage commission for the purchase or sale of a property which is reasonable, customary and competitive in light of the size, type and location of the property. No such fees were incurred or paid for the three and nine months ended September 30, 2015 and 2014 .
In connection with the Listing, the OP entered into the Listing Note. See Note 9 - Subordinated Listing Distribution Derivative.
In connection with the Listing and the Advisory Agreement, the Company terminated the subordinated termination fee that would be due to the Advisor in the event of termination of the Advisory Agreement.
In October 2014, the Company entered into separate transaction management agreements with Barclays Capital Inc. and the Dealer Manager as financial advisors to assist the board of the Company in evaluating strategic options to enhance long-term shareholder value, including a business combination involving the Company or a sale of the Company. In May 2015, the Company’s board of directors suspended the formal strategic alternatives process and the Company terminated its agreements with Barclays Capital Inc. and RCS Capital. The Company is no longer obligated to pay any transaction fees under either agreement.

24
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

Note 15 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the 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, the sale of shares of the Company's common stock available for issue, transfer agency services 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 the 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 16 — 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 will be 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, 2015 and December 31, 2014 , 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 Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.
Prior to the Listing, the RSP provided for the automatic grant of 3,000 restricted shares of common stock to each of the independent directors, without any further action by the Company's board of directors or the stockholders, on the date of initial election to the board of directors and on the date of each annual stockholder's meeting. Restricted shares issued to independent directors vest over a five-year period in increments of 20% per annum. Subsequent to the Listing, the Company amended the RSP to, among other things, remove the fixed amount of restricted shares that are automatically granted to the independent directors. Under the amended RSP, the annual amount granted to the independent directors is determined by the board of directors. 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 re-elected to the board.
  Prior to March 31, 2014, the total number of shares of common stock granted under the RSP could not exceed 5.0% of the Company's outstanding shares on a fully diluted basis at any time, and in any event could not exceed 7.5 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events). On March 31, 2014, the Company adopted an amendment to the Company’s RSP to increase the number of shares of the Company capital stock, par value $0.01 per share, available for awards thereunder to 10% of the Company’s outstanding shares of capital stock on a fully diluted basis at any time. The amendment also eliminated the RSP limit of 7.5 million shares of capital stock.
Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash dividends prior to the time that the restrictions on the restricted shares have lapsed. Any dividends payable in shares of common stock shall be subject to the same restrictions as the underlying restricted shares.

25
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

The following table displays restricted share award activity during the nine months ended September 30, 2015 :
 
Number of Restricted Shares
 
Weighted-Average Issue Price
Unvested, December 31, 2014
89,499

 
$
10.73

Granted
301,907

 
10.36

Vested
(17,558
)
 
10.75

Forfeited
(56,633
)
 
10.36

Unvested, September 30, 2015
317,215

 
$
10.44

During the nine months ended September 30, 2015 , the board of directors approved, and the Company awarded, 279,365 restricted shares to employees of the Advisor. The awards vest over a four year period in increments of 25% per annum. The fair value of the awards granted to employees of the Advisor are remeasured quarterly, with the resulting amortization adjustments reflected in general and administrative expense in the consolidated statements of operations and comprehensive income (loss). During the three months ended September 30, 2015 , 56,633 restricted shares were forfeited.
For awards granted to directors of the Company, the fair value of the restricted shares on the date of grant, based on the per share closing price on the NYSE, is expensed on a straight-line basis over the service period.
Compensation expense related to restricted shares was $0.2 million and $0.4 million , respectively, for the three and nine months ended September 30, 2015 . Compensation expense related to restricted shares was $1.0 million and $1.1 million for the three and nine months ended September 30, 2014 , respectively.
As of September 30, 2015 , the Company had approximately $2.1 million of unrecognized compensation cost related to unvested restricted share awards granted under the Company’s RSP, which is expected to vest over a period of 3.4 years.
2014 Advisor Multi-Year Outperformance Agreement
On April 15, 2014 (the "Effective Date") in connection with the Listing, the Company entered into the 2014 Advisor Multi-Year Outperformance Agreement (as amended and restated effective August 5, 2015, the "OPP") with the OP and the Advisor. The Company amended and restated the OPP effective August 5, 2015 to amend certain definitions related to performance measurement to equitably adjust for share issuances and share repurchases for the OPP's remaining valuation dates.
Under the OPP, the Advisor was issued 8,880,579 LTIP units in the OP 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 interest in the OP.

26
Table of Contents
NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

The Advisor is eligible 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 based on the Company’s achievement of certain levels of total return to its 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 Periods”); and the initial 24 -month period of the Three -Year Period (the “Two-Year Period”), as follows:
 
 
 
 
Performance Period
 
Annual Period
 
Interim Period
Absolute Component: 4% of any excess Total Return if total shareholder return attained above an absolute hurdle measured from the beginning of such period:
 
21%
 
7%
 
14%
Relative Component: 4% of any excess Total Return attained above the Total Return for the performance period of the Peer Group*, subject to a ratable sliding scale factor as follows based on achievement of cumulative Total Return measured from the beginning of such period:
 
 
 
 
 
 
 
•
100% will be earned if total shareholder return achieved is at least:
 
18%
 
6%
 
12%
 
•
50% will be earned if total shareholder return achieved is:
 
0%
 
0%
 
0%
 
•
0% will be earned if total shareholder return achieved is less than:
 
0%
 
0%
 
0%
 
•
a percentage from 50% to 100% calculated by linear interpolation will be earned if the cumulative Total Return achieved is between:
 
0% - 18%
 
0% - 6%
 
0% - 12%
______________________ 
*The “Peer Group” is comprised of the companies in the SNL US REIT Office Index.
The potential outperformance award is 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 is 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 is 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 are unearned at the end of the Performance Period will be forfeited. On April 15, 2015, 367,059 LTIP units were earned by the Advisor under the terms of the OPP.
Subject to the Advisor’s continued service through each vesting date, one third of any earned LTIP units will vest on each of the third, fourth and fifth anniversaries of the Effective Date. Until such time as an LTIP unit is earned in accordance with the provisions of the OPP, the holder of such LTIP unit is entitled to distributions on such LTIP unit equal to 10% of the distributions made per OP unit. The Company paid $0.1 million and $0.5 million , respectively, in distributions related to LTIP units during the three and nine months ended September 30, 2015 , respectively, which is included in non-controlling interest in the consolidated balance sheets. The Company paid $0.2 million in distributions related to LTIP units for the three and nine months ended September 30, 2014 . After an LTIP unit is earned, the holder of such LTIP unit is entitled to a catch-up distribution and then the same distribution as the holder of an OP unit. At the time the Advisor’s average capital account balance with respect to an LTIP unit is economically equivalent to the average capital account balance of an OP unit, the LTIP unit has been earned and it has been vested for 30 days, the Advisor, in its sole discretion, will be entitled to convert such LTIP unit into an OP unit in accordance with the provisions of the limited partnership agreement of the OP.
The Company records equity based compensation expense associated with the awards over the requisite service period of five years. Equity-based compensation expense is adjusted each reporting period for changes in the estimated market-related performance. Compensation expense related to the OPP was $3.9 million and $6.1 million , respectively, for the three and nine months ended September 30, 2015 . Compensation expense related to the OPP was $1.5 million and $3.3 million , respectively, for the three and nine months ended September 30, 2014 .
The valuation of the OPP is determined using a Monte Carlo simulation. This analysis reflects the contractual terms of the OPP, including the performance periods and total return hurdles, as well as observable market-based inputs, including interest rate curves, and unobservable inputs, such as expected volatility. As a result, the Company has determined that its OPP valuation in its entirety is classified in Level 3 of the fair value hierarchy. For a description of the levels within the fair value hierarchy, see Note 10 — Fair Value of Financial Instruments.

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NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

The following table presents information about the Company's OPP, which is measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 , aggregated by the level in the fair value hierarchy within which the instrument falls:
(In thousands)
 
Quoted Prices in Active Markets
Level 1
 
Significant Other Observable Inputs
Level 2
 
Significant Unobservable Inputs
Level 3
 
Total
September 30, 2015
 
 
 
 
 
 
 
 
OPP
 
$
—

 
$
—

 
$
29,900

 
$
29,900

December 31, 2014
 
 
 
 
 
 
 
 
OPP
 
$
—

 
$
—

 
$
29,100

 
$
29,100

Level 3 Valuations
The following is a reconciliation of the beginning and ending balance for the changes in instruments with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, 2015 :
(In thousands)
 
OPP
Beginning balance as of December 31, 2014
 
$
29,100

   Fair value adjustment
 
800

Ending balance as of September 30, 2015
 
$
29,900

The following table provides quantitative information about significant Level 3 input used:
Financial Instrument
 
Fair Value
 
Principal Valuation Technique
 
Unobservable Inputs
 
Input Value
 
 
(In thousands)
 
 
 
 
 
 
September 30, 2015
 
 
 
 
 
 
 
 
OPP
 
$
29,900

 
Monte Carlo Simulation
 
Expected volatility
 
26.0%
December 31, 2014
 
 
 
 
 
 
 
 
OPP
 
$
29,100

 
Monte Carlo Simulation
 
Expected volatility
 
27.0%
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.
Note 17 — Accumulated Other Comprehensive Income (Loss)
The following table illustrates the changes in accumulated other comprehensive income (loss) as of and for the periods indicated:
 
 
Unrealized gains
 
Change in
 
Total
 
 
on available-for-sale
 
unrealized gain
 
accumulated other
(in thousands)
 
securities
 
(loss) on derivatives
 
comprehensive loss
Balance, December 31, 2014
 
$
244

 
$
(1,060
)
 
$
(816
)
Other comprehensive loss, before reclassifications
 
(137
)
 
(3,005
)
 
(3,142
)
Amounts reclassified from accumulated other comprehensive income (loss)
 
(102
)
 
1,759

 
1,657

Net current-period other comprehensive loss
 
(239
)
 
(1,246
)
 
(1,485
)
Balance, September 30, 2015
 
$
5

 
$
(2,306
)
 
$
(2,301
)

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NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

For a reconciliation of the income statement line item affected due to amounts reclassified out of accumulated other comprehensive loss for the three and nine months ended September 30, 2015 , see Note 11 — Interest Rate Derivatives and Hedging Activities.
Note 18 — Net Income (Loss) Per Share
The following is a summary of the basic and diluted net income (loss) per share computations for the periods presented:  
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
  (In thousands, except share and per share data)
 
2015
 
2014
 
2015
 
2014
Basic net income (loss) attributable to stockholders
 
$
(12,752
)
 
$
9,695

 
$
(29,610
)
 
$
(65,698
)
Adjustments to net income (loss) attributable to stockholders for common share equivalents
 
—

 
(1,305
)
 
—

 
—

Net income (loss) attributable to stockholders
 
$
(12,752
)
 
$
8,390

 
$
(29,610
)
 
$
(65,698
)
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding, basic
 
162,202,733

 
161,975,420

 
162,150,947

 
168,624,050

Net income (loss) per share attributable to stockholders, basic
 
$
(0.08
)
 
$
0.06

 
$
(0.18
)
 
$
(0.39
)
Weighted average shares outstanding, diluted
 
162,202,733

 
162,181,209

 
162,150,947

 
168,624,050

Net income (loss) per share attributable to stockholders, diluted
 
$
(0.08
)
 
$
0.05

 
$
(0.18
)
 
$
(0.39
)
Diluted net loss per share assumes the conversion of all common share equivalents into an equivalent number of common shares, unless the effect is antidilutive. The Company considers unvested restricted shares, OP units and LTIP units to be common share equivalents. The Company had the following common share equivalents for the periods presented, which were excluded from the calculation of diluted loss per share attributable to stockholders as the effect would have been antidilutive:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Unvested restricted shares
 
317,215

 
—

 
317,215

 
174,172

OP units
 
4,178,090

 
1,272,200

 
4,178,090

 
1,272,200

LTIP units
 
8,880,579

 
8,880,579

 
8,880,579

 
8,880,579

Total anti-dilutive common share equivalents
 
13,375,884

 
10,152,779

 
13,375,884

 
10,326,951

Note 19 — Non-Controlling Interests
The Company is the sole general partner of the OP and holds the majority of OP units. As of September 30, 2015 and December 31, 2014 , the Advisor held 4,178,090 and 4,270,841 OP units, respectively. As of September 30, 2015 and December 31, 2014 , the Advisor held 8,880,579 unvested LTIP units. There were $0.6 million and $2.0 million , respectively, of distributions paid to OP unit and LTIP unit holders during the three and nine months ended September 30, 2015 . There were $0.3 million and $0.4 million , respectively, of distributions paid to OP unit and LTIP unit holders during the three and nine months ended September 30, 2014 .
A holder of OP units has the right to distributions and has the right to convert 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 Company's election, 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.
On May 13, 2015, 92,751 OP units were redeemed for newly issued shares of the Company's common stock and reclassified from non-controlling interest to stockholders' equity.

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NEW YORK REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015
(Unaudited)

The Company is the controlling member of the limited liability company that owns 163 Washington Avenue, acquired in September 2012. The Company has the sole voting rights under the operating agreement of this limited liability company. The non-controlling members' aggregate initial investment balance of $0.5 million will be reduced by the dividends paid to each non-controlling member. No dividends were paid during the three and nine months ended September 30, 2015 or 2014 . On October 21, 2015, the Company closed on the sale of 163 Washington Avenue and repaid the investment of each non-controlling member. See Note 20 — Subsequent Events.
Note 20 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements, except for the following events:
On October 1, 2015, the Company announced that it intends to enter into joint venture agreements with American Realty Capital New York City REIT, Inc. (“ARC NYCR”), an entity also sponsored by the Sponsor, which is intended to better align interests between the Company and ARC NYCR and to facilitate the continued growth and diversification of both portfolios with reduced need to raise additional equity capital. Any joint venture agreement will require approval by the boards of the Company and ARC NYCR.
On October 21, 2015, the Company closed on the sale of its property located at 163 Washington Avenue in Brooklyn, NY for a contract purchase price of $37.7 million .
On November 9, 2015, ARC advised the Company that ARC and Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, “Apollo”) have mutually agreed to terminate an agreement, dated as of August 6, 2015, pursuant to which Apollo would have purchased a controlling interest in a newly formed company that would have owned a majority of the ongoing asset management business of ARC, including the Advisor and the Property Manager. The termination has no effect on the Company's previously announced strategic initiatives or the current management team.



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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of New York REIT, Inc. and the notes thereto. As used herein, the terms "we," "our" and "us" refer to New York REIT, Inc., a Maryland corporation, and, as required by context, to New York Recovery Operating Partnership, L.P., a Delaware limited partnership, which we refer to as the "OP," and to their subsidiaries. We are externally managed by New York Recovery Advisors, LLC (our "Advisor"), a Delaware limited liability company. Capitalized terms used herein but not otherwise defined have the meaning ascribed to those terms in "Part I  - Financial Information" included in the notes to consolidated financial statements and contained herein.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake 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, unless required by law.
The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:
•
All of our executive officers are also officers, managers or holders of a direct or indirect interest in our Advisor and other American Realty Capital-affiliated entities; as a result, our executive officers, our Advisor and its affiliates face conflicts of interest, including significant conflicts created by our Advisor’s compensation arrangements with us and other investor entities advised by American Realty Capital affiliates, and conflicts in allocating time among these entities and us, which could negatively impact our operating results;
•
Because investment opportunities that are suitable for us may also be suitable for other American Realty Capital-advised programs or investors, our Advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders;
•
We are party to an investment opportunity allocation agreement with two other programs that are sponsored by American Realty Capital III, LLC (our "Sponsor"), pursuant to which we may not have the first opportunity to acquire all properties identified by our Advisor and its affiliates;
•
We depend on tenants for our revenue, and, accordingly, our revenue is dependent upon the success and economic viability of our tenants;
•
We may not be able to achieve our rental rate objectives on new and renewal leases and our expenses could be greater, which may impact our results of operations;
•
Increases in interest rates could increase the amount of our debt payments and limit our ability to pay dividends;
•
We have not and may not generate cash flows sufficient to pay our dividends to stockholders, as such, we may be forced to borrow at higher rates or depend on our Advisor or our property manager, New York Recovery Properties, LLC (our "Property Manager"), to waive fees or reimbursement of certain expenses to fund our operations. There is no assurance these entities will waive such amounts;
•
We may be unable to pay or maintain cash dividends or increase dividends over time. Amounts paid to our stockholders may be a return of capital and not a return on a stockholder's investment;
•
We are obligated to pay fees, which may be substantial, to our Advisor and its affiliates, including fees payable upon the sale of properties;
•
We are subject to risks associated with the significant dislocations and liquidity disruptions that recently existed or occurred in the credit markets of the United States;
•
We may fail to continue to qualify to be treated as a real estate investment trust for U.S. federal income tax purposes (“REIT”);
•
Our properties may be adversely affected by economic cycles and risks inherent to the New York metropolitan statistical area (“MSA”), especially New York City; and

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•
We may be adversely affected by changes in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes in conditions of United States or international lending, capital and financing markets.
Overview
We are a New York City focused REIT that seeks to provide stockholders with an opportunity to participate in one of the world's most dynamic real estate markets by primarily acquiring income-producing commercial real estate in New York City. We were incorporated on October 6, 2009 as a Maryland corporation that qualified as a REIT beginning with the taxable year ended December 31, 2010. We operated as a non-traded REIT through April 14, 2014. On April 15, 2014, we listed our common stock on the New York Stock Exchange ("NYSE") under the symbol "NYRT" (the "Listing").
We focus on acquiring and owning office and retail properties in Manhattan, the largest and most liquid real estate market in the United States. We purchased our first property and commenced active operations in June 2010.  As of September 30, 2015 , we owned 23 properties and other real estate assets located in New York City. As of September 30, 2015 our properties and other real estate assets aggregated 3.4 million rentable square feet, had an occupancy of 97.2% and an average remaining lease term of 9.2 years. Our portfolio primarily consisted of office and retail properties, representing 81% and 10% of rentable square feet, respectively, as of September 30, 2015 . We have acquired, and may continue to acquire, multifamily, industrial, hotel and other types of real properties to add diversity to our portfolio. Properties other than office and retail spaces represented 9% of rentable square feet. Additionally, we also may originate or acquire first mortgage loans, mezzanine loans or preferred equity positions related to New York City real estate.
 Substantially all of our business is conducted through the OP. We have no direct employees. Our Advisor manages our affairs on a day-to-day basis. The Property Manager manages our properties, unless services are performed by a third party for specific properties. Realty Capital Securities, LLC (our "Dealer Manager") served as the dealer manager of our initial public offering which was ongoing from September 2010 to December 2013 (our "IPO") and continues to provide us with various services. The Advisor, Property Manager and Dealer Manager are under common control with AR Capital, LLC ("ARC"), the parent of our Sponsor, as a result of which they are related parties and receive compensation, fees and expense reimbursements for services related to the investment and management of our assets.
Significant Accounting Estimates and Critical Accounting Policies
Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our consolidated financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates and critical accounting policies include:
Revenue Recognition
Our revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Since many of our leases provide for rental increases at specified intervals, generally accepted accounting principles ("GAAP") require us to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. We defer the revenue related to lease payments received from tenants in advance of their due dates. When we acquire a property, the terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation.
Rental revenue recognition commences when the tenant takes possession or controls the physical use of the leased space. For the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, we evaluate whether we own or the tenant owns the tenant improvements. When we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such improvements are substantially complete. When we conclude that we are not the owner (as the tenant is the owner) of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space.
When we conclude that we are the owner of tenant improvements, we capitalize the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants. When we conclude that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred leasing costs, net on the consolidated balance sheets and amortized as a reduction to rental income on a straight-line basis over the term of the lease.

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We will continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, we will record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our consolidated statements of operations.
We may own 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. As the lessor to the aforementioned leases, we defer the recognition of contingent rental income until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. If we own certain properties with leases that include these provisions, contingent rental income will be included in rental income on the consolidated statements of operations and comprehensive income (loss).
Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.
Our hotel revenues are recognized as earned and are derived from room rentals and other sources such as charges to guests for telephone service, movie and vending commissions, meeting and banquet room revenue and laundry services.
Investments in Real Estate
We evaluate the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statement of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.
In business combinations, we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and noncontrolling interests based on their respective estimated fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets or liabilities may include the value of in-place leases, above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics.
The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value of above-market or below-market leases is recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and our estimate of the comparable fair market lease rate, measured over the remaining term of the lease. The fair value of other intangible assets, such as real estate tax abatements, are recorded based on the present value of the expected benefit and amortized over the expected useful life including any below-market fixed rate renewal options for below-market leases.
Fair values of assumed mortgages, if applicable, are recorded as debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates.
Non-controlling interests in property owning entities are recorded based on the fair value of units issued at the date of acquisition, as determined by the terms of the applicable agreement.
We utilize a number of sources in making our estimates of fair values for purposes of allocating purchase price including real estate valuations prepared by independent valuation firms. We also consider information and other factors including: market conditions, the industry in which the tenant operates, characteristics of the real estate such as location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business.
We present the operations related to properties that have been or are intended to be sold as discontinued operations in the consolidated statements of operations and comprehensive income (loss) where the disposal of a component represents a strategic shift that has had or will have a major effect on our operations and financial results. Properties that are intended to be sold will be designated as "held for sale" on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs for all periods presented when they meet specific criteria to be presented as held for sale. Properties are no longer depreciated when they are classified as held for sale.

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Depreciation and Amortization
We are required to make subjective assessments as to the useful lives of the components of our real estate investments for purposes of determining the amount of depreciation to record on an annual basis. These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our real estate investments, we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income.
Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Acquired above-market leases are amortized as a reduction of rental income over the remaining terms of the respective leases. Acquired below-market leases are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.
Acquired above-market ground leases are amortized as a reduction of property operating expense over the remaining term of the respective leases. Acquired below-market ground leases are amortized as an increase to property operating expense over the remaining term of the respective leases and expected below-market renewal option period.
The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to depreciation and amortization expense over the remaining periods of the respective leases.
Assumed mortgage premiums or discounts, if applicable, are amortized as a reduction or increase to interest expense over the remaining term of the respective mortgages.
Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, we review the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If such estimated cash flows are less than the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is based on the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.
Derivative Instruments
We use derivative financial instruments to hedge the interest rate risk associated with a portion of our borrowings. The principal objective of such agreements is to minimize the risks and costs associated with our operating and financial structure as well as to hedge specific anticipated transactions.
We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives also may be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. 
We may enter into derivative contracts that are intended to economically hedge certain of our risk, even though hedge accounting does not apply or we elect not to apply hedge accounting. If we designate a qualifying derivative as a hedge, changes in the value of the derivative are reflected in accumulated other comprehensive income (loss) on the accompanying consolidated balance sheets. If a derivative does not qualify as a hedge, or if we elect not to apply hedge accounting, changes in the value of the derivative are reflected in other income (loss) on the accompanying consolidated statements of operations and comprehensive income (loss).

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Recently Issued Accounting Pronouncements
In May 2014, the FASB issued revised guidance relating to revenue recognition. Under the revised guidance, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revised guidance was to become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption was not permitted under GAAP. The revised guidance allows entities to apply the full retrospective or modified retrospective transition method upon adoption. In July 2015, the FASB deferred the effective date of the revised guidance by one year to annual reporting periods beginning after December 15, 2017, although entities will be allowed to early adopt the guidance as of the original effective date. We have not yet selected a transition method and are currently evaluating the impact of the new guidance.
In January 2015, the FASB issued updated guidance that eliminates from GAAP the concept of an event or transaction that is unusual in nature and occurs infrequently being treated as an extraordinary item. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Any amendments may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We have opted to adopt this revised guidance early and have determined that there has been no impact to our financial position, results of operations and cash flows.
In February 2015, the FASB amended the accounting for consolidation of certain legal entities. The amendments modify the evaluation of whether certain legal entities are variable interest entities ("VIEs") or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships) and provide a scope exception from consolidation guidance for reporting entities with interests in legal entities. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We have not yet selected a transition method and are currently evaluating the impact of the new guidance.
In April 2015, the FASB amended the presentation of debt issuance costs on the balance sheet. The amendments require that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability. In August 2015, the FASB added that, for line of credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line, regardless of whether or not there are any outstanding borrowings. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not previously been issued. The revised guidance is not expected to have a significant impact on our financial position, results of operations or cash flows.
In September 2015, the FASB issued an update that eliminates the requirement to adjust provisional amounts from a business combination and the related impact on earnings by restating prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of measurement period adjustments on current and prior periods, including the prior period impact on depreciation, amortization and other income statement items and their related tax effects, shall be recognized in the period the adjustment amount is determined. The cumulative adjustment would be reflected within the respective financial statement line items affected. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. We have elected to adopt the new guidance as of September 30, 2015. The adoption of this guidance had no impact on our consolidated financial position, results of operations or cash flows.
Results of Operations
Comparison of Three Months Ended September 30, 2015 to Three Months Ended September 30, 2014
As of July 1, 2014, we owned 22 properties (our "Same Store"), excluding our previously owned preferred equity investment. In August 2014, we acquired one property located at 245-249 West 17th Street (our "Acquisition") and therefore own 23 properties as of September 30, 2015 . Accordingly, due to our Acquisition, our results of operations for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014 , reflect increases in revenue, property operating expenses and interest expense. Net income (loss) attributable to stockholders was $(12.8) million and $9.7 million for the three months ended September 30, 2015 and 2014 , respectively.

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During the three months ended September 30, 2015 , we signed one new lease for 2,811 square feet. The initial rent on the space is approximately $158.42 per square foot and the term is for 10.0 years.
Rental Income
Rental income increased $2.3 million to $ 32.5 million for the three months ended September 30, 2015 , from $ 30.2 million for the three months ended September 30, 2014 . The increase in rental income was primarily driven by our Acquisition, which resulted in an increase in rental income of $3.5 million for the three months ended September 30, 2015 , compared to the three months ended September 30, 2014 . This was partially offset by a net decrease in rental income of $1.2 million in our Same Store, primarily due to lease modifications and terminations, partially offset by new leasing activity.
Operating Expense Reimbursements and Other Revenue
Operating expense reimbursements and other revenue increased $0.8 million to $ 5.0 million  for the three months ended September 30, 2015 from $ 4.2 million for the three months ended September 30, 2014 , primarily due to our Acquisition and increased reimbursable property operating expenses in our Same Store.
Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of certain property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. Therefore, operating expense reimbursements are directly affected by changes in property operating expenses, although not all increases in property operating expenses may be reimbursed by our tenants.
Property Operating Expenses
Property operating expenses increased $1.9 million to $ 11.2 million for the three months ended September 30, 2015 , from $9.3 million for the three months ended September 30, 2014 . A total of $0.8 million of the increase was primarily related to our Acquisition. Additionally, property operating expenses at our Same Store increased by $0.4 million primarily due to higher real estate taxes and utility costs. Additionally, the Advisor absorbed $0.6 million of property operating expenses during the three months ended September 30, 2014 which did not recur for the three months ended September 30, 2015 .
Hotel Revenue and Operating Expenses
Hotel revenues increased $1.0 million to $7.1 million for the three months ended September 30, 2015 , from $6.1 million for the three months ended September 30, 2014 . Hotel operating expenses increased $0.2 million to $6.5 million for the three months ended September 30, 2015 , from $6.3 million for the three months ended September 30, 2014 . The increase in hotel revenues and hotel operating expenses relate to higher occupancy and average daily rates. Average occupancy and average daily rate was 86.4% and $335.67 , respectively, for the three months ended September 30, 2015 , compared to 76.2% and $324.66 , respectively, for the three months ended September 30, 2014 .
Operating Fees Incurred from the Advisor
Operating fees incurred from the Advisor, which consist of asset management fees, increased $0.1 million to $3.1 million for the three months ended September 30, 2015 , from $3.0 million for the three months ended September 30, 2014 . Asset management fees are currently equal to 0.5% per annum of the cost of assets, which have increased since the prior year primarily due to our Acquisition.
Our Property Manager is entitled to fees for the management of our properties. Property management fees increase in direct correlation with gross revenues. Our Property Manager elected to waive these fees for the three months ended September 30, 2015 and 2014 .  For the three months ended September 30, 2015 and 2014 , we would have incurred property management fees of $0.7 million and $0.4 million , respectively, had these fees not been waived.
Acquisition and Transaction Related
Acquisition and transaction related fees and expenses were $2.9 million during the three months ended September 30, 2015 , compared to $4.4 million for the three months ended September 30, 2014 . Acquisition and transaction related expenses for the three months ended September 30, 2015 primarily included costs associated with the modification of our amended and restated credit facility with Capital One, National Association (the "Credit Facility") and the pay-off before scheduled maturity of six mortgage notes payable in September 2015. Acquisition and transaction related expenses for the three months ended September 30, 2014 primarily included costs associated with our Acquisition, which occurred in August 2014.
Fair Value of Listing Promote
Fair value of listing promote gain of  $24.7 million  for the  three months  ended  September 30, 2014  represents the valuation of the Listing Note. Until the final value of the Listing Note was determined in November 2014, the Listing Note was marked-to-market quarterly, with changes in the value recorded in the consolidated statements of operations and comprehensive income (loss).

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General and Administrative Expenses
General and administrative expenses increased $3.2 million to $6.5 million for the three months ended September 30, 2015 , from $3.3 million for the three months ended September 30, 2014 , largely driven by $1.1 million in higher legal and professional fees primarily related to our external auditors and our outsourced internal audit firm. Equity-based compensation expense was $1.6 million higher for the three months ended September 30, 2015 , primarily related to the amortization of the fair value of the 2014 Advisor Multi-Year Outperformance Agreement (the "OPP"), which was adopted in conjunction with the Listing. Additionally, our Advisor elected to absorb $0.4 million of general and administrative expenses during the three months ended September 30, 2014 , which did not recur during the three months ended September 30, 2015 .
Depreciation and Amortization Expense
Depreciation and amortization expense decreased $1.2 million to $ 20.5 million for the three months ended September 30, 2015 , compared to $21.7 million for the three months ended September 30, 2014 . Higher depreciation and amortization expense of $1.0 million related to our Acquisition. This increase was offset by a decrease in depreciation and amortization related to our Same Store of $2.2 million , mainly due to prior period tenant lease expirations and terminations.
Interest Expense
Interest expense decreased $1.2 million to $7.2 million for the three months ended September 30, 2015 , from $8.4 million for the three months ended September 30, 2014 , primarily related to higher write-offs of deferred financing costs during the three months ended September 30, 2014 related to changes in our Credit Facility. This decrease was partially offset by a higher weighted average Credit Facility balance outstanding of $635.0 million during the three months ended September 30, 2015 , compared to $518.3 million during the three months ended September 30, 2014 , which primarily increased to fund our Acquisition.
Income from Unconsolidated Joint Venture
Income from unconsolidated joint venture for the three months ended September 30, 2015 increased $0.6 million to $0.5 million from a loss of $0.1 million for the three months ended September 30, 2014 , which represents our preferred return, net of our pro rata share of the net loss of Worldwide Plaza and the amortization of the difference in basis between our investment and the book value of Worldwide Plaza's net assets.
Income from Preferred Equity Investment, Investment Securities and Interest Income
Income from preferred equity investment, investment securities and interest income decreased $0.7 million to $0.1 million for the three months ended September 30, 2015 from $0.8 million during the three months ended September 30, 2014 , primarily due to the repayment of our preferred equity investment, which occurred in March 2015.
Gain (Loss) on Derivative Instruments
Gain (loss) on derivative instruments of $0.5 million for the three months ended September 30, 2015 related to fair value adjustments on derivatives not designated as hedges as well as the expense incurred due to the termination of interest rate swaps associated with mortgages we paid-off before the scheduled maturity, which made it probable that the hedged forecasted transactions would not occur.
Net Loss Attributable to Non-Controlling Interests
The net loss attributable to non-controlling interests during the three months ended September 30, 2015 and 2014 was $0.4 million and $0.2 million , respectively, which represents the net loss attributable to non-controlling interests for the period. The net loss attributable to non-controlling interests has increased as a result of the vesting of Class B units, the OPP and the conversion of the Listing Note.
Comparison of Nine Months Ended September 30, 2015 to Nine Months Ended September 30, 2014
As of January 1, 2014, we owned our Same Store, excluding our previously owned preferred equity investment. In August 2014, we acquired our Acquisition and therefore own 23 properties as of September 30, 2015 . Accordingly, our results of operations for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 , reflect increases in revenue, property operating expenses and interest expense. Net loss attributable to stockholders was $29.6 million and $65.7 million for the nine months ended September 30, 2015 and 2014 , respectively.

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During the nine months ended September 30, 2015 , we signed nine new leases for 210,243 square feet, of which our pro rata share is 139,544 square feet. The weighted-average initial rent on the spaces is approximately $68.51 per square foot and the weighted-average term is for 13.4 years. Of the nine new leases signed, four of the spaces were previously leased over the past twelve months ("Replacement Leases"). Initial base cash rents per square foot on Replacement Leases are approximately $181.44 . We expect to incur tenant improvements and leasing commissions on Replacement Leases of $58.00 and $58.92 per square foot, respectively.
Rental Income
Rental income increased $13.7 million to $97.2 million for the nine months ended September 30, 2015 , from $83.5 million for the nine months ended September 30, 2014 . The increase in rental income was primarily driven by our Acquisition, which contributed an increase in rental income of $15.4 million for the nine months ended September 30, 2015 , compared to the nine months ended September 30, 2014 . This was partially offset by a net decrease in rental income of $1.7 million in our Same Store, primarily due to lease modifications and terminations, partially offset by new leasing activity.
Operating Expense Reimbursements and Other Revenue
Operating expense reimbursements and other revenue increased $2.4 million to $13.4 million  for the nine months ended September 30, 2015 from $11.0 million for the nine months ended September 30, 2014 , primarily due to our Acquisition and increased reimbursable property operating expenses in our Same Store.
Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of certain property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. Therefore, operating expense reimbursements are directly affected by changes in property operating expenses, although not all increases in property operating expenses may be reimbursed by our tenants.
Property Operating Expenses
Property operating expenses increased $5.8 million to $32.3 million for the nine months ended September 30, 2015 , from $26.5 million for the nine months ended September 30, 2014 . Property operating expenses related to our Acquisition were $3.2 million . Additionally, property operating expenses at our Same Store increased by $2.0 million primarily as a result of bad debt expense associated with a tenant bankruptcy and lease termination at 256 West 38th Street and higher real estate taxes and utility costs. Additionally, the Advisor absorbed $0.6 million of property operating expenses during the nine months ended September 30, 2014 which did not recur for the nine months ended September 30, 2015 .
Hotel Revenue and Operating Expenses
Hotel revenues increased $3.1 million to $18.6 million for the nine months ended September 30, 2015 , from $15.5 million for the nine months ended September 30, 2014 . Hotel operating expenses increased $1.5 million to $18.7 million for the nine months ended September 30, 2015 , from $17.2 million for the nine months ended September 30, 2014 . The increase in hotel revenues and hotel operating expenses relate to higher occupancy. Average occupancy and average daily rate was 79.2% and $329.62 , respectively, for the nine months ended September 30, 2015 , compared to 65.9% and $330.74 for the nine months ended September 30, 2014 .
Operating Fees Incurred from the Advisor
Operating fees incurred from the Advisor, which consist of asset management fees, were $9.4 million for the nine months ended September 30, 2015 . Prior to the Listing, we issued to the Advisor restricted, performance-based, forfeitable Class B units for asset management services, which vested and were expensed as of the Listing. Subsequent to the Listing, the asset management fee is earned and expensed in the related period. As such, the $5.3 million operating fees to the Advisor for the nine months ended September 30, 2014 represents fees earned beginning after the Listing.
Our Property Manager is entitled to fees for the management of our properties. Property management fees increase in direct correlation with gross revenues. Our Property Manager elected to waive these fees for the nine months ended September 30, 2015 and 2014 .  For the nine months ended September 30, 2015 and 2014 , we would have incurred property management fees of $1.9 million and $1.2 million , respectively, had these fees not been waived.
Acquisition and Transaction Related
Acquisition and transaction related fees and expenses were $3.1 million during the nine months ended September 30, 2015 compared to $16.1 million for the nine months ended September 30, 2014 . Acquisition and transaction related expenses for the nine months ended September 30, 2015 primarily included costs associated with the modification of our Credit Facility and the pay-off before scheduled maturity of six mortgage notes payable in September 2015. Acquisition and transaction related expenses for the nine months ended September 30, 2014 primarily included costs associated with our Listing, which occurred in April 2014, and costs associated with our Acquisition in August 2014.

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Vesting of Asset Management Fees
Vesting of asset management fees expense of  $11.5 million  for the  nine months  ended  September 30, 2014 related to the vesting of Class B units previously issued to the Advisor for asset management services. The performance condition related to these Class B units was satisfied upon completion of the Listing. On April 15, 2014, the Class B units were converted to OP units on a one-to-one basis.
Fair Value of Listing Promote
Fair value of listing promote of  $13.4 million  for the  nine months  ended  September 30, 2014  represents the valuation of the Listing Note. Until the final value of the Listing Note was determined in November 2014, the Listing Note was marked-to-market quarterly, with changes in the value recorded in the consolidated statements of operations and comprehensive income (loss).
General and Administrative Expenses
General and administrative expenses increased $8.2 million to $15.7 million for the nine months ended September 30, 2015 , from $7.5 million for the nine months ended September 30, 2014 , largely driven by a $4.7 million increase in legal and professional fees primarily related to the audit of our 2014 financial statements and the external audit requirements associated with being a traded REIT. We operated as a non-traded REIT until our Listing on April 15, 2014. Additionally, our Advisor elected to absorb $1.4 million of general and administrative expenses during the nine months ended September 30, 2014 , which did not recur during the nine months ended September 30, 2015 . This increase was also due to higher equity-based compensation expense of $2.1 million for the nine months ended September 30, 2015 , primarily related to the amortization of the fair value of the OPP, which was adopted in conjunction with the Listing.
Depreciation and Amortization Expense
Depreciation and amortization expense increased $0.5 million to $63.4 million for the nine months ended September 30, 2015 , compared to $62.9 million for the nine months ended September 30, 2014 . This increase was primarily related to our Acquisition, which contributed an additional $5.2 million in depreciation and amortization. This increase was partially offset by a decrease of $4.7 million related to our Same Store due to prior period tenant lease expirations and terminations.
Interest Expense
Interest expense increased $1.9 million to $19.1 million for the nine months ended September 30, 2015 , from $17.2 million for the nine months ended September 30, 2014 , as a result of a higher weighted average Credit Facility balance outstanding during the nine months ended September 30, 2015 of $635.0 million to fund our Acquisition compared to $376.1 million during the nine months ended September 30, 2014 , partially offset by higher write-offs of previously deferred financing costs during the nine months ended September 30, 2014 , related to changes in our Credit Facility.
Income (Loss) from Unconsolidated Joint Venture
Income (loss) from unconsolidated joint venture for the nine months ended September 30, 2015 was $1.3 million of income and $1.1 million of loss for the nine months ended September 30, 2014 , respectively, which represents our preferred return, net of our pro rata share of the net loss of Worldwide Plaza and the amortization of the difference in basis between our investment and the book value of Worldwide Plaza's net assets.
Income from Preferred Equity Investment, Investment Securities and Interest Income
Income from preferred equity investment, investment securities and interest income decreased $1.0 million to $1.1 million for the nine months ended September 30, 2015 from $2.1 million during the nine months ended September 30, 2014 , primarily due to the repayment of our preferred equity investment, which occurred in March 2015.
Gain (Loss) on Derivative Instruments
Gain (loss) on derivative instruments of $0.5 million for the nine months ended September 30, 2015 related to fair value adjustments on derivatives not designated as hedges as well as the expense incurred due to the termination of interest rate swaps associated with mortgages we paid-off before the scheduled maturity, which made it probable that the hedged forecasted transactions would not occur.
Net Loss Attributable to Non-Controlling Interests
The net loss attributable to non-controlling interests for the nine months ended September 30, 2015 and 2014 was $1.0 million and $0.7 million , respectively, which represents the net loss attributable to non-controlling interests for the period. The net loss attributable to non-controlling interests has increased as a result of the vesting of Class B units, the OPP and the conversion of the Listing Note.

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Cash Flows for the Nine Months Ended September 30, 2015
For the nine months ended September 30, 2015 , net cash provided by operating activities was $33.2 million . The level of cash flows used in or provided by operating activities is affected by the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of property operating expenses. Cash flows provided by operating activities included a net loss adjusted for non-cash items, resulting in a cash inflow of $37.6 million (net loss of $30.6 million adjusted for depreciation and amortization of tangible and intangible real estate assets and other non-cash charges of $68.1 million ), an increase in accounts payable and accrued expenses of $3.6 million , primarily due to accrued legal and professional fees, an increase in accrued unbilled ground rent of $2.5 million from recording ground rent expense on a straight-line basis and a decrease in prepaid expenses and other assets of $2.3 million , primarily related to the amortization of prepaid real estate taxes. These cash inflows were partially offset by an increase in unbilled rent receivables of $11.3 million from recording rental income on a straight-line basis, an increase in tenant and other receivables of $0.7 million and a decrease in deferred revenue of $0.7 million .
Net cash provided by investing activities during the nine months ended September 30, 2015  of $24.4 million primarily related to the sale of 123 William Street and the return of our principal invested of $35.1 million , free rent credits released from escrow of $4.7 million related to our Acquisition in August 2014, $4.4 million of proceeds from the sale of investment securities and $3.6 million in distributions from Worldwide Plaza. These cash inflows were partially offset by $23.3 million of capital expenditures and purchases of investment securities of $0.1 million .
Net cash used in financing activities of $59.7 million during the nine months ended September 30, 2015 primarily related to repayments on our Credit Facility of $150.0 million , regularly scheduled principal payments on mortgage notes payable as well as full paydowns on six mortgage notes payable before the scheduled maturity dates of $88.7 million , dividends to common stockholders of $56.0 million , increases in funds held in escrow of $52.1 million , which represents financing transactions which closed on September 30, 2015 and settled on October 1, 2015. Net cash used in financing activities also included payments of financing costs of $10.7 million , an increase in restricted cash of $4.7 million , $2.0 million of distributions to OP unit and participating LTIP unit holders and the purchase of an interest rate cap of $0.5 million . These cash outflows were partially offset by proceeds from mortgage notes payable of $305.0 million secured by 1440 Broadway.
Cash Flows for the Nine Months Ended September 30, 2014
For the nine months ended September 30, 2014 , net cash provided by operating activities was $1.1 million . The level of cash flows used in or provided by operating activities is affected by the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of property operating expenses. Cash flows provided by operating activities included a net loss adjusted for non-cash items, resulting in a cash inflow of $26.6 million (net loss of $66.4 million adjusted for depreciation and amortization of tangible and intangible real estate assets and other non-cash charges of $93.0 million ) and an increase in accrued unbilled ground rent of $3.3 million from recording ground rent expense on a straight-line basis. These cash inflows were partially offset by an increase in unbilled rent receivables of $12.0 million from recording rental income on a straight-line basis, a decrease in accounts payable and accrued expenses of $7.7 million primarily due to payments to our Dealer Manager for services rendered in 2013 related to exploring our Listing and payments for tenant improvements, an increase in tenant and other receivables of $4.0 million relating to tenant accounts receivable and accrued income on our preferred equity investment in 123 William Street, a decrease in deferred revenue of $4.0 million , an increase in receivable from the Advisor of  $1.0 million  relating to absorbed expenses and an increase in prepaid expenses and other assets of $0.1 million .
Net cash used in investing activities during the nine months ended September 30, 2014  of $328.3 million primarily related to $316.2 million for our Acquisition in August 2014, additional investments in Worldwide Plaza and our preferred equity investment, a free rent credit from the seller held in escrow of $8.4 million , $5.8 million for capital expenditures and tenant improvements and $3.0 million in purchases of additional investment securities. These cash inflows were partially offset by $5.2 million of distributions from our unconsolidated joint venture in Worldwide Plaza.
Net cash provided by financing activities of $120.0 million during the nine months ended September 30, 2014 primarily related to proceeds from our line of credit of $320.0 million , proceeds received from the sale of common stock of $11.3 million and a $0.8 million contribution from the Advisor for OP units. These cash outflows were partially offset by $154.3 million in share repurchases related to our tender offer, including associated fees and expenses, dividends to stockholders of $47.5 million , deferred financing costs of $7.3 million to expand our Credit Facility, payments of offering costs of $1.5 million , increases to restricted cash of $0.8 million , principal payments on mortgage notes payable of $0.4 million and $0.4 million of distributions to OP unit holders.

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Non-GAAP Financial Measures
This section includes non-GAAP financial measures, including Funds from Operations, Core Funds from Operations, Adjusted Funds from Operations, Earnings before Interest, Taxes and Depreciation and Amortization, Net Operating Income, Cash Net Operating Income and Adjusted Cash Net Operating Income. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income (loss), is provided below.
Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has promulgated a measure known as funds from operations (“FFO”), which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure but is not equivalent to our net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property but including asset impairment writedowns, plus depreciation and amortization, after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s definition.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of a real estate asset diminishes predictably over time, especially if not adequately maintained or repaired and renovated as required by relevant circumstances or as requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income (loss). However, FFO, core funds from operations ("Core FFO") and adjusted funds from operations (“AFFO”), as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in its applicability in evaluating our operating performance. In calculating FFO, Core FFO and AFFO, other REITs may not define FFO in accordance with the current NAREIT definition (as we do) or may interpret the current NAREIT definition differently than we do and/or calculate Core FFO and/or AFFO differently than we do. Consequently, our presentation of FFO, Core FFO and AFFO may not be comparable to other similarly titled measures presented by other REITs.
We consider FFO, Core FFO and AFFO useful indicators of our performance. Because FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO facilitates comparisons of operating performance between periods and between other REITs in our peer group.
Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) that were put into effect in 2009 and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT's definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses for all industries as items that are expensed under GAAP, that are typically accounted for as operating expenses.
Core FFO is FFO, excluding acquisition and transaction related costs and other costs that are considered to be non-recurring, such as gains on sales of securities and investments, non-recurring revenue, gains, losses and expenses related to the early extinguishment of debt and other non-recurring expenses. The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our business plan to generate operational income and cash flows in order to pay dividends or other amounts to our stockholders. In evaluating investments in real estate, we differentiate the costs to acquire the investment from the operations derived from the investment. By excluding expensed acquisition and transaction related costs and non-recurring revenues and expenses, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management's analysis of the investing and operating performance of our properties.

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We exclude certain income or expense items from AFFO that we consider more reflective of investing activities, other non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our business plan. These items include unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments and gains or losses on contingent valuation rights. We also exclude distributions on Class B units as the related shares are assumed to have converted to common stock in our calculation of fully diluted weighted average shares of common stock. In addition, by excluding non-cash income and expense items such as equity-based compensation expenses, amortization of above-market and below-market lease intangibles, amortization of deferred financing costs and straight-line rent from AFFO, we believe we provide useful information regarding income and expense items which have no cash impact and do not provide liquidity to the company or require capital resources of the company. Similarly, we include items such as free rent credits paid by sellers in our calculation of AFFO because these funds are paid to us during the free rent period and therefore improve our liquidity. By providing AFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our ongoing operating performance without the impacts of transactions that are not related to the ongoing profitability of our portfolio of properties. We also believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry. Further, we believe AFFO is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies that are not making a significant number of acquisitions. Investors are cautioned that AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as it excludes certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.
In calculating AFFO, we exclude certain expenses, which under GAAP are characterized as operating expenses in determining operating net income. These expenses are paid in cash by us, and therefore such funds will not be available to distribute to investors. All paid and accrued merger, acquisition and transaction related fees and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired will also have negative effects on returns to investors, the ability to fund dividends or distributions in the future, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property and certain other expenses. AFFO that excludes such costs and expenses would only be comparable to companies that did not have such activities. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, we view fair value adjustments as items which are unrealized and may not ultimately be realized. We view both gains and losses from fair value adjustments as items which are not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management's analysis of the operating performance of the properties. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe AFFO provides useful supplemental information.
As a result, we believe that the use of FFO, Core FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our performance relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.

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The table below reflects the items deducted from or added to net loss in our calculation of FFO, Core FFO and AFFO during the period presented.  Items are presented net of non-controlling interest portions where applicable.
 
 
Three Months Ended
 
Nine Months Ended
(In thousands)
 
March 31, 2015
 
June 30, 2015
 
September 30, 2015
 
September 30, 2015
Net loss (in accordance with GAAP)
 
$
(8,460
)
 
$
(8,916
)
 
$
(13,186
)
 
$
(30,562
)
Depreciation and amortization, net of adjustments related to joint ventures
 
20,723

 
22,144

 
20,477

 
63,344

Depreciation and amortization related to unconsolidated joint venture (1)
 
6,431

 
6,439

 
6,478

 
19,348

FFO
 
18,694

 
19,667

 
13,769

 
52,130

Acquisition and transaction-related expenses (2)
 
125

 
96

 
2,850

 
3,071

    Gain on sale of investment securities
 
(48
)
 
—

 
(54
)
 
(102
)
    Non-recurring other income
 
(158
)
 
—

 
—

 
(158
)
    Non-recurring general and administrative expense (3)
 
500

 
1,500

 
—

 
2,000

    Non-recurring straight-line rent bad debt expense
 
529

 
8

 
—

 
537

    Non-recurring derivative losses
 
—

 
—

 
423

 
423

    Non-recurring deferred financing costs (4)
 
—

 
—

 
1,060

 
1,060

Core FFO
 
19,642

 
21,271

 
18,048

 
58,961

Non-cash compensation expense (5)
 
248

 
2,189

 
4,081

 
6,518

Deferred financing costs
 
1,138

 
1,162

 
1,179

 
3,479

Seller free rent credit
 
3,679

 
872

 
197

 
4,748

Amortization of market lease intangibles
 
(2,124
)
 
(1,842
)
 
(1,843
)
 
(5,809
)
Mark-to-market adjustments on derivatives
 
4

 
—

 
117

 
121

Straight-line rent
 
(5,870
)
 
(2,856
)
 
(2,525
)
 
(11,251
)
Straight-line ground rent
 
987

 
787

 
719

 
2,493

Leasing commissions - second generation
 
(3
)
 
(3
)
 
(12
)
 
(18
)
Building improvements - second generation
 
(9
)
 
(51
)
 
(201
)
 
(261
)
Proportionate share of straight-line rent related to unconsolidated joint venture
 
(714
)
 
(773
)
 
(988
)
 
(2,475
)
AFFO
 
$
16,978

 
$
20,756

 
$
18,772

 
$
56,506

___________________________
(1)
Proportionate share of depreciation and amortization related to unconsolidated joint venture and amortization of difference in basis.
(2)
Acquisition and transaction-related expenses for the third quarter of 2015 primarily represent costs associated with mortgage payoffs and our Credit Facility amendment.
(3)
Represents our estimate of non-recurring audit fees.
(4)
Represents deferred financing costs that were written off as a result of paying off mortgages in advance of their scheduled maturity dates.
(5)
During the second quarter of 2015, we excluded equity-based compensation from our calculation of Core FFO for the first time. During the third quarter of 2015, we reverted to our previous practice of excluding the impact of non-cash compensation expense from the reconciliation to Core FFO to the reconciliation to AFFO.

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Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income, Cash Net Operating Income and Adjusted Cash Net Operating Income.
We believe that earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, other non-cash items and including our pro-rata share from unconsolidated joint ventures ("Adjusted EBITDA") is an appropriate measure of our ability to incur and service debt. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.
Net operating income ("NOI") is a non-GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, less discontinued operations, interest, other income and income from preferred equity investments and investments securities, plus corporate general and administrative expense, acquisition and transaction-related expenses, depreciation and amortization, other non-cash expenses and interest expense. NOI is adjusted to include our pro rata share of NOI from unconsolidated joint ventures. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets and to make decisions about resource allocations. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition activity on an unlevered basis, providing perspective not immediately apparent from net income. NOI excludes certain components from net income in order to provide results that are more closely related to a property's results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity.
Cash NOI is NOI presented on a cash basis, which is NOI after eliminating the effects of straight-lining of rent and the amortization of above and below market leases.
Adjusted Cash NOI is Cash NOI after eliminating the effects of free rent.

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The table below reflect the reconciliation of net loss to Adjusted EBITDA, NOI, Cash NOI and Adjusted Cash NOI during the period presented.
 
 
Three Months Ended
Nine Months Ended
(In thousands)
 
March 31, 2015
 
June 30, 2015
 
September 30, 2015
 
September 30, 2015
Net loss (in accordance with GAAP)
 
$
(8,460
)
 
$
(8,916
)
 
$
(13,186
)
 
$
(30,562
)
Acquisition and transaction related
 
125

 
96

 
2,850

 
3,071

Depreciation and amortization
 
20,732

 
22,154

 
20,484

 
63,370

Interest expense
 
5,933

 
6,024

 
7,172

 
19,129

Loss on derivatives
 
4

 
—

 
540

 
544

Adjustments related to unconsolidated joint venture (1)
 
11,264

 
11,324

 
11,418

 
34,006

Adjusted EBITDA
 
29,598

 
30,682

 
29,278

 
89,558

General and administrative
 
3,950

 
5,203

 
6,519

 
15,672

Asset management fee to the Advisor
 
3,144

 
3,101

 
3,121

 
9,366

Income from preferred equity investment, investment securities and interest
 
(930
)
 
(8
)
 
(141
)
 
(1,079
)
Preferred return on unconsolidated joint venture
 
(3,851
)
 
(3,894
)
 
(3,936
)
 
(11,681
)
Proportionate share of other adjustments related to unconsolidated joint venture
 
1,883

 
1,905

 
1,924

 
5,712

NOI
 
33,794

 
36,989

 
36,765

 
107,548

Amortization of above/below market lease assets and liabilities
 
(2,124
)
 
(1,842
)
 
(1,843
)
 
(5,809
)
Straight-line rent
 
(5,341
)
 
(2,848
)
 
(2,525
)
 
(10,714
)
Straight-line ground rent
 
987

 
787

 
719

 
2,493

Proportionate share of adjustments related to unconsolidated joint venture
 
(714
)
 
(773
)
 
(988
)
 
(2,475
)
Cash NOI
 
26,602

 
32,313

 
32,128

 
91,043

Free rent
 
4,498

 
1,880

 
1,808

 
8,186

Adjusted Cash NOI
 
$
31,100

 
$
34,193

 
$
33,936

 
$
99,229

_________________
(1)
Proportionate share of adjustments related to unconsolidated joint venture and amortization of difference in basis.

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Liquidity and Capital Resources
As of September 30, 2015 , we had cash and cash equivalents of $20.4 million . On October 1, 2015, we received $48.8 million of funds held in escrow, which represented the net proceeds from financing our 1440 Broadway property and pay-off of mortgage notes payable before the scheduled maturity dates and $150.0 million pay-down on our Credit Facility, all of which closed on September 30, 2015.
In the normal course of business, our principal demands for funds are for operating expenses, capital expenditures, dividends to our stockholders and principal and interest on our outstanding indebtedness. We expect to continue to increase the amount of cash flow generated from operating activities in future periods through future acquisitions and the stabilization of our current investment portfolio. Furthermore, we anticipate increased cash flow through future leasing activity and the contractual rent escalations included in a majority of our current leases during the primary term of the lease. Such increased cash flow will positively impact the amount of funds available for payments to our stockholders. Future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from offerings, including issuances of equity or debt securities, proceeds from the sale of properties and undistributed funds from operations. Our principal sources and uses of funds are further described below.
Principal Sources of Funds
Availability of Funds from Credit Facility
On April 14, 2014, we entered into our amended and restated credit facility ("Credit Facility") with Capital One, National Association ("Capital One"). The Credit Facility allows for total borrowings of up to $705.0 million with a $305.0 million term loan and a $400.0 million revolving loan which mature on August 20, 2018 and August 20, 2016, respectively. We have two one-year options to extend the revolving loan to August 20, 2018. The Credit Facility contains an "accordion feature" to allow us, under certain circumstances, and with consent of our lenders, to increase the aggregate loan borrowings to up to $1.0 billion of total borrowings.
On August 27, 2015, we entered into an amendment pursuant to which certain changes were made under the Credit Facility primarily to increase the borrowing base capacity including, among other changes, (i) the ability to add a hotel asset as a borrowing base asset, (ii) reducing the debt service coverage ratio test from 1.4 to 1.3 for draw downs on the Credit Facility, (iii) increasing the amount of dividends we are permitted to pay relative to our Modified Funds From Operations (as defined in the Credit Facility) for the twelve months commencing June 30, 2015 from 95% to 100%, and (iv) increasing the amount we can spend to repurchase shares of common stock during a fiscal year from $65.0 million to $100.0 million.
We repaid $150.0 million in advances on the revolving portion of our Credit Facility during the three months ended September 30, 2015 . As of September 30, 2015 , the outstanding balance of the term loan and revolving components of the Credit Facility was $305.0 million and $180.0 million , respectively, with a combined weighted average interest rate of 2.2% . The unused borrowing capacity, based on the value of the borrowing base properties as of September 30, 2015 , was $65.3 million . Availability of borrowings is based on a pool of eligible unencumbered real estate assets.
The Credit Facility requires monthly interest payments for each Base Rate loan and periodic payments for each LIBOR loan, based upon the applicable LIBOR loan period, with all principal outstanding being due on the maturity date. The Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty. In the event of a default, the lenders have the right to terminate their obligations under the Credit Facility and to accelerate the payment on any unpaid principal amount of all outstanding loans.
We view a mix of secured and unsecured financing sources as an efficient and accretive means to acquire properties and manage working capital. Our interest expense in future periods will vary based, in part, on our level of future borrowings, which will depend on the cost of borrowings and the opportunity to acquire real estate assets which meet our investment objectives.
Other Sources of Funds
On March 27, 2015, the owner of 123 William Street, the property in which we held our $35.1 million preferred equity investment, sold the property to American Realty Capital New York City REIT, Inc. ("ARC NYCR"), which is advised by entities under common control with our Advisor. The sponsor of ARC NYCR is also our Sponsor. On that date, we received our entire principal balance plus accrued income receivable. Cash received from the sale of our preferred equity investment has increased our liquidity and the funds are available for dividends to our stockholders and other working capital requirements.

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Table of Contents

During the second quarter of 2015, we announced several initiatives to both increase our liquidity and create long-term value for our stockholders. These initiatives include 1) increasing cash NOI by leasing currently vacant space, stabilizing revenue at the Viceroy Hotel and releasing currently below-market expiring space at market rates; 2) considering joint venture partners in our top five assets to unlock excess value; 3) exploring the sale of five non-core assets in the Brooklyn and Queens boroughs of New York City; and 4) realizing internal growth opportunities by repositioning office and basement space to retail space at 1440 Broadway as well as converting the lobby to rentable retail space. We are also in the process of refinancing the mortgage notes payable secured by the Design Center.
On September 30, 2015, we obtained a mortgage note payable of up to $325.0 million , secured by our property located at 1440 Broadway. As of September 30, 2015, the mortgage note payable outstanding was $305.0 million , and up to $20.0 million is available in the future as additional advances, subject to customary funding conditions to pay, among other things, for certain tenant allowances, capital expenditures and leasing costs that have been approved by the lender.
Subsequent Events
On October 1, 2015, we announced the initiation of a series of governance, strategic and operational actions intended to enhance value for all stockholders. Management and our board of directors unanimously endorsed the following actions:
•
Engaged the Eastdil Secured division of Wells Fargo Securities, a leading real estate investment banking group, as strategic advisor to identify and evaluate potential strategic transactions at the asset or entity level;
•
Appointed an additional non-independent director to the board of directors as well as conducting a search to identify additional independent directors to appoint in the near future; and
•
In the process of completing a joint venture arrangement with ARC NYCR, in order to better align interests between us and ARC NYCR.
On October 21 2015, we completed the sale of one of our non-core assets, 163 Washington Avenue, for a contract purchase price of $37.7 million .
On November 9, 2015, ARC advised us that ARC and Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, “Apollo”) have mutually agreed to terminate an agreement, dated as of August 6, 2015, pursuant to which Apollo would have purchased a controlling interest in a newly formed company that would have owned a majority of the ongoing asset management business of ARC, including our Advisor and our Property Manager. The termination has no effect on our previously announced strategic initiatives or the current management team.
Also on November 9, 2015, we announced that our board of directors decided to increase the size of our board by two additional members and that these two additional members have been appointed to fill the two new slots as additional independent directors. Our board of directors now consists of seven members, five of which are independent.
Principal Use of Funds
Acquisitions and Capital Expenditures
As of September 30, 2015 , we owned 23 properties. Our Advisor is actively and continuously evaluating potential acquisitions of real estate and real estate-related assets and engages in negotiations with sellers and borrowers on our behalf.
In connection with the leasing of our properties, we have entered into and will continue to enter into agreements with our tenants to provide allowances for tenant improvements. These allowances require us to fund capital expenditures up to amounts specified in our lease agreements. We intend to fund tenant improvement allowances with cash on hand and cash flows from operations.
Repurchase of Common Stock
On June 22, 2015, our board of directors authorized us to repurchase up to $150.0 million of our common stock. We expect to opportunistically repurchase shares during periods of favorable market conditions to increase stockholder value. We expect to fund repurchases with cash on hand, cash flow from operations and excess cash from the sale of non-core assets. As of September 30, 2015 , we had not repurchased any shares pursuant to the $150.0 million share repurchase plan.
Joint Ventures
On October 1, 2015, we announced that we intend to enter into joint venture agreements with ARC NYCR, which is intended to better align interests between us and ARC NYCR and to facilitate the continued growth and diversification of both portfolios with reduced need to raise additional equity capital. Any joint venture agreement will require approval by our board of directors and the board of directors of ARC NYCR.

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Table of Contents

Dividends
We are required to distribute at least 90% of our annual REIT taxable income. During the nine months ended September 30, 2015 , we declared and paid a dividend rate equal to $0.46 per share per annum. Payments are made to stockholders of record at the close of business on the 8th day of each month, and payable on the 15th day of such month. Payments are dependent on the availability of funds. Amounts paid to our stockholders may be a return of capital and not a return on a stockholder's investment. Our board of directors may reduce the amount of dividends or distributions paid or suspend dividend payments at any time and therefore dividend payments are not assured.
During the nine months ended September 30, 2015 , dividends paid totaled $58.0 million , inclusive of $2.0 million of distributions paid on OP units and participating LTIP units. During the nine months ended September 30, 2015 , cash used to pay our dividends was primarily generated from cash flows provided by operations and proceeds from the return of our preferred equity investment in 123 William Street. We expect to fund dividend payments over the next three months primarily from cash flows from operations, the remaining proceeds from the return of our preferred equity investment in 123 William Street, distributions from Worldwide Plaza and proceeds from sales of investment securities.
Worldwide Plaza Option
We expect to exercise our $1.4 billion purchase option for the remaining interest in Worldwide Plaza and fund the purchase option using cash on hand and future debt financing.
The following table shows the sources for the payment of dividends for the periods presented:
 
 
Three Months Ended
 
Nine Months Ended
 
 
March 31, 2015
 
June 30, 2015
 
September 30, 2015
 
September 30, 2015
(In thousands)
 
 
 
Percentage
of
Distributions
 
 
 
Percentage
of
Distributions
 
 
 
Percentage 
of
Distributions
 
 
 
Percentage
of
Distributions
Distributions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid in cash
 
$
18,654

 
 
 
$
18,651

 
 
 
$
18,711

 
 
 
$
56,016

 
 
Other (1)
 
593

 
 
 
768

 
 
 
621

 
 
 
1,982

 
 
Total dividends
 
$
19,247

 
 
 
$
19,419

 
 
 
$
19,332

 
 
 
$
57,998

 
 
Source of dividend coverage:
 
 
 
 
 
 
 
 
 
 

 
 
 
 

 
 
Cash flows provided by operations  
 
$
14,446

 
75.1
%
 
$
1,886

 
9.7
%
 
$
16,912

 
87.5
%
 
$
33,244

 
57.3
%
Proceeds from return of preferred equity investment
 
4,801

 
24.9
%
 
17,533

 
90.3
%
 
2,420

 
12.5
%
 
24,754

 
42.7
%
Total sources of dividends
 
$
19,247

 
100.0
%
 
$
19,419

 
100.0
%
 
$
19,332

 
100.0
%
 
$
57,998

 
100.0
%
Cash flows provided by operations (GAAP basis)
 
$
14,446

 
 
 
$
1,886

 
 
 
$
16,912

 
 

 
$
33,244

 
 

Net loss attributable to stockholders (in accordance with GAAP)
 
$
(8,199
)
 
 
 
$
(8,659
)
 
 
 
$
(12,752
)
 
 

 
$
(29,610
)
 
 

__________________
(1)
Includes distributions on OP units and participating LTIP units.
Loan Obligations
As of September 30, 2015 , we had consolidated mortgage notes payable of $388.5 million , excluding our pro rata share, of $427.9 million , of unconsolidated mortgage debt relating to Worldwide Plaza's total mortgage debt of $875.0 million . As of September 30, 2015 , the consolidated mortgage notes payable had a weighted average interest rate of 3.8% and our pro rata share of unconsolidated mortgage debt relating to Worldwide Plaza had a weighted average interest rate of 4.6% .
The payment terms of our loan obligations require principal and interest amounts payable monthly with all unpaid principal and interest due at maturity. Our loan agreements require us to comply with specific reporting covenants. As of September 30, 2015 , we were in compliance with the debt covenants under our loan agreements.
Incurring mortgage debt increases the risk of loss because defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default and cause us to recognize taxable income on foreclosure for federal income tax purposes even though we do not receive any cash proceeds. In such event, we may be unable to pay the amount of distributions required in order to maintain our REIT status.

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Contractual Obligations
Debt Obligations
The following is a summary of our contractual debt obligations as of September 30, 2015 :
 
 
 
 
 
 
Years Ended December 31,
 
 
(In thousands)
 
Total
 
October 1, 2015 - December 31, 2015
 
2016 — 2017
 
2018 — 2019
 
Thereafter
Principal payments due:
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable
 
$
388,537

 
$
101

 
$
67,601

 
$
312,572

 
$
8,263

Credit facility
 
485,000

 
—

 
180,000

 
305,000

 
—

 
 
$
873,537

 
$
101

 
$
247,601

 
$
617,572

 
$
8,263

Interest payments due:
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable
 
$
53,732

 
$
2,686

 
$
28,369

 
$
22,295

 
$
382

Credit Facility
 
23,500

 
2,638

 
16,363

 
4,499

 
—

 
 
$
77,232

 
$
5,324

 
$
44,732

 
$
26,794

 
$
382

Lease Obligations
We entered into lease agreements primarily related to 350 Bleecker Street and the Viceroy Hotel under leasehold interest agreements. The following table reflects the minimum base rental cash payments due from us over the next five years and thereafter under these arrangements. 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.
 
 
 
 
 
 
Years Ended December 31,
 
 
(In thousands)
 
Total
 
October 1, 2015 - December 31, 2015
 
2016 — 2017
 
2018 — 2019
 
Thereafter
Capital lease obligations
 
$
3,856

 
$
22

 
$
172

 
$
172

 
$
3,490

Operating lease obligations
 
273,167

 
1,242

 
9,863

 
10,435

 
251,627

Total lease obligations
 
$
277,023

 
$
1,264

 
$
10,035

 
$
10,607

 
$
255,117

Election as a REIT
We elected and qualified to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), effective for our taxable year ended December 31, 2010. We believe that, commencing with such taxable year, we are organized and operate in such a manner as to qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner to qualify for taxation as a REIT, but no assurance can be given that we will operate in a manner so as to remain qualified for taxation as a REIT. In order to continue to qualify for taxation as a REIT we must, among other things, distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard for the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on that portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as federal income and excise taxes on our undistributed income.
Inflation
Some of our leases contain provisions designed to mitigate the adverse impact of inflation. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions. In addition, our net leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in costs and operating expenses resulting from inflation.
Related-Party Transactions and Agreements
We have entered into agreements with affiliates of our Sponsor, whereby we have paid or may in the future pay certain fees or reimbursements to our Advisor, its affiliates and entities under common ownership with our Advisor in connection with acquisition and financing activities, sales and maintenance of common stock under our offering, transfer agency services, asset and property management services and reimbursement of operating and offering related costs.

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Table of Contents

Off-Balance Sheet Arrangements
We have no off-balance-sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our long-term debt, which consists of secured financings and our Credit Facility, bears interest at fixed rates and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. From time to time, we may enter into interest rate hedge contracts such as swaps, collars, and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.
As of September 30, 2015 , our debt consisted of both fixed and variable-rate debt. We had fixed-rate secured mortgage notes payable and fixed-rate loans under our Credit Facility, with an aggregate carrying value of $163.5 million and a fair value of $168.8 million . Changes in market interest rates on our fixed-rate debt impact the fair value of the notes, but it has no impact on interest due on the notes. For instance, if interest rates rise 100 basis points and our fixed rate debt balance remains constant, we expect the fair value of our obligation to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed–rate debt assumes an immediate 100 basis point move in interest rates from their September 30, 2015 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt by $1.7 million . A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt by $1.7 million .
As of September 30, 2015 , our variable-rate debt had a carrying and fair value of $710.0 million . Interest rate volatility associated with this variable-rate debt affects interest expense incurred and cash flow. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their September 30, 2015 levels, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate debt would increase or decrease our interest expense by $7.1 million annually.
These amounts were determined by considering the impact of hypothetical interest rates changes on our borrowing costs, and assuming no other changes in our capital structure. As the information presented above includes only those exposures that existed as of September 30, 2015 , it does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting.
We completed the execution of our remediation plan with respect to previously identified material weaknesses during the quarter ended June 30, 2015. No change occurred in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended  September 30, 2015  that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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Table of Contents

PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
The information related to litigation and regulatory matters contained in “Note 13 — Commitments and Contingencies” of our notes to the consolidated financial statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1. Except as set forth therein, as of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2014.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.

51
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
NEW YORK REIT, INC.
 
By:
/s/ Michael A. Happel
 
 
Michael A. Happel
 
 
Chief Executive Officer and President
(Principal Executive Officer)
 
 
 
 
By:
/s/ Nicholas Radesca
 
 
Nicholas Radesca
 
 
Interim Chief Financial Officer, Treasurer and Secretary
(Principal Financial Officer and Principal Accounting Officer)

Date: November 9, 2015

52
EXHIBIT INDEX


The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.
 
Description
10.1 (1)
 
Loan Agreement, dated as of September 30, 2015, between ARC NY1440BWY1, LLC, as Borrower, and H/2 Financial Funding I LLC, as Lender
10.2 (1)
 
Mezzanine Loan Agreement, dated as of September 30, 2015, between ARC NY1440BWY1 MEZZ, LLC, as Borrower, and Paramount Group Fund VIII 1440 Broadway Mezz LP, as Lender
10.3 (1)
 
Amended, Restated and Consolidated Mortgage, Assignment of Rents and Leases, Collateral Assignment of Property Agreements, Security Agreement and Fixture Filing
10.4 (1)
 
Pledge and Security Agreement, made as of September 30, 2015, by ARC NY1440BWY1 MEZZ, LLC in favor of Paramount Group Fund VIII 1440 Broadway Mezz LP
10.5 (1)
 
Guaranty (Unfunded Obligations), dated as of September 30, 2015, by New York REIT, Inc. and New York Recovery Operating Partnership, L.P. for the benefit of the Mortgage Lender
10.6 (1)
 
Guaranty (Unfunded Obligations), dated as of September 30, 2015, by New York REIT, Inc. and New York Recovery Operating Partnership, L.P. for the benefit of the Mezzanine Lender
10.7 (1)
 
Environmental Indemnity Agreement, dated as of September 30, 2015, by New York REIT, Inc., New York Recovery Operating Partnership, L.P., and ARC NY1440BWY1, LLC for the benefit of the Mortgage Lender
10.8 (1)
 
Environmental Indemnity Agreement, dated as of September 30, 2015, by New York REIT, Inc., New York Recovery Operating Partnership, L.P., and ARC NY1440BWY1 MEZZ, LLC for the benefit of the Mezzanine Lender.
10.9 (1)
 
Guaranty, dated as of September 30, 2015, by New York REIT, Inc. and New York Recovery Operating Partnership, L.P. for the benefit of the Mortgage Lender
10.10 (1)
 
Guaranty, dated as of September 30, 2015, by New York REIT, Inc. and New York Recovery Operating Partnership, L.P. for the benefit of the Mezzanine Lender
10.11*
 
Amended and Restated 2014 Advisor Multi-Year Outperformance Agreement by and among New York REIT, Inc., New York Recovery Operating Partnership, L.P. and New York Recovery Advisors, LLC effective as of August 5, 2015
10.12*
 
First Amendment to Second Amended and Restated Credit Agreement by and among New York REIT, Inc., New York Recovery Operating Partnership, L.P. and Capital One, National Association, dated as of August 27, 2015
10.13*
 
Indemnification Agreement, dated September 30, 2015, between New York REIT, Inc. and Marc Rowan
31.1 *
 
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 *
 
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 *
 
Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 *
 
XBRL (eXtensible Business Reporting Language). The following materials from New York REIT, Inc.'s Quarterly Report on Form 10-Q for the nine months ended September 30, 2015, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements. As provided in Rule 406T of Regulation S-T, this information in furnished and not filed for purpose of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934
_____________________
* Filed herewith.
(1)
Filed as an exhibit to New York REIT, Inc.’s Current Report on Form 8-K filed with the SEC on October 5, 2015.



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Exhibit 10.11

NEW YORK REIT, INC.
SECOND AMENDED AND RESTATED
2014 ADVISOR MULTI-YEAR OUTPERFORMANCE AGREEMENT
This 2014 ADVISOR MULTI-YEAR OUTPERFORMANCE AGREEMENT (this “ Agreement ”) effective as of August 5, 2015, by and among NEW YORK REIT, INC., a Maryland corporation (the “ Company ”), its subsidiary NEW YORK RECOVERY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership and the entity through which the Company conducts substantially all of its operations (the “ Partnership ”), and NEW YORK RECOVERY ADVISORS, LLC, a Delaware limited liability company, the Company’s manager (the “ Advisor ”).
RECITALS
The Advisor provides services to the Company pursuant to the Sixth Amended and Restated Advisory Agreement by and among the Company, the Partnership and the Advisor, dated as of April 15, 2014.
The Compensation Committee (the “ Committee ”) of the Board of Directors of the Company (the “ Board ”) approved this Agreement to provide the Advisor with the incentive compensation described in this Agreement (the “ Award ”) and thereby provide additional incentive for the Advisor to promote the progress and success of the business of the Company and its affiliates, including the Partnership. This Agreement evidences the Award and is subject to the terms and conditions set forth herein and in the Partnership Agreement (as defined herein).
NOW, THEREFORE, the Company, the Partnership and the Advisor agree as follows:
1. Administration . The Award granted under this Agreement shall be administered by the Committee; provided that all powers of the Committee hereunder can be exercised by the full Board if the Board so elects. The Committee shall have the discretionary authority to make all determinations regarding the Award, including, without limitation, the interpretation and construction of the Award and the determination of relevant facts; provided such determinations are made in good faith and are consistent with the purpose and intent of the Award. Except as expressly provided herein, no such action by the Committee shall adversely affect the rights of the Advisor to any earned and outstanding Award LTIP Units (as defined below). Subject to the terms hereof, all decisions made by the Committee shall be final, conclusive and binding on all persons, including the Company, the Partnership and the Advisor. No member of the Committee, nor any other member of the Board or any officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Award, and all members of the Committee and each other member of the Board and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.




2.      Definitions . As used herein:
“ Additional Shares ” means (without double-counting), as of a particular date of determination, the sum of (A) the number of shares of Common Stock plus (B) the REIT Shares Amount for all Partnership Units (assuming that such Partnership Units were converted, exercised, exchanged or redeemed for OP Units as of such date of determination at the applicable conversion, exercise, exchange or redemption rate (or rate deemed applicable by the Committee if there is no such stated rate) and such OP Units were then tendered to the Partnership for redemption pursuant to the Partnership Agreement as of such date) other than those Partnership Units held by the Company, in the case of each (A) and (B), to the extent issued after the Effective Date and on or before such date of determination in a capital raising transaction, in exchange for assets or securities, or upon the acquisition of another entity; provided , that for the avoidance of doubt, this definition of “Additional Shares” shall exclude: (i) shares of Common Stock issued after the Effective Date upon exercise of stock options or upon the exchange (directly or indirectly) of LTIP Units or other Partnership Units issued to employees, non‑employee directors, consultants, advisors or other persons or entities as incentive or other compensation, (ii) shares of Common Stock awarded after the Effective Date to employees or other persons or entities in exchange for services provided or to be provided to the Company or any of its affiliates, and (iii) all Initial Shares.
“ Adjusted Market Cap ” means (A) the Company’s Initial Market Cap less an amount equal to the total number of Buyback Shares bought back over the measurement period multiplied by $9.00 with respect to the calculation of (i) the Annual Amount on the First Valuation Date, (ii) the Interim Amount, (iii) the Final Absolute TRS Amount, and (iv) the Final Relative TRS Amount, and (B) the Total Shares as of the prior Valuation Date less any Buyback Shares bought back over the measurement period multiplied by the spot closing stock price on the prior Valuation Date, with respect to the calculation of the Annual Amount on the Second Valuation Date and the Final Valuation Date.
“ Annual Absolute TRS ” means, as of the each Valuation Date and provided the Company’s TRS Percentage exceeds seven percent (7%) for the period commencing on (A) the Effective Date with respect to the First Valuation Date and (B) the prior Valuation Date with respect to the Second Valuation Date and the Final Valuation Date, a dollar amount equal to four percent (4%) of the dollar amount by which, if any, the amount of the Company’s Total Return, determined as of such date, exceeds the Threshold Amount, determined as of such date.
“ Annual Amount ” means, as of a Valuation Date, an amount equal to up to one and one-quarter percent (1.25%) of the Company’s Initial Market Cap based on the level of achievement of Annual Absolute TRS and Annual Relative TRS as of such Valuation Date for the period commencing on (A) the Effective Date with respect to the First Valuation Date and (B) the prior Valuation Date with respect to the Second Valuation Date and the Final Valuation Date.
“ Annual Relative TRS ” means, as of each Valuation Date, a dollar amount equal to four percent (4%) of any amount by which the Company’s Total Return for the period commencing on (A) the Effective Date with respect to the First Valuation Date and (B) the prior Valuation Date with respect to the Second Valuation Date and the Final Valuation Date, exceeds the Relative Threshold Amount as of such date; provided , that the amount so earned will be subject to reduction

2


in accordance with a ratable sliding scale factor so that (A) if the Company’s TRS Percentage for the applicable period is six percent (6%) or more, there will be no reduction to Annual Relative TRS for such period; (B) Annual Relative TRS for such period shall be reduced by fifty percent (50%) if such TRS Percentage for the applicable period is zero percent (0%); (C) Annual Relative TRS for such period shall be reduced based on a linear interpolation between the foregoing reduction factors if the Company’s TRS Percentage for the applicable period is between zero percent (0%) and six percent (6%); and (D) Annual Relative TRS for such period shall be reduced by one hundred percent (100%) if the TRS Percentage for the applicable period is below zero percent (0%).
“ Award OP Units ” has the meaning set forth in Section 7 hereof.
“ Award LTIP Units ” has the meaning set forth in Section 3(a) hereof.
“ Beneficial Owner ” has the meaning set forth in Rule 13d-3 under the Exchange Act.
“ Buyback Shares ” means (without double-counting), as of a particular date of determination, (A) shares of Common Stock or (B) the REIT Shares Amount for Partnership Units (assuming that such Partnership Units were converted, exercised, exchanged or redeemed for OP Units as of such date of determination at the applicable conversion, exercise, exchange or redemption rate (or rate deemed applicable by the Committee if there is no such stated rate) and such OP Units were then tendered to the Partnership for redemption pursuant to the Partnership Agreement as of such date), other than those Partnership Units held by the Company, in the case of each (A) and (B), to the extent repurchased by the Company after the Effective Date and on or before such date of determination in a stock buyback transaction or in a redemption of Partnership Units for cash pursuant to the Partnership Agreement; provided , that for the avoidance of doubt, this definition of “Buyback Shares” shall exclude: (i) shares of Common Stock issued after the Effective Date upon exercise of stock options or upon the exchange (directly or indirectly) of LTIP Units or other Partnership Units issued to employees, non‑employee directors, consultants, advisors or other persons or entities as incentive or other compensation, and (ii) shares of Common Stock awarded after the Effective Date to employees or other persons or entities in exchange for services provided or to be provided to the Company or any of its affiliates.
“ Change of Control ” means and includes any of the following events:
(i) any Person is or becomes Beneficial Owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the then outstanding securities of the Company, excluding (A) any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (x) of subsection (ii) below and (B) any Person who becomes such a Beneficial Owner through the issuance of such securities with respect to purchases made directly from the Company; or
(ii)      the consummation of a merger or consolidation of the Company with any other Person or the issuance of voting securities of the Company in connection with a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) pursuant to applicable stock exchange requirements, other than (x) a merger or consolidation which would

3


result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) seventy percent (70%) or more of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the then outstanding securities of the Company; or
(iii)      the consummation of a sale or disposition by the Company of all or substantially all of the assets of the Company; or
(iv)      persons who, as of the Effective Date, constitute the Board (the “ Incumbent Directors ”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to such date shall be considered an Incumbent Director if such person’s election was approved by or such person was nominated for election a vote of at least a majority of the Incumbent Directors.
Notwithstanding the foregoing, with respect to any payment that is triggered upon a Change in Control, a transaction shall not be deemed to be a Change in Control unless such transaction constitutes a “change in control event” within the meaning of Section 409A of the Code.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Common Stock ” means the Company’s common stock, par value $0.01 per share, either currently existing or authorized hereafter.
“ Common Stock Price ” means, as of a particular date, the average of the Fair Market Value of one share of Common Stock over the fifteen (15) consecutive trading days ending on, and including, such date (or, if such date is not a trading day, the most recent trading day immediately preceding such date); provided , however, that if such date is the date upon which a Transactional Change of Control occurs, the Common Stock Price as of such date shall be equal to the fair value, as determined by the Committee, of the total consideration paid or payable in the transaction resulting in the Transactional Change of Control for one share of Common Stock.
“ Continuous Service ” means the Advisor’s continuous service as manager of the Company without interruption or termination.
“ Conversion Factor ” has the meaning set forth in the Partnership Agreement.
“ Effective Date ” means April 15, 2014.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

4


“ Fair Market Value ” means, as of any given date, the fair market value of a security determined by the Committee using any reasonable method and in good faith (such determination will be made in a manner that satisfies Section 409A of the Code and in good-faith as required by Section 422(c)(1) of the Code); provided that (A) if such security is admitted to trading on a national securities exchange, the fair market value of such security on any date shall be the closing sale price reported for such security on the principal stock exchange or, if applicable, any other national exchange on which the security is traded or admitted to trading on such date on which a sale was reported; and (B) if such security is admitted to quotation on the National Association of Securities Dealers Automated Quotation System (“ NASDAQ ”) or a successor quotation system, the fair market value of such security on any such date shall be the average of the highest bid and lowest asked prices for such security on the system on such date on which both the bid and asked prices were reported.
“ Final Absolute TRS Amount ” means, as of the Final Valuation Date and provided the Company’s TRS Percentage exceeds twenty-one percent (21%) for the period commencing on the Effective Date through the Final Valuation Date, a dollar amount equal to four percent (4%) of the dollar amount by which, if any, the amount of the Company’s Total Return, determined as of such date, exceeds the Threshold Amount, determined as of such date.
“ Final Relative TRS Amount ” means, as of the Final Valuation Date, a dollar amount equal to four percent (4%) of any amount by which the Company’s Total Return for the period commencing on the Effective Date through the Final Valuation Date exceeds the Relative Threshold Amount as of such date; provided , that the amount so earned will be subject to reduction in accordance with a ratable sliding scale factor so that (A) if the Company’s TRS Percentage for the period commencing on the Effective Date through the Final Valuation Date is eighteen percent (18%) or more, there will be no reduction to the Final Relative TRS Amount; (B) the Final Relative TRS Amount shall be reduced by fifty percent (50%) if such TRS Percentage is zero percent (0%); (C) the Final Relative TRS Amount shall be reduced based on a linear interpolation between the foregoing reduction factors if the Company’s TRS Percentage is between zero percent (0%) and eighteen percent (18%); and (D) the Final Relative TRS Amount shall be reduced by one hundred percent (100%) if such TRS Percentage is below zero percent (0%).
“ Final Valuation Date ” means April 15, 2017.
“ First Valuation Date ” means April 15, 2015.
“ Initial Market Cap ” means (A) $9 multiplied by (B) the number of Initial Shares outstanding on the Effective Date.
“ Initial Shares ” means the sum of (A) all shares of Common Stock outstanding as of the Effective Date (including any vested and nonvested restricted shares of Common Stock issued under any other incentive plan maintained by the Company prior to the Effective Date), plus (B) any shares of Common Stock representing the REIT Shares Amount for all Partnership Units outstanding as of the Effective Date (assuming such Partnership Units were converted, exercised, exchange or redeemed for OP Units as of the Effective Date at the applicable conversion, exercise, exchange or redemption rate (or rate deemed applicable by the Committee if there is no such stated

5


rate) and such OP Units were then tendered to the Partnership for redemption pursuant to the Partnership Agreement as of such date) other than Partnership Units held by the Company; provided, that for the avoidance of doubt, this definition of “Initial Shares” shall exclude shares of Common Stock issuable upon exercise of stock options or upon the exchange (directly or indirectly) of LTIP Units or other Partnership Units issued to employees, non-employee directors, consultants, advisors or other persons or entities as incentive or other compensation.
“ Interim Amount ” means, as of the Second Valuation Date, an amount equal to (A) up to three percent (3%) of the Company’s Initial Market Cap, less (B) any amount of the Annual Amount achieved through the Second Valuation Date (such that the maximum level of achievement through the Second Valuation Date shall not exceed three (3%) of the Company’s Initial Market Cap), based on the level of achievement of: (x) as of the Second Valuation Date and provided the Company’s TRS Percentage exceeds fourteen percent (14%) for the period commencing on the Effective Date, a dollar amount equal to four percent (4%) of the dollar amount by which, if any, the amount of the Company’s Total Return, determined as of such date, exceeds the Threshold Amount, determined as of such date (“ Interim Absolute TRS ”), and (y) as of the Second Valuation Date, a dollar amount equal to four percent (4%) of any amount by which the Company’s Total Return for the period commencing on the Effective Date, exceeds the Relative Threshold Amount as of such date (“ Interim Relative TRS ”); provided , that the amount so earned will be subject to reduction in accordance with a ratable sliding scale factor so that (A) if the Company’s TRS Percentage for the applicable period is twelve percent (12%) or more, there will be no reduction to Interim Relative TRS for such period; (B) Interim Relative TRS for such period shall be reduced by fifty percent (50%) if such TRS Percentage for the applicable period is zero percent (0%); (C) Interim Relative TRS for such period shall be reduced based on a linear interpolation between the foregoing reduction factors if the Company’s TRS Percentage for the applicable period is between zero percent (0%) and twelve percent (12%); and (D) Interim Relative TRS for such period shall be reduced by one hundred percent (100%) if the TRS Percentage for the applicable period is below zero percent (0%). For the avoidance of doubt, any Interim Amount will be determined based on the formula in the preceding sentence which provides for a reduction for any Annual Amounts determined at the First and Second Valuation Dates, but not less than zero.
“ LTIP Units ” means LTIP Units, as such term is defined in the Partnership Agreement.
“ Maximum Total Outperformance Amount ” means five percent (5%) of the Company’s Initial Market Cap.
“ OP Units ” has the meaning set forth in the Partnership Agreement.
“ Partnership Agreement ” means the Third Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of April 15, 2014, among the Company, as general partner, New York Recovery Special Limited Partnership, LLC, as special limited partner, the Advisor, as the initial limited partner, and any limited partners that are admitted from time to time to the Partnership and listed on Exhibit A thereto, as amended, restated or supplemented from time to time.

6


“ Partnership Units ” has the meaning set forth in the Partnership Agreement.
“ Peer Group ” means each of the companies in the SNL US REIT Office Index.
“ Peer Group Return Percentage ” means, the median percentage return to stockholders of the Peer Group (A) for the period commencing on the Effective Date and ending on the First Valuation Date with respect to the calculation of Annual Relative TRS for the First Valuation Date, (B) for the period commencing on the day after the prior Valuation Date and ending on the next Valuation Date with respect to calculation of Annual Relative TRS for the Second Valuation Date and the Final Valuation Date and (C) for the period commencing on the Effective Date and ending on the Second Valuation Date and the Final Valuation Date with respect to calculating Interim Relative TRS and Final Relative TRS, respectively; in each case as calculated by a consultant engaged by the Committee and as approved by the Committee in its reasonable discretion.
“ Person ” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, other entity or “group” (as defined in the Exchange Act).
“ REIT Shares Amount ” has the meaning set forth in the Partnership Agreement.
“ Relative Threshold Amount ” means an amount calculated in the same manner as the Threshold Amount, provided that instead of the 7%, 14%, and 21% required return percentages for the Annual Absolute TRS, Interim Absolute TRS, and Final Absolute TRS Amount, respectively, the Peer Group Return Percentage shall be utilized in calculating the required return on the Adjusted Market Cap and proportional required returns on the values of the Buyback Shares and Additional Shares for the Relative Threshold Amount.
“ Second Valuation Date ” means April 15, 2016.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Subsidiary ” means any corporation or other entity (other than the Company) in which the Company has more than a fifty percent (50%) interest, either directly or indirectly.
“ Threshold Amount ” means for each measurement period an amount equal to the sum of (A) an amount equal to (i) seven percent (7%) multiplied by the Adjusted Market Cap for each annual measurement period, (ii) fourteen percent (14%) multiplied by the Adjusted Market Cap for purposes of calculating Interim Absolute TRS and (iii) twenty-one percent (21%) multiplied by the Adjusted Market Cap for purposes of calculating the Final Absolute TRS Amount; plus (B) an amount equal to the proportional required return (based on a non-compounded daily rate of .0001918) from the issuance dates of any Additional Shares to the end of the measurement period on the values of any Additional Shares issued since the start of the measurement period (based on the spot closing spot prices on the issuance dates of the Additional Shares); plus (C) an amount equal to the proportional required return (based on a non-compounded daily rate of .0001918) from the start of the measurement period to the buyback dates of any Buyback Shares based on the number

7


of Buyback Shares bought back since the start of the measurement period and the closing spot price at the start of the measurement period (or $9.00 for measurement periods beginning on the Effective Date).
“ Total Outperformance Amount ” means, as of the Final Valuation Date, a dollar amount equal to the algebraic sum of: (A) the Final Absolute TRS Amount, (B) the Final Relative TRS Amount, (C) the Annual Amounts determined as of each Valuation Date and (D) the Interim Amount; provided that (i) if the resulting amount is a negative number, the Total Outperformance Amount shall be zero, and (ii) in no event shall the Total Outperformance Amount exceed the Maximum Total Outperformance Amount. For the avoidance of doubt, the Total Outperformance Amount is based on (i) the Annual Amounts granted at the First, Second and Final Valuation Dates, plus (ii) the Interim Amount less any Annual Amounts granted at the First and Second Valuation Dates, plus (iii) the sum of the Final Absolute TRS Amount plus the Final Relative TRS Amount, less any Annual Amounts granted at the First, Second and Third Valuation Dates and any Interim Amount granted at the Second Valuation Date, but not less than zero and not greater than the Maximum Total Outperformance Amount.
“ Total Return ” means (without double-counting), as of a particular date of determination, a dollar amount equal to the sum of: (A) the Total Shares as of such date of determination multiplied by the Common Stock Price as of such date, minus (B) the Adjusted Market Cap, minus (C) the values of any Additional Shares issued since the start of the measurement period (based on the spot closing prices on the issuance dates of the Additional Shares), plus (D) the difference between the buyback values of any Buyback Shares (based on spot prices on the buyback dates) and the baseline values of the buyback shares at the start of the measurement period (also based on spot prices or $9.00 on the Effective Date), plus (E) an amount equal to the sum of the total dividends and other distributions declared between the Effective Date and such date of determination so long as the “ex-dividend” date with respect thereto falls prior to such date of determination (excluding dividends and distributions paid in the form of additional shares of Common Stock or Partnership Units), in respect of the Total Shares as of such date of determination (it being understood, for the avoidance of doubt, that such total dividends and distributions shall be calculated by reference to actual securities outstanding as of each record date with respect to each applicable dividend or distribution payment date, and not by multiplying the aggregate amount of distributions paid on one OP Unit that was outstanding as of the Effective Date between the Effective Date and such date of determination by the number of Total Shares as of the date of determination).
“ Total Shares ” means (without double-counting), as of a particular date of determination, the algebraic sum of: (A) the Initial Shares, plus (B) the Additional Shares, minus (C) all Buyback Shares repurchased or redeemed between the Effective Date and such date of determination.
“ Total OPP Unit Equivalent ” means the aggregate of the (i) sum of Annual OPP Unit Equivalents and the Interim OPP Unit Equivalent (the “Earned Annual and Interim OPP Unit Equivalents”) and (ii) the excess (if any) of the Final OPP Unit Equivalent over the Earned Annual and Interim OPP Unit Equivalents.

8


“ Transactional Change of Control ” means (A) a Change of Control described in clause (a) of the definition thereof where the Person makes a tender offer for Common Stock, (B) a Change of Control described in clause (b) of the definition thereof where the Company is not the surviving entity, or (C) a Change of Control described in clause (c) of the definition thereof.
“ Transfer ” has the meaning set forth in Section 7 hereof.
“ TRS Percentage ” means the Company’s Total Return divided by the sum of (A) the Adjusted Market Cap; (B) the baseline value of any Buyback Shares purchased or redeemed over the measurement period based on the spot closing stock price at the start of the measurement period (or $9.00 for measurement periods beginning on the Effective Date); and (C) the value of any Additional Shares issued during the measurement period based on the closing spot prices on the issuance dates, with the result multiplied by 100 and expressed as a percentage.
“ Valuation Date ” means the First Valuation Date, the Second Valuation Date and the Final Valuation Date, as applicable.
3.      Outperformance Award .
a.      On April 15, 2014 (the “ Grant Date ”) the Advisor was granted the Award, consisting of 8,880,579 LTIP Units (the “ Award LTIP Units ”), which will be subject to forfeiture and vesting to the extent provided in this Section 3 and Section 4 hereof.
b.      As soon as practicable following each Valuation Date, but as of such Valuation Date, the Committee will determine the applicable Annual Amount and divide the resulting dollar amount by the Common Stock Price calculated as of the applicable Valuation Date (appropriately adjusted to the extent that the Conversion Factor is greater or less than 1.0); the resulting number of unit equivalents determined for each Valuation Date referred to herein as the “ Annual OPP Unit Equivalent ”.
c.      As soon as practicable following the Second Valuation Date, but as of the Second Valuation Date, the Committee will determine the Interim Amount and divide the resulting dollar amount by the Common Stock Price calculated as of the Second Valuation Date (appropriately adjusted to the extent that the Conversion Factor is greater or less than 1.0); the resulting number of unit equivalents determined as of the Second Valuation Date referred to herein as the “ Interim OPP Unit Equivalent ”.
d.      As soon as practicable following the Final Valuation Date, but as of the Final Valuation Date, the Committee will:
(i)      determine the Final Absolute TRS Amount;
(ii)      determine the Final Relative TRS Amount;
(iii)      determine the Total Outperformance Amount; and

9


(iv)      divide the resulting dollar amounts by the Common Stock Price calculated as of the Final Valuation Date (appropriately adjusted to the extent that the Conversion Factor is greater or less than 1.0); the resulting number of unit equivalents determined as of the Final Valuation Date referred to herein as the “ Final OPP Unit Equivalent. ”
If the Total OPP Unit Equivalent is smaller than the number of Award LTIP Units previously issued to the Advisor, as of the Final Valuation Date, the Advisor shall forfeit the number of Award LTIP Units equal to the difference without payment of any consideration by the Partnership; thereafter the term Award LTIP Units will refer only to the Award LTIP Units that were not so forfeited and neither the Advisor nor any of its successors, members or their respective assigns or personal representatives will have any further rights or interests in the Award LTIP Units that were so forfeited. If the Total OPP Unit Equivalent is greater than the number of Award LTIP Units previously issued to the Advisor: (A) the Company shall cause the Partnership to issue to the Advisor, as of the Final Valuation Date, a number of additional LTIP Units equal to the difference; (B) such additional LTIP Units shall be added to the Award LTIP Units previously issued, if any, and thereby become part of this Award; and (C) the Company and the Partnership shall take such action as is necessary to accomplish the grant of such additional LTIP Units; provided that such issuance will be subject to the Advisor executing and delivering such documents, comparable to the documents executed and delivered in connection with this Agreement, as the Company and/or the Partnership reasonably request in order to comply with all applicable legal requirements, including, without limitation, federal and state securities laws. If the Total OPP Unit Equivalent is the same as the number of Award LTIP Units previously issued to the Advisor, then there will be no change to the number of Award LTIP Units under this Award.
e.      If any of the Award LTIP Units have been earned based on performance as provided in Sections 3(b), (c) and (d) , subject to Section 4 hereof, the Award LTIP Units shall become vested in the following amounts and at the following times, provided that the Continuous Service of the Advisor must continue through the applicable vesting date or the accelerated vesting date provided in Section 4 hereof, as applicable:
(i)      one-third (1/3) on April 15, 2017;
(ii)      one-third (1/3) on April 15, 2018; and
(iii)      one-third (1/3) on April 15, 2019.
f.      Within thirty (30) days following each vesting date under Section 3(e) , the Advisor, in its sole discretion, shall be entitled to convert such Award LTIP Units that vested on such date into OP Units.
g.      Any Award LTIP Units that do not become vested pursuant to Section 3(e) or Section 4 hereof shall, without payment of any consideration by the Partnership automatically and without notice be forfeited and be and become null and void, and neither the Advisor nor any of its successors, heirs, assigns, members or their respective assigns or personal representatives will thereafter have any further rights or interests in such forfeited Award LTIP Units.

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4.      Termination/ Change of Control .
a.      In the event the Company terminates the Advisor’s Continuous Service for any reason prior to the Final Valuation Date, the calculations provided in Sections 3(b), (c) and (d) hereof shall be performed as of the Valuation Date next following such termination (and if such Valuation Date is not the Final Valuation Date, on the Final Valuation Date as well) as if the termination of Continuous Service had not occurred and the Advisor shall be fully (100%) vested in the Total OPP Unit Equivalent as so determined. Within thirty (30) days of the date such calculations are completed, the Advisor, in its sole discretion, shall be entitled to convert the Total OPP Unit Equivalent so determined into OP Units.
b.      In the event the Company terminates the Advisor’s Continuous Service for any reason after the Final Valuation Date, any then unvested Award LTIP Units shall be fully (100%) vested and nonforfeitable hereunder. Within thirty (30) days of the date such termination, the Advisor, in its sole discretion, shall be entitled to convert such Award LTIP Units into OP Units.
c.      In the event of a Change in Control prior to the Final Valuation Date, (i) the Advisor shall become fully (100%) vested in any Award LTIP Units that had been earned but were unvested prior to the Change in Control and within thirty (30) days of the date such Change in Control, the Advisor, in its sole discretion, shall be entitled to convert such Earned Annual and Interim OPP Units into OP Units; and (ii) the calculations provided in Sections 3(b), (c) and (d) hereof shall be performed as of the Valuation Date next following such Change in Control (and if such Valuation Date is not the Final Valuation Date, on the Final Valuation Date as well) and the Advisor shall be fully (100%) vested in the Total OPP Unit Equivalent as so determined and within thirty (30) days of the date such calculations are completed, the Advisor, in its sole discretion, shall be entitled to convert the number of Award LTIP Units so determined into OP Units.
d.      In the event of a Change in Control after the Final Valuation Date, any then unvested Award LTIP Units shall be fully (100%) vested and nonforfeitable hereunder. Within thirty (30) days of the date such Change in Control, the Advisor, in its sole discretion, shall be entitled to convert such Award LTIP Units into OP Units.
5.      Rights of Advisor . The Advisor shall have no rights with respect to this Agreement (and the Award evidenced hereby) unless the Advisor shall have accepted this Agreement prior to the close of business on the Effective Date by signing and delivering to the Partnership a copy of this Agreement. Upon acceptance of this Agreement by the Advisor, the Partnership Agreement shall be amended to reflect the issuance to the Advisor of the Award LTIP Units so accepted. Thereupon, the Advisor shall have all the rights of a Limited Partner of the Partnership with respect to the Award LTIP Units, as set forth in the Partnership Agreement, subject, however, to the restrictions and conditions specified herein. Award LTIP Units constitute and shall be treated for all purposes as the property of the Advisor, subject to the terms of this Agreement and the Partnership Agreement.

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6.      Distributions .
a.      The Advisor shall be entitled to receive distributions with respect to the Award LTIP Units to the extent provided for in the Partnership Agreement, as modified hereby.
b.      The LTIP Unit Distribution Participation Date (as defined in the Partnership Agreement) with respect to any Award LTIP Unit shall be the date as of which such Award LTIP Unit is earned pursuant to Sections 3(b), (c) and (d) , and on such date, the Partnership will pay the Advisor, for each Award LTIP Unit earned, an amount in cash equal to the quotient of (i) the per unit amount of all distributions paid with respect to each OP Unit on or after the Effective Date and before the date on which such Award LTIP Unit is earned (other than those with respect to which an adjustment was made pursuant to Section 8 hereof) divided by (ii) the Conversion Factor.
c.      All distributions paid with respect to Award LTIP Units shall be fully vested and non-forfeitable when paid, whether or not the underlying LTIP Units have been earned based on performance or have become vested based on the passage of time as provided in Section 3 or Section 4 hereof.
7.      Restrictions on Transfer . Except as otherwise permitted by the Committee in its sole discretion, none of the Award LTIP Units granted hereunder nor any of the OP Units of the Partnership into which such Award LTIP Units may be converted (the “ Award OP Units ”) shall be sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of, encumbered, whether voluntarily or by operation of law (each such action a “ Transfer ”). The transferee in any Transfers of Award LTIP Units or Award OP Units permitted by the Committee must agree in writing with the Company and the Partnership to be bound by all the terms and conditions of this Agreement and that subsequent transfers shall be prohibited except those in accordance with this Section 7 . Additionally, all Transfers of Award LTIP Units or Award OP Units must be in compliance with all applicable securities laws (including, without limitation, the Securities Act) and the applicable terms and conditions of the Partnership Agreement. In connection with any Transfer of Award LTIP Units or Award OP Units, the Partnership may require the Advisor to provide an opinion of counsel, satisfactory to the Partnership, that such Transfer is in compliance with all federal and state securities laws (including, without limitation, the Securities Act). Any attempted Transfer of Award LTIP Units or Award OP Units not in accordance with the terms and conditions of this Section 7 shall be null and void, and the Partnership shall not reflect on its records any change in record ownership of any Award LTIP Units or Award OP Units as a result of any such Transfer, shall otherwise refuse to recognize any such Transfer and shall not in any way give effect to any such Transfer of any Award LTIP Units or Award OP Units. Except as provided in this Section 7 , this Agreement is personal to the Advisor, is nonassignable and is not transferable in any manner, by operation of law or otherwise.
8.      Changes in Capital Structure . If (i) the Company shall at any time be involved in a merger, consolidation, dissolution, liquidation, reorganization, exchange of shares, sale of all or substantially all of the assets or stock of the Company or other transaction similar thereto, (ii) any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, significant repurchases of stock, or other similar change in the capital stock of the Company, (iii)

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any cash dividend or other distribution to holders of share of Common Stock or OP Units shall be declared and paid other than in the ordinary course, or (iv) any other extraordinary corporate event shall occur that in each case in the good faith judgment of the Committee necessitates action by way of equitable or proportionate adjustment in the terms of this Agreement or the Award LTIP Units to avoid distortion in the value of this Award, the Committee shall make equitable or proportionate adjustment and take such other action as it deems necessary to maintain the Advisor’s rights hereunder so that they are substantially proportionate to the rights existing under this Award and the terms of the Award LTIP Units prior to such event, including, without limitation: (A) interpretations of or modifications to any defined term in this Agreement; (B) adjustments in any calculations provided for in this Agreement, and (C) substitution of other awards. All adjustments made by the Committee shall be final, binding and conclusive.
9.      Miscellaneous .
a.      Amendments . This Agreement may be amended or modified only with the consent of the Company and the Partnership acting through the Committee; provided that any such amendment or modification that adversely affects the rights of the Advisor hereunder must be consented to by the Advisor to be effective as against it. Notwithstanding the foregoing, this Agreement may be amended in writing signed only by the Company and the Partnership to correct any errors or ambiguities in this Agreement and/or to make such changes that do not adversely affect the Advisor’s rights hereunder.
b.      Legend . The records of the Partnership evidencing the Award LTIP Units shall bear an appropriate legend, as determined by the Partnership in its sole discretion, to the effect that such Award LTIP Units are subject to restrictions as set forth herein and in the Partnership Agreement.
c.      Compliance With Law . The Partnership and the Advisor will make reasonable efforts to comply with all applicable securities laws. In addition, notwithstanding any provision of this Agreement to the contrary, no Award LTIP Units will become vested or be paid at a time that such vesting or payment would result in a violation of any such law.
d.      Advisor Representations; Registration .
(i)      The Advisor hereby represents and warrants that (A) it understands that it is responsible for consulting its own tax advisor with respect to the application of the U.S. federal income tax laws, and the tax laws of any state, local or other taxing jurisdiction to which the Advisor is or by reason of this Award may become subject, to its particular situation; (B) the Advisor has not received or relied upon business or tax advice from the Company, the Partnership or any of their respective Affiliates (as defined in the Partnership Agreement), employees, agents, consultants or advisors, in their capacity as such; (C) the Advisor provides services to the Partnership on a regular basis and in such capacity has access to such information, and has such experience of and involvement in the business and operations of the Partnership, as the Advisor believes to be necessary and appropriate to make an informed decision to accept this Award; (D) Award LTIP Units are subject to substantial risks; (E) the Advisor has been furnished with, and has reviewed and understands, information relating to this Award; (F) the Advisor has

13


been afforded the opportunity to obtain such additional information as it deemed necessary before accepting this Award; and (G) the Advisor has had an opportunity to ask questions of representatives of the Partnership and the Company, or persons acting on their behalf, concerning this Award.
(ii)      The Advisor hereby acknowledges that: (A) there is no public market for Award LTIP Units or Award OP Units and neither the Partnership nor the Company has any obligation or intention to create such a market; (B) sales of Award LTIP Units and Award OP Units are subject to restrictions under the Securities Act and applicable state securities laws; and (C) because of the restrictions on transfer or assignment of Award LTIP Units and Award OP Units set forth in the Partnership Agreement and in this Agreement, the Advisor may have to bear the economic risk of its ownership of the Award LTIP Units covered by this Award for an indefinite period of time.
e.      Section 83(b) Election . In connection with each separate issuance of LTIP Units under this Award pursuant to Section 3 hereof, the Advisor may elect to include in gross income in the year of transfer the applicable Award LTIP Units pursuant to Section 83(b) of the Code substantially in the form attached hereto as Exhibit A and to supply the necessary information in accordance with the regulations promulgated thereunder. The Advisor agrees to file such election (or to permit the Partnership to file such election on the Advisor’s behalf) within thirty (30) days after the Grant Date with the IRS Service Center where the Advisor files its personal income tax returns, provide a copy of such election to the Partnership, and to file a copy of such election with the Advisor’s U.S. federal income tax return for the taxable year in which the LTIP Units are awarded to the Advisor. So long as the Advisor holds any Award LTIP Units, the Advisor shall disclose to the Partnership in writing such information as may be reasonably requested with respect to ownership of LTIP Units as the Partnership may deem reasonably necessary to ascertain and to establish compliance with provisions of the Code applicable to the Partnership or to comply with requirements of any other appropriate taxing authority.
f.      Severability . If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not so held invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision not held so invalid, and the rest of such provision, together with all other provisions of this Agreement, shall to the full extent consistent with law continue in full force and effect.
g.      Governing Law . This Agreement is made under, and will be construed in accordance with, the laws of State of Delaware, without giving effect to the principles of conflict of laws of such state.
h.      No Obligation to Continue Service as a Consultant or Advisor . Neither the Company nor any affiliate is obligated by or as a result of this Agreement to continue to have the Advisor as a consultant, advisor or other service provider and this Agreement shall not interfere in any way with the right of the Company or any affiliate to terminate the Advisor’s service relationship at any time.

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i.      Notices . Any notice to be given to the Company shall be addressed to the Secretary of the Company at 405 Park Avenue, New York, New York, 10022, and any notice to be given the Advisor shall be addressed to the Advisor at the Advisor’s address as it appears on the records of the Company, or at such other address as the Company or the Advisor may hereafter designate in writing to the other.
j.      Withholding and Taxes . The Advisor shall be solely responsible for all federal, state, local or foreign taxes or any taxes under the Federal Insurance Contributions Act with respect to this Award. Notwithstanding the foregoing, if at any time the Company or Partnership are required to withhold any such taxes, the Advisor shall make arrangements satisfactory to the Committee regarding the payment of any United States federal, state or local or foreign taxes required by law to be withheld with respect to such amount; provided , however, that if any Award LTIP Units or Award OP Units are withheld (or returned), the number of Award LTIP Units or Award OP Units so withheld (or returned) shall be limited to the number which have a fair market value on the date of withholding equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income. The obligations of the Company under this Agreement will be conditional on such payment or arrangements, and the Company and its affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Advisor.
k.      Excise Tax . In the event that the Advisor becomes entitled to any amounts under this Agreement that will be subject to the tax imposed by Section 4999 of the Code, the provisions of Section 8 of the Company’s Equity Plan will apply to such amounts.
l.      Headings . The headings of paragraphs hereof are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.
m.      Counterparts . This Agreement may be executed in multiple counterparts with the same effect as if each of the signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument.
n.      Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and any successors to the Company and the Partnership, on the one hand, and any successors to the Advisor, on the other hand, by will or the laws of descent and distribution, but this Agreement shall not otherwise be assignable or otherwise subject to hypothecation by the Advisor.
o.      Section 409A . This Agreement shall be construed, administered and interpreted in accordance with a good faith interpretation of Section 409A of the Code. Any provision of this Agreement that is inconsistent with Section 409A of the Code, or that may result in penalties under Section 409A of the Code, shall be amended, with the reasonable cooperation of the Advisor and the Company and the Partnership, to the extent necessary to exempt it from, or bring it into compliance with, Section 409A of the Code. Any payment to Advisor made pursuant to Section 9(k) will be made in a manner intended to comply with Regulation Section 1.409A-3(i)(1)(v).

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[Signature page follows]

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the 28 th day of September, 2015.
NEW YORK REIT, INC.
By:     /s/ Michael A. Happel            
Name: Michael A. Happel
Title: Chief Executive Officer and President

NEW YORK RECOVERY OPERATING PARTNERSHIP, L.P.
By:
New York REIT, Inc., its general partner
By:     /s/ Michael A. Happel            
Name: Michael A. Happel
Title: Chief Executive Officer and President

NEW YORK RECOVERY ADVISORS, LLC
By:
New York Recovery Special Limited Partnership, LLC its Member
By:
American Realty Capital III, LLC its Managing Member
By:     /s/ William M. Kahane        
Name: William M. Kahane
Title: Manager

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EXHIBIT A

ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF TRANSFER OF PROPERTY PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder:
1.
The name, address and taxpayer identification number of the undersigned are:
Name: New York Recovery Advisors LLC (the “ Taxpayer ”)
Address:     
Social Security No./Taxpayer Identification No.: ____-____-____
2.
Description of property with respect to which the election is being made: ____ LTIP Units in New York Recovery Operating Partnership, L.P. (the “ Partnership ”).
3.
The date on which the LTIP Units were transferred is April 15, 2014. The taxable year to which this election relates is calendar year 2014.
4.
Nature of restrictions to which the LTIP Units are subject:
(a)
With limited exceptions, until the LTIP Units vest, the Taxpayer may not transfer in any manner any portion of the LTIP Units without the consent of the Partnership.
(b)
The Taxpayer’s LTIP Units vest in accordance with the vesting provisions described in the Schedule attached hereto. Unvested LTIP Units are forfeited in accordance with the vesting provisions described in the Schedule attached hereto.
5.
The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the LTIP Units with respect to which this election is being made was $____ per LTIP Unit.
6.
The amount paid by the Taxpayer for the LTIP Units was $0 per LTIP Unit.
7.
A copy of this statement has been furnished to the Partnership and New York REIT, Inc.
Dated:      Name:     


Exhibit A - 1


SCHEDULE TO EXHIBIT B

Vesting Provisions of LTIP Units
The LTIP Units are subject to time-based and performance-based vesting with the final vesting percentage equaling the product of the time-based vesting percentage and the performance-based vesting percentage. Performance-based vesting will be from 0% to 100% based (i) 50% on New York REIT, Inc.’s (the “ Company’s ”) per-share total return to shareholders and (ii) 50% on total return against the total percentage return to stock holders of a specified peer group, in each case for the period from April 15, 2014 to April 15, 2017 (or earlier in certain circumstances). Under the time-based vesting hurdles, one-third (1/3) of the LTIP Units will vest on April 15, 2017, one-third (1/3) of the LTIP Units will vest on April 15, 2018, and the remaining one-third (1/3) of the LTIP Units will vest on April 15, 2019, provided that the Taxpayer continues its service relationship with the Company and the Partnership through such dates, subject to acceleration in the event of certain extraordinary transactions or termination of the Taxpayer’s service relationship with the Company under specified circumstances. Unvested LTIP Units are subject to forfeiture in the event of failure to vest based on the determination of the performance-based percentage or the passage of time.

Schedule A - 2

Exhibit 10.12

FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “ Amendment ”), dated as of August 27, 2015, which shall only be deemed effective as of the First Amendment Effective Date (as hereinafter defined), is entered into by and among NEW YORK RECOVERY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“ Borrower ”), NEW YORK REIT, INC., a Maryland corporation (the “ REIT ”), CAPITAL ONE, NATIONAL ASSOCIATION, as administrative agent for the Lenders (as defined below) (in such capacity, the “ Administrative Agent ”), and each Lender that has executed this Amendment.
WHEREAS, Borrower, the REIT, the Administrative Agent, and certain lenders party thereto (each a “ Lender ” and collectively, the “ Lenders ”) entered into that certain Second Amended and Restated Credit Agreement, dated as of April 14, 2014 (as amended, modified, restated, consolidated or supplemented from time to time, the “ Credit Agreement ”), pursuant to which the Lenders made certain credit facilities available to Borrower;
WHEREAS, the parties hereto desire to, among other things, amend the Credit Agreement as provided herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1 Defined Terms . Unless otherwise defined in this Amendment, terms defined in the Credit Agreement shall have their defined meanings when used herein.
SECTION 2      Amendment of the Credit Agreement . The Credit Agreement is hereby amended as follows:
(a)      Section 1.01 of the Credit Agreement is hereby modified such that:
(i)
The definition of “Change in Control” therein is modified such that:
(A) clause (b) thereof is amended and restated in its entirety as follows:



“(b) Prior to the Internalization, the Advisor shall no longer be Controlled by Nicholas S. Schorsch, William M. Kahane, their Permitted Successors or other Persons consented to in writing by the Required Lenders; provided , however, no Change of Control shall be deemed to have occurred if any two of Michael Happel, Nicholas Radesca (or his successor to the extent such successor is approved by the Administrative Agent), Patrick O’Malley or Michael Ead immediately before the event (collectively, the “ Key Officers ”) remain in their existing capacity with the Advisor or in a substantially similar capacity with the Advisor immediately after such event.  “ Permitted Successors ” means AR Global International, LLC, or any asset manager or investment professional of similar asset management experience and expertise approv ed by the Administrative Agent; and

(B) clause (c) thereof is modified such that the names “William G. Stanley” and “Gregory W. Sullivan” therein are replaced with the names “Sue Perrotty” and “Nicholas Radesca”, respectively.
(ii)
The definition of “Consolidated Net Income” therein is modified such that:
(A)
the following is added both (1) at the end of the parenthetical immediately before the proviso therein and (2) at the end of clause (b) of the proviso therein: “, except income from the Worldwide Plaza Investment, which income shall be included for the purpose of determining “Consolidated Net Income” in accordance herewith”; and
(B)
the following sentence is added at the end thereof: “Consolidated Net Income shall include, for any Lease, the amount of Eligible Rent Abatements with respect to such Lease.”
(iii)
The following definition is added between the definitions of “Eligible Institution” and “Environmental Indemnity Agreement”:
“ Eligible Rent Abatements ” means, for any Lease, rent abatements equal to the lesser of (a) actual months of free rent concessions provided for under any Lease, (b) if a Lease has a term of ten (10) or more years, up to twelve (12) months of free rent concessions, (c) if a Lease has a term of less than ten (10) years but five (5) or more years, then a number of months of free rent concessions equal to the aggregate of (i) one (1) month for each year of the term of the Lease and (ii) one (1) month, (d) if a Lease has a term of less than five (5) years but three (3) or more years, then one (1) month of free rent

2


concession, and (e) if a Lease has a term of less than three (3) years, then no months of free rent concession, but in no event shall such abatements exceed 5% of Consolidated EBITDA during the relevant testing period.”

(iv)
The definition of “FFO Distribution Allowance” therein is modified such that the following is added immediately after the last word thereof: “, provided that with respect to the four (4) consecutive fiscal quarters starting with the third calendar quarter of 2015 through and including the second calendar quarter of 2016, a cumulative amount equal to 100% of Modified Funds From Operations for such period shall apply”.

(v)
The following definition is added thereto between the definitions of “FFO Distribution Allowance” and “First Extended Revolving Maturity Date”:

“ FF&E ” means Fixtures and Personalty other than stocks of food, alcohol and other supplies held for consumption in normal operations.

(vi)
The following definition is added thereto between the definitions of “Fixed Charge Coverage Ratio” and “Foreign Lender”:

“ Fixtures and Personalty ” means all fixtures, machinery, furnishings, equipment, furniture and other tangible personal property now or hereafter affixed or attached to, installed in, located on, under, above or within the Property or used in connection with the use, occupancy, operation and maintenance of all or any part of the Property, whether or not permanently affixed thereto, together with all accessions, replacements and substitutions thereto or therefor and the proceeds thereof, including all “equipment” (as defined in the UCC), inventory, “farm products” (as defined in the UCC), “fixtures” (as defined in the UCC), “manufactured homes” (as defined in the UCC), oil, gas and other minerals (whether before or after extraction), and other “goods” (as defined in the UCC) and any and all of the following: machinery; signs; artwork; office furnishings and equipment; partitions and screens; generators, boilers, compressors and engines; fuel; water and other pumps and tanks; irrigation lines and sprinklers; refrigeration equipment; pipes and plumbing; elevators and escalators; sprinkler systems and other fire extinguishing machinery and equipment; heating, incinerating, ventilating, air conditioning and air cooling

3


ducts, machinery, equipment and systems; gas and electric machinery and equipment; facilities used to provide utility services; laundry, drying, dishwashing and garbage disposal machinery or equipment; communication apparatus, including television, radio, music, and cable antennae and systems; floor coverings, rugs, carpets, window coverings, blinds, awnings, shades, curtains, drapes and rods; screens, storm doors and windows; stoves, refrigerators, dishwashers and other installed appliances; attached cabinets; trees, plants and other items of landscaping; motorized, manual, mechanical or other buses, boats, aircrafts and vehicles of any nature whatsoever; visual and electronic surveillance systems and other security systems; elevators; escalators; telecommunications equipment including telephones, switchboards, exchanges, wires and phone jacks; maintenance equipment, golf carts, pro shop merchandise, tables, chairs, mirrors, desks, wall coverings, clocks and lamps; kitchen, restaurant, bar, lounge, public room, public area, and other operating or specialized equipment, including menus, dishes, flatware, dishware, glassware, cooking utensils, tables, refrigerating units, microwave equipment, ovens and timers; food and beverages; alcohol; cleaning materials and other similar items; swimming pool heaters and equipment; recreational equipment and maintenance supplies; clubhouse equipment, furnishings and supplies, including lockers and sporting equipment; health and recreational facilities; and linens. Fixtures and Personalty does not include fixtures, equipment and personalty owned by the Franchisor or by tenants under Leases of the Real Property or any part thereof.”

(vii)
The following definitions are added thereto between the definitions of “Form W-8IMY” and “Fronting Exposure”:

“ Franchise Agreement ” means hat certain Hotel Management Agreement for Viceroy New York, between KHM Viceroy New York, LLC, a Delaware limited liability company and Franchisor, dated as of February 20, 2013.

“ Franchisor ” means AREP Fifty-Seventh LLC, a Delaware limited liability company.


(viii)
The following definition is added thereto between the definitions of “Governmental Authority” and “Guaranteed Obligations”:

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“ Gross Income ” means, with respect to any Real Property for any period, property rental and other income (as determined in accordance with GAAP) attributable to such Real Property accruing for such period (adjusted to eliminate the straight lining of rents), including Eligible Rent Abatements.
(ix)
The following definitions are added thereto between the definitions of “Honor Date” and “Incentive Listing Distribution”:
“ Hotel ” has the meaning set forth in Section 6.15.
“ Hotel Owner ” means ARC NY120W5701, LLC, a Delaware limited liability company.
(x)
The definition of “Modified Funds From Operations” therein is modified by adding the following at the end thereof: “Modified Funds From Operations shall include all Eligible Rent Abatements.””.
(xi)
The definition of “Net Operating Income” therein is modified such that the words “with respect to any Real Property for any period, property rental and other income (as determined in accordance with GAAP) attributable to such property accruing for such period (adjusted to eliminate the straight lining of rents)” are deleted and replaced with the following: “(a) Gross Income”.
(xii)
The following definitions are added thereto between the definitions of “163 Washington SPE” and “Option Rights”:
“ Operating Lease ” means that certain Lease Agreement between Hotel Owner and Operating Lessee, dated as of November 18, 2013, as amended through the date hereof, and as the same may from time to time be extended, amended, restated, supplement or otherwise modified.
“ Operating Lessee ” means ARC NY120W5701 TRS, LLC, a Delaware limited liability company.

(xiii)
Clause (E) of the definition of “Permitted Distributions” therein is modified such that the amount “$65,000,000” therein is deleted and replaced with “$100,000,000”.
(xiv)
The word “or” at the end of Clause (H) of the definition of “Permitted Distributions” is deleted.
(xv)
The following definition is added thereto between the definitions of “Special Purpose Entity” and “Statutory Reserve Rate”:

5



“ STAR Report ” means a STAR Report issued by STR, Inc. (or any successor or other entity that succeeds STR, Inc. in customarily providing such reports in the hotel industry) with respect to the Hotel.

(xvi)
The definition of “Threshold Amount” therein is modified such that the amounts “Forty Million Dollars ($40,000,000)” and “Twenty Million Dollars ($20,000,000)” appearing in clauses (a) and (b) thereof, respectively, are deleted and replaced with “Eighty Million Dollars ($80,000,000)” and “Forty Million Dollars ($40,000,000)” respectively.
(xvii)
The definition of “Value-Based Borrowing Base Limit” therein is modified to add the following proviso at the end thereof: “; provided that the Value-Based Borrowing Base Limit for the Hotel shall be forty percent (40%)”.
(b)      The following is added as Section 5.22 of the Credit Agreement:
“Section 5.22 Franchise Agreements .
(a)    For so long as the Hotel is a Borrowing Base Property, Borrower shall (or shall cause the Hotel Owner to) (i) operate the Hotel in accordance with the Franchise Agreement and promptly perform and observe all of the material covenants required to be performed and observed by Hotel Owner under the Franchise Agreement and do all things necessary to preserve and to keep unimpaired their material rights thereunder after giving effect to any waivers provided by Franchisor thereunder, (ii) promptly notify Administrative Agent of any material default under the Franchise Agreement of which any Credit Party is aware and (iii) promptly enforce, in a commercially reasonable manner, the performance and observance of all of the material covenants required to be performed and observed by Franchisor under the Franchise Agreement.
(b)    For so long as the Hotel is a Borrowing Base Property, neither the Hotel Owner nor any Credit Party nor any Affiliate of any Credit Party shall, without the prior written approval of Administrative Agent, such approval not to be unreasonably withheld, conditioned or delayed, (i) enter into any new franchise agreement for the Hotel or (ii) terminate or modify the Franchise Agreement, either orally or in writing, in any material respect. Promptly following any modification to the Franchise Agreement that does not require the consent of Administrative Agent pursuant to this Section 5.22 ,

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Borrower shall provide Administrative Agent with a copy of such modification.
(c)    For so long as the Hotel is a Borrowing Base Property, as additional security for the Obligations, Borrower shall cause Hotel Owner to collaterally assign and grant to Administrative Agent on behalf of the Lenders, a security interest in, all of Hotel Owner’s right, title and interest in and to the Franchise Agreement. Administrative Agent does not hereby assume any of Hotel Owner’s obligations or duties under the Franchise Agreement.”
(c)      The following is added as Section 5.23 of the Credit Agreement:
“Section 5.23 FF&E . Borrower shall maintain, or cause to be maintained, adequate and sufficient FF&E for the use, occupancy, operation and maintenance of the Hotel leased by it as a 240-room full service hotel at market occupancy levels, and in accordance with its Franchise Agreement.”
(d)      The following is added as Section 5.24 of the Credit Agreement:
“Section 5.24 Operating Lease . For so long as the Hotel is a Borrowing Base Property, (a) the Operating Lease shall be in full force and effect; (b) Operating Lessee shall have (i) accepted possession of all of demised premises under the Operating Lease and (ii) commenced the payment of rent to the extent due under the Operating Lease, and there shall be no offsets, claims or defenses to the enforcement thereof; (c) all rents due and payable under the Operating Lease shall be paid and no portion thereof shall have been paid for any period more than thirty (30) days in advance; (d) the rent payable under the Operating Lease shall be the amount set forth in the Operating Lease approved by Administrative Agent, and there shall be no claim or basis for a claim by Operating Lessee for an adjustment to such rent; (e) there shall be no material default (beyond the expiration of any applicable notice, grace or cure periods) by Operating Lessee under the Operating Lease; (f) all security deposits under Operating Lease, if any, shall be as set forth in the Operating Lease; (g) Hotel Owner shall be the sole owner of the entire lessor’s interest under the Operating Lease; (h) the Operating Lease shall be the valid, binding and enforceable obligation of Hotel Owner, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally and to general principles of equity; and (i) the Operating Lease shall be subordinate to the Loan Documents pursuant to its terms.”

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(e)      Section 6.01(a)(ii) of the Credit Agreement is hereby modified such that the ratio “1.40:1.00” therein is deleted and replaced with the ratio “1:30:1.00”.
(f)      Section 6.01(a)(iii)(B) of the Credit Agreement is hereby deleted and replaced with “(B) nine (9) Borrowing Base Properties at any time after there are at least nine (9) Borrowing Base Properties,”.
(g)      Section 6.01(b)(vii) of the Credit Agreement is hereby modified such that the following is added at the end thereof as a new paragraph thereto:
“Notwithstanding anything contained to the contrary herein, the REIT shall be permitted to make distributions for payments of fees, interest, and other payments required in connection with any Indebtedness expressly permitted under Section 6.04 hereof, provided that no Default or Event of Default then exists and no Default or Event of Default shall result therefrom.”
(h)      Intentionally omitted.
(i)      Section 6.04 of the Credit Agreement is hereby amended and restated in its entirety as follows:
Indebtedness . Each Subsidiary of Borrower that holds any interest in any Subsidiary Guarantor, each of the 163 Entities and each Subsidiary Guarantor shall not create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness except (a) Indebtedness incurred pursuant to this Agreement and (b) Trade Payables. The foregoing covenant does not limit the ability of (i) Subsidiaries that are not Subsidiary Guarantors and that do not hold any interest in any Subsidiary Guarantor (other than the 163 Entities) from creating, incurring, assuming, suffering to exist or otherwise becoming or remaining directly or indirectly liable with respect any Indebtedness or (ii) Subsidiary Guarantors to guarantee unsecured Indebtedness of the REIT or the Borrower otherwise permitted hereunder; provided, however, that (A) any guarantee provided by any Subsidiary Guarantor of other unsecured Indebtedness of the REIT or the Borrower shall be expressly made subordinate to such Subsidiary Guarantor’s obligations in respect of their respective Guaranties to the extent of the value of the Liens provided by such Subsidiary Guarantor under the Loan Documents, which, with respect to any Mortgage executed by such Subsidiary Guarantor, shall be an amount equal to no less than the maximum principal secured by such Mortgage as stated therein, and (B) if any Subsidiary who is not a Subsidiary Guarantor hereunder is required to deliver a guaranty in connection with other unsecured Indebtedness of the REIT or the

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Borrower which is permitted hereunder, then such Subsidiary shall, simultaneously therewith, become a guarantor of the Loans by executing a guaranty of the Loans and such guaranty shall continue in full force and effect for so long as such Subsidiary remains a guarantor of such other Indebtedness (it being understood that its guaranty of the Loans shall be automatically released if such Subsidiary is released from its guaranty of such other Indebtedness) and the obligations of such Subsidiary in respect of such other Indebtedness shall rank equal in right of payment with their obligations under the guaranty.
(j)      Section 6.06 of the Credit Agreement is hereby modified such that the following is added at the end thereof: “, unless the Liens and Negative Pledges under the Loan Documents in respect of the Collateral are expressly permitted thereby.”
(k)      Section 6.15 of the Credit Agreement is hereby modified such that the following is added at the end thereof as a new paragraph:
“Notwithstanding anything to the contrary contained herein, the REIT, Borrower, and their respective Subsidiaries shall be permitted to own any Investment (to the extent otherwise permitted hereunder and in accordance with this Agreement) in the hotel located at 120 West 57 th Street, New York, New York (currently known as the “Viceroy Hotel”) (the “ Hotel ”) owned by the Hotel Owner, and engage in any business activities substantially related or incidental thereto (to the extent not otherwise prohibited hereunder and in accordance with this Agreement), and such property may be a Borrowing Base Property to the extent added in accordance with Section 9.03(a). It is expressly agreed that no other hotel or other lodging facility shall be added as a Borrowing Base Property hereunder.”
(l)      Section 7.01(i) of the Credit Agreement is hereby modified such that the amount “$15,000,000” therein is deleted and replaced with “$30,000,000”.
(m)      Section 9.01(b) of the Credit Agreement is hereby modified such that new clause (xxi) thereof is added as follows:
“(xxi)    In addition to any other requirements set forth herein, for so long as the Hotel is a Borrowing Base Property, Administrative Agent shall receive on a quarterly basis a STAR Report for the then current quarter.”
(n)      Section 9.01(c)(i) of the Credit Agreement is hereby modified such that the names and e-mail addresses “Paul Verdi (at Paul.Verdi@capitalone.com), Patricia Visone (at

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patricia.visone@capitalone.com)” therein are deleted and replaced with “Michael Sleece (at michael.sleece@capitalone.com), Ashish Tandon (at ashish.tandon@capitalone.com)”.
(o)      Section 9.03(a) of the Credit Agreement is hereby modified such that (i) the word “and” at the end of clause (xii) thereof is deleted and (ii) the period at the end of clause (xiii) thereof is deleted and replaced with the following:
“; and
(xiv)    In addition to any other requirements set forth herein, in connection with the addition of the Hotel as a Borrowing Base Property, Administrative Agent shall have received and approved (such approval not to be unreasonably withheld, conditioned or delayed) the Franchise Agreement and the Operating Lease, and shall have received a STAR Report for the then current quarter.”
(p)      Section10.01(a) of the Credit Agreement is hereby modified such that the notice addresses and contact Persons for Administrative Agent, Swingline Lender, and L/C Issuer therein shall be deleted and replaced for all purposes under the Credit Agreement in accordance therewith with the following:
“Capital One, National Association, 299 Park Avenue, New York, New York 10171, Attention: Michael Sleece, with a copy to Capital One, National Association, 1680 Capital One Drive, Mclean, Virginia 22102, Attention: Ashish Tandon, and with a copy to Morrison & Foerster LLP, 250 West 55 th Street, New York, New York 10019, Attention: Jeffrey J. Temple, Esq.”
SECTION 3      Effectiveness of this Amendment . Notwithstanding anything to the contrary contained in the Credit Agreement or this Amendment, the effectiveness of this Amendment is conditioned upon, and this Amendment shall not be deemed effective until, the date on which all of the following conditions shall have been satisfied (the “ First Amendment Effective Date ”):
(a)      there are at least nine (9) Borrowing Base Properties (as defined in the Credit Agreement as if same had already been amended and modified by this Amendment); and
(b)      the receipt by the Administrative Agent, for the account of each Lender that has executed this Amendment on or before the date hereof, of a fee from Borrower which shall be equal to the product of (i) the aggregate of each such Lender’s Revolving Commitment and Term Commitment, and (ii) 0.1%, in accordance with that certain fee letter agreement in connection with same executed by Borrower and Administrative Agent on or before the First Amendment Effective Date.

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SECTION 4      Other References . All references in the Loan Documents to the “Credit Agreement” shall be deemed to hereinafter refer to the Credit Agreement as amended by this Amendment.
SECTION 5      Representations and Warranties . In order to induce the Administrative Agent and the Required Lenders to execute this Amendment, each of the Borrower and the REIT hereby represent and warrant to the Administrative Agent and each of the Lenders that:
(a)      no Default or Event of Default exists;
(b)      the execution, delivery and performance by Borrower and the REIT of this Amendment have been duly authorized by all necessary organizational action, on the part of such Credit Party and do not require any consent or approval of, or notice to or action by, any Person (including any Governmental Authority);
(c)      this Amendment and the other Loan Documents constitute the legal, valid and binding obligations of each Credit Party hereto or thereto, and are enforceable against each such Credit Party in accordance with their respective terms, except as such enforceability may be limited by (a) an applicable Insolvency Proceeding, (b) bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and (c) the application of general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; and
(d)      each of the representations and warranties made by each Credit Party in or pursuant to any Loan Document (i) that is qualified by materiality or “material adverse effect” or similar language is true and correct, and (ii) that is not qualified by materiality, is true and correct in all material respects, in each case, on and as of the date hereof, as if made on and as of such date, except to the extent any such representation and warranty expressly relates to an earlier date, in which case such representation and warranty shall have been true and correct in all material respects as of such earlier date.
SECTION 6     Reaffirmation of Loan Documents .    Borrower and the REIT each hereby: (a) reaffirms, ratifies, confirms, and acknowledges its obligations under each Loan Document (as modified herein) to which it is a party, and agrees to continue to be bound thereby and perform thereunder; (b) agrees and acknowledges that all such Loan Documents (as modified herein) and all of such party’s obligations thereunder are and remain in full force and effect and, except as expressly provided herein, have not been modified; and (c) acknowledges and agrees that it has no defenses, offsets or counterclaims of any kind or nature whatsoever to its obligations under the Loan Documents (as modified herein).
SECTION 1      Miscellaneous .
(a)      Credit Agreement Otherwise Not Affected; No Other Amendment or Modification . Except as expressly contemplated hereby, the Credit Agreement shall remain unchanged and in full force and effect and is hereby ratified and confirmed in all respects. The

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Administrative Agent’s and the Required Lenders’ execution and delivery of, or acceptance of, this Amendment shall not be deemed to create a course of dealing or otherwise create any express or implied duty by the Administrative Agent or any such Lender to provide any other or further waivers or consents under the same or similar circumstances in the future. Nothing contained herein shall be deemed a waiver or consent in respect of (or otherwise affect the Administrative Agent’s or the Lenders’ ability to enforce) any Default or Event of Default not explicitly waived by Section 2 hereof.
(b)      No Reliance . Each of the Borrower and the REIT hereby acknowledge and confirm to the Administrative Agent and the Lenders that it is executing this Amendment on the basis of its own investigation and for its own reasons without reliance upon any agreement, representation, understanding or communication by or on behalf of any other Person.
(c)      Binding Effect . This Amendment shall be binding upon and inure to the benefit of the parties hereto and to the benefit of their respective successors and assigns permitted by the terms of the Loan Documents. No third party beneficiaries are intended in connection with this Amendment.
(d)      Governing Law . THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(e)      Complete Agreement . This Amendment, together with the Credit Agreement and the other Loan Documents, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein. This Amendment supersedes all prior drafts and communications with respect hereto and may not be amended except in accordance with the provisions of Section 10.18 of the Credit Agreement.
(f)      Severability . Whenever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under all applicable laws and regulations. If, however, any provision of this Amendment shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Amendment, or the validity or effectiveness of such provision in any other jurisdiction.
(g)      Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of this Amendment by PDF, facsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Amendment but the failure to deliver an original executed counterpart shall not affect the validity, enforceability and binding effect of this Amendment.

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(h)      Interpretation . This Amendment is the result of negotiations between and has been reviewed by respective counsel to the Borrower, the REIT, the Administrative Agent and the Required Lenders and is the product of all parties hereto. Accordingly, this Amendment shall not be construed against any party merely because of its involvement in the preparation hereof.
(i)      Loan Document . This Amendment shall constitute a Loan Document.
(Remainder of page intentionally left blank; signature pages follow.)


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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

BORROWER :
NEW YORK RECOVERY OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership

By:    New York REIT, Inc.,
a Maryland corporation, its general partner


By:     /s/ Michael Ead            
Name: Michael Ead
Title: Senior Vice President and Counsel


REIT :
NEW YORK REIT, INC.,
a Maryland corporation


By:     /s/ Michael Ead                
Name: Michael Ead
Title: Senior Vice President and Counsel






(Signatures continue on following pages.)


 
ny-1200613
Exhibit 10.12

ADMINISTRATIVE AGENT :
CAPITAL ONE, NATIONAL ASSOCIATION,
as administrative agent


By:     /s/ Ashish Tandon            
Name: Ashish Tandon
Title: Vice President




LENDER :
CAPITAL ONE, NATIONAL ASSOCIATION



By:     /s/ Ashish Tandon            
Name: Ashish Tandon
Title: Vice President



(Signatures continue on following pages.)


 

Exhibit 10.12

LENDER : BARCLAYS BANK PLC




By:     /s/ Christopher R. Lee            
Name: Christopher R. Lee
Title: Vice President




 

Exhibit 10.12

LENDER : JPMORGAN CHASE BANK, N.A.




By:     /s/ Christian Lunt            
Name: Christian Lunt
Title: Vice President



 

Exhibit 10.12

LENDER : KEYBANK, N.A.




By:     /s/ Sara Jo Smith        
Name: Sarah Jo Smith
Title: Assistant Vice President




 

Exhibit 10.12

LENDER : CITIZENS BANK, NATIONAL ASSOCIATION




By:     /s/ Brad E. Bindas        
Name: Brad E. Bindas
Title: Sr. Vice President






 

Exhibit 10.12

LENDER : SunTrust Bank




By:     /s/ Bryan P. McFarland        
Name: Bryan P. McFarland
Title: Senior Vice President



 

Exhibit 10.13


INDEMNIFICATION AGREEMENT


THIS INDEMNIFICATION AGREEMENT (this “ Agreement ”) is made and entered into as of the 30th of September, 2015 (the “ Effective Date ”), by and between New York REIT, Inc., a Maryland corporation (the “ Company ”), and Marc Rowan (the “ Indemnitee ”).
WHEREAS, at the request of the Company, Indemnitee currently serves or has previously served as a director, officer or service provider of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of his or her service; and
WHEREAS, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and
WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Definitions . For purposes of this Agreement:
(a)      “ Bylaws ” means the Bylaws of the Company, as amended from time to time.
(b)      “ Charter ” means the charter of the Company, as amended, supplemented or otherwise modified from time to time.
(c)      “ Change in Control ” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors of the Company (the “ Board of Directors ”) in office immediately prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by the affirmative vote of at least two-thirds of the members of the Board of Directors then in office who were directors as of the Effective Date or whose election for nomination for election was previously so approved.
(d)      “ Corporate Status ” means the status of a person as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing

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member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company. As a clarification and without limiting the circumstances in which Indemnitee may be serving at the request of the Company, service by Indemnitee shall be deemed to be at the request of the Company if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise (i) of which a majority of the voting power or equity interest is owned directly or indirectly by the Company or (ii) the management of which is controlled directly or indirectly by the Company.
(e)      “ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by Indemnitee.
(f)      “ Effective Date ” means the date set forth in the first paragraph of this Agreement.
(g)      “ Expenses ” means any and all reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, Employee Retirement Income Security Act of 1974, as amended, excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding. Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.
(h)      “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advance of Expenses hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
(i)      “ Proceeding ” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee. If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.
Section 2.      Services by Indemnitee . Indemnitee serves or has previously served as a director, officer or service provider of the Company. However, this Agreement shall not impose any independent

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obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company. This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.
Section 3.      General . The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date. The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law (the “ MGCL ”).
Section 4.      Standard for Indemnification . If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall indemnify Indemnitee against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding unless it is established that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
Section 5.      Certain Limits on Indemnification . Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:
(a)      indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged to be liable to the Company;
(b)      indemnification hereunder if Indemnitee is adjudged to be liable on the basis that personal benefit was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in the Indemnitee’s Corporate Status; or
(c)      indemnification or advance of Expenses hereunder if the Proceeding was brought by Indemnitee, unless: (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.
Section 6.      Court-Ordered Indemnification . Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:
(a)      if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or

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(b)      if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper. However, indemnification with respect to any Proceeding by or in the right of the Company or in which liability shall have been adjudged in the circumstances described in Section 2-418(c) of the MGCL shall be limited to Expenses.
Section 7.      Indemnification for Expenses of an Indemnitee Who Is Wholly or Partially Successful . Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee was or is, by reason of his or her Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, Indemnitee shall be indemnified for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section 7 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
Section 8.      Advance of Expenses for Indemnitee . If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with such Proceeding within ten days after the receipt by the Company of a statement or statements requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to claims, issues or matters in the Proceeding as to which it shall ultimately be established that the standard of conduct has not been met by Indemnitee and which have not been successfully resolved as described in Section 7 of this Agreement. To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.
Section 9.      Indemnification and Advance of Expenses as a Witness or Other Participant . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of Indemnitee’s Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party, Indemnitee shall be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith within ten days after

4

the receipt by the Company of a statement or statements requesting any such advance or indemnification from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee.
Section 10.      Procedure for Determination of Entitlement to Indemnification .
(a)      To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion. The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.
(b)      Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by the Indemnitee and approved by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors or, if such a quorum cannot be obtained, then by a majority vote of a duly authorized committee of the Board of Directors consisting solely of one or more Disinterested Directors, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by the Indemnitee, which approval shall not be unreasonably withheld, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b). Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.
(c)      The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.
Section 11.      Presumptions and Effect of Certain Proceedings .
(a)      In making any determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the

5

burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.
(b)      The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, or entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.
(c)      The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.
Section 12.      Remedies of Indemnitee .
(a)      If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Sections 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 7 or 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the Charter or Bylaws is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification or advance of Expenses. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce his or her rights under Section 7 of this Agreement. Except as set forth herein, the provisions of Maryland law (without regard to its conflicts of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
(b)      In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed). The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

6

(c)      If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification.
(d)      In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.
(e)      Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth day after the date on which the Company was requested to advance Expenses in accordance with Sections 8 or 9 of this Agreement or the 60 th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.
Section 13.      Defense of the Underlying Proceeding .
(a)      Indemnitee shall notify the Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding. The failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.
(b)      Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) would impose any Expense, judgment, fine, penalty or limitation on Indemnitee. This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.

7

(c)      Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.
Section 14.      Non-Exclusivity; Survival of Rights; Subrogation .
(a)      The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter or Bylaws, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise. Unless consented to in writing by Indemnitee, no amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.
(b)      In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
Section 15.      Insurance . The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee by reason of his or her Corporate Status and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of his or her Corporate Status. Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance

8

referred to in the previous sentence. The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies. If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise) the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.
Section 16.      Coordination of Payments . The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
Section 17.      Reports to Stockholders . To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.
Section 18.      Duration of Agreement; Binding Effect .
(a)      This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).
(b)      The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
(c)      The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

9

(d)      The Company and Indemnitee agree that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith. The Company acknowledges that, in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.
Section 19.      Severability . If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 20.      Identical Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.
Section 21.      Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
Section 22.      Modification and Waiver . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 23.      Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, on the day of such delivery, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
(a)      If to Indemnitee, to the address set forth on the signature page hereto.
(b)      If to the Company, to:

10

New York REIT, Inc.
405 Park Avenue, 14 th Floor
New York, New York 10022
Attention: General Counsel
with a copy to:
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Attention: Peter M. Fass, Esq.
Michael J. Choate, Esq.

or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
Section 24.      Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.
[SIGNATURE PAGE FOLLOWS]


11

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
COMPANY:

NEW YORK REIT, INC.


By:
    /s/ Michael A. Happel        
Name:
Michael A. Happel
Title:
Chief Executive Officer and President


INDEMNITEE


By:
    /s/ Marc Rowan            
Name:     Marc Rowan






-12-

EXHIBIT A     

AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED
To: The Board of Directors of New York REIT, Inc.
Re: Affirmation and Undertaking
Ladies and Gentlemen:
This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement dated the 30 th day of September, 2015, by and between New York REIT, Inc., a Maryland corporation (the “ Company ”), and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the “ Proceeding ”).
Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.
I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm my good faith belief that at all times, insofar as I was involved as [a director] [an officer] [and] [service provider] of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.
In consideration of the advance of Expenses by the Company for reasonable attorneys’ fees and related Expenses incurred by me in connection with the Proceeding (the “ Advanced Expenses ”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.
IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this __  day of _________________, 20 __ .
Name:     


Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Michael A. Happel, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of New York REIT, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 9th day of November, 2015
/s/ Michael A. Happel
 
Michael A. Happel
 
Chief Executive Officer and President
 
(Principal Executive Officer)




Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Nicholas Radesca, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of New York REIT, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 9th day of November, 2015
/s/ Nicholas Radesca
 
Nicholas Radesca
 
Interim Chief Financial Officer, Treasurer and Secretary
 
(Principal Financial Officer and Principal Accounting Officer)




Exhibit 32
SECTION 1350 CERTIFICATIONS

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
The undersigned, who are the Chief Executive Officer and Chief Financial Officer of New York REIT, Inc. (the “Company”), each hereby certify as follows:
The quarterly report on Form 10-Q of the Company which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated this 9th day of November, 2015
 
/s/ Michael A. Happel
 
Michael A. Happel
 
Chief Executive Officer and President
 
(Principal Executive Officer)
 
 
 
/s/ Nicholas Radesca
 
Nicholas Radesca
 
Interim Chief Financial Officer, Treasurer and Secretary
 
(Principal Financial Officer and Principal Accounting Officer)