NEW YORK CITY REIT, INC. Management’s discussion and analysis of financial condition and results of operations. (Form 10-K)

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The following discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements. The following information
contains forward-looking statements, which are subject to risks and
uncertainties. Should one or more of these risks or uncertainties materialize,
actual results may differ materially from those expressed or implied by the
forward-looking statements. Please see "Forward-Looking Statements" and "Item
1A. Risk Factors" elsewhere in this report for a description of these risks and
uncertainties.

Overview

We are an externally managed REIT that invests primarily in office properties
located exclusively within the five boroughs of New York City, primarily
Manhattan. We have also purchased certain real estate assets that accompany
office properties, including retail spaces and amenities, and may purchase
hospitality assets, residential assets and other property types also located
exclusively within the five boroughs of New York City. As of December 31, 2021,
we owned eight properties consisting of 1,163,061 rentable square feet acquired
for an aggregate purchase price of $790.7 million. At our 1140 Avenue of the
Americas property, we also began operating Innovate NYC, a co-working company
that is specific to this property only, that offers move-in ready private
offices, virtual offices, and meeting space on bespoke terms to clients.

At August 18, 2020we have listed our Class A common stock on the NYSE. For more information, see Note 7 – Equity of our Consolidated Financial Statements, which is included on Form 10-K of this Annual Report.

Substantially all of our business is conducted through the OP and its
wholly-owned subsidiaries. Our Advisor manages our day-to-day business with the
assistance of our Property Manager. Our Advisor and Property Manager are under
common control with AR Global and these related parties receive compensation and
fees for providing services to us. We also reimburse these entities for certain
expenses they incur in providing these services to us.

Management update on the impact of the COVID-19 pandemic

The COVID-19 global pandemic has created several risks and uncertainties that
have affected and may continue to impact our business, including our financial
condition, future results of operations and our liquidity. New York City, where
all of our properties are located, has been among the most affected locations in
the country. Until it began its phased reopening in June 2020, New York City
operated under a mandatory order under which tenants were required to cease all
non-essential in-office functions. Although New York City lifted its indoor mask
and vaccine mandate, many offices have not yet fully reopened. Our properties
remain accessible to all tenants, although, even as operating restrictions
expire, not all tenants have resumed in person operations. In addition, as
occupants continue to return to our properties, operating costs may begin to
rise, including for services, labor, and personal protective equipment and other
supplies, as our property managers take appropriate actions to protect tenants
and property management personnel. Some of these costs may be recoverable
through reimbursement from tenants but others will be borne by us. We have
experienced an increase in 2021 of non-reimburseable property operating expenses
and general and administrative expenses for legal fees associated with
litigation against tenants that have not paid amounts contractually due under
their leases and tenant lease amendment negotiations. We expect that continued
vaccination efforts will result in continuing the progression, which began late
in 2021, towards a "return to normalcy" in 2022 and will support an increase in
office usage and leasing trends through 2022 but there can be no assurance these
trends will continue.

The negative impacts of the COVID-19 pandemic has caused and may continue to
cause certain of our tenants to be unable to make rent payments to us timely, or
at all. During the year ended December 31, 2020, we reduced revenue from tenants
by $8.5 million for reserves recorded during the period on receivables for which
the related tenants have been put on a cash basis or there were early lease
terminations. For the year ended December 31, 2021, we did not receive any
rental income from any of the tenants that were previously placed on a cash
basis, however, we did receive lease termination fees of $1.5 million in 2021,
of which $1.4 million was from two tenants that were placed on a cash basis in
2020. During the quarter ended March 31, 2021, we experienced one large
termination due to the termination of leases within two of our buildings, 123
William Street and 9 Times Square, with our former tenant, Knotel, after
declaring bankruptcy in January 2021, and an expiration without a renewal. We
had previously written off any contract and straight line rent receivables net
of any security deposits associated with this tenant as of December 31, 2020 as
they were deemed to be uncollectible. A portion of the vacant space formerly
occupied by Knotel at its 123 William Street, and other previously vacant space
at 123 William Street, has been re-leased and management is working on securing
additional new leases to replace Knotel's former space at our 9 Times Square
building. However, the annualized straight-line rent per square foot for the
leases we have entered into to replace Knotel is lower than the annualized
straight-line rent per square foot under Knotel's leases. Also, the leases with
the original tenant of the garages at both the 200

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Riverside Boulevard property and 400 E. 67th Street - Laurel Condominium
property were both terminated on October 26, 2021, however we received a lease
termination fee of $1.4 million in the fourth quarter of 2021. We simultaneously
entered into six-month license agreements with a new operator at both garage
properties. There can be no assurance we will be able to lease all or any
portion of our currently vacant space at any property on acceptable or favorable
terms, or at all, or experience additional terminations. The impact of COVID-19
on our tenants led to early lease terminations and expirations without renewals
that has caused cash trap events on four of our mortgages aggregating $214.0
million in principal amount, all as described in detail further below in the
Liquidity and Capital Resources section and in   Item 1A  . Risk Factors in this
Annual Report on Form 10-K. The negative impact of the pandemic on our future
results of operations and cash flows could continue to impact our ability to
comply with covenants in our loans, and we may also experience additional
covenant violations on our mortgages at other properties. The ultimate impact on
our results of operations, our liquidity and the ability of our tenants to
continue to pay us rent will depend on numerous factors including the overall
length and severity of the COVID-19 pandemic. For additional information on the
risks and uncertainties associated with the COVID-19 pandemic, please see Item
1A. "Risk Factors - We are subject to risks associated with a pandemic, epidemic
or outbreak of a contagious disease, such as the ongoing global COVID-19
pandemic, which has caused severe disruptions and may worsen" included in this
Annual Report on Form 10-K for the year ended December 31, 2021.

We have taken several steps to mitigate the impact of the pandemic on our
business. We have been in direct contact with our tenants since the crisis
began, continuing to cultivate open dialogue and deepen the fundamental
relationships that we have carefully developed through prior transactions and
historic operations. We have taken a proactive approach to achieve mutually
agreeable solutions with our tenants and in some cases, in 2020 and 2021, we
executed different types of lease amendments, including rent deferrals and
abatements and, in some cases, extensions to the term of the leases. Based on
this approach and the overall financial strength and creditworthiness of our
tenants, we believe that we have had positive results in our cash rent
collections during this pandemic.

Our portfolio is primarily comprised of office and retail tenants. We have
collected 97% of fourth quarter original cash rent due from our office tenants,
94% of original cash rent due from our retail tenants and 96% of original cash
rent due across our entire portfolio, including 98% of cash rent due from our
top ten tenants (based on annualized straight-line rent as of December 31,
2021). The original cash rent collected across our entire portfolio was
consistent with the third quarter in which we reported total portfolio original
cash rent collections of 92% due for the third quarter 2021 as of October 31,
2021, which is unchanged as of December 31, 2021. We also reported total
portfolio original cash rent collections of 91% due for the second quarter 2021
as of October 31, 2021, which remains unchanged as of December 31, 2021 and
original cash rent collections of 87% due for first quarter 2021,which remains
unchanged as of December 31, 2021. We expect our cash rent collections will stay
at current levels, however there can be no assurance that we will be able to
collect cash rent at these levels in the future.

"Original cash rent" refers to contractual rents on a cash basis due from
tenants as stipulated in their originally executed lease agreement at inception
or as amended, prior to any rent deferral agreement. We calculate "original cash
rent collections" by comparing the total amount of rent collected during the
period to the original cash rent due for the applicable period. Total rent
collected during the period includes both original cash rent due and payments
made by tenants pursuant to rent deferral agreements. Eliminating the impact of
deferred rent paid, we collected 85%, 89%, 92% and 96% of original cash rent for
the first, second, third and fourth quarters of 2021, respectively. The amount
of cash rent collected in the most recent quarter increased by approximately
$0.7 million compared to the quarter ended March 31, 2021 even though factoring
the impact of the lease terminations the amount of cash rent due declined by
approximately $0.6 million comparing the same periods.

A deferral or abatement agreement is an executed or approved amendment to an
existing lease to defer a certain portion of cash rent due to a future period or
grant the tenant a rent credit for some portion of cash rent due. The rent
credit is generally coupled with an extension of the lease. The terms of the
lease amendments providing for rent credits differ by tenant in terms of length
and amount of the credit and may also provide for payments of additional amounts
to us if the tenant's gross sales exceed a certain threshold.

During the year ended December 31, 2020, we granted rent deferrals for an
aggregate of $1.5 million or approximately 7% of original cash rent due for the
year. Those deferred amounts were scheduled for repayment during 2020 or 2021.We
have entered into 12 approved abatement or deferral agreements outside of the
new and replacement leases included in the "Results of Operations" section
below, that commenced during the year ended December 31, 2021. The total amount
deferred for the year ended December 31, 2021 under these approved agreements
was $0.6 million. The total amounts of abatements (i.e. rent credits) during the
year ended December 31, 2021 was $0.9 million. Under agreements entered into
during 2020, the total amount of abatements recorded in the year ended December
31, 2021 was $0.1 million.

Also, during the year ended December 31, 2021, we entered into percentage rent
deals with two tenants, as opposed to straight deferral agreements that we
entered into previously. These percentage rent deals provided us with the
opportunity to capture more of the original cash rent due as New York City began
rebounding from the COVID-19 pandemic, as compared to executing a flat deferral
or abatement agreement.

The cash rent collections for the fourth quarter of 2021 includes cash received
in January 2022 and February 2022 for rent due in the fourth quarter of 2021.
Such cash receipts are not, however, included in cash and cash equivalents on
our December 31, 2021 consolidated balance sheet.

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We may receive requests from tenants for future rent deferrals and abatements.
Generally, for tenants with which we have entered into abatement and deferral
agreements, we received the deferred amounts when due. During the year ended
December 31, 2021, we did not collect any cash rent due from any of the tenants
that were moved to a cash basis in 2020, however, we did receive a lease
termination fee of $1.4 million in the fourth quarter from one of the tenants
that was placed on a cash basis in 2020.

Our cash rent collections may not be indicative of any future period and remain
subject to changes based ongoing collection efforts and negotiation of
additional agreements. Moreover, there is no assurance that we will be able to
collect the cash rent that is due in future months, including any deferred 2021
rent amounts that we expect to receive in 2022. The impact of the COVID-19
pandemic on our tenants and thus our ability to collect rents in future periods
cannot be determined at present.

Significant accounting estimates and critical accounting policies

Set forth below is a summary of the critical accounting policies that management
believes is 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:

Recently issued accounting pronouncements

See Note 2 – Summary of Significant Accounting Policies – Recent Accounting Pronouncements accompanying our Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further explanation.

Effects of the COVID-19 pandemic

As discussed above, we have taken a proactive approach to achieve mutually
agreeable solutions with tenants impacted by COVID-19, we executed different
types of lease amendments. These agreements include deferrals and abatements
and, in some cases, also may include extensions to the term of the leases.

For accounting purposes, in accordance with ASC 842: Leases, normally a company
would be required to assess a lease modification to determine if the lease
modification should be treated as a separate lease and if not, modification
accounting would be applied which would require a company to reassess the
classification of the lease (including leases for which the prior classification
under ASC 840 was retained as part of the election to apply the package of
practical expedients allowed upon the adoption of ASC 842, which does not apply
to leases subsequently modified). However, in light of the COVID-19 pandemic in
which many leases are being modified, the FASB and SEC have provided relief that
allows companies to make a policy election as to whether they treat COVID-19
related lease amendments as a provision included in the pre-concession
arrangement, and therefore, not a lease modification, or to treat the lease
amendment as a modification. In order to be considered COVID-19 related, cash
flows must be substantially the same or less than those prior to the concession.
For COVID-19 relief qualified changes, there are two methods to potentially
account for such rent deferrals or abatements under the relief, (1) as if the
changes were originally contemplated in the lease contract or (2) as if the
deferred payments are variable lease payments contained in the lease contract.
For all other lease changes that did not qualify for FASB relief, we would be
required to apply modification accounting including assessing classification
under ASC 842.

Some, but not all of our lease modifications qualify for the FASB relief. In
accordance with the relief provisions, instead of treating these qualifying
leases as modifications, we have elected to treat the modifications as if
previously contained in the lease and recast rents receivable prospectively (if
necessary). Under that accounting, for modifications that were deferrals only,
there would be no impact on overall rental revenue and for any abatement amounts
that reduced total rent to be received, the impact would be recognized ratably
over the remaining life of the lease.

For leases not qualifying for this relief, we applied modification accounting
and determined that there were no changes in the current classification of its
leases impacted by negotiations with its tenants.

Revenue Recognition

Our revenue from tenants, which are derived primarily from lease contracts,
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. As of
December 31, 2021, these leases had a weighted-average remaining lease term of
6.9 years. Because many of our leases provide for rental increases at specified
intervals, straight-line basis accounting requires that we record a receivable
for, and include in revenue from tenants, 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. When we acquire a property, the
acquisition date is considered to be the commencement date for purposes of this
calculation. For new leases after acquisition, the commencement date is
considered to be the date the tenant takes control of the space. For lease
modifications, the commencement date is considered to be the date the lease
modification is executed. We defer the revenue related to lease payments
received from tenants in advance of their due dates. Pursuant to certain of our
lease agreements, tenants are required to reimburse us for certain property
operating expenses

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(recorded in total revenue from tenants), in addition to paying base rent,
whereas under certain other lease agreements, the tenants are directly
responsible for all operating costs of the respective properties. To the extent
such costs exceed the tenants base year, some of our leases require the tenant
to pay its allocable share of increases in operating expenses, which may include
common area maintenance costs, real estate taxes and insurance. Under ASC 842,
we have elected to report combined lease and non-lease components in a single
line "Revenue from tenants". For expenses paid directly by the tenant, under
both ASC 842 and 840, we have reflected them on a net basis.

We 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. For the years ended December 31,
2021, 2020 and 2019, approximately $0.5 million, $0.1 million and $0.1 million,
respectively, in contingent rental income is included in revenue from tenants in
the consolidated statements of operations and comprehensive loss.

We continually review receivables related to rent and unbilled rents receivable
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. Under the leasing standard adopted on January 1,
2019 (see   Note 2   - Summary of Significant Accounting Polices - "Recently
Issued Accounting Pronouncements" to our consolidated financial statements
included in this Annual Report on Form 10-K for further discussion), we are
required to assess, based on credit risk, if it is probable that we will collect
virtually all of the lease payments at the lease commencement date and we must
continue to reassess collectability periodically thereafter based on new facts
and circumstances affecting the credit risk of the tenant. In fiscal year ended
2021 and 2020, this assessment has included consideration of the impacts of the
COVID-19 pandemic on our tenant's ability to pay rents in accordance with their
contracts. Partial reserves, or the ability to assume partial recovery are no
longer permitted. If we determine that it is probable that we will collect
virtually all of the lease payments (base rent and additional rent), the lease
will continue to be accounted for on an accrual basis (i.e., straight-line).
However, if we determine that it is not probable that we will collect virtually
all of the lease payments, the lease will be accounted for on a cash basis and
the straight-line rent receivable accrued will be written off, as well as any
accounts receivable, where it was subsequently concluded that collection was not
probable. Cost recoveries from tenants are included in revenue from tenants in
accordance with current accounting rules, on the accompanying consolidated
statements of operations and comprehensive loss in the period the related costs
are incurred, as applicable.

Investments in real estate

Investments in real estate are recorded at cost. Improvements and replacements
are capitalized when they extend the useful life of the asset. Costs of repairs
and maintenance are expensed as incurred.

At the time an asset is acquired, we evaluate the inputs, processes and outputs
of the 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
statements of operations and comprehensive loss. 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. See the
Purchase Price Allocation section below for a discussion of the initial
accounting for investments in real estate.

Disposal of real estate investments that represent a strategic shift in
operations that will have a major effect on our operations and financial results
are required to be presented as discontinued operations in the consolidated
statements of operations. No properties were presented as discontinued
operations during the years ended December 31, 2021, 2020 or 2019. Properties
that are intended to be sold are to be designated as "held for sale" on the
consolidated balance sheets at the lesser of carrying amount or fair value less
estimated selling costs when they meet specific criteria to be presented as held
for sale, most significantly that the sale is probable within one year. We
evaluate probability of sale based on specific facts including whether a sales
agreement is in place and the buyer has made significant non-refundable
deposits. Properties are no longer depreciated when they are classified as held
for sale. As of December 31, 2021 and 2020, we did not have any properties held
for sale.

As more fully discussed in   Note 2   - Summary of Significant Accounting
Polices - "Recently Issued Accounting Pronouncements - ASU No. 2016-02 Leases"
to the consolidated financial statements included in this Annual Report on Form
10-K, all of our leases as lessor prior to adoption of the new leasing standard
on January 1, 2019 were accounted for as operating leases and we continued to
account for them as operating leases under the transition guidance. We evaluate
new leases originated after the adoption date (by us or by a predecessor
lessor/owner) pursuant to the new guidance where a lease for some or all of a
building is classified by a lessor as a sales-type lease if the significant
risks and rewards of ownership reside with the tenant. This situation is met if,
among other things, there is an automatic transfer of title during the lease, a
bargain purchase option, the non-cancelable lease term is for more than major
part of remaining economic useful life of the asset (e.g., equal to or greater
than 75%), if the present value of the minimum lease payments represents
substantially all (e.g., equal to or greater than 90%) of the leased property's
fair value at lease inception, or if the asset so specialized in nature that it
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alternative use to the lessor (and therefore would not provide any future value
to the lessor) after the lease term. Further, such new leases would be evaluated
to consider whether they would be failed sale-leaseback transactions and
accounted for as financing transactions by the lessor. For the three year period
ended December 31, 2021, we have no leases as a lessor that would be considered
as sales-type leases or financings under sale-leaseback rules.

We are also the lessee under a land lease which was previously classified prior
to adoption of lease accounting, and will continue to be classified, as
operating leases under transition elections unless subsequently modified. These
leases are reflected on the balance sheet and the rent expense is reflected on a
straight line basis over the lease term.

purchase price allocation

In both a business combination and an asset acquisition, we allocate the
purchase price of acquired properties to tangible and identifiable intangible
assets or liabilities based on their respective fair values. Tangible assets may
include land, land improvements, buildings, fixtures and tenant improvements on
an as if vacant basis. Intangible assets may include the value of in-place
leases and above- and below- market leases and other identifiable assets or
liabilities based on lease or property specific characteristics. In addition,
any assumed mortgages receivable or payable and any assumed or issued
noncontrolling interests (in a business combination) are recorded at their
estimated fair values. In allocating the fair value to assumed mortgages,
amounts are recorded to 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. In a business combination, the difference between
the purchase price and the fair value of identifiable net assets acquired is
either recorded as goodwill or as a bargain purchase gain. In an asset
acquisition, the difference between the acquisition price (including capitalized
transaction costs) and the fair value of identifiable net assets acquired is
allocated to the non-current assets. There were no asset acquisitions during the
years ended December 31, 2021 or 2020 and the acquisition during the year ended
December 31, 2019 was an asset acquisition.

For acquired properties with leases classified as operating leases, we allocate
the purchase price of acquired properties to tangible and identifiable
intangible assets acquired and liabilities assumed, based on their respective
fair values. In making estimates of fair values for purposes of allocating
purchase price, we utilize a number of sources, including independent appraisals
that may be obtained in connection with the acquisition or financing of the
respective property and other market data. We also consider information obtained
about each property as a result of our pre-acquisition due diligence in
estimating the fair value of the tangible and intangible assets acquired and
intangible liabilities assumed.

Tangible assets include land, land improvements, buildings, fixtures and tenant
improvements on an as-if vacant basis. We utilize various estimates, processes
and information to determine the as-if vacant property value. Estimates of value
are made using customary methods, including data from appraisals, comparable
sales, discounted cash flow analysis and other methods. Fair value estimates are
also made using significant assumptions such as capitalization rates, discount
rates, fair market lease rates and land values per square foot.

Identifiable intangible assets include amounts allocated to acquire leases for
above- and below-market lease rates and the value of in-place leases as
applicable. Factors considered in the analysis of the in-place lease intangibles
include an estimate of carrying costs during the expected lease-up period for
each property, taking into account current market conditions and costs to
execute similar leases. In estimating carrying costs, we include real estate
taxes, insurance and other operating expenses and estimates of lost rentals at
contract rates during the expected lease-up period, which typically ranges
from six to 24 months. We also estimate costs to execute similar leases
including leasing commissions, legal and other related expenses.

Above-market and below-market lease values for acquired properties are initially
recorded based on the present value (using a discount rate which reflects the
risks associated with the leases acquired) of the difference between (i) the
contractual amounts to be paid pursuant to each in-place lease and (ii)
management's estimate of fair market lease rates for each corresponding in-place
lease, measured over a period equal to the remaining initial term of the lease
for above-market leases and the remaining initial term plus the term of any
below-market fixed rate renewal options for below-market leases.

The aggregate value of intangible assets related to customer relationship, as
applicable, is measured based on our evaluation of the specific characteristics
of each tenant's lease and our overall relationship with the tenant.
Characteristics considered by us in determining these values include the nature
and extent of its existing business relationships with the tenant, growth
prospects for developing new business with the tenant, the tenant's credit
quality and expectations of lease renewals, among other factors. We did not
record any intangible asset amounts related to customer relationships recorded
in connection with the acquisition completed during the year ended December 31,
2019.

Profit from the sale of real estate investments

Gains on sales of rental real estate are not considered sales to customers and
will generally be recognized pursuant to the provisions included in ASC 610-20,
Gains and Losses from the Derecognition of Nonfinancial Assets. We did not have
any dispositions during the years ended December 31, 2021, 2020 or 2019.

Impairment of long-lived assets

We regularly check whether there are any indications that a property is impaired or that the book value is not recoverable. Indicators include continued net operating losses, a significant change in occupancy, a

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significant decline in rent collection, economic changes, or a likely
disposition of a property. To determine whether an asset is impaired, the
carrying value of the property's asset group is compared to the estimated future
undiscounted cash flow that management expects the property's asset group will
generate, including any estimated proceeds from the eventual sale of the
property's asset group. The estimated future undiscounted cash flow considers
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. We estimate the expected future operating income using in
place contractual rent and market rents. We estimate the lease up period, market
rents and residual values using market information from outside sources such as
third-party market research, external appraisals, broker quotes, or recent
comparable sales. For residual values, management applies a selected market
capitalization rate based on current market data. If an impairment exists, due
to the inability to recover the carrying value of a property, we would recognize
an impairment loss in the consolidated statement of operations and comprehensive
(loss) 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 recorded would equal the adjustment to fair value less
estimated cost to dispose of the asset. We estimate the expected approximate
fair value of the property by developing a discounted cash flow analysis, which
considers factors such as lease up period, expected future operating income,
market and other applicable trends, residual value, and discount rate. These
assessments have a direct impact on net income because recording an impairment
loss results in an immediate negative adjustment to net earnings. We recorded an
impairment charge during the year ended December 31, 2021 of $1.5 million for
this property as it was determined that the carrying value exceeded our most
recent estimate of the fair market value of the property, which was based on the
estimated selling price. (see   Note 3   - Real Estate Investments to our
consolidated financial statements found in this Annual Report on Form 10-K for
further discussion). We did not recognize any impairment charges for the years
ended December 31, 2020 or 2019.

depreciation and amortization

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.

The value of in-place leases, excluding above-market and below-market value of in-place leases, is amortized as an expense over the remaining lease terms.

The value of customer relationship intangibles, if any, is amortized to expense
over the initial term and any renewal periods in the respective leases, but in
no event does the amortization period for intangible assets exceed the remaining
depreciable life of the building. If a tenant terminates its lease, the
unamortized portion of the in-place lease value and customer relationship
intangibles is charged to expense.

Any mortgage premiums or discounts accepted are amortized as a reduction or increase in interest expense over the remaining term of the mortgage in question.

Amortization above and below market value

Capitalized above-market lease values are amortized as a reduction of revenue
from tenants over the remaining terms of the respective leases and the
capitalized below-market lease values are amortized as an increase to revenue
from tenants over the remaining initial terms plus the terms of any below-market
fixed rate renewal options of the respective leases. If a tenant with a
below-market rent renewal does not renew any remaining unamortized amount will
be taken into income at that time.

Capitalized above-market ground lease values are amortized as a reduction of
property operating expense over the remaining terms of the respective leases.
Capitalized below-market ground lease values are amortized as an increase to
property operating expense over the remaining terms of the respective leases and
expected below-market renewal option periods.

Derivative Instruments

We may use derivative financial instruments to hedge all or a portion of the
interest rate risk associated with our borrowings. Certain of the techniques
used to hedge exposure to interest rate fluctuations may also be used to protect
against declines in the market value of assets that result from general trends
in debt markets. 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 may also 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 are attributable to the hedged risk in a fair
value hedge or the earnings effect of the hedged forecasted transactions in a
cash

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flow hedge. We may enter into derivative contracts designed to economically hedge certain risks even though hedge accounting is not used, or we elect not to use hedge accounting.

The accounting for subsequent changes in the fair value of these derivatives
depends on whether each has been designated and qualifies for hedge accounting
treatment. If we elect not to apply hedge accounting treatment, any change in
the fair value of these derivative instruments is recognized immediately in
gains (losses) on derivative instruments in the accompanying consolidated
statements of operations and comprehensive loss. If the derivative is designated
and qualifies for hedge accounting treatment, the change in the estimated fair
value of the derivative is recorded in other comprehensive income (loss) to the
extent that it is effective. Any ineffective portion of a derivative's change in
fair value will be immediately recognized in earnings.

Recently issued accounting pronouncements

See   Note 2   - Summary of Significant Accounting Policies - "Recently Issued
Accounting Pronouncements" to our consolidated financial statements found in
this Annual Report on Form 10-K for further discussion.

operating results

Below is a discussion of our results of operations for the years ended
December 31, 2021 and 2020. Please see the "Results of Operations" section
located on page 36 under Item 7 of our Annual Report on Form 10-K for the year
ended December 31, 2019 for a comparison of our results of operations for the
years ended December 31, 2019 and 2018.

As of December 31, 2021 and 2020, our overall portfolio occupancy was 82.9% and
87.0%, respectively. The following table is a summary of our quarterly leasing
activity for the year ended December 31, 2021:

                                                              Q1 2021          Q2 2021          Q3 2021           Q4 2021
Leasing activity:
New Leases:(1)
New leases commenced                                               4                4                4                 5
Total square feet leased                                      30,271           20,454           35,414           115,630
Annualized straight-line rent per square foot(2)             $ 50.16          $ 29.22          $ 55.78          $  50.15
Weighted-average lease term (years)(3)                           2.9              6.4              7.3               3.2

Replacement leases:(4)
Replacement leases commenced                                       2                -                3                 -
Square feet                                                   23,429                -           41,702                 -
Annualized straight-line rent per square foot(2)             $ 49.12          $     -          $ 53.56          $      -
Weighted-average lease term (years)(3)                           1.0                -              2.3                 -

Terminated or Expired Leases:(5)
Number of leases terminated or expired                             3                -                3                 6
Square feet                                                   78,952                -           27,030           122,000
Annualized straight-line rent per square foot(2)             $ 66.14        

$- $22.91 $67.73

Tenant improvements in replacement leases per square foot(6)

                                                      $     -          $     -          $     -          $      -
Leasing commissions on replacement leases per square
foot(6)                                                      $  2.63          $     -          $  5.52          $      -


_______

(1) Includes new and replacement leases which commenced during the quarter. This
excludes lease renewals, amendments, and lease modifications for
deferrals/abatements in responses to COVID-19 negotiations which qualify for
FASB relief. For more information - see Management Update on Impacts of the
COVID-19 Pandemic.
(2) Represents the GAAP basis annualized straight-line rent that is recognized
over the term on the respective leases, includes free rent, periodic rent
increases, and excludes recoveries (see "-Management's Actions" above).
(3) The weighted-average remaining lease term (years) is based on annualized
straight-line rent.
(4) Represents leases commenced for spaces that had been previously leased in
the prior twelve months, including spaces that were vacant at the time of the
lease.
(5) Calculated as of the date of termination for terminated leases and
expiration for those leases that have expired.
(6) Presented as if tenant improvements and leasing commissions were incurred in
the period in which the lease commenced, which may be different than the period
in which these amounts are actually paid. Does not include tenant improvements
and leasing commissions on new leases that are not replacement leases.

In addition to the comparative period-to-period discussions below, see the “Overview – Management Update on the Impact of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties related to the COVID-19 pandemic and the management answers.

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Year-end comparison December 31, 2021 until 2020

As of December 31, 2021, we owned eight properties, all of which were acquired
prior to January 2020. Our results of operations for the year ended December 31,
2021 as compared to the year ended December 31, 2020 primarily reflect changes
due to changes in occupancy and changes due to certain tenants being placed on a
cash basis during 2020.

Revenue from Tenants
Revenue from tenants increased $7.3 million to $70.2 million for the year ended
December 31, 2021, compared to $62.9 million for the year ended December 31,
2020. The net increase was primarily due to the accelerated amortization of the
remaining unamortized balance of a below-market lease liabilities of
approximately $7.9 million, of which $7.7 million related to a terminated lease
with a former parking garage tenant at our 200 Riverside Boulevard property, as
compared to the accelerated amortization of the remaining unamortized balance of
certain above and below-market lease liabilities of $1.8 million during 2020. In
addition, the net increase was impacted by the recording of $1.5 million in
termination fees related to terminated leases at our 200 Riverside Boulevard
property, 400 E. 67th Street - Laurel Condominium property and 9 Times Square
property, as well as higher revenue from increased leasing activity, primarily
at 123 William Street, during the year ended ended December 31, 2021. Also, the
increase in revenue from tenants was due to the addition of $0.3 million of
revenue from Innovate NYC, our co-working space. These increases were partially
offset by lower revenue of approximately $3.0 million from the termination of
several leases including those with our former tenant, Knotel, as well the
impact of abatements (rent credits), lease terminations and tenants that were
placed on cash basis at the end of 2020.

Wealth and Property Management Fees to Related Parties

We incurred $7.6 million and $7.6 million in fees for asset and property
management services to our Advisor and Property Manager for the years ended
December 31, 2021 and 2020, respectively. See   Note 9   - Related Party
Transactions and Arrangements to our consolidated financial statements found in
this Annual Report on Form 10-K for more information on fees incurred to our
Advisor and Property Manager.

Property Operating Expenses

Property operating expenses increased $1.1 million to $33.4 million for the year
ended December 31, 2021, compared to $32.3 million for the year ended
December 31, 2020. This is due to an increase in other non-reimbursable
expenses, such as real estate taxes which are the responsibility of certain
tenants that have not reimbursed us for the taxes. As a result, these taxes for
the cash-basis tenants have been paid by us during 2021. The increase was
partially offset by lower legal fees in the current period due to higher
activity in the prior year period related to tenant lease amendment negotiations
that are non-reimbursable to us.

Impairments of real estate investments

During the year ended December 31, 2021, we recorded impairment charges of $1.5
million related to our 421 W. 54th Street - Hit Factory property. We have been
evaluating our options for this property, which includes marketing the property
for sale. As no buyer has been identified for the property, it does not qualify
to be classified as held for sale on the consolidated balance sheet as of
December 31, 2021. However, during the year ended December 31, 2021, we recorded
impairment charges for this property as determined that the carrying value
exceeded our estimate of fair value of the property.

Acquisition and transaction related expenses

We did not incur any acquisition or transaction-related costs in the past year
December 31, 2021 and 2020.

Listing Expenses

During the year ended December 31, 2020, we incurred $1.3 million of expenses
associated with the Listing. There were no listing expenses for the year ended
December 31, 2021.

Transfer and transformation of the class B units

During the year ended December 31, 2020, we recorded a non-cash expense of
$1.2 million related to the vesting and conversion of units of limited
partnership designated as "Class B Units" ("Class B Units"). The vesting
conditions relating to the Class B Units were fully satisfied upon completion of
the listing of our Class A common stock on the NYSE. On the listing date, 65,498
Class B Units were converted into Class A Units, of which 52,398 held by the
Advisor were subsequently redeemed for an equal number of shares of Class A
common stock during the third quarter of 2020 and the remaining were redeemed
for an equal number of shares of Class A common stock during the second quarter
of 2021. See   Note 9   - Related Party Transactions and Arrangements to our
consolidated financial statements included in this Annual Report on Form 10-K
for further details.


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Equity-Based Compensation

Equity-based compensation increased $4.6 million to $8.5 million for the year
ended December 31, 2021 from $3.9 million for the year ended December 31, 2020.
We granted our Advisor a multi-year out-performance award in August 2020 (the
"2020 OPP"). This increase is related to there being a full year of the
amortization of the OPP in the year ended December 31, 2021 resulting in an
expense of $8.4 million, whereas there was only a partial year of amortization
resulting in $3.8 million of expense for the period from the date of grant n
2020 to the end of 2020. Approximately $108,000 and $96,000 of expense was also
recorded during the year ended December 31, 2021 and 2020, respectively, for the
amortization of restricted shares of common stock. See   Note 11   -
Equity-Based Compensation to our consolidated financial statements included in
this Quarterly Report on Form 10-Q for further details on the 2020 OPP and
restricted shares of common stock.

General and administrative expenses

General and administrative expenses increased $1.1 million to $8.7 million for
the year ended December 31, 2021, compared to $7.6 million for the year ended
December 31, 2020, and were materially consistent for the year ended
December 31, 2021 and 2020, respectively. The primary reason for the increase
relates to the professional fee credit from the Advisor of $0.4 million
(described below) received in 2020 (related to a change in estimate for the 2019
bonuses) which did not recur in 2021. The remaining increases were due to
increases in legal and other professional fees

Total reimbursement expenses for administrative and personnel services provided
by the Advisor during the year ended December 31, 2021 were $4.1 million, of
which $1.5 million related to administrative and overhead expenses and
$2.6 million were for salaries, wages, and benefits. This is compared to
$3.6 million, of which $1.0 million related to administrative and overhead
expenses and $2.6 million were related to salaries, wages, and benefit for the
year ended December 31, 2020. Pursuant to our Advisory Agreement, reimbursement
for administrative and overhead expenses and reimbursements for salaries, wages,
and benefits are subject to an annual limit. During the year ended December 31,
2021 and 2020 the annual limits on reimbursement for administrative and overhead
expenses on and for salaries, wages, and benefit were reached. During the year
ended December 31, 2020, we also received a professional fee credit of
$0.4 million relating to a change in estimate for previously paid 2019 bonuses.
The limit on reimbursement for salaries, wages and benefits was evaluated
without regard to our 2019 bonus reimbursement from the Advisor. On a combined
basis, giving effect to the credit, our reimbursements to our Advisor were
approximately the same year over year. See   Note 9   - Related Party
Transactions and Arrangements to our consolidated financial statements included
in this Annual Report on Form 10-K.

depreciation and amortization

Depreciation and amortization expense decreased $0.6 million to $31.1 million
for the year ended December 31, 2021, compared to $31.7 million for the year
ended December 31, 2020, primarily due to a lower depreciable asset base during
the year ended December 31, 2021 as a result of intangible write-offs in the
third and fourth quarters of 2020. We did not acquire any properties in 2021.
The decrease was primarily due to a lower depreciable asset base in 2021 due to
the write-off in 2020 of in-place leases of $1.3 million associated with certain
lease terminations. Also, there have not been any new acquisitions during 2021
and 2020 that would increase the depreciable base. The decrease was partially
offset by a deferred leasing commission write-off of $1.3 million and a write
-off of tenant improvements of approximately $0.3 million.

interest expense

Interest expense remained the same at $19.1 million for the year ended
December 31, 2021 compared to $19.1 million for the year ended December 31,
2020. There was no substantial change in our borrowings in 2021 and 2020. During
both the year ended December 31, 2021 and 2020, our weighted-average outstanding
debt balance was $405.0 million with a weighted-average effective interest rate
of 4.35% (see   Note 4   - Mortgage Notes Payable, Net to our consolidated
financial statements in this Annual Report on Form 10-K for additional
information).

Other Income
Other income decreased to $47,000 for year ended December 31, 2021, from
0.8 million for the year ended December 31, 2020. Approximately $0.7 million of
the other income in 2020 is related to the recognition of income from the
retention of a deposit forfeited by the buyer on the potential sale of the
property commonly known as the "HIT Factory" under a purchase agreement which
expired in April 2020. Further, we earned less interest income on our temporary
cash investments due to lower rates and available balances

The cash flow from operating activities

The level of cash flows used in or provided by operating activities is affected
by the volume of acquisition activity, the restricted cash we are required to
maintain, the timing of interest payments, the receipt of scheduled rent
payments and the level of property operating expenses.

Net cash used for operational activities during the past year December 31, 2021
was $7.9 million and consisted primarily of a net loss of $39.5 millionadjusted for non-cash items from $33.9 millionincluding depreciation and amortization of tangible and intangible real estate assets, amortization of deferred finance charges, appreciation/amortization below and above market value

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market lease liabilities and assets and equity-based compensation. Net cash used
in operating activities also included a decrease in prepaid expenses of $0.8
million and increase in accounts payable and accrued expenses of $0.1 million
associated with operating activities. These cash inflows were offset by an
increase in straight-line receivable of $3.7 million.

Net cash used in operating activities during the year ended December 31, 2020
was $13.6 million and consisted primarily of a net loss of $41.0 million,
adjusted for non-cash items of $35.3 million, including depreciation and
amortization of tangible and intangible real estate assets, amortization of
deferred financing costs, accretion/amortization of below market and above
market lease liabilities and assets and share-based compensation, as well as the
vesting and conversion of Class B Units. Net cash used in operating activities
also included net cash outflows of $7.4 million for an increase in prepaid
expenses and other assets, $0.3 million for a net increase in straight-line
receivables and $0.5 million related to a decrease related to accounts payable
and accrued expenses associated with operating activities. These cash outflows
were partially offset by a $0.3 million increase related to additional deferred
(prepaid rent) revenue.

Cash flows from investing activities

Net cash used in investing activities during the year ended December 31, 2021 of
$3.4 million related to the funding of capital expenditures relating to tenant
and building improvements at 9 Times Square, 123 William Street and 1140 Avenue
of the Americas.

Net cash used in investing activities during the year ended December 31, 2020 of
$3.8 million related to the funding of capital expenditures relating to tenant
and building improvements at 9 Times Square, 123 William Street and 1140 Avenue
of the Americas.

Cash flows from financing activities

Net cash used in financing activities was $0.3 million during the year ended
December 31, 2021 related to the payment of dividends on common stock of $5.2
million and the repurchase of common stock as part of the tender offer completed
in January 2021 of $0.2 million, partially offset by the proceeds from the
issuance of common stock of $5.3 million.

Net cash used in financing activities was $1.0 million during the year ended
December 31, 2020 related to the redemption of fractional shares of common stock
of $0.3 million and restricted shares following the Reverse Stock Split (as
defined below) that occurred on August 5, 2020 as well as dividends paid on
common stock of $0.6 million in October 2020 (see   Note 7   - Stockholders'
Equity to our consolidated financial statements included in this Annual Report
on Form 10-K for further details).

liquidity and capital resources

Our principal demands for cash are to fund operating and administrative
expenses, capital expenditures, tenant improvement and leasing commission costs
related to our properties, our debt service obligations and, subject to capital
availability, acquisitions and share repurchases.

As of December 31, 2021, we had cash and cash equivalents of $11.7 million as
compared to $23.2 million as of September 30, 2021, $23.9 million as of June 30,
2021, $29.4 million as of March 31, 2021 and $31.0 million as of December 31,
2020. Under the guarantee of certain enumerated recourse liabilities of the
borrower under one of our mortgage loans, we are required to maintain a minimum
net worth in excess of $175.0 million and minimum liquid assets (i.e. cash and
cash equivalents) of $10.0 million. In addition we had restricted cash of
$16.8 million as compared to $9.0 million as of December 31, 2021 and 2020,
respectively. As of December 31, 2021, we had $4.3 million, $4.5 million and
$1.4 million of cash maintained in segregated and restricted cash accounts
resulting from the breach of covenants on loans secured by our 9 Times Square,
1140 Avenue of the Americas and Laurel/Riverside properties, respectively. We
may not access this cash unless and until the various breaches have been cured.
We entered into a waiver and amendment with the lender for the loan secured by 9
Times Square in March, 2022. As part of this agreement, we were permitted to use
the restricted cash which aggregated $5.5 million at the time of the agreement
repay principal principal. Excess cash generated by the property, continues to
be deposited in a separate cash management account until the borrower under the
loan is able to comply with all of the applicable covenants.
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Cash flow from operating activities during the year ended December 31, 2021 was
negative, primarily due to rent deferrals, vacancies and the other impacts of
COVID-19, and we anticipate the need to continue to fund a portion of our
operating expenses and capital requirements over the next 12 months with cash on
hand, proceeds from our Common Stock ATM program, potential dispositions and
cash received from the immediate reinvestment by the Advisor of up to
$3.0 million of fees we pay to our Advisor in 2022 in shares of our Class A
Common stock (see below for details). We do not have any significant debt
principal repayments that are scheduled to be due until 2024, and we believe
that we will have sufficient cash available to us to meet our operating cash
requirements including cash to pay dividends at the existing rate over the next
year. We expect to fund our future capital needs primarily through proceeds from
our Common Stock ATM Program or potentially other future equity offerings. We
may also fund our future capital needs through a combination of net cash, if
any, provided by our current property operations, or the operations of
properties that we may acquire in the future and proceeds from property
dispositions (if any). There can be no assurance, however, that capital
sufficient to meet our capital needs will be available to us on favorable terms,
or at all.

The negative impacts of the COVID-19 pandemic has caused and may continue to
cause certain of our tenants to be unable to make rent payments to us timely, or
at all, which has had, and could continue to have, an adverse effect on the
amount of cash we receive from our operations and therefore our ability to fund
operating expenses and other capital requirements, which, beginning in October
2020, include dividends to our common stockholders. During the third and fourth
quarters of 2020 and the year ended December 31, 2021, the operating results at
1140 Avenue of the Americas, 9 Times Square, 400 E. 67th Street - Laurel
Condominium/200 Riverside Boulevard Garage and 8713 Fifth Avenue properties were
negatively impacted by the COVID-19 pandemic causing cash trap events under the
non-recourse mortgages for those properties to be triggered, as described below.
Specifically for these properties, there were early lease terminations,
expirations without renewal and a tenant bankruptcy for a significant tenant in
the 9 Times Square property (Knotel). Also, the leases with the original tenant
of the garages at both the 200 Riverside Boulevard property and 400 E. 67th
Street - Laurel Condominium property were terminated on October 26, 2021 and we
simultaneously entered into six-month license agreements with a new operator at
the garages at both properties. The termination agreement with these tenants
required them to pay a $1.4 million termination fee to us, which was all
received during the fourth quarter of 2021.

As a result of the breaches at these properties, which together represent 47% of
the rentable square feet in our portfolio as of as of December 31, 2021, we were
not be able to use excess cash flow from the properties to fund operating
expenses at our other properties and other capital requirements during the year
ended December 31, 2021 and we will not be able to use excess cash flow from the
remaining properties that are under breach to fund operating expenses at our
other properties and other capital requirements until the breaches have been
cured. On March 2, 2022 we entered into a waiver and amendment to the mortgage
loan for our 9 Times Square property, under which the lender agreed to waive any
potential existing default that may have existed under the loan, subject to us
paying $5.5 million of the principal amount under the loan. This amount was paid
on March 3, 2022 using the cash held in a segregated account as of that date,
$4.3 million of which was part of our restricted cash balance on our
consolidated balance sheet as of December 31, 2021. See "  Item 1A. Risk
Factors   - We have been in breach of several of our mortgage loans for multiple
quarters" for more details.

We continue to focus on increasing occupancy of the portfolio by seeking
replacement tenants for leases that had expired or otherwise have been
terminated. We believe that certain market tenant incentives we have used and
expect to continue to use, including free rent periods and tenant improvements,
will support our occupancy rate and extend the average duration of our leases
upon commencement of executed leases. While we do not receive cash during
initial free rent periods, which has impacted and may continue to impact the net
cash provided by our property operations in recent periods adversely, we believe
this helps position us to negotiate longer, more attractive lease terms by
having the flexibility to include such a feature. Our ability to generate net
cash from our property operations depends, in part on the amount of additional
cash we are able to generate through our leasing initiatives, which is not
assured, and on our ability to access any excess cash we are able to generate
from properties that are encumbered by mortgages where a cash trap event has
occurred (see below for more details), which also is not assured.

Subsequent to December 31, 2021, on February 4, 2022, we entered into a side
letter (the "Side Letter") with Advisor to the Advisory Agreement. Pursuant to
the Side Letter, and subject to the conditions below, the Advisor agreed to,
from the date of the Side Letter until August 4, 2022, immediately invest the
base management fees and variable management fee (if earned) of the Advisory
Agreement in shares of our Class A common stock, in an amount aggregating no
more than $3.0 million. We believe the terms of the Side Letter will enhance
their cash resources over the six-month term of the Side Letter. In accordance
with the Side Letter, the Advisor reinvested base management fees, aggregating
$1.0 million, in shares of our Class A common stock in the first quarter of
2022. As a result, we issued 45,372 and 43,508 shares of its Class A common
stock (issued at $11.02 per share and $11.49 per share) in February and March
2022 in respect of these purchases. See   Note 9   - Related Party Transactions
and Arrangements and   Note 13   - Subsequent Events to our consolidated
financial statements in this Annual Report on Form 10-K for additional
information.

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See "  Item 1A. Risk Factor  s - Our ability to fund our capital requirements,
including potential payments of principal on mortgage loans, will depend on,
among other things, the amount of cash we are able to generate from our
operations and outside sources, which may not be available on acceptable or
favorable terms, or at all."

mortgage loan

We have six mortgage loans secured by seven of our eight properties with an
aggregate balance of $405.0 million as of December 31, 2021 with a
weighted-average effective interest rate of 4.35%. All of our mortgage loans
bear interest at a fixed rate, except for a mortgage loan agreement secured by
Capital One N.A. that has terms based on LIBOR for which we have a related
derivative agreement for a "pay-fixed" swap which effectively converts the loan
to a fixed rate. Those agreements have alternative rates already contained in
the agreements, and we anticipate that we will either utilize the alternative
rates contained in the agreements or negotiate a replacement reference rate for
LIBOR with the lenders derivative counterparties.

We do not currently have a commitment for a corporate-level revolving credit
facility or any other corporate-level indebtedness, and there can be no
assurance we would be able to obtain corporate-level financing on favorable
terms, or at all. Our only asset that is not serving as collateral for a
mortgage is 421 W. 54th Street - Hit Factory, which is unoccupied and therefore
unlikely to be accepted as collateral for a new mortgage loan. See
"-Acquisitions and Dispositions" section below for further detail on this
property. We do not currently anticipate incurring additional indebtedness
secured by our existing properties, however, despite a tightening of the credit
markets, we expect to be able to continue to use debt financing as a source of
capital to the extent we acquire additional properties.

We have no scheduled principal payments on our mortgage loans that are due at the end of the year December 31, 2022. However, as mentioned here (below), we repaid $5.5 million the principal amount on the loan secured by us 9 Times Square Property.

9 Times Square

We breached both a debt service coverage and a debt yield covenant under the
non-recourse mortgage loan secured by 9 Times Square for each of the quarters
ended December 31, 2020, through December 31, 2021. The debt service coverage
and debt yield covenants are calculated quarterly using the twelve preceding
months. The principal amount of the loan was $55.0 million as of December 31,
2021. The breaches, through the fourth consecutive quarter (September 31, 2021),
while not events of default, required us to enter into a cash management period
requiring all rents and other revenue of the property, if any, to be held in a
segregated account as additional collateral under the loan. Thereafter, the
contract provided for specific financial remedies to be completed or the loan
would be in default. As of December 31, 2021 there was $4.3 million cash trapped
under the loan being held in the cash management account which was classified in
restricted cash on our consolidated balance sheet as of December 31, 2021.

The quarter ended September 30, 2021 was the fourth consecutive quarter that we
were in breach. On March 2, 2022, we entered into a waiver and amendment to this
mortgage loan, under which the lender agreed to waive any potential existing
default that may have existed under the loan, subject to us paying $5.5 million
of the principal amount under the loan. To fund the payment, which was made on
March 3, 2022, we were permitted to use $5.5 million that was being held in a
cash management account as of that date, $4.3 million of which was part of our
restricted cash balance on our consolidated balance sheet as of December 31,
2021.

Other significant changes from the waiver and amendment include: (1) revision of
how the "debt service coverage ratio" is calculated by reducing the hypothetical
interest rate used in this calculation to the actual interest rate on the loan;
(2) a reduction the "debt yield" covenant to 7.5% from 8.0%; and (3) permits us
to include free rent periods (subject to maximum limits) in calculating
compliance with the debt service and debt yield covenants. The waiver and
amendment also revises the LIBOR rate provisions to provide for a successor
benchmark using the Secured Overnight Financing Rate ("SOFR") and amends the
spreads to 1.60% from 1.50%, per annum.

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With the waiver as of September 30, 2021, we can be in breach for up to four
consecutive quarters without causing an event of default. Accordingly, while we
also breached the debt service coverage and debt yield covenant as of December
31, 2021 and expects continue to be in breach in the near term, this does not
represent an event of default under the amended terms. We expect to remain in
the cash trap while we remain in breach and excess cash generated by the
property, continues to be deposited in a separate cash management account until
we comply with all of the applicable covenants. We may remain in breach of the
covenants through the reporting of third quarter of 2022 results at which time
we will again enter the right sizing period which would require (1) repaying a
portion of the loan or (ii) providing the lenders with additional collateral in
the form of cash or a letter of credit, in each case in an amount sufficient to
cure the covenant breaches when applied as a reduction of the loan balance.
There is no assurance that we will be able to cure the breaches before such
time, which could result in the lender accelerating the principal amount due
under the loan and exercising other remedies including foreclosing on the
property. Further, funding any substantial principal repayment would
significantly impact our capital resources which could have a material adverse
effect on our ability to fund our operating expenses (including debt service
obligations), acquisitions, capital expenditures and dividends to the holders of
shares of our Class A common stock. The agreement governing this loan requires
us to maintain $10.0 million in liquid assets.

1140 Avenue of the Americas

We have breached both a debt service coverage provision and a reserve fund
provision under our non-recourse mortgage secured by the 1140 Avenue of the
Americas property in each of the last six quarters ended December 31, 2021. The
debt service coverage covenant is calculated quarterly using the twelve
preceding months. The principal amount of the loan was $99.0 million as of
December 31, 2021. These breaches are not events of default, rather they require
excess cash, if any, generated at the property (after paying operating costs,
debt service and capital/tenant replacement reserves) to be held in a segregated
account as additional collateral under the loan. The covenants for this loan may
be cured if we satisfy the required debt service coverage ratio for two
consecutive quarters, whereupon the additional collateral will be released. We
can remain subject to this reserve requirement through maturity of the loan
without further penalty or ramifications. As of December 31, 2021, we had
$4.5 million in cash that is retained by the lender and maintained in restricted
cash on our consolidated balance sheet as of December 31, 2021.


400 E. 67th Street – Laurel Condo/200 Riverside Blvd – Icon garage

We have breached a debt service coverage covenant under the non-recourse
mortgage loan secured by 400 E. 67th Street - Laurel Condominium/200 Riverside
Boulevard - Icon Garage in the first, second and third quarters of 2021. The
debt service coverage covenant is calculated quarterly using the twelve
preceding months. The principal amount of the loan was $50.0 million as of
December 31, 2021. The two parking garage tenants at this property had not paid
rent in accordance with their lease agreements for 19 months and were placed on
a cash basis in the fourth quarter of 2020. In October 2021, we signed a
termination agreement with these tenants, which required the tenants to pay a
$1.4 million termination fee to us, which was all received during the fourth
quarter of 2021. The $1.4 million in cash received for the lease termination fee
has been deposited into a cash management account and is classified in
restricted cash on our consolidated balance sheet as of December 31, 2021. As of
December 31, 2021, while we have satisfied the debt service coverage covenant
for this one quarter, we remain in breach until we satisfy the covenant for two
consecutive quarters.

Our breaches of the debt services coverage covenant are not events of default
but rather require us to enter into a cash management period requiring all rents
and other revenue of the property, if any, to be held in a segregated account as
additional collateral under the loan. The covenant may be cured after complying
with the debt service covenant for two consecutive quarters when the required
debt service coverage for the property is maintained. We can remain subject to
this reserve requirement through maturity of the loan without further penalty or
ramifications.

8713 Fifth Avenue

We breached a debt service coverage ratio covenant under the non-recourse
mortgage secured by 8713 Fifth Avenue during the second, third and fourth
quarters of 2021. The debt service coverage covenant is calculated quarterly
using the twelve preceding months. The principal amount for the loan was $10.0
million as of December 31, 2021. The breach of this covenant did not result in
an event of default but rather triggered an excess cash flow sweep period. We
have the ability to avoid the excess cash flow sweep period by electing to fund
a reserve in the amount of $125,000 of additional collateral in cash or as a
letter of credit. As of December 31, 2021, we had not yet determined whether we
will do so. We also have the ability to continue to avoid an excess cash flow
sweep period by funding an additional $125,000 each quarter until the covenant
breaches are cured in accordance with the terms of the loan agreement. If we do
not elect to continue to fund the $125,000 additional collateral in a subsequent
quarter, then the excess flow sweep period would commence in such quarter and
continue until the covenant breaches are cured in accordance with the terms of
the loan agreement. Additionally, in the event that the debt service coverage
ratio covenant remains in breach at or below the current level for two
consecutive calendar quarters and the lender reasonably determines that such
breach is due to the property not being prudently managed by the current
manager, the lender has the right, but not the obligation, to require that we
replace the current manager with a third party manager chosen by us. As of
December 31, 2021, no cash was trapped related to this property. We signed a
lease with a new tenant at this property in
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November 2021 and expects the new tenant to move into the space in the second quarter of 2022, which will bring occupancy at this property back to 100%.

Other information

We entered into new leases at 123 William Street that collectively represent
over 60,000 square feet during the year ended December 31, 2021, and we are
working to find new tenants to replace the portion of the space previously
leased to Knotel that has not yet been re-leased and to increase the rental
income at our 1140 Avenue of the Americas and 9 Times Square properties through
leasing activity. There can be no assurance, however, that we will be able to
lease all or any portion of our currently vacant space at any property on
acceptable or favorable terms, or at all, or that we will not experience further
terminations. Unless we are able to increase the occupancy at the properties
described herein on terms that allow us to cure the covenant breaches described
above, we will be unable to access excess cash flow from those properties and
the lenders may be able to exercise additional remedies.

Any cash that is restricted for these breaches (as disclosed above) is not
available to be used for other corporate purposes. There is no assurance that we
will be able to cure these breaches. Moreover, if we experience additional lease
terminations, due to tenant bankruptcies or otherwise, or tenants placed on a
cash basis continue to not pay rent, it is possible that certain of the
covenants on other loans may be breached and we may also become restricted from
accessing excess cash flows from those properties. Except as described herein,
we were in compliance with the remaining covenants under our mortgage notes
payable as of December 31, 2021.

Common Stock ATM Program

On October 1, 2020, we entered into an Equity Distribution Agreement, pursuant
to which we may, from time to time, offer, issue and sell to the public, through
our sales agents, shares of Class A common stock, having an aggregate offering
price of up to $250.0 million in an "at the market" equity offering program (the
"Common Stock ATM Program"). During the year ended December 31, 2021, we sold
466,651 shares of Class A common stock through the Common Stock ATM Program for
gross proceeds of $5.3 million, before commissions paid of $53,000 and issuance
costs of $0.8 million. The issuance costs were paid during the year ended
December 31, 2020 and were reclassed to additional-paid-in capital throughout
2021 commencing with the initial sales under Common Stock ATM Program during
2021. As noted herein, we expect to fund a portion of our operating and capital
cash needs for 2022 from sales of our Class A Common Stock through our Common
Stock ATM Program.

Repurchase Program

Our board of directors has adopted a resolution authorizing consideration of
share repurchases of up to $100.0 million of shares of Class A common stock over
a long-term period following the listing of our Class common stock on the NYSE.
Actual repurchases would be reviewed and approved by our board of directors
based on management recommendations taking into consideration all information
available at the specific time including our available cash resources (including
the ability to borrow), market capitalization, trading price and alternative
uses such as acquisitions. Repurchases would typically be made on the open
market in accordance with SEC rules creating a safe harbor for issuer
repurchases but may also occur in privately negotiated transactions. As of
December 31, 2021, no shares had been repurchased by us under this program. As
of December 31, 2021, we also had cash and cash equivalents of approximately
$11.7 million. We are also subject to a covenant under one of our mortgage loans
requiring us to maintain minimum liquid assets (i.e. cash and cash equivalents)
of $10 million. See Item 1.A. "Risk Factors - "Our ability to fund our capital
requirements will depend on, among other things, the amount of cash we are able
to generate from our operations and outside sources, which may not be available
on acceptable or favorable terms, or at all."

Rental activity/occupancy

We had an occupancy level of 82.9% across our portfolio as of December 31, 2021,
as compared to 87.0% (80.8% excluding our former tenant Knotel discussed below)
as of December 31, 2020. The significant year-over-year occupancy changes were
as follows:

•Occupancy at 9 Times Square down to 59.3% December 31, 2021, compared to 78.7% last year. The decline was due to the termination or expiration of six leases, causing rented square footage to decrease by approximately 47,150 square feet with no new leases started during the year.

•Occupancy at 123 William Street was 90.8% as of December 31, 2021, compared to
90.3% last year. The increase was due to new leases signed during the year ended
December 31, 2021, which more than offset the termination of our leases with
Knotel and the expiration of another lease.

•Occupancy at 8713 Fifth Avenue was 68.6% as of December 31, 2021, compared to
100% last year. The decrease was the result of one lease termination. We signed
a new lease in November 2021 and expect the new tenant to occupy the space in
the second quarter of 2022, which will bring the occupancy at this property back
to 100%.

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As of December 31, 2020, occupancy included the leased space occupied by one of
our former tenants, Knotel (6.2%), which was a tenant at both our 9 Times Square
and 123 William Street properties. In January 2021, Knotel filed for bankruptcy
and all leases were terminated effective January 31, 2021. If Knotel was not
included in this calculation as of December 31, 2020, occupancy for 9 Times
Square would have been 57.7%, occupancy for 123 William Street would have been
83.6% and occupancy across our portfolio would have been 80.8%. In addition,
during the year ended December 31, 2020, we put certain tenants on a cash basis
and fully reserved certain receivables and reflected this as a reduction in
revenue from tenants during the period. For additional information on our
accounting policy related to revenue recognition, see   Note 2   - Summary of
Significant Accounting Polices to our consolidated financial statements included
in this Annual Report on Form 10-K. Also, for a discussion of overall impact on
our result of operations for this and other reserves and write-offs for tenant
receivables recorded in 2020 and for additional information on leasing activity
during the year ended December 31, 2021, see Results of Operations section
located in Item 7. Management's Discussion and Analysis.

investments

For the year ended December 31, 2021 we funded $3.4 million of capital
expenditures primarily related to tenant improvements at our 123 William Street,
9 Times Square and 1140 Avenue of the Americas properties. The capital
expenditures for the year ended December 31, 2020 of $3.8 million were primarily
related to tenant improvements at our 123 William Street, 9 Times Square, and
1140 Avenue of the Americas properties. We may invest in additional capital
expenditures to further enhance the value of our properties. Additionally, many
of our lease agreements with tenants include provisions for tenant improvement
allowances. The amount we invest in capital expenditures during 2022, including
amounts we are, or expect to be, contractually obligated to fund under new or
replacement leases, will likely in-line with the amount invested in 2021. We
funded our capital expenditures during 2021 from cash on hand consisting of
proceeds from previous financings and, commencing in the second quarter of 2021,
proceeds from our Common Stock ATM program, and expect to fund any future
capital expenditures with available cash on hand, proceeds from our Common Stock
ATM program and cash retained from the Advisor choosing to receive their
management fee in shares of our stock as opposed to cash. The recent economic
uncertainty created by the COVID-19 global pandemic has impacted and could
continue to impact our decisions on the amount and timing of future capital
expenditures.

takeover offer

In December 2020, we commenced a tender offer to purchase up to 65,000 shares of
Class B common stock for cash at a purchase price equal to $7.00 per share. In
February 2021, we purchased approximately 26,236 shares of Class B common stock
following the expiration of the tender offer for a total cost to us of
approximately $0.2 million, including fees and expenses relating to the tender
offer, which was funded with cash on hand.

Acquisitions and Disposals

We had no acquisitions or disposals in the past year December 31, 2021.

We continue to evaluate our strategic alternatives for ours 421 W. 54th Streethit factory Real estate, including marketing the property for sale. The sole tenant terminated his lease early and vacated the space in the second quarter of 2018.

Non-GAAP Financial Measures

This section discusses the non-GAAP financial measures we use to evaluate our
performance, including Funds from Operations ("FFO"), Core Funds from Operations
("Core FFO") and Cash Net Operating Income ("Cash NOI"). 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 and Core Funds from Operations

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 performance measure known
as FFO, which we believe to be an appropriate supplemental measure to reflect
the operating performance of a REIT. FFO is not equivalent to net income or loss
as determined under GAAP.

We calculate FFO, a non-GAAP measure, consistent with the standards established
over time by the Board of Governors of NAREIT, as restated in a White Paper and
approved by the Board of Governors of NAREIT effective in December 2018 (the
"White Paper"). The White Paper defines FFO as net income or loss computed in
accordance with GAAP, excluding depreciation and amortization related to real
estate, gains and losses from sales of certain real estate assets, gain and
losses from change in control and impairment write-downs of certain real estate
assets and investments in entities when the impairment is directly attributable
to decreases in the value of depreciable real estate held by the entity.
Adjustments for consolidated partially-owned entities (including our OP) and
equity in earnings of unconsolidated affiliates are made to arrive at our
proportionate share of FFO attributable to our stockholders. Our FFO calculation
complies with NAREIT's definition.

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The historical accounting convention used for real estate assets requires
straight-line depreciation of buildings and improvements, and straight-line
amortization of intangibles, which implies that the value of a real estate asset
diminishes predictably over time. We believe that, because real estate values
historically rise and fall with market conditions, including inflation, interest
rates, 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.

Core Funds from Operations

Beginning in the third quarter 2020, following the listing of our Class A common
stock on the NYSE, we began presenting Core FFO as a non-GAAP metric. We have
presented prior periods on a comparable basis so that the metric is useful to
the users of our financial statements. We believe that Core FFO is utilized by
other publicly-traded REITs although Core FFO presented by us may not be
comparable to Core FFO reported by other REITs that define Core FFO differently.
In calculating Core FFO, we start with FFO, then we exclude the impact of
discrete non-operating transactions and other events which we do not consider
representative of the comparable operating results of our real estate operating
portfolio, which is our core business platform. Specific examples of discrete
non-operating items include acquisition and transaction related costs for dead
deals, debt extinguishment costs, listing related costs and expenses (including
the vesting and conversion of Class B Units and cash expenses and fees which are
non-recurring in nature incurred in connection with the listing of our Class A
common stock on the NYSE and related transactions), and non-cash equity-based
compensation. We add back non-cash write-offs of deferred financing costs and
prepayment penalties incurred with the early extinguishment of debt which are
included in net income but are considered financing cash flows when paid in the
statement of cash flows. We consider these write-offs and prepayment penalties
to be capital transactions and not indicative of operations. By excluding
expensed acquisition and transaction dead deal costs as well as non-operating
costs, 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. In future periods, we may also exclude other items from Core FFO
that we believe may help investors compare our results.


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Accounting treatment of rent deferrals

The majority of the concessions granted to our tenants as a result of the
COVID-19 pandemic are rent deferrals or temporary rent abatements with the
original lease term unchanged and collection of deferred rent deemed probable
(see the "Overview - Management Update on the Impacts of the COVID-19 Pandemic"
section of this Management's Discussion and Analysis of Financial Condition and
Results of Operations for additional information). As a result of relief granted
by the FASB and the SEC related to lease modification accounting, rental revenue
used to calculate Net Income, NAREIT FFO and Core FFO have not been, and we do
not expect it to be, significantly impacted by these types of deferrals. For a
detailed discussion of our revenue recognition policy, including details related
to the relief granted by the FASB and SEC, see   Note 2   - Significant
Accounting Polices to our consolidated financial statements in this Annual
Report on Form 10-K.

The table below reflects the items deducted or added to net loss in our
calculation of FFO and Core FFO for the year ended December 31, 2021, 2020 and
2019:

                                                                             Year Ended December 31,
(In thousands)                                                    2021 (1)           2020 (2)             2019
Net loss attributable to common stockholders (in
accordance with GAAP) (3)                                       $ (39,466)         $ (40,962)         $ (21,890)
Impairment of real estate investments                               1,452                  -                  -
Depreciation and amortization                                      31,057             31,747             31,161
Gain (loss) on disposition of real estate assets                        -                  -                  -

Proportion of adjustments for non-controlling interests to achieve FFO

                                              -                  -                  -
FFO (as defined by NAREIT) attributable to common
stockholders (3)                                                   (6,957)            (9,215)             9,271
Acquisition, transaction and other costs                                -                  -                 13
Listing expenses (4)                                                    -              1,299                  -
Vesting and conversion of Class B Units (4)                             -              1,153                  -
Equity-based compensation                                           8,475              3,874                 86

Core FFO attributable to common stockholders (3)                $   1,518          $  (2,889)         $   9,370


___________

(1) FFO and Core FFO for the year ended December 31, 2021 includes income from
lease termination fees of $1.5 million, which is recorded in Revenue from
tenants in the consolidated statements of operations. Such termination payments
represent cash income for accounting and tax purposes and as such management
believes they should be included in both FFO and Core FFO. The termination fees
were collected from the tenants and earned and recorded as income in the year
ended December 31, 2021.

(2) Included in Net loss, FFO and Core FFO for the year ended December 31, 2020
is other income of approximately $0.7 million related to the recognition of
income from the retention of a deposit forfeited by the potential buyer on the
potential sale of the property commonly known as the HIT Factory pursuant to a
purchase agreement which expired in April 2020.

(3) Net Loss, FFO and Core FFO for the years ended December 31, 2021 and 2020
includes income from the accelerated amortization of the remaining unamortized
balance of below-market lease liabilities of approximately $7.9 million and
$1.8 million, respectively, which is recorded in Revenue from tenants in the
consolidated statements of operations.

(4) Listing expenses include financial advisory and other professional fees and
other expenses incurred in connection with the listing of our Class A common
stock on the NYSE in August 2020. These costs are non-recurring and are not part
of the operations of our real estate portfolio as they were incurred only as a
result of our decision to list our Class A common stock on the NYSE. In
addition, the vesting and conversion of the Class B Units is effectively equity
based compensation and is non-recurring/non-cash.

Cash Net Operating Income

Cash NOI is a non-GAAP financial measure equal to net income (loss), the most
directly comparable GAAP financial measure, less income from investment
securities and interest, plus general and administrative expenses, acquisition
and transaction-related expenses, depreciation and amortization, other non-cash
expenses and interest expense. In calculating Cash NOI, we also eliminate the
effects of straight-lining of rent and the amortization of above- and
below-market leases. Cash NOI should not be considered an alternative to net
income (loss) as an indication of our performance or to cash flows as a measure
of our liquidity.

We use Cash NOI internally as a performance measure and believe Cash 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 Cash 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
Cash NOI is useful to investors as performance measures because, when compared
across periods, Cash NOI reflects the impact on operations from trends in
occupancy rates, rental rates, operating costs and acquisition activity on an
unlevered basis. Cash 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

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example, interest expense is not linked to the operating performance of a real
estate asset and Cash NOI is not affected by whether the financing is at the
property level or corporate level. In addition, depreciation and amortization,
because of historical cost accounting and useful life estimates, may distort
operating performance at the property level. Cash NOI presented by us may not be
comparable to Cash NOI reported by other REITs that define Cash NOI differently.
We believe that in order to facilitate a clear understanding of our operating
results, Cash NOI should be examined in conjunction with net income (loss) as
presented in our consolidated financial statements.

The following table reflects the items that were subtracted from or added to the net loss in our calculation of cash NOI for the periods presented.

                                                                                Year Ended December 31,
(In thousands)                                                                  2021                   2020

Net Loss Attributable to Common Shareholders (according to GAAP)

                                                                   $     (39,466)             $ (40,962)
Depreciation and amortization                                                  31,057                 31,747
Interest Expense                                                               19,090                 19,140
Income tax expense                                                                 37                      -
Impairment of real estate investments                                           1,452                      -

Listing expenses                                                                    -                  1,299
Vesting and conversion of Class B Units                                             -                  1,153
Equity-based compensation                                                       8,475                  3,874
Other expense (income)                                                            (47)                  (787)
Asset and property management fees to related parties                           7,554                  7,577
General and administrative                                                      8,704                  7,571

Accrual of below market value and amortization of above market value lease liabilities and assets, net

                                                    (8,671)                (3,026)
Straight-line rent (revenues as lessor)                                        (3,788)                  (402)
Straight-line ground rent (expenses as lessee)                                    109                    109
Cash NOI                                                                $      24,506              $  27,293


Dividends

We are required to 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. A tax loss for a particular year eliminates the need to
distribute REIT taxable income to meet the 90% distribution requirement for that
year and may minimize or eliminate the need to pay distributions in order to
meet the distribution requirement in one or more subsequent years. We had a loss
for tax purposes in 2020 and therefore there was no REIT taxable income
requiring distribution to maintain our qualification as a REIT in 2020. For the
year ended December 31, 2021, from a U.S. federal income tax perspective, 100%
of dividends, or $0.40 per share, represented a return of capital due to loss
for tax purposes in 2021.

During the year ended December 31 2021 we paid dividends to our common
stockholders at our current annual rate of $0.40 per share of common stock.
During the year ended December 31, 2020, after reinstating the dividend, we
declared a dividend on October 1, 2020 equal to $0.04889 per share on each share
of common stock, which was paid on October 15, 2020. The dividend was calculated
to cover the period from August 18, 2020, the date on which shares of Class A
common stock commenced trading on the NYSE, through September 30, 2020, based on
the previously-announced cash dividend rate equal to $0.40 per share per year or
$0.10 per share on a quarterly basis. We did not pay distributions during the
year ended December 31, 2019 due to a suspension of dividends buy our board of
directors in February 2018.

Decisions regarding the frequency and amount of any future dividends we pay on
our common stock will remain at all times entirely at the discretion of our
board of directors, which reserves the right to change our dividend policy at
any time and for any reason. Our ability to pay dividends in the future depends
on our ability to operate profitably and to generate sufficient cash flows from
the operations of our existing properties and any properties we may acquire. We
cannot guarantee that we will be able to pay dividends on a regular basis on our
common stock or any other class or series of stock we may issue in the future.
Our board of directors previously suspended and then reinstituted dividends.
There is no assurance we will continue to pay dividends at the current rate, or
at all. The amount of dividends payable to our stockholders is determined by our
board of directors and is dependent on a number of factors, including funds
available for dividends, our financial condition, provisions in our loans and
any agreement we are party to that may restrict our ability to pay dividends or
repurchase shares, capital expenditure requirements, as applicable, requirements
of Maryland law and annual distribution requirements needed to maintain our
status as a REIT. For the year ended December 31, 2021, our cash flows used in
operations were $7.9 million. During this period, we paid dividends of $5.2
million. These dividend payments were funded from cash on hand.

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The following table shows the sources of payment of dividends to holders of common shares and distributions to holders of LTIP shares for the periods shown:

                                          Three Months Ended                           Three Months Ended                           Three Months Ended                            Three Months Ended                                

year ended

                                            March 31, 2021                               June 30, 2021                              September 30, 2021                            December 31, 2021                              December 31, 2021
                                                      Percentage of                                Percentage of                                 Percentage of                                Percentage of                                   Percentage of
(In thousands)                                          Dividends                                    Dividends                                     Dividends                                    Dividends                                       Dividends
Dividends and
Distributions:
Dividends to holders of
common stock                    $    1,280                                   $    1,282                                   $    1,309                                    $   1,330                                    $    5,201
Distributions to holders
of LTIP Units                           40                                           40                                           40                                           40                                           160
Total dividends and
distributions                   $    1,320                                   $    1,322                                   $    1,349                                    $   1,370                                    $    5,361

Source of dividend
coverage:
Cash flows used in                                                                                                                                                                                                                   (1)
operations                      $    1,320                      100  %       $        -                        -  %       $    1,086                        81  %       $       -                         -  %       $        -                           -  %
Available cash on hand                   -                        -  %            1,322                      100  %              263                        19  %           1,370                       100  %            5,361      (1)                100  %
Total sources of dividend
and distribution coverage       $    1,320                      100  %       $    1,322                      100  %       $    1,349                       100  %       $   1,370                       100  %       $    5,361                         100  %

Cash flows provided by
(used in) operations
(GAAP basis)                    $    2,145                                   $   (7,542)                                  $    1,086                                    $  (3,605)                                   $   (7,916)

Net loss and Net loss
attributable to common
stockholders (in
accordance with GAAP)           $  (13,535)                                  $  (11,052)                                  $  (11,124)                                   $  (3,755)                                   $  (39,466)


_______

(1) Annual totals may not be equal to quarterly totals. For the purpose of this table, each quarter and each year-to-date period is evaluated separately.

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election as a REIT

We elected to be taxed as a REIT under the Code, effective for our taxable year
ended December 31, 2014. We believe that, commencing with such taxable year, we
have been organized and have operated in a manner so that we qualify as a REIT
under the Code. We intend to continue to operate in such a manner but can
provide no assurances that we will operate in a manner so as to remain qualified
as a REIT. To continue to qualify as a REIT, we must 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 comply with a number of
other organizational and operational requirements. If we continue to qualify as
a REIT, we generally will not be subject to U.S. federal corporate income tax on
the portion of our REIT taxable income that we distribute to our stockholders.
Even if we qualify as a REIT, we may be subject to certain state and local taxes
on our income and properties as well as U.S. federal income and excise taxes on
our undistributed income. A tax loss for a particular year eliminates the need
to distribute REIT taxable income to meet the 90% distribution requirement for
that year and may minimize or eliminate the need to pay distributions in order
to meet the distribution requirement in one or more subsequent years. We had a
loss for tax purposes in 2021 and therefore there was no REIT taxable income
requiring distribution to maintain our qualification as a REIT in 2021.

inflation

We may be adversely impacted by inflation on the leases that do not contain
indexed escalation provisions, or those leases which have escalations at rates
which do not exceed or approximate current inflation rates. For the year ended
December 31, 2021, the increase to the 12-month CPI for all items, as published
by the Bureau of Labor Statistics, was 7.0%. To help mitigate the adverse impact
of inflation, approximately 87% of our leases with our tenants contain rent
escalation provisions which average 1.84% per year. These provisions generally
increase rental rates during the terms of the leases either at fixed rates or
other measures. Approximately 78% are fixed-rate, 9% are based on other measures
and 13% do not contain any escalation provisions.

In addition, we may be required to pay costs for maintenance and operation of
properties which may adversely impact our results of operations due to potential
increases in costs and operating expenses resulting from inflation. However, to
the extent such costs exceed the tenants base year, many but not all of our
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. As the costs of general goods and services
continue to rise, we may be adversely impacted by increases in general and
administrative costs due to overall inflation.

Transactions and Agreements with Related Parties

See Note 9 – Related Party Transactions and Arrangements to our Consolidated Financial Statements included in this Annual Report on Form 10-K for a discussion of various related party transactions, arrangements and fees.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have had 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.

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