New York City REIT Announces Listing on NYSE with Delay in Liquidity

July 28, 2020

New York City REIT, Inc., a nontraded REIT, announced in a filing on July 29, that it intends to list its common shares on the NYSE in August. The REIT also announced plans to effect a reverse stock split that will render 75% of its common shares non-listed and only 25% exchange tradeable. By reclassifying 75% of its common shares as Class B shares and planning to convert the Class B non-listed shares to Class A shares that are exchange tradeable at a rate of 1/3 of the Class B shares converted to Class A every 120 days, all the common shares of the REIT will be fully exchange tradeable approximately one year from the listing. As part of the conversion, the REIT will do a 2.43:1 reverse stock split.  

From the SEC filing on July 29:

“New York City REIT, Inc. (“NYC” or the “Company”) announced on July 29, 2020 that it intends to list its common stock on the NYSE under the ticker symbol NYC on or about August 18, 2020 (the “Listing”) and that, in connection with the Listing, the Board anticipates reinstating a distribution to common stockholders as a quarterly dividend based on an annual amount equal to $0.40 per share. Prior to the commencement of trading, the Company also intends to effect a series of corporate actions that will affect your shares of the Company’s common stock. The net result of the corporate actions will be that 25% of your shares of common stock will be designated as Class A common stock and will begin trading upon the Listing, and 75% of your shares of common stock will be designated as Class B common stock. Approximately every 120 days after the Listing, a portion of the Class B shares will convert to Class A shares automatically and without any action required by the stockholder. All Class B shares are expected to convert into Class A shares within a year of the Listing. Prior to the Listing, the Company will also implement a 2.43 : 1 reverse stock split ( the “Reverse Split”) that will cause the total number of shares of the Company’s common stock to decrease 2.43 times compared to the total number of shares of stock outstanding currently. Giving effect to the Reverse Split, the Company’s most recently published estimated net asset value per share (“NAV”) as of June 30, 2019 would be adjusted from $20.26 to $49.23 to reflect the impact of the Reverse Split.¹

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¹ This split-adjusted NAV will appear in your customer account statement as the value of your shares prior to the Listing but you should be aware that NAV does not represent the price at which shares of common stock will trade on the NYSE after Listing or the value you could realize on your investment in the Company under other circumstances. Further, NAV was calculated as of a specific date over a year ago and has not been updated over time to reflect the effect of factors that could affect the value of your investment in the Company, including changes in the Company’s cash and other assets as well as debt and other liabilities since June 30, 2019. Please see the Company’s Current Report on Form 8-K filed with the SEC on October 25, 2019 for a full description of the NAV calculation.

Source:  SEC