The board of American Realty Capital New York City REIT Inc., a publicly registered non-traded real estate investment trust sponsored by AR Global, has suspended distributions, according to a filing with the Securities and Exchange Commission. The board believes this change better positions the company for future growth and a successful future liquidity event.
The company said that it suspended distributions to enhance its ability to execute on acquisitions, and conduct repositioning and leasing efforts related to its properties. The suspension went into effect on March 1, 2018.
The repositioning and leasing initiatives have already generated positive results, the company noted, increasing the occupancy level across its portfolio to above the 87.1 percent level at the end of the third quarter of 2017.
According to Summit Investment Research, the REIT had an 11 percent distribution coverage in the third quarter of 2017 and the 6 percent distribution rate was overdistributed by $3.53 per share. Shares were originally sold for $25.00 each and have a net asset value per share of $20.26 as of June 30, 2017.
The company expects that cash retained by the suspension will facilitate capital expenditures related to tenant improvements, new leases, lease renewals, and acquisitions in New York City at attractive cap rates.
The board plans evaluate the company’s performance and expects to assess the distribution policy no sooner than March 1, 2019.
In other company news, American Realty Capital New York City REIT recently launched a self-tender offer to deter a Tel Aviv-based investment fund from purchasing shares. Comrit Investments 1 LP and ARC NYC REIT have been bidding up the price of the REIT’s shares since last month.
American Realty Capital New York City REIT invests in properties located in the five boroughs of New York City, with a focus on Manhattan. The company closed its offering in May 2015 and raised a total of $772 million in investor equity, as of the third quarter of 2017, and owns six properties with an investment cost of $725 million, according to Summit Investment Research.