New York City REIT announced that it intends to expand the scope of the assets and businesses the Company may own and operate. By investing in other asset types, the Company may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a Real Estate Investment Trust. As a result, the Company expects to change its REIT election and become a taxable C corporation. The election if and when made, would be effective as of January 1, 2023. Additionally, NYC announced that its board approved a 1-for-8 reverse stock split pursuant to which each outstanding share of common stock will be converted into 0.125 shares of common stock/ The reverse stock split is expected to be effective at 5:00p.m. eastern time on January 11, 2023. Further, subject to executing necessary documents and board approval, the Company intends to launch a rights offering to raise additional capital from existing stockholders. The company said, "Diversification May Offset Prolonged New York City Office Rebound: The pace of recovery in the New York City office market from the COVID-19 pandemic continues to be challenged as leasing and occupancy trends for the broader market have slowed, leading political, community, and business leaders to propose repositioning plans for New York City office assets. Additional Capital Raising Opportunities: NYC can potentially raise additional capital from existing stockholders and, in the future, from a broader base of new investors which may not have been previously available to NYC, who seek companies with greater asset and business diversification and deploy potential proceeds in income generating ventures. External Growth Opportunities: NYC believes that the Company may achieve external growth by expanding the scope of the assets and businesses the Company may own and operate. Increased Diversification: By expanding the nature and type of assets NYC seeks to own and acquire, NYC can potentially reduce single asset class exposure and increase corporate flexibility and income generated. Potential to Use Net Operating Loss Carryforwards: Even if NYC terminates it status as a REIT, the Company may be able to use existing or future net operating loss carryforwards to limit the tax on any future income."
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