American Strategic Investment (NYC) - 2024 Q4 - Annual Report

Property Ownership and Sales - As of December 31, 2024, the company owned six properties totaling approximately 1.0 million rentable square feet[18]. - The company sold the 9 Times Square property for a gross purchase price of $63.5 million on December 18, 2024[20]. - As of December 31, 2024, the total rentable square footage of the properties owned by the company is 988,453 square feet, with an overall occupancy rate of 80.8$18.9 million, up from $12.8 million in 2023[57]. - Federal net operating losses (NOLs) totaled$298.8 million as of December 31, 2024, with a portion beginning to expire in 2035[52]. - The company incurred impairment charges of $112.5 million during the year ended December 31, 2024, indicating potential permanent adverse changes in property values[69]. - The company has not paid dividends on its Class A common stock since March 2022, with past dividends being funded from available cash rather than operational cash flow[67]. Corporate Structure and Governance - The company revoked its REIT election effective January 1, 2023, and is now subject to taxation as a C corporation[35]. - The advisory agreement with the Advisor expires on July 1, 2030, and termination could incur a fee of up to$15 million plus four times the previous year's compensation[142]. - The company has a classified board structure that may discourage third-party acquisitions, potentially affecting stockholder value[139]. - The stockholder rights plan adopted by the company may discourage third parties from acquiring more than 4.9% of its outstanding common stock, which could impact stockholder premiums[141]. Market and Economic Conditions - The ongoing economic conditions, including high inflation and interest rates, may impact tenants' ability to make timely rent payments[58]. - The concentration of real estate assets in New York City makes the company particularly vulnerable to economic downturns in that area[50]. - The ongoing Russia-Ukraine conflict may adversely impact business operations and financial performance due to market disruptions and increased geopolitical tensions[78]. - Interest rates increased eleven times during 2022 and 2023, impacting the company's ability to access capital on favorable terms[123]. Lease and Tenant Information - As of December 31, 2024, 32.6% of the rentable square feet in the portfolio is affected by cash trap provisions due to the performance of three properties[60]. - Approximately 42% of the company's leases, based on annualized straight-line rent, are set to expire over the next five years, raising concerns about lease renewals[85]. - Major tenants contributing to 5% or more of total annualized rental income include City National Bank (9.6%), Planned Parenthood Federation of America, Inc. (7.5%), and Equinox (6.4%) as of December 31, 2024[77]. - The company experienced lease terminations, including the bankruptcy of Knotel, which was the second largest tenant based on annualized straight-line rent as of September 30, 2020[58]. Debt and Financing - As of December 31, 2024, the company had total outstanding indebtedness of approximately $347.4 million[114]. - The company was in breach of covenants under three separate mortgage loans aggregating$159.0 million, representing 33% of the total rentable square feet in its portfolio[116]. - The company may need to secure external funding for capital requirements if sufficient cash from operations is not generated, with no assurance of favorable terms[61]. - The company may incur additional indebtedness in the future for various purposes, which could have material adverse consequences[114]. Operational Risks and Challenges - The company has identified material weaknesses in its internal control over financial reporting, leading to restatements of financial statements for certain periods[54]. - The company relies on the Advisor and Property Manager for essential services, and any inability to provide these services could adversely affect operations[43]. - The company faces significant competition in the New York City real estate market, which may impact occupancy levels and rental rates due to competitors having greater financial resources[63]. - The company may face risks related to defaults by borrowers on loans, which could lead to losses if the underlying asset value is less than the loan amount[80]. Future Outlook and Strategy - The company aims to pay quarterly dividends, subject to capital availability, and maximize total returns to stockholders[23]. - The company announced its intention to expand the scope of assets and businesses, including hotels and co-working office spaces, which may not generate REIT-qualifying income[51]. - The company has changed its investment policies to expand into other asset types, revoking its election to be taxed as a REIT effective January 1, 2023[73]. - Future tenant improvements and capital needs may be constrained by significant amounts of restricted cash, potentially impacting property maintenance and leasing activities[68].