American Strategic Investment (NYC) - 2019 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for New York City REIT, Inc. as of September 30, 2019, and for the three and nine-month periods then ended Consolidated Balance Sheets Consolidated Balance Sheet Highlights (Unaudited, In millions) | (In millions) | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Total Assets | $909.3 | $773.7 | | Total real estate investments, net | $755.5 | $684.3 | | Cash and cash equivalents | $53.8 | $48.0 | | Total Liabilities | $482.7 | $330.1 | | Mortgage notes payable, net | $394.6 | $291.7 | | Total Stockholders' Equity | $426.6 | $443.7 | - Total assets increased by approximately $135.6 million, primarily driven by a $71.2 million increase in net real estate investments and the addition of a $55.6 million operating lease right-of-use asset[9] - Total liabilities increased by approximately $152.6 million, mainly due to a $103.0 million increase in net mortgage notes payable and a new operating lease liability of $54.9 million[9] Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Highlights (Unaudited, In millions) | | Three Months Ended Sep 30, | Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | 2019 | 2018 | 2019 | 2018 | | Revenue from tenants | $18.6 | $15.7 | $52.2 | $46.2 | | Total operating expenses | $19.0 | $18.2 | $55.8 | $55.7 | | Operating loss | $(0.3) | $(2.5) | $(3.6) | $(9.5) | | Net loss | $(4.8) | $(5.9) | $(15.2) | $(19.0) | | Comprehensive loss | $(5.4) | $(5.9) | $(17.1) | $(19.0) | | Net loss per share | $(0.16) | $(0.19) | $(0.49) | $(0.61) | - Revenue from tenants increased by 18.4% for the third quarter and 13.1% for the nine-month period year-over-year, primarily due to property acquisitions and leasing activity[11][202][210] - Net loss improved for both the three-month and nine-month periods in 2019 compared to 2018, driven by higher revenue and lower general and administrative expenses, which offset increased interest and property operating costs[11] Consolidated Statements of Changes in Equity - Total stockholders' equity decreased from $443.7 million at December 31, 2018, to $426.6 million at September 30, 2019, primarily due to a net loss of $15.2 million and an other comprehensive loss of $1.9 million related to a derivative instrument[14] - In contrast to 2018, there were no distributions paid or common stock repurchases in the first nine months of 2019, whereas in the same period of 2018, the company paid $7.7 million in distributions and repurchased $10.3 million of common stock[17] Consolidated Statements of Cash Flows Consolidated Statement of Cash Flows Highlights (Unaudited, In millions) | | Nine Months Ended Sep 30, | | :--- | :--- | | | 2019 | 2018 | | Net cash used in operating activities | $(0.5) | $(4.2) | | Net cash used in investing activities | $(43.8) | $(6.1) | | Net cash provided by financing activities | $51.1 | $32.9 | | Net change in cash, cash equivalents and restricted cash | $6.8 | $22.6 | | Cash, cash equivalents and restricted cash, end of period | $61.6 | $69.8 | - Cash used in investing activities significantly increased to $43.8 million in 2019 from $6.1 million in 2018, primarily due to the $38.3 million net cash paid for the acquisition of the 196 Orchard Street property[21][221] - Cash from financing activities increased to $51.1 million in 2019, driven by $55.0 million in proceeds from a new mortgage note, while in 2018, financing activities provided $32.9 million, which was offset by $7.5 million in distributions and $7.3 million in stock repurchases, neither of which occurred in 2019[21][223][224] Notes to Consolidated Financial Statements - Organization: As of September 30, 2019, the Company owned eight properties in New York City with 1.2 million rentable square feet, and has no employees, being managed by its Advisor, New York City Advisors, LLC[24][28] - Accounting Changes: The Company adopted ASU 2016-02 (Leases) on January 1, 2019, resulting in the recognition of a right-of-use asset of $55.6 million and a lease liability of $54.9 million related to a ground lease[50][57][122] - Real Estate Acquisition: On July 17, 2019, the Company acquired three condominium units at 196 Orchard Street for a total of $89.3 million in assets, funded by $51.0 million in new mortgage debt and $38.3 million in cash[65][66] - Debt: The Company's gross mortgage notes payable increased from $299.0 million at year-end 2018 to $405.0 million as of September 30, 2019, following new loans totaling $106.0 million related to the 9 Times Square and 196 Orchard Street properties[72][75][76] - Derivatives: The Company entered into an interest rate swap in 2019 to hedge interest rate risk on its $55.0 million term loan for the 9 Times Square property, which had a fair value liability of $1.9 million as of September 30, 2019[93][95][100] - Common Stock & Distributions: The Company suspended its Share Repurchase Program (SRP) in September 2018 and did not pay distributions during the first nine months of 2019, a change from 2018 when distributions were paid until March 1[110][114][116] - Related Party Transactions: Effective November 2018, the advisory agreement was amended, eliminating acquisition and financing coordination fees and changing the asset management fee to a fixed monthly amount plus a variable component based on new equity proceeds[130][135][142] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for the three and nine months ended September 30, 2019, covering revenue, expenses, liquidity, and strategic initiatives Q3 2019 vs Q3 2018 Results Comparison (In millions) | | Q3 2019 | Q3 2018 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Revenue from tenants | $18.6 | $15.7 | +$2.9 | Acquisitions of 8713 Fifth Ave & 196 Orchard Street ($1.7M) and leasing activity ($1.0M) | | Property operating expenses | $8.0 | $7.3 | +$0.7 | Costs from new acquisitions and higher non-reimbursable expenses | | G&A expenses | $1.2 | $2.3 | -$1.1 | Lower legal, proxy, and Advisor professional fees | | Interest expense | $4.7 | $3.5 | +$1.2 | New loans taken in Oct 2018, Apr 2019, and Jul 2019 | - Liquidity & Capital: As of September 30, 2019, the company had $53.8 million in cash, and believes cash flow and retained cash from suspended distributions will be sufficient for operating needs over the next year[225][226][227] - Debt Strategy: The company's gross borrowings reached $405.0 million, aligning with its strategy to target leverage of 40-50% of asset fair market value, with no anticipated additional debt secured by existing properties[233] - Leasing & Occupancy: Portfolio occupancy increased to 92.4% as of Sep 30, 2019, from 90.3% a year prior, largely due to leasing at 9 Times Square, with ongoing focus on leasing vacant space[198][235] Non-GAAP Financial Measures (In millions) | | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net Loss | $(15.2) | $(19.0) | | FFO | $7.6 | $3.4 | | MFFO | $2.0 | $(1.3) | | Cash NOI | $24.0 | $20.5 | Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its exposure to market risk during the nine months ended September 30, 2019 - There has been no material change in the company's exposure to market risk during the nine months ended September 30, 2019[270] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[271] - No changes occurred in the company's internal control over financial reporting during the third quarter of 2019 that materially affected, or are reasonably likely to materially affect, internal controls[272] PART II - OTHER INFORMATION Legal Proceedings The company reports that it is not a party to any material pending legal proceedings as of the end of the quarter - As of September 30, 2019, the company is not a party to any material pending legal proceedings[274] Risk Factors The company states there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018 - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2018[275] Unregistered Sales of Equity Securities and Use of Proceeds This section discloses the issuance of unregistered securities, specifically the award of 1,481 restricted shares to each independent director on June 5, 2019 - On June 5, 2019, the company awarded 1,481 restricted shares to each of its independent directors under its incentive plan, which awards were exempt from registration under Section 4(a)(2) of the Securities Act of 1933[276] - The company made no purchases of its equity securities during the period[278] Defaults Upon Senior Securities The company reports no defaults upon its senior securities during the period - None[278] Mine Safety Disclosures This item is not applicable to the company - Not applicable[279] Other Information The company reports no other information that is required to be disclosed in this section - None[280] Exhibits This section lists the exhibits that are included or incorporated by reference in the Form 10-Q filing, including certifications - The exhibits listed include loan agreements, articles of amendment, bylaws, and certifications pursuant to the Sarbanes-Oxley Act of 2002[281][289]