American Strategic Investment (US:NYC)2025-05-09 20:00PART I - FINANCIAL INFORMATION Financial Statements The company reported an increased net loss and negative operating cash flow for Q1 2025, with declining assets and rising liabilities Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity as of March 31, 2025, and December 31, 2024 Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Total real estate investments, net | $395,573 | $398,759 | | Cash and cash equivalents | $7,083 | $9,776 | | Total assets | $499,377 | $507,066 | | Liabilities & Equity | | | | Mortgage notes payable, net | $347,637 | $347,384 | | Total liabilities | $422,291 | $421,480 | | Total equity | $77,086 | $85,586 | | Total liabilities and equity | $499,377 | $507,066 | Consolidated Statements of Operations and Comprehensive Loss This section outlines the company's financial performance, including revenue, operating expenses, and net loss for the three months ended March 31, 2025 and 2024 Consolidated Statement of Operations Summary (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue from tenants | $12,308 | $15,481 | | Total operating expenses | $16,823 | $18,401 | | Operating loss | $(4,515) | $(2,920) | | Interest expense | $(4,083) | $(4,697) | | Net loss | $(8,592) | $(7,608) | | Net loss per share — Basic and Diluted | $(3.39) | $(3.28) | Consolidated Statements of Cash Flows This section details the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025 and 2024 Consolidated Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(3,037) | $1,655 | | Net cash used in investing activities | $(72) | $(364) | | Net cash (used in) provided by financing activities | $— | $— | | Net change in cash, cash equivalents and restricted cash | $(3,109) | $1,291 | Notes to Consolidated Financial Statements The notes detail the company's real estate operations, significant accounting policies, and critical issues including mortgage covenant non-compliance, liquidity constraints, and related-party transactions - As of March 31, 2025, the company owned six properties in New York City totaling 1.0 million rentable square feet25 - The company is experiencing non-compliance with mortgage debt covenants at its 1140 Avenue of Americas and 8713 Fifth Avenue properties, and a cash sweep event at its 400 E. 67th Street property due to occupancy and operating result challenges post-pandemic33 - The company received a notice of default and subsequent notice of acceleration on its $99.0 million loan for the 1140 Avenue of the Americas property, making the full principal balance due and payable as of April 7, 20255770150 - The company faces significant liquidity constraints due to declining rental income, constrained cash flow, and debt service obligations, leading to the suspension of the corporate dividend and plans to market certain assets for sale737475 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the increased net loss, declining tenant revenue and occupancy, severe liquidity challenges including mortgage defaults, and strategic responses like dividend suspension and asset sales Overview This overview details the company's property portfolio, the challenging New York City office market, and significant mortgage defaults and cash trap events - As of March 31, 2025, the company owned six properties with 1.0 million rentable square feet and an overall occupancy of 82.0%154 - The New York City office market recovery continues to be challenged, negatively impacting the company's leasing activity, results of operations, and ability to comply with mortgage covenants156157 - As of March 31, 2025, two mortgages totaling $149.0 million are in default, and three mortgages totaling $159.0 million are subject to cash trap events158 Results of Operations This section analyzes the company's operational performance, highlighting changes in portfolio occupancy, tenant revenue, operating expenses, and net loss - Total portfolio occupancy decreased to 82.0% as of March 31, 2025, from 87.2% as of March 31, 2024, primarily due to a significant drop in occupancy at the 400 E. 67th Street property166 Comparison of Operations (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue from tenants | $12,308 | $15,481 | | Total operating expenses | $16,823 | $18,401 | | Operating loss | $(4,515) | $(2,920) | | Interest expense | $(4,083) | $(4,697) | | Net loss | $(8,592) | $(7,608) | - Revenue from tenants decreased by $3.2 million year-over-year, primarily due to the sale of the 9 Times Square property in December 2024172 - Depreciation and amortization expense decreased to $3.6 million from $5.3 million, also primarily due to the sale of the 9 Times Square property179 Liquidity and Capital Resources This section examines the company's cash position, restricted cash, leverage, mortgage cash traps, loan acceleration events, and dividend policy - As of March 31, 2025, the company had $7.1 million in cash and cash equivalents and $8.7 million in restricted cash185186 - The company is operating under three cash traps at 1140 Avenue of the Americas, 400 E. 67th Street, and 8713 Fifth Avenue, restricting access to excess cash flow from these properties188 - The company's leverage (net debt divided by gross asset value) was 57.9% as of March 31, 2025189 - On April 7, 2025, the lender for the 1140 Avenue of the Americas property accelerated the $99.0 million loan, making the entire balance due and payable195202 - The company's board has suspended dividends since Q2 2022 and has not declared any for the period through March 31, 2025204 Non-GAAP Financial Measures This section provides a reconciliation of non-GAAP financial measures, specifically Adjusted EBITDA, for the three months ended March 31, 2025 and 2024 Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net loss (GAAP) | $(8,592) | $(7,608) | | EBITDA | $(918) | $2,350 | | Adjusted EBITDA | $(832) | $2,928 | Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposure during Q1 2025, referencing prior disclosures in its 2024 Annual Report - There was no material change in the company's market risk exposure during Q1 2025219 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective220 - No material changes occurred in the company's internal control over financial reporting during Q1 2025221 PART II - OTHER INFORMATION Legal Proceedings The company reports no involvement in any material pending legal proceedings as of the end of the quarter - The company is not currently involved in any material pending legal proceedings223 Risk Factors The company reports no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Annual Report have occurred225 Other Information This section incorporates disclosures on the 1140 Avenue of Americas loan default and confirms no Rule 10b5-1 trading plan activity by officers or directors - The disclosure regarding the default and acceleration of the loan on the 1140 Avenue of the Americas property is incorporated by reference into this item228 - No officers or directors adopted or terminated Rule 10b5-1 trading plans during the quarter ended March 31, 2025229