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American Strategic Investment (NYC) - 2024 Q3 - Earnings Call Transcript
NYCAmerican Strategic Investment (NYC)2024-11-12 18:43
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Financial Data and Key Metrics Changes - Third quarter 2024 revenue was 15.4million,downfrom15.4 million, down from 16 million in the same quarter of 2023 [17] - GAAP net loss attributable to common stockholders was 34.5millioninQ32024,comparedtoanetlossof34.5 million in Q3 2024, compared to a net loss of 9.4 million in Q3 2023, primarily due to noncash impairments [17] - Adjusted EBITDA for Q3 2024 was 3.1million,downfrom3.1 million, down from 3.4 million in Q3 2023 [18] - Cash net operating income grew by 0.3millionto0.3 million to 6.8 million from 6.5millioninQ32023[18]−Netleverageatquarterendwasapproximately606.5 million in Q3 2023 [18] - Net leverage at quarter end was approximately 60%, with a weighted average interest rate of 4.9% and 2.5 years of weighted average debt maturity [19] Business Line Data and Key Metrics Changes - The company achieved a 70 basis point increase in occupancy to 85.8% compared to Q3 2023 [9] - The sale of the property at 9 Times Square for 63.5 million is expected to close in Q4 2024, which will reduce leverage and generate net proceeds of approximately 13.5million[10]MarketDataandKeyMetricsChanges−PositivenetabsorptionwasreportedintheNewYorkCityofficemarket,reversingalong−runningtrendandhaltingvacancyrates[15]−Stronginterestfrompotentiallesseesforremainingavailablespaceinthecompany′sportfoliowasnoted[15]CompanyStrategyandDevelopmentDirection−Thecompanyisactivelymarketing123WilliamStreetand196Orchardforsaletodiversifyitsportfoliointohigher−yieldingassets[11][12]−Theweightedaverageremainingleasetermis5.9years,with4513.5 million [10] Market Data and Key Metrics Changes - Positive net absorption was reported in the New York City office market, reversing a long-running trend and halting vacancy rates [15] - Strong interest from potential lessees for remaining available space in the company's portfolio was noted [15] Company Strategy and Development Direction - The company is actively marketing 123 William Street and 196 Orchard for sale to diversify its portfolio into higher-yielding assets [11][12] - The weighted average remaining lease term is 5.9 years, with 45% of leases extending beyond 2030 [13] - The company is focusing on resilient industries and transit-oriented locations to position itself for long-term success [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the effectiveness of their portfolio management strategy, emphasizing tenant retention, property enhancements, and cost control [16] - The anticipated cash proceeds from asset divestitures will be crucial for expanding into new higher-yielding opportunities [21] Other Important Information - A noncash impairment of 1.9 million was incurred for the property at 9 Times Square in Q3 2024 [10] - The company has let go of its REIT status, providing more flexibility in owning and operating assets [26] Q&A Session Summary Question: How are the properties being marketed for sale? - Management confirmed that brokers are engaged for both properties, with 196 Orchard attracting family office investors and 123 William Street attracting institutional interest [23] Question: Where might the proceeds from sales be reinvested? - Management indicated interest in core iconic real estate outside of New York City, particularly in the New England area, focusing on hospitality and operating business mixes [25] Question: What improvements are seen in leasing trends in New York City? - Management noted a marked increase in return-to-office trends, with many tenants looking to expand their footprint after previously downsizing during COVID [28]