American Strategic Investment Co

Previous wording

Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts may be forward-looking statements including statements regarding the intent, belief or current expectations of American Strategic Investment Co. (including, as required by context, New York City Operating Partnership, L.P. (the “OP”) and its subsidiaries, “we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions are intended to identify forward looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as that term is defined under the Private Securites Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements regarding the intent, belief or current expectations of American Strategic Investment Co. (including, as required by context, New York City Operating Partnership, L.P. (the “OP”) and its subsidiaries, “we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions are intended to identify forward looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements. We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.

Previous wording

We are an externally managed company that owns a portfolio of commercial real estate located within the five boroughs of New York City, primarily Manhattan. Our real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities and parking garages that do not accompany office spaces. As of June 30, 2024, we owned seven properties consisting of 1.2 million rentable square feet, acquired for an aggregate purchase price of $783.5 million with an overall occupancy of 85.9%.

Current wording

We are an externally managed company that owns a portfolio of commercial real estate located within the five boroughs of New York City, primarily Manhattan. Our real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities and parking garages that do not accompany office spaces. As of September 30, 2024, we owned seven properties consisting of 1.2 million rentable square feet, acquired for an aggregate purchase price of $783.5 million with an overall occupancy of 85.8%.

Previous wording

On January 11, 2023 we effected a 1-for-8 reverse stock split that was previously approved by our board, resulting in each outstanding share of Class A common stock, par value $0.01 per share, (the “Class A common stock”) being converted into 0.125 shares of common stock, with no fractional shares being issued (the “Reverse Stock Split”). For additional information, see Note 7 — Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q. Also, effective January 19, 2023, we amended our charter to change our name to “American Strategic Investment Co.” from “New York City REIT, Inc.” Trading of our Class A common stock on the New York Stock Exchange under the new name began on January 20, 2023 under the existing trading symbol “NYC.” Shares of our Class A common stock were first listed on the New York Stock Exchange (“NYSE”) on August 18, 2020. Also, on February 22, 2023, we completed a non-transferable rights offering raising gross proceeds of $5.0 million (the “Rights Offering”). As a result, we issued 386,100 shares of our Class A common stock subscribed for in the Rights Offering on February 27, 2023.

Current wording

On January 11, 2023 we effected a 1-for-8 reverse stock split that was previously approved by our board, resulting in each outstanding share of Class A common stock, par value $0.01 per share, (the “Class A common stock”) being converted into 0.125 shares of common stock, with no fractional shares being issued (the “Reverse Stock Split”). For additional information, seeNote 7** — Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q. Also, effective January 19, 2023, we amended our charter to change our name to “American Strategic Investment Co.” from “New York City REIT, Inc.” Trading of our Class A common stock on the New York Stock Exchange under the new name began on January 20, 2023

Previous wording

The adverse economic impacts since the onset of the COVID-19 pandemic have caused us to experience challenges in leasing up available space and maintaining occupancy in our properties. These challenges with leasing activity have negatively impacted, and continue to impact, our results of operations, cash flows, and ability to comply with certain mortgage debt covenants. For additional information on our leasing activity for the three and six months ended June 30, 2024 and 2023, please see Results of Operations — Leasing Activity below.

Current wording

The adverse economic impacts since the onset of the COVID-19 pandemic have caused us to experience challenges in leasing up available space and maintaining occupancy in our properties. These challenges with leasing activity have negatively impacted, and continue to impact, our results of operations, cash flows, and ability to comply with certain mortgage debt covenants. For additional information on our leasing activity for the three and nine months ended September 30, 2024 and 2023, please seeResults of Operations — Leasing Activity below.

Previous wording

In addition, beginning in the third and fourth quarters of 2020, the operating results at (i) 1140 Avenue of the Americas, (ii) 9 Times Square, (iii) 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard Garage and (iv) 8713 Fifth Avenue properties were negatively impacted, causing covenant non-compliance or cash trap events under the respective non-recourse mortgages for those properties to be triggered. Thus, we have not been able to use excess cash flows, if any, from these properties while the cash trap events are active to fund operating expenses at our other properties and other capital requirements. As of June 30, 2024 two of our mortgages aggregating $109.0 million in principal amount remained in a cash trap events, as described in detail further below in the Liquidity and Capital Resources section.

Current wording

In addition, beginning in the third and fourth quarters of 2020, the operating results at (i) 1140 Avenue of the Americas, (ii) 9 Times Square, (iii) 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard Garage and (iv) 8713 Fifth Avenue properties were negatively impacted, causing covenant non-compliance or cash trap events under the respective non-recourse mortgages for those properties to be triggered. Thus, we have not been able to use excess cash flows, if any, from these properties while the cash trap events are active to fund operating expenses at our other properties and other capital requirements. As of September 30, 2024 two of our mortgages aggregating $109.0 million in principal amount remained in a cash trap events, as described in detail further below in theLiquidity and Capital Resources section.

Previous wording

See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncementsto our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Current wording

See* Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements*to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Previous wording

The following table is a summary of our quarterly leasing activity during the six months ended June 30, 2024:

Current wording

The following table is a summary of our quarterly leasing activity during the nine months ended September 30, 2024:

Previous wording

The following table is a summary of our quarterly leasing activity during the six months ended June 30, 2023:

Current wording

The following table is a summary of our quarterly leasing activity during the nine months ended September 30, 2023:

Previous wording

Our total overall portfolio occupancy improved as of June 30, 2024 to 85.9% from a total portfolio occupancy of 85.1% as of June 30, 2023 from the following:

Current wording

Our total overall portfolio occupancy improved as of September 30, 2024 to 85.8% from a total portfolio occupancy of 85.1% as of September 30, 2023 from the following:

Previous wording

Net loss attributable to common stockholders was $91.9 million for the quarter ended June 30, 2024, as compared to $10.9 million for the quarter ended June 30, 2023. The change in net loss income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Current wording

Net loss attributable to common stockholders was $34.5 million for the quarter ended September 30, 2024, as compared to $9.4 million for the quarter ended September 30, 2023. The change in net loss income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Previous wording

Revenue from tenants decreased slightly to $15.8 millionfor the three months ended June 30, 2024 as compared to $15.8 million for the three months ended June 30, 2023.

Current wording

Revenue from tenants decreased slightly to $15.4 million for the three months ended September 30, 2024 as compared to $16.0 million for the three months ended September 30, 2023.

Previous wording

We incurred$1.9 million and $2.0 million in fees for asset and property management services paid to our Advisor and Property Manager for both the three months ended June 30, 2024 and 2023. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager. The Advisor was paid in cash for the January, February and June 2024 base management fee, however, the Advisor elected to receive shares in lieu of cash for the March and May 2024 base management fee. Additionally, the Advisor elected to receive shares in lieu of cash for the April property management fee. During the quarter ended June 30, 2023 the Advisor elected to receive shares in lieu of cash for the January 2023 base management fee, however, the management fees for February through June 2023 were paid in cash. The shares issued in lieu of cash for the quarters ended June 30, 2024 and 2023 were valued at $1.0 million and zero, respectively.

Current wording

We incurred $2.0 million and $1.9 million in fees for asset and property management services paid to our Advisor and Property Manager for both the three months ended September 30, 2024 and 2023. SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager. The Advisor was paid in cash for the January, February, June, July, August and September 2024 base management fee, however, the Advisor elected to receive shares in lieu of cash for the March and May 2024 base management fee. Additionally, the Advisor elected to receive shares in lieu of cash for the April property management fee. During the quarter ended September 30, 2024 and September 30, 2023 the Advisor was paid in cash for the base management fee.

Previous wording

Property operating expenses increased to $8.5 million for the three months ended June 30, 2024 as compared to $8.4 million for the three months ended June 30, 2023. The increase in expenses is primarily related to a an increase in maintenance expenses for the three months ended June 30, 2024.

Current wording

Property operating expenses decreased to $8.6 million for the three months ended September 30, 2024 as compared to $8.8 million for the three months ended September 30, 2023. The decrease in expenses is primarily related to a decrease in maintenance expenses for the three months ended September 30, 2024.

Previous wording

During the six months ended June 30, 2024, we recorded an impairment charges of $84.7 million related to our 9 Times Square property. This mortgage had a principal balance of $49.5 million that was set to expire in April 2024 but has been extended to October of 2024 with an option to extend to January 2025 if certain conditions are met. The $84.7 million impairment, which represents the reduction of the carrying value of the property to its estimated fair value as determined by a purchase and sale agreement, executed in August 2024, to sell the property, pursuant to the terms of the amended mortgage agreement which encumbers the property (as further discussed in Note 4 — Mortgage Notes Payable, Net). We estimate the sale to be consummated no later than January 2025, although there can be no assurance that the sale of this property will occur on its contemplated terms, or at all.

Current wording

October 2024 but has been extended to January 2025. The $1.9 million impairment, which represents the reduction of the carrying value of the property to its estimated fair value as determined by a purchase and sale agreement less selling costs, executed in August 2024, to sell the property pursuant to the terms of the amended mortgage agreement which encumbers the property (as further discussed inNote 3 — Real Estate Investments). We estimate the sale to be consummated no later than January 2025, although there can be no assurance that the sale of this property will occur on its contemplated terms, or at all.

Previous wording

During the three months ended June 30, 2023, we recorded impairment charges of $0.2 million related to our 421 W. 54th Street - Hit Factory property. We recorded impairment charges for this property because we determined that the carrying value exceeded our estimate of the net sale price of the property as of June 30, 2023. This property was sold in October 2023.

Current wording

During the three months ended September 30, 2023, we recorded impairment charges of $0.4 million related to our 421 W. 54th Street - Hit Factory property. We recorded impairment charges for this property because we determined that the carrying value exceeded our estimate of the net sale price of the property as of September 30, 2023. This property was sold in October 2023.

Previous wording

Equity-based compensation decreased $2.1 million to $0.2 million for the three months ended June 30, 2024 compared to $2.3 million for the three months ended June 30, 2023. These amounts are comprised of restricted share amortization expense and the amortization of our multi-year outperformance award granted to the Advisor in August 2020 (the “2020 OPP”). The 2020 OPP expired on August 18, 2023. The three months ended June 30, 2023 contained $2.1 million of equity-based compensation expenses related to the 2020 OPP, whereas the three months ended June 30, 2024 did not contain any amortization related to the 2020 OPP. See Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and restricted shares of common stock.

Current wording

Equity-based compensation decreased to $0.1 million for the three months ended September 30, 2024 as compared to $1.2 million for the three months ended September 30, 2023. These amounts are comprised of restricted share amortization expense and the amortization of our multi-year outperformance award granted to the Advisor in August 2020 (the “2020 OPP”). The 2020 OPP expired on August 18, 2023. The three months ended September 30, 2023 contained $1.1 million of equity-based compensation expenses related to the 2020 OPP, whereas the three months ended September 30, 2024 did not contain any amortization related to the 2020 OPP. SeeNote 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and restricted shares of common stock.

Previous wording

General and administrative expenses decreased to $2.0 million for the three months ended June 30, 2024 from $2.4 million for three months ended June 30, 2023. The decrease in general and administrative expenses was primarily attributable to (i) lower legal fees of approximately $0.3 million, (ii) a decrease in our insurances expenses of $0.1 million and (iii) a decrease of $0.1 million in other miscellaneous general and administrative expenses.

Current wording

General and administrative expenses decreased to $1.8 million for the three months ended September 30, 2024 from $1.9 million for three months ended September 30, 2023. The decrease in general and administrative expenses was primarily attributable to lower legal fees of approximately $0.1 million.

Previous wording

These decreases were partially offset by an increase of $0.1 million of total reimbursement expenses for administrative and personnel services provided by the Advisor, which were$0.9 million ($0.8 million related tosalaries, wages, and benefits and$0.1 million related toadministrative and overhead expenses) during the three months ended June 30, 2024 and $0.8 million, ($0.7 million related tosalaries, wages, and benefits and$0.1 million related toadministrative and overhead expenses)during the three months ended June 30, 2023.

Current wording

Total reimbursement expenses for administrative and personnel services provided by the Advisor, were $0.8 million ($0.8 million related to salaries, wages, and benefits and none related to administrative and overhead expenses) during the three months ended September 30, 2024 and $0.8 million, ($0.8 million related to salaries, wages, and benefits and none related to administrative and overhead expenses) during the three months ended September 30, 2023.

Previous wording

Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits of$3.0 million ($2.6 million before the three months ended March 31, 2024) related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Current wording

Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits of $3.0 million ($2.6 million before the three months ended March 31, 2024) related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Previous wording

Depreciation and amortization expense decreased to $5.2 million for the three months ended June 30, 2024 as compared to $6.7 million for the three months ended June 30, 2023. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to the 1140 Avenue of the Americas impairment charge recorded in the three month period ending December 31, 2023. For more information please see our Annual Report on Form 10-K filed with the SEC on April 1, 2024.

Current wording

Depreciation and amortization expense decreased to $4.4 million for the three months ended September 30, 2024 as compared to $6.5 million for the three months ended September 30, 2023. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to an impairment charge in the second quarter 2024 related to our 9 Times Square property. For more information please see our Annual Report on Form 10-K filed with the SEC on April 1, 2024.

Previous wording

Interest expense increased to$5.2 million for the three months ended June 30, 2024, as compared to$4.7 millionfor the three months ended June 30, 2023. The increase in interest expense can partially be attributed to the maturity of our $49.5 million notional, SOFR based “pay-fixed” interest rate swap in April 2024. During the three months ended June 30, 2024 and 2023, our weighted-average outstanding debt balance was $399.5 million, and had a weighted-average effective interest rate of 4.90% in each period. All of our mortgage debt was either fixed rate or swapped to fixed rate until the maturity of our interest rate swap secured by our 9 Times Square mortgage loan in April 2024. Upon maturity of the interest rate swap in April 2024, the interest rate on the loan secured by that property reverted to a floating variable interest rate.

Current wording

Interest expense increased to $5.3 million for the three months ended September 30, 2024, as compared to $4.7 million for the three months ended September 30, 2023. The increase in interest expense can partially be attributed to the maturity of our $49.5 million notional, SOFR based “pay-fixed” interest rate swap in April 2024. During the three months ended September 30, 2024 and 2023, our weighted-average outstanding debt balance was $399.5 million, and had a weighted-average effective interest rate of 4.90% in each period. All of our mortgage debt was either fixed rate or swapped to fixed rate until the maturity of our interest rate swap secured by our 9 Times Square mortgage loan in April 2024. Upon maturity of the interest rate swap in April 2024, the interest rate on the loan secured by that property reverted to a floating variable interest rate.

Previous wording

As of June 30, 2024, we owned seven properties, all of which were acquired prior to January 1, 2021. Changes in our results of operations for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily due to an increase in occupancy which increased rental revenue for previously vacant spaces. On October 12, 2023 we sold the Hit Factory for a contract sales price of$4.5 million. This property was classified as held-for-sale on our consolidated balance sheet as of September 30, 2023. The sole tenant terminated its lease early and vacated the space during the quarter ended June 30, 2018. The sale of this vacant property eliminated annual carrying costs of approximately $0.3 million associated with owning the property.

Current wording

On October 12, 2023 we sold the Hit Factory for a contract sales price of $4.5 million. This property was classified as held-for-sale on our consolidated balance sheet as of September 30, 2023. The sole tenant terminated its lease early and vacated the space during the quarter ended June 30, 2018. The sale of this vacant property eliminated annual carrying costs of approximately $0.3 million associated with owning the property.

Previous wording

Net loss attributable to common stockholders was $99.5 million for the six months ended June 30, 2024, as compared to $22.7 million for the six months ended June 30, 2023. The change in net loss income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Current wording

Net loss attributable to common stockholders was $133.9 million for the nine months ended September 30, 2024, as compared to $32.0 million for the nine months ended September 30, 2023. The change in net loss income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Previous wording

Revenue from tenants decreased to $31.2 million for the six months ended June 30, 2024, from $31.3 million for the six months ended June 30, 2023. The decrease was primarily the result of lower reimbursable operating expenses in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Current wording

Revenue from tenants decreased to $46.7 million for the nine months ended September 30, 2024, from $47.3 million for the nine months ended September 30, 2023. The decrease was primarily the result of lower reimbursable operating expenses in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Previous wording

Fees for asset and property management services paid to our Advisor and Property Manager were $3.8 million and $3.9 million for the six months ended June 30, 2024 and 2023, respectively. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager. The Advisor was paid in cash for the January, February and June 2024 base management fee, however, the Advisor elected to receive shares in lieu of cash for the March and May 2024 base management fee. Additionally, the Advisor elected to receive shares in lieu of cash for the April property management fee for the six months ended June 30, 2024. The Advisor elected to receive shares in lieu of cash for the January 2023 base management fee, however the remainder of the management fees in the six months ended June 30, 2023 were paid in cash. For accounting purposes these shares are issued using the closing price on date of issuance and the related expense was $1.6 million and $0.5 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Fees for asset and property management services paid to our Advisor and Property Manager were $5.8 million and $5.8 million for the nine months ended September 30, 2024 and 2023, respectively. SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager. The Advisor was paid in cash for the January, February, June, July, August and September 2024 base management fee, however, the Advisor elected to receive shares in lieu of cash for the March and May 2024 base management fee. Additionally, the Advisor elected to receive shares in lieu of cash for the April property management fee for the nine months ended September 30, 2024. The Advisor elected to receive shares in lieu of cash for the January 2023 base management fee, however the remainder of the management fees in the nine months ended September 30, 2023 were paid in cash. For accounting purposes these shares are issued using the closing price on date of issuance and the related expense was $1.6 million and $0.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

During the three months ended June 30, 2024, we recorded an impairment charges of $84.7 million related to our 9 Times Square property. This mortgage had a principal balance of $49.5 million that was set to expire in April 2024 but has been extended to October of 2024 with an option to extend to January 2025 if certain conditions are met. The $84.7 million impairment, which represents the reduction of the carrying value of the property to its estimated fair value as determined by a purchase and sale agreement, executed in August 2024, to sell the property pursuant to the terms of the amended mortgage agreement which encumbers the property (as further discussed in Note 4 — Mortgage Notes Payable, Net). We estimate the sale to be consummated no later than January 2025, although there can be no assurance that the sale of this property will occur on its contemplated terms, or at all.

Current wording

During the nine months ended September 30, 2024, we recorded impairment charges of $86.6 million related to our 9 Times Square property. This property is encumbered by a mortgage with a principal balance of $49.5 million that was set to expire in April 2024 but has been extended to January 2025. The $86.6 million impairment, which represents the reduction of the carrying value of the property to its estimated fair value as determined by a purchase and sale agreement less selling costs, executed in August 2024, to sell the property, pursuant to the terms of the amended mortgage agreement which encumbers the property (as further discussed inNote 4 — Mortgage Notes Payable, Net). We estimate the sale to be consummated no later than January 2025, although there can be no assurance that the sale of this property will occur on its contemplated terms, or at all.

Previous wording

During the six months ended June 30, 2023, we recorded impairment charges of $0.2 million related to our 421 W. 54th Street - Hit Factory property. We recorded impairment charges for this property because we determined that the carrying value exceeded our estimate of the net sale price of the property as of June 30, 2023. This property was sold in October of 2023.

Current wording

During the nine months ended September 30, 2023, we recorded impairment charges of $0.4 million related to our 421 W. 54th Street - Hit Factory property. We recorded impairment charges for this property because we determined that the carrying value exceeded our estimate of the net sale price of the property as of September 30, 2023. This property was sold in October of 2023.

Previous wording

Equity-based compensation decreased to$0.2 million for the six months ended June 30, 2024, as compared to $4.5 million for the six months ended June 30, 2023. These amounts are comprised of restricted share amortization expense and the amortization of our multi-year outperformance award granted under the 2020 OPP. The 2020 OPP expired on August 18, 2023. The six months ended June 30, 2023 contained $4.2 million of equity-based compensation expenses related to the 2020 OPP, whereas the six months ended June 30, 2024 did not contain any amortization related to the 2020 OPP. See Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and restricted shares of common stock.

Current wording

Equity-based compensation decreased to $0.3 million for the nine months ended September 30, 2024, as compared to $5.7 million for the nine months ended September 30, 2023. These amounts are comprised of restricted share amortization expense and the amortization of our multi-year outperformance award granted under the 2020 OPP. The 2020 OPP expired on August 18, 2023. The nine months ended September 30, 2023 contained $5.3 million of equity-based compensation expenses related to the 2020 OPP, whereas the nine months ended September 30, 2023 did not contain any amortization related to the 2020 OPP. SeeNote 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and restricted shares of common stock.

Previous wording

General and administrative expenses decreased $0.8 million to $4.8 million for the six months ended June 30, 2024 compared to $5.6 million for the six months ended June 30, 2023. The decrease was primarily due to (i) lower legal fees of approximately $0.6 million, (ii) a decrease in other miscellaneous general and administrative expense of $0.3 million and (iii) a decrease of our insurance expense of $0.1 million in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Current wording

General and administrative expenses decreased $1.0 million to $6.5 million for the nine months ended September 30, 2024 compared to $7.6 million for the nine months ended September 30, 2023. The decrease was primarily due to (i) lower legal fees of approximately $0.7 million, (ii) a decrease of $0.3 million in miscellaneous general and administrative expenses for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Previous wording

These decreases were partially offset by an increase of $0.2 million for total reimbursement expenses for administrative and personnel services provided by the Advisor. Such expenses were $2.1 million($1.7 million were for salaries, wages, and benefits and$0.4 million related to administrative and overhead expenses)during the six months ended June 30, 2024 and were $1.9 million ($1.5 million were for salaries, wages, and benefits and$0.4 million related to administrative and overhead expenses) during thesix months ended June 30, 2023.

Current wording

Total reimbursement expenses for administrative and personnel services provided by the Advisor were $2.9 million ($2.5 million were for salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses) during the nine months ended September 30, 2024 and were $2.7 million ($2.3 million were for salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses) during the nine months ended September 30, 2023.

Previous wording

Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits of$3.0 million ($2.6 million before the three months ended March 31, 2024) related to salaries, wages, and benefits and$0.4 million related to administrative and overhead expenses. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Current wording

Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits of $3.0 million ($2.6 million before the three months ended March 31, 2024) related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Previous wording

Depreciation and amortization expense decreased to $10.4 million for the six months ended June 30, 2024, compared to $13.7 million for the six months ended June 30, 2023. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to the 1140 Avenue of the Americas impairment charge recorded in the three month period ending December 31, 2023. For more information please see our Annual Report on Form 10-K filed with the SEC on April 1, 2024.

Current wording

Depreciation and amortization expense decreased to $14.8 million for the nine months ended September 30, 2024, compared to $20.2 million for the nine months ended September 30, 2023. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to impairment charges in the nine months ended September 30, 2024 related to our 9 Times Square property. For more information please see our Annual Report on Form 10-K filed with the SEC on April 1, 2024.

Previous wording

Interest expense increased to $9.9 million for the six months ended June 30, 2024 as compared to $9.4 million for the six months ended June 30, 2023. The increase in interest expense can partially be attributed to the maturity of our $49.5 million notional, SOFR based “pay-fixed” interest rate swap in April 2024. During the six months ended June 30, 2024 and 2023, our weighted average outstanding debt balance was $399.5 million, respectively, and had a weighted-average effective interest rate of 4.90% in each period. All of our mortgage debt was either fixed rate or swapped to fixed rate until the maturity of our interest rate swap secured by our 9 Times Square mortgage loan in April 2024. Upon maturity of the interest rate swap in April 2024, the interest rate on the loan secured by that property reverted to a floating variable interest rate.

Current wording

Interest expense increased to $15.2 million for the nine months ended September 30, 2024 as compared to $14.1 million for the nine months ended September 30, 2023. The increase in interest expense can partially be attributed to the maturity of our $49.5 million notional, SOFR based “pay-fixed” interest rate swap in April 2024. During the nine months ended September 30, 2024 and 2023, our weighted average outstanding debt balance was $399.5 million, respectively, and had a weighted-average effective interest rate of 4.90% in each period. All of our mortgage debt was either fixed rate or swapped to fixed rate until the maturity of our interest rate swap secured by our 9 Times Square mortgage loan in April 2024. Upon maturity of the interest rate swap in April 2024, the interest rate on the loan secured by that property reverted to a floating variable interest rate.

Previous wording

As of June 30, 2024, we had cash and cash equivalents of$5.2 million as compared to $5.3 million as of December 31, 2023. Under the guarantee of certain enumerated recourse liabilities of the borrower under one of our mortgage loans, we are required to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million, which includes cash and cash equivalents and restricted cash, which totaled $13.1 million as of June 30, 2024.

Current wording

As of September 30, 2024 we had cash and cash equivalents of $5.2 million as compared to $5.3 million for the year ended December 31, 2023. Under the guarantee of certain enumerated recourse liabilities of the borrower under one of our mortgage loans, we are required to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million, which includes cash and cash equivalents and restricted cash, which totaled $15.8 million as of September 30, 2024.

Previous wording

We had restricted cash of $7.9 million as of June 30, 2024 as compared to $7.5 million as of December 31, 2023. Our restricted cash balance includes cash sweeps for 1140 Avenue of the Americas of $1.6 million and $2.5 million, as of June 30, 2024 and December 31, 2023, respectively, and the remaining balance of restricted cash is comprised of various escrow accounts and other cash accounts with restricted uses. We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures. For certain property operating expenses and capital expenditures specifically related to our 1140 Avenue of the Americas property, lender approval is required to use any of the cash that is held in restricted cash accounts resulting from the breach of covenants on the loan secured by that property (see below). As a result, some of the property operating expenses and capital expenditures that will be paid with restricted cash may reside in accounts payable and accrued expenses on our consolidated balance sheet as of June 30, 2024.

Current wording

We had restricted cash of $10.5 million as of September 30, 2024 as compared to $7.5 million as of December 31, 2023. Our restricted cash balance includes cash sweeps for 1140 Avenue of the Americas of $3.1 million and $2.5 million, as of September 30, 2024 and December 31, 2023, respectively, and the remaining balance of restricted cash is comprised of various escrow accounts and other cash accounts with restricted uses. We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures. For certain property operating expenses and capital expenditures specifically related to our 1140 Avenue of the Americas property, lender approval is required to use any of the cash that is held in restricted cash accounts resulting from the breach of covenants on the loan secured by that property (see below). As a result, some of the property operating expenses and capital expenditures that will be paid with restricted cash may reside in accounts payable and accrued expenses on our consolidated balance sheet as of September 30, 2024.

Previous wording

As of June 30, 2024, we are operating under two cash traps at both 1140 Avenue of the Americas and 8713 Fifth Avenue, which together, represent 23% of the rentable square feet in our portfolio as of June 30, 2024. As of June 30, 2024 and December 31, 2023, there was $1.6 million and $2.5 million, respectively, of cash maintained in a segregated and restricted cash account resulting from the breach of covenants on the loan secured by our 1140 Avenue of the Americas property. The remaining cash that is classified as restricted cash on the consolidated balance sheet are held in escrow accounts. As of June 30, 2024 our 8713 Fifth Avenue property has not generated excess cash after debt service and there is no related cash maintained in a segregated and restricted cash account for that property. We may not access the cash from the 1140 Avenue of the Americas property without lender approval unless and until the various breaches have been cured. Excess cash generated by the 1140 Avenue of the Americas property continues to be deposited in a separate cash management account until the borrower under the loan is able to comply with all of the applicable covenants.

Current wording

classified as restricted cash on the consolidated balance sheet are held in escrow accounts. As of September 30, 2024 our 8713 Fifth Avenue property has not generated excess cash after debt service and there is no related cash maintained in a segregated and restricted cash account for that property. We may not access the cash from the 1140 Avenue of the Americas property without lender approval unless and until the various breaches have been cured. Excess cash generated by the 1140 Avenue of the Americas property continues to be deposited in a separate cash management account until the borrower under the loan is able to comply with all of the applicable covenants.

Previous wording

Additionally, as of June 30, 2024, we are operating under two cash sweeps at our 9 Times Square and 400 E. 67th Street/200 Riverside Blvd. properties. Under these lease sweep periods, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral. This swept cash is classified as restricted cash on our consolidated balance sheet. As of June 30, 2024 we had $2.5 million retained by the lender in a restricted cash account for our 400 E. 67th Street/200 Riverside Blvd. property. For additional information please see Note 4 —Mortgage Notes Payableto our consolidated financials statements included in this Quarterly Report on Form 10-Q.

Current wording

Additionally, as of September 30, 2024, we are operating under two cash sweeps at our 9 Times Square and 400 E. 67th Street/200 Riverside Blvd. properties. Under these lease sweep periods, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral. This swept cash is classified as restricted cash on our consolidated balance sheet. As of September 30, 2024 we had $3.1 million retained by the lender in a restricted cash account for our 400 E. 67th Street/200 Riverside Blvd. property. For additional information please seeNote 4 —Mortgage Notes Payableto our consolidated financials statements included in this Quarterly Report on Form 10-Q.

Previous wording

We define our leverage as the ratio between our net debt, which is calculated as our gross debt of $399.5 million less cash and cash equivalents of $5.2 million divided by our gross asset value, which is calculated as the carrying value of our total assets of $598.9 million plus our accumulated depreciation and amortization of $106.6 million. As of June 30, 2024, our net debt was $394.3 million, our gross asset value was $705.5 million and our leverage was 55.9%.

Current wording

We define our leverage as the ratio between our net debt, which is calculated as our gross debt of $399.5 million less cash and cash equivalents of $5.2 million divided by our gross asset value, which is calculated as the carrying value of our total assets of $567.9 million plus our accumulated depreciation and amortization of $87.9 million. As of September 30, 2024, our net debt was $394.3 million, our gross asset value was $655.8 million and our leverage was 60.1%.

Previous wording

As of June 30, 2024 our gross borrowings totaled $399.5 million, which bore interest at a weighted-average annual rate of 4.90% and had a weighted-average maturity of 2.7 years. All of our properties are encumbered under mortgage notes payable, and are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable, unless the existing indebtedness associated with the property is satisfied.

Current wording

As of September 30, 2024 our gross borrowings totaled $399.5 million, which bore interest at a weighted-average annual rate of 4.90% and had a weighted-average maturity of 2.5 years. All of our properties are encumbered under mortgage notes payable, and are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable, unless the existing indebtedness associated with the property is satisfied.

Previous wording

We had six mortgage loans secured by our seven properties with an aggregate balance of$399.5 million as of June 30, 2024 with a weighted-average effective interest rate of 4.90%. All our mortgage loans bear interest at a fixed rate, except for our 9 Times Square mortgage note payable which bears interest at an annual variable interest rate of 30-day SOFR plus 2.60%. The 9 Times Square mortgage note was effectively fixed at 3.73% by an interest rate swap derivative instrument prior to its maturity in April 2024.

Current wording

We had six mortgage loans secured by our seven properties with an aggregate balance of $399.5 million as of September 30, 2024 with a weighted-average effective interest rate of 4.90%. All our mortgage loans bear interest at a fixed rate, except for our 9 Times Square mortgage note payable which bears interest at an annual variable interest rate of 30-day SOFR plus 2.60%. The 9 Times Square mortgage note was effectively fixed at 3.73% by an interest rate swap derivative instrument prior to its maturity in April 2024.