American Strategic Investment Co.

Previous wording

These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include anticipated benefits of our election to terminate our status as a real estate investment trust; whether we will be able to successfully acquire new assets or businesses; our ability to execute on our business plan and sell certain of our properties on commercially practicable terms, if at all; the risks associated with the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on us, our tenants and the global economy and financial markets; the potential adverse effects on inflationary conditions and higher interest rate environment; the risk that any potential future acquisition or disposition by us is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all; and the risk that we may not meet the listing requirements of the New York Stock Exchange. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2023, this and our other Quarterly Reports on Form 10-Q and our other filings with the United States Securities and Exchange Commission (“SEC”).

Current wording

These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include anticipated benefits of our election to terminate our status as a real estate investment trust; whether we will be able to successfully acquire new assets or businesses; our ability to execute on our business plan and sell certain of our properties on commercially practicable terms, if at all; the risks associated with the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on us, our tenants and the global economy and financial markets; the potential adverse effects on inflationary conditions and higher interest rate environment; economic uncertainties about the ultimate impact of tariffs imposed by, or imposed on, the United States and its trading relationships; the risk that any potential future acquisition or disposition by us is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all; and the risk that we may not meet the listing requirements of the New York Stock Exchange. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) on March 19, 2025 (“the 2024 Annual Report”), this and our other Quarterly Reports on Form 10-Q and our other filings with the.

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 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%.

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 March 31, 2025, we owned six properties consisting of 1.0 million rentable square feet, acquired for an aggregate purchase price of $621.2 million with an overall occupancy of 82.0%.

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 nine months ended September 30, 2024 and 2023, please seeResults 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 months ended March 31, 2025 and 2024, please see Results 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 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.

Current wording

As of March 31, 2025 two of our mortgages aggregating $149.0 million are in default and three of our mortgages aggregating $159.0 million in principal amount remained in a cash trap events, as described in detail further below in the Liquidity and Capital Resources section.

Previous wording

For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our 2023 Annual Report on Form 10-K. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.

Current wording

For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our 2024 Annual Report. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.

Previous 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.

Current 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.

Previous wording

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

Current wording

The following table is a summary of our quarterly leasing activity during the three months ended March 31, 2025:

Previous wording

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

Current wording

The following table is a summary of our quarterly leasing activity during the three months ended March 31, 2024:

Previous 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:

Current wording

Our total overall portfolio occupancy decreased as of March 31, 2025 to 82.0% from a total portfolio occupancy of 87.2% as of March 31, 2024 from the following:

Previous wording

As of September 30, 2024, we owned seven properties, all of which were acquired prior to January 1, 2023. Our results of operations for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily reflect changes due to leasing activity and occupancy.

Current wording

As of March 31, 2025, we owned six properties, all of which were acquired prior to January 1, 2024. Our results of operations for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 primarily reflect changes due to leasing activity and occupancy.

Previous 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.

Current wording

Net loss attributable to common stockholders was $8.6 million for the quarter ended March 31, 2025, as compared to $7.6 million for the quarter ended March 31, 2024. 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

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.

Current wording

We incurred$1.9 million and $1.9 million in fees for asset and property management services paid to our Advisor and Property Manager for the three months ended March 31, 2025 and 2024, 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.

Previous 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.

Current wording

Property operating expenses decreased to $8.1 million for the three months ended March 31, 2025 as compared to $8.4 million for the three months ended March 31, 2024. The decrease in expenses is primarily related to the sale of 9 Times Square during the three months ended December 31, 2024.

Previous 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.

Current wording

Equity-based compensation remained consistent at $0.1 million for the three months ended March 31, 2025 as compared to $0.1 million for the three months ended March 31, 2024. These amounts are comprised of restricted share amortization expense.

Previous 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.

Current wording

General and administrative expenses increased to $3.1 million for the three months ended March 31, 2025 from $2.8 million for three months ended March 31, 2024. The increase in general and administrative expenses was primarily attributable to higher legal and external audit fees of approximately $0.5 million.

Previous 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.

Current wording

Total reimbursement expenses for administrative and personnel services provided by the Advisor, were$1.6 million during the three months ended March 31, 2025 and $1.2 million, during the three months ended March 31, 2024.

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. SeeNote 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. 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.

Previous 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.

Current wording

Depreciation and amortization expense decreased to $3.6 million for the three months ended March 31, 2025 as compared to $5.3 million for the three months ended March 31, 2024. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to the sale of our 9 Times Square property in the fourth quarter of 2024. For more information, please see our 2024 Annual Report.

Previous wording

The following table represents a reconciliation of our net cash provided by (used in) financing activities for the three months ended September 30, 2024 and 2023:

Current wording

There was no cash provided by or used in financing activities for the three months ended March 31, 2025 and 2024.

Previous 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.

Current wording

As of March 31, 2025 we had cash and cash equivalents of$7.1 million as compared to $9.8 million for the year ended December 31, 2024. 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 March 31, 2025.

Previous 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.

Current wording

We had restricted cash of $8.7 million as of March 31, 2025 as compared to $9.2 million as of December 31, 2024. Our restricted cash balance includes cash sweeps for 1140 Avenue of the Americas of $1.2 million and $1.6 million, and for 400 E 67th Street for $4.4 million and $4.2 million as of March 31, 2025 and December 31, 2024, respectively. 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 March 31, 2025.

Previous wording

The continuing adverse economic impacts since the COVID-19 pandemic have caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, and could continue to have, an adverse effect on the amount of cash we receive from our operations and therefore our ability to fund operating expenses and other capital requirements. Beginning in the third and fourth quarters of 2020, the operating results at some of our properties, including our 1140 Avenue of the Americas and 8713 Fifth Avenue properties, were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages, where excess operating cash flow from the property, if any, after debt service was held in restricted cash as additional collateral for the loan, for those properties to be triggered. Thus, we were not able to use excess cash flow, if any, from these properties to fund operating expenses at our other properties and other capital requirements during the quarter ended September 30, 2024.

Current wording

The New York City real estate market continues to be challenged as a result of the impacts of the COVID-19 pandemic and the related changing nature of in-office working arrangements, which previously caused, and may in the future cause certain of our tenants to be unable to make rent payments to us timely, or at all, and could continue to have, an adverse effect on the amount of cash we receive from our operations and therefore our ability to fund operating expenses and other capital requirements. Beginning in the third and fourth quarters of 2020, the operating results at some of our properties, including our 1140 Avenue of the Americas and 8713 Fifth Avenue properties, were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages, where excess operating cash flow from the property, if any, after debt service was held in restricted cash as additional collateral for the loan, for those properties to be triggered. Thus, we were not able to use excess cash flow, if any, from the properties while the cash trap events were active (see below), to fund operating expenses at our other properties and other capital requirements during the quarter ended March 31, 2025.

Previous 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.

Current wording

As of March 31, 2025, we are operating under three cash traps at 1140 Avenue of the Americas, 400 E. 67th Street and 8713 Fifth Avenue, which together, represent 33% of the rentable square feet in our portfolio as of March 31, 2025. As of March 31, 2025 and December 31, 2024, there was $1.2 million and $1.6 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. However, our 8713 Fifth Avenue property has not generated excess cash after debt service and as of March 31, 2025 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. Additionally, as of March 31, 2025, we are operating under one cash sweep at our 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 March 31, 2025 we had $4.4 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 Payable, Netto our consolidated financial 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 $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%.

Current wording

We define our leverage as the ratio between our net debt, which is calculated as our gross debt of $350.0 million less cash and cash equivalents of $7.1 million divided by our gross asset value, which is calculated as the carrying value of our total assets of $499.4 million plus our accumulated depreciation and amortization of $92.5 million. As of March 31, 2025, our net debt was $342.9 million, our gross asset value was $591.9 million and our leverage was 57.9%.

Previous 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.

Current wording

As of March 31, 2025 our gross borrowings totaled $350.0 million, which bore interest at a weighted-average annual rate of 4.43% and had a weighted-average maturity of 2.3 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 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.

Current wording

We had five mortgage loans secured by our sixproperties with an aggregate balance of$350.0 million as of March 31, 2025 with a weighted-average effective interest rate of 4.43%. All our mortgage loans bear interest at a fixed rate.

Previous wording

There are no future scheduled principal payments on our mortgage notes payable for the remainder of 2024. In October 2024 we exercised the option in the 9 Times Square mortgage note to extend the maturity of this mortgage note payable to January 2025. This loan had a principal balance of $49.5 million. Unless the 9 Times Square mortgage note payable is further extended, we would not have any future scheduled principal payments for the year ended December 31, 2025.

Current wording

There are no future scheduled principal payments on our mortgage notes payable for the remainder of 2025. The next future scheduled principal payments on our mortgage notes payable are in July 2026. In October 2024 we exercised the option in the 9 Times Square mortgage note to extend the maturity of this mortgage note payable to January 2025. This loan had a principal balance of $49.5 million at the time. On December 18, 2024, we sold 9 Times Square. For additional information please see Note 3 - Real Estate Investments to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

We have breached both a debt service coverage provision and a reserve fund provision under our non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 17 quarters ended September 30, 2024. The principal amount of the loan was $99.0 million as of September 30, 2024. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after paying operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured if we satisfy the required debt service coverage ratio for two consecutive quarters, whereupon the additional collateral will be released. We can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications. As of September 30, 2024 and December 31, 2023 we had $3.1 million and $2.5 million in cash that is retained by the lender and maintained in restricted cash on our consolidated balance sheet as of those dates.

Current wording

We have breached both a debt service coverage provision and a reserve fund provision under our non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 19 quarters ended March 31, 2025. The principal amount of the loan was $99.0 million as of March 31, 2025. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after paying operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured if we satisfy the required debt service coverage ratio for two consecutive quarters, whereupon the additional collateral will be released. We can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications. As of March 31, 2025 and December 31, 2024 we had $1.2 million and$1.6 million in cash that is retained by the lender and maintained in restricted cash on our consolidated balance sheet as of those dates. In addition, the debt service payment for the month of April under this non-recourse mortgage was not made in full by the rental income from the property collected in the cash management accounts under control of the lender.

Previous wording

We have breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue in each of the last 17 quarters ended September 30, 2024. The principal amount for the loan was $10.0 million as of September 30, 2024. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period. The excess cash flow sweep period will continue until the covenant breaches are cured in accordance with the terms of the loan agreement. This property has not generated any excess cash since the breach occurred and thus no cash has ever been trapped related to this property.

Current wording

We have breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue in each of the last 19 quarters ended March 31, 2025. The principal amount for the loan was $10.0 million as of March 31, 2025. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period. The excess cash flow sweep period will continue until the covenant breaches are cured in accordance with the terms of the loan agreement. This property has not generated any excess cash since the breach occurred and thus no cash has ever been trapped related to this property.

Previous wording

We entered a lease sweep period under the non-recourse mortgage secured by 400 E. 67th Street/200 Riverside Blvd. in the nine months ended September 30, 2024, resulting from a near-maturity lease with a major tenant at the property set to expire in the third quarter of 2024. The principal amount for the loan was $50.0 million as of September 30, 2024. Under the loan agreement, a lease sweep period is triggered when (i) the date that is twelve months prior to the end of the term of the major lease, (ii) the date required by the major tenant to give notice of its exercise of a renewal option, (iii) any major tenant lease is surrendered or terminated prior to the expiration date, (iv) if the major tenant discontinues its operations and the major tenants long term debt is not rated lower than investment grade, (v) any material default under the major tenant’s lease, (vi) any major tenant insolvency proceeding. Under the lease sweep period, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral.

Current wording

We entered a lease sweep period under the non-recourse mortgage secured by 400 E. 67th Street/200 Riverside Blvd. in the year ended December 31, 2024, resulting from a near-maturity lease with a major tenant at the property which expired in the third quarter of 2024. The principal amount for the loan was $50.0 million as of March 31, 2025. Under the loan agreement, a lease sweep period is triggered when (i) the date that is twelve months prior to the end of the term of the major lease, (ii) the date required by the major tenant to give notice of its exercise of a renewal option, (iii) any major tenant lease is surrendered or terminated prior to the expiration date, (iv) if the major tenant discontinues its operations and the major tenants long term debt is not rated lower than investment grade, (v) any material default under the major tenant’s lease, (vi) any major tenant insolvency proceeding.

Previous wording

As of September 30, 2024 we had $3.1 million retained by the lender in a restricted cash account on our consolidated balance sheet. We may exit the lease sweep period when the major tenant executes a renewal or extension option beyond the terms described above.

Current wording

Under the lease sweep period, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral. As of March 31, 2025 we had $4.4 million retained by the lender in a restricted cash account on our consolidated balance sheet. We may exit the lease sweep period when the major tenant executes a renewal or extension option beyond the terms described above.

Previous wording

For the nine months ended September 30, 2024, we funded an aggregate of $0.9 million of capital expenditures primarily for tenant and building improvements at 123 William Street, 9 Times Square, 1140 Avenue of the Americas, and 8713 Fifth Avenue. We may invest in additional capital expenditures to further enhance the value of our properties. Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances.

Current wording

For the three months ended March 31, 2025, we funded an aggregate of $0.1 million of capital expenditures primarily for tenant and building improvements at 123 William Street and 1140 Avenue of the Americas. We may invest in additional capital expenditures to further enhance the value of our properties. Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances.

Previous wording

We expect the amount we invest in capital expenditures during the full year ending December 31, 2024, including amounts we expect to fund under new or replacement leases, will be lower when compared to the amount invested during the year ended December 31, 2023. However, this could change if management deems necessary. We funded our capital expenditures during the three months ended September 30, 2024 with cash on hand consisting of proceeds from previous offerings/financings and, cash retained from the Advisor by electing to receive shares of our Class A common stock in lieu of cash for its base management fee for March 2024.

Current wording

We expect the amount we invest in capital expenditures during the full year ending December 31, 2025, including amounts we expect to fund under new or replacement leases, will be lower when compared to the amount invested during the year ended December 31, 2024. However, this could change if management deems necessary.

Previous wording

To further augment our liquidity, we may also further dispose of properties. We had no acquisitions or dispositions during the three or nine months ended September 30, 2024 or 2023, other than the activity described below.

Current wording

We had no acquisitions or dispositions during the three months ended March 31, 2025 or 2024.

Previous wording

We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates. As of September 30, 2024, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 2.4%. To help mitigate the adverse impact of inflation, approximately 82% of our leases with our tenants contain rent escalation provisions which increase the cash rent that is due under these leases over time by an average cumulative increase of 2.1% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures. As of September 30, 2024, based on straight-line rent, approximately 82% are fixed rate, scheduled escalation increases recorded on a straight-line basis, and 18% do not contain any escalation provisions.

Current wording

We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates. As of March 31, 2025, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 2.4%. To help mitigate the adverse impact of inflation, approximately 82% of our leases with our tenants contain rent escalation provisions which increase the cash rent that is due under these leases over time by an average cumulative increase of 0.4% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures. As of March 31, 2025, based on straight-line rent, approximately 82% are fixed rate, scheduled escalation increases recorded on a straight-line basis, and 18% do not contain any escalation provisions.