American Strategic Investment Co.

Previous 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.

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as that term is defined under the Private Securities 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

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.

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 SEC.

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 months ended March 31, 2025 and 2024, 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 six months ended June 30, 2025 and 2024, please see Results of Operations — Leasing Activity below.

Previous 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.

Current wording

As of June 30, 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. The lenders holding one of such mortgages in default, which is in respect of our 1140 Avenue of Americas property, have accelerated the debt outstanding under the applicable loan agreement and in June 2025 initiated foreclosure litigation as a result of alleged defaults, see Note 5 – Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Previous wording

Our portfolio is primarily comprised of office and retail tenants. We have collected 99% of cash rent due across our entire portfolio for the three months ended March 31, 2025 (based on annualized straight-line rent as of March 31, 2025). We expect our cash rent collections will stay at that level, however there can be no assurance that we will be able to collect cash rent due in the future.

Current wording

Our portfolio is primarily comprised of office and retail tenants. We have collected 98% of cash rent due across our entire portfolio for the six months ended June 30, 2025 (based on annualized straight-line rent as of June 30, 2025). We expect our cash rent collections will stay at that level, however there can be no assurance that we will be able to collect cash rent due in the future.

Previous wording

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

Current wording

The following table is a summary of our quarterly leasing activity during the six months ended June 30, 2025:

Previous wording

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

Current wording

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

Previous 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:

Current wording

Our total overall portfolio occupancy decreased as of June 30, 2025 to 82.0% from a total portfolio occupancy of 85.9% as of June 30, 2024 from the following:

Previous wording

•Occupancy at 1140 Avenue of the Americas remained consistent at 74.1% for the period ended March 31, 2025 as compared to 77.1% for period ended March 31, 2024.

Current wording

•Occupancy at 1140 Avenue of the Americas was at 74.1% for the period ended June 30, 2025 as compared to 79.3% for period ended June 30, 2024.

Previous wording

•Occupancy at 123 William Street decreased to 84.4% as of March 31, 2025 compared to 92.5% as of March 31, 2024. The decrease in occupancy was due to a lease amendment and a tenant occupying less space and an early termination with a tenant during the quarter ended September 30, 2024.

Current wording

•Occupancy at 123 William Street decreased to 84.4% as of June 30, 2025 compared to 88.8% as of June 30, 2024. The decrease in occupancy was due to a lease amendment and a tenant occupying less space and an early termination with a tenant during the quarter ended September 30, 2024.

Previous 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.

Current wording

Net loss attributable to common stockholders was $41.7 million for the quarter ended June 30, 2025, as compared to $91.9 million for the quarter ended June 30, 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

Revenue from tenants decreased to $12.3 millionfor the three months ended March 31, 2025 as compared to $15.5 million for the three months ended March 31, 2024 primarily due to the sale of 9 Times Square during the three months ended December 31, 2024, resulting in a $3.2 million decrease in revenue from tenants.

Current wording

Revenue from tenants decreased to $12.2 millionfor the three months ended June 30, 2025 as compared to $15.8 million for the three months ended June 30, 2024 primarily due to the sale of 9 Times Square during the three months ended December 31, 2024, resulting in a $3.5 million decrease in revenue from tenants.

Previous 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.

Current wording

We incurred$1.7 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 June 30, 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 $8.1 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.

Current wording

Property operating expenses decreased to $8.0 million for the three months ended June 30, 2025 as compared to $8.5 million for the three months ended June 30, 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 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.

Current wording

Equity-based compensation remained materially consistent at $0.1 million for the three months ended June 30, 2025 as compared to $0.2 million for the three months ended June 30, 2024. These amounts are comprised of restricted share amortization expense.

Previous 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.

Current wording

Total reimbursement expenses for administrative and personnel services provided by the Advisor, were$1.0 million during the three months ended June 30, 2025 and $0.9 million, during the three months ended June 30, 2024.

Previous 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.

Current wording

Depreciation and amortization expense decreased to $3.5 million for the three months ended June 30, 2025 as compared to $5.2 million for the three months ended June 30, 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

Interest expense decreased to$4.1 million for the three months ended March 31, 2025, as compared to$4.7 millionfor the three months ended March 31, 2024. The decrease in interest expense can primarily be attributed to the sale of 9 Times Square during the three months ended December 31, 2024.

Current wording

Interest expense increased to$7.9 million for the three months ended June 30, 2025, as compared to$5.2 millionfor the three months ended June 30, 2024. The increase in interest expense can primarily be attributed to accrual of default interest for 1140 Avenue of the Americas and 400 E. 67th Street/200 Riverside properties.

Previous 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.

Current wording

General and administrative expenses increased to $5.3 million for the six months ended June 30, 2025 compared to $4.8 million for the six months ended June 30, 2024. The increase was primarily attributable to higher legal and external audit fees.

Previous wording

The following table represents a reconciliation of our net cash provided by (used in) operations from our net loss for the three months ended March 31, 2025 and 2024:

Current wording

The following table represents a reconciliation of our net cash provided by (used in) operations from our net loss for the six months ended June 30, 2025 and 2024:

Previous wording

The following table represents a reconciliation of our net cash provided by (used in) investing activities for the three months ended March 31, 2025 and 2024:

Current wording

The following table represents a reconciliation of our net cash provided by (used in) investing activities for the six months ended June 30, 2025 and 2024:

Previous wording

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

Current wording

There was no cash provided by or used in financing activities for the six months ended June 30, 2025. The following table represents a reconciliation of our net cash provided by financing activities for the six months ended June 30, 2024.

Previous 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.

Current wording

As of June 30, 2025 we had cash and cash equivalents of$5.3 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 $12.8 million as of June 30, 2025.

Previous 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.

Current wording

We had restricted cash of $7.5 million as of June 30, 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 $0.4 million and $1.6 million, and for 400 E 67th Street for $4.1 million and $4.2 million as of June 30, 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 June 30, 2025.

Previous 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.

Current wording

As of June 30, 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 June 30, 2025. As of June 30, 2025 and December 31, 2024, there was $0.4 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 enough excess cash after debt service and as of June 30, 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 June 30, 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 June 30, 2025 we had $4.1 million retained by the lender in a restricted cash account for our 400 E. 67th Street/200 Riverside Blvd. property. For additional information please see Note 5 —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 $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%.

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 $5.3 million divided by our gross asset value, which is calculated as the carrying value of our total assets of $464.0 million plus our accumulated depreciation and amortization of $78.1 million. As of June 30, 2025, our net debt was $344.7 million, our gross asset value was $542.1 million and our leverage was 63.6%.

Previous 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.

Current wording

As of June 30, 2025 our gross borrowings totaled $350.0 million, which bore interest at a weighted-average annual rate of 6.39% and had a weighted-average maturity of 1.8 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 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.

Current wording

We had five mortgage loans secured by our sixproperties with an aggregate balance of$350.0 million as of June 30, 2025 with a weighted-average effective interest rate of 6.39%. All our mortgage loans bear interest at a fixed rate.

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 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.

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 20 quarters ended June 30, 2025. The principal amount of the loan was $99.0 million as of June 30, 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. As of June 30, 2025 and December 31, 2024 we had $0.4 million and $1.6 million, respectively, 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 months of April, May and June under this non-recourse mortgage were not made in full by the rental income from the property collected in the cash management accounts under control of the lender.

Previous wording

On April 7, 2025, we were informed by the lender that the principal balance due under such loan agreement had been accelerated and all amounts under such loan agreement were due and payable, together with interest at the default rate set forth in the loan document which is a rate annum equal to the lesser of (i) the maximum nonusurious interest rate or (ii) five percent (5%) above the interest rate of 4.109% per annum. Such amounts include, but are not limited to, the $99.0 million principal amount of the mortgage note. We are evaluating its options with respect to the property and there can be no assurance as to the resolution of these matters with the lender.

Current wording

We were informed by the lender on February 19, 2025 that we were in default under the loan agreement for failure to make certain scheduled interest payments. We made the payments in question in full on the same day the default notice was received by us as a cure for the February event of default. On April 7, 2025, the lender notified us that the principal balance due under such loan agreement had been accelerated and all amounts under such loan agreement were due and payable as a result of a default described in the notice, together with interest at the default rate set forth in the loan document, which is a rate annum equal to the lesser of (i) the maximum nonusurious interest rate or (ii) five percent (5%) above the interest rate of 4.109% per annum. Such amounts include, but are not limited to, the $99.0 million principal amount of the mortgage note.

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 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.

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 20 quarters ended June 30, 2025. The principal amount for the loan was $10.0 million as of June 30, 2025. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period that has been ongoing. 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

Additionally, in the event that the debt service coverage ratio covenant remains in breach at or below the current level for two consecutive calendar quarters and the lender reasonably determines that such breach is due to the property being imprudently managed by the current manager, the lender has the right, but not the obligation, to require that we replace the current manager with a third party manager chosen by us.

Current wording

Additionally, in the event that the debt service coverage ratio covenant remains in breach at or below the current level for two consecutive calendar quarters and the lender reasonably determines that such breach is due to the property being imprudently managed by the current manager, the lender has the right, but not the obligation, to require that we replace the current manager with a third party manager chosen by us. We have remained in breach for four consecutive quarters as of June 30, 2025, although, the lender has not exercised their right to replace the current manager.

Previous 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.

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 June 30, 2025 and December 31, 2024 we had $4.1 million and $4.2 million, respectively, in cash swept that is retained by the lender and recorded within restricted cash on our consolidated balance sheet.

Previous wording

On November 19, 2024, the lender sent a notice to us alleging that we were in default under the loan agreement governing the loan secured by the non-recourse mortgage on the property for events that occurred in the third and fourth quarters of 2023, specifically our failure to establish a cash management account for excess cash sweeps over monthly debt service requirements. The lender had been remitting excess cash on their own accord until the period of cash sweep was put into effect in 2024 as described above. In their notice of default, the lender asserted we owe an estimated $1.0 million in excess cash to be deposited into the loan reserve account. The lender sent additional notices to use on December 16, 2024 and January 31, 2025 reiterating the foregoing assertions. We responded to the notice of default rejecting the assertions made by the lender, which we believe are without merit as a result of the lender's failure to implement a cash management account and our inability to take such action unilaterally due to the mechanics for receipt of lease payments provided for by the loan agreement. We have not received a response or any additional notices from the lender, which has not accelerated any portion of the loan. We have made all other required payments in accordance with the loan agreement. Beginning in March 2025, the lender has charged default interest to us, currently totaling $3.3 million. While we cannot predict the ultimate outcome of legal matters, we currently believe that it is not probable a liability has been incurred with respect to the alleged defaults and intends to challenge the charge of default interest by the lender.

Current wording

On November 19, 2024, the lender sent a notice to us alleging that we were in default under the loan agreement governing the loan secured by the non-recourse mortgage on the property for events that occurred in the third and fourth quarters of 2023, specifically our failure to establish a cash management account for excess cash sweeps over monthly debt service requirements. The lender had been remitting excess cash on their own accord until the period of cash sweep was put into effect in 2024 as described above. In that notice of default, the lender asserted we owe an estimated $1.0 million in excess cash to be deposited into the loan reserve account. We responded to such notice of default on February 20, 2025 rejecting the assertions made by the lender, which we believed were without merit as a result of the lender's failure to implement a cash management account and our inability to take such action unilaterally due to the mechanics for receipt of lease payments provided for by the loan agreement. Beginning in March 2025, the lender began charging default interest to us, currently totaling $3.3 million. On June 10, 2025, the lender sent a second notice to us alleging defaults under such loan agreement as a result of (i) our failure to pay the outstanding amount due thereunder beginning in April 2025 and (ii) our failure to cooperate with the lender to comply with the aforementioned cash management procedures. The second default notice reaffirmed that, as a result of the aforementioned defaults, interest was accruing at the default rate under the loan agreement and made a demand that all unpaid amounts due under the loan agreement be paid. As of the date of this Quarterly Report on Form 10-Q, we have not responded to the second default notice, but while we cannot predict the ultimate outcome of legal matters, we currently believe that it is not probable a liability has been incurred with respect to the alleged default from the November 19, 2024 notice and intend to continue to challenge the charge of default interest by the lender associated with that notice. Further, we incurred a liability as of June 30, 2025 in relation to the June 10, 2025 default notice.

Previous wording

We were in compliance with the remaining covenants under our other mortgage notes payable as of March 31, 2025, and we continue to monitor compliance with those provisions. If we experience additional lease terminations, due to tenant bankruptcies or otherwise, or tenants placed on a cash basis revenue recognition continue to not pay rent, it is possible that certain of the covenants on other loans may be breached and we may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, our other mortgages also contain cash management provisions that are not considered events of default, and as such, acceleration of principal would only occur upon an event of default.

Current wording

We were in compliance with the remaining covenants under our other mortgage notes payable as of June 30, 2025 and, we continues to monitor compliance with those provisions. If we experience additional lease terminations, due to tenant bankruptcies or otherwise, or tenants placed on a cash basis continue to not pay rent, it is possible that certain of the covenants on other loans may be breached and we may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, our other mortgages also contain cash management provisions that are not considered events of default, and as such, acceleration of principal would only occur upon an event of default.

Previous 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.

Current wording

For the six months ended June 30, 2025, we funded an aggregate of $0.6 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 had no acquisitions or dispositions during the three months ended March 31, 2025 or 2024.

Current wording

We had no acquisitions or dispositions during the three or six months ended June 30, 2025 or 2024.

Previous wording

The below table presents a reconciliation of our EBITDA and our adjusted EBITDA from net loss for the three months ended March 31, 2025 and 2024:

Current wording

The below table presents a reconciliation of our EBITDA and our adjusted EBITDA from net loss for the three and six months ended June 30, 2025 and 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 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.

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 June 30, 2025, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 2.7%. To help mitigate the adverse impact of inflation, approximately 80% 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 June 30, 2025, based on straight-line rent, approximately 80% are fixed rate, scheduled escalation increases recorded on a straight-line basis, and 20% do not contain any escalation provisions.