American Strategic Investment Co. quarterly report, Q1 FY2022

Filing Context and Reporting Period

This Form 10-Q covers the three months ended March 31, 2022. The filing identifies the registrant as New York City REIT, Inc., not American Strategic Investment Co.; investors should verify the requested company identity. The company owned eight New York City properties totaling approximately 1.2 million rentable square feet, with 84.4% portfolio occupancy at quarter-end.

Financial Performance and Position

Metric	Q1 2022	Q1 2021	Change
Revenue from tenants	$15.6 million	$15.2 million	+3.0%
Operating loss	$6.4 million	$8.8 million	Improved $2.5 million
Net loss attributable to common stockholders	$11.1 million	$13.5 million	Improved $2.4 million
Net loss per share	$0.84	$1.06	Improved $0.22
Cash flow from operations	$2.2 million	$2.1 million	+1.5%
Cash NOI	$5.7 million	$5.6 million	+1.8%
Core FFO attributable to common stockholders	$(2.0) million	$(2.9) million	Improved $0.9 million

Operating margin was approximately negative 40.6% and net margin was approximately negative 71.0%, reflecting substantial depreciation, amortization, equity-based compensation and interest expense. Depreciation and amortization declined to $7.0 million from $8.5 million, while interest expense was essentially unchanged at $4.7 million.

Cash and cash equivalents were $10.3 million at March 31, 2022, compared with $11.7 million at December 31, 2021 and $29.4 million at March 31, 2021.
Restricted cash was $13.0 million, including amounts trapped or retained under mortgage covenant provisions.
Total assets were $810.2 million and total liabilities were $466.6 million.
Gross mortgage debt was $399.5 million, or $393.0 million net of deferred financing costs, with a weighted-average effective interest rate of 4.35%.
No scheduled mortgage principal payments were due during the remainder of 2022; maturities include $49.5 million in 2024 and $99.0 million in 2026.
The company paid $1.3 million of common dividends, or $0.10 per share, during the quarter. The board declared another $0.10 per-share dividend on April 1, 2022, paid April 18, 2022.

Material Changes Versus Q1 2021

Revenue increased by $0.5 million, primarily from leasing activity at 8713 Fifth Avenue and 9 Times Square and $0.2 million of revenue from the Innovate NYC co-working operation.
Property operating expenses declined by $0.2 million, and general and administrative expenses declined by $0.3 million, primarily because of lower legal costs.
Depreciation and amortization declined by $1.5 million because of a lower depreciable and amortizable asset base and prior-period impairments and write-offs. Q1 2021 included a $1.3 million write-off of deferred leasing costs related to Knotel’s bankruptcy.
Net cash used in financing increased to $6.9 million from $1.5 million, primarily because the company repaid $5.5 million of the 9 Times Square mortgage principal.
Occupancy improved from approximately 82.8% in Q1 2021 to 84.4% in Q1 2022. The company signed one new lease covering 3,940 square feet and reported no replacement leases during the quarter.
The Advisor reinvested $1.0 million of base management fees in company shares, resulting in the issuance of 88,880 shares and reducing cash fee payments.

Outlook, Risks and Unusual Items

Management reported collection of 98% of original cash rent due across the portfolio, including 97% from the top ten tenants, and stated that rent collection delays experienced in 2021 had not continued in Q1 2022. These collection levels are not guaranteed to continue.
COVID-19, tenant financial weakness, office utilization trends, inflation and higher operating costs remain significant risks. Approximately 85% of leases contain escalation provisions, averaging 1.74% annually, which may not fully offset inflation.
Knotel’s bankruptcy and lease terminations continue to affect occupancy, particularly at 9 Times Square. Replacement rents at 123 William Street were lower per square foot than Knotel’s former rents.
Four mortgage loans, totaling approximately $214.0 million of principal, were subject to cash traps or other covenant-related restrictions at quarter-end. The 9 Times Square and 1140 Avenue of the Americas loans remained in breach of specified covenants, although the breaches were not reported as events of default.
The amended 9 Times Square loan permits covenant breaches for up to four consecutive quarters, but a continued breach through Q3 2022 could trigger a right-sizing requirement, potential acceleration and foreclosure remedies. The company must also maintain $10.0 million of liquid assets under that agreement.
The 1140 Avenue of the Americas lender retained $5.9 million of cash, and $0.7 million remained trapped at 9 Times Square. The company had no cash trapped at 8713 Fifth Avenue, but an additional $125,000 reserve may be required to avoid an excess cash flow sweep.
The company expects to fund operating and capital needs with cash on hand, its $250 million ATM program, potential property dispositions and up to $3.0 million of Advisor fee reinvestments through August 4, 2022. No ATM shares were sold during the quarter.
The company is evaluating a potential sale of the vacant 421 W. 54th Street property but had not classified it as held for sale because no buyer had been identified.
The garage license agreements at 200 Riverside Boulevard and 400 E. 67th Street were extended through October 31, 2022. The company received a $1.4 million lease termination fee in Q4 2021.
The 9 Times Square interest-rate swap was replaced with a SOFR-based swap in connection with the loan amendment. The derivative was an asset of $0.1 million at March 31, 2022, compared with a liability of $1.6 million at December 31, 2021.
Management reported no material pending legal proceedings, no material off-balance-sheet arrangements and effective disclosure controls.

Key Facts for Investors to Verify

Confirm whether this New York City REIT filing corresponds to American Strategic Investment Co. and determine whether a name or registrant transition is involved.
Monitor 9 Times Square covenant compliance through Q3 2022, required liquidity levels and the risk of additional principal repayment or foreclosure remedies.
Assess whether occupancy and rent collections can improve sufficiently to release trapped cash and support dividends and capital expenditures.
Evaluate liquidity after restricted cash, debt service, tenant improvements, leasing commissions and the $10.0 million minimum liquid-asset requirement.
Verify the sustainability of the $0.10 quarterly dividend given recurring GAAP losses, negative Core FFO and reliance on operating cash flow and external capital.
Track leasing progress at 9 Times Square, 123 William Street, 1140 Avenue of the Americas, 8713 Fifth Avenue and the vacant Hit Factory property.
Review related-party fees, the Advisor’s share-based fee reinvestments and the potential dilution from outstanding equity awards and LTIP Units.