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What changed in American Strategic Investment Co.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of American Strategic Investment Co.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+383 added−456 removedSource: 10-K (2025-03-19) vs 10-K (2024-04-01)

Top changes in American Strategic Investment Co.'s 2024 10-K

383 paragraphs added · 456 removed · 217 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeInvestment Strategy Prior to the announcement to change our business strategy on December 30, 2022, we focused on acquiring high-quality commercial real estate located in the five boroughs of New York City, and, in particular, Manhattan. We believe that investment diversification may offset a prolonged New York City office market rebound.
Biggest changeWe believe that investment diversification may offset a prolonged New York City office market rebound.
The real estate debt, which we may also originate or acquire is expected to be primarily first mortgage debt but also may include bridge loans, mezzanine loans, preferred equity or securitized loans. 1 We may also make different types of equity investments in other companies that operate assets meeting our investment objectives.
The real estate debt, which we may also originate or acquire is expected to be primarily first mortgage debt but also may include bridge loans, mezzanine loans, preferred equity or securitized loans. We may also make different types of equity investments in other companies that operate assets meeting our investment objectives.
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 being converted into 0.125 shares of Class A common stock, with no fractional shares being issued (the “Reverse Stock Split”).
Properties.” 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 being converted into 0.125 shares of Class A common stock, with no fractional shares being issued (the “Reverse Stock Split”).
As of December 31, 2023 and 2022, respectively, there were no tenants whose annualized rental income on a straight-line basis, based on leases commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.
As of December 31, 2024 and 2023, respectively, there were no tenants whose annualized rental income on a straight-line basis, based on leases commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.
Tenants and Leasing Our portfolio features a diverse tenant mix across seven mixed-use office and retail condominium buildings primarily located in Manhattan.
Tenants and Leasing Our portfolio features a diverse tenant mix across six mixed-use office and retail condominium buildings primarily located in Manhattan.
As a result, on January 9, 2023, our board of directors (the “Board”) authorized revocation of our REIT election which became effective as of January 1, 2023.
As a result, on January 9, 2023, our board of directors (the “Board”) authorized termination of our REIT election which became effective as of January 1, 2023.
In addition, our top 10 tenants (measured based on rental income on a straight-line basis for the year ended December 31, 2023) are 59% actual investment grade rated and 20% implied investment grade rated. For our purposes, “investment grade” includes both tenants (or lease guarantors) with actual investment grade ratings or tenants with “implied” investment grade ratings.
In addition, our top 10 tenants (measured based on rental income on a straight-line basis for the year ended December 31, 2024) are 55% actual investment grade rated and 22% implied investment grade rated. For our purposes, “investment grade” includes both tenants (or lease guarantors) with actual investment grade ratings or tenants with “implied” investment grade ratings.
In evaluating prospective investments, our advisor, New York City Advisors, LLC (our “Advisor”), considers relevant real estate and financial factors, including the location of the property, the leases and other agreements affecting it, the creditworthiness of its major tenants, its income-producing capacity, its physical condition, its prospects for appreciation, its prospects for liquidity, tax considerations and other factors.
We may make investments in properties located outside of New York City. 1 In evaluating prospective investments, our advisor, New York City Advisors, LLC (our “Advisor”), considers relevant real estate and financial factors, including the location of the property, the leases and other agreements affecting it, the creditworthiness of its major tenants, its income-producing capacity, its physical condition, its prospects for appreciation, its prospects for liquidity, tax considerations and other factors.
For additional information, see Note 7 — Stockholders’ Equity to our consolidated financial statements included in this Annual Report on Form 10-K (our “2023 Financial Statements”).
For additional information, see Note 8 — Stockholders’ Equity to our consolidated financial statements included in this Annual Report on Form 10-K (our “2024 Financial Statements”).
Historically, we filed an election to be taxed as a REIT commencing with o ur taxable year ended December 31, 2014, which remained in effect with respect to each taxable year ended on or before December 31, 2022.
Historically, we had filed an election to be taxed as a REIT commencing with our taxable year ended December 31, 2014, which remained in effect with respect to each subsequent taxable year ending on or before the year ended December 31, 2022.
The term “parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. We also seek to maintain high occupancy rates through long-term leases. As of December 31, 2023, our portfolio was 86.7% occupied with a weighted average remaining lease term of 6.5 years. See “ Leasing/Occupancy” section in
The term “parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. We also seek to maintain high occupancy rates through long-term leases. As of December 31, 2024, our portfolio was 80.8% occupied with a weighted average remaining lease term of 6.3 years.
As of December 31, 2023, on a weighted-average basis based on annualized straight-line rent, 24% of our tenants were in the financial services sector, 13% of our tenants were in the government/public administration sector, 9% of our tenants were in the non-profit sector, 12% of our tenants were in the retail sector, and no other sector accounted for more than 10%.
As of December 31, 2024, on a weighted-average basis based on annualized straight-line rent, 28% of our tenants were in the financial services sector, 17% of our tenants were in the government/public administration sector, 10% of our tenants were in the retail sector, and no other sector accounted for more than 10%.
By investing in o ther asset types, we may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”). Excluding hotels, these additional assets do not generate REIT-qualifying income and are operating businesses.
By investing in o ther asset types, we may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”).
As of December 31, 2023, we owned seven properties consisting of 1.2 million rentable square feet. On December 30, 2022, we announced that we were changing our business strategy by expanding the scope of the assets and businesses we may own and operate.
On December 30, 2022, we announced that we were changing our business strategy by expanding the scope of the assets and businesses we may own and operate.
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, 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.” Investment Strategy Prior to the announcement to change our business strategy on December 30, 2022, we focused on acquiring high-quality commercial real estate located in the five boroughs of New York City, and, in particular, Manhattan.
Item 1. Business Overview We are an externally managed company that owns a portfolio of high-quality 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.
Item 1. Business Overview We were incorporated in the State of Maryland on December 19, 2013. 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.
Removed
We may now seek to acquire assets such as hotels, co-working office space businesses and seek to invest in and operate businesses such as hotel or parking lot management companies.
Added
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 December 31, 2024, we owned six properties consisting of approximately 1.0 million rentable square feet.
Removed
As a consequence of our decision to revoke our election to be taxed as a REIT, the ownership limitations set forth in Section 5.7 of our charter, including, without limitation, the “Aggregate Share Ownership Limit,” as defined therein, no longer apply.
Added
In furtherance of this strategy, we initiated the sale of certain properties in 2024 to reduce the leverage and generate capital for diversification efforts.
Removed
We filed with the State Department of Assessments and Taxation of Maryland a Certificate of Notice reflecting the Board’s determination that it is no longer in our best interest to continue to qualify as a REIT and that therefore the Aggregate Share Ownership Limit will no longer be in effect.
Added
On December 18, 2024, our wholly-owned subsidiary, ARCNYC570SEVENTH, LLC, consummated the sale of the 9 Times Square Midtown Manhattan property (“9 Times Square”) to 9 Times Square Acquisitions, LLC, pursuant to that certain purchase and sale agreement, dated August 1, 2024, as amended on November 19, 2024.
Removed
We may make investments in properties located outside of New York City.
Added
The 9 Times Square was sold for a gross purchase price of $63.5 million. See “Item 2.
Added
See “ Leasing/Occupancy” section in Item 7A.Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources for additional information. Our business is generally not seasonal.
Added
Financing Strategies and Policies In the year ended December 31, 2024 and other recent years, our primary source of capital has been cash on hand, which includes excess proceeds from property-level financings secured by certain of our properties.
Added
The net cash provided by our operations has not been sufficient to fund operating expenses and other capital requirements during the years ended December 31, 2024, 2023 and 2022.
Added
During the year ended December 31, 2024 other sources of capital included (i) the sale of the 9 Times Square for a gross purchase price of $63.5 million, and (ii) the issuance of shares of our Class A common stock in lieu of cash for our asset management fee, property management fee and general and administrative fee which are payable to our Advisor on a monthly basis.
Added
For more detailed information on these transactions, please see Note 3 — Real Estate Investments , Note 8 — Stockholders’ Equity and Note 10 — Related Party Transactions to our 2024 Financial Statements.
Added
Subject to availability, we may also seek to generate capital from a variety of sources, including equity offerings of common and preferred stock and borrowings under a corporate-level credit facility. The form of our indebtedness will vary and could be long-term or short-term, secured or unsecured or fixed-rate or floating rate.
Added
We will not enter into interest rate swaps or caps, or similar hedging transactions or derivative arrangements for speculative purposes, but we have entered into and expect to continue to enter into these types of transactions in order to manage or mitigate our interest rate risk on variable rate debt.
Added
We may reevaluate and change our investing or financing policies at our Board’s sole discretion. Please also see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” and “ Item 1A. Risk Factors .
Added
Our ability to fund our capital requirements will depend on, among other things, the amount of cash we are able to generate from our operations and outside sources, which may not be available on acceptable or favorable terms, or at all” herein for a discussion of how we have funded our capital requirements and some related risks.
Added
Impact of COVID-19 and Changing In-Office Working Arrangements on the New York City Real Estate Market New York City, where all of our properties are located, was among the hardest hit locations in the country by the COVID-19 pandemic and fully reopened on March 7, 2022.
Added
While the COVID-19 pandemic has subsided, not all tenants have fully resumed operations and the New York City real estate market continues to be challenged as a result of the impact the COVID-19 pandemic had on the changing nature of in-office working arrangements. 2 Our portfolio is primarily comprised of office and retail tenants.
Added
We have collected 100% of cash rent due across our entire portfolio for the three months December 31, 2024 (based on annualized straight-line rent as of December 31, 2024). 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.
Added
For additional information on the past and ongoing impacts of COVID-19 on our business as well as managements actions, see “Management Update on the Continuing Adverse Economic Impacts Since the COVID-19 Pandemic” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Added
Organizational Structure Substantially all of our business is conducted through New York City Operating Partnership, L.P. (the “OP”), a Delaware limited partnership, and its wholly-owned subsidiaries. Our Advisor manages our day-to-day business with the assistance of our property manager, New York City Properties, LLC (the “Property Manager”).
Added
Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.
Added
In an effort to preserve our operating cash, we have issued shares of our Class A common stock in lieu of cash to our Advisor and Property Manager as payment for providing services to us. For additional information, please see Note 10 — Related Party Transactions to our 2024 Financial Statements.
Added
Tax Status We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), effective for the period commencing with our taxable year ended December 31, 2014 through our taxable year ended December 31, 2022. As discussed above, we revoked that election effective as of January 1, 2023.
Added
Accordingly, we are now a corporation primarily subject to taxation under the provisions of subchapter C of the Code, a “taxable C corporation,” beginning with the taxable year ending December 31, 2023.
Added
We believe that, during the period commencing with our taxable year ended December 31, 2014 through December 31, 2022, we were organized and operated in a manner so that we qualified as a REIT.
Added
To qualify as a REIT during that period, we were required, among other things, distribute annually at least 90% of our REIT taxable income (which does not equal to net income as calculated in accordance with generally accepted accounting principles (“GAAP”)) determined without regard for the deduction for dividends paid and excluding net capital gains, and we were required to comply with a number of other organizational and operational requirements.
Added
As long as we qualified as a REIT, we generally were not subject to federal corporate income tax on the portion of our REIT taxable income that we distributed to our stockholders.
Added
As a taxable C corporation, we will not be allowed a deduction for dividends paid to our stockholders in computing our taxable income and will be subject to U.S. federal and state income tax on our taxable income at corporate tax rates.
Added
In addition, we generally will be disqualified from treatment as a REIT for the four taxable years following the year in which we revoked our REIT election. This action may reduce our net earnings available for investment or distribution to stockholders because of an additional income tax liability.
Added
Further, any cash distributions we pay to our stockholders will be taxed as dividend income under U.S. federal income tax law, to the extent attributable to our current accumulated earnings and profits, and not at rates applicable to dividends paid by REITs.
Added
To the extent we generate taxable income going forward, we may be able to limit the tax on our income through the use of net operating loss carryforwards or “NOLs”.
Added
However, b ecause of our recent operating history of taxable losses from our results of operations, we are not able to conclude that it is more likely than not we will realize the future benefit of our NOLs; thus we have provided a 100% v aluation allowance as of December 31, 2024 .
Added
Competition The New York City real estate market, where our properties are currently located, is highly competitive. We compete for tenants in this market based on various factors that include location, rental rates, security, suitability of the property’s design for a tenant’s needs and the manner in which the property is operated and marketed.
Added
The number of competing properties in the New York City area could have a material effect on our occupancy levels for our New York City properties, rental rates and on the operating expenses of certain of our properties.
Added
In addition, we compete for acquisitions with REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, sovereign wealth funds, mutual funds and other entities.
Added
Some of these competitors, including larger REITs, have substantially greater financial resources than us, and generally may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of tenants.
Added
There is also competition with others for assets outside of real estate, which we will face as we expand the scope of the assets and businesses we may acquire. However, there are no other specific competition-related factors known to us at this time.
Added
Competition from these and other third-party real estate investors may limit the number of suitable investment opportunities available to us and increase prices, which will lower yields, making it more difficult for us to acquire new investments on attractive terms. 3 Regulations - General Our investments are subject to various federal, state and local laws, ordinances and regulations, including, among other things, the Americans with Disabilities Act of 1990, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity.
Added
We believe that we have all permits and approvals necessary under current law to operate our investments. These regulations have not and are not expected to have a material impact on our capital expenditures, competitive position, and financial condition or results of operations during the next twelve months.
Added
Regulations - Environmental and Related Matters As an owner of real estate, we are subject to various environmental laws of federal, state and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition or results of operations, and management does not believe it will have such an impact in the future.
Added
However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which we hold an interest, or on properties that may be acquired directly or indirectly in the future. We hire third parties to conduct Phase I environmental reviews of the real property that we intend to purchase.
Added
We did not make any material capital expenditures in connection with environmental, health and safety laws, ordinances and regulations in the year ended December 31, 2024 and do not expect that we will be required to make any such material capital expenditures during the year ending December 31, 2025.
Added
Human Capital Resources We are an externally managed company and thus have no employees. We have retained the Advisor pursuant to a long-term advisory contract to manage our affairs on a day-to-day basis. We have also entered into agreements with our Property Manager to manage and lease our properties.
Added
The employees of the Advisor, Property Manager and their respective affiliates perform a full range of services for us, including acquisitions, property management, accounting, legal, asset management, investor relations and all general administrative services. We depend on the Advisor and the Property Manager for services that are essential to us.
Added
If the Advisor and the Property Manager were unable to provide these services to us, we would be required to provide these services ourselves or obtain them from other sources.
Added
Available Information We electronically file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those filings with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Internet address at http://www.sec.gov.
Added
The website contains reports, proxy statements and information statements, and other information, which you may obtain free of charge. In addition, copies of our filings with the SEC may be obtained from our website at www.americanstrategicinvestment.com . Access to these filings is free of charge.
Added
We are not incorporating our website or any information from the website into this Annual Report on Form 10-K.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

93 edited+23 added−46 removed241 unchanged
Biggest changeThe occurrence of any of the risks discussed in this Annual Report on Form 10-K could have a material adverse effect on our business, financial condition, results of operations and ability to pay dividends on our Class A common stock and they may also impact the trading price of our Class A common stock. 4 Summary Risk Factors • Our real estate assets are located in the New York City area and, therefore, our business is particularly vulnerable to an economic downturn in New York City. • Our ability to fund our capital requirements will depend on, among other things, the amount of cash we are able to generate from our operations and outside sources, which may not be available on acceptable or favorable terms, or at all. • Certain periods of our unaudited financial statements were required to be restated or revised as a result of management identifying and reporting a material weakness in our internal control over financial reporting for the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022. • There is no assurance we will restart paying cash dividends. • We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the global COVID-19 pandemic, which may have a material adverse effect on our business. • The ongoing Russia-Ukraine conflict and the recent escalation of the Israel-Hamas conflict may adversely impact our business operations and financial performance. • Inflation may have an adverse effect on our investments and results of operations • Increasing interest rates could increase the amount of our debt payments. • We depend on tenants for our revenue, and accordingly lease terminations, tenant default and bankruptcy have adversely affected and could in the future adversely affect the income produced by our properties. • Costs of complying with governmental laws and regulations, including those relating to environmental matters and discovery of previously undetected environmentally hazardous conditions, may adversely affect our operating results. • We depend on our Advisor and our Property Manager to provide us with executive officers, key personnel and all services required for us to conduct our operations and our operating performance may be impacted by any adverse changes in the financial health or reputation of our Advisor and our Property Manager. • All of our executive officers face conflicts of interest, such as conflicts created by the terms of our agreements with the Advisor and compensation payable thereunder, conflicts allocating investment opportunities to us, and conflicts in allocating their time and attention to our matters.
Biggest changeThe occurrence of any of the risks discussed in this Annual Report on Form 10-K could have a material adverse effect on our business, financial condition, results of operations and ability to pay dividends on our Class A common stock and they may also impact the trading price of our Class A common stock. 4 Summary Risk Factors • Our real estate assets are located in the New York City area and, therefore, our business is particularly vulnerable to an economic downturn in New York City, including trends that reduce demand for office real estate or risks that affect the general and New York City retail environments. • Risks related to operating businesses that are not REIT qualifying assets and being classified as a taxable C corporation. • Our ability to fund our capital requirements will depend on, among other things, the amount of cash we are able to generate from our operations and outside sources, which may not be available on acceptable or favorable terms, or at all. • Our ability to maintain effective system of internal control over financial reporting. • Certain periods of our unaudited financial statements were required to be restated or revised as a result of management identifying and reporting a material weakness in our internal control over financial reporting for the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022. • There is no assurance that we will restart paying cash dividends. • We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the global COVID-19 pandemic, which may have a material adverse effect on our business. • The ongoing Russia-Ukraine conflict and the recent escalation of the Israel-Hamas conflict may adversely impact our business operations and financial performance. • Inflation may have an adverse effect on our investments and results of operations • Increasing interest rates could increase the amount of our debt payments. • We depend on tenants for our revenue, and accordingly lease terminations, tenant default and bankruptcy have adversely affected and could in the future adversely affect the income produced by our properties. • Our ability to maintain or increase rental rates, and to renew leases with current tenants or enter into new leases with new tenants at competitive rental rates. • We may change our targeted investments without stockholder consent, and our strategy to acquire assets opportunistically involves a higher risk of loss than more conservative investment strategies. • Risks related to our relatively small asset base and the high concentration of our total assets in two large individual real estate assets, including the reliance on three major tenants. • We may incur additional risks from acquisition or origination of real estate debt or investment in real estate-related securities issued by real estate market participants. • Costs of complying with governmental laws and regulations, including those relating to environmental matters and discovery of previously undetected environmentally hazardous conditions, may adversely affect our operating results. • We depend on our Advisor and our Property Manager to provide us with executive officers, key personnel and all services required for us to conduct our operations and our operating performance may be impacted by any adverse changes in the financial health or reputation of our Advisor and our Property Manager. • All of our executive officers face conflicts of interest, such as conflicts created by the terms of our agreements with the Advisor and compensation payable thereunder, conflicts allocating investment opportunities to us, and conflicts in allocating their time and attention to our matters.
There is no assurance we will be able to identify and acquire other assets or operating businesses at acceptable prices, if at all or that we will be able to operate the asset and businesses in a profitable fashion.
There is no assurance that we will be able to identify and acquire other assets or operating businesses at acceptable prices, if at all or that we will be able to operate the asset and businesses in a profitable fashion.
Our management and audit committee concluded in November 2022 that our previously issued unaudited consolidated financial statements as of and for the three and six month periods ended June 30, 2022 (the “Interim Financial Statements”), included in the Company’s Quarterly Report on Form 10-Q filed on August 12, 2022 (the “Q2 2022 10-Q”), were materially misstated.
In November 2022, our management and audit committee concluded that our previously issued unaudited consolidated financial statements as of and for the three and six month periods ended June 30, 2022 (the “Interim Financial Statements”), included in the Company’s Quarterly Report on Form 10-Q filed on August 12, 2022 (the “Q2 2022 10-Q”), were materially misstated.
There are costs associated with complying with the Americans with Disabilities Act. Our properties are subject to the Americans with Disabilities Act of 1990 (“Disabilities Act”). Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons.
There are costs associated with complying with the Americans with Disabilities Act. Our properties are subject to the Americans with Disabilities Act of 1990 (the “Disabilities Act”). Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons.
The amount of our indebtedness could have material adverse consequences for us, including: • hindering our ability to adjust to changing market, industry or economic conditions; • limiting our ability to access the capital markets to raise additional equity or debt on favorable terms or at all, whether to refinance maturing debt, to fund acquisitions, to fund dividends or for other corporate purposes; • limiting the amount of cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses; • making us more vulnerable to economic or industry downturns, including interest rate increases. • requiring us to dispose of one or more of our properties at disadvantageous prices in order to service our indebtedness or to raise funds to pay indebtedness at maturity; and • resulting in an event of default if we fail to pay our debt obligations when due, fail to refinance our maturing debt timely, or fail to comply with the financial and other restrictive covenants contained in our loan agreements which event of default could rise to the lender’s right to accelerate the amount due under the applicable loan and could permit certain of our lenders to foreclose on our assets securing the debt.
The amount of our indebtedness could have material adverse consequences for us, including: 17 • hindering our ability to adjust to changing market, industry or economic conditions; • limiting our ability to access the capital markets to raise additional equity or debt on favorable terms or at all, whether to refinance maturing debt, to fund acquisitions, to fund dividends or for other corporate purposes; • limiting the amount of cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses; • making us more vulnerable to economic or industry downturns, including interest rate increases; • requiring us to dispose of one or more of our properties at disadvantageous prices in order to service our indebtedness or to raise funds to pay indebtedness at maturity; and • resulting in an event of default if we fail to pay our debt obligations when due, fail to refinance our maturing debt timely, or fail to comply with the financial and other restrictive covenants contained in our loan agreements which event of default could rise to the lender’s right to accelerate the amount due under the applicable loan and could permit certain of our lenders to foreclose on our assets securing the debt.
Any sustained period of increased non-payment, delinquencies or losses caused by adverse market or economic conditions in New York City or in the overall national economy could adversely affect the value of our assets, revenues, results of operations and financial condition. 5 We have no operating history with businesses that are not REIT qualifying assets.
Any sustained period of increased non-payment, delinquencies or losses caused by adverse market or economic conditions in New York City or in the overall national economy could adversely affect the value of our assets, revenues, results of operations and financial condition. We have no operating history with businesses that are not REIT qualifying assets.
Our revenues is largely dependent on the success and economic viability of our tenants and, as a result, our financial condition and results of operations may be adversely affected. We may in the future acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, which could expose us to additional risks.
Our revenues is largely dependent on the success and economic viability of our tenants and, as a result, our financial condition and results of operations may be adversely affected. 11 We may in the future acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, which could expose us to additional risks.
Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by these disruptions. As reliance on technology has increased, so have the risks posed to those systems.
Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by these disruptions. 23 As reliance on technology has increased, so have the risks posed to those systems.
In addition, other than any working capital reserve or other reserves we may establish, we have no source of funding to repair or reconstruct any uninsured property. 14 Additionally, mortgage lenders insist in some cases that commercial property owners purchase coverage against terrorism as a condition for providing mortgage loans.
In addition, other than any working capital reserve or other reserves we may establish, we have no source of funding to repair or reconstruct any uninsured property. Additionally, mortgage lenders insist in some cases that commercial property owners purchase coverage against terrorism as a condition for providing mortgage loans.
If we are unable to lease properties on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs. 15 We face possible risks associated with the natural disasters and the physical effects of climate change.
If we are unable to lease properties on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs. We face possible risks associated with the natural disasters and the physical effects of climate change.
If we are not able to generate sufficient cash from operations, we will need to generate funds from outside sources to meet our capital requirements. However, there can be no assurance we will be able to do so. Equity or debt capital may not be available to us on favorable terms, or at all.
If we are not able to generate sufficient cash from operations, we will need to generate funds from outside sources to meet our capital requirements. However, there can be no assurance that we will be able to do so. Equity or debt capital may not be available to us on favorable terms, or at all.
We cannot assure our stockholders that the tenant or its trustee will assume our lease and that our cash flow and the amounts available for distributions to our stockholders will not be adversely affected. A sale-leaseback transaction may be recharacterized in a tenant’s bankruptcy proceeding.
We cannot assure our stockholders that the tenant or its trustee will assume our lease and that our cash flow and the amounts available for distributions to our stockholders will not be adversely affected. 13 A sale-leaseback transaction may be recharacterized in a tenant’s bankruptcy proceeding.
Thus, the executive officers and real estate professionals at our Advisor could direct attractive investment opportunities to other entities advised by affiliates of AR Global. We and other entities advised by affiliates of AR Global also rely on these executive officers and other key real estate professionals to supervise the property management and leasing of properties.
Thus, the executive officers and real estate professionals at our Advisor could direct attractive investment opportunities to other entities advised by affiliates of AR Global. 19 We and other entities advised by affiliates of AR Global also rely on these executive officers and other key real estate professionals to supervise the property management and leasing of properties.
Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our OP and its subsidiaries will be available to satisfy the claims of our creditors or to pay our stockholders only after all the liabilities and obligations of our OP and its subsidiaries have been paid in full. 25 U.S.
Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our OP and its subsidiaries will be available to satisfy the claims of our creditors or to pay our stockholders only after all the liabilities and obligations of our OP and its subsidiaries have been paid in full. U.S.
The additional reporting and other obligations resulting from these material weaknesses, including any litigation or regulatory inquires that may result therefrom, increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities and may impact investor perceptions.
The additional reporting and other obligations resulting from any material weaknesses, including any litigation or regulatory inquires that may result therefrom, increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities and may impact investor perceptions.
There is no assurance we will be able to cure any breaches of any of our mortgage loan covenants on favorable terms or at all and access the excess cash generated by these properties, if any.
There is no assurance that we will be able to cure any breaches of any of our mortgage loan covenants on favorable terms or at all and access the excess cash generated by these properties, if any.
Certain tenants have been, or may be in the future, unwilling or unable to pay rent in full or on a timely basis due to bankruptcy, lack of liquidity, or funding, operational failures, 9 or for other reasons.
Certain tenants have been, or may be in the future, unwilling or unable to pay rent in full or on a timely basis due to bankruptcy, lack of liquidity, or funding, operational failures, or for other reasons.
We do not have a corporate-level revolving credit facility or any other corporate-level indebtedness, and there can be no assurance we would be able to obtain corporate-level financing on favorable terms, or at all.
We do not have a corporate-level revolving credit facility or any other corporate-level indebtedness, and there can be no assurance that we would be able to obtain corporate-level financing on favorable terms, or at all.
Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine and to Israel, increasing geopolitical tensions among a number of nations.
Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine, increasing geopolitical tensions among a number of nations.
In addition to the bankruptcy of Knotel, or any guarantor of a tenant’s lease obligations, could also become insolvent or be subject to a bankruptcy proceeding pursuant to Title 11 of the United States Code.
In addition to the bankruptcy of Knotel, or any guarantor of a tenant’s lease obligations, we could also become insolvent or be subject to a bankruptcy proceeding pursuant to Title 11 of the United States Code.
These breaches, which have been ongoing for several quarters are described in more detail elsewhere in this Annual Report on Form 10-K (see Note 4 — Mortgage Notes Payable, Net to our 2023 Financial Statements for additional information) require us to hold any excess cash generated by the properties, if any, in a segregated account as additional collateral under the loans.
These breaches, which have been ongoing for several quarters are described in more detail elsewhere in this Annual Report on Form 10-K (see Note 4 — Mortgage Notes Payable, Net to our 2024 Financial Statements for additional information) require us to hold any excess cash generated by the properties, if any, in a segregated account as additional collateral under the loans.
We have also experienced lease terminations, including the terminations in January 2021 due to the bankruptcy of Knotel, a co-working company that was previously the second largest tenant in our portfolio based on annualized straight-line rent as of September 30, 2020 and occupied several floors at both our 9 Times Square and 123 William Street properties.
We have also experienced lease terminations, including the terminations in January 2021 due to the bankruptcy of Knotel, a co-working company that was previously the second largest tenant in our portfolio based on annualized straight-line rent as of September 30, 2020 which occupied several floors at the 9 Times Square and 123 William Street properties.
There can be no assurance we will be able to recover on any of the claims we have against Knotel.
There can be no assurance that we will be able to recover on any of the claims we have against Knotel.
Our Board has adopted a stockholder rights plan will expire in August 2025 unless further extended by our Board.
Our Board has adopted a stockholder rights plan that will expire in August 2025, unless further extended by our Board.
There was no cash maintained in segregated cash accounts for our 8713 Fifth Avenue property as of December 31, 2023 since this property had not generated excess cash after debt service.
There was no cash maintained in segregated cash accounts for our 8713 Fifth Avenue property as of December 31, 2024 since this property had not generated excess cash after debt service.
Although none of our indebtedness is variable rate that is not otherwise fixed by swap, to the extent that we incur variable rate debt not fixed by swap in the future, increases in interest rates would increase our interest costs, which could reduce our cash flows and our ability to use cash for other corporate purposes. The U.S.
Although none of our indebtedness is variable rate, to the extent that we incur variable rate debt not fixed by swap in the future, increases in interest rates would increase our interest costs, which could reduce our cash flows and our ability to use cash for other corporate purposes.
During the year ended December 31, 2023, the net cash provided by our property operations has not been sufficient to fund operating expenses and other cash requirements.
During the year ended December 31, 2024, the net cash provided by our property operations has not been sufficient to fund operating expenses and other cash requirements.
Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets. These ongoing conflicts and the resulting geopolitical instability can adversely impact our business operations and financial performance.
Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets. The ongoing conflict and the resulting geopolitical instability can adversely impact our business operations and financial performance.
We are subject to risks that affect the general and New York City retail environments. Certain of our properties located in New York City are leased to retail tenants which generated 26% of the annualized straight-line rental income during the year ended December 31, 2023.
We are subject to risks that affect the general and New York City retail environments. Certain of our properties located in New York City are leased to retail tenants which generated 27% of the annualized straight-line rental income during the year ended December 31, 2024.
Our success depends to a significant degree upon the contributions of our executive officers and other key personnel of our Advisor and its affiliates, including Michael Anderson, chief executive officer, and Joseph Marnikovic, our chief financial officer.
Our success depends to a significant degree upon the contributions of our executive officers and other key personnel of our Advisor and its affiliates, including Michael Anderson, chief executive officer, and Michael LeSanto, our chief financial officer.
Most of our leases for properties contain fixed rental rate with annual escalation based upon fixed percentage increases while some are based on other measures. Approximately 84% of our leases with our tenants contain rent escalation provisions which increase the amount of cash rent due by an average of 2.2% per year.
Most of our leases for properties contain fixed rental rate with annual escalation based upon fixed percentage increases while some are based on other measures. Approximately 82% of our leases with our tenants contain rent escalation provisions which increase the amount of cash rent due by an average of 0.4% per year.
Breaches of loan covenants have reduced the cash available to us and further breaches will limit our ability to access cash generated by these properties (see — We have been in breach of several of our mortgage loan covenants for multiple quarters).
Breaches of loan covenants have reduced the cash available to us and further breaches will limit our ability to access cash generated by these properties (see — “We have been in breach of several of our mortgage loan covenants for multiple quarters”).
If a person or entity, together with its affiliates and associates, acquires beneficial ownership of 4.9% or more of our then outstanding common stock, subject to certain exceptions (including our Board’s right to grant waivers), each right would entitle its holder (other than the acquirer, its affiliates and associates) to purchase a fraction of a share of Series A Preferred Stock.
If a person or entity, together with its affiliates and associates, acquires beneficial ownership of 4.9% or more of our then outstanding common stock, subject to certain exceptions (including our Board’s right to grant waivers), each right would entitle its holder (other than the acquirer, its affiliates and associates) to purchase a fraction of a share of Series A Preferred Stock, par value $0.01 per share, of the Company.
As of December 31, 2023, the following tenants accounted for 5% or more of our total annualized rental income on a straight-line basis, based on leases commenced: Tenant % of Annualized Straight-Line Rent City National Bank 7.4% Planned Parenthood 5.8% Equinox 5.9% 10 The failure of any of these tenants to pay rent could have a material adverse effect on our cash flow and the value of the applicable property and our results of operations.
As of December 31, 2024, the following tenants accounted for 5% or more of our total annualized rental income on a straight-line basis, based on leases commenced: Tenant % of Annualized Straight-Line Rent City National Bank 9.6% Planned Parenthood Federation of America, Inc. 7.5% Equinox 6.4% The failure of any of these tenants to pay rent could have a material adverse effect on our cash flow and the value of the applicable property and our results of operations.
Moreover, there is no assurance that the anticipated benefits of the transition from a REIT to a taxable C corporation will be realized or that we will be able to use existing or future NOLs to offset future taxable income, if any. Our federal NOLs totaled $186.5 million as of December 31, 2023.
Moreover, there is no assurance that the anticipated benefits of the transition from a REIT to a taxable C corporation will be realized or that we will be able to use existing or future NOLs to offset future taxable income, if any. Our federal NOLs totaled $298.8 million as of December 31, 2024.
During the year ended December 31, 2023 we have incurred impairment charges of $66.6 million. We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the global COVID-19 pandemic, which may have a material adverse effect on our business.
During the year ended December 31, 2024 we have incurred impairment charges of $112.5 million. We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the global COVID-19 pandemic, which may have a material adverse effect on our business.
The invasion of Ukraine by Russia and the escalation of the Israel-Hamas conflict and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel and its neighboring states and other countries have created global security concerns that could have a lasting impact on regional and global economies.
The invasion of Ukraine by Russia and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, and other countries have created global security concerns that could have a lasting impact on regional and global economies.
Although the length and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions and increased cyber-attacks against U.S. companies.
Although the length and impact of the ongoing conflict is highly unpredictable, it could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions and increased cyber-attacks against U.S. companies.
Our mortgage loans generally contain covenants that limit the ability of the subsidiaries, holding title to the properties to incur additional indebtedness secured by the properties as well as to incur additional debt, engage in property transfers, make distributions to the OP, and discontinue insurance coverage.
Our loan agreements contain restrictive covenants that limit operating and financial flexibility. Our mortgage loans generally contain covenants that limit the ability of the subsidiaries, holding title to the properties to incur additional indebtedness secured by the properties as well as to incur additional debt, engage in property transfers, make distributions to the OP, and discontinue insurance coverage.
The ongoing Russia-Ukraine conflict and the recent escalation of the Israel-Hamas conflict may adversely impact our business operations and financial performance. United States and global markets are experiencing volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and the recent escalation of the Israel-Hamas conflict.
The ongoing Russia-Ukraine conflict may adversely impact our business operations and financial performance. United States and global markets are experiencing volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and, until recently, the Israel-Hamas conflict.
General economic conditions such as high inflation, increasing interest rates and the continuing impact of COVID-19 pandemic on the New York City real estate market, which has led, for example, to a slow return of persons to their offices may cause certain of our tenants to be unable to make rent payments to us timely, or at all, reducing the amount of cash generated from our operations and therefore our ability to fund operating expenses and other capital requirements.
General economic conditions such as persistently high inflation and interest rates and the impact the COVID-19 pandemic had on the changing nature of in-office working arrangements on the New York City real estate market, which led, for example, to a slow return of persons to their offices may cause certain of our tenants to be unable to make rent payments to us timely, or at all, reducing the amount of cash generated from our operations and therefore our ability to fund operating expenses and other capital requirements.
We had $2.5 million, of cash maintained in segregated cash accounts, and classified as restricted cash on our consolidated balance sheet as of December 31, 2023, resulting from breaches of the mortgage loans secured by our 1140 Avenue of the Americas property.
We had $1.6 million, of cash maintained in segregated cash accounts, and classified as restricted cash on our consolidated balance sheet as of December 31, 2024, resulting from breaches of the mortgage loans secured by our 1140 Avenue of the Americas property.
Decisions regarding the frequency and amount of any future dividends we pay on our Class A common stock will remain at all times entirely at the discretion of our Board, which reserves the right to change our dividend policy at any time and for any reason.
There is no assurance we will restart paying cash dividends. Decisions regarding the frequency and amount of any future dividends we pay on our Class A common stock will remain at all times entirely at the discretion of our Board, which reserves the right to change our dividend policy at any time and for any reason.
We had $2.5 million of cash maintained in segregated cash accounts, and classified as restricted cash on our consolidated balance sheet as of December 31, 2023, resulting from the breach of covenants under loan agreements secured by our 1140 Avenue of the Americas property.
Also, we had $1.6 million of cash maintained in segregated cash accounts, and classified as restricted cash on our consolidated balance sheet as of December 31, 2024, resulting from the breach of covenants under loan agreements secured by our 1140 Avenue of the Americas property.
Conflicts that arise may not be resolved in our favor and could result in actions that are adverse to us. • We may terminate our advisory agreement in only limited circumstances, which may require payment of a termination fee. • We have substantial indebtedness and may be unable to repay, refinance, restructure or extend our indebtedness as it becomes due and we may incur additional indebtedness in the future. • We have been in breach of several of our mortgage loan covenants, which are not events of default, for multiple quarters. • The stockholder rights plan adopted by our Board, our classified board and other aspects of our corporate structure and Maryland law may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders. • Failure to qualify as a REIT for prior taxable years would subject us to U.S. federal income tax and potentially state and local tax.
Conflicts that arise may not be resolved in our favor and could result in actions that are adverse to us. • We may terminate our advisory agreement in only limited circumstances, which may require payment of a termination fee. • We have substantial indebtedness and may be unable to repay, refinance, restructure or extend our indebtedness as it becomes due and we may incur additional indebtedness in the future. • We have been in breach of several of our mortgage loan covenants, which are not events of default, for multiple quarters. • The stockholder rights plan adopted by our Board, our classified board and other aspects of our corporate structure and Maryland law may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders. • Failure to qualify as a REIT for prior taxable years would subject us to U.S. federal income tax and potentially state and local tax. 5 Risks Related to Our Properties and Operations All of our real estate assets are located in the New York City area and, therefore, our business is particularly vulnerable to an economic downturn in New York City.
Our Board may further change our targeted investments and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, initially anticipated by, among other things, increasing our exposure to interest rate risk, default risk and market fluctuations.
Our Board may further change our targeted investments and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, initially anticipated by, among other things, increasing our exposure to interest rate risk, default risk and market fluctuations. 10 Part of our strategy for building our portfolio involves acquiring assets opportunistically.
Two of our individual real estate investments represent a material percentage of our assets. As of December 31, 2023, our two largest assets, 123 William Street and 1140 Avenue of the Americas, aggregated approximately 68% of the total rentable square footage in our portfolio and 62% of annualized straight-line rent.
Two of our individual real estate investments represent a material percentage of our assets. As of December 31, 2024, our portfolio consisted of six properties, and the two largest assets, 123 William Street and 1140 Avenue of the Americas, aggregated approximately 80% of the total rentable square footage in our portfolio and 77% of annualized straight-line rent.
If a default or bankruptcy occurs and the underlying asset value is less than the loan amount, we will suffer a loss. 11 In the event of any default under a commercial real estate loan held directly by us, we will bear a risk of loss of principal or accrued interest to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the commercial real estate loan, which could have a material adverse effect on our cash flow from operations.
In the event of any default under a commercial real estate loan held directly by us, we will bear a risk of loss of principal or accrued interest to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the commercial real estate loan, which could have a material adverse effect on our cash flow from operations.
The purchase of properties with limited warranties increases the risk that we may lose some or all our invested capital in the property as well as the loss of rental income from that property, which could have an adverse effect on our business, financial condition and results of operations.
The purchase of properties with limited warranties increases the risk that we may lose some or all our invested capital in the property as well as the loss of rental income from that property, which could have an adverse effect on our business, financial condition and results of operations. 12 We may be unable to sell a property at the time or on the terms we desire.
These properties represented, in the aggregate, 23% of the total rentable square feet in our portfolio as of December 31, 2023.
These properties represented, in the aggregate, 33% of the total rentable square feet in our portfolio as of December 31, 2024.
These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures. Approximately 84% are fixed-rate, and 16% do not contain any escalation provisions. Inflation as measured by the consumer price index for all items as of December 31, 2023 as published by the Bureau of Labor Statistics, was 3.4%, however.
These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures. Approximately 82% are fixed-rate, and 18% do not contain any escalation provisions. Inflation as measured by the consumer price index for all items as of December 31, 2024 as published by the Bureau of Labor Statistics, was 2.9%.
Increased economic volatility could adversely affect our tenants’ abilities to conduct their operations profitably or our ability to borrow money or issue capital stock at acceptable prices. Inflation may have an adverse effect on our investments and results of operations.
Increased economic volatility could adversely affect our tenants’ abilities to conduct their operations profitably or our ability to borrow money or issue capital stock at acceptable prices. Inflation may have an adverse effect on our investments and results of operations. Recent increases in the rate of inflation, both real and anticipated, may impact our investments and results of operations.
Changes in the debt markets could materially and adversely impact us. The commercial debt markets are subject to volatility, resulting in, from time to time, the tightening of underwriting standards by lenders and credit rating agencies and reductions in the availability of financing. In addition, interest rates recently increased as a result of actions taken by the U.S.
The commercial debt markets are subject to volatility, resulting in, from time to time, the tightening of underwriting standards by lenders and credit rating agencies and reductions in the availability of financing. In addition, interest rates increased during 2022 and 2023 as a result of actions taken by the U.S.
In order to meet our investment objectives, we have acquired and may continue to acquire assets that have less than 80% occupancy at the time of acquisition, but which we believe we can reposition, redevelop or remarket to enhance value.
This strategy involves a higher risk of loss than more conservative investment strategies. In order to meet our investment objectives, we have acquired and may continue to acquire assets that have less than 80% occupancy at the time of acquisition, but which we believe we can reposition, redevelop or remarket to enhance value.
In addition, increased operating costs paid by our tenants could have an adverse impact on them if increases in their operating expenses exceed increases in their revenue, which may adversely affect their ability to pay rent owed to us or property expenses to be paid, or reimbursed to us, by our tenants.
In addition, increased operating costs paid by our tenants could have an adverse impact on them if increases in their operating expenses exceed increases in their revenue, which may adversely affect their ability to pay rent owed to us or property expenses to be paid, or reimbursed to us, by our tenants. 15 Conversely, unusually low inflation can cause deflation, or an outright decline in prices.
In addition: • we have limited sources of capital available to us to fund acquisitions; • we may not be able to raise the necessary debt or equity financing on favorable terms, or at all, in order to fund acquisitions; • we may acquire properties or other assets that are not accretive and may not successfully integrate, manage and lease these assets we acquire to meet our expectations; • we may need to fund improvements or renovations to acquired assets; • agreements to acquire assets and businesses generally, and properties in particulate, are typically subject to customary conditions to closing, and we may spend significant time and money on potential acquisitions that we do not consummate; • the process of acquiring assets or business or pursuing an acquisition may divert the attention of our management team from our existing business operations; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations; • market conditions may result in higher vacancies and lower-than expected rental rates at our properties; and • we may acquire properties or other assets or businesses without recourse, or with only limited recourse, for liabilities, whether known or unknown.
As we expand the type of assets or businesses we may seek to acquire, we are also competing with third-parties who may have greater access or expertise with these other assets which may limit the number of suitable investment opportunities available to us and also may result in higher prices, lower yields and a narrower spread of yields over our borrowing costs, making it more difficult for us to acquire new investments on attractive terms. 8 In addition: • we have limited sources of capital available to us to fund acquisitions; • we may not be able to raise the necessary debt or equity financing on favorable terms, or at all, in order to fund acquisitions; • we may acquire properties or other assets that are not accretive and may not successfully integrate, manage and lease these assets we acquire to meet our expectations; • we may need to fund improvements or renovations to acquired assets; • agreements to acquire assets and businesses generally, and properties in particulate, are typically subject to customary conditions to closing, and we may spend significant time and money on potential acquisitions that we do not consummate; • the process of acquiring assets or business or pursuing an acquisition may divert the attention of our management team from our existing business operations; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations; • market conditions may result in higher vacancies and lower-than expected rental rates at our properties; and • we may acquire properties or other assets or businesses without recourse, or with only limited recourse, for liabilities, whether known or unknown.
We may be unable to secure funds for future tenant improvements or capital needs. We are generally responsible for funding any major structural repairs to our properties, such as repairs to the foundation, exterior walls and rooftops as well as for tenant improvement and leasing commission costs associated with our leasing activities.
We are generally responsible for funding any major structural repairs to our properties, such as repairs to the foundation, exterior walls and rooftops as well as for tenant improvement and leasing commission costs associated with our leasing activities.
If the IRS were to determine that we failed to qualify as a REIT for any prior taxable year ended on or before December 31, 2022, and we do not qualify for certain statutory relief provisions, we would be subject to U.S. federal income tax on our taxable income for any such taxable year at the applicable corporate rate.
Furthermore, future legislative, judicial or administrative changes to the U.S. federal income tax laws could be applied retroactively, which could result in our disqualification as a REIT for prior taxable years. 25 If the IRS were to determine that we failed to qualify as a REIT for any prior taxable year ended on or before December 31, 2022, and we do not qualify for certain statutory relief provisions, we would be subject to U.S. federal income tax on our taxable income for any such taxable year at the applicable corporate rate.
Investments in joint ventures may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their required capital contributions.
If we do so, we may not be in a position to exercise sole decision-making authority regarding the joint venture. Investments in joint ventures may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their required capital contributions.
If we fail to pay any such taxes, the applicable taxing authority may place a lien on the real property and the real property may be subject to a tax sale. In addition, we are generally responsible for real property taxes related to any vacant space.
If we fail to pay any such taxes, the applicable taxing authority may place a lien on the real property and the real property may be subject to a tax sale.
As of December 31, 2023 and 2022, we had cash and cash equivalents and restricted cash of $12.8 million and $16.1 million, respectively.
As of December 31, 2024 and 2023, we had cash and cash equivalents and restricted cash of $18.9 million and $12.8 million, respectively.
The impact of the COVID-19 pandemic evolved rapidly and resulted in a decrease in economic activity particularly in the New York City area, which continues to negatively affect the New York City real estate market.
The impact of the COVID-19 pandemic evolved rapidly and resulted in a decrease in economic activity particularly in the New York City area.
A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. 6 A material weakness may result in a misstatement of accounts or disclosures that would result in a material misstatement of the Company’s financial statements that would not be prevented or detected on a timely basis or cause us to fail to meet our obligations under securities laws, stock exchange listing rules, or debt instrument covenants to file periodic financial reports on a timely basis.
A material weakness may result in a misstatement of accounts or disclosures that would result in a material misstatement of the Company’s financial statements that would not be prevented or detected on a timely basis or cause us to fail to meet our obligations under securities laws, stock exchange listing rules, or debt instrument covenants to file periodic financial reports on a timely basis.
Funding our cash needs from cash on hand or the other sources mentioned above reduces the amount of capital available for other uses, including acquisitions and capital expenditures, which limits our financial and operating flexibility and could adversely affect our business.
Funding our cash needs from cash on hand or the other sources mentioned above reduces the amount of capital available for other uses, including acquisitions and capital expenditures, which limits our financial and operating flexibility and could adversely affect our business. 7 Our ability to increase the amount of cash we generate from property operations depends on a variety of factors, including the performance of our tenants and our business.
Our inability to sell a property when we desire to do so may cause us to reduce our selling price for the property, which could have an adverse effect on our business, financial condition and results of operations.
Our inability to sell a property when we desire to do so may cause us to reduce our selling price for the property, which could have an adverse effect on our business, financial condition and results of operations. We may be unable to renew leases or re-lease space on favorable terms or at all as leases expire.
We filed an amendment to the Q2 2022 10-Q on November 14, 2022 in order to correct the errors by (i) restating our previously issued unaudited condensed consolidated financial statements as of and for the three and six month periods ended June 30, 2022, and (ii) revising our previously issued unaudited condensed consolidated financial statements as of and for the three month period ended March 31, 2022.
We filed an amendment to the Q2 2022 10-Q on November 14, 2022 in order to correct the errors by (i) restating our previously issued unaudited condensed consolidated financial statements as of and for the three and six month periods ended June 30, 2022, and (ii) revising our previously issued unaudited condensed consolidated financial statements as of and for the three month period ended March 31, 2022. 6 Our management evaluated the impact of these errors on its assessment of the design and operating effectiveness of the Company’s internal control over financial reporting and identified a material weakness in its internal control over financial reporting.
We may suffer uninsured losses relating to real property or have to pay expensive premiums for insurance coverage. Our general liability, property and umbrella liability insurance coverage on all our properties may not be adequate to insure against liability claims and provide for the costs of defense.
Our general liability, property and umbrella liability, insurance coverage on all our properties may not be adequate to insure against liability claims and provide for the costs of defense.
If we provide a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for repaying the debt if it is not paid by the entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties.
If we provide a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for repaying the debt if it is not paid by the entity.
The loans secured by our 9 Times Square property requires us to maintain a minimum net worth and a minimum level of liquid assets. In addition, loan documents may limit our ability to replace property managers or terminate certain leases.
We may be required to maintain a minimum net worth and a minimum level of liquid assets. In addition, loan documents may limit our ability to replace property managers or terminate certain leases.
In some cases, we may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price, and subsequent payments will be spread over a number of years.
In some cases, we may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price, and subsequent payments will be spread over a number of years. If any purchaser defaults under a financing arrangement with us, it could negatively impact our cash flow.
Additionally, changes in ownership or management practices, the occurrence of adverse events affecting our Advisor or its affiliates or other companies advised by our Advisor and its affiliates could create adverse publicity and adversely affect us and our relationship with lenders, tenants or other third-parties with whom we do business. 23 Our business and operations could suffer if our Advisor or any other party that provides us with services essential to our operations experiences system failures or cyber incidents or a deficiency in cybersecurity.
Additionally, changes in ownership or management practices, the occurrence of adverse events affecting our Advisor or its affiliates or other companies advised by our Advisor and its affiliates could create adverse publicity and adversely affect us and our relationship with lenders, tenants or other third-parties with whom we do business.
If we need additional capital in the future to improve or maintain our properties or for tenant improvements and leasing commissions, we may have to obtain financing from sources, beyond our cash flow from operations, such as borrowings or future equity offerings. These sources of funding may not be available on attractive terms or at all.
Our cash, cash equivalents and restricted cash as of December 31, 2024 includes a significant amount of restricted cash, which may not be available to make tenant improvements or satisfy our capital needs, and if we need additional capital in the future to improve or maintain our properties or for tenant improvements and leasing commissions, we may have to obtain financing from sources, beyond our cash flow from operations, such as borrowings or future equity offerings.
As a result, the presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property, which could adversely affect our operating results. 16 The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could materially adversely affect our business, the value of our properties or our results of operations and, consequently, amounts available for distribution to our stockholders.
The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could materially adversely affect our business, the value of our properties or our results of operations and, consequently, amounts available for distribution to our stockholders.
There can be no assurance that the measures adopted by our Advisor and other parties that provide us with services essential to our operations will be sufficient, and any material adverse effect experienced by our Advisor and other parties that provide us with services essential to our operations could, in turn, have an adverse impact on us. 24 Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders.
There can be no assurance that the measures adopted by our Advisor and other parties that provide us with services essential to our operations will be sufficient, and any material adverse effect experienced by our Advisor and other parties that provide us with services essential to our operations could, in turn, have an adverse impact on us.
As such, these properties are affected by the general and New York City retail environments, including the level of consumer spending and consumer confidence, store closures and changing consumer preferences among other things. These factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our retail locations.
As such, these properties are affected by the general and New York City retail environments, including the level of consumer spending and consumer confidence, store closures and changing consumer preferences among other things.
These individuals, as well as AR Global, as an entity, are not prohibited from engaging, directly or indirectly, in any business or from possessing interests in other businesses and ventures, including businesses and ventures involved in the acquisition, development, ownership, leasing or sale of real estate investments. 19 Our Property Manager is an affiliate of our Advisor and therefore we face conflicts of interest in determining whether to assign certain operating assets to our Property Manager or an unaffiliated property manager.
These individuals, as well as AR Global, as an entity, are not prohibited from engaging, directly or indirectly, in any business or from possessing interests in other businesses and ventures, including businesses and ventures involved in the acquisition, development, ownership, leasing or sale of real estate investments.
As of December 31, 2023, we were in breach of covenants under two separate mortgage loans aggregating $109.0 million in principal amount, which are secured by two of our properties - 1140 Avenue of the Americas, and by 8713 Fifth Avenue.
We have been in breach of several of our mortgage loan covenants for multiple quarters. As of December 31, 2024, we were in breach of covenants under three separate mortgage loans aggregating $159.0 million in principal amount, which are secured by three of our properties: 1140 Avenue of the Americas, 400 E. 67th Street, and 8713 Fifth Avenue.
Costs of complying with governmental laws and regulations, including those relating to environmental matters and discovery of previously undetected environmentally hazardous conditions, may adversely affect our operating results.
These factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our retail locations. 16 Costs of complying with governmental laws and regulations, including those relating to environmental matters and discovery of previously undetected environmentally hazardous conditions, may adversely affect our operating results.
We are subject to risks generally inherent in concentrating investments in a certain geographic area. These risks resulting from a lack of diversification become greater in downturns. The economy and real estate market in New York City has been negatively impacted by the continuing impacts of the COVID-19 pandemic.
All of the real estate assets we own are located in the New York City area. We are subject to risks generally inherent in concentrating investments in a certain geographic area. These risks resulting from a lack of diversification become greater in downturns.
Any future indebtedness we may incur may impose restrictions on us that affect our ability to pay dividends and other distributions as well as other restrictions, including financial covenants, which would decrease our operating and financial flexibility and our ability to achieve our operating objectives. 7 The issuance of additional shares of our Class A common stock, including pursuant to our Common Stock ATM Program, could dilute the interests of the holders of our common stock, and any issuance of shares of preferred stock could dilute the interests of the holders of our Class A common stock and affect our ability to pay dividends on our Class A common stock in the future.
Any future indebtedness we may incur may impose restrictions on us that affect our ability to pay dividends and other distributions as well as other restrictions, including financial covenants, which would decrease our operating and financial flexibility and our ability to achieve our operating objectives.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo manage our material risks from cybersecurity threats and to protect against, detect, and prepare to respond to cybersecurity incidents, we undertake the below listed activities: • Monitor emerging data protection laws and implement changes to our processes to comply; • Conduct periodic data handling and use requirement training for our employees; • Conduct annual cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data; and • Conduct regular phishing email simulations for all employees Our incident response plan coordinates the activities that we and our third-party cybersecurity providers take to prepare to respond and recover from cybersecurity incidents, which include processes to triage, assess severity, investigate, escalate, contain, and remediate an incident, as well as to comply with potentially applicable legal obligations.
Biggest changeTo manage our material risks from cybersecurity threats and to protect against, detect, and prepare to respond to cybersecurity incidents, we undertake the below listed activities: • Monitor emerging data protection laws and implement changes to our processes to comply; • Conduct periodic data handling and use requirement training for our employees; • Conduct annual cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data; and • Conduct regular phishing email simulations for all employees.
As of the date of this Annual Report on Form 10-K, we have not encountered risks from cybersecurity threats that have materially affected us, or are reasonably likely to materially affect, our business strategy, results of operations or financial position. 27
During the reporting period of this Annual Report on Form 10-K, we have not encountered risks from cybersecurity threats that have materially affected us, or are reasonably likely to materially affect, our business strategy, results of operations or financial position. However, we cannot assure you that we will not experience any such threats or incidents in the future.
Added
Our incident response plan coordinates the activities that we and our third-party cybersecurity providers take to prepare to respond and recover from cybersecurity incidents, which include processes to triage, assess severity, investigate, escalate, contain, and remediate an incident, as well as to comply with potentially applicable legal obligations.
Added
See “Item 1A. Risk Factors” in this Annual Report on Form 10-K, for additional discussion about cybersecurity-related risks. 27

Item 2. Properties

Properties — owned and leased real estate

10 edited+4 added−1 removed1 unchanged
Biggest changeFuture Lease Expirations Table The following is a summary of lease expirations for the next ten years at the properties we owned as of December 31, 2023: Year of Expiration Number of Leases Expiring Expiring Annualized Straight-Line Rent (1) Expiring Annualized Straight-Line Rent as a Percentage of the Total Portfolio Leased Rentable Square Feet Percentage of Portfolio Leased Rentable Square Feet Expiring (In thousands) (In thousands) 2024 17 $ 8,231 14.0 % 157 15.7 % 2025 13 5,964 10.2 % 109 10.9 % 2026 9 2,801 4.8 % 56 5.6 % 2027 12 6,008 10.2 % 131 13.1 % 2028 7 3,405 5.8 % 47 4.7 % 2029 8 3,508 6.0 % 63 6.3 % 2030 4 2,310 3.9 % 42 4.2 % 2031 9 6,529 11.1 % 118 11.8 % 2032 3 781 1.3 % 14 1.4 % 2033 8 4,967 8.5 % 47 4.7 % Total 90 $ 44,504 75.8 % 784 78.4 % __________ (1) Includes tenant concessions, such as free rent, as applicable.
Biggest changeFuture Lease Expirations Table The following is a summary of lease expirations for the next ten years at the properties we owned as of December 31, 2024: Year of Expiration Number of Leases Expiring Expiring Annualized Straight-Line Rent (1) Expiring Annualized Straight-Line Rent as a Percentage of the Total Portfolio Leased Rentable Square Feet Percentage of Portfolio Leased Rentable Square Feet Expiring (In thousands) (In thousands) 2025 12 $ 5,778 12.7 % 109 13.6 % 2026 7 $ 2,155 4.7 % 42 5.2 % 2027 9 5,949 13.1 % 132 16.5 % 2028 9 3,500 7.7 % 57 7.2 % 2029 4 1,785 3.9 % 32 4.0 % 2030 5 2,919 6.4 % 55 6.8 % 2031 8 6,234 13.7 % 111 13.9 % 2032 2 352 0.8 % 6 0.7 % 2033 8 4,967 10.9 % 47 5.8 % 2034 4 3,425 7.5 % 30 3.8 % Thereafter 14 $ 8,348 18.6 % 180 22.5 % Total 82 $ 45,412 100.0 % 801 100.0 % __________ (1) Includes tenant concessions, such as free rent, as applicable.
(2) Annualized rental income on a straight-line basis as of December 31, 2023, which includes tenant concessions such as free rent, as applicable. Property Financings See Note 4 — Mortgage Notes Payable, Net to our 2023 Financial Statements for information regarding property financings as of December 31, 2023 and 2022. Item 3. Legal Proceedings. None. Item 4. Mine Safety Disclosure.
(2) Annualized rental income on a straight-line basis as of December 31, 2024, which includes tenant concessions such as free rent, as applicable. Property Financings See Note 4 — Mortgage Notes Payable, Net to our 2024 Financial Statements for information regarding property financings as of December 31, 2024 and 2023. Item 3. Legal Proceedings. None. Item 4. Mine Safety Disclosure.
Management’s Discussion and Analysis. (2) Calculated on a weighted-average basis as of December 31, 2023, as applicable. 28 Future Minimum Lease Payments The following table presents future minimum base cash rental payments due to us over the next ten years and thereafter at the properties we owned as of December 31, 2023.
Management’s Discussion and Analysis. (2) Calculated on a weighted-average basis as of December 31, 2024, as applicable. 28 Future Minimum Lease Payments The following table presents future minimum base cash rental payments due to us over the next ten years and thereafter at the properties we owned as of December 31, 2024.
(2) Annualized rental income on a straight-line basis as of December 31, 2023, which includes tenant concessions such as free rent, as applicable. 1140 Avenue of the Americas The following table lists the tenants at 1140 Avenue of the Americas whose annualized rental income on a straight-line basis is greater than 10% of the total annualized rental income for commenced leases at this property as of December 31, 2023: Tenant Rented Square Feet Rented Square Feet as a % of Total 1140 Avenue of the Americas Lease Expiration Remaining Lease Term (1) Renewal Options Annualized Rental Income (2 ) Annualized Rental Income as a % of 1140 Avenue of the Americas (In thousands) City National Bank 35,643 18.8% June. 2033 9.5 None $ 4,356 28.7 % __________ (1) Remaining lease term in years as of December 31, 2023.
(2) Annualized rental income on a straight-line basis as of December 31, 2024, which includes tenant concessions such as free rent, as applicable. 1140 Avenue of the Americas The following table lists the tenants at 1140 Avenue of the Americas whose annualized rental income on a straight-line basis is greater than 10% of the total annualized rental income for commenced leases at this property as of December 31, 2024: 30 Tenant Rented Square Feet Rented Square Feet as a % of Total 1140 Avenue of the Americas Lease Expiration Remaining Lease Term (1) Renewal Options Annualized Rental Income (2 ) Annualized Rental Income as a % of 1140 Avenue of the Americas (In thousands) City National Bank 35,643 19.6% June. 2033 8.5 None $ 4,356 30.7 % __________ (1) Remaining lease term in years as of December 31, 2024.
For a discussion of the significant changes in occupancy during the year ended December 31, 2023, see the “ Liquidity and Capital Resources - Leasing Activity/Occupancy” section located in Item 7. Management’s Discussion and Analysis.
For a discussion of the significant changes in occupancy during the year ended December 31, 2024, see the “ Liquidity and Capital Resources - Leasing Activity/Occupancy” section located in Item 7.
(2) Annualized rental income on a straight-line basis as of December 31, 2023, which includes tenant concessions such as free rent, as applicable. 30 196 Orchard Street The following table lists all the tenants at 196 Orchard Street as their annualized rental income on a straight-line basis is greater than 10% of the total annualized rental income for commenced leases at this property as of December 31, 2023: Tenant Rented Square Feet Rented Square Feet as a % of 196 Orchard Street Lease Expiration Remaining Lease Term (1) Renewal Options Annualized Rental Income (2 ) Annualized Rental Income as a % of 196 Orchard Street (In thousands) CVS 9,956 16.5 % Aug. 2034 10.7 2 - 5 year options 2,161 29.8 % Equinox 30,033 49.8 % Nov. 2038 14.9 2 - 5 year options 3,448 47.6 % Marshalls 20,308 33.7 % Oct. 2028 4.8 3 - 5 year options 1,641 22.6 % __________ (1) Remaining lease term in years as of December 31, 2023.
(2) Annualized rental income on a straight-line basis as of December 31, 2024, which includes tenant concessions such as free rent, as applicable. 196 Orchard Street The following table lists all the tenants at 196 Orchard Street as their annualized rental income on a straight-line basis is greater than 10% of the total annualized rental income for commenced leases at this property as of December 31, 2024: Tenant Rented Square Feet Rented Square Feet as a % of 196 Orchard Street Lease Expiration Remaining Lease Term (1) Renewal Options Annualized Rental Income (2 ) Annualized Rental Income as a % of 196 Orchard Street (In thousands) CVS 9,956 16.5 % Aug. 2034 9.7 2 - 5 year options 2,161 32.3 % Equinox 30,033 49.8 % Nov. 2038 13.9 2 - 5 year options 2,897 43.3 % Marshalls 20,308 33.7 % Oct. 2028 3.8 3 - 5 year options 1,641 24.5 % __________ (1) Remaining lease term in years as of December 31, 2024.
Properties The following table presents certain information about the properties we owned as of December 31, 2023: Portfolio Acquisition Date Number of Properties Rentable Square Feet Occupancy (1) Remaining Lease Term (2) 400 E. 67th Street - Laurel Condominium Sept. 2014 1 58,750 100.0% 3.5 200 Riverside Boulevard - ICON Garage Sept. 2014 1 61,475 100.0% 13.5 9 Times Square Nov. 2014 1 167,390 71.2% 6 123 William Street Mar. 2015 1 542,676 91.4% 5.3 1140 Avenue of the Americas Jun. 2016 1 245,821 77.1% 6.5 8713 Fifth Avenue Oct. 2018 1 17,500 88.6% 10.6 196 Orchard Street Jul. 2019 1 60,297 100.0% 11.4 7 1,153,909 86.7% 6.5 __________ (1) For a discussion of the significant changes in occupancy during the year ended December 31, 2023, see the “ Liquidity and Capital Resources - Leasing Activity/Occupancy” section located in Item 7.
Properties The following table presents certain information about the properties we owned as of December 31, 2024: Portfolio Acquisition Date Number of Properties Rentable Square Feet Occupancy (1) Remaining Lease Term (2) 400 E. 67th Street - Laurel Condominium Sept. 2014 1 58,750 44.3% 6.3 200 Riverside Boulevard - ICON Garage Sept. 2014 1 61,475 100.0% 12.5 123 William Street Mar. 2015 1 544,610 82.3% 4.5 1140 Avenue of the Americas Jun. 2016 1 245,821 74.1% 6.4 8713 Fifth Avenue Oct. 2018 1 17,500 100.0% 9.6 196 Orchard Street Jul. 2019 1 60,297 100.0% 10.1 6 988,453 80.8% 6.3 __________ (1) For a discussion of the significant changes in occupancy during the year ended December 31, 2024, see the “ Liquidity and Capital Resources - Leasing Activity/Occupancy” section located in Item 7.
The tenant concentrations of the properties located at 123 William Street, 9 Times Square, 1140 Avenue of the Americas and 196 Orchard Street are summarized below: 123 William Street The following table lists the tenant at 123 William Street whose annualized rental income on a straight-line basis is greater than 10% of the annualized rental income for commenced leases at this property as of December 31, 2023: Tenant Rented Square Feet Rented Square Feet as a % of Total 123 William Street Lease Expiration Remaining Lease Term (1) Renewal Options Annualized Rental Income (2 ) Annualized Rental Income as a % of 123 William Street (In thousands) Planned Parenthood Federation of America, Inc. 68,240 13.8% Jul. 2031 7.5 1 - 5 year option $ 3,385 15.8% __________ (1) Remaining lease term in years as of December 31, 2023.
The tenant concentrations of the properties located at 123 William Street, 1140 Avenue of the Americas and 196 Orchard Street are summarized below: 123 William Street The following table lists the tenant at 123 William Street whose annualized rental income on a straight-line basis is greater than 10% of the annualized rental income for commenced leases at this property as of December 31, 2024: Tenant Rented Square Feet Rented Square Feet as a % of Total 123 William Street Lease Expiration Remaining Lease Term (1) Renewal Options Annualized Rental Income (2 ) Annualized Rental Income as a % of 123 William Street (In thousands) Planned Parenthood Federation of America, Inc. 68,240 15.2% Jul. 2031 6.6 1 - 5 year option $ 3,388 16.4% The City of New York - The Department of Youth and Community 40,610 9.1% Dec. 2037 13.01 1 - 5 year option $ 2,215 10.7% __________ (1) Remaining lease term in years as of December 31, 2024.
Tenant Concentration There were no tenants whose rentable square footage represented greater than 10.0% of total portfolio rentable square footage as of December 31, 2023 29 Significant Portfolio Properties The rentable square feet or annualized rental income on a straight-line basis of the properties located at 123 William Street, 9 Times Square, 1140 Avenue of the Americas and 196 Orchard Street represent greater than 10% of our total portfolio.
Significant Portfolio Properties The rentable square feet or annualized rental income on a straight-line basis of the properties located at 123 William Street, 1140 Avenue of the Americas and 196 Orchard Street represent greater than 10% of our total portfolio.
(In thousands) Future Minimum Base Rent Payments (1) 2024 $ 56,205 2025 49,064 2026 44,112 2027 40,733 2028 36,460 2029 33,020 2030 30,054 2031 25,173 2032 20,920 2033 17,889 Thereafter 48,220 Total $ 401,850 __________ (1) For a discussion of the significant changes in occupancy during the year ended December 31, 2023, see the “ Liquidity and Capital Resources - Leasing Activity/Occupancy” section located in Item 7.
(In thousands) Future Minimum Base Rent Payments (1) 2025 $ 43,695 2026 39,437 2027 36,051 2028 31,383 2029 29,145 2030 26,745 2031 22,269 2032 18,207 2033 15,544 2034 11,956 Thereafter 30,578 Total $ 305,010 __________ (1) For a discussion of the significant changes in occupancy during the year ended December 31, 2024, see the “ Liquidity and Capital Resources - Leasing Activity/Occupancy” section located in Item 7.
Removed
(2) Annualized rental income on a straight-line basis as of December 31, 2023, which includes tenant concessions such as free rent, as applicable. 9 Times Square The following table lists the tenant at 9 Times Square whose annualized rental income on a straight-line basis is greater than 10% of the total annualized rental income for commenced leases at this property as of December 31, 2023: Tenant Rented Square Feet Rented Square Feet as a % of Total 9 Times Square Lease Expiration Remaining Lease Term (1) Renewal Options Annualized Rental Income (2 ) Annualized Rental Income as a % of 9 Times Square (In thousands) ILNY/9TS Gifts LLC 7,479 6.3% May. 2036 12.4 None $ 1,932 22.4% Global-E US Inc. 17,560 14.7% Sept. 2029 5.7 None $ 976 11.3% __________ (1) Remaining lease term in years as of December 31, 2023.
Added
Management’s Discussion and Analysis. 29 Tenant Concentration There were no tenants whose rentable square footage represented greater than 10.0% of total portfolio rentable square footage as of December 31, 2024.
Added
As of December 31, 2024, the following tenants accounted for 5% or more of our total annualized rental income on a straight-line basis, based on leases commenced: Tenant % of Annualized City National Bank 9.6% Planned Parenthood Federation of America, Inc. 7.5% Equinox 6.4% See also “Item 1A.
Added
Risk Factors - Risks Related to Our Properties and Operations - We rely significantly on the following major tenants and therefore, are subject to tenant credit concentrations that make us more susceptible to adverse events with respect to these tenants.” in this Annual Report on Form 10-K.
Added
As of December 31, 2024, our two largest assets, 123 William Street and 1140 Avenue of the Americas, aggregated approximately 80% of the total rentable square footage in our portfolio and 77% of annualized straight-line rent. See also “Item 1A. Risk Factors” in this Annual Report on Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+4 added−14 removed0 unchanged
Biggest changeFor the year ended December 31, 2022 from a U.S. federal income tax perspective, 100% of dividends, or $0.20 per share ($1.60 adjusted for the Reverse Stock Split), represented a return of capital and no part constituted a taxable dividend (see full discussion in Liquidity and Capital Resources section below). 32 Table of Contents Unregistered Sales of Equity Securities The following table presents the unregistered sales of equity securities for the years ended December 31, 2023 and 2022: Period of Issuance Recipient Agreement Shares Issued (1) Issued Share Price (1) February 2022 The Advisor Side Letter 5,672 $ 88.16 March 2022 The Advisor Side Letter 5,439 $ 91.94 April 2022 The Advisor Side Letter 4,848 $ 103.13 May 2022 The Advisor Side Letter 5,031 $ 99.39 June 2022 The Advisor Side Letter 5,924 $ 84.40 July 2022 The Advisor Side Letter 5,924 $ 84.40 August 2022 The Advisor Management Agreement 15,586 $ 32.08 September 2022 The Advisor Management Agreement 18,899 $ 26.24 October 2022 The Advisor Management Agreement 18,285 $ 27.36 November 2022 The Advisor Management Agreement 19,320 $ 25.92 December 2022 The Advisor Management Agreement 24,744 $ 20.24 January 2023 The Advisor Management Agreement 31,407 $ 15.92 __________ (1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1 for additional information) Each of the issuances above reflect the issuance of our Class A common stock in lieu of cash of $0.5 million per month for the base management fee due to the Advisor for services rendered.
Biggest changeUnregistered Sales of Equity Securities The following table presents the unregistered sales of equity securities for the years ended December 31, 2024 and 2023: Period of Issuance Recipient Agreement Shares Issued (1) Issued Share Price (1) January 2023 The Advisor Advisory Agreement 31,407 $ 15.44 March 2024 The Advisor Advisory Agreement 70,607 $ 7.54 April 2024 The Advisor Advisory Agreement 68,308 $ 6.58 April 2024 The Advisor Property Management Agreement 22,857 $ 6.58 May 2024 The Advisor Advisory Agreement 88,543 $ 5.72 __________ (1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1 - Organization to our 2024 Financial Statements for additional information) Each of the issuances above reflect the issuance of our Class A common stock in lieu of cash of $0.5 million per month for the base management fee and $0.1 million per month for the property management fee due to the Advisor for services rendered or property management fee, as applicable.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our Class A common stock began trading on the NYSE under the symbol “NYC” as of August 18, 2020.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our Class A common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “NYC” as of August 18, 2020.
Each issuance of shares to the Advisor was made in reliance on the exemption from registration in Section 4(a)(2) of the Securities Act of 1933, as amended. Subsequent to December 31, 2023, we paid the Advisor in cash for January 2024 and February 2024 base asset management fees.
Each issuance of shares to the Advisor was made in reliance on the exemption from registration in Section 4(a)(2) of the Securities Act of 1933, as amended.
The graph assumes an investment of $100 on August 18, 2020, with the reinvestment of dividends. Holders As of March 26, 2024, we had 2,404,639 shares of Class A common stock outstanding held by 3,162 stockholders of record. Dividends We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014.
Holders As of March 14, 2025, we had 2,634,355 shares of Class A common stock outstanding held by 2,839 stockholders of record. Dividends Dividends to Common Stockholders We did not distribute any dividends in the year ended December 31, 2024.
Removed
Set forth below is a line graph comparing the cumulative total stockholder return on our Class A common stock, based on the market price of Class A common stock, with the FTSE National Association of Real Estate Investment Trusts Equity Index (“NAREIT”), Modern Index Strategy Indexes (“MSCI”), and the NYSE Index for the period commencing August 18, 2020, the date on which we listed our Class A common stock on the NYSE and ending December 31, 2023.
Added
Our Board of Directors plans to reevaluate the dividend policy on a quarterly basis but there is no assurance as to when or if our Board will authorize future dividends or the amount of any future dividends.
Removed
We revoked our REIT election which became effective as of January 1, 2023.
Added
Any such determination will be dependent upon then-existing conditions, including our earnings, capital requirements, results of operations, financial condition, business prospects and any other factors that our Board of Directors considers relevant. For additional information see “Item 7.
Removed
As a REIT, we were required, among other things, to distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains, and to comply with a number of other organizational and operating requirements.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operation— Liquidity and Capital Resources—Liquidity—Dividend Policy” of this Annual Report on Form 10-K.
Removed
A tax loss for a particular year eliminated the need to distribute REIT taxable income to meet the 90% distribution requirement for that year and may have minimized or eliminated the need to pay distributions in order to meet the distribution requirement in one or more subsequent years.
Added
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as part of Publicly Announced Plans or Programs Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs December 1, 2024 to December 31, 2024 26,625 $ 8.69 — $ — Total 26,625 $ 8.69 — $ — __________ (1) On December 20, 2024, we entered into an agreement with a shareholder, pursuant to which we purchased the following Class A common stock (the “Repurchased Shares”) held by such shareholder based on the market price on the day of purchase and we reimbursed such shareholder for certain expenses incurred in connection with the foregoing equal to the difference between $639,000 and the amounts paid by the Company for the Repurchased Shares.
Removed
We had a tax loss for the year ended December 31, 2022 and therefore there was no REIT taxable income requiring distribution to maintain our qualification as a REIT through December 31, 2022.
Removed
Dividends to Common Stockholders Through the six months ended June 30, 2022 and for the year ended December 31, 2021, we paid dividends to our common stockholders at an annual rate of $0.40 per share ($3.20 per share a djusted for the Reverse Stock Split) of Class A common stock, or $0.10 per share ($0.80 per share a djusted for the Reverse Stock Split) on a quarterly basis.
Removed
On July 1, 2022, we announced that we suspended our policy regarding dividends paid on our Class A common stock, beginning with the dividend that would have been payable for the quarter ended June 30, 2022. We did not distribute any dividends in the year ended December 31, 2023.
Removed
However, o n March 1, 2024, we issued 70,607 shares of our Class A common stock to the Advisor as a result of the Advisor’s decision to accept shares of our stock in lieu of $0.5 million in cash with respect to the base asset management fee paid to the Advisor for services rendered in March.
Removed
These shares were issued using the 10-day average price of $7.08, which was the higher value per share between the minimum price required by the New York Stock Exchange regulations and the price set forth in the terms of the Second Amended and Restated Advisory Agreement.
Removed
The 10-day average price is calculated as the average of the daily market price of such security for the ten consecutive Trading Days immediately preceding the date of such valuation. Each issuance of shares to the Advisor was made in reliance on the exemption from registration in Section 4(a)(2) of the Securities Act of 1933, as amended.
Removed
For additional information Note 1 4 — Subsequent Events to our 2023 Financial Statements.
Removed
Additionally, on April 1, 2024, we issued 91,165 shares of its Class A common stock to the Advisor as a result of the Advisor’s decision to accept shares of our stock in lieu of $0.6 million in cash with respect to the March property management fees and February general and administrative expense reimbursements.
Removed
These shares were issued using the 10-day average price of $6.64, which was the higher value per share between the minimum price required by the New York Stock Exchange regulations and the price set forth in the terms of the Second Amended and Restated Advisory Agreement and the Third Amendment to the Property Management and Leasing Agreement (details below).
Removed
The 10-day average price is calculated as the average of the daily market price of such security for the ten consecutive Trading Days immediately preceding the date of such valuation. For additional information Note 1 4 — Subsequent Events to the our Financial Statements. Item 6. [Reserved].

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

91 edited+77 added−134 removed79 unchanged
Biggest changeCash Flows from Operating Activities The following table represents a reconciliation of our net cash used in operations from our net loss for the years ended December 31, 2023 and 2022: Year Ended December 31, Increase 2023 2022 (Decrease) Cash flows from operating activities: Net loss $ (105,924) $ (45,896) $ (60,028) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 26,532 28,666 $ (2,134) Amortization of deferred financing costs 1,543 1,543 $ — Accretion of below- and amortization of above-market lease liabilities and assets, net (70) (8) $ (62) Equity-based compensation 5,863 8,782 $ (2,919) Management fees paid/reinvested in common stock by the Advisor 485 5,013 $ (4,528) Common stock issued to directors in lieu of cash for board fees — 62 $ (62) Impairments of real estate investments 66,565 — $ 66,565 Changes in assets and liabilities: Straight-line rent receivable (1,635) (3,274) $ 1,639 Straight-line rent payable 109 110 $ (1) Prepaid expenses, other assets and deferred costs (1,516) 1,490 $ (3,006) Accounts payable, accrued expenses and other liabilities 871 3,935 $ (3,064) Deferred revenue (228) (909) $ 681 Net cash used in operating activities (7,405) (486) (6,919) The level of cash flows used in or provided by operating activities is affected by the volume of acquisition activity, the restricted cash we are required to maintain, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses.
Biggest changeCash Flows from Operating Activities The following table represents a reconciliation of our net cash used in operations from our net loss for the years ended December 31, 2024 and 2023: Year Ended December 31, Increase 2024 2023 (Decrease) Cash flows from operating activities: Net loss $ (140,591) $ (105,924) $ (34,667) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 18,408 26,532 $ (8,124) Amortization of deferred financing costs 1,182 1,543 $ (361) Accretion of below- and amortization of above-market lease liabilities and assets, net (476) (70) $ (406) Equity-based compensation 408 5,863 $ (5,455) Common stock issued to the Advisor in connection with Advisor related fees 1,610 485 $ 1,125 (Gain)/loss on dispositions of real estate 276 — $ 276 Impairments of real estate investments 112,541 66,565 $ 45,976 Changes in assets and liabilities: Straight-line rent receivable 869 (1,635) $ 2,504 Straight-line rent payable 109 109 $ — Prepaid expenses, other assets and deferred costs 238 (1,516) $ 1,754 Accounts payable, accrued expenses and other liabilities 2,369 871 $ 1,498 Deferred revenue (942) (228) $ (714) Net cash provided by (used in) operating activities (3,999) (7,405) 3,406 The level of cash flows used in or provided by operating activities is affected by the volume of acquisition activity, the restricted cash we are required to maintain, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses. 41 Table of Contents Cash Flows from Investing Activities The following table presents our net cash provided by (used in) investing activities for the years ended December 31, 2024 and 2023: Year Ended December 31, Increase 2024 2023 (Decrease) Cash flows from investing activities: Capital expenditures (1,291) (4,059) 2,768 Net proceeds from sale of real estate investments 61,148 4,130 57,018 Net cash provided by (used in) investing activities 59,857 71 59,786 Cash Flows from Financing Activities The following table presents our net cash (used in) provided by financing activities for the years ended December 31, 2024 and 2023: Year Ended December 31, Increase 2024 2023 (Decrease) Cash flows from financing activities: Proceeds from notes payable to related parties 725 — 725 Repayments of notes payable to related parties (725) — (725) Proceeds from mortgage note payable — — — Payment of mortgage note payable (49,500) — (49,500) Payments of financing costs — — — Proceeds from issuance of common stock to affiliates of the Advisor, net — — — Proceeds from issuance of common stock, net — — — Proceeds from Rights Offering, net (see Note 8) — 4,059 (4,059) Dividends paid on common stock — — — Redemption of fractional shares of common stock and restricted shares — (24) 24 Distributions to non-controlling interest holders — — — Common stock shares withheld upon vesting of restricted shares — (10) 10 Repurchases of common stock (231) — (231) Net cash provided by (used in) financing activities (49,731) 4,025 (53,756) Liquidity and Capital Resources Our principal demands for cash are to fund operating and administrative expenses, capital expenditures, tenant improvement and leasing commission costs related to our properties and our debt service obligations.
Moreover, 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.
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.
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 not being prudently 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.
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 evaluate probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. As of December 31, 2023 and 2022, we did not have any properties held for sale.
We evaluate probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. As of December 31, 2024 and 2023, we did not have any properties held for sale.
Further, such new leases are be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor. For the three year period ended December 31, 2023, we did not have any leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.
Further, such new leases are be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor. For the three year period ended December 31, 2024, we did not have any leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.
The pace of recovery in the New York City office market from the COVID-19 pandemic continues to be challenging as leasing and occupancy trends for the broader market have slowed, leading political, community and business leaders to propose repositioning plans for many New York City office assets that are experiencing high vacancy rates.
The pace of recovery in the New York City office market from the COVID-19 pandemic continues to be challenged as leasing and occupancy trends for the broader market have slowed, leading political, community, and business leaders to propose repositioning plans for many New York City office assets that are experiencing high vacancy rates.
In fiscal years ended December 31, 2023, 2022 and 2021, respectively, this assessment has included consideration of the impacts of the COVID-19 pandemic on our tenant’s ability to pay rents in accordance with their contracts. Partial reserves, or the ability to assume partial recovery are no longer permitted.
In fiscal years ended December 31, 2024, 2023 and 2022, respectively, this assessment has included consideration of the impacts of the COVID-19 pandemic on our tenant’s ability to pay rents in accordance with their contracts. Partial reserves, or the ability to assume partial recovery are no longer permitted.
Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances. The amount we invest in capital expenditures during the full year 2024, including amounts we expect to fund under new or replacement leases, will likely be similar to the amount invested in 2023.
Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances. The amount we expect to invest in capital expenditures during the full year 2025, including amounts we expect to fund under new or replacement leases, will likely be similar to the amount invested in 2024.
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 December 31, 2023.
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 December 31, 2024.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis should be read in conjunction with our 2023 Financial Statements. The following information contains forward-looking statements, which are subject to risks and uncertainties.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis should be read in conjunction with our 2024 Financial Statements. The following information contains forward-looking statements, which are subject to risks and uncertainties.
Recently Issued Accounting Pronouncements See Note 2 — Summary of Significant Accounting Policies — “ Recently Issued Accounting Pronouncements” to our 2023 Financial Statements for a discussion of recently issued accounting pronouncements. Results of Operations Below is a discussion of our results of operations for the years ended December 31, 2023 and 2022.
Recently Issued Accounting Pronouncements See Note 2 — Summary of Significant Accounting Policies — “ Recently Issued Accounting Pronouncements” to our 2024 Financial Statements for a discussion of recently issued accounting pronouncements. Results of Operations Below is a discussion of our results of operations for the years ended December 31, 2024 and 2023.
However, our 8713 Fifth Avenue property has not generated excess cash after debt service and as of December 31, 2023 there is no related cash maintained in a segregated and restricted cash account for that property.
However, our 8713 Fifth Avenue property has not generated excess cash after debt service and as of December 31, 2024 there is no related cash maintained in a segregated and restricted cash account for that property.
We funded our capital expenditures during the year ended December 31, 2023 with (i) cash on hand, which included proceeds from previous financings, (ii) cash retained from the Advisor either from (a) reinvesting its base management fees in shares of our Class A common stock or (b) electing to receive shares of our Class A common stock in lieu cash for its base management fee.
We funded our capital expenditures during the year ended December 31, 2024 with (i) cash on hand, which included proceeds from previous financings, and (ii) cash retained from the Advisor either from (a) reinvesting its base management fees in shares of our Class A common stock or (b) electing to receive shares of our Class A common stock in lieu cash for its base management fee.
Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods. Derivative Instruments We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings.
Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods. 37 Table of Contents Derivative Instruments We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings.
We also consider information obtained about each property as a result of our pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis.
We also consider information obtained about each property as a result of our pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed. 35 Table of Contents Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis.
We cannot guarantee that we will be able to pay dividends on a regular basis on our common stock or any other class or series of stock we may issue in the future. Our Board previously suspended and then reinstituted dividends. As of December 31, 2023, our dividend remains suspended.
We cannot guarantee that we will be able to pay dividends on a regular basis on our common stock or any other class or series of stock we may issue in the future. Our Board previously suspended and then reinstituted dividends. As of December 31, 2024, our dividend program remains suspended.
Impairment of Long-Lived Assets We periodically assesses whether there are any indicators that the value of a property may be impaired or that the carrying value may not be recoverable.
Impairment of Long-Lived Assets We periodically assess whether there are any indicators that the value of a property may be impaired or that the carrying value may not be recoverable.
Thus, we were not be 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 year ended December 31, 2023.
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 year ended December 31, 2024.
To help mitigate the adverse impact of inflation, approximately 84% of our leases with our tenants contain rent escalation provisions which the cash rent that is due over time by an average cumulative increase of 2.2% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures.
To help mitigate the adverse impact of inflation, approximately 82% of our leases with our tenants contain rent escalation provisions which the cash rent that is due 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.
No properties were presented as discontinued operations during the years ended December 31, 2023, 2022 or 2021, respectively.
No properties were presented as discontinued operations during the years ended December 31, 2024, 2023 or 2022, respectively.
Comparison of Year Ended December 31, 2023 to 2022 As of December 31, 2023, we owned seven properties, all of which were acquired prior to January 1, 2023. Our results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily reflect changes due to leasing activity and occupancy.
Comparison of Year Ended December 31, 2024 to 2023 As of December 31, 2024, we owned six properties, all of which were acquired prior to January 1, 2024. Our results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily reflect changes due to leasing activity and occupancy.
There were no acquisitions during the years ended December 31, 2023, 2022 or 2021, respectively. 36 Table of Contents For acquired properties with leases classified as operating leases, we allocate the purchase price of acquired properties to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values.
There were no acquisitions during the years ended December 31, 2024, 2023 or 2022, respectively. For acquired properties with leases classified as operating leases, we allocate the purchase price of acquired properties to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values.
As of December 31, 2023, approximately 84%, based on straight-line rent, are fixed-rate and 16% do not contain any escalation provisions. In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation.
As of December 31, 2024, approximately 82%, based on straight-line rent, are fixed-rate and 18% do not contain any escalation provisions. In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation.
Inflation 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 December 31, 2023, the increase to the twelve-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.4%.
Inflation 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 December 31, 2024, the increase to the twelve-month CPI for all items, as published by the Bureau of Labor Statistics, was 2.9% .
Capital Expenditures For the years ended December 31, 2023 and 2022 we funded an aggregate of $4.1 million and $5.6 million, respectively, of capital expenditures primarily related to tenant improvements at certain of our properties. We may invest in additional capital expenditures to further enhance the value of our properties.
Capital Expenditures For the years ended December 31, 2024 and 2023 we funded an aggregate of $1.3 million and $4.1 million, respectively, of capital expenditures primarily related to tenant improvements at certain of our properties. We may invest in additional capital expenditures to further enhance the value of our properties.
Acquisitions and Dispositions We had no acquisitions during the year ended December 31, 2023. We disposed of our Hit Factory property during the year ended December 31, 2023 for a contract sales price $4.5 million, and we determined the property was impaired by $0.5 million during the year ended December 31, 2023.
We disposed of our Hit Factory property during the year ended December 31, 2023 for a contract sales price $4.5 million, and we determined the property was impaired by $0.5 million during the year ended December 31, 2023.
As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates and critical accounting policies include: Revenue Recognition Our revenue from tenants, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease.
These significant accounting estimates and critical accounting policies include: Revenue Recognition Our revenue from tenants, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease.
Also, as of December 31, 2023, we still had $2.5 million 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.
Also, as of December 31, 2024, we still had $1.6 million 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 principal amount of the loan was $99.0 million as of December 31, 2023. 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.
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.
During the year ended December 31, 2023 and 2022, our weighted-average outstanding debt balance was $399.5 million and $400.4 million, respectively, with a weighted-average effective interest rate of 4.35% in each period.
During the year ended December 31, 2024 and 2023, our weighted-average outstanding debt balance was $350.0 million and $399.5 million, respectively, with a weighted-average effective interest rate of 4.43% in each period.
These assessments have a direct impact on earnings because recording an impairment loss results in an immediate negative adjustment to net earnings. We recorded impairment charges on two properties for $66.6 million during the year ended December 31, 2023 and we recorded impairment charges on one property for $1.5 million in the year ended December 31, 2021.
These assessments have a direct impact on earnings because recording an impairment loss results in an immediate negative adjustment to net earnings. We recorded impairment charges on two properties for $112.5 million and $66.6 million during the years ended December 31, 2024 and 2023, respectively.
For additional information on these and other subsequent activities, please see Note 14 — Subsequent Events to our consolidated financial statements in this Annual report on Form 10-K.
For additional information on these and other subsequent activities, please see Note 10 — Related Party Transactions and Arrangements to our consolidated financial statements in this Annual report on Form 10-K.
As the costs of general goods and services continue to rise, we may be adversely impacted by increases in general and administrative costs due to overall inflation. See “Risk Factors—Risks Related to Investments in Real Estate—Inflation may have an adverse effect on our investments and results of operations.” Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As the costs of general goods and services continue to rise, we may be adversely impacted by increases in general and administrative costs due to overall inflation. See “Item 1A. Risk Factors—Risks Related to Investments in Real Estate—Inflation may have an adverse effect on our investments and results of operations.”
Net Loss Attributable to Common Stockholders Net loss attributable to common stockholders was $105.9 million for the year ended December 31, 2023, as compared to $45.9 million for the year ended December 31, 2022.
Net Loss Attributable to Common Stockholders Net loss attributable to common stockholders was $140.6 million for the year ended December 31, 2024, as compared to $105.9 million for the year ended December 31, 2023.
As of December 31, 2023, these leases had a weighted-average remaining lease term of 6.5 years.
As of December 31, 2024, these leases had a weighted-average remaining lease term of 6.3 years.
Beginning in the third and fourth quarters of 2020, the operating results at 1140 Avenue of the Americas, 9 Times Square, 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard Garage and 8713 Fifth Avenue properties were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages, where operating cash flow from the property after debt service was held in restricted cash as additional collateral for the loan, for those properties to be triggered.
Beginning in the third and fourth quarters of 2020, the operating results at some of our properties, including our 1140 Avenue of the Americas, 400 E. 6th Street 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.
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, cash equivalents and restricted cash) of $10.0 million, which totaled $12.8 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, cash equivalents and restricted cash) of $10.0 million, which totaled $18.9 million as of December 31, 2024. 42 Table of Contents We had restricted cash of $9.2 million as of December 31, 2024 as compared to $7.5 million as of December 31, 2023, respectively.
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 being converted into 0.125 shares of common stock, with no fractional shares being issued (the “Reverse Stock Split”). Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries.
Properties.” 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 being converted into 0.125 shares of common stock, with no fractional shares being issued (the “Reverse Stock Split”).
On July 1, 2022, we announced that we suspended our policy regarding dividends paid on our Class A common stock, beginning with the dividend that would have been payable for the quarter ended June 30, 2022 (see full discussion in Liquidity and Capital Resources section above).
On July 1, 2022, we announced that we suspended our policy regarding dividends paid on our Class A common stock, beginning with the dividend that would have been payable for the quarter ended June 30, 2022 (see full discussion in Liquidity and Capital Resources section above). 48 Table of Contents We have not paid dividends to stockholders since those that were declared and paid through the six months ended June 30, 2022.
We recorded the impairment charges on this property because we determined that the carrying value exceeded the sales price of the asset, less the costs to sell the property. In addition, we recorded an impairment charge of $66.1 million during the year ended December 31, 2023 for our 1140 Avenues of the Americas property.
We recorded the impairment charges on this property because we determined that the carrying value exceeded the sales price of the asset, less the costs to sell the property. In addition, we recorded an impairment charge of $25.8 million during the year ended December 31, 2024 for our 400 E. 67th Street property.
The principal amount for the loan was $10.0 million as of December 31, 2022. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period.
The principal amount for the loan was $10.0 million as of December 31, 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.
For the year ended December 31, 2023 , our cash flows used in operations were $7.4 million. 52 Table of Contents Previous election as a REIT We elected to be taxed as a REIT, effective commencing with our taxable year ended December 31, 2014 through our taxable year ended December 31, 2022, as a result of the Board authorized revocation of our REIT election which became effective as of January 1, 2023.
Previous election as a REIT We elected to be taxed as a REIT, effective commencing with our taxable year ended December 31, 2014 through our taxable year ended December 31, 2022, as a result of the Board authorized revocation of our REIT election which became effective as of January 1, 2023.
Assumed mortgage premiums or discounts, if applicable, are amortized as a reduction or increase to interest expense over the remaining term of the respective mortgages. 38 Table of Contents Above and Below-Market Lease Amortization Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases.
Above and Below-Market Lease Amortization Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases.
Ongoing Impacts Since the COVID-19 Pandemic on the New York City Real Estate Market Occupancy and Unreimbursed Expenses 34 Table of Contents New York City, where all of our properties are located, was among the hardest hit locations in the country and fully reopened from relevant restrictions and lockdowns on March 7, 2022.
Management Update on the Continuing Adverse Economic Impacts Since the COVID-19 Pandemic New York City, where all of our properties are located, was among the hardest hit locations in the country and fully reopened from relevant restrictions and lockdowns on March 7, 2022.
As of December 31, 2023, our 1140 Avenue of the Americas and 8713 Fifth Avenue mortgages, aggregating $109.0 million in principal amounts, remained in cash trap events, as described in detail further below in the Liquidity and Capital Resources section and Item 1A. Risk Factors in this Annual Report on Form 10-K for the year ended December 31, 2023.
As of December 31, 2024, our 1140 Avenue of the Americas, 400 E. 67th Street/200 Riverside Boulevard, and 8713 Fifth Avenue mortgages, aggregating $159.0 million in principal amounts, remained in cash trap events, as described in detail further below in the Liquidity and Capital Resources section and “Item 1A. Risk Factors” in this Annual Report on Form 10-K.
Please see the “Results of Operations” section located on page 37 under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of our results of operations for the year ended December 31, 2022 and year-to-date comparisons between 2022 and 2021. 39 Table of Contents Leasing Activity and Occupancy As of December 31, 2023 and 2022, our overall portfolio occupancy was 86.7% and 82.7%, respectively.
Please see the “Results of Operations” section located on page 34 under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of our results of operations for the year ended December 31, 2023, and year-to-date comparisons between 2023 and 2022.
Segregated Cash Accounts - Loan Covenant Breaches The negative impacts of the COVID-19 pandemic has 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.
Segregated Cash Accounts - Loan Covenant Breaches 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.
As of December 31, 2023, we are operating under two cash traps (1140 Avenue of the Americas and 8713 Fifth Avenue), which together, represent 22.8% of the rentable square feet in our portfolio as of December 31 , 2023.
As of December 31, 2024, 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 December 31 , 2024.
Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. Please see “Forward-Looking Statements” and “Item 1A.
Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. Please see “Forward-Looking Statements” and “Item 1A. Risk Factors” elsewhere in this Annual Report on Form 10-K for a description of these risks and uncertainties.
When we determine that an impairment exists, we recognize an impairment loss in the consolidated statement of operations and comprehensive loss to the extent that the carrying value exceeds the estimated fair value of a property or asset group to be held for sale or use.
If an impairment exists, due to the inability to recover the carrying value of a property, we would recognize an impairment loss in the consolidated statement of operations and comprehensive (loss) to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used.
Depreciation and Amortization Depreciation and amortization expense decreased $2.2 million to $26.5 million for the year ended December 31, 2023, compared to $28.7 million for the year ended December 31, 2022.
Depreciation and Amortization Depreciation and amortization expense decreased $8.1 million to $18.4 million for the year ended December 31, 2024, compared to $26.5 million for the year ended December 31, 2023.
Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed. 37 Table of Contents Lessee Accounting For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.
Lessee Accounting For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.
Our 1140 Avenue of the Americas property is encumbered by a non-recourse, secured mortgage note with a principal balance of $99.0 million, which matures in July 2026.
In addition, we recorded an impairment charge of $66.1 million during the year ended December 31, 2023 for our 1140 Avenues of the Americas property. Our 1140 Avenue of the Americas property is encumbered by a non-recourse, secured mortgage note with a principal balance of $99.0 million, which matures in July 2026.
Other sources of capital to further augment our liquidity during the year ended December 31, 2023 included net proceeds of approximately $4.1 million from our non-transferable rights offering in February of 2023, which entitled holders of rights to purchase 0.20130805 of a share of our Class A common stock for every right held at a subscription price of $12.95 per whole shar e.
Rights Offering In February 2023, we raised gross proceeds of $5.0 million ($4.1 million of net proceeds) from our non-transferrable rights offering (the “Rights Offering”), which entitled holders of rights to purchase 0.20130805 of a share of our Class A common stock for every right held at a subscription price of $12.95 per whole share.
We are the lessee under a land leases which was previously classified as an operating lease prior to adoption of lease accounting and will continue to be classified as an operating lease under transition elections unless subsequently modified.
For additional information and disclosures related to the Company’s operating leases, see Note 9 - Commitments and Contingencies t o our 2024 Financial Statements. 36 Table of Contents We are the lessee under a land leases which was previously classified as an operating lease prior to adoption of lease accounting and will continue to be classified as an operating lease under transition elections unless subsequently modified.
We had restricted cash of $7.5 million as of December 31, 2023 as compared to $6.9 million as of December 31, 2022, respectively. We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures.
We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures.
Critical Accounting Estimates Set forth below is a summary of the critical accounting policies that management believes is important to the preparation of our consolidated financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management.
Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty.
The decrease was the result of a lower depreciable/amortizable asset base during the year ended December 31, 2023 due to impairments, write-offs of lease intangibles and write off of tenant improvements recorded in prior periods as well as accelerated depreciation/amortization in the prior year. See Note 3 — Real Estate Investments to our 2023 Financial Statements for further details..
The decrease was the result of a lower depreciable/amortizable asset base during the year ended December 31, 2024 due to 1140 Avenue of Americas being impaired in the prior year, 9 Times Square being classified as an Asset Held for Sale during September 2024, impairments, write-offs of lease intangibles and write off of tenant improvements recorded between periods as well as accelerated depreciation/amortization in the prior year.
The decrease can be primarily attributable to lower repairs and maintenance costs, as well as lower custodial fees. Impairments of Real Estate Investments During the year ended December 31, 2023, we recorded total impairment charges of $66.6 million as compared to no impairment charges recorded during the year ended December 31, 2022.
Impairments of Real Estate Investments During the year ended December 31, 2024, we recorded total impairment charges of $112.5 million as compared to $66.6 million impairment charges recorded during the year ended December 31, 2023.
We expect to fund these cash demands through a combination of current cash on hand, net cash provided by our property operations and net cash provided by potential property dispositions. Cash, Cash Equivalents and Restricted Cash As of December 31, 2023, we had cash and cash equivalents of $5.3 million as compared to $9.2 million as of December 31, 2022.
We expect to fund these cash demands in the short term through a combination of current cash on hand, net cash provided by our property operations and net cash provided by potential property dispositions.
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. 44 Table of Contents We previously satisfied the required debt service coverage for 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard Garage with the quarter ended March 31, 2022.
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 December 31, 2024, we are operating under one cash sweep at our 400 E. 67th Street/200 Riverside Blvd. properties.
The following table is a summary of our quarterly leasing activity for the year ended December 31, 2023: Q1 2023 Q2 2023 Q3 2023 Q4 2023 Leasing activity: New Leases: New leases commenced 5 4 1 5 Total square feet leased 19,812 26,778 12,658 47,957 Annualized straight-line rent per square foot (1) $ 54.18 $ 55.14 $ 35.00 $ 33.96 Weighted-average lease term (years) (2) 12.7 5.4 1.3 6.0 Terminated or Expired Leases: Number of leases terminated or expired 1 3 1 2 Square feet 4,548 17,908 12,658 37,170 Annualized straight-line rent per square foot $ 44.93 $ 95.56 $ 50.79 $ 64.55 __________ (1) Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, includes free rent, periodic rent increases, and excludes recoveries.
The following table is a summary of our quarterly leasing activity for the year ended December 31, 2024: Q1 2024 Q2 2024 Q3 2024 Q4 2024 Leasing activity: New Leases: New leases commenced 1 1 3 1 Total square feet leased 8,122 5,284 24,081 12,750 Annualized straight-line rent per square foot (1) $ 22.16 $ 70.30 $ 59.28 $ 59.59 Weighted-average lease term (years) (2) 1.2 3.2 5.3 5.6 Terminated or Expired Leases: Number of leases terminated or expired — 1 2 5 Square feet — 12,183 21,438 92,801 Annualized straight-line rent per square foot $ — $ 5.96 $ 61.31 $ 72.39 __________ (1) Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, includes free rent, periodic rent increases, and excludes recoveries.
The following table shows our results of operations for the years ended December 31, 2023 and December 31, 2022 and the year to year change by line item of the consolidated statements of operations: 40 Table of Contents Year Ended December 31, Increase (Decrease) (in thousands) 2023 2022 $ Revenue from tenants $ 62,710 $ 64,005 $ (1,295) Operating expenses: Asset and property management fees to related parties 7,680 7,082 598 Property operating 33,797 33,927 (130) Impairment of real estate investments 66,565 — 66,565 Equity-based compensation 5,863 8,782 (2,919) General and administrative 9,375 12,493 (3,118) Depreciation and amortization 26,532 28,666 (2,134) Total operating expenses 149,812 90,950 58,862 Operating loss (87,102) (26,945) (60,157) Other income (expenses): Interest expense (18,858) (18,924) 66 Other (expenses) income 36 (27) 63 Total other expenses (18,822) (18,951) 129 Net loss before income taxes (105,924) (45,896) (60,028) Income tax expense — — — Net loss and Net loss attributable to common shareholders $ (105,924) $ (45,896) $ (60,028) Revenue from Tenants Revenue from tenants decreased $1.3 million to $62.7 million for the year ended December 31, 2023, compared to $64.0 million for the year ended December 31, 2022.
The following table shows our results of operations for the years ended December 31, 2024 and December 31, 2023 and the year to year change by line item of the consolidated statements of operations: Year Ended December 31, Increase (Decrease) (in thousands) 2024 2023 $ Revenue from tenants $ 61,570 $ 62,710 $ (1,140) Operating expenses: Asset and property management fees to related parties 7,751 7,680 71 Property operating expenses 34,185 33,797 388 Impairment of real estate investments 112,541 66,565 45,976 Equity-based compensation 408 5,863 (5,455) General and administrative 9,216 9,375 (159) Depreciation and amortization 18,408 26,532 (8,124) Total operating expenses 182,509 149,812 32,697 Operating loss before gain (loss) on sale of real estate investments (120,939) (87,102) (33,837) Gain (loss) on sale of real estate investments (276) — (276) Operating loss (121,215) (87,102) (34,113) Other income (expenses): Interest expense (19,488) (18,858) (630) Other income 112 36 76 Total other expenses (19,376) (18,822) (554) Net loss before income taxes (140,591) (105,924) (34,667) Income tax expense — — — Net loss and Net loss attributable to common shareholders $ (140,591) $ (105,924) $ (34,667) Revenue from Tenants Revenue from tenants decreased $1.1 million to $61.6 million for the year ended December 31, 2024, compared to $62.7 million for the year ended December 31, 2023.
We continually review receivables related to rent and unbilled rents receivable and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.
For the years ended December 31, 2024, 2023 and 2022, approximately $0.1 million, $0.1 million and $0.5 million, respectively, in contingent rental income is included in revenue from tenants in the consolidated statements of operations and comprehensive loss. 34 Table of Contents We continually review receivables related to rent and unbilled rents receivable and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.
If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.
If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense. Assumed mortgage premiums or discounts, if applicable, are amortized as a reduction or increase to interest expense over the remaining term of the respective mortgages.
Year Ended December 31, (In thousands) 2023 2022 Net loss attributable to common stockholders (in accordance with GAAP) $ (105,924) $ (45,896) Depreciation and amortization 26,532 28,666 Interest Expense 18,858 18,924 Impairment of real estate investments 66,565 — Equity-based compensation 5,863 8,782 Other expense (income) (36) 27 Asset and property management fees to related parties 7,680 7,082 General and administrative 9,375 12,493 Accretion of below- and amortization of above-market lease liabilities and assets, net (70) (8) Straight-line rent (revenues as lessor) (1,635) (3,274) Straight-line ground rent (expenses as lessee) 109 110 Cash NOI $ 27,317 $ 26,906 Dividends For the taxable years we elected to be taxed as a REIT (commencing with our taxable year ended December 31, 2014 through our taxable year ended December 31, 2022) we were required to distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains.
The below table presents a reconciliation of our EBITDA and our adjusted EBITDA from net loss for the years ended December 31, 2024 and 2023: Years Ended (in thousands) December 31, 2024 December 31, 2023 Net loss and net loss attributable to common stockholders (in accordance with GAAP) $ (140,591) $ (105,924) Interest expense 19,488 18,858 Tax expense (benefit) — — Depreciation and amortization 18,408 26,532 EBITDA (102,695) (60,534) Impairment of real estate investments 112,541 66,565 Equity-based compensation 408 5,863 Other income (112) (36) Management fees paid in common stock to the Advisor in lieu of cash 1,610 485 Adjusted EBITDA $ 11,752 $ 12,343 Dividends For the taxable years we elected to be taxed as a REIT (commencing with our taxable year ended December 31, 2014 through our taxable year ended December 31, 2022) we were required to distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains.
See Note 11 — Equity-Based Compensation to our 2023 Financial Statements for further details on the 2020 OPP and restricted shares of common stock.
The year ended December 31, 2023 contained $5.3 million of equity-based compensation expenses related to the 2020 OPP, whereas the year ended December 31, 2024 did not contain any amortization related to the 2020 OPP. See Note 12 — Equity-Based Compensation to our 2024 Financial Statements for further details on the 2020 OPP and restricted shares of common stock.
Under ASC 842, we have elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under both ASC 842 and 840, we have reflected them on a net basis. 35 Table of Contents We own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets.
We own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets.
There were no acquisitions or dispositions of properties subsequent to December 31, 2023 prior to filing of this Form 10-K. Non-GAAP Financial Measures This section discusses the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”) and Cash Net Operating Income (“Cash NOI”).
There were no acquisitions or dispositions of properties subsequent to December 31, 2024 and prior to filing of this Annual Report on Form 10-K. Non-GAAP Financial Measures This section discusses the non-GAAP financial measures we use to evaluate our performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) as well as adjusted EBITDA.
For additional information, please see Note 3 — Real Estate Investments and Note 5 — Fair Value of Financial Instruments.
For additional information, please see Note 3 — Real Estate Investments to our 2024 Financial Statements .
Total reimbursement expenses for administrative and personnel services provided by the Advisor during the year ended December 31, 2023 were $4.4 million, of which $1.8 million related to administrative and overhead expenses and $2.6 million for salaries, wages, and benefits.
General and Administrative Expenses General and administrative expenses remained flat at $9.2 million for both the years ended December 31, 2024 and 2023. Total reimbursement expenses for administrative and personnel services provided by the Advisor during the years ended December 31, 2024 and 2023 were $4.4 million.
This is compared to $4.4 million, of which $1.8 million related to administrative and overhead expenses and $2.6 million related to salaries, wages, and benefits for the year ended December 31, 2022. Pursuant to the Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to an annual limit.
Pursuant to the Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to an annual limit. During the years ended December 31, 2024 and 2023 the annual limits on reimbursement for administrative and overhead expenses on and for salaries, wages, and benefit were reached.
For additional details, please see Note 14 — Subsequent Events to our Annual Report on Form 10-K. 1140 Avenue of the Americas We breached both a debt service coverage provision and a reserve fund provision under its non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 14 quarters ended December 31, 2023.
Debt Covenant Non-Compliance 1140 Avenue of the Americas 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 18 quarters ended December 31, 2024. The principal amount of the loan was $99.0 million as of December 31, 2024.
Subsequent to December 31, 2023, we issued shares of our common stock to the Advisor in lieu of cash for the February 2024 general and administrative reimbursement expenses. For additional information on these and other subsequent activities, please see Note 14 — Subsequent Events to our consolidated financial statements in this Annual report on Form 10-K.
See Note 10 — Related Party Transactions and Arrangements to our 2024 Financial Statements for further details. 40 Table of Contents During the year ended December 31, 2024, we issued shares of our common stock to the Advisor in lieu of cash for the February 2024 general and administrative reimbursement expenses.
Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance.
Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.
Our total portfolio occupancy improved during the year ended December 31, 2023 to 86.7% from a total portfolio occupancy of 82.7% as of December 31, 2022 from the following: • Occupancy at 9 Times Square increased to 71.2% as of December 31, 2023, compared to 61.9% as of December 31, 2022, due to new leases signed during the year ended December 31, 2023. • Occupancy at 1140 Avenues of the Americas increased to 77.1% as of December 31, 2023, compared to 70.9% as of December 31, 2022. • Occupancy at our properties located at 196 Orchard Street, 400 E. 67th Street/200 Riverside Blvd. is at 100% for the year ended December 31, 2023.
(2) The weighted-average remaining lease term (years) is based on annualized straight-line rent. 38 Table of Contents Our total portfolio occupancy decreased during the year ended December 31, 2024 to 80.8% from a total portfolio occupancy of 86.7% as of December 31, 2023 from the following: • Occupancy at 1140 Avenues of the Americas decreased to 74.1% as of December 31, 2024, compared to 77.1% as of December 31, 2023. • Occupancy at 400 E. 67th Street decreased to 44.3% as of the year ended December 31, 2024 compared to 100% as of December 31, 2023. • Occupancy at our properties located at 196 Orchard Street, 200 Riverside Blvd. and 8713 Fifth Avenue remained the same at 100.0% as of December 31, 2024 and December 31, 2023.
On December 30, 2022, we announced that we were changing our business strategy by expanding the scope of the assets and businesses we may own and operate. By investing in other asset types, we may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a REIT.
By investing in other asset types, we may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a REIT. As a result, on January 9, 2023, our Board authorized termination of our REIT election which became effective as of January 1, 2023.
We recorded $0.5 million of impairment charges related to our 421 W. 54th Street - Hit Factory property, which was sold in October 2023 for a contract sales price of $4.5 million.
This property was sold in October 2023 for a contract sales price of $4.5 million. We recorded the impairment charges on this property because we determined that the carrying value exceeded the sales price of the asset, less the costs to sell the property.
Mortgage Loans We have six mortgage loans secured by all of our seven properties with an aggregate balance of $399.5 million as of December 31, 2023 with a weighted-average effective interest rate of 4.35%.
Mortgage Notes Payable We had five mortgage loans secured by our six properties with an aggregate balance of $350.0 million as of December 31, 2024 with a weighted-average effective interest rate of 4.43%. All our mortgage loans bear interest at a fixed rate. There are no future scheduled principal payments on our mortgage notes payable for the remainder of 2025.
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 caused cash trap events under their non-recourse mortgages.
With the exception of one minor lease deferral during the third quarter of 2022, rent collections from our tenants have generally been timely in the years ended December 31, 2024 and 2023 and no other deferral or abatement agreements were entered into. 33 Table of Contents Beginning in the third and fourth quarters of 2020, the operating results at (i) 1140 Avenue of the Americas, (ii) 9 Times Square (which we sold in December 2024), (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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe will not enter into interest rate swaps or caps, or similar hedging transactions or derivative arrangements for speculative purposes, but we have entered into and expect to continue to enter into these types of transactions in order to manage or mitigate our interest rate risk on variable rate debt.
Biggest changeFrom time to time, we may enter into interest rate hedge contracts such as swaps, caps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We will not hold or issue these derivative contracts for trading or speculative purposes.
Removed
Item 7A.Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources for additional information. Our business is generally not seasonal.
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates.
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Financing Strategies and Policies In the year ended December 31, 2023 and other recent years, our primary source of capital has been cash on hand, which includes excess proceeds from property-level financings secured by certain of our properties.
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Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs.
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The net cash provided by our operations has not been sufficient to fund operating expenses and other capital requirements during the years ended December 31, 2023, 2022 and 2021.
Added
We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations. 49 Table of Contents As of December 31, 2024, our debt consisted of fixed-rate or swapped to fixed-rate secured mortgage notes payable with an aggregate carrying value of $350.0 million and a fair value of $287.5 million.
Removed
During the year ended December 31, 2023 other sources of capital included (i) net proceeds of approximately $4.1 million from our non-transferable rights offering (the “Rights Offering ” ) in February of 2023, which entitled holders of rights to purchase 0.20130805 of a share of our Class A common stock for every right held at a subscription price of $12.95 per whole shar e, (ii) the sale of our property at 421 W. 54th street (the “Hit Factory”) for a contract sales price of $4.5 million, which had been vacant since the year ended December 31, 2018, and (iii) the issuance of shares of our Class A common stock in lieu of cash for our asset management fee, which is payable to our Advisor on a monthly basis.
Added
As of December 31, 2023, our debt consisted of fixed-rate or swapped to fixed-rate secured mortgage notes payable with an aggregate carrying value of $399.5 million and a fair value of $348.8 million. Changes in market interest rates have no impact on interest expense incurred on the notes net of related swap payments or receipts.
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For more detailed information on these transactions, please see Note 2 — Summary of Significant Accounting Policies , Note 7 — Stockholders’ Equity and No te 9 — Related Party Transactions to our 2023 Financial Statements.
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However, changes in market interest rates would have an impact on the fair value of our related mortgage notes net of the impact on the related interest rate swap.
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Subject to availability, we may also seek to generate capital from a variety of sources, including equity offerings of common and preferred stock and borrowings under a corporate-level credit facility. The form of our indebtedness will vary and could be long-term or short-term, secured or unsecured or fixed-rate or floating rate.
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For instance, if interest rates rise 100 basis points and our net fixed rate debt balance remains constant, we expect the fair value of our net obligation to decrease, the same way the price of a bond declines as interest rates rise.
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We may reevaluate and change our investing or financing policies at our Board’s sole discretion. Please also see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” and “ Item 1A. Risk Factors .
Added
The sensitivity analysis related to our net fixed–rate debt assumes an immediate 100 basis point move in interest rates from their December 31, 2024 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our net fixed-rate debt by $4.7 million.
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Our ability to fund our capital requirements will depend on, among other things, the amount of cash we are able to generate from our operations and outside sources, which may not be available on acceptable or favorable terms, or at all” herein for a discussion of how we have funded our capital requirements and some related risks. 2 Ongoing Impact of COVID-19 on the New York City Real Estate Market New York City, where all of our properties are located, was among the hardest hit locations in the country by the COVID-19 pandemic and fully reopened on March 7, 2022.
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A 100 basis point decrease in market interest rates would result in an increase in the fair value of our net fixed-rate debt by $4.8 million. These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs, and assuming no other changes in our capital structure.
Removed
Our properties remain accessible to all tenants. However, even as the COVID-19 pandemic has subsided and operating restrictions have now expired, not all tenants have fully resumed operations. Our portfolio is primarily comprised of office and retail tenants.
Added
As the information presented above includes only those exposures that existed as of December 31, 2024 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value.
Removed
We have collected 100% of cash rent due across our entire portfolio for the three months December 31, 2023 (based on annualized straight-line rent as of December 31, 2023). 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.
Added
Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.
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For additional information on the past and ongoing impacts of COVID-19 on our business as well as managements actions, see “Ongoing Impact of COVID-19 on the New York Real Estate Market” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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Organizational Structure Substantially all of our business is conducted through New York City Operating Partnership, L.P. (the “OP”), a Delaware limited partnership, and its wholly-owned subsidiaries. Our Advisor manages our day-to-day business with the assistance of our property manager, New York City Properties, LLC (the “Property Manager”).
Removed
Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.
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In an effort to preserve our operating cash, we have issued shares of our Class A common stock in lieu of cash to our Advisor and Property Manager as payment for providing services to us. For additional information, please see Note 9 — Related Party Transactions to our 2023 Financial Statements.
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Tax Status We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), effective for the period commencing with our taxable year ended December 31, 2014 through our taxable year ended December 31, 2022. As discussed above, we revoked that election effective as of January 1, 2023.
Removed
Accordingly, we are now a corporation primarily subject to taxation under the provisions of subchapter C of the Code, a “taxable C corporation,” beginning with the taxable year ending December 31, 2023.
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We believe that, during the period commencing with our taxable year ended December 31, 2014 through December 31, 2022, we were organized and operated in a manner so that we qualified as a REIT.
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To qualify as a REIT during that period, we were required, among other things, distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with generally accepted accounting principles (“GAAP”)) determined without regard for the deduction for dividends paid and excluding net capital gains, and we were required to comply with a number of other organizational and operational requirements.
Removed
As long as we qualified as a REIT, we generally were not subject to federal corporate income tax on the portion of our REIT taxable income that we distributed to our stockholders.
Removed
As a taxable C corporation, we will not be allowed a deduction for dividends paid to our stockholders in computing our taxable income and will be subject to U.S. federal and state income tax on our taxable income at corporate tax rates.
Removed
In addition, we generally will be disqualified from treatment as a REIT for the four taxable years following the year in which we revoked our REIT election. This action may reduce our net earnings available for investment or distribution to stockholders because of an additional income tax liability.
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Further, any cash distributions we pay to our stockholders will be taxed as dividend income under U.S. federal income tax law, to the extent attributable to our current accumulated earnings and profits, and not at rates applicable to dividends paid by REITs.
Removed
To the extent we generate taxable income going forward, we may be able to limit the tax on our income through the use of net operating loss carryforwards or “NOLs”.
Removed
However, b ecause of our recent operating history of taxable losses from our results of operations, we are not able to conclude that it is more likely than not we will realize the future benefit of our NOLs; thus we have provided a 100% valuation allowance as of December 31, 2023 .
Removed
Competition The New York City real estate market, where our properties are currently located, is highly competitive. We compete for tenants in this market based on various factors that include location, rental rates, security, suitability of the property’s design for a tenant’s needs and the manner in which the property is operated and marketed.
Removed
The number of competing properties in the New York City area could have a material effect on our occupancy levels for our New York City properties, rental rates and on the operating expenses of certain of our properties. 3 In addition, we compete for acquisitions with REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, sovereign wealth funds, mutual funds and other entities.
Removed
Some of these competitors, including larger REITs, have substantially greater financial resources than us, and generally may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of tenants.
Removed
There is also competition with others for assets outside of real estate, which we will face as we expand the scope of the assets and businesses we may acquire. However, there are no other specific competition-related factors known to us at this time.
Removed
Competition from these and other third-party real estate investors may limit the number of suitable investment opportunities available to us and increase prices, which will lower yields, making it more difficult for us to acquire new investments on attractive terms.
Removed
Regulations - General Our investments are subject to various federal, state and local laws, ordinances and regulations, including, among other things, the Americans with Disabilities Act of 1990, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity.
Removed
We believe that we have all permits and approvals necessary under current law to operate our investments. These regulations have not and are not expected to have a material impact on our capital expenditures, competitive position, and financial condition or results of operations during the next twelve months.
Removed
Regulations - Environmental As an owner of real estate, we are subject to various environmental laws of federal, state and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition or results of operations, and management does not believe it will have such an impact in the future.
Removed
However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which we hold an interest, or on properties that may be acquired directly or indirectly in the future. We hire third parties to conduct Phase I environmental reviews of the real property that we intend to purchase.
Removed
We did not make any material capital expenditures in connection with environmental, health and safety laws, ordinances and regulations in the year ended December 31, 2023 and do not expect that we will be required to make any such material capital expenditures during the year ended December 31, 2024.
Removed
Human Capital Resources We are an externally managed company and thus have no employees. We have retained the Advisor pursuant to a long-term advisory contract to manage our affairs on a day-to-day basis. We have also entered into agreements with our Property Manager to manage and lease our properties.
Removed
The employees of the Advisor, Property Manager and their respective affiliates perform a full range of services for us, including acquisitions, property management, accounting, legal, asset management, investor relations and all general administrative services. We depend on the Advisor and the Property Manager for services that are essential to us.
Removed
If the Advisor and the Property Manager were unable to provide these services to us, we would be required to provide these services ourselves or obtain them from other sources.
Removed
Available Information We electronically file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those filings with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Internet address at http://www.sec.gov.
Removed
The website contains reports, proxy statements and information statements, and other information, which you may obtain free of charge. In addition, copies of our filings with the SEC may be obtained from our website at www.americanstrategicinvestment.com . Access to these filings is free of charge.
Removed
We are not incorporating our website or any information from the website into this Annual Report on Form 10-K.

Other NYC 10-K year-over-year comparisons