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What changed in American Strategic Investment Co.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of American Strategic Investment Co.'s 2022 and 2023 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 2023 report.

+431 added−457 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-16)

Top changes in American Strategic Investment Co.'s 2023 10-K

431 paragraphs added · 457 removed · 311 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Advisor has substantial discretion to select specific investments, subject to approval by our board of directors, including any related guidelines. Tenants and Leasing Our existing portfolio features a diverse tenant mix across eight mixed-use office and retail condominium buildings primarily located in Manhattan.
Biggest changeTenants and Leasing Our portfolio features a diverse tenant mix across seven mixed-use office and retail condominium buildings primarily located in Manhattan.
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 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”).
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 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.” Shares of our Class A common stock were first listed on the New York Stock Exchange (“NYSE”) on August 18, 2020.
Item 1. Business Overview We are an externally managed company that currently 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 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.
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 ending on or before December 31, 2022.
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.
Investment Strategy Prior to the announcement to change our business strategy on December 30, 2022, we have been 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.
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. We believe that investment diversification may offset a prolonged New York City office market rebound.
The real estate debt, which we may also 1 Table of Contents 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.
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.
In addition, our top 10 tenants (measured based on rental income on a straight-line basis for the year ended December 31, 2022) 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, 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.
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 New York City office assets.
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 New York City office assets.
As a consequence of our decision to terminate 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.
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.
As of December 31, 2022 and 2021, 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, 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, 2022, we owned eight 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.
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.
Specifically, our investment goals are as follows: • Expand the scope of the assets and businesses that we own and operate in order to achieve external growth which would reduce our exposure to a single asset class and increase corporate flexibility and income generated; • Investing primarily in properties with 80% or greater occupancy at the time of purchase; • Purchasing properties valued using current market rents with potential for appreciation and endeavor to acquire properties below replacement cost; • Paying quarterly dividends, subject to capital availability; and • Maximizing total returns to our stockholders through a combination of realized appreciation and current income.
Specifically, our investment goals are as follows: • Expand the scope of the assets and businesses that we own and operate in order to achieve external growth which would reduce our exposure to a single asset class and increase corporate flexibility and income generated; • Invest primarily in properties with 80% or greater occupancy at the time of purchase; • Purchase properties valued using current market rents with potential for appreciation and endeavor to acquire properties below replacement cost; • Pay quarterly dividends, subject to capital availability; and • Maximize total returns to our stockholders through a combination of realized appreciation and current income.
We may now seek to acquire assets such as hotels, expand our co-working office space business and seek to invest in and operate businesses such as hotel or parking lot management companies.
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.
As of December 31, 2022, on a weighted-average basis based on annualized straight-line rent, 26% of our tenants were in the financial services sector, 13% of our tenants were in the government/public administration sector, 10% 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, 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%.
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, 2022, our portfolio was 82.7% occupied with a weighted average remaining lease term of 7.1 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, 2023, our portfolio was 86.7% occupied with a weighted average remaining lease term of 6.5 years. See “ Leasing/Occupancy” section in
As a result, on January 9, 2023, our board of directors authorized termination of our REIT election which became effective on January 1, 2023.
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.
For additional information, see Note 15 — Subsequent Events to our consolidated financial statements included in this Annual Report on Form 10-K.
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”).
Removed
At our 1140 Avenue of the Americas property, during the third quarter of 2021, we also began operating Innovate NYC, a co-working company that is specific to this property only, that offers move-in ready private offices, virtual offices, and meeting space on bespoke terms to clients.
Added
Our Advisor has substantial discretion to select specific investments, subject to approval by our Board, including any related guidelines. As part of our investment strategy, we have also implemented expense reduction initiatives, that target expenses such as tax appeals and the renegotiation and bidding of contracted services to lower operating expenses.
Removed
Also, on February 22, 2023, we completed a non-transferable rights offering raising gross proceeds of $5.0 million. As a result, we issued 386,100 shares of our Class A common stock subscribed for in the Rights Offering on February 27, 2023.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

114 edited+50 added−47 removed216 unchanged
Biggest changeSummary Risk Factors • Our properties and other assets may be adversely affected by economic cycles and risks inherent to New York City or the other areas in which our assets are located or we conduct our business. • 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, which is dependent on, among other things, the continuing impact of economic factors impacting our tenants such as inflation, high interest rates and the continuing impact of COVID19 as well as our ability to access capital, which may not be available on acceptable or favorable terms, or at all. • Certain of our unaudited financial statements were required to be restated or revised and our management and, as a result, management had identified and reported 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. • While we have suspended our policy regarding dividends, in the event we resume payment of dividends, and if we are not able to generate sufficient cash flows from operations, we may fund dividends from sources other 4 Table of Contents than cash flow from operations and may have to reduce the amount of dividends we pay or identify other financing sources. • Funding dividends from other sources such as borrowings, asset sales or equity issuances limits the amount we can use for property acquisitions, investments and other corporate purposes. • We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the global COVID-19 pandemic, including negative impacts on our tenants and their respective businesses. • Geopolitical instability due to the ongoing military conflict between Russia and Ukraine may impact the economic conditions in the United States. • Inflation and continuing increases in the inflation rate may have an adverse effect on our investments and results of operations. • Increases in interest rates could increase the amount of our debt payments, or limit the amount of funds we may borrow. • Market and economic challenges experienced by the U.S. and global economies may adversely impact aspects of our operating results and financial condition. • We depend on tenants for our rental revenue and, accordingly, our rental revenue is dependent upon the success and economic viability of our tenants.
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.
The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. We have a classified board, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders. Our board of directors is divided into three classes of directors.
The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. We have a classified board, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders. Our Board is divided into three classes of directors.
Provisions contained in our bylaws may deter, delay or prevent a change in control of our board of directors, including, for example, provisions requiring qualifications for an individual to serve as a director and a requirement that certain of our directors be “Managing Directors” and other directors be “Independent Directors” as defined in our governing documents.
Provisions contained in our bylaws may deter, delay or prevent a change in control of our Board, including, for example, provisions requiring qualifications for an individual to serve as a director and a requirement that certain of our directors be “Managing Directors” and other directors be “Independent Directors” as defined in our governing documents.
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 such taxable year at the applicable corporate rate.
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.
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 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: • 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.
In addition, although our board of directors has adopted a resolution authorizing consideration of share repurchases of up to $100 million of shares of Class A common stock over a long-term period actual repurchases must be reviewed and approved by our board of directors based on management recommendations taking into consideration all information available at the specific time including our available cash resources (including the ability to borrow), market capitalization, trading price and alternative uses such as acquisitions.
In addition, although our Board has adopted a resolution authorizing consideration of share repurchases of up to $100 million of shares of Class A common stock over a long-term period actual repurchases must be reviewed and approved by our Board based on management recommendations taking into consideration all information available at the specific time including our available cash resources (including the ability to borrow), market capitalization, trading price and alternative uses such as acquisitions.
After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by our board of directors of the corporation and approved by the affirmative vote of at least: • 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and • two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least: • 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and • two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
Among the factors that could affect trading price are: • our financial condition, including the level of our indebtedness, and performance; • our ability to grow through property acquisitions, the terms and pace of any acquisitions we may make and the availability and terms of financing or other capital for those acquisitions • our ability to integrate and manage assets; • the financial condition of our tenants, including tenant bankruptcies or defaults; • actual or anticipated quarterly fluctuations in our operating results and financial condition; • the amount and frequency of our dividend payments; • additional sales of equity securities, including Class A common stock, or the perception that additional sales may occur; 21 Table of Contents • our reputation and the reputation of AR Global and its affiliates or other entities advised by AR Global and its affiliates; • uncertainty and volatility in the equity and credit markets; • increases in interest rates; • inflation and continuing increases, or the perception of increases, in the rate of inflation; • changes in revenue, earnings or estimates, or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities; • failure to meet analyst revenue or earnings estimates or projections made by our Advisor; • strategic actions by us or our competitors, such as acquisitions or restructurings; • the extent of investment in our shares by institutional investors; • the extent of short-selling of our shares; • general financial and economic market conditions and, in particular, developments related to market conditions for real estate related companies; • changes in tax laws; • economic factors unrelated to our performance; and • all other risk factors addressed elsewhere in this Annual Report on Form 10-K.
Among the factors that could affect trading price are: • our financial condition, including the level of our indebtedness, and performance; • our ability to grow through property acquisitions, the terms and pace of any acquisitions we may make and the availability and terms of financing or other capital for those acquisitions • our ability to integrate and manage assets; • the financial condition of our tenants, including tenant bankruptcies or defaults; • actual or anticipated quarterly fluctuations in our operating results and financial condition; • the amount and frequency of our dividend payments; • additional sales of equity securities, including Class A common stock, or the perception that additional sales may occur; • our reputation and the reputation of AR Global and its affiliates or other entities advised by AR Global and its affiliates; • uncertainty and volatility in the equity and credit markets; • increases in interest rates; • inflation and continuing increases, or the perception of increases, in the rate of inflation; • changes in revenue, earnings or estimates, or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities; • failure to meet analyst revenue or earnings estimates or projections made by our Advisor; • strategic actions by us or our competitors, such as acquisitions or restructurings; • the extent of investment in our shares by institutional investors; • the extent of short-selling of our shares; • general financial and economic market conditions and, in particular, developments related to market conditions for real estate related companies; • changes in tax laws; • economic factors unrelated to our performance; and • all other risk factors addressed elsewhere in this Annual Report on Form 10-K.
Doing so would expose us not only to the risks and uncertainties we are currently exposed to through our direct investments in real estate but also to additional risks and uncertainties attendant to investing in and holding these types of investments, such as: • risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and investments; • increased competition from entities engaged in mortgage lending and, or investing in our target assets; • deterioration in the performance of properties securing our investments may cause deterioration in the performance of our investments and, potentially, principal losses to us; 12 Table of Contents • fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other investments; • difficulty in redeploying the proceeds from repayments of our existing loans and investments; • the illiquidity of certain of these investments; • lack of control over certain of our loans and investments; • the potential need to foreclose on certain of the loans we originate or acquire, which could result in losses; • additional risks, including the risks of the securitization process, posed by investments in CMBS and other similar structured finance investments, as well as those we structure, sponsor or arrange; • use of leverage may create a mismatch with the duration and interest rate of the investments that we finance; and • risks related to the operating performance or trading price volatility of any publicly-traded and private companies primarily engaged in real estate businesses we invest in.
Doing so would expose us not only to the risks and uncertainties we are currently exposed to through our direct investments in real estate but also to additional risks and uncertainties attendant to investing in and holding these types of investments, such as: • risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and investments; • increased competition from entities engaged in mortgage lending and, or investing in our target assets; • deterioration in the performance of properties securing our investments may cause deterioration in the performance of our investments and, potentially, principal losses to us; • fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other investments; • difficulty in redeploying the proceeds from repayments of our existing loans and investments; • the illiquidity of certain of these investments; • lack of control over certain of our loans and investments; • the potential need to foreclose on certain of the loans we originate or acquire, which could result in losses; • additional risks, including the risks of the securitization process, posed by investments in CMBS and other similar structured finance investments, as well as those we structure, sponsor or arrange; • use of leverage may create a mismatch with the duration and interest rate of the investments that we finance; and • risks related to the operating performance or trading price volatility of any publicly-traded and private companies primarily engaged in real estate businesses we invest in.
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.
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.
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 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.
The stockholder rights plan could make it more difficult for a third party to acquire us or a large block of our Class A common stock without the approval of our board or directors, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
The stockholder rights plan could make it more difficult for a third party to acquire us or a large block of our Class A common stock without the approval of our Board, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
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 of directors, which reserves the right to change our dividend policy at any time and for any reason.
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.
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.
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.
Federal Reserve Board which may impact our ability in the future to access capital on favorable terms, in a timely manner, or at all, which could make obtaining funding for our capital requirements more challenging or expensive.
Federal Reserve Board which may continue to impact our ability in the future to access capital on favorable terms, in a timely manner, or at all, which could make obtaining funding for our capital requirements more challenging or expensive.
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.
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.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, other than actions arising under federal securities laws; (b) any Internal Corporate Claim, as such term is defined in the 23 Table of Contents Maryland General Corporation Law (the “MGCL”), or any successor provision thereof, including, without limitation, (i) any action asserting a claim of breach of any duty owed by any of our directors, officers or other employee to us or to our stockholders or (ii) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the MGCL, our charter or our bylaws; or (c) any other action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, other than actions arising under federal securities laws; (b) any Internal Corporate Claim, as such term is defined in the Maryland General Corporation Law (the “MGCL”), or any successor provision thereof, including, without limitation, (i) any action asserting a claim of breach of any duty owed by any of our directors, officers or other employee to us or to our stockholders or (ii) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the MGCL, our charter or our bylaws; or (c) any other action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine.
Our principal sources of cash in recent periods has been cash on hand from prior financings or from offerings of our Class A Common Stock including proceeds from our Common Stock ATM Program and more recently the Rights Offerings.
Our principal sources of cash in recent periods has been cash on hand from prior financings or from offerings of our Class A common stock including proceeds from our Common Stock ATM Program and more recently the Rights Offering.
Pursuant to the statute, our board of directors has exempted any business combination involving our Advisor or any affiliate of our Advisor or any REIT formed and organized by our sponsor (an entity under common ownership with AR Global).
Pursuant to the statute, our Board has exempted any business combination involving our Advisor or any affiliate of our Advisor or any REIT formed and organized by our sponsor (an entity under common ownership with AR Global).
However, in approving a transaction, our board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by our board of directors.
However, in approving a transaction, our Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by our Board.
As we expand the type of assets or business 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.
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.
For these and other reasons, there is no assurance that we will be profitable or that we will realize growth in the value of our real estate properties. In addition, leasing vacant space will likely result in our incurring expenses for tenant improvements and leasing commissions, which would adversely impact our cash flow.
For these and other reasons, there is no assurance that we will be profitable or that we will realize growth in the value of our real estate properties. In addition, leasing vacant space will likely result in our incurring expenses for tenant improvements and leasing commissions, which could adversely impact our cash flow.
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.
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.
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 83% 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 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.
If the increases continue to lag behind inflation, our net income and cash flow would be negatively impacted. Future leases may not even contain escalation provisions and these provisions may not be sufficient to protect our revenues or expenses from the adverse effects of inflation.
If the rental rate increases continue to lag behind inflation, our net income and cash flow would be negatively impacted. Future leases may not even contain escalation provisions and these provisions may not be sufficient to protect our revenues or expenses from the adverse effects of inflation.
Prior to terminating our REIT election, our qualification as a REIT depended upon our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. We structured, our activities in a manner designed to satisfy all the requirements to qualify as a REIT.
Prior to revoking our REIT election, our qualification as a REIT depended upon our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. We structured, our activities in a manner designed to satisfy all the requirements to qualify as a REIT.
As of December 31, 2022, 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.
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.
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 8 Table of Contents or future equity offerings. These sources of funding may not be available on attractive terms or at all.
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.
Likewise, a portion of the NOL carryforward may be limited in its use due to certain portions of the Tax Code (defined herein), including but not limited to Section 382 which imposes an annual limit on the amount of NOLs and net capital loss carry forwards that the Company may use to affect future taxable income.
Likewise, a portion of the NOL carryforward may be limited in its use due to certain portions of the Code, including but not limited to Section 382 which imposes an annual limit on the amount of NOLs and net capital loss carry forwards that the Company may use to affect future taxable income.
Many of these competitors, as compared to us, have a lower cost of capital enhanced operating efficiencies and substantially greater financial resources. In addition, the number of competing properties in 7 Table of Contents the New York City area could have a material effect on our occupancy levels, rental rates and on the operating expenses of certain of our properties.
Many of these competitors, as compared to us, have a lower cost of capital enhanced operating efficiencies and substantially greater financial resources. In addition, the number of competing properties in the New York City area could have a material effect on our occupancy levels, rental rates and on the operating expenses of certain of our properties.
Each of our OP’s subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from these entities. In addition, any claims we may have will be structurally subordinated to all existing 24 Table of Contents and future liabilities and obligations of our OP and its subsidiaries.
Each of our OP’s subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from these entities. In addition, any claims we may have will be structurally subordinated to all existing and future liabilities and obligations of our OP and its subsidiaries.
There was no cash maintained in segregated cash accounts for our 8713 Fifth Avenue property as of December 31, 2022 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, 2023 since this property had not generated excess cash after debt service.
Our Advisor faces conflicts of interest relating to joint ventures, which could result in a disproportionate benefit to the other venture partners. 20 Table of Contents We may enter into joint ventures with other entities advised by affiliates of AR Global for the acquisition, development or improvement of properties.
Our Advisor faces conflicts of interest relating to joint ventures, which could result in a disproportionate benefit to the other venture partners. We may enter into joint ventures with other entities advised by affiliates of AR Global for the acquisition, development or improvement of properties.
The business combination statute permits various exemptions from its provisions, including business combinations that are exempted by our board of directors prior to the time that the interested stockholder becomes an interested stockholder.
The business combination statute permits various exemptions from its provisions, including business combinations that are exempted by our Board prior to the time that the interested stockholder becomes an interested stockholder.
If the sale-leaseback were recharacterized as a financing, we might not 14 Table of Contents be considered the owner of the property, and as a result would have the status of a creditor. In that event, we would no longer have the right to sell or encumber our ownership interest in the property.
If the sale-leaseback were recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor. In that event, we would no longer have the right to sell or encumber our ownership interest in the property.
During the year ended December 31, 2022, 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, 2023, the net cash provided by our property operations has not been sufficient to fund operating expenses and other cash requirements.
A person is not an interested stockholder under the statute if our board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder.
A person is not an interested stockholder under the statute if our Board approved in advance the transaction by which the person otherwise would have become an interested stockholder.
Renewals of leases or future leases for our net lease properties may not be negotiated on a 16 Table of Contents triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs.
Renewals of leases or future leases for our net lease properties may not be negotiated on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs.
Insurance risks associated with such catastrophic events could sharply increase the premiums we pay for coverage against property and casualty claims. 15 Table of Contents This risk is particularly relevant with respect to potential acts of terrorism.
Insurance risks associated with such catastrophic events could sharply increase the premiums we pay for coverage against property and casualty claims. This risk is particularly relevant with respect to potential acts of terrorism.
Future indebtedness we may incur may also impose restrictions on us that require us to comply with financial covenants, affect our distribution and operating policies or limit our ability to incur additional debt, further mortgage a property, engage in mergers and consolidations, discontinue insurance coverage or replace 19 Table of Contents our Advisor or Property Manager.
Future indebtedness we may incur may also impose restrictions on us that require us to comply with financial covenants, affect our distribution and operating policies or limit our ability to incur additional debt, further mortgage a property, engage in mergers and consolidations, discontinue insurance coverage or replace our Advisor or Property Manager.
Federal Income Tax Risks 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. We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014, but recently terminated our election, effective January 1, 2023.
Federal Income Tax Risks 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. We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014, but revoked our election, effective as of January 1, 2023.
These business combinations, but are not limited to, include a merger, consolidation, share 22 Table of Contents exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities.
These business combinations, but are not limited to, include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities.
Two of our individual real estate investments represent a material percentage of our assets. As of December 31, 2022, 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 64% of annualized straight-line rent.
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.
As of December 31, 2022, the following tenants accounted for 5% or more of our total annualized rental income on a straight-line basis, based on leases commenced: 10 Table of Contents Tenant % of Annualized Straight-Line Rent City National Bank 7.5% Planned Parenthood 5.7% Equinox 5.9% 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, 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.
General economic conditions such as high inflation, increasing interest rates and the continuing impact of COVID-19 pandemic 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 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.
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 have been increasing as a result of actions taken by the U.S.
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.
Moreover, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments.
Moreover, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters including as a result of climate change, that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments.
There is no assurance that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses. In addition, the use of such instruments may reduce the overall return on our investments. Interest-only and adjustable rate indebtedness may increase our risk of default.
There is no assurance that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses. In addition, the use of such instruments may reduce the overall return on our investments.
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 and continuing increases in the inflation rate 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.
Due to the covenant breach resulting in a cash trap, all cash generated, if any, at our 1140 Avenue of Americas property is required to be held in a segregated account unavailable to us until the covenant breach is or was cured.
Due to this covenant breach all cash generated, if any, at our 1140 Avenue of Americas property is required to be held in a segregated account unavailable to us until the covenant breach is cured.
During the six months ended June 30, 2022 and during the year ended December 31, 2021, we paid our common stockholders dividends in the amount equal to $1.60 per share per year, or $0.80 per share per quarter (both adjusted for the Reverse Stock Split).
During the six months ended June 30, 2022 and during the year ended December 31, 2021, we paid our Class A common stockholders dividends in the amount equal to $0.80 per share per quarter (adjusted for the Reverse Stock Split).
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 as of December 31, 2022.
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.
As of December 31, 2022, we had $3.6 million, of cash maintained in segregated cash accounts, and classified as restricted cash on our consolidated balance sheet as of December 31, 2022, resulting from breaches of the mortgage loans secured by our 1140 Avenue of the Americas property.
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.
These breaches, which have been ongoing for several quarters are described in more detail elsewhere in this Annual Report on 18 Table of Contents Form 10-K (see No te 4 — Mortgage Notes Payable, Net to our consolidated financial statements included in this Annual Report on Form 10-K 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 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.
As of December 31, 2022, we had $3.6 million of cash maintained in segregated cash accounts, and classified as restricted cash on our consolidated balance sheet as of December 31, 2022, from the breach of covenants under loan agreements secured by our 1140 Avenue of the Americas property.
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.
Costs associated with complying with the Americans with Disabilities Act may affect cash available for distributions. 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 (“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.
Risks Related to Our Corporate Structure The trading price of our Class A common stock may fluctuate significantly. The trading price of our Class A common stock may be volatile and subject to significant price and volume fluctuations in response to market and other factors, many of which are out of our control.
The trading price of our Class A common stock may be volatile and subject to significant price and volume fluctuations in response to market and other factors, many of which are out of our control.
These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures. Approximately 83% are fixed-rate, and 17% do not contain any escalation provisions. Inflation as measured by the consumer price index for all items as of December 31, 2022 as published by the Bureau of Labor Statistics, was 6.5%, however.
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.
If our Advisor loses or is unable to obtain the services of skilled personnel due to an overall labor shortage, lack of skilled labor, increased turnover or labor inflation, our Advisor's ability to manage our business and implement our investment strategies could be delayed or hindered.
If our Advisor loses or is unable to obtain the services of skilled personnel due to an overall labor shortage, lack of skilled labor, increased turnover or labor inflation, our Advisor's ability to manage our business and implement our investment strategies could be delayed or hindered, which could have a material adverse effect on us.
In some cases attempted attacks and intrusions are designed not to be detected and, in fact, may not be detected. 11 Table of Contents The remediation costs and lost revenues experienced by a subject of an intentional cyberattack or other event which results in unauthorized third party access to systems to disrupt operations, corrupt data or steal confidential information may be significant and significant resources may be required to repair system damage, protect against the threat of future security breaches or to alleviate problems, including reputational harm, loss of revenues and litigation, caused by any breaches.
The remediation costs and lost revenues experienced by a subject of an intentional cyberattack or other event which results in unauthorized third party access to systems to disrupt operations, corrupt data or steal confidential information may be significant and significant resources may be required to repair system damage, protect against the threat of future security breaches or to alleviate problems, including reputational harm, loss of revenues and litigation, caused by any breaches.
Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions.
Concern about indoor exposure to mold has been increasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions.
Further, we may acquire assets in areas outside of New York City which will, among other things, expose us to risks and economic uncertainties in these new areas. We may not be able to effectively manage or adjust for these risks and economic uncertainties.
Further, we may acquire assets in areas outside of New York City which will, among other things, expose us to risks and economic uncertainties in these new areas. We may not be able to effectively manage or adjust for these risks and economic uncertainties, and our business may be adversely affected if we do not manage these challenges successfully.
Breaches of loan covenants has reduced the cash available to us and further breaches will limit our ability to access cash generated by these properties. There is no assurance we will be able to cure any breaches of any of our mortgage loans on favorable terms or at all and access the excess cash generated by these properties, if any.
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.
If we cannot fund capital improvements, tenant improvements or leasing commissions, our investments may generate lower cash flows or decline in value, or both and result in our inability to lease vacant space or retain tenants upon the expiration of their leases.
If we cannot fund capital improvements, tenant improvements or leasing commissions, our investments may generate lower cash flows or decline in value, or both and result in our inability to lease vacant space or retain tenants upon the expiration of their leases, which could have a material adverse effect on us.
These properties represented, in the aggregate, 22% of the total rentable square feet in our portfolio as of December 31, 2022.
These properties represented, in the aggregate, 23% of the total rentable square feet in our portfolio as of December 31, 2023.
Payment of yield maintenance premiums in connection with dispositions or refinancings could adversely affect our results of operations and cash available for corporate purposes. We may be unable to renew leases or re-lease space as leases expire. Approximately 7% of our leases (based on annualized straight-line rent) expire in 2023.
Payment of yield maintenance premiums in connection with dispositions or refinancings could adversely affect our results of operations and cash available for corporate purposes, negatively affecting our results of operations. 12 We may be unable to renew leases or re-lease space as leases expire. Approximately 45% of our leases (based on annualized straight-line rent) expire over the next five years.
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 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.
Excluding hotels, these assets do not generate REIT-qualifying income and are operating businesses. 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 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.
In 2022, the net cash provided by our property operations was not alone sufficient to fund operating expenses and other capital requirements.
In the years ended December 31, 2023 and 2022, the net cash provided by our property operations were not alone sufficient to fund operating expenses and other capital requirements.
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 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.
Risks Related to Our Indebtedness Our level of indebtedness may increase our business risks. As of December 31, 2022, we had total outstanding indebtedness of approximately $394.2 million. We do not have any debt maturing in 2023 and we have approximately $49.5 million of debt maturing in 2024.
Risks Related to Our Indebtedness Our level of indebtedness may increase our business risks. As of December 31, 2023, we had total outstanding indebtedness of approximately $395.7 million. We have approximately $49.5 million of debt maturing in 2024.
During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments or payments made due to covenant waivers or other amendments) because there are no scheduled monthly payments of principal during this period.
The principal balance of the mortgage loan will not be reduced (except in the case of prepayments or payments made due to covenant waivers or other amendments) because there are no scheduled monthly payments of principal during this period.
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.
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.
In most instances, we acquire real properties by using either existing financing or borrowing new funds. In addition, we may incur mortgage debt and pledge the underlying property as security for that debt to obtain funds to acquire additional real properties or for other corporate purposes. We have been in breach of several of our mortgage loans for multiple quarters.
In addition, we may incur mortgage debt and pledge the underlying property as security for that debt to obtain funds to acquire additional real properties or for other corporate purposes. 17 We have been in breach of several of our mortgage loan covenants for multiple quarters.
The classification of our board of directors may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might result in a premium price for our stockholders.
The classification of our Board may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might result in a premium price for our stockholders. 22 The stockholder rights plan adopted by our Board may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
The impact of the COVID-19 pandemic evolved rapidly and resulted in a decrease in economic activity particularly in the New York City area.
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.
If we are unable to promptly renew expiring leases or re-lease the space at similar rates or if we incur substantial costs in renewing or re-leasing the space, our cash flow could be adversely affected. Our properties may be subject to impairment charges. We periodically evaluate our real estate investments for impairment indicators.
If we are unable to promptly renew expiring leases or re-lease the space at similar rates or if we incur substantial costs in renewing or re-leasing the space, our cash flow could be adversely affected.
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 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.
Our inability to sell a property when we desire to do so may cause us to reduce our selling price for the property. 13 Table of Contents We have acquired or financed, and may continue to acquire or finance, properties with lock-out provisions which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
We have acquired or financed, and may continue to acquire or finance, properties with lock-out provisions which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
These arrangements, coupled with the fact that the Advisor does not maintain a significant equity interest in us, may result in the Advisor taking actions or recommending investments that are riskier or more speculative than absent these compensation arrangements. In addition, these fees and other compensation payable to the Advisor reduce the cash available for investment or other corporate purposes.
These arrangements, coupled with the fact that the Advisor does not maintain a significant equity interest in us, may result in the Advisor taking actions or recommending investments that are riskier or more speculative than absent these compensation arrangements.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following table presents certain information about the properties we owned as of December 31, 2022: Portfolio Acquisition Date Number of Properties Rentable Square Feet Occupancy Remaining Lease Term (1) 421 W. 54th Street - Hit Factory Jun. 2014 1 12,327 —% — 400 E. 67th Street - Laurel Condominium Sept. 2014 1 58,750 100.0% (2) 4.5 200 Riverside Boulevard - ICON Garage Sept. 2014 1 61,475 100.0% (2) 14.5 9 Times Square Nov. 2014 1 167,390 61.9% (3) 6.8 123 William Street Mar. 2015 1 542,676 91.4% (3) 5.9 1140 Avenue of the Americas Jun. 2016 1 242,646 70.9% (4) 6.8 8713 Fifth Avenue Oct. 2018 1 17,500 57.1% (5) 9.0 196 Orchard Street Jul. 2019 1 60,297 100.0% 12.4 8 1,163,061 82.7% 7.1 _____ (1) Calculated on a weighted-average basis as of December 31, 2022, as applicable.
Biggest changeProperties 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.
(2) Annualized rental income on a straight-line basis as of December 31, 2022, which includes tenant concessions such as free rent, as applicable. 196 Orchard Street 28 Table of Contents 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, 2022: Tenant Rented Square Feet Rented Square Feet as a % of Total Portfolio Lease Expiration Remaining Lease Term (1) Renewal Options Annualized Rental Income (2 ) Annualized Rental Income as a % of Total Portfolio (In thousands) CVS 9,956 16.5 % Aug. 2034 11.7 2 - 5 year option 2,161 29.8 % Equinox 30,033 49.8 % Nov. 2038 15.9 2 - 5 year option 3,448 47.6 % Marshalls 20,308 33.7 % Oct. 2028 5.8 3 - 5 year option 1,641 22.6 % (1) Remaining lease term in years as of December 31, 2022.
(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, 2022, 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, 2022: 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 20.7% June 2033 10.5 None $ 4,356 29.3 % ______ (1) Remaining lease term in years as of December 31, 2022.
(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.
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, 2022: 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. 65,242 13.2% Jul. 2031 8.6 1 - 5 year option $ 3,337 15.0% _______ (1) Remaining lease term in years as of December 31, 2022.
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.
Management’s Discussion and Analysis. 27 Table of Contents 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, 2022 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.
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.
(2) Annualized rental income on a straight-line basis as of December 31, 2022, 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, 2022: 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 7.2% May 2036 13.4 None $ 1,932 24.4% _______ (1) Remaining lease term in years as of December 31, 2022.
(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.
For a discussion of the significant changes in occupancy during 2022, see the “ Liquidity and Capital Resources - Leasing Activity/Occupancy” section located in Item 7.
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.
(2) Annualized rental income on a straight-line basis as of December 31, 2022, which includes tenant concessions such as free rent, as applicable. Property Financings See Note 4 — Mortgage Notes Payable, Net to our consolidated financial statements included in this Annual Report on Form 10-K for information regarding property financings as of December 31, 2022 and 2021. Item 3.
(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.
Future 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, 2022: 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) 2023 14 $ 3,908 6.7 % 65 6.8 % 2024 10 7,041 12.1 % 110 11.4 % 2025 12 5,762 9.9 % 104 10.8 % 2026 8 3,265 5.6 % 64 6.7 % 2027 12 6,004 10.3 % 131 13.6 % 2028 7 3,407 5.9 % 56 5.8 % 2029 6 2,836 4.9 % 49 5.1 % 2030 3 1,810 3.1 % 34 3.5 % 2031 7 5,374 9.2 % 92 9.6 % 2032 2 676 1.2 % 13 1.3 % Total 81 $ 40,083 68.9 % 718 74.6 % _________ (1) Includes tenant concessions, such as free rent, as applicable.
Future 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.
We signed a new lease in November 2021 and the new tenant occupied the space in the first quarter of 2023, which brought the occupancy at this property back to 100%. 26 Table of Contents 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, 2022.
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.
(In thousands) Future Minimum Base Rent Payments (1) 2023 $ 54,541 2024 53,093 2025 46,038 2026 41,362 2027 38,413 2028 34,016 2029 30,579 2030 27,854 2031 24,437 2032 20,605 Thereafter 66,101 Total $ 437,039 ________________ (1) For a discussion of the significant changes in occupancy during 2022, see the “ Liquidity and Capital Resources - Leasing Activity/Occupancy” section located in Item 7.
(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.
Removed
(2) The leases with the original tenant of the garages at both the 200 Riverside Boulevard property and 400 E. 67th Street - Laurel Condominium property were terminated on October 26, 2021 and we simultaneously entered into six-month license agreements with a new operator at the garages at both properties.
Removed
In October 2021, we signed a termination agreement with the original tenants, which required the tenants to pay an aggregate of $1.4 million in termination fees to us, which was all received during the fourth quarter of 2021. In July 2022, the parties terminated the six-month license agreements and commenced new leases that expire in June 2037.
Removed
(3) In January 2021, our former tenant, Knotel, filed for bankruptcy and the leases with this tenant were terminated effective January 31, 2021, which impacted two of our properties, 9 Times Square and 123 William Street.
Removed
The Knotel termination and new leasing activity since that time has resulted in occupancy of 61.9% as of December 31, 2022, as compared to 59.3% and 78.7% as of December 31, 2021 and 2020, respectively at the 9 Times Square property.
Removed
After taking into account the Knotel termination and new leasing activity since that time at the 123 William Street property, occupancy as of December 31, 2022, was 91.4%, as compared to 90.8% and 90.3% as of December 31, 2021 and 2020, respectively. (4) Occupancy at 1140 Avenue of the Americas decreased 3.2% compared to December 31, 2021.
Removed
(5) Occupancy at 8713 Fifth Avenue as of December 31, 2022 decreased 11.5% compared to December 31, 2021 as a result of a termination.
Removed
Legal Proceedings. None. Item 4. Mine Safety Disclosure. Not applicable. 29 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+9 added−4 removed3 unchanged
Biggest changeOn 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 below). 30 Table of Contents Unregistered Sales of Equity Securities On August 1, 2022, September 2, 2022, October 3, 2022, November 1, 2022, December 2, 2022 and January 3, 2023, respectively, pursuant to and in accordance with the Advisory Agreement, the Advisor elected to receive 124,685, 151,194, 146,284, 154,559, 197,949 shares ( 15,586, 18,899, 18,285, 19,320, 24,744 and 31,407 shares adjusted for the Reverse Stock Split), respectively, of the Company’s 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 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.
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, 2022.
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.
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 our current annual rate of $0.40 per share ( $3.20 per share a djusted for the Reverse Stock Split) of common stock, or $0.10 per share ($0.80 per share a djusted for the Reverse Stock Split) on a quarterly basis.
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.
We had a loss for tax purposes for 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.
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.
The graph assumes an investment of $100 on August 18, 2020, with the reinvestment of dividends. Holders As of March 13, 2023, we had 2,303,896 shares of Class A common stock outstanding held by 3,548 stockholders of record.
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.
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. Item 6. [Reserved].
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.
Removed
Dividends We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2014. We terminated our REIT election which became effective on January 1, 2023.
Added
We revoked our REIT election which became effective as of January 1, 2023.
Removed
For the year ended December 31, 2022, from a U.S. federal income tax perspective, 100% of dividends, or $0.20 per share ( $1.60 per share adjusted for the Reverse Stock Split), represented a return of capital.
Added
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
For the year ended December 31, 2021 from a U.S. federal income tax perspective, 100% of dividends, or $0.40 per share ($3.20 adjusted for the Reverse Stock Split), represented a return of capital, and for the year ended December 31, 2020 from a U.S. federal income tax perspective 100% of dividends, or $0.04889 per share ($0.39 per share adjusted for the Reverse Stock Split), represented a return of capital.
Added
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
The shares were issued to the Advisor at a price equivalent to the 10-day average price of $4.01, $3.28, $3.42, $3.24, $2.53 per share ( $32.08, $26.24, $27.36, $25.92 , $20.24 and $15.92 per share adjusted for the Reverse Stock Split), respectively, which was greater than the minimum price required under the NYSE rules.
Added
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.
Added
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.
Added
For additional information Note 1 4 — Subsequent Events to our 2023 Financial Statements.
Added
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.
Added
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).
Added
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

137 edited+55 added−82 removed112 unchanged
Biggest changeNet cash used in financing activities was $0.3 million during the year ended December 31, 2021 related to the payment of dividends on common stock of $5.2 million and the repurchase of common stock as part of the tender offer completed in January 2021 of $0.2 million, partially offset by the proceeds from the issuance of common stock of $5.3 million. 39 Table of Contents 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, our debt service obligations and, subject to capital availability and acquisitions.
Biggest changeCash Flows from Investing Activities The following table presents our net cash provided by (used in) investing activities for the years ended December 31, 2023 and 2022: Year Ended December 31, Increase 2023 2022 (Decrease) Cash flows from investing activities: Capital expenditures (4,059) (5,555) 1,496 Proceeds from sale of real estate investments 4,130 — 4,130 Net cash provided by (used in) investing activities 71 (5,555) 5,626 43 Table of Contents Cash Flows from Financing Activities The following table presents our net cash provided by (used in) financing activities for the years ended December 31, 2023 and 2022: Year Ended December 31, Increase 2023 2022 (Decrease) Cash flows from financing activities: Payment of mortgage note payable — (5,500) 5,500 Proceeds from issuance of common stock to affiliates of the Advisor, net (see Note 9) — 1,980 (1,980) Proceeds from Rights Offering, net (see Note 7) 4,059 — 4,059 Dividends paid on common stock — (2,670) 2,670 Redemption of fractional shares of common stock and restricted shares (24) — (24) Distributions to non-controlling interest holders — (80) 80 Common stock shares withheld upon vesting of restricted shares (10) — (10) Net cash provided by (used in) financing activities 4,025 (6,270) 10,295 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.
We satisfied the debt service coverage for the subsequent quarters through the quarter ended December 31, 2022. 8713 Fifth Avenue We breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue during the second, third and fourth quarters of 2021 and all four quarters of 2022.
We satisfied the debt service coverage for the subsequent quarters through the quarter ended December 31, 2023 . 8713 Fifth Avenue We breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue during the second, third and fourth quarters of 2021 and all four quarters of 2022.
The principal amount of the loan was $99.0 million as of December 31, 2022. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after paying operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan.
The 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.
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, 2022 and 2021, 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, 2023 and 2022, 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, 2022, 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, 2023, we did not have any leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.
Dividend Policy On July 1, 2022, we announced that our board would not declare a dividend for the quarter ended June 30, 2022. Our board of directors concluded that it was in our best interest to suspend paying dividends and to use the monies to generate additional working capital to fund future leasing and tenant improvement costs.
Dividend Policy On July 1, 2022, we announced that our Board would not declare a dividend for the quarter ended June 30, 2022. Our Board concluded that it was in our best interest to suspend paying dividends and to use the monies to generate additional working capital to fund future leasing and tenant improvement costs.
We are working to find new tenants to replace the portion of the space previously leased to Knotel at 123 William Street that has not yet been re-leased and to increase the rental income at our 1140 Avenue of the Americas and 9 Times Square properties, as well as our other properties that are not fully occupied as of December 31, 2022.
We are working to find new tenants to replace the portion of the space previously leased to Knotel at 123 William Street that has not yet been re-leased and to increase the rental income at our 1140 Avenue of the Americas and 9 Times Square properties, as well as our other properties that are not fully occupied as of December 31, 2023.
To help mitigate the adverse impact of inflation, approximately 83% 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 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.
The pace of recovery in the New York City office market from the 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.
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 principal amount of the loan was $49.5 million as of December 31, 2022 (after a partial pay-down in 2022 as described below).
The principal amount of the loan was $49.5 million as of December 31, 2023 (after a partial pay-down in 2022 as described below).
Through the six months ended June 30, 2022 and for the year ended December 31, 2021 we paid dividends to our common stockholders at our current annual rate of $0.40 per share of Common Stock ( $3.20 per share adjusted for the Reverse Stock Split) , or $0.10 per share ($0.80 per share adjusted for the Reverse Stock Split) on a quarterly basis.
Through the six months ended June 30, 2022 and for the year ended December 31, 2021 we paid dividends to our common stockholders at the annual rate of $0.40 per share of Class A common stock ($3.20 per share adjusted for the Reverse Stock Split) , or $0.10 per share ($0.80 per share adjusted for the Reverse Stock Split) on a quarterly basis.
In fiscal years ended December 31, 2022, 2021 and 2020, 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, 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.
We believe that in order to facilitate a clear understanding of our operating results, Cash NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. The table below reflects the items deducted or added to net loss in our calculation of Cash NOI for the periods presented.
We believe that in order to facilitate a clear understanding of our operating results, Cash NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. 51 Table of Contents The table below reflects the items deducted or added to net loss in our calculation of Cash NOI for the periods presented.
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, 2022.
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.
To further augment our liquidity, we may potentially be able to generate funds for these needs through the additional offering and sale of Class A shares through the Common Stock ATM Program as approved by our board, 40 Table of Contents from time to time, and subject to market conditions, the potential issuance or placement of unsecured debt or an offering of equity securities as well as proceeds from property dispositions, if any.
To further augment our liquidity, we may potentially be able to generate funds for these needs through the additional offering and sale of Class A shares through the Common Stock ATM Program as approved by our Board, from time to time, and subject to market conditions, the potential issuance or placement of unsecured debt or an offering of equity securities as well as proceeds from property dispositions, if any.
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, 2022.
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.
However, our 8713 Fifth Avenue property has not generated excess cash after debt service and as of December 31, 2022 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, 2023 there is no related cash maintained in a segregated and restricted cash account for that property.
As the information presented above includes only those exposures that existed as of December 31, 2022 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value.
As the information presented above includes only those exposures that existed as of December 31, 2023 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value.
Intangible assets may include the value of in-place leases and above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued noncontrolling interests (in a business combination) are recorded at their estimated fair values.
Intangible assets may include the value of in-place leases and above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values.
The breaches, through the fourth consecutive quarter (September 31, 2021), while not events of default, required us to enter into a cash management period requiring all rents and other revenue of the property, if any, to be held in a segregated account as additional 41 Table of Contents collateral under the loan.
The breaches, through the fourth consecutive quarter (September 31, 2021), while not events of default, required us to enter into a cash management period requiring all rents and other revenue of the property, if any, to be held in a segregated account as additional collateral under the loan.
In calculating Cash NOI, we also eliminate the effects of straight-lining of rent and the amortization of above- and below-market leases. Cash NOI should not be considered an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity.
In calculating Cash NOI, we also eliminate the effects of straight-lining of rent and the amortization of above- and below-market leases. Cash NOI should not be considered an alternative to net income (loss) as determined under GAAP as an indication of our performance or to cash flows as a measure of our liquidity.
If we do not elect to continue to fund the $125,000 additional 42 Table of Contents collateral in a subsequent quarter, then the excess flow sweep period would commence in such quarter and continue until the covenant breaches are cured in accordance with the terms of the loan agreement.
If we do not elect to continue to fund the $125,000 additional collateral in a subsequent quarter, then the excess flow sweep period would commence in such quarter and continue until the covenant breaches are cured in accordance with the terms of the loan agreement.
During the year ended December 31, 2022, we sold 632,911 (79,114 shares of Class A common stock adjusted for Reverse Stock Split) to Bellevue under the Common Stock ATM Program, which generated gross proceeds of $2.0 million, before nominal commissions paid.
During the year ended December 31, 2022, we sold 79,114 shares of Class A common stock (as adjusted for Reverse Stock Split) to Bellevue under the Common Stock ATM Program, which generated gross proceeds of $2.0 million, before nominal commissions paid.
Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification.
Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than twelve months regardless of their classification.
Specific examples of discrete non-operating items include acquisition and transaction related costs for dead deals, debt extinguishment costs, non-cash equity-based compensation and costs incurred for the 2022 contested proxy that were specifically related to the portion of our 2022 proxy contest.
Specific examples of discrete non-operating items include acquisition and transaction related costs for dead deals, debt extinguishment costs, non-cash equity-based compensation and costs incurred for the 2022 contested proxy that were specifically related to the portion of our 2022 proxy contest and non-cash equity-based compensation costs incurred for the 2023 Tender Offer.
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 $12.5 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.
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 $8.1 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.
Such amounts included in net loss were $5.0 million for the year ended December 31, 2022. (6) Amount relates to costs incurred for the 2022 proxy that were specifically related to the portion of the Company’s 2022 proxy contest.
Such amounts included in net loss were $0.5 million for the year ended December 31, 2023. (4) Amount relates to costs incurred for the 2022 proxy that were specifically related to the portion of the Company’s 2022 proxy contest.
Likewise, the Advisor may, at its election, accept shares of Class A Common Stock in lieu of cash for the management fee due as it did make in respect of fees for services rendered from August 2022 through January 2023 (see below for more details).
The Advisor may, at its election, accept shares of Class A common stock in lieu of cash for the asset and property management fee due as it did make for the asset management fee in respect of fees for services rendered from August 2022 through January 2023 (see below for more details).
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. 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.
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. 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.
This is compared to $4.1 million, of which $1.5 million related to administrative and overhead expenses and $2.6 million related to salaries, wages, and benefits for the year ended December 31, 2021. Pursuant to the Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to an annual limit.
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.
Cash Net Operating Income 45 Table of Contents Cash NOI is a non-GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, less income from investment securities and interest, plus general and administrative expenses, acquisition and transaction-related expenses, depreciation and amortization, other non-cash expenses and interest expense.
Cash Net Operating Income Cash NOI is a non-GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, less income from investment securities and interest, plus general and administrative expenses, acquisition and transaction-related expenses, depreciation and amortization, other non-cash expenses and interest expense.
No properties were presented as discontinued operations during the years ended December 31, 2022, 2021 or 2020, respectively.
No properties were presented as discontinued operations during the years ended December 31, 2023, 2022 or 2021, respectively.
There were no acquisitions during the years ended December 31, 2022, 2021 or 2020, 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.
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.
Asset and Property Management Fees to Related Parties Fees for asset and property management services to our Advisor and Property Manager were $7.1 million and $7.6 million for the years ended December 31, 2022 and 2021, respectively.
Asset and Property Management Fees to Related Parties Fees for asset and property management services to our Advisor and Property Manager were $7.7 million and $7.1 million for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2022, approximately 83%, based on straight-line rent, are fixed-rate and 17% 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, 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.
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 the accompanying consolidated 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 2023 Financial Statements. The following information contains forward-looking statements, which are subject to risks and uncertainties.
We estimate the lease up period, market rents and residual values using market information from outside sources such as third-party market research, external appraisals, broker quotes, or recent comparable sales. For residual values, management applies a selected market capitalization rate based on current market data.
We also estimate the lease-up period, market rents and residual values using market information from external sources such as third-party market research, external appraisals, broker quotes, or recent comparable sales. For residual values, we apply a selected market capitalization rate based on current market data.
Mortgage Loans We have six mortgage loans secured by seven of our eight properties with an aggregate balance of $399.5 million as of December 31, 2022 with a weighted-average effective interest rate of 4.35%.
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%.
The sensitivity analysis related to our net fixed–rate debt assumes an immediate 100 basis point move in interest rates from their December 31, 2022 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 $11.9 million.
The sensitivity analysis related to our net fixed–rate debt assumes an immediate 100 basis point move in interest rates from their December 31, 2023 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 $7.8 million.
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 $16.1 million as of December 31, 2022.
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.
The amount of dividends payable to our stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, provisions in our loans and any agreement we are party to that may restrict our ability to pay dividends or repurchase shares, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT.
The amount of dividends payable to our stockholders is determined by our Board and is dependent on a number of factors, including funds available for dividends, our financial condition, provisions in our loans and any agreement we are party to that may restrict our ability to pay dividends or repurchase shares, capital expenditure requirements, as applicable, and requirements of Maryland law.
We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations. As of December 31, 2022, 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 $359.4 million.
We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations. 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.
Total reimbursement expenses for administrative and personnel services provided by the Advisor during the year ended December 31, 2022 were $4.4 million, of which $1.8 million related to administrative and overhead expenses and $2.6 million 38 Table of Contents for salaries, wages, and benefits.
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.
The estimated future undiscounted cash flow considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. We estimate the expected future operating income using in place contractual rent and market rents.
The estimated future undiscounted cash flows consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. We estimate the expected future operating income using in-place contractual rents and market rents.
For the years ended December 31, 2022, 2021 and 2020, approximately $0.5 million, $0.5 million and $0.1 million, 33 Table of Contents respectively, in contingent rental income is included in revenue from tenants in the consolidated statements of operations and comprehensive loss.
For the years ended December 31, 2023, 2022 and 2021, approximately $0.1 million, $0.5 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.
As of December 31, 2022, we are only operating under two cash traps (1140 Avenue of the Americas and 8713 Fifth Avenue), which together, represent 22.4% of the rentable square feet in our portfolio as of December 31 , 2022.
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.
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, 2022, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 6.5%.
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%.
Our Advisor and Property Manager are under common control with 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.
Our Advisor manages our day-to-day business with the assistance of our Property Manager. Our Advisor and Property Manager are under common control with 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.
Adjustments for consolidated partially-owned entities (including our OP) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.
Adjustments for consolidated partially-owned entities (including our OP) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders.
Also, as of December 31, 2022, we still had $3.6 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.
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.
At our 1140 Avenue of the Americas property, during the third quarter of 2021, we also began operating Innovate NYC, a co-working company that is specific to this property only, that offers move-in ready private offices, virtual offices, and meeting space on bespoke terms to clients.
At our 1140 Avenue of the Americas property, during the third quarter of 2021, we also began leasing to Innovate NYC, a co-working company that is specific to this property only, that offers move-in ready private offices, virtual offices, and meeting space on bespoke terms to clients. In November of 2023 Innovate NYC terminated its lease with the Company.
Our ability to sell shares under our existing shelf registration statement including under the Common Stock ATM Program is limited to one third of our market capitalization unless the aggregate value of our Class A Common Stock held by non-affiliates exceeds $75.0 million. As of March 13, 2023, our public float was $25.6 million.
Our ability to sell shares under our existing shelf registration statement including under the Common Stock ATM Program is limited to one third of our market capitalization unless the aggregate value of our Class A common stock held by non-affiliates exceeds $75.0 million. As of March 26, 2024, our public float was $15.1 million.
The Advisor is not obligated to accept shares in lieu of cash in payment of its base management fee and was paid in cash for the fees due in February and March 2023.
The Advisor is not obligated to accept shares in lieu of cash in payment of its base management fee and was paid in cash for the fees due subsequent to January 2023 through February 2024.
During the year ended December 31, 2022 and 2021, our weighted-average outstanding debt balance was $400.4 million and $405.0 million, respectively, with a weighted-average effective interest rate of 4.35% in each period.
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.
We had restricted cash of $6.9 million as of December 31, 2022 as compared to $16.8 million as of December 31, 2021, respectively. We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures.
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.
(3) Net Loss, FFO and Core FFO for the years ended December 31, 2021 and 2020 includes income from the accelerated amortization of the remaining unamortized balance of below-market lease liabilities of approximately $7.9 million and $1.8 million, respectively, which is recorded in Revenue from tenants in the consolidated statements of operations.
(2) Net Loss, FFO and Core FFO for the year ended December 31, 2021 includes income from the accelerated amortization of the remaining unamortized balance of below-market lease liabilities of approximately $7.9 million, which is recorded in Revenue from tenants in the consolidated statements of operations.
(5) Includes expense related to the amortization of the Company's restricted common shares and LTIP Units related to its multi-year outperformance agreement for all periods presented.
(3) Includes expense related to the amortization of our restricted common shares and LTIP Units related to our multi-year outperformance agreement for all periods presented.
For the year ended December 31, 2022, from a U.S. federal income tax perspective, 100% of dividends, or $0.20 ($1.60 per share adjusted for the Reverse Stock Split), represented a return of capital.
For the year ended December 31, 2022 , from a U.S. federal income tax perspective, 100% of distributions, or $0.20 ($1.60 per share adjusted for the Reverse Stock Split), represented a return of capital and no part constituted a taxable dividend.
Our board of directors did not declare dividends for any later payment in 2022 and plans to reevaluate the dividend policy on a quarterly basis but there is no assurance as to when or if the board will authorize future dividends or the amount of any future dividends.
Our Board did not declare dividends for any later payment in 2022 and 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. There were no dividend payments made during the year ended December 31, 2023.
We funded our capital expenditures during the year ended December 31, 2022 with cash on hand consisting of proceeds from previous financings and, cash retained from the Advisor either reinvesting its base management fees in shares of our Common Stock or electing to receive shares of our Common Stock in lieu cash for its base management fee.
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.
The Company does not consider these expenses to be part of its normal operating performance and has, accordingly, increased its Core FFO for this amount.
We do not consider these expenses to be part of our normal operating performance and has, accordingly, increased its Core FFO for this amount.
A new swap was entered into for a notional value that aligns with the remaining principal balance owed on the mortgage using a new SOFR effective rate (see Note 6 — Derivatives and Hedging Activities to our consolidated financial statements included in this Annual Report on Form 10-K).
A new swap was entered into for a notional value that aligns with the remaining principal balance owed on the mortgage using a new SOFR effective rate (see Note 6 — Derivatives and Hedging Activities to our 2023 Financial Statements).
Year Ended December 31, (In thousands) 2022 2021 Net loss attributable to common stockholders (in accordance with GAAP) $ (45,896) $ (39,466) Depreciation and amortization 28,666 31,057 Interest Expense 18,924 19,090 Income tax expense — 37 Impairment of real estate investments — 1,452 Equity-based compensation 8,782 8,475 Other expense (income) 27 (47) Asset and property management fees to related parties 7,082 7,554 General and administrative 12,493 8,704 Accretion of below- and amortization of above-market lease liabilities and assets, net (8) (8,671) Straight-line rent (revenues as lessor) (3,274) (3,788) Straight-line ground rent (expenses as lessee) 110 109 Cash NOI $ 26,906 $ 24,506 Dividends For the taxable years we elected to be taxed as a REIT (commencing with our taxable year ended December 31, 2014 through December 31, 2022) we elect to be taxed as a REIT and 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.
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.
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 report for a description of these risks and uncertainties.
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.
FFO is not equivalent to net income or loss as determined under GAAP. We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”).
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”).
As of December 31, 2022 two of our mortgages aggregating $109.0 million in principal amount remained in cash trap event, all 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, 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.
We did not recognize any impairment charges for the years ended December 31, 2022 or 2020 Depreciation and Amortization Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Depreciation and Amortization Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Depreciation and Amortization Depreciation and amortization expense decreased $2.4 million to $28.7 million for the year ended December 31, 2022, compared to $31.1 million for the year ended December 31, 2021.
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.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time.
Our FFO calculation complies with NAREIT’s definition. 49 Table of Contents The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time.
To determine whether an asset is impaired, the carrying value of the property’s asset group is compared to the estimated future undiscounted cash flow that management expects the property’s asset group will generate, including any estimated proceeds from the eventual sale of the property’s asset group.
To determine whether an asset is impaired, the carrying value of the property or asset group is compared to the estimated future undiscounted cash flows that we expect the property or asset group will generate, including any estimated proceeds from the eventual sale of the property or asset group.
See also, “Cash, Cash Equivalents and Restricted Cash” section above for potential limits on our ability to sell shares under the Common Stock ATM Program.
See also, “Cash, Cash Equivalents and Restricted Cash” section above for potential limits on our ability to sell shares under the Common Stock ATM Program. There were no shares sold under the Common Stock ATM Program for the year ended December 31, 2023.
Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases.
Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates and the value of in-place leases as applicable. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases.
Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. 49 Table of Contents Core Funds from Operations Beginning in the third quarter 2020, following the listing of our Class A common stock on the NYSE, we began presenting Core FFO, also a non-GAAP metric.
Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K for further details. During the years ended December 31, 2022 and 2021 the annual limits on reimbursement for administrative and overhead expenses on and for salaries, wages, and benefit were reached.
During the years ended December 31, 2023 and 2022 the annual limits on reimbursement for administrative and overhead expenses on and for salaries, wages, and benefit were reached. See Note 9 — Related Party Transactions and Arrangements and Note 14 — Subsequent Events 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, 2022 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.
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..
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.
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.
Recently Issued Accounting Pronouncements See Note 2 — Summary of Significant Accounting Policies — “ Recently Issued Accounting Pronouncements” to our consolidated financial statements included in this Annual Report on Form 10-K for further discussion. Results of Operations Below is a discussion of our results of operations for the years ended December 31, 2022 and 2021.
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.
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.
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.
Common Stock ATM Program On October 1, 2020, we entered into an equity distribution agreement, pursuant to which we may, from time to time, offer, issue and sell to the public, through our sales agents, shares of Class A common stock, having an aggregate offering price of up to $250.0 million in our Common Stock ATM Program.
Except as described herein, we were in compliance with the remaining covenants under our mortgage notes payable as of December 31, 2023. 48 Table of Contents Common Stock ATM Program On October 1, 2020, we entered into an equity distribution agreement, pursuant to which we may, from time to time, offer, issue and sell to the public, through our sales agents, shares of Class A common stock, having an aggregate offering price of up to $250.0 million in our Common Stock ATM Program.
We also issued 251,256 shares (31,407 adjusted for the Reverse Stock Split) of our Class A Common Stock to the Advisor as a result of the Advisor’s decision to accept the shares in lieu of cash in respect of the base management fee paid to the Advisor for advisory services rendered in January 2023.
We also issued 70,607 shares of our Class A common stock to the Advisor as a result of the Advisor’s decision to accept the shares in lieu of cash in respect of the base management fee paid to the Advisor for advisory services rendered in March of 2024.

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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 changeSubsequent to December 31, 2022, in February 2023, we received net proceeds of approximately $4.1 million from our non-transferable 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 shar e (see Note 15 — Subsequent Events to our consolidated financial statements included in this Annual Report on Form 10-K).
Biggest changeDuring 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.
We will not enter into interest rate swaps or caps, or similar hedging transactions or derivative arrangements for speculative purposes, but 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.
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.
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 must comply with a number of other organizational and operational requirements.
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.
Some of these competitors, including larger REITs, have substantially greater financial resources than we have and generally may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of tenants.
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.
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 December 31, 2022. As discussed above, we terminated that election effective January 1, 2023.
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.
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 12 months.
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.
We may reevaluate and change our investing or financing policies in 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 .
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 .
Subject to availability, we may also seek to generate capital from: (1) equity offerings of common and preferred stock; and (2) 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.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. 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”).
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”).
We are now a taxable C corporation beginning with the taxable year ending December 31, 2023. 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.
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.
However, there are no other specific competition-related factors known to us at this time. 3 Table of Contents 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.
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.
Further, any cash dividends we pay to our stockholders will be taxed as dividend income under federal tax law and not at rates applicable to dividends paid by REITs.
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.
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.
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.
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.
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.
In some recent periods, including the third and fourth quarters of 2020 and years ended December 31, 2021 and 2022, the net cash provided by our property operations has not been sufficient to fund operating expenses and other capital requirements.
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.
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 2 Table of Contents acceptable or favorable terms, or at all” herein for a discussion of how we have funded our capital requirements and some related risks.
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.
We did not make any material capital expenditures in connection with environmental, health and safety laws, ordinances and regulations in 2022 and do not expect that we will be required to make any such material capital expenditures during 2023. Human Capital Resources We are an externally managed company and thus have no employees.
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.
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 business we may acquire.
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.
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. As noted above, we terminated our REIT election, effective January 1, 2023, and we are now a taxable “C corporation” beginning with such taxable year.
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.
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.” Competition The New York City real estate market, where our properties are currently located, is highly competitive.
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”.
For more detailed information on all of these transactions, please see Note 7 — Stockholders’ Equity and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K.
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.
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.
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.
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. For additional information on the impacts of COVID-19 on our business as well as managements actions, see “Management Update on the Impacts of the COVID-19 Pandemic” in Item 7.
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.
COVID-19 Update New York City, where all of our properties are located, has been among the hardest hit locations in the country and fully reopened on March 7, 2022. Our properties remain accessible to all tenants. However, even as the operating restrictions have now expired, not all tenants have fully resumed operations.
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.
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. Financing Strategies and Policies In 2022 and other recent years, our primary source of capital has been cash on hand, representing excess proceeds from property-level financing secured by then unencumbered underlying property or properties.
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.
Removed
During 2022 other sources of capital included proceeds received from our Common Stock ATM Program (the “Common Stock ATM Program”), which included the sale of Class A common stock to Bellevue Capital Partners, LLC (“Bellevue”).
Added
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.
Removed
Also, during 2022, we retained cash as a result of the Advisor reinvesting its base management fee in shares of our Class A common stock over the six-month period from February to July 2022 and from the Advisor electing to receive shares of our Class A common stock in lieu of cash for its base management fee over the five-month period from August 2022 to December 2022.
Added
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.
Removed
Our portfolio is primarily comprised of office and retail tenants. We have collected 100% of cash rent due across our entire portfolio for the three months December 31, 2022 (based on annualized straight-line rent as of December 31, 2022).
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 9 — Related Party Transactions to our 2023 Financial Statements.
Removed
In addition, we currently 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
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
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 .

Other NYC 10-K year-over-year comparisons