UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number: 001-39448

American Strategic Investment Co.

(Exact name of registrant as specified in its charter)

Maryland	46-4380248
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

222 Bellevue Ave., Newport, RI	02840
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (212) 415-6500

Securities registered pursuant to Section 12(b) of the Act: None.
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.01 par value per share	NYC	New York Stock Exchange
Class A Preferred Stock Purchase Rights		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of May 7, 2024, the registrant had 2,578,702 shares of Class A common stock outstanding.

AMERICAN STRATEGIC INVESTMENT CO.

INDEX TO FINANCIAL STATEMENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023	3
Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023 (Unaudited)	4
Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2024 and 2023 (Unaudited)	5
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023(Unaudited)	6
Notes to Consolidated Financial Statements (Unaudited)	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
Item 4. Controls and Procedures	43
PART II - OTHER INFORMATION	44
Item 1. Legal Proceedings	44
Item 1A. Risk Factors	45
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchase of Equity Securities	46
Item 3. Defaults Upon Senior Securities	46
Item 4. Mine Safety Disclosures	46
Item 5. Other Information	46
Item 6. Exhibits	46
Signatures	49

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICAN STRATEGIC INVESTMENT CO.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

	March 31, 2024		December 31, 2023
ASSETS	(Unaudited)
Real estate investments, at cost:
Land	$	188,935	$	188,935
Buildings and improvements	479,672		479,265
Acquired intangible assets	56,919		56,929
Total real estate investments, at cost	725,526		725,129
Less accumulated depreciation and amortization	(149,916)		(144,956)
Total real estate investments, net	575,610		580,173
Cash and cash equivalents	5,293		5,292
Restricted cash	8,806		7,516
Operating lease right-of-use asset	54,682		54,737
Prepaid expenses and other assets	5,908		6,150
Derivative asset, at fair value	—		400
Straight-line rent receivable	30,782		30,752
Deferred leasing costs, net	8,718		9,152
Total assets	$	689,799	$	694,172
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net	$	396,088	$	395,702
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $615 and $20 at March 31, 2024 and December 31, 2023, respectively)	15,488		12,975
Operating lease liability	54,641		54,657
Below-market lease liabilities, net	1,848		2,061
Deferred revenue	4,367		3,983
Total liabilities	472,432		469,378
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at March 31, 2024 and December 31, 2023	—		—
Common stock, $0.01 par value, 300,000,000 shares authorized, 2,403,994 and 2,334,340 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	24		23
Additional paid-in capital	730,230		729,644
Accumulated other comprehensive income	—		406
Distributions in excess of accumulated earnings	(512,887)		(505,279)
Total equity	217,367		224,794
Total liabilities and equity	$	689,799	$	694,172

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

AMERICAN STRATEGIC INVESTMENT CO.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except for share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Revenue from tenants	$	15,481	$	15,534
Operating expenses:
Asset and property management fees to related parties	1,903		1,884
Property operating	8,382		8,421
Equity-based compensation	54		2,200
General and administrative	2,801		3,181
Depreciation and amortization	5,261		6,952
Total operating expenses	18,401		22,638
Operating loss	(2,920)		(7,104)
Other income (expense):
Interest expense	(4,697)		(4,663)
Other income (expense)	9		9
Total other expense	(4,688)		(4,654)
Net loss before income tax	(7,608)		(11,758)
Net loss and Net loss attributable to common stockholders	$	(7,608)	$	(11,758)
Other comprehensive income (loss):
Change in unrealized (loss) gain on derivative	(406)		(382)
Other comprehensive (loss) income	(406)		(382)
Comprehensive loss	$	(8,014)	$	(12,140)
Weighted-average shares outstanding — Basic and Diluted	2,322,594		2,038,880
Net loss per share attributable to common stockholders — Basic and Diluted	$	(3.28)	$	(5.77)
Weighted-average shares outstanding — Basic and Diluted	2,322,594		2,038,880
Net loss per share attributable to common stockholders — Basic and Diluted	$	(3.28)	$	(5.77)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

AMERICAN STRATEGIC INVESTMENT CO.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for share data)

(Unaudited)

	Three Months Ended March 31, 2024
	Class A Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, December 31, 2023	2,334,340	$	23	$	729,644	$	406	$	(505,279)	$	224,794	$	—	$	224,794
Common stock issued to the Advisor in connection with management fees (see Note 7)	70,607	1		532		—		—		533		—		533
Equity-based compensation	(953)	—		54		—		—		54		—		54
Net loss	—	—		—		—		(7,608)		(7,608)		—		(7,608)
Other comprehensive loss	—	—		—		(406)		—		(406)		—		(406)
Balance, March 31, 2024	2,403,994	$	24	$	730,230	$	—	$	(512,887)	$	217,367	$	—	$	217,367

	Three Months Ended March 31, 2023
	Class A Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital (1)		Accumulated Other Comprehensive Loss		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, December 31, 2022	1,886,298	$	19	$	698,761	$	1,637	$	(399,355)	$	301,062	$	20,514	$	321,576
Common stock issued related to Rights Offering	386,100	4		4,055		—		—		4,059		—		4,059
Common stock issued to the Advisor in connection with management fees (see Note 7)	31,407	—		485		—		—		485		—		485
Redemption of fraction shares of common stock	(1,948)			(24)						(24)				(24)
Equity-based compensation	2,038	—		108		—		—		108		2,092		2,200
Net loss	—	—		—		—		(11,758)		(11,758)		—		(11,758)
Other comprehensive loss	—	—		—		(382)		—		(382)		—		(382)
Balance, March 31, 2023	2,303,895	$	23	$	703,385	$	1,255	$	(411,113)	$	293,550	$	22,606	$	316,156

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

AMERICAN STRATEGIC INVESTMENT CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(7,608)	$	(11,758)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	5,261		6,952
Amortization of deferred financing costs	386		386
Accretion of below- and amortization of above-market lease liabilities and assets, net	(55)		36
Equity-based compensation	54		2,200
Management fees paid/reinvested in common stock by the Advisor	533		485
Impairments of real estate investments	—		—
Changes in assets and liabilities:
Straight-line rent receivable	(30)		(204)
Straight-line rent payable	27		27
Prepaid expenses, other assets and deferred costs	234		(865)
Accounts payable, accrued expenses and other liabilities	2,470		1,193
Deferred revenue	383		806
Net cash provided by (used in) operating activities	1,655		(742)
Cash flows from investing activities:
Capital expenditures	(364)		(2,308)
Net cash used in investing activities	(364)		(2,308)
Cash flows from financing activities:
Proceeds from Rights Offering, net (see Note 7)	—		4,059
Redemption of fractional shares of common stock and restricted shares	—		(24)
Net cash provided by (used in) financing activities	—		4,035
Net change in cash, cash equivalents and restricted cash	1,291		985
Cash, cash equivalents and restricted cash, beginning of period	12,808		16,117
Cash, cash equivalents and restricted cash, end of period	$	14,099	$	17,102
Cash and cash equivalents	$	5,293	$	8,753
Restricted cash	8,806		8,349
Cash, cash equivalents and restricted cash, end of period	$	14,099	$	17,102
Supplemental Disclosures:
Cash paid for interest	$	4,321	$	4,190
Non-Cash Investing and Financing Activities:
Net change in accrued capital expenditures for the period	43		(867)
Common stock issued to the Advisor in connection with management fees (see Note 7)	533		485

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Note 1 — Organization

American Strategic Investment Co. (including, New York City Operating Partnership L.P., (the “OP”) and its subsidiaries, the “Company”) is an externally managed company that currently owns a portfolio of commercial real estate located within the five boroughs of New York City, primarily Manhattan. The Company’s real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities. As of March 31, 2024, the Company owned seven properties consisting of 1.2 million rentable square feet.

On December 30, 2022, the Company announced that it was changing its business strategy by expanding the scope of the assets and businesses it may own and operate. The Company may now seek to acquire assets such as hotels, expand its co-working office space business and seek to invest in and operate businesses such as hotel or parking lot management companies. By investing in other asset types, the Company may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”). Excluding hotels, these additional assets do not generate REIT-qualifying income and are operating businesses. As a result, on January 9, 2023, the Company’s board of directors authorized the termination of the Company’s REIT election which became effective on January 1, 2023. Historically, the Company filed an election to be taxed as a REIT commencing with its taxable year ended December 31, 2014, which remained in effect with respect to each taxable year ending on or before December 31, 2022.

As a consequence of the Company’s decision to terminate its election to be taxed as a REIT, the ownership limitations set forth in Section 5.7 of its charter, including, without limitation, the “Aggregate Share Ownership Limit,” as defined therein, no longer apply. The Company filed with the State Department of Assessments and Taxation of Maryland a Certificate of Notice reflecting the board’s determination that it is no longer in its best interest to continue to qualify as a REIT and that therefore the Aggregate Share Ownership Limit will no longer be in effect.

On January 11, 2023 the Company effected a 1-for-8 reverse stock split that was previously approved by the Company’s board of directors, resulting in each outstanding share of Class A common stock. par value $0.01 per share (the “Class A common stock”) being converted into 0.125 shares of common stock, with no fractional shares being issued (the “Reverse Stock Split”). All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Reverse Stock Split.

Additionally, effective January 19, 2023, the Company amended its charter to change its name to “American Strategic Investment Co.” from “New York City REIT, Inc.” Trading of the Company’s 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 the Company’s Class A common stock were first listed on the New York Stock Exchange (“NYSE”) on August 18, 2020. Also, on February 22, 2023, the Company completed a non-transferable rights offering raising gross proceeds of $5.0 million (the “Rights Offering”). As a result, the Company issued 386,100 shares of its Class A common stock subscribed for in the Rights Offering on February 27, 2023.

Substantially all of the Company’s business is conducted through the OP and its wholly-owned subsidiaries. The Company’s advisor, New York City Advisors, LLC (the “Advisor”), manages the Company’s day-to-day business with the assistance of the Company’s property manager, New York City Properties, LLC (the “Property Manager”). The Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to the Company. The Company also reimburses these entities for certain expenses they incur in providing these services. Please see Note 9 — Related Party Transactions and Arrangements for additional information on the Company’s Advisor and affiliates of the Advisor, including ownership percentages.

Note 2 — Summary of Significant Accounting Policies

Basis of Accounting

The accompanying consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. The results of operations for the three months ended March 31, 2024 and 2023, respectively, are not necessarily indicative of the results for the entire year or any subsequent interim period.

7

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on April 1, 2024. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2024.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. Substantially all the Company’s assets and liabilities are held by the OP. The Company has determined the OP is a VIE of which the Company is the primary beneficiary.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable.

Non-controlling Interests

The non-controlling interests represent the portion of the equity in the OP that is not owned by the Company. Under the multi-year outperformance agreement with the Advisor (the “2020 OPP”), the OP issued a class of units of limited partnership (“LTIP Units”) during 2020, which have historically been reflected as part of non-controlling interest. The performance period under the 2020 OPP expired on August 18, 2023. Following the end of the performance period, as required under the 2020 OPP the compensation committee of the board of directors of the Company, determined that none of the 501,605 of the LTIP Units subject to the 2020 OPP had been earned, and these LTIP Units were thus automatically forfeited effective as of August 18, 2023. On that date, the Company reclassified $25.8 million of amounts reflected in non-controlling interest for these LTIP Units to additional paid in capital on its consolidated balance sheet and consolidated statement of changes in equity. No amounts remain in non-controlling interests after the expiration date. Please see Note 7 — Stockholders’ Equity and Note 11 — Equity-Based Compensation for additional information.

Continuing Adverse Impacts Since the COVID-19 Pandemic

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. New York City, where all of the Company’s properties are located, was among the hardest hit locations in the country and fully reopened from relevant restrictions and lockdowns in March 2022.

While the Company’s properties remain accessible to all tenants and operating restrictions have now expired, some tenants have vacated, terminated or otherwise did not renew their lease. The Company has incurred increased unreimbursed property operating expenses because the Company’s occupancy has not fully recovered to pre-pandemic levels, and these increased expenses have been compounded by inflation. 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. There can be no assurance that the Company will be able to lease all or any portion of the currently vacant space at any property on acceptable or favorable terms, or at all.

Cash Collection and Mortgage Covenant Breaches

In prior periods, the COVID-19 pandemic caused certain of the Company’s tenants to be unable to make rent payments to the Company timely, or at all. Rent collections from the Company’s tenants have generally been timely in the quarters ended March 31, 2024 and 2023 and no new deferral or abatement agreements were entered into. In the years ended December 31, 2021 and 2022, the Company executed different types of lease amendments with tenants which included deferrals, abatements, extensions to the term of the leases, and in one instance, a reduction of the lease term.

8

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Beginning in the third and fourth quarters of 2020, the operating results at (i) 9 Times Square, (ii) 1140 Avenue of Americas, (iii) Laurel/Riverside and (iv) 8713 Fifth Avenue properties caused cash trap events under their non-recourse mortgages, which are not considered events of default. When a cash trap is active, operating cash flow from the property after debt service is held in restricted cash as additional collateral for the loan, and the Company is unable to access those funds for other purposes. The Company remains in breach of the 1140 Avenue of the Americas and 8713 Fifth Avenue loans as of March 31, 2024. See Note 4 — Mortgage Notes Payable, Net for further details regarding the status of the debt covenants under the above mentioned mortgages as of March 31, 2024.

Revenue Recognition

The Company’s revenues, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. As of March 31, 2024, these leases had a weighted-average remaining lease term of 6.3 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires that the Company record a receivable for, and include in revenue from tenants, unbilled rent receivables that the Company will receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses (recorded in total revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. To the extent such costs exceed the applicable tenant’s base year, many but not all of the Company’s leases require the tenant to pay its allocable share of increases in operating expenses, which may include common area maintenance costs, real estate taxes and insurance. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.

The Company continually reviews receivables related to rent and unbilled rents receivable and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under the leasing standard, the Company is required to assess, based on credit risk, if it is probable that the Company will collect virtually all of the lease payments at the lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. In fiscal years ended December 31, 2022, 2021 and 2020, respectively, this assessment included consideration of the impacts of the COVID-19 pandemic on the Company’s tenant’s ability to pay rents in accordance with their contracts. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that it is probable that it will collect virtually all of the lease payments (base rent and additional rent), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and the straight-line rent receivable accrued will be written off, as well as any accounts receivable, where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants in accordance with current accounting rules, on the accompanying consolidated statements of operations and comprehensive loss in the period the related costs are incurred, as applicable.

In accordance with lease accounting rules the Company records uncollectible amounts as reductions in revenue from tenants. During the three months ended March 31, 2024 and 2023, the Company had no such reductions in revenue which excludes rents from tenants on a cash basis not collected.

9

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Accounting for Leases

Lessor Accounting

In accordance with the lease accounting standard, all leases as lessor prior to adoption were accounted for as operating leases. The Company evaluates new leases originated after the adoption date (by the Company or by a predecessor lessor/owner) pursuant to the new guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than major part of remaining economic useful life of the asset (e.g., equal to or greater than 75%), the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or the asset so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases are 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, the Company did not have any leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules. As of March 31, 2024 the Company did not have any leases as a lessor that would be considered as sales-type leases or financing under sales-leaseback rules.

As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.

Lessee Accounting

For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. 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. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 8 — Commitments and Contingencies.

We are the lessee under a land lease which was previously classified as an operating lease prior to adoption of lease accounting and will continue to be classified as an operating lease under transition elections unless subsequently modified. This lease is reflected on the Company’s consolidated balance sheets and the rent expense is reflected on a straight-line basis over the lease term.

Recently Issued Accounting Pronouncements

Not Yet Adopted as of March 31, 2024

In November 2023, the FASB issued ASU 2023-07, Segment Reporting — Improvements to Reportable Segment Disclosures (Topic 280). The guidance in Topic 280 may be elected beginning December 15, 2023, with interim periods beginning after December 15, 2024, as segment reporting activities occur. The new standard requires a public entity to disclose significant segment expense categories and amounts for each reportable segment. A significant expense is an expense that (i) is significant to the segment, (ii) regularly provided or easily computed from information regularly provided to management and (iii) included in the reported measure of profit or loss. The Company is continuing to evaluate the impact on the Company’s financial statements. The Company does not believe the impact of the adoption of the standard will be material to the financial statements.

Note 3 — Real Estate Investments

There were no real estate assets acquired or liabilities assumed during the three months ended March 31, 2024 or 2023. Also, there were no dispositions of real estate during the three months ended March 31, 2024 or 2023.

10

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:

	Three Months Ended March 31,
	2024		2023
In-place leases	$	580	$	1,094
Other intangibles	177		177
Total included in depreciation and amortization	$	757	$	1,271
Above-market lease intangibles	$	145	$	280
Below-market lease liabilities	(213)		(256)
Total included in revenue from tenants	$	(68)	$	24
Below-market ground lease, included in property operating expenses	$	12	$	12

The following table provides the projected amortization expense and adjustments to revenues for the next five years as of March 31, 2024:

(In thousands)	2024 (remainder)		2025		2026		2027		2028
In-place leases	$	1,509	$	1,164	$	632	$	624	$	584
Other intangibles	531		708		708		708		708
Total to be included in depreciation and amortization	$	2,040	$	1,872	$	1,340	$	1,332	$	1,292
Above-market lease assets	$	277	$	123	$	117	$	117	$	112
Below-market lease liabilities	(638)		(503)		(183)		(180)		(180)
Total to be included in revenue from tenants	$	(361)	$	(380)	$	(66)	$	(63)	$	(68)

Significant Tenants

As of March 31, 2024 and December 31, 2023, 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.

11

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Note 4 — Mortgage Notes Payable, Net

The Company’s mortgage notes payable, net as of March 31, 2024 and December 31, 2023 are as follows:

		Outstanding Loan Amount
Portfolio	Encumbered Properties	March 31, 2024		December 31, 2023		Effective Interest Rate		Interest Rate		Maturity
		(In thousands)		(In thousands)
123 William Street	1	$	140,000	$	140,000	4.74	%	Fixed		Mar. 2027
9 Times Square (5)	1	49,500		49,500		3.73	%	Fixed	(1)	Apr. 2024
1140 Avenue of the Americas (2)	1	99,000		99,000		4.18	%	Fixed		Jul. 2026
400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage	2	50,000		50,000		4.59	%	Fixed		May 2028
8713 Fifth Avenue (3)	1	10,000		10,000		5.05	%	Fixed		Nov. 2028
196 Orchard Street	1	51,000		51,000		3.91	%	Fixed		Aug. 2029
Mortgage notes payable, gross	7	399,500		399,500		4.36	%
Less: deferred financing costs, net (4)		(3,412)		(3,798)
Mortgage notes payable, net		$	396,088	$	395,702

_______

(1)Fixed as a result of the Company having entered into a “pay-fixed” interest rate swap agreement, which is included in derivatives, at fair value on the consolidated balance sheet as of March 31, 2024 (see Note 6 — Derivatives and Hedging Activities for additional information).

(2)Due to covenant breaches resulting in cash trap for this property, all cash generated from operating this property is being held in a segregated account, and the Company will not have access to the excess cash flows until the covenant breaches are cleared. As of March 31, 2024 and December 31, 2023, there were $2.6 million and $2.5 million, respectively, held in a cash management account, which is part of the Company’s restricted cash on its consolidated balance sheet. See “Debt Covenants” section below for additional details.

(3)Due to covenant breaches resulting in cash trap for this property, all cash generated from operating this property, if any, is required to be held in a segregated account, and the Company will not have access to the excess cash flows until the covenant breaches are cleared. As of March 31, 2024 and December 31, 2023, no cash was trapped related to this property. The Company signed a lease with a new tenant at this property in November 2021, and the tenant began occupying a portion of the leased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of the space in the second quarter of the year ending December 31, 2024, which will bring the occupancy to 100.0%.

(4)Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.

(5)Subsequent to March 31, 2024, the Company entered into an amendment to the loan agreement that extends the maturity of the loan to October 31, 2024, (with the option of an additional extension to January 31, 2025, subject to certain conditions) at an effective variable interest rate of one-month SOFR plus a spread of 2.60% per annum. As announced in the Company’s press release on April 29, 2024, the Company has determined to market certain of their properties for sale, including 9 Times Square. This amended agreement allows the Company to begin marketing the property for sale, with the option to extend in the event the property is under contract for sale but has not yet closed at the time of maturity. For additional information please see Note 14 — Subsequent Events.

Collateral and Principal Payments

Real estate assets and intangible assets of $716.3 million, at cost (net of below-market lease liabilities), as of March 31, 2024 have been pledged as collateral to the Company’s mortgage notes payable and are not available to satisfy the Company’s other obligations unless first satisfying the mortgage note payable on the property. The Company is required to make payments of interest on its mortgage notes payable on a monthly basis.

12

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

The following table summarizes the scheduled aggregate principal payments subsequent to March 31, 2024:

(In thousands)	Future Minimum Principal Payments
2024 (remainder)	$	49,500
2024 (1)	—
2026	99,000
2027	140,000
2028	60,000
Thereafter	51,000
Total	$	399,500

(1)Subsequent to March 31, 2024, the Company entered into an amendment to the loan agreement that extends the maturity of the loan to October 31, 2024, (with the option of an additional extension to January 31, 2025, subject to certain conditions) at an effective variable interest rate of one-month SOFR plus a spread 2.60% per annum. As announced in the Company’s press release on April 29, 2024, the Company has determined to market certain of their properties for sale, including 9 Times Square. This amended agreement allows the Company to begin marketing the property for sale, with the option to extend in the event the property is under contract for sale but has not yet closed at the time of maturity. For additional information please see Note 14 — Subsequent Events.

Debt Covenants

1140 Avenue of the Americas

The Company has breached both a debt service coverage provision and a reserve fund provision under its non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 15 quarters ended March 31, 2024. The principal amount of the loan was $99.0 million as of March 31, 2024. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after paying operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured if the Company satisfies the required debt service coverage ratio for two consecutive quarters, whereupon the additional collateral will be released. The Company can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications. As of March 31, 2024 and December 31, 2023 the Company had $2.6 million and $2.5 million, respectively, in cash that is retained by the lender and maintained in restricted cash on the Company’s consolidated balance sheet as of those dates.

8713 Fifth Avenue

The Company breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue in each of the last 15 quarters ended March 31, 2024. The principal amount for the loan was $10.0 million as of March 31, 2024. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period that has been ongoing. The Company has the ability to avoid the excess cash flow sweep period by electing to fund a reserve in the amount of $125,000 of additional collateral in cash or as a letter of credit. As of the date of filing this Quarterly Report on Form 10-Q, the Company had not yet determined whether it will do so. If the Company continues to not elect to fund the $125,000 additional collateral, 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.

Additionally, in the event that the debt service coverage ratio covenant remains in breach at or below the current level for two consecutive calendar quarters and the lender reasonably determines that such breach is due to the property not being prudently managed by the current manager, the lender has the right, but not the obligation, to require that the Company replace the current manager with a third party manager chosen by the Company. This property did not generate any excess cash since the breach occurred and thus no cash has ever been trapped related to this property. The Company signed a lease with a new tenant at this property in November 2021, and the tenant began occupying a portion of the leased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of the space in the second quarter of the year ending December 31, 2024, which will bring the occupancy to 100.0%.

13

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

400 E. 67th Street/200 Riverside Blvd.

The Company entered a lease sweep period under the non-recourse mortgage secured by 400 E. 67th Street/200 Riverside Blvd. in the three months ended March 31, 2024, resulting from a near-maturity lease with a major tenant at the property set to expire in the second quarter of 2024 that, as of March 31, 2024, was not renewed or extended. The principal amount for the loan was $50.0 million as of March 31, 2024. Under the loan agreement, a lease sweep period is triggered when (i) the date that is twelve months prior to the end of the term of the major lease, (ii) the date required by the major tenant to give notice of its exercise of a renewal option, (iii) any major tenant lease is surrendered or terminated prior to the expiration date, (iv) if the major tenant discontinues its operations and the major tenants long term debt is not rated lower than investment grade, (v) any material default under the major tenant’s lease, (vi) any major tenant insolvency proceeding. Under the lease sweep period, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral.

9 Times Square

Subsequent to March 31, 2024, the Company entered a cash sweep period under the mortgage secured by the 9 Times Square asset pursuant to an amendment which, among other things, extends the maturity of the loan from April 2024 to October 2024. The amendment provides that Excess Cash Flow (as defined in the Amendment) shall be deposited to an account maintained by the Administrative Agent within ten (10) calendar days of the end of each month. For additional information, please see Note 14 — Subsequent Events.

As of March 31, 2024 the Company had $1.1 million retained by the lender in a restricted cash account on the Company’s consolidated balance sheet. The Company may exit the lease sweep period when the major tenant executes a renewal or extension option.

Other Debt Covenants

The Company was in compliance with the remaining covenants under its other mortgage notes payable as of March 31, 2024 and, it continues to monitor compliance with those provisions. If the Company experiences additional lease terminations, due to tenant bankruptcies or otherwise, or tenants placed on a cash basis continue to not pay rent, it is possible that certain of the covenants on other loans may be breached and the Company may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, the Company’s other mortgages also contain cash management provisions that are not considered events of default, and as such, acceleration of principal would only occur upon an event of default.

Note 5 — Fair Value of Financial Instruments

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the instrument. This alternative approach also reflects the contractual terms of the instrument, as applicable, including the period to maturity, and may use observable market-based inputs, including interest rate curves and implied volatilities, and unobservable inputs, such as expected volatility. The guidance defines three levels of inputs that may be used to measure fair value:

Level 1	—	Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2	—	Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3	—	Unobservable inputs that reflect the entity’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

14

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Financial Instruments Measured at Fair Value on a Recurring Basis

Derivative Instruments

The Company’s derivative instruments are measured at fair value on a recurring basis. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with this derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparty. However, as of March 31, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivatives valuation in its entirety is classified in Level 2 of the fair value hierarchy.

The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.

(In thousands)	Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
March 31, 2024
Interest rate “Pay - Fixed” swaps - assets	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—
December 31, 2023
Interest rate “Pay - Fixed” swaps - assets	$	—	$	400	$	—	$	400
Total	$	—	$	400	$	—	$	400

Financial Instruments That Are Not Reported at Fair Value

The Company is required to disclose at least annually the fair value of financial instruments for which it is practicable to estimate the value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other assets, accounts payable and distributions payable approximate their carrying value on the consolidated balance sheets due to their short-term nature.

The fair values of the Company’s financial instruments that are not reported at fair value on the consolidated balance sheet are reported below:

		March 31, 2024				December 31, 2023
(In thousands)	Level	Gross Principal Balance		Fair Value		Gross Principal Balance		Fair Value
Mortgage note payable — 9 Times Square	3	$	49,500	$	49,452	$	49,500	$	49,265
Mortgage note payable — 1140 Avenue of the Americas	3	99,000		69,570		99,000		69,619
Mortgage note payable — 123 William Street	3	140,000		129,242		140,000		130,463
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage	3	50,000		44,837		50,000		45,442
Mortgage note payable — 8713 Fifth Avenue	3	10,000		9,050		10,000		9,193
Mortgage note payable — 196 Orchard Street	3	51,000		44,590		51,000		44,857
Total		$	399,500	$	346,741	$	399,500	$	348,839

15

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Note 6 — Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company currently uses derivative financial instruments, including an interest rate swap, and may in the future use others, including options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company endeavors to only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Company’s consolidated balance sheets as of March 31, 2024 and December 31, 2023.

(In thousands)	Balance Sheet Location	March 31, 2024		December 31, 2023
Derivatives designated as hedging instruments:
Interest Rate “Pay-fixed” Swap	Derivative asset, at fair value	$	—	$	400

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate collars designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract and payments of variable-rate amounts if interest rates fall below the floor strike rate on the contract.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2024 and year ended December 31, 2023, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. In connection with the modification and partial pay down of the Company’s mortgage loan on its 9 Times Square property in March 2022, the Company terminated a $55.0 million notional, LIBOR based “pay-fixed” interest rate swap and replaced it with a $49.5 million notional, SOFR based “pay-fixed” interest rate swap. In connection with this termination/replacement of the swap derivatives, the Company reflected as a charge (associated with the reduced notional amount) of approximately $38,338 in Other Income (Expense) on the Company’s Statement of Operations for the six month period ended June 30, 2022. At the time of the modification a net carrying amount reflecting the amount paid and the off market value rolled into the new swap and remained in Accumulated Other Comprehensive Income. The amount will be amortized into interest expense over the term of the hedged item. There was $66 of unamortized balance left as of March 31, 2024.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates that $65 will be reclassified from other comprehensive income (loss) as a decrease to interest expense.

As of March 31, 2024 and December 31, 2023, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk.

	March 31, 2024			December 31, 2023
Interest Rate Derivative	Number of Instruments	Notional Amount		Number of Instruments	Notional Amount
		(In thousands)			(In thousands)
Interest Rate “Pay-fixed” Swap	1	$	49,500	1	$	49,500

16

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the periods indicated:

	Three Months Ended March 31,
(In thousands)	2024		2023
Amount of gain (loss) recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)	$	8	$	(74)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income as interest expense	$	414	$	308
Total interest expense recorded in consolidated statements of operations and comprehensive loss	$	4,697	$	4,663

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2024 and December 31, 2023. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Company’s consolidated balance sheets.

									Gross Amounts Not Offset on the Balance Sheet
(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts of Recognized (Liabilities)		Gross Amounts Offset on the Balance Sheet		Net Amounts of Assets (Liabilities) Presented on the Balance Sheet		Financial Instruments		Cash Collateral Received (Posted)		Net Amount
March 31, 2024	$	—	$	—	$	—	$	—	$	—	$	—	—
December 31, 2023	$	400	$	—	$	—	$	400	$	—	$	—	400

Credit-Risk-Related Contingent Features

The Company has agreements with its derivative counterparty that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

As of March 31, 2024, the Company did not have any derivatives with a fair value in a net liability position including accrued interest but excluding any adjustment for nonperformance risk. As of March 31, 2024, the Company did not post any collateral related to these agreements and was not in breach of any agreement provisions.

Note 7 — Stockholders’ Equity

As of March 31, 2024 and December 31, 2023, the Company had 2.4 million and 2.3 million shares of common stock outstanding, respectively, including unvested restricted shares. As of March 31, 2024, all of the Company’s shares of common stock outstanding were Class A common stock, including unvested restricted shares.

Rights Offering

In February 2023, the Company raised gross proceeds of $5.0 million ($4.1 million of net proceeds) from its Rights Offering, which entitled holders of rights to purchase 0.20130805 of a share of its Class A common stock for every right held at a subscription price of $12.95 per whole share. As a result, the Company issued 386,100 shares of its Class A common stock subscribed for in the Rights Offering on February 27, 2023. In connection with the Rights Offering, Bellevue and its affiliates acquired approximately 367,956 shares.

Dividends

On July 1, 2022, the Company announced that it suspended paying dividends and has not declared or paid dividends, beginning with the quarter ended June 30, 2022.

17

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Class A Common Stock Issued to the Advisor In Lieu of Cash

In January 2023, the Advisor elected to receive shares of Class A common stock in lieu of cash in respect of its management fee for that month. The Company issued 31,407 shares of its Class A common stock using the 10-day average price of $15.92 per share, which was greater than minimum price required by the NYSE rules. The Company paid the Advisor in cash for the Advisor’s management fees in subsequent months through February 2024.

In March 2024, the Advisor elected to receive shares of Class A common stock in lieu of cash in respect of its management fee for that month. The Company issued 70,607 shares of its Class A common stock using the 10-day average price of $7.08 per share, which was greater than minimum price required by the NYSE rules.

For accounting purposes, the shares of the Company’s Class A common stock issued in lieu of cash for the management fee, as elected by the Advisor, were treated as issued using the closing price on date of issue. The related expenses are reflected as $0.5 million and $0.5 million for the three months ended March 31, 2024 and 2023, respectively.

The following table shows the shares issued in relation to the advisory and property management agreements as of March 31, 2024 and 2023:

Period of Issuance	Recipient	Agreement	Shares Issued		Closing Share Price
January 2023	The Advisor	Advisory Agreement	31,407 (1)	$	15.44 (1)
March 2024	The Advisor	Advisory Agreement	70,607	$	7.54

__________

(1)Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1 — Organization for additional information).

Subsequent to March 31, 2024, the Company issued 91,165 shares of its Class A common stock to the Advisor in April 2024 as a result of the Advisor’s decision to elect to receive shares of the Company’s stock in lieu of cash with respect to the property management fees for the month of March and general and administrative expense reimbursements for the month of February, pursuant to the advisory agreement and property management agreement, respectively. These shares were issued using the 10-day average price of $6.64 per share. Additionally, the Company issued 83,543 shares of its Class A common stock to the Advisor in May 2024 as a result of the Advisor’s decision to elect to receive shares of the Company’s stock in lieu of cash with respect to the asset management fee for the month of May. These shares were issued using the 10-day average price of $6.04 per share. The shares were issued at 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. 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, please see Note 9 — Related Party Transactions and Agreements and Note 14 — Subsequent Events.

Equity Offerings

Class A Common Stock

On October 1, 2020, the Company entered into an Equity Distribution Agreement, pursuant to which the Company may, from time to time, offer, issue and sell to the public, through its sales agents, shares of Class A common stock having an aggregate offering price of up to $250.0 million in an “at the market” equity offering program (the “Common Stock ATM Program”). The Company’s ability to sell shares under its existing shelf registration statement, including under the Common Stock ATM Program, was limited to one third of the Company’s market capitalization or “public float” unless the aggregate value of its Class A Common Stock held by non-affiliates exceeds $75.0 million. The shelf Registration Statement covering sales under the Common Stock ATM Program expired on October 1, 2023.

18

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Stockholder Rights Plan

In May 2020, the Company announced that its board of directors had approved a stockholder rights plan, but did not take actions to declare a dividend for the plan to become effective. In August 2020, in connection with the listing of the Company’s shares on the NYSE and the related bifurcation of common stock into Class A and Class B common stock, the Company entered into an amended and restated rights agreement, which amended and restated the stockholders rights plan approved in May 2020 and declared a dividend payable in August 2020, of one Class A right for and on each share of Class A common stock and one Class B right for and on each share of Class B common stock, in each case, outstanding on the close of business on August 28, 2020 to the stockholders of record on that date. Each right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”), of the Company at a price of $55.00 per one one-thousandth of a share of Series A Preferred Stock, represented by a right, subject to adjustment. The expiration date of these rights has subsequently been extended to August 18, 2025.

Distribution Reinvestment Plan

An amendment and restatement of the distribution reinvestment plan (the “A&R DRIP”) in connection with the listing of the Company’s shares on the NYSE became effective on August 28, 2020. The A&R DRIP allows stockholders who have elected to participate to have dividends paid with respect to all or a portion of their shares of Class A common stock and Class B common stock reinvested in additional shares of Class A common stock. Shares received by participants in the A&R DRIP will represent shares that are, at the election of the Company, either (i) acquired directly from the Company, which would issue new shares, at a price based on the average of the high and low sales prices of Class A common stock on the NYSE on the date of reinvestment, or (ii) acquired through open market purchases by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with proceeds from reinvested dividends to participants for the related quarter, less a per share processing fee.

Shares issued by the Company pursuant to the A&R DRIP, if any, would be recorded within stockholders’ equity in the consolidated balance sheets in the period dividends or other distributions are declared. During the three months ended March 31, 2024 and year ended December 31, 2023, any DRIP transactions were settled through open market transactions and no shares were issued by the Company.

Non-Controlling Interest

Following the end of the performance period, which ended on August 18, 2023, as required under the 2020 OPP the compensation committee of the board of directors of the Company determined that none of the 501,605 of the LTIP Units subject to the 2020 OPP had been earned, and these LTIP Units were thus automatically forfeited effective as of August 18, 2023. On that date, the Company reclassified $25.8 million of amounts reflected in non-controlling interest for these LTIP Units to additional paid in capital on its consolidated balance sheet and consolidated statement of changes in equity. No amounts remain in non-controlling interests after the expiration date. For additional information on the 2020 OPP, please see Note 11 — Equity-Based Compensation.

Tender Offers by an Affiliate of the Advisor

On September 27, 2023, Bellevue announced a tender offer to purchase up to 350,000 shares of the Company’s Class A common stock at a purchase price equal to $10.25 per share. The tender offer expired on October 26, 2023 and, 223,460 shares were tendered and accepted by Bellevue for a purchase price to Bellevue of an aggregate of approximately $2.3 million, less any fees, expenses, or taxes withheld.

Subsequent to March 31, 2024, Bellevue announced a tender offer to purchase up to 125,000 shares of the Company’s Class A common stock, at a purchase price equal to $9.25 per share. The tender offer expires on July 5, 2024 unless the tender offer is extended or terminated.

Note 8 — Commitments and Contingencies

Lessee Arrangement - Ground Lease

The Company entered into a ground lease agreement in 2016 related to the acquisition of 1140 Avenue of the Americas under a leasehold interest arrangement and recorded an ROU asset and lease liability related to this lease upon adoption of ASU 2016-02 during the year ended December 31, 2019. The ground lease is considered an operating lease. In computing the lease liabilities, the Company discounts future lease payments at an estimated incremental borrowing rate at adoption or acquisition if later. The term of the Company’s ground lease is significantly longer than the term of borrowings available to the Company on a fully-collateralized basis. The Company’s estimate of the incremental borrowing rate required significant judgment.

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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

As of March 31, 2024, the Company’s ground lease had a weighted-average remaining lease term of 42.8 years and a discount rate of 8.6%. As of March 31, 2024, the Company’s balance sheet includes an ROU asset and liability of $54.7 million and $54.6 million, respectively, which are included in operating lease right-of-use asset and operating lease liability, respectively, on the consolidated balance sheet. For both the three months ended March 31, 2024 and 2023, the Company paid cash of $1.2 million for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million on a straight-line basis in accordance with the standard.

The lease expense is recorded in property operating expenses in the consolidated statements of operations and comprehensive loss. The Company did not enter into any additional ground leases as lessee during the three months ended March 31, 2024 and 2023.

The following table reflects the ground lease rent payments due from the Company and a reconciliation to the net present value of those payments as of March 31, 2024:

(In thousands)	Future Base Rent Payments
2024 (remainder)	$	3,560
2025	4,746
2026	4,746
2027	4,746
2028	4,746
Thereafter	188,262
Total lease payments	210,806
Less: Effects of discounting	(156,165)
Total present value of lease payments	$	54,641

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of March 31, 2024, the Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

Note 9 — Related Party Transactions and Arrangements

As of March 31, 2024 and December 31, 2023, entities wholly owned by AR Global owned 361,544 and 290,937 shares, respectively, of the Company’s outstanding Class A common stock. As of March 31, 2024 and December 31, 2023, Bellevue owned approximately 47.0% and 45.4% of outstanding shares of the Company, respectively.

Fees and Participations Incurred in Connection with the Operations of the Company

Summary of Advisory Agreement

Pursuant to the advisory agreement with the Advisor (as amended from time to time, the “Advisory Agreement”), the Advisor manages the Company’s day-to-day operations. The initial term of the Advisory Agreement ends in July 2030 and will automatically renew for successive five-year terms unless either party gives written notice of its election not to renew at least 180 days prior to the then-applicable expiration date. The Company may only elect not to renew the Advisory Agreement on this basis with the prior approval of at least two-thirds of the Company’s independent directors, and no change of control fee (as defined in the Advisory Agreement) is payable if the Company makes this election.

20

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Asset Management Fees and Variable Management/Incentive Fees

Overview

The Company pays the Advisor a base asset management fee on the first business day of each month equal to (x) $0.5 million plus (y) a variable amount equal to (a) 1.25% of the equity proceeds received after November 16, 2018, divided by (b) 12. The base asset management fee is payable in cash, shares of common stock, or a combination thereof, at the Advisor’s election. Equity proceeds are defined as, with respect to any period, cumulative net proceeds of all common and preferred equity and equity-linked securities issued by the Company and its subsidiaries during the period, including: (i) any equity issued in exchange or conversion of exchangeable notes based on the stock price at the date of issuance and convertible equity; (ii) any other issuances of equity, including but not limited to units in the OP (excluding equity-based compensation but including issuances related to an acquisition, investment, joint-venture or partnership); and (iii) effective following the time the Company commences paying a dividend of at least $0.05 per share per annum to its stockholders, (which occurred in October 2020), any cumulative Core Earnings (as defined in the Advisory Agreement) in excess of cumulative distributions paid on the Company’s common stock since November 16, 2018, the effective date of the most recent amendment and restatement of the Advisory Agreement.

The Advisory Agreement also entitles the Advisor to an incentive variable management fee. Currently and since the year ended December 31, 2021, the variable management fee is equal to (i) the product of (a) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (b) 15.0% multiplied by (c) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.1458 (before any adjustment for the Reverse Stock Split), plus (ii) the product of (x) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (y) 10.0% multiplied by (z) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.1944 (before any adjustment for the Reverse Stock Split). The variable management fee is payable quarterly in arrears in cash, shares of common stock, or a combination thereof, at the Advisor’s election. No incentive variable management fees were earned during the three months ended March 31, 2024 or 2023.

Management Fee Expense

The Company recorded expense of $1.5 million and $1.5 million for base asset management fees during and three months ended March 31, 2024 and 2023, respectively. There were no variable management fees incurred in either of these periods. The management fees for the three months ended March 31, 2024 and 2023 were paid partially with cash and partly with shares of the Company’s Class A common stock. The Advisor may elect to but is not obligated to accept shares in lieu of cash for these management fees and makes this election on a monthly basis. The management fees for both periods were paid as follows:

•The Company paid base management fees in cash of $1.0 million (for January and February 2024) in the three months ended March 31, 2024 and it issued $0.5 million (for March 2024) in the three months ended March 31, 2024 in shares of Class A common stock in lieu of cash. As a result, the Company issued 70,607 shares of its Class A common stock using the 10-day average price of $7.08.

•The Company paid base management fees in cash of $1.0 million (for February and March 2023) in the three months ended March 31, 2023 and it issued $0.5 million (for January 2023) in the three months ended March 31, 2023 in shares of Class A common stock in lieu of cash. As a result, the Company issued 31,407 shares of its Class A common stock (adjusted for the Reverse Stock Split) using the 10-day average price of $15.92 (adjusted for the Reverse Stock Split).

•On May 1, 2024, the Company issued $0.5 million in its shares of Class A common stock in lieu of cash for the May 2024 asset management fee. As a result, the company issued 83,543 of its Class A common stock using the 10-day average price of $6.04 per share. For more information please see Note 14 — Subsequent Events.

For accounting purposes, the shares of the Company’s Class A common stock issued in lieu of cash for the management fees to the Advisor for March 2024 and January 2023, as elected by the Advisor, are treated as issued using the closing price on date of issue and the related expense totaled $0.5 million for the three months ended March 31, 2024 and 2023, respectively.

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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Property Management Fees

Pursuant to the Property Management and Leasing Agreement (the “PMA”), as most recently amended on November 16, 2018, except in certain cases where the Company contracts with a third party, the Company pays the Property Manager a property management fee equal to: (i) for non-hotel properties, 3.25% of gross revenues from the properties managed, plus market-based leasing commissions; and (ii) for hotel properties, a market-based fee based on a percentage of gross revenues. The term of the PMA is coterminous with the term of the Advisory Agreement.

Pursuant to the PMA, the Company reimburses the Property Manager for property-level expenses. These reimbursements are not limited in amount and may include reasonable salaries, bonuses, and benefits of individuals employed by the Property Manager, except for the salaries, bonuses, and benefits of individuals who also serve as one of the Company’s executive officers or as an executive officer of the Property Manager or any of its affiliates. The Property Manager may also subcontract the performance of its property management and leasing services duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services.

On April 13, 2018, in connection with the loan for its 400 E. 67th Street - Laurel Condominium and 200 Riverside Boulevard properties, the Company entered into a new property management agreement with the Property Manager (the “April 2018 PMA”) to manage the properties secured by the loan. With respect to these properties, the substantive terms of the April 2018 PMA are identical to the terms of the PMA, except that the property management fee for non-hotel properties is 4.0% of gross revenues from the properties managed, plus market-based leasing commissions. The April 2018 PMA has an initial term of one year that is automatically extended for an unlimited number of successive one-year terms at the end of each year unless any party gives 60 days’ written notice to the other parties of its intention to terminate.

In March 2024, the Company and the Property Manager amended the PMA to allow the Property Manager to elect to receive Class A Units or shares of the Company’s common stock in lieu of cash for all fees payable to the Property Manager. Subsequent to March 31, 2024, the Company issued 22,857 shares of its Class A common stock to the Advisor in April 2024 as a result of the Advisor’s decision to accept shares of the Company’s stock in lieu of cash with respect to the March property management fees. These shares were issued using the 10-day average price of $6.64 per share for the April issuance, of 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 PMA (as amended). 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, please see Note 14 — Subsequent Events.

The Company incurred approximately $0.4 million in property management fees during three months ended March 31, 2024, and $0.4 million in property management fees during the three months ended March 31, 2023.

Professional Fees and Other Reimbursements

The Company pays directly or reimburses the Advisor monthly in arrears, for all the expenses paid or incurred by the Advisor or its affiliates in connection with the services it provides to the Company under the Advisory Agreement, subject to the following limitations:

•(a) With respect to administrative and overhead expenses of the Advisor, including administrative and overhead expenses of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services but not including their salaries, wages, and benefits, these costs may not exceed in any fiscal year,

(i) $0.4 million, or

(ii) if the Asset Cost (as defined in the Advisory Agreement) as of the last day of the fiscal quarter immediately preceding the month is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal quarter multiplied by (y) 0.10%.

•(b) With respect to the salaries, wages, and benefits of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services (including the Company’s executive officers), these amounts must be comparable to market rates and reimbursements may not exceed, in any fiscal year,

(i) $3.0 million ($2.6 million before the three months ended March 31, 2024), or

(ii) if the Asset Cost as of the last day of the fiscal year is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal year multiplied by (y) 0.30%.

22

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Professional fees and other reimbursement include reimbursements to the Advisor for administrative, overhead and personnel services, which are subject to the limits noted above, as well as costs associated with directors and officers insurance which are not subject to those limits.

Professional fees and other reimbursements for three months ended March 31, 2024 were $1.4 million. The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the three months ended March 31, 2024 were $1.2 million ($0.9 million were for salaries, wages, and benefits and $0.3 million related to administrative and overhead expenses).

Professional fees and other reimbursements for the three months ended March 31, 2023 were $1.4 million. The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the three months ended March 31, 2023 was $1.0 million ($0.8 million were for salaries, wages, and benefits and $0.2 million related to administrative and overhead expenses).

In March 2024, the Company and the Advisor amended the Advisory Agreement to increase the limit of incurred costs from the salaries, wages, and benefits of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services (including the Company’s executive officers) from $2.6 million to $3.0 million, and to allow the Advisor to elect to receive any expense reimbursement amounts pursuant to the Advisory Agreement in cash, OP Units, shares of the Company’s common stock, or any combination thereof. Subsequent to March 31, 2024, the Company issued 68,308 shares of its Class A common stock to the Advisor in April 2024 as a result of the Advisor’s decision to elect to receive shares of the Company’s stock in lieu of cash with respect to the reimbursement of professional fees for the month of February. These shares were issued using the 10-day average price of $6.64 per share. This issuances 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 Advisory Agreement (as amended). 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, please see Note 14 — Subsequent Events.

Summary of Fees, Expenses and Related Payables

The following table details amounts incurred in connection with the Company’s operations-related services described above as of and for the periods presented:

	Three Months Ended March 31,				Payable (receivable) as of
(In thousands)	2024		2023		March 31, 2024		December 31, 2023
Ongoing fees:
Asset and property management fees to related parties (1)	$	1,903	$	1,884	$	615	$	20
Professional fees and other reimbursements (2)	1,392		1,361		—		—
Total related party operation fees and reimbursements	$	3,295	$	3,245	$	615	$	20

________

(1)During the three months ended March 31, 2024 and 2023, approximately $0.5 million of this expense was for the asset and property management fees paid in shares of the Company’s Class A common stock (see above) in lieu of cash.

(2)Amounts for the three months ended March 31, 2024 and 2023 are included in general and administrative expenses in the unaudited consolidated statements of operations and comprehensive loss.

Termination Fees Payable to the Advisor

The Advisory Agreement requires the Company to pay a termination fee to the Advisor in the event the Advisory Agreement is terminated prior to the expiration of the initial term in certain limited scenarios. The termination fee will be payable to the Advisor if either the Company or the Advisor exercises the right to terminate the Advisory Agreement in connection with the consummation of the first change of control (as defined in the Advisory Agreement). The termination fee is equal to $15 million plus an amount equal to the product of: (i) three (if the termination was effective on or prior to June 30, 2020) or (ii) four (if the termination is effective after June 30, 2020), multiplied by applicable Subject Fees (defined below).

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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

The “Subject Fees” are equal to the product of 12 and the actual base management fee for the month immediately prior to the month in which the Advisory Agreement is terminated, plus the product of four and the actual variable management fee for the quarter immediately prior to the quarter in which the Advisory Agreement is terminated, plus without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity issued by the Company and its subsidiaries in respect of the fiscal quarter immediately prior to the fiscal quarter in which the Advisory Agreement is terminated.

In connection with the termination or expiration of the Advisory Agreement, the Advisor will be entitled to receive (in addition to any termination fee) all amounts then accrued and owing to the Advisor, including an amount equal to then-present fair market value of its shares of the Company’s Class A common stock and interest in the OP.

Note 10 — Economic Dependency

Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services, transaction management services and investor relations.

As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

Note 11 — Equity-Based Compensation

Equity Plans

Restricted Share Plan

Prior to the Company listing its shares on the NYSE, the Company had an employee and director incentive restricted share plan (as amended, the “RSP”). The RSP provided for the automatic grant of the number of restricted shares equal to $30,000 divided by the then-current Estimated Per-Share NAV, which were made without any further approval by the Company’s board of directors or the stockholders, after initial election to the board of directors and after each annual stockholder meeting, with such restricted shares vesting annually over a five-year period following the grant date in increments of 20.0% per annum. The RSP also provided the Company with the ability to grant awards of restricted shares to the Company’s board of directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.

2020 Equity Plan

Effective at the time of the listing, the Company’s independent directors approved an equity plan for the Advisor (the “Advisor Plan”) and an equity plan for individuals (the “Individual Plan” and together with the Advisor Plan, the “2020 Equity Plan”). The Advisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Awards under the Individual Plan are open to the Company’s directors, officers and employees (if the Company ever has employees), employees, officers and directors of the Advisor and as a general matter, employees of affiliates of the Advisor that provide services to the Company. Awards under the Advisor Plan may only be granted to the Advisor and its affiliates (including any person to whom the Advisor subcontracts substantially all of responsibility for directing or performing the day-to-day business affairs of the Company).

24

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

The 2020 Equity Plan succeeded and replaced the then existing RSP. Following the effectiveness of the 2020 Equity Plan at the listing of its shares on the NYSE, no further awards have been or will be granted under the RSP; provided, however, any outstanding awards under the RSP, such as unvested restricted shares held by the Company’s independent directors, will remain in effect in accordance with their terms and the terms of the RSP, until all those awards are exercised, settled, forfeited, canceled, expired or otherwise terminated. The Company accounts for forfeitures when they occur. While the RSP provided only for awards of restricted shares, the 2020 Equity Plan has been expanded to also permit awards of restricted stock units, stock options, stock appreciation rights, stock awards, LTIP Units and other equity awards. In addition, the 2020 Equity Plan eliminates the “automatic grant” provisions of the RSP that dictated the terms and amount of the annual award of restricted shares to independent directors. Grants to independent directors are made in accordance with the Company’s new director compensation program, as described below under “—Director Compensation.” The 2020 Equity Plan has a term of 10 years, expiring August 18, 2030. The number of shares of the Company’s capital stock that may be issued or subject to awards under the 2020 Equity Plan, in the aggregate, is equal to 20.0% of the Company’s outstanding shares of Class A common stock on a fully diluted basis at any time. Shares subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a one-for-one basis and vice versa.

Director Compensation

On August 18, 2020 the Company listed its shares of Class A common stock on the NYSE (the “Listing Date”), and effective on that date, the Company’s independent directors approved a change to the Company’s director compensation program. Starting with the annual award of restricted shares made in connection with the Company’s 2021 annual meeting of stockholders, the amount of the annual award was increased from $30,000 to $65,000. No other changes have been made to the Company’s director compensation program.

Restricted Shares

Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares receive cash dividends on the same basis as dividends paid on shares of common stock, if any, prior to the time that the restrictions on the restricted shares have lapsed and thereafter. Any dividends payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

In March 2022, the compensation committee delegated authority to the Company’s chief executive officer to award up to 25,000 restricted shares (adjusted for the Reverse Stock Split) to employees of the Advisor or its affiliates who are involved in providing services to the Company, including the Company’s chief financial officer, subject to certain limits and restrictions imposed by the compensation committee. The compensation committee remains responsible for approving and administering all grants of awards to the Company’s chief financial officer or any other executive officer of the Company, including any award of restricted shares recommended by the Company’s chief executive officer. No awards under the 2020 Equity Plan may be made pursuant to this delegation of authority to anyone who is also a partner, member or equity owner of the parent of the Advisor. As of March 31, 2024 there have been no shares awarded to anyone who is also a partner, member or equity owner of the parent of the Advisor.

Restricted share awards that have been granted to the Company’s directors provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient’s voluntary termination or the failure to be re-elected to the Company’s board of directors.

In the quarter ended March 31, 2023, the Company issued 2,038 restricted shares (adjusted for the Reverse Stock Split) to a member of the Company’s board of directors. During the quarter ended June 30, 2023 the Company issued 13 restricted shares to an employee of the advisor and its affiliates. In the quarter ended September 30, 2023, the Company issued 24,042 shares to the Company’s the board of directors as part of the annual award of restricted shares by the Company to the board of directors. These restricted shares issued to the board of directors will vest in 20% increments on each of the first five anniversaries of the respective grant dates. Also, during the quarter ended September 30, 2023, several former employees of the advisor that were terminated, and as defined in the award agreement, forfeited a total 2,792 restricted shares. During the quarter ended December 31, 2023, the Company granted 10,139 restricted shares to employees of the Advisor. The restricted shares granted to employees of the Advisor will vest in 25% increments on each of the first four anniversaries of the grant date.

In the quarter ended March 31, 2024, three former employees of the Advisor terminated their employment, and as defined in the award agreement, forfeited a total of 953 restricted shares.

25

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

The following table displays restricted share award activity during the three months ended March 31, 2024:

	Number of Restricted Shares (1)	Weighted-Average Issue Price (1)
Unvested, December 31, 2023	36,198	$	29.37
Granted	—	—
Vested	(408)	15.44
Forfeitures	(953)	65.86
Unvested, March 31, 2024	34,837	$	28.53

As of March 31, 2024, the Company had $0.7 million of unrecognized compensation cost related to unvested restricted share awards granted and is expected to be recognized over a weighted-average period of 3.6 years. Restricted share awards are expensed in accordance with the service period required. Compensation expense related to restricted share awards was approximately $0.1 million for the three months ended March 31, 2024, and $0.1 million for the three months ended March 31, 2023. Compensation expense related to restricted share awards is recorded as equity-based compensation in the accompanying unaudited consolidated statements of operations and comprehensive loss.

Multi-Year Outperformance Award

2020 OPP

On the Listing Date, the Company, the OP and the Advisor entered into the 2020 OPP pursuant to which a performance-based equity award was granted to the Advisor. The award was based on the recommendation of the Company’s compensation consultant, and approved by the Company’s independent directors, acting as a group.

Initially, the award under the 2020 OPP was in the form of a single LTIP Unit. On September 30, 2020, the 30th trading day following the Listing Date, in accordance with its terms, the single LTIP Unit automatically converted into 501,605 LTIP Units (adjusted for the Reverse Stock Split), the quotient of $50.0 million divided by $99.68 (adjusted for the Reverse Stock Split), representing the average closing price of one share of Class A common stock over the ten consecutive trading days immediately prior to September 30, 2020. This number of LTIP Units represented the maximum number of LTIP Units that could have been earned by the Advisor during a performance period which ended on August 18, 2023. The compensation committee of the board of directors of the Company determined that none of the 501,605 of the LTIP Units subject to the 2020 OPP had been earned under the performance measures.

For accounting purposes, July 19, 2020 was treated as the grant date (the “Grant Date”), because the Company’s independent directors approved the 2020 OPP and the award made thereunder on that date. The Company engaged third party specialists, who used a Monte Carlo simulation, to calculate the fair value as of the date the single LTIP Unit converted (September 30, 2020), on which date the fair value was also fixed. The total fair value of the LTIP Units of $25.8 million was recorded over the requisite service period of 3.07 years beginning on the Grant Date and ending on the third anniversary of the Listing Date (August 18, 2023). As a result, during the three months ended March 31, 2024, the Company did not record any equity-based compensation expense related to the LTIP Units. For the three months ended March 31, 2023 the Company recorded equity-based compensation expense related to the LTIP Units of $2.1 million. As of August 18, 2023, the total fair value of the LTIP Units has been amortized to expense and no future expense remains. Equity-based compensation expense related to the LTIP Units was recorded in equity-based compensation in the consolidated statements of operations and comprehensive loss.

The LTIP Units issued pursuant to the 2020 OPP could potentially have been earned by the Advisor during a performance period which ended on August 18, 2023. The compensation committee of the board of directors of the Company determined that none of the 501,605 of the LTIP Units subject to the 2020 OPP had been earned under the performance measures. These LTIP Units were thus automatically forfeited effective as of August 18, 2023, without the payment of any consideration by the Company or the OP. On that date, the Company reclassified amounts reflected in non-controlling interest for these LTIP Units to additional paid in capital on its consolidated balance sheet and consolidated statement of equity.

26

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

LTIP Units/Distributions/Redemption

The rights of the Advisor as the holder of the LTIP Units were governed by the terms of the LTIP Units set forth in the agreement of limited partnership of the OP. Holders of LTIP Units were entitled to distributions on the LTIP Units equal to 10% of the distributions made per Class A Unit (other than distributions of sale proceeds) until if, and when, the LTIP Units were earned. Distributions paid on a Class A Unit were equal to dividends paid on a share of Class A common stock and were not subject to forfeiture, even though the LTIP Units were not earned and have been forfeited. If the LTIP Units had been earned, the Advisor would have been entitled to a priority catch-up distribution on each earned LTIP Unit equal to 90% of the aggregate distributions paid on Class A Units during the applicable performance period. Any LTIP Units that were earned would have become entitled to receive the same distributions paid on the Class A Units. If the Advisor’s capital account with respect to an earned LTIP Unit had been equal to the capital account balance of a Class A Unit, the Advisor, as the holder of the earned LTIP Unit, in its sole discretion, would have been entitled to convert the LTIP Unit into a Class A Unit, which would have in turn been redeemed on a one-for-one basis for, at the Company’s election, a share of Class A common stock or the cash equivalent thereof. Through the six months ended June 30, 2022 we paid dividends to our common stockholders at our current annual rate of $3.20 per share of Class A common stock (adjusted for the Reverse Stock Split), or $0.80 per share (adjusted for the Reverse Stock Split) on a quarterly basis. Subsequently, the board decided not to declare any further dividends. There is no assurance as to when or if the board will declare future dividends or the amount of any future dividends that may be declared. Because the LTIP Units only receive distributions when the Class A common stock receives dividends, no distributions have been paid since the quarter ended March 31, 2022.

For the three months ended March 31, 2024 and 2023, the Company did not pay distributions on the LTIP Units. As discussed above, the LTIP Units were automatically forfeited effective as of August 18, 2023, without the payment of any consideration by the Company or the OP.

Performance Measures

As indicated above, on November 7, 2023, following the end of the performance period that expired on August 18, 2023, the compensation committee of the Company’s board of directors determined that none of the 501,605 LTIP Units under the 2020 OPP had been earned. These LTIP Units were thus automatically forfeited effective as of August 18, 2023, without the payment of any consideration by the Company or the OP.

With respect to one-half of the LTIP Units granted under the 2020 OPP, the number of LTIP Units that could have potentially become earned was determined as of the last day of the performance period based on the Company’s achievement of absolute total stockholder return (“TSR”) levels as shown in the table below.

Performance Level	Absolute TSR				Percentage of LTIP Units Earned
Below Threshold	Less than	12%			0	%
Threshold		12%			25	%
Target		18	%		50	%
Maximum		24	%	or higher	100	%

If the Company’s absolute TSR was more than 12% but less than 18%, or more than 18% but less than 24%, the percentage of the Absolute TSR LTIP Units that would have been earned would have been determined using linear interpolation as between those tiers, respectively.

With respect to the remaining one-half of the LTIP Units granted under the 2020 OPP, the number of LTIP Units that could have potentially become earned was determined as of the last day of the performance period base on the difference (expressed in terms of basis points, whether positive or negative, as shown in the table below) between the Company’s absolute TSR on the last day of the performance period relative to the average TSR of a peer group consisting of Empire State Realty Trust, Inc., Franklin Street Properties Corp., Paramount Group, Inc. and Clipper Realty Inc. as of the last day of the performance period.

27

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Performance Level	Relative TSR Excess			Percentage of LTIP Units Earned
Below Threshold	Less than	-600	basis points	0	%
Threshold		-600	basis points	25	%
Target		0	basis points	50	%
Maximum		+600	basis points	100	%

If the relative TSR excess was between -600 basis points and zero basis points, or between zero basis points and +600 basis points, the number of LTIP Units that would have been earned would have been determined using linear interpolation as between those tiers, respectively.

Note 12 — Income Taxes

On December 30, 2022, the Company announced that it was changing its business strategy by expanding the scope of the assets and businesses the Company may own and operate. By investing in other asset types, the Company may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a REIT. As a result, on January 9, 2023, the Company’s board of directors authorized the termination of the Company’s REIT election which became effective as of January 1, 2023. Historically, effective with the taxable year ended December 31, 2014 through December 31, 2022, the Company had elected to be taxed as a REIT.

The Company is subject to U.S. federal, state and local income taxes. For deferred items, the Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. Because of the Company’s recent operating history of taxable losses and the continuing adverse economic impacts since the COVID-19 pandemic on the Company’s results of operations, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets; thus the Company has provided a 100% valuation allowance as of March 31, 2024 and as of December 31, 2023. If and when the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in its consolidated statements of comprehensive income (loss).

The effective tax rate was zero for the three months ended March 31, 2024 and 2023. The Company expects to have a taxable loss for federal, state and local income taxes for the year ending December 31, 2024. Accordingly, the Company has recorded no income tax expense (after considering changes in the valuation allowance) for and three months ended March 31, 2024. The Company remains in a net deferred tax asset position with a full valuation allowance as of both March 31, 2024 and December 31, 2023. As of March 31, 2024, the Company had no material uncertain tax positions.

Note 13 — Net Loss Per Share

The following is a summary of the basic and diluted net loss per share computation for the periods presented:

	Three Months Ended March 31,
(In thousands, except share and per share data)	2024		2023
Net loss attributable to common stockholders (in thousands)	$	(7,608)	$	(11,758)
Adjustments to net loss attributable to common stockholders	—		—
Adjusted net loss attributable to common stockholders	$	(7,608)	$	(11,758)
Weighted average shares outstanding — Basic and Diluted	2,322,594		2,038,880
Net loss per share attributable to common stockholders — Basic and Diluted	$	(3.28)	$	(5.77)

28

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted shares, Class A Units and unearned LTIP Units contain rights to receive distributions considered to be non-forfeitable, except in certain limited circumstances, and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share above adjusts net loss to exclude the distributions to the unvested restricted shares, Class A Units and the unearned LTIP Units that were issued under the 2020 OPP from the numerator. On July 1, 2022, the Company announced that it suspended its policy regarding dividends paid on its Class A common stock, beginning with the dividend that would have been payable for the quarter ended June 30, 2022. Accordingly, there is no adjustment for the three month period ended March 31, 2024 or 2023 relating to distributions to LTIP Units which are paid in arrears. Accordingly, since the LTIP Units only receive distributions when the Class A common stock receives dividends there were no distributions to the LTIP Units beginning with the distribution that would have been payable for the quarter ended June 30, 2022 and quarterly periods thereafter.

Diluted net loss per share assumes the conversion of all Class A common stock share equivalents into an equivalent number of shares of Class A common stock, unless the effect is anti-dilutive. The Company considers unvested restricted shares, Class A Units and unvested LTIP Units to be common share equivalents. The following table shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted earnings per share as their effect would have been antidilutive for the periods presented.

	Three Months Ended March 31,
	2024	2023
Unvested restricted shares (1)	35,025	20,104
LTIP Units (2)	—	501,605
Total weighted-average anti-dilutive common share equivalents	35,025	521,709

_______

(1)There were 34,837 and 20,172 unvested restricted shares outstanding as of March 31, 2024 and 2023, respectively.

(2)There were no LTIP units outstanding as of March 31, 2024 and there were 501,605 LTIP Units outstanding as of March 31, 2023 (see Note 11 — Equity-Based Compensation for additional information).

If dilutive, conditionally issuable shares relating to the 2020 OPP award would be included, as applicable, in the computation of fully diluted EPS on a weighted-average basis for and three month periods ended March 31, 2024 and 2023, respectively, based on shares that would be issued if the applicable balance sheet date was the end of the measurement period. No LTIP Unit share equivalents were included in the computation for three month periods ended March 31, 2024 because either or both (i) no LTIP Units would have been earned based on the trading price of Class A common stock including any cumulative dividends paid (since inception of the 2020 OPP) at March 31, 2024 and 2023 or (ii) the Company recorded a net loss to common stockholders for all periods presented and any shares conditionally issuable under the LTIPs would be anti-dilutive.

Note 14 — Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements other than the following:

Asset Management, Property Management Fees and Advisor Expense Reimbursements

On April 1, 2024, the Company issued 91,165 total shares of its Class A common stock to the Advisor as a result of the Advisor’s decision to elect to receive shares of the Company’s common stock in lieu of cash with respect to the March property management fees (22,857 shares) and February general and administrative expense reimbursements (68,308 shares). 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 Advisory Agreement and the Property Management and Leasing Agreement, as applicable. 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.

29

AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

On May 1, 2024, the Company issued 83,543 shares of its Class A common stock to the Advisor in May 2024 as a result of the Advisor’s decision to elect to receive shares of the Company’s stock in lieu of cash with respect to the asset management fees for May. These shares were issued using the 10-day average price of $6.04 per share. These issuances were 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 Advisory Agreement (as amended). 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.

9 Times Square Loan Agreement Amendment

On April 29, 2024 the Company entered into a second amendment to its 9 Times Square loan agreement with Capital One.

The second amendment primarily affects the following changes: (i) extends of the maturity date of the mortgage to October 31, 2024 (with the option of an additional extension to January 31, 2025, subject to certain conditions) in order to facilitate the sale of the 9 Times Square property, (ii) increases the interest rate spread on one-month SOFR from 1.60% to 2.60%, (iii) provides that excess operating cash flows shall be deposited to an account maintained by the lender, (iv) requires that the Company deliver a purchase and sale agreement to the lender with respect to 9 Times Square (or another offering document with a prospective buyer) within 60 days of the second amendment, (v) prohibits the Company from making distributions while the mortgage is outstanding and (vi) requires the OP to pledge its equity interest in 9 Times Square as additional collateral for the mortgage if the mortgage is not paid in full on or prior to maturity.

As announced in the Company’s press release on April 29, 2024, the Company has determined to market certain of their properties for sale, including 9 Times Square. This amended agreement facilitates the Company to market the property for sale, with the option to extend maturity to January 31, 2025 in the event the property is under contract for sale but has not yet closed by October 31, 2024. There can be no assurance the Company will be able to sell the property before January 31, 2025. The Company may record significant impairment charges on the property while the property is marketed for sale.

Tender Offer by Affiliates of the Advisor

On May 7, 2024, Bellevue Capital Partners, LLC announced a tender offer to purchase up to 125,000 shares of the Company’s Class A common stock, at a purchase price equal to $9.25 per share. The tender offer expires on July 5, 2024 unless the tender offer is extended or terminated.

30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts may be forward-looking statements including statements regarding the intent, belief or current expectations of American Strategic Investment Co. (including, as required by context, New York City Operating Partnership, L.P. (the “OP”) and its subsidiaries, “we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions are intended to identify forward looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include the risks associated with the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on us, our tenants and the global economy and financial markets; the risk that any potential future acquisition by us is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all; and the risk that we may not meet the listing requirements of the New York Stock Exchange. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2023, this and our other Quarterly Reports on Form 10-Q and our other filings with the United States Securities and Exchange Commission (“SEC”).

Overview

We are an externally managed company that owns a portfolio of commercial real estate located within the five boroughs of New York City, primarily Manhattan. Our real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities and parking garages that do not accompany office spaces. As of March 31, 2024, we owned seven properties consisting of 1.2 million rentable square feet, acquired for an aggregate purchase price of $783.5 million with an overall occupancy of 87.2%.

On December 30, 2022, we announced that we were changing our business strategy by expanding the scope of the assets and businesses we may own and operate. By investing in other asset types, we may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a REIT. As a result, on January 9, 2023, our board of directors authorized termination of our REIT election which became effective as of January 1, 2023. Historically, we had filed an election to be taxed as a REIT commencing with our taxable year ended December 31, 2014, which remained in effect with respect to each subsequent taxable year ending on or before the year ended December 31, 2022.

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, par value $0.01 per share, (the “Class A common stock”) being converted into 0.125 shares of common stock, with no fractional shares being issued (the “Reverse Stock Split”). For additional information, see Note 7 — Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q. Also, effective January 19, 2023, we amended our charter to change our name to “American Strategic Investment Co.” from “New York City REIT, Inc.” Trading of our Class A common stock on the New York Stock Exchange under the new name began on January 20, 2023 under the existing trading symbol “NYC.” Shares of our Class A common stock were first listed on the New York Stock Exchange (“NYSE”) on August 18, 2020. Also, on February 22, 2023, we completed a non-transferable rights offering raising gross proceeds of $5.0 million (the “Rights Offering”). As a result, we issued 386,100 shares of our Class A common stock subscribed for in the Rights Offering on February 27, 2023.

Substantially all of our business is conducted through the OP and its wholly owned subsidiaries. New York City Advisors, LLC (our “Advisor”) manages our day-to-day business with the assistance of New York City Properties, LLC (our “Property Manager”). Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.

31

Management Update on the Continuing Adverse Economic Impacts Since the COVID-19 Pandemic

New York City, where all of our properties are located, has been among the hardest hit locations in the country and fully reopened from relevant restrictions and lockdowns on March 7, 2022. The pace of recovery in the New York City office market from the COVID-19 pandemic continues to be challenged as leasing and occupancy trends for the broader market have slowed, leading political, community, and business leaders to propose repositioning plans for many New York City office assets that are experiencing high vacancy rates.

The negative impacts of the COVID-19 pandemic during 2020 and 2021 caused certain of our tenants to be unable to make rent payments to us timely, or at all. As a result, we did experience delays in rent collections during 2021, however, with the exception of one minor lease deferral during the quarter of the ended September 30, 2022, our tenants have paid rent. During the quarter ended September 30, 2023 we had one tenant lease expire by its terms. During the period ended June 30, 2023, one tenant elected to terminate its lease early effective in October of 2023, which was unrelated to the impact of COVID-19. Also, during the quarter ended September 30, 2023 we had a new lease that commenced.

Beginning in the third and fourth quarters of 2020, the operating results at 1140 Avenue of the Americas, 9 Times Square, 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard Garage and 8713 Fifth Avenue properties were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages for those properties to be triggered. Thus, we were not able to use excess cash flow, if any, from the properties while the cash trap events were active, to fund operating expenses at our other properties and other capital requirements. As of March 31, 2024 two of our mortgages aggregating $109.0 million in principal amount remained in a cash trap event, all as described in detail further below in the Liquidity and Capital Resources section.

We took several steps to mitigate the impact of the pandemic on our business and in some cases, in 2020 and 2021, we executed different types of lease amendments, including rent deferrals and abatements and, in some cases, extensions to the term of the leases. There were no new deferrals or abatements during the three months ended March 31, 2024.

Our portfolio is primarily comprised of office and retail tenants. We collected 100% of original cash rent due across our entire portfolio for the three months ended March 31, 2024. We collected 100% of the original cash rent due across our entire portfolio for all of 2023 and 2022. There can be no assurance, however, that tenants will continue to pay all cash rent due. The cash rent collections for the first quarter of 2024 includes cash receipts through April 30, 2024 and includes cash received in April for cash rent due in the quarter ended March 31, 2024. Cash received in April 2024 is not, however, included in cash and cash equivalents on our March 31, 2024 consolidated balance sheet and was immaterial in amount for the quarter ended March 31, 2024. “Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in their originally executed lease agreement at inception or as amended, prior to any rent deferral agreement. We calculate “original cash rent collections” by comparing the total amount of rent collected during the period to the original cash rent due. Total rent collected during the period includes both original cash rent due and payments made by tenants pursuant to rent deferral agreements.

Our cash rent collections may not be indicative of any future period. Moreover, there is no assurance that we will be able to collect the cash rent that is due in future months including the remaining amounts deferred rent amounts from prior years that we expect to receive during the remainder of 2024 under deferral agreements we have entered into with our tenants.

Significant Accounting Estimates and Critical Accounting Policies

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

Recently Issued Accounting Pronouncements

See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

32

Properties

The following table presents certain information about the investment properties we owned as of March 31, 2024:

Portfolio	Acquisition Date	Number of Properties	Rentable Square Feet	Occupancy		Remaining Lease Term (1)
400 E. 67th Street - Laurel Condominium	Sept. 2014	1	58,750	100.0	%	3.2
200 Riverside Boulevard - ICON Garage	Sept. 2014	1	61,475	100.0	%	13.3
9 Times Square	Nov. 2014	1	167,390	70.6	%	6.8
123 William Street	Mar. 2015	1	544,610	92.5	%	5.0
1140 Avenue of the Americas	Jun. 2016	1	245,821	77.1	%	6.3
8713 Fifth Avenue (2)	Oct. 2018	1	17,500	88.6	%	10.4
196 Orchard Street	Jul. 2019	1	60,297	100.0	%	10.8
Total portfolio		7	1,155,843	87.2	%	6.3

______

(1)Calculated on a weighted-average basis as of March 31, 2024, as applicable.

(2)We signed a lease with a new tenant at this property in November 2021, and the new tenant began occupying a portion of the leased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of the space in the second quarter of 2024, which will bring the occupancy to 100.0%.

33

Results of Operations

The following table is a summary of our quarterly leasing activity during the first three months of 2024.

	Q1 2024
Leasing activity:
New leases:
New leases commenced	1
Total square feet leased	8,122
Annualized straight-line rent per square foot (1)	$	22.16
Weighted-average lease term (years) (2)	1.2
Terminated or expired leases:
Number of leases terminated or expired	—
Square feet	—
Annualized straight-line rent per square foot (1)	$	—

______

(1)Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries.

(2)The weighted-average remaining lease term (years) is based on annualized straight-line rent.

Our total overall portfolio occupancy improved as of March 31, 2024 to 87.2% from a total portfolio occupancy of 84.0% as of March 31, 2023 from the following:

•Occupancy at 9 Times Square improved to 70.6% for the period ended March 31, 2024 as compared to 62.4% for period ended March 31, 2023. This improvement can be attributed to new leases signed during the year ended December 31, 2023.

•Occupancy at 1140 Avenue of the Americas increased to 77.1% for the period ended March 31, 2024 as compared to 74.6% for period ended March 31, 2023. This improvement can be attributed to new leases signed during the year ended December 31, 2023.

•Occupancy at or properties located at 196 Orchard Street, 400 E. 67th Street/200 Riverside Blvd was at 100% for the periods ended March 31, 2024 and 2023.

Comparison of Three Months Ended March 31, 2024 and 2023

As of March 31, 2024, we owned seven properties, all of which were acquired prior to January 1, 2023. Our results of operations for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily reflect changes due to leasing activity and occupancy.

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders was $7.6 million for the quarter ended March 31, 2024, as compared to $11.8 million for the quarter ended March 31, 2023. The change in net loss income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

34

	Quarter Ended March 31,				Increase (Decrease)
(in thousands)	2024		2023		$
Revenue from tenants	$	15,481	$	15,534	$	(53)
Operating expenses:
Asset and property management fees to related parties	1,903		1,884		19
Property operating	8,382		8,421		(39)
Equity-based compensation	54		2,200		(2,146)
General and administrative	2,801		3,181		(380)
Depreciation and amortization	5,261		6,952		(1,691)
Total operating expenses	18,401		22,638		(4,237)
Operating loss	(2,920)		(7,104)		4,184
Other income (expenses):
Interest expense	(4,697)		(4,663)		(34)
Other income	9		9		—
Total other expenses	(4,688)		(4,654)		(34)
Net loss before income taxes	(7,608)		(11,758)		4,150
Income tax expense	—		—		—
Net loss and Net loss attributable to common shareholders	$	(7,608)	$	(11,758)	$	4,150

Revenue from Tenants

Revenue from tenants remained the same at $15.5 million for the three months ended March 31, 2024 and 2023. Included in revenue from tenants for the three month period ended March 31, 2024, and 2023 were rental income and operating expense reimbursement.

Asset and Property Management Fees to Related Parties

We incurred $1.9 million in fees for asset and property management services paid to our Advisor and Property Manager for both the three months ended March 31, 2024 and 2023. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager. The Advisor was paid in cash for the January and February 2024 base management fee, however, the Advisor elected to receive shares in lieu of cash for the March 2024 base management fee. During the quarter ended March 31, 2023 the Advisor elected to receive shares in lieu of cash for the January 2023 base management fee, however, the management fee for February and March 2023 were paid in cash. The shares issued in lieu of cash for the quarters ended March 31, 2024 and 2023 were valued at $0.5 million, respectively.

Property Operating Expenses

Property operating expenses remained the same at $8.4 million for the three months ended March 31, 2024 and 2023. Property expenses for the three months ended March 31, 2024 and 2023 consisted of utility maintenance, real estate taxes, janitorial services, and other property expense related services.

Equity-Based Compensation

Equity-based compensation decreased $2.1 million to $0.1 million for the three months ended March 31, 2024 compared to $2.2 million for the three months ended March 31, 2023. These amounts are comprised of restricted share amortization expense and the amortization of our multi-year outperformance award granted to the Advisor in August 2020 (the “2020 OPP”). The expense from the 2020 OPP is generally consistent period over period, however the third quarter of 2023 only includes expense through the end of the performance period, August 18, 2023 and resulted in a decrease in equity based compensation for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. See Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and restricted shares of common stock.

35

General and Administrative Expenses

General and administrative expenses decreased to $2.8 million for the three months ended March 31, 2024 from $3.2 million for three months ended March 31, 2023. The decrease in general and administrative expenses was primarily attributable to lower legal fees of approximately $0.2 million, a decrease of our New York annual capital base tax accrual of $0.2 million and lower professional fees for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

Total reimbursement expenses for administrative and personnel services provided by the Advisor during the three months ended March 31, 2024 and 2023 were $1.2 million ($0.9 million related to salaries, wages, and benefits and $0.3 million related to administrative and overhead expenses) and $1.0 million, ($0.8 million related to salaries, wages, and benefits and $0.2 million related to administrative and overhead expenses), respectively.

Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits of $3.0 million ($2.6 million before the three months ended March 31, 2024) related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Depreciation and Amortization

Depreciation and amortization expense decreased to $5.3 million for the three months ended March 31, 2024 as compared to $7.0 million for the three months ended March 31, 2023. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to the 1140 Avenue of the Americas impairment charge recorded in the three month period ending December 31, 2023. For more information please see our Annual Report on Form 10-K filed with the SEC on April 1, 2024.

Interest Expense

Interest expense remained the same at $4.7 million for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024 and 2023, our weighted-average outstanding debt balance was $399.5 million, and had a weighted-average effective interest rate of 4.36% in each period. All of our mortgage debt is either fixed rate or swapped to fixed rate and, accordingly, we have not currently been affected by rising interest rates.

Cash Flows from Operating Activities

The following table represents a reconciliation of our net cash provided by (used in) operations from our net loss for the three months ended March 31, 2024 and 2023:

	Quarter Ended March 31,				Increase
	2024		2023		(Decrease)
Cash flows from operating activities:
Net loss	$	(7,608)	$	(11,758)	$	4,150
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	5,261		6,952		(1,691)
Amortization of deferred financing costs	386		386		—
Accretion of below- and amortization of above-market lease liabilities and assets, net	(55)		36		(91)
Equity-based compensation	54		2,200		(2,146)
Management fees paid/reinvested in common stock by the Advisor	533		485		48
Changes in assets and liabilities:					—
Straight-line rent receivable	(30)		(204)		174
Straight-line rent payable	27		27		—
Prepaid expenses, other assets and deferred costs	234		(865)		1,099
Accounts payable, accrued expenses and other liabilities	2,470		1,193		1,277
Deferred revenue	383		806		(423)
Net cash provided by (used in) operating activities	1,655		(742)		$	2,397

36

The level of cash flows used in or provided by operating activities is affected by the volume of the restricted cash we are required to maintain, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses.

Cash Flows from Investing Activities

The following table represents a reconciliation of our net cash provided by (used in) investing activities for the three months ended March 31, 2024 and 2023:

	Quarter Ended March 31,		Increase
	2024	2023	(Decrease)
Cash flows from investing activities:
Capital expenditures	(364)	(2,308)	$	1,944
Net cash provided by (used in) investing activities	(364)	(2,308)	$	1,944

Cash Flows from Financing Activities

The following table represents a reconciliation of our net cash provided by (used in) financing activities for the three months ended March 31, 2024 and 2023:

	Quarter Ended March 31,		Increase
	2024	2023	(Decrease)
Cash flows from financing activities:
Proceeds from Rights Offering, net (see Note 7)	—	4,059	(4,059)
Redemption of fractional shares of common stock and restricted shares	—	(24)	24
Net cash provided by (used in) financing activities	—	4,035	(4,035)

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, acquisitions. We did not make any new acquisitions or investments in the quarter ended March 31, 2024.

Cash, Cash Equivalents and Restricted Cash

As of March 31, 2024, we had cash and cash equivalents of $5.3 million as compared to $5.3 million as of December 31, 2023. Under the guarantee of certain enumerated recourse liabilities of the borrower under one of our mortgage loans, we are required to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million, which includes cash and cash equivalents and restricted cash, which totaled $14.1 million as of March 31, 2024.

We had restricted cash of $8.8 million as of March 31, 2024 as compared to $7.5 million as of December 31, 2023. Our restricted cash balance includes cash sweeps for 1140 Avenue of the Americas of $2.6 million and $2.5 million, as of March 31, 2024 and December 31, 2023, respectively, and the remaining balance of restricted cash is comprised of various escrow accounts and other cash accounts with restricted uses. We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures. For certain property operating expenses and capital expenditures specifically related to our 1140 Avenue of the Americas property, lender approval is required to use any of the cash that is held in restricted cash accounts resulting from the breach of covenants on the loan secured by that property (see below). As a result, some of the property operating expenses and capital expenditures that will be paid with restricted cash may reside in accounts payable and accrued expenses on our consolidated balance sheet as of March 31, 2024.

Segregated Cash Accounts - Loan Covenant Breaches

The continuing adverse economic impacts since the COVID-19 pandemic have caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, and could continue to have, an adverse effect on the amount of cash we receive from our operations and therefore our ability to fund operating expenses and other capital requirements. Beginning in the third and fourth quarters of 2020, the operating results at some of our properties, including our 1140 Avenue of the Americas and 8713 Fifth Avenue properties, were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages, where excess operating cash flow from the property, if any, after debt service was held in restricted cash as additional collateral for the loan, for those properties to be triggered. Thus, we were not able to use excess cash flow, if any, from these properties to fund operating expenses at our other properties and other capital requirements during the quarter ended March 31, 2024.

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As of March 31, 2024, we are operating under two cash traps at both 1140 Avenue of the Americas and 8713 Fifth Avenue, which together, represent 23% of the rentable square feet in our portfolio as of March 31, 2024. As of March 31, 2024 and December 31, 2023, there was $2.6 million and $2.5 million, respectively, of cash maintained in a segregated and restricted cash account resulting from the breach of covenants on the loan secured by our 1140 Avenue of the Americas property. The remaining cash that is classified as restricted cash on the consolidated balance sheet are held in escrow accounts. As of March 31, 2024 our 8713 Fifth Avenue property has not generated excess cash after debt service and there is no related cash maintained in a segregated and restricted cash account for that property. We may not access the cash from the 1140 Avenue of the Americas property without lender approval unless and until the various breaches have been cured. Excess cash generated by the 1140 Avenue of the Americas property continues to be deposited in a separate cash management account until the borrower under the loan is able to comply with all of the applicable covenants.

Liquidity

We do not have any significant scheduled debt principal repayments due until April 2024 when the loan in the principal amount of $49.5 million and secured by 9 Times Square matures. On April 29, 2024 we entered into a second amendment to the term loan agreement which extended the maturity of the loan to October 31, 2024 (with an option to extend to January 31, 2025, subject to certain conditions) at a variable interest rate of one-month SOFR plus a spread of 2.60% per annum, in order to facilitate our efforts to sell the property. Under the agreement any excess cash generated will be deposited into an account maintained by the lender. Any cash generated from the sale of the property will be used to fund further investments as part of our revenue diversification efforts. However, there can be no assurance we will be able to sell this property before the renegotiated maturity date. For additional information please see Note 14 — Subsequent Events.

In February 2023, we raised gross proceeds of $5.0 million ($4.1 million of net proceeds) from our Rights Offering, which entitled holders of rights to purchase 0.20130805 of a share of our Class A common stock for every right held at a subscription price of $12.95 per whole share. As a result, we issued 386,100 shares of our Class A common stock subscribed for in our Rights Offering on February 27, 2023. The net proceeds were used for general corporate purposes.

To further augment our liquidity, we may potentially be able to generate funds for these needs through the potential issuance or placement of unsecured debt or an offering of equity securities although there can be no assurance that a market will exist for either a debt or equity offering of our securities. We may also further dispose of properties, but presently do not have plans to do so.

During the year ended December 31, 2023 and the three months ended March 31, 2024, we were also able to preserve cash through an arrangement with our Advisor. Pursuant to the Advisory Agreement, the Advisor had agreed to elect to accept shares of our common stock in lieu of cash for the base asset management fee as well as for the property management fee and reimbursement expenses (see Note 14 — Subsequent Events) to the Advisor. For the months described below, the Company paid asset management fees in shares in lieu of cash. For more information see Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details).

A summary of amounts invested by the Advisor or Bellevue during the months ended March 31, 2024 and the year ended December 31, 2023 is as follows:

Period of Issuance	Recipient	Agreement	Shares Issued	Closing Share Price
January 2023	The Advisor	Advisory Agreement	31,407 (1)	$	15.44 (1)
March 2024	The Advisor	Advisory Agreement	70,607	$	7.54

__________

(1)Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1 for additional information).

We continue to focus on increasing occupancy of the portfolio by seeking new and replacement tenants for leases that expired or otherwise have been terminated. We believe that certain market tenant incentives we have used and expect to continue to use, including free rent periods and tenant improvements, will support our occupancy rate and extend the average duration of our leases upon commencement of executed leases. These incentives have delayed, and may delay or reduce cash flow in the future for some period. Our ability to generate net cash from our property operations depends, in part on the amount of additional cash we can generate through new or renewal leases, which is not assured, and on our ability to access any excess cash we are able to generate from properties that are encumbered by mortgages where a cash trap event has occurred (see below for more details), which also is not assured.

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Dividend Policy

Through the six months ended June 30, 2022, we paid dividends to our common stockholders at our current annual rate of $3.20 per share of Class A common stock (adjusted for the Reverse Stock Split), or $0.80 per share (adjusted for the Reverse Stock Split) on a quarterly basis. The board subsequently decided not to declare any further dividends for the subsequent periods through March 31, 2024. There is no assurance as to when or if the board will declare future dividends or the amount of any future dividends that may be declared.

Mortgage Notes Payable

We had six mortgage loans secured by our seven properties with an aggregate balance of $399.5 million as of March 31, 2024 with a weighted-average effective interest rate of 4.36%. All our mortgage loans bear interest at a fixed rate, except for a mortgage loan agreement secured by Capital One N.A. that has terms now based on SOFR for which we have a related derivative agreement for a “pay-fixed” swap which effectively converts the loan to a fixed rate. We do not have any scheduled principal payments due on our mortgage notes payable during the three months ended March 31, 2024. Subsequent to the quarter end, we had principal payments due associated with our loan secured by 9 Times Square. The loan secured by 9 Times Square in the principal amount of $49.5 million matures in April 2024. This loan bears interest at a rate equal to 3.73% per annum. On April 29, 2024 we entered into an amended loan agreement with the existing lender to extend the maturity of the loan to October 31, 2024 with an option to extend the maturity to January 31, 2025 (subject to certain conditions) at an effective variable interest rate of SOFR 2.60% per annum. As announced in our press release on April 29, 2024, we have determined to market certain of their properties for sale, including 9 Times Square. This amended agreement allows us to begin marketing the property for sale, with the option to extend in the event the property is under contract for sale but has not yet closed at the time of maturity, however, there can be no assurance we will be able to sell the property before the extended maturity date. For additional information please see Note 14 — Subsequent Events.

We do not currently have a commitment for a corporate-level revolving credit facility or any other corporate-level indebtedness, and there can be no assurance we would be able to obtain corporate-level financing on favorable terms, or at all. We do not currently anticipate incurring additional indebtedness secured by our existing properties, however, despite a tightening of the credit markets, we expect to be able to continue to use debt financing as a source of capital especially if we acquire additional properties.

1140 Avenue of the Americas

We breached both a debt service coverage provision and a reserve fund provision under our non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 15 quarters ended March 31, 2024. The principal amount of the loan was $99.0 million as of March 31, 2024. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after paying operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured if we satisfy the required debt service coverage ratio for two consecutive quarters, whereupon the additional collateral will be released. We can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications. As of March 31, 2024 and December 31, 2023 we had $2.6 million and $2.5 million in cash that is retained by the lender and maintained in restricted cash on our consolidated balance sheet as of those dates.

8713 Fifth Avenue

We breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue in each of the last 15 quarters ended March 31, 2024. The principal amount for the loan was $10.0 million as of March 31, 2024. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period. We have the ability to avoid the excess cash flow sweep period by electing to fund a reserve in the amount of $125,000 of additional collateral in cash or as a letter of credit. As of the date of filing this Quarterly Report on Form 10-Q, we had not yet determined whether we will do so, and have not previously done so. 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. Additionally, in the event that the debt service coverage ratio covenant remains in breach at or below the current level for two consecutive calendar quarters and the lender reasonably determines that such breach is due to the property not being prudently managed by the current manager, the lender has the right, but not the obligation, to require that we replace the current manager with a third party manager chosen by us. This property did not generate any excess cash since the breach occurred and thus no cash has ever been trapped related to this property. We signed a lease with a tenant at this property in November 2021. The tenant and began occupying a portion of the leased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of the space in the quarter ending June 30, 2024, which will bring the occupancy to 100%. We anticipate complying with the debt service coverage ratio under the non-recourse mortgage once the space is occupied.

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400 E. 67th Street/200 Riverside Blvd.

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

As of March 31, 2024 we had $1.1 million retained by the lender in a restricted cash account on our consolidated balance sheet. We may exit the lease sweep period when the major tenant executes a renewal or extension option.

Other Information

We entered into one new lease at 123 William Street during the three months ended March 31, 2024. We are also working to increase the rental income at our other properties that are not fully occupied. There can be no assurance, however, that we will be able to lease all or any portion of the vacant space at any property on acceptable or favorable terms, or at all, or that we will not experience further terminations. Unless we are able to increase the occupancy at 1140 Avenue of the Americas and 8713 Fifth Avenue on terms that allow us to cure the two remaining covenant breaches described above, we will be unable to access excess cash flow from those properties and the lenders may be able to exercise additional remedies. We will also be unable to use the restricted cash related to the 400 E. 67th Street/200 Riverside Blvd. lease sweep period, until an extension or renewal is signed by the major tenant, or the space is subsequently filled.

Any cash that is restricted for the remaining breaches on 1140 Avenue of the Americas and 8713 Fifth Avenue mortgages (as disclosed above) are not available to be used for other corporate purposes. Restricted cash related to 400 E. 67th Street/200 Riverside Blvd. lease sweep period is also not available to be used for other corporate purposes. There is no assurance that we will be able to cure these breaches. Moreover, if we experience additional lease terminations, due to tenant bankruptcies or otherwise, or tenants placed on a cash basis continue to not pay rent, it is possible that certain of the covenants on other loans may be breached and we may also become restricted from accessing excess cash flows from those properties. Except as described herein, we were in compliance with the remaining covenants under our mortgage notes payable as of March 31, 2024.

Leasing Activity/Occupancy

We had an increase in occupancy level to 87.2% across our portfolio as of March 31, 2024, as compared to 86.7% as of December 31, 2023. The changes in occupancy were as follows:

•Occupancy at 9 Times Square decreased to 70.6% as of March 31, 2024 as compared to 71.2% as of December 31, 2023. The decrease was primarily due to a lease amendment and relocation of a tenant to a smaller suite.

•Occupancy at 123 William Street increased to 92.5% as of March 31, 2024 compared to 91.4% as of December 31, 2023. The increase was due to the signing of a new lease during the three months ended March 31, 2024.

•Occupancy at 1140 Avenue of the Americas remained the same at 77.1% as of March 31, 2024 and December 31, 2023.

•Occupancy at our properties located at 196 Orchard Street, 400 E. 67th Street/200 Riverside Blvd. was at 100% as of March 31, 2024 and December 31, 2023.

•Occupancy at 8713 Fifth Avenue remained the same at 88.6% as of March 31, 2024 and December 31, 2023. We signed a lease with a new tenant at this property in November 2021, that began occupying a portion of the leased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of the space in the second quarter of the year ended December 31, 2024, which will bring the occupancy to 100.0%.

Capital Expenditures

For the three months ended March 31, 2024, we funded an aggregate of $0.4 million of capital expenditures primarily for tenant and building improvements at 123 William Street, 9 Times Square 1140 Avenue of the Americas, and 8713 Fifth Avenue. We may invest in additional capital expenditures to further enhance the value of our properties. Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances.

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

Acquisitions and Dispositions

We had no acquisitions or dispositions during the three months ended March 31, 2024 or 2023.

Non-GAAP Financial Measures

This section discusses the non-GAAP financial measures we use to evaluate our performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) as well as adjusted EBITDA.

EBITDA and adjusted EBITDA are both non-GAAP metrics and should not be construed to be more relevant or accurate than other metrics calculated and presented in accordance with GAAP, including net loss, in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than non-GAAP metrics.

We consider EBITDA and adjusted EBITDA useful indicators of our performance. Because these metrics’ calculations exclude such factors as depreciation and amortization of real estate assets, interest expense, impairment charges, equity-based compensation, gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), these metrics’ presentations facilitate comparisons of operating performance between periods and between other companies that use these measures.

As a result, we believe that the use of these non-GAAP metrics together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, these non-GAAP metrics are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends and capital expenditures. Investors are cautioned that these non-GAAP metrics should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization

We define adjusted EBITDA as net loss excluding (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization expense, (iv) impairment charges, (v) interest income and other income or expense, (vi) gains or losses on debt extinguishment, (vii) equity-based compensation expense, (vii) acquisition and transaction costs, (viii) gain or loss on asset sales and (ix) and expenses paid with issuances of our common stock in lieu of cash.

The below table presents a reconciliation of our EBITDA and our adjusted EBITDA from net loss for the three months ended March 31, 2024 and 2023:

	Three Months Ended
(in thousands)	March 31, 2024		March 31, 2023
Net loss and net loss attributable to common stockholders (in accordance with GAAP)	$	(7,608)	$	(11,758)
Interest expense	4,697		4,663
Depreciation and amortization	5,261		6,952
EBITDA	2,350		(143)
Impairment of real estate investments	—		—
Equity-base compensation	54		2,200
Other income	(9)		(9)
Management fees paid in common stock to the Advisor in lieu of cash	533		485
Adjusted EBITDA	$	2,928	$	2,533

Dividends

As noted above, we have not paid dividends to stockholders since those that were declared and paid through the six months ended June 30, 2022.

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Decisions regarding the frequency and amount of any future dividends we pay on our Class A common stock are entirely at the discretion of our board of directors. Our ability to pay dividends in the future will depend on our ability to operate profitably and to generate sufficient cash flows from the operations. We cannot guarantee that we will be able to pay dividends on a regular basis on our Class A common stock or any other class or series of stock we may issue in the future. There is no assurance we will reinstitute the payment dividends at the previous rate, or at all. The amount of dividends we may pay to our stockholders is determined by our board of directors based on several 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.

Previous Election as a REIT 

We elected to be taxed as a REIT, effective commencing with our taxable year ended December 31, 2014. Our board subsequently authorized the termination of our REIT election which became effective on January 1, 2023. We believe that during the 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. To qualify as a REIT during that period, 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 and comply with several other organizational and operational requirements. As a REIT, we were generally not be subject to U.S. federal corporate income tax on the portion of our REIT taxable income that we distributed to our stockholders. A tax loss for a particular year eliminated the need to distribute REIT taxable income to meet the 90% distribution requirement for that year and minimized or eliminated the need to pay distributions to meet the distribution requirement in one or more subsequent years. We had a loss for tax purposes in the year ending December 31, 2022 and therefore there was no REIT taxable income requiring distribution to maintain our qualification as a REIT for the year ended December 31, 2022.

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 March 31, 2024, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.5%. To help mitigate the adverse impact of inflation, approximately 84% of our leases with our tenants contain rent escalation provisions which increase the cash rent that is due under these leases over time by an average cumulative increase of 2.2% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures. As of March 31, 2024, based on straight-line rent, approximately 84% are fixed rate, scheduled escalation increases recorded on a straight-line basis, 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. Currently, the impact of inflation has had an immaterial impact to operating costs. However, to the extent such costs exceed the tenants base year, certain but not all of our leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in costs and operating expenses resulting from inflation. As the costs of general goods and services continue to rise, we may be adversely impacted by increases in general and administrative costs due to overall inflation.

Related-Party Transactions and Agreements

Please see Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There has been no material change in our exposure to market risk during the three months ended March 31, 2024. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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Item 4. Controls and Procedures.

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of March 31, 2024, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2024, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.

No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to any material pending legal proceedings.

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Item 1A. Risk Factors.

Please refer to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, as amended and supplemented as follows:

Negative fluctuations in the price of our Class A common stock could impact our market capitalization and our ability to meet the ongoing listing requirements of the NYSE.

From time to time, fluctuations in the price of our Class A common stock have caused the Company’s market capitalization to fall below $15 million. Pursuant to Rule 802.01B in the Listed Company Manual of the NYSE, the Company must maintain a thirty-trading-day average market capitalization of $15 million. If we are unable to satisfy the market capitalization test, the NYSE would delist our Class A common stock from trading on the NYSE which could have a negative impact on stockholder liquidity and the Company’s ability to raise capital.

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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchase of Equity Securities.

Recent Sales of Unregistered Securities

None.

Use of Proceeds from Sales of Registered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Trading Plans

During our last fiscal quarter, no director or officer, as defined in Rule 16a-1(f), adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," each as defined in Regulation S-K Item 408.

Item 6. Exhibits.

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the three months ended March 31, 2024 (and are numbered in accordance with Item 601 of Regulation S-K).

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EXHIBITS INDEX

Exhibit No.	Description
3.1 (1)	Articles of Amendment and Restatement, dated July 17, 2018
3.2 (2)	Articles of Amendment relating to corporate name change, dated March 13, 2019
3.3 (3)	Articles of Amendment relating to reverse stock split, dated August 5, 2020
3.4 (3)	Articles of Amendment relating to par value decrease and common stock name change, dated August 5, 2020
3.5 (3)	Articles Supplementary classifying and designating Class B common stock, dated March 16, 2022
3.6 (4)	Articles Supplementary classifying and designating Series A Preferred Stock, dated August 17, 2020
3.7 (5)	Articles Supplementary reclassifying Class B common stock into Class A common stock, dated March 16, 2022
3.8 (6)	Articles of Amendment relating to Reverse Stock Split (2023), dated January 10, 2023
3.9 (6)	Articles of Amendment relating to par value decrease (2023), dated January 10, 2023
3.10 (7)	Articles of Amendment relating to name change (2023), dated January 18, 2023
3.11 (8)	Second Amended and Restated Bylaws of American Strategic Investment Co.
4.1 (7)	Third Amendment, dated as of January 23, 2023, to the Amended and Restated Rights Agreement, as amended by Amendment No. 1, dated August 12, 2021, and Amendment No. 2, dated August 10, 2022, between American Strategic Investment Co. and Computershare Trust Company, N.A. as Rights Agent
4.2 (7)	Certificate of Notice of American Strategic Investment Co., dated January 18, 2023
10.1 (9)	Second Amendment to Second Amended and Restated Advisory Agreement, dated March 29, 2024, by and among American Strategic Investment Co., New York City Operating Partnership, L.P. and New York City Advisors, LLC
10.2 (9)	Third Amendment to Property Management and Lease Agreement, dated March 29, 2024, by and among American Strategic Investment Co., New York City Operating Partnership, L.P. and New York City Advisors, LLC
31.1 *	Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *	Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 +	Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *	Inline XBRL Taxonomy Extension Schema Document.
101.CAL *	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 *	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

_______

*    Filed herewith

+    Furnished herewith

(1)Filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on August 14, 2018.

(2)Filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on March 15, 2019.

(3)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 5, 2020.

(4) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 18, 2020.

(5)Filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on March 18, 2022.

(6)Filed as an exhibit to our Form 8-K filed with the SEC on January 12, 2023.

(7)Filed as an exhibit to our Form 8-K filed with the SEC on January 24, 2023.

(8)Filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on August 11, 2023.

47

EXHIBITS INDEX

(9)Filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on April 1, 2023

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERICAN STRATEGIC INVESTMENT CO.
By:	/s/ Michael Anderson
	Michael Anderson
	Chief Executive Officer (Principal Executive Officer)
By:	/s/ Michael LeSanto
	Michael LeSanto
	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Dated: May 10, 2024

49