American Strategic Investment Co. (NYSE: NYC) (“ASIC” or the “Company”), a company that owns a portfolio of commercial real estate located within the five boroughs of New York City, announced today its financial and operating results for the second quarter ended June 30, 2023.
Second Quarter 2023 and Subsequent Event Highlights
- Revenue was $15.8 million compared to $16.2 million in the second quarter 2022 and $15.5 million in the first quarter 2023, as new leases began to commence
- Net loss attributable to common stockholders improved to $10.9 million, compared to $13.0 million in the second quarter 2022
- Cash net operating income (“NOI”) grew 7.7% to $7.5 million from $6.9 million in the second quarter 2022
- Adjusted EBITDA grew over 200% to $3.0 million compared to $0.9 million in the second quarter 2022
- Funds from Operations (“FFO”) improved $2.0 million to negative $4.0 million compared to negative $6.0 million in the second quarter 2022
- Core Funds from Operations (“Core FFO”) was negative $1.7 million compared to negative $1.7 million in the second quarter 2022
- 79% of annualized straight-line rent from Top 10 tenants1 is derived from investment grade or implied investment grade2 rated tenants with a weighted-average remaining lease term of 9.1 years as of June 30, 2023
- Portfolio occupancy grew to 85% as of June 30, 2023 from 84% as of March 31, 2023, with weighted-average lease term3 of 6.8 years
- Executed four new leases totaling over 26,000 square feet and $1.5 million of annualized straight-line rent
- Portfolio debt is 100% fixed rate with no maturities through the end of 2023 and limited maturities through 2025, 4.4% weighted-average interest rate and 3.7 years of weighted-average debt maturity
CEO Comments
“Our proactive asset management platform generated strong leasing activity during the quarter that drove occupancy to 85% from 84% in the previous quarter and added $1.5 million of annualized straight-line rent,” said Michael Weil, CEO of ASIC. “The leasing activity was highlighted by a long-term lease extension at 8713 Fifth Avenue and a lease expansion at 9 Times Square that we signed this quarter, signaling our tenants' commitments to the properties we own in New York City. Adjusted EBITDA, Cash NOI and Core FFO per share all grew sequentially as a result of increased revenue and lower operating expenses. We believe our resilient portfolio and creditworthy tenant base, coupled with 100% fixed rate debt with limited maturities through 2025, are a strong foundation to support future growth for ASIC.”
Financial Results
Three Months Ended June 30, | ||||||||
(In thousands, except per share data) | 2023 | 2022 | ||||||
Revenue from tenants | $ | 15,782 | $ | 16,231 | ||||
Net loss attributable to common stockholders | $ | (10,899 | ) | $ | (13,001 | ) | ||
Net loss per common share (a) | $ | (4.77 | ) | $ | (7.77 | ) | ||
FFO attributable to common stockholders | $ | (3,999 | ) | $ | (5,960 | ) | ||
FFO per common share (a) | (1.75 | ) | $ | (3.52 | ) | |||
Core FFO attributable to common stockholders | $ | (1,695 | ) | $ | (1,675 | ) | ||
Core FFO per common share (a) | $ | (0.74 | ) | $ | (0.96 | ) | ||
| (a) | All per share data based on 2,286,797 and 1,679,211 diluted weighted-average shares outstanding for the three months ended June 30, 2023 and 2022, respectively. | |
Real Estate Portfolio
The Company’s portfolio consisted of eight properties comprised of 1.2 million rentable square feet as of June 30, 2023. Portfolio metrics include:
- 85.1% leased
- 6.8 years remaining weighted-average lease term
- 79% of annualized straight-line rent4 from top 10 tenants derived from investment grade or implied investment grade tenants with 9.1 years of weighted-average remaining lease term
- Diversified portfolio, comprised of 24% financial services tenants, 13% government and public administration tenants, 12% retail tenants, 10% non-profit and 41% all other industries, based on annualized straight-line rent
Capital Structure and Liquidity Resources
As of June 30, 2023, the Company had $7.1 million of cash and cash equivalents.5 The Company’s net debt6 to gross asset value7 was 41.4%, with net debt of $392.4 million.
All of the Company’s debt was fixed-rate as of June 30, 2023. The Company’s total combined debt had a weighted-average interest rate of 4.4%.8
Footnotes/Definitions
| 1 | Top 10 tenants based on annualized straight-line rent as of June 30, 2023. | |
| 2 | As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term “parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of June 30, 2023. Based on annualized straight-line rent, top 10 tenants are 59% actual investment grade rated and 20% implied investment grade rated. | |
| 3 | The weighted-average remaining lease term (years) is weighted by annualized straight-line rent as of June 30, 2023. | |
| 4 | Annualized straight-line rent is calculated using the most recent available lease terms as of June 30, 2023. | |
| 5 | Under one of our mortgage loans, we are required to maintain minimum liquid assets (i.e. cash and cash equivalents and restricted cash) of $10.0 million. | |
| 6 | Total debt of $399.5 million less cash and cash equivalents of $7.1 million as of June 30, 2023. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents. | |
| 7 | Defined as the carrying value of total assets of $775.5 million plus accumulated depreciation and amortization of $171.7 million as of June 30, 2023. | |
| 8 | Weighted based on the outstanding principal balance of the debt. | |
Webcast and Conference Call
ASIC will host a webcast and call on August 11, 2023 at 11:00 a.m. ET to discuss its financial and operating results. This webcast will be broadcast live over the Internet and can be accessed by all interested parties through the ASIC website, www.americanstrategicinvestment.com, in the “Investor Relations” section.
Dial-in instructions for the conference call and the replay are outlined below.
To listen to the live call, please go to ASIC’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the ASIC website at www.americanstrategicinvestment.com.
Live Call
Dial-In (Toll Free): 1-888-330-3127
International Dial-In: 1-646-960-0855
Conference ID: 5954637
Conference Replay*
Domestic Dial-In (Toll Free): 1-800-770-2030
International Dial-In: 1-647-362-9199
Conference Number: 5954637
*Available from August 11, 2023 through November 11, 2023.
About American Strategic Investment Co.
American Strategic Investment Co. (NYSE: NYC) owns a portfolio of commercial real estate located within the five boroughs of New York City. Additional information about ASIC can be found on its website at www.americanstrategicinvestment.com.
Supplemental Schedules
The Company will file supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of ASIC’s website at www.americanstrategicinvestment.com and on the SEC website at www.sec.gov.
Important Notice
The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. The words “may,” “will,” “seeks,” “anticipates,” “believes,” “expects,” “estimates,” “projects,” “plans,” “intends,” “should” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include (a) the anticipated benefits of the Company’s election to terminate its status as a real estate investment trust, (b) whether the Company will be able to successfully acquire new assets or businesses, (c) the potential adverse effects of (i) the global COVID-19 pandemic, including actions taken to contain or treat COVID-19, (ii) the geopolitical instability due to the ongoing military conflict between Russia and Ukraine, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on the Company, the Company’s tenants, and the global economy and financial markets, and (iii) inflationary conditions and higher interest rate environment and (d) that any potential future acquisition is subject to market conditions and capital availability and may not be completed on favorable terms, or at all, as well as those risks and uncertainties set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 16, 2023 and all other filings with the SEC after that date, as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, unless required to do so by law.
American Strategic Investment Co.
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June 30,
| December 31,
| |||||||
ASSETS | (Unaudited) | |||||||
Real estate investments, at cost: | ||||||||
Land | $ | 192,489 | $ | 192,600 | ||||
Buildings and improvements | 577,761 | 576,686 | ||||||
Acquired intangible assets | 63,445 | 71,848 | ||||||
Total real estate investments, at cost | 833,695 | 841,134 | ||||||
Less accumulated depreciation and amortization | (171,721 | ) | (167,978 | ) | ||||
Total real estate investments, net | 661,974 | 673,156 | ||||||
Cash and cash equivalents | 7,052 | 9,215 | ||||||
Restricted cash | 6,112 | 6,902 | ||||||
Operating lease right-of-use asset | 54,846 | 54,954 | ||||||
Prepaid expenses and other assets | 5,540 | 5,624 | ||||||
Derivative asset, at fair value | 1,184 | 1,607 | ||||||
Straight-line rent receivable | 29,203 | 29,116 | ||||||
Deferred leasing costs, net | 9,581 | 9,881 | ||||||
Total assets | $ | 775,492 | $ | 790,455 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Mortgage notes payable, net | $ | 394,931 | $ | 394,159 | ||||
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $401 and $118 at June 30, 2023 and December 31, 2022, respectively) | 12,045 | 12,787 | ||||||
Operating lease liability | 54,687 | 54,716 | ||||||
Below-market lease liabilities, net | 2,495 | 3,006 | ||||||
Deferred revenue | 3,835 | 4,211 | ||||||
Total liabilities | 467,993 | 468,879 | ||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at June 30, 2023 and December 31, 2022 | — | — | ||||||
Common stock, $0.01 par value, 300,000,000 shares authorized, 2,302,950 and 1,886,298 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 23 | 19 | ||||||
Additional paid-in capital | 703,587 | 698,761 | ||||||
Accumulated other comprehensive income | 1,203 | 1,637 | ||||||
Distributions in excess of accumulated earnings | (422,012 | ) | (399,355 | ) | ||||
Total stockholders’ equity | 282,801 | 301,062 | ||||||
Non-controlling interests | 24,698 | 20,514 | ||||||
Total equity | 307,499 | 321,576 | ||||||
Total liabilities and equity | $ | 775,492 | $ | 790,455 | ||||
American Strategic Investment Co.
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Three Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
Revenue from tenants | $ | 15,782 | $ | 16,231 | ||||
Operating expenses: | ||||||||
Asset and property management fees to related parties | 1,988 | 1,785 | ||||||
Property operating | 8,353 | 8,329 | ||||||
Impairments of real estate investments | 151 | — | ||||||
Equity-based compensation | 2,304 | 2,201 | ||||||
General and administrative | 2,439 | 5,175 | ||||||
Depreciation and amortization | 6,749 | 7,041 | ||||||
Total operating expenses | 21,984 | 24,531 | ||||||
Operating loss | (6,202 | ) | (8,300 | ) | ||||
Other income (expense): | ||||||||
Interest expense | (4,707 | ) | (4,703 | ) | ||||
Other income | 10 | 2 | ||||||
Total other expense | (4,697 | ) | (4,701 | ) | ||||
Net loss and Net loss attributable to common stockholders | ||||||||
