Company to Host Investor Webcast and
Conference Call Today at 11:00 AM ET
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. Consolidated Balance Sheets (In thousands. except
share and per share data)
June 30, 2023
December 31,
2022
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. Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)
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
$
(10,899
)
$
(13,001
)
Net loss per share attributable to common
stockholders — Basic and Diluted
$
(4.77
)
$
(7.77
)
Weighted-average shares outstanding —
Basic and Diluted
2,286,797
1,679,211
American Strategic Investment
Co. Quarterly Reconciliation of Non-GAAP Measures
(Unaudited) (In thousands)
Three Months Ended June
30,
2023
2022
Adjusted EBITDA
Net loss and Net loss attributable to
common stockholders
$
(10,899
)
$
(13,001
)
Depreciation and amortization
6,749
7,041
Interest expense
4,707
4,703
Impairment of real estate investments
151
—
Equity-based compensation
2,304
2,201
Other income
(10
)
(2
)
Adjusted EBITDA
3,002
942
Asset and property management fees to
related parties
1,988
1,785
General and administrative
2,439
5,175
NOI
7,429
7,902
Accretion of below- and amortization of
above-market lease liabilities and assets, net
(45
)
(50
)
Straight-line rent (revenue as a
lessor)
120
(930
)
Straight-line ground rent (expense as
lessee)
27
27
Cash NOI
$
7,531
$
6,949
Cash Paid for Interest:
Interest expense
$
4,707
$
4,703
Amortization of deferred financing
costs
(385
)
(386
)
Total cash paid for interest
$
4,322
$
4,317
American Strategic Investment
Co. Quarterly Reconciliation of Non-GAAP Measures
(Unaudited) (In thousands)
Three Months Ended June
30,
2023
2022
Net loss and Net loss attributable to
common stockholders (in accordance with GAAP)
$
(10,899
)
$
(13,001
)
Impairment of real estate investments
151
—
Depreciation and amortization
6,749
7,041
FFO (as defined by NAREIT) attributable
to common stockholders
(3,999
)
(5,960
)
Equity-based compensation (1)
2,304
2,201
Expenses attributable to portion of 2022
proxy contest (2)
—
2,084
Core FFO attributable to common
stockholders
$
(1,695
)
$
(1,675
)
(1)
Includes expense related to the
amortization of the Company's restricted common shares and LTIP
Units related to its multi-year outperformance agreement for all
periods presented. Management has not added back the cost of the
base management fee elected to be received by the Advisor in shares
in lieu of cash or the cost of the Advisor’s base management fee
used by the Advisor under the Side Letter to purchase shares or
because such amounts are considered a normal operating expense.
Such amount included in net loss was $1.3 million for the three
months ended June 30, 2022.
(2)
Amounts relate to costs incurred for the
2022 annual meeting that were specifically related to the portion
of the Company’s 2022 proxy contest. The Company does not consider
these expenses to be part of its normal operating performance and
has, accordingly, increased its Core FFO for these amounts.
Non-GAAP Financial Measures
This release discusses the non-GAAP financial measures we use to
evaluate our performance, including Funds from Operations (“FFO”),
Core Funds from Operations (“Core FFO”), Earnings before Interest,
Taxes, Depreciation and Amortization (“ EBITDA”), Adjusted Earnings
before Interest, Taxes, Depreciation and Amortization (“Adjusted
EBITDA”), Net Operating Income (“NOI”) and Cash Net Operating
Income (“Cash NOI”) and Cash Paid for Interest. While NOI is a
property-level measure, Core FFO is based on our total performance
and therefore reflects the impact of other items not specifically
associated with NOI such as, interest expense, general and
administrative expenses and operating fees to related parties. A
description of these non-GAAP measures and reconciliations to the
most directly comparable GAAP measure, which is net income, is
provided above.
In December 2022 we announced that we changed our business
strategy and terminated our election to be taxed as a REIT
effective January 1, 2023, however, our business and operations
have not materially changed in the first quarter of 2023.
Therefore, we did not change any of the non-GAAP metrics that we
have historically used to evaluate performance.
Caution on Use of Non-GAAP Measures
FFO, Core FFO, EBITDA, Adjusted EBITDA, NOI, Cash NOI and Cash
Paid for Interest should not be construed to be more relevant or
accurate than the current GAAP methodology in calculating net
income or in its applicability 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 the non-GAAP measures.
Other companies may not define FFO in accordance with the
current National Association of Real Estate Investment Trusts
(“NAREIT”), an industry trade group, definition (as we do), or may
interpret the current NAREIT definition differently than we do, or
may calculate Core FFO differently than we do. Consequently, our
presentation of FFO and Core FFO may not be comparable to other
similarly titled measures presented by other REITs.
We consider FFO and Core FFO useful indicators of our
performance. Because FFO and Core FFO calculations exclude such
factors as depreciation and amortization of real estate assets and
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), FFO
and Core FFO 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 FFO and Core FFO,
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, FFO and Core FFO are not indicative of cash
available to fund ongoing cash needs, including the ability to pay
cash dividends. Investors are cautioned that FFO and Core FFO
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.
Funds from Operations and Core Funds from Operations
Funds from Operations
Due to certain unique operating characteristics of real estate
companies, as discussed below, the NAREIT, an industry trade group,
has promulgated a performance measure known as FFO, which we
believe to be an appropriate supplemental measure to reflect the
operating performance of a company with a business similar to our
current business. FFO is not equivalent to net income or loss as
determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the
standards established over time by the Board of Governors of
NAREIT, as restated in a White Paper and approved by the Board of
Governors of NAREIT effective in December 2018 (the “White Paper”).
The White Paper defines FFO as net income or loss computed in
accordance with GAAP, excluding depreciation and amortization
related to real estate, gains and losses from sales of certain real
estate assets, gain and losses from change in control and
impairment write-downs of certain real estate assets and
investments in entities when the impairment is directly
attributable to decreases in the value of depreciable real estate
held by the entity. Adjustments for consolidated partially-owned
entities (including our New York City Operating Partnership L.P.)
and equity in earnings of unconsolidated affiliates are made to
arrive at our proportionate share of FFO attributable to our
stockholders. Our FFO calculation complies with NAREIT’s
definition.
The historical accounting convention used for real estate assets
requires straight-line depreciation of buildings and improvements,
and straight-line amortization of intangibles, which implies that
the value of a real estate asset diminishes predictably over time.
We believe that, because real estate values historically rise and
fall with market conditions, including inflation, interest rates,
unemployment and consumer spending, presentations of operating
results for a company with a business similar to our current
business using historical accounting for depreciation and certain
other items may be less informative. Historical accounting for real
estate involves the use of GAAP. Any other method of accounting for
real estate such as the fair value method cannot be construed to be
any more accurate or relevant than the comparable methodologies of
real estate valuation found in GAAP. Nevertheless, we believe that
the use of FFO, which excludes the impact of real estate related
depreciation and amortization, among other things, provides a more
complete understanding of our performance to investors and to
management, and when compared year over year, reflects the impact
on our operations from trends in occupancy rates, rental rates,
operating costs, general and administrative expenses, and interest
costs, which may not be immediately apparent from net income.
Core Funds from Operations
Beginning in the third quarter 2020, following the listing of
our Class A common stock on the NYSE, we began presenting Core FFO,
also a non-GAAP metric. We believe that Core FFO is utilized by
other publicly-traded companies with a business similar to our
current business, although Core FFO presented by us may not be
comparable to Core FFO reported by other companies that define Core
FFO differently. In calculating Core FFO, we start with FFO, then
we exclude the impact of discrete non-operating transactions and
other events which we do not consider representative of the
comparable operating results of our real estate operating
portfolio, which is our core business platform. Specific examples
of discrete non-operating items include acquisition and transaction
related costs for dead deals, debt extinguishment costs, non-cash
equity-based compensation and costs incurred for the 2022 proxy
contest. We add back non-cash write-offs of deferred financing
costs and prepayment penalties incurred with the early
extinguishment of debt which are included in net income but are
considered financing cash flows when paid in the statement of cash
flows. We consider these write-offs and prepayment penalties to be
capital transactions and not indicative of operations normal
operating performance. Further, we do not consider the costs
associated with the 2022 contested proxy, while paid in cash, to be
indicative of normal operating performance. By excluding expensed
acquisition and transaction dead deal costs as well as
non-operating costs described above, we believe Core FFO provides
useful supplemental information that is comparable for each type of
real estate investment and is consistent with management’s analysis
of the investing and operating performance of our properties. In
future periods, we may also exclude other items from Core FFO that
we believe may help investors compare our results.
Adjusted Earnings before Interest, Taxes, Depreciation and
Amortization, Net Operating Income, Cash Net Operating Income and
Cash Paid for Interest.
We believe that EBITDA and Adjusted EBITDA, which is defined as
earnings before interest, taxes, depreciation and amortization
adjusted for acquisition and transaction-related expenses, fees
related to the listing related costs and expenses, other non-cash
items such as the vesting and conversion of the Class B Units,
equity-based compensation expense and including our pro-rata share
from unconsolidated joint ventures, is an appropriate measure of
our ability to incur and service debt. Adjusted EBITDA should not
be considered as an alternative to cash flows from operating
activities, as a measure of our liquidity or as an alternative to
net income as an indicator of our operating activities. Other
companies may calculate Adjusted EBITDA differently and our
calculation should not be compared to that of other companies.
NOI is a non-GAAP financial measure used by us to evaluate the
operating performance of our real estate. NOI is equal to total
revenues, excluding contingent purchase price consideration, less
property operating and maintenance expense. NOI excludes all other
items of expense and income included in the financial statements in
calculating net income (loss). We believe NOI provides useful and
relevant information because it reflects only those income and
expense items that are incurred at the property level and presents
such items on an unleveraged basis. We use NOI to assess and
compare property level performance and to make decisions concerning
the operations of the properties. Further, we believe NOI is useful
to investors as a performance measure because, when compared across
periods, NOI reflects the impact on operations from trends in
occupancy rates, rental rates, operating expenses and acquisition
activity on an unleveraged basis, providing perspective not
immediately apparent from net income (loss). NOI excludes certain
items included in calculating net income (loss) in order to provide
results that are more closely related to a property’s results of
operations. For example, interest expense is not necessarily linked
to the operating performance of a real estate asset. In addition,
depreciation and amortization, because of historical cost
accounting and useful life estimates, may distort operating
performance at the property level. NOI presented by us may not be
comparable to NOI reported by other companies that define NOI
differently. We believe that in order to facilitate a clear
understanding of our operating results, NOI should be examined in
conjunction with net income (loss) as presented in our consolidated
financial statements. NOI should not be considered as an
alternative to net income (loss) as an indication of our
performance or to cash flows as a measure of our liquidity or our
ability to pay dividends.
Cash NOI, is a non-GAAP financial measure that is intended to
reflect the performance of our properties. We define Cash NOI as
NOI excluding amortization of above/below market lease intangibles
and straight-line adjustments that are included in GAAP lease
revenues. We believe that Cash NOI is a helpful measure that both
investors and management can use to evaluate the current financial
performance of our properties and it allows for comparison of our
operating performance between periods and to other companies. Cash
NOI should not be considered as an alternative to net income, as an
indication of our financial performance, or to cash flows as a
measure of liquidity or our ability to fund all needs. The method
by which we calculate and present Cash NOI may not be directly
comparable to the way other companies present Cash NOI.
Cash Paid for Interest is calculated based on the interest
expense less non-cash portion of interest expense and amortization
of mortgage (discount) premium, net. Management believes that Cash
Paid for Interest provides useful information to investors to
assess our overall solvency and financial flexibility. Cash Paid
for Interest should not be considered as an alternative to interest
expense as determined in accordance with GAAP or any other GAAP
financial measures and should only be considered together with and
as a supplement to our financial information prepared in accordance
with GAAP.
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