Q2 2024 American Strategic Investment Co Earnings Call

August 9, 2024

Bailey: Good morning and welcome to the American Strategic Investment Company's second quarter earnings call. My name is Bailey and I will be your conference operator today. All lines have been placed on mute to prevent any background noise.

Bailey: Order Earnings Call. My name is Bailey, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise.

Bailey: My name is Bailey, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise.

Bailey: After this beaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and one.

Bailey: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and 1. I would now like to turn the conference over to Curtis Parker, Senior Vice President. Please go ahead.

Speaker Change: After the speaker's remarks, there will be a question and answer session.

Speaker Change: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press star and 1. I would now like to turn the conference over to Curtis Parker, Senior Vice President. Please go ahead.

Curtis Parker: I would now like to turn the conference over to Curtis Parker, Senior Vice President. Please go ahead.

Curtis Parker: Good morning, everyone, and thank you for joining us for our second quarter, 2024 earnings call. This event is also being webcast in the Investor Relations section of our website. Joining me today on the call to discuss the quarter's results are Michael Anderson, American Strategic Investment Company's chief executive officer, and Michael LeSanto, the chief financial officer.

Curtis Parker: Good morning, everyone. And thank you for joining us for our second quarter 2024 earnings call. This event is also being webcast in the investor relations section of our website. Joining me today on the call to discuss the quarter's results are Michael Anderson, American Strategic Investment Company's Chief Executive Officer, and Mike LeSanto, the Chief Financial Officer.

Curtis Parker: Good morning, everyone, and thank you for joining us for our second quarter 2024 earnings call.

Speaker Change: This event is also being webcast in the investor relations section of our website. Joining me today on the call to discuss the quarter's results are Michael Anderson, American Strategic Investment Company's Chief Executive Officer, and Mike LeSanto, the Chief Financial Officer.

Curtis Parker: The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. Please review the forward-looking and cautionary statement section at the end of the second quarter, 2024 earnings release, for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings, including the Form 10-K filed for the year ended December 31, 2023, filed on April 1, 2024, and all subsequent SEC filings for a more detailed discussion of the risk factors that could cause these differences.

Curtis Parker: The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. Please review the Forward-Looking and Cautionary Statements section at the end of the second quarter 2024 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statement.

Speaker Change: The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties.

Speaker Change: Please review the Forward-Looking and Cautionary Statements section at the end of the second quarter 2024 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today.

Speaker Change: Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements.

Curtis Parker: We refer all of you to our SEC filings, including the Form 10-K for the year ended December 31, 2023, filed on April 1, 2024, and all subsequent SEC filings for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, the company disclaims any intent or obligation to update or revise these forward-looking statements, except as required by law.

Speaker Change: We refer all of you to our SEC filings, including the Form 10-K, filed for the year ended December 31, 2023, filed on April 1, 2024, and all subsequent SEC filings for a more detailed discussion of the risk factors that could cause these differences.

Curtis Parker: Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, the company disclaims any intent or obligation to update or revise these forward-looking statements, except as required by law.

Speaker Change: Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, the company disclaims any intent or obligation to update or revise these forward-looking statements, except as required by law.

Curtis Parker: Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. However, these measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable gap measure is available in our earnings release, which is posted on our website at www.americanstrategicinvestment.com. We also refer to our earnings release for more detailed information about what we consider to be implied investment grade tenants, a term we will use throughout today's call. I will now turn the call over to Michael Anderson, Chief Executive Officer. Please go ahead, Michael.

Curtis Parker: Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation, or as a substitute for our financial results prepared in accordance with GAAP. A recommended affiliation of these measures to the most directly comparable GAAP measure is available in our earnings release, which is posted on our website at www.americanstrategicinvestment.com. We also refer to our earnings release for more detailed information about what we consider to be implied investment-grade tenants, a term we will use throughout today's call.

Speaker Change: Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

Speaker Change: A reconciliation of these measures to the most directly comparable gap measure is available in our earnings release, which is posted on our website at www.americanstrategicinvestment.com.

Speaker Change: We also refer to our earnings release for more detailed information about what we consider to be implied investment grade tenants, a term we will use throughout today's call.

Michael Anderson: I will now turn the call over to Michael Anderson, Chief Executive Officer. Please go ahead, Michael.

Speaker Change: I will now turn the call over to Michael Anderson, Chief Executive Officer. Please go ahead, Michael.

Michael Anderson: Thanks, Curtis. Good morning, and thank you all for joining us.

Michael Anderson: Thanks, Curtis.

Michael Anderson: Good morning, and thank you all for joining us. Our positive results for the second quarter included adjusted EBDA growth of nearly 50 percent compared to the second quarter of 2023. We achieved this growth through a reduction in G&A and operating expenses, coupled with our ongoing leasing success. We also delivered an 80 basis point expansion and occupancy to 85.9 percent compared to the same quarter in 2023. Additionally, as we previously announced, we signed a non-binding agreement to sell our property at 9 Times Square for $63.5 million, which became definitive last week. The sale of this property would reduce leverage on our balance sheet and generate net proceeds at approximately $13.5 million, strengthening our cash position.

Michael Anderson: Our positive results for the second quarter included adjusted EBITDA growth of nearly 50% compared to the second quarter of 2020. We achieved this growth through a reduction in GNA and operating expenses, coupled with our ongoing leasing success. We also delivered an 80 basis point expansion in occupancy to 85.9% compared to the same quarter last year. Additionally, as we previously announced, we signed a non-binding agreement to sell our property at Nine Times Square for $63.5 million, which became definitive last year.

Michael Anderson: Thanks Curtis. Good morning and thank you all for joining us.

Michael Anderson: Our positive results for the second quarter included adjusted EBITDA growth of nearly 50% compared to the second quarter of 2023.

Michael Anderson: We achieved this growth through a reduction in G&A and operating expenses, coupled with our ongoing leasing success. We also delivered an 80 basis point expansion in occupancy to 85.9% compared to the same quarter in 2023.

Michael Anderson: Additionally, as we previously announced, we signed a non-binding agreement to sell our property at Nine Times Square for $63.5 million, which became definitive last week.

Michael Anderson: The sale of this property would reduce leverage on our balance sheet and generate net proceeds of approximately $13.5 million, strengthening our cash position. While there is no guarantee that the sale will close, we continue to work with the buyer to complete the transaction. We acquired this property in 2014 for $170.3 million. Accordingly, we incurred a non-cash impairment of $84.7 million in this quarter's results.

Michael Anderson: The sale of this property would reduce leverage on our balance sheet and generate net proceeds of approximately $13.5 million, strengthening our cash position.

Michael Anderson: Investment. While there is no guarantee that the sale will close, we continue to work with the buyer to complete the transaction. We acquired this property in 2014 for $170.3 million. Accordingly, we incurred a non-cash impairment of $84.7 million in this quarter's results. We are excited to be moving forward on this initiative and look forward to the opportunity to increase value over time. While we are committed to value creation, we are focused on our current assets. As of June 30, 2024, our portfolio weighted average remaining lease term was 6.3 years, as 45% of our lease is extended beyond the year 2030 based on annualized straight-line rent, which we believe enhances the stability of the real estate we own.

Michael Anderson: While there is no guarantee that the sale will close, we continue to work with the buyer to complete the transaction.

Michael Anderson: We acquired this property in 2014 for $170.3 million. Accordingly, we incurred a non-cash impairment of $84.7 million in this quarter's results.

Michael Anderson: Importantly, and as we previously shared, we successfully extended our debt on this asset through year-end as we work to close this transaction. The marketing process for the sale of 123 William Street and 196 Orchard is ongoing. We believe that these properties are also well-positioned to generate significant net profit. We intend to use the proceeds from any disposition to diversify our portfolio into higher-yielding assets, a strategy we discussed last year. We are excited to be moving forward on this initiative and look forward to the opportunity to increase its value.

Michael Anderson: Importantly, and as we previously shared, we successfully extended our debt on this asset through year-end as we work to close this transaction.

Michael Anderson: The marketing process for the sale of 123 William Street and 196 Orchard is ongoing. We believe that these properties are also well positioned to generate significant net proceeds.

Michael Anderson: We intend to use the proceeds from any disposition to diversify our portfolio into higher yielding assets, a strategy we discussed last year.

Michael Anderson: We are excited to be moving forward on this initiative and look forward to the opportunity to increase value over time.

Michael Anderson: While we are committed to value creation, we are focused on our current. As of June 30th, 2024, our portfolio weighted average remaining lease term was 6.3 years, as 45% of our leases extend beyond the year 2030 based on annualized straight line rent, which we believe enhances the stability of the real estate we own. Of the top 10 tenants, 81% are investment grade or implied investment grade, showing the quality of our tenant roster.

Michael Anderson: While we are committed to value creation, we are focused on our current assets.

Michael Anderson: As of June 30th, 2024, our portfolio-weighted average remaining lease term was 6.3 years, as 45% of our leases extend beyond the year 2030 based on annualized straight-line rent, which we believe enhances the stability of the real estate we own.

Michael Anderson: Of the top 10 tenants, 81% are investment grade or implied investment grade, showing the quality of our tenant roster. These tenants had a remaining lease term of 7.9 years, providing further stability to our portfolio. We believe our proactive asset management strategy has enhanced the marketability of our $593 million, 1.2 million square foot New York City real estate portfolio. Concentrated primarily in Manhattan are seven office and retail properties, both to strong tenant pace, including several large investment grade firms. That's focusing on resilient industries like finance and healthcare and strategically locating our properties in desirable, transit-oriented areas.

Michael Anderson: Of the top 10 tenants, 81% are investment grade or implied investment grade, showing the quality of our tenant roster.

Michael Anderson: These tenants had a remaining lease term of 7.9 years, providing further stability to our portfolio. We believe our proactive asset management strategy has enhanced the marketability of our $593 million, 1.2 million square foot New York City real estate portfolio. Concentrated primarily in Manhattan, our seven office and retail properties boast a strong tenant base, including several large investment grade firms. By focusing on resilient industries like finance and healthcare and strategically locating our properties in desirable transit-Oriented areas, we believe we've positioned ourselves for success.

Michael Anderson: These 10 data remaining least term of 7.9 years, providing further stability to our portfolio.

Michael Anderson: We believe our proactive asset management strategy has enhanced the marketability of our $593 million, 1.2 million square foot New York City real estate portfolio.

Michael Anderson: Concentrated primarily in Manhattan, our seven office and retail properties boast a strong tenant base including several large investment-grade firms.

Michael Anderson: By focusing on resilient industries like finance and healthcare, and strategically locating our properties in desirable, transit-oriented areas, we believe we've positioned ourselves for success.

Michael Anderson: Our second quarter results underscore the value of our consistent portfolio management approach. By prioritizing tenant retention, property enhancement, and cost control, we've created a solid foundation for maximizing shareholder value. As we embark on divesting certain Manhattan assets to reduce leverage and pursue higher yielding opportunities, we are confident in our ability to execute on this strategy. With that, I'll turn it over to Michael LeSanto to go over the second quarter results.

Michael Anderson: Our second quarter results underscore the value of our consistent portfolio management approach.

Michael Anderson: By prioritizing tenant retention, property enhancement, and cost control, we've created a solid foundation for maximizing shareholder value. As we embark on divesting certain Manhattan assets to reduce leverage and pursue higher yielding opportunities, we are confident in our ability to execute on the strategy.

Michael Anderson: As we embark on divesting certain Manhattan assets to reduce leverage and pursue higher yield and opportunities, we are confident in our ability to execute on the strategy.

Michael LeSanto: With that, I'll turn it over to Michael Santos to go for the second quarter results. Mike.

Michael LeSanto: Michael, second quarter 2024 revenue was relatively flat, as we produced $15.8 million in the second quarter of 2024 compared to $15.8 million in the second quarter of 2023. The company's gap net loss attributed to common stockholders was $91.9 million in the second quarter of 2024, compared to a net loss of $10.9 million in the second quarter of 2023, due primarily to the non-cash impairment Michael discussed earlier. For the second quarter of 2024, adjusted EBITDA was $4.5 million, compared to $3 million in the second quarter of 2023.

Michael Anderson: With that, I'll turn it over to Michael LeSanto to go over the second quarter results. Mike?

Michael LeSanto: Thank you, Michael. Second quarter, 2024 revenue was relatively flat as we produced 15.8 million in the second quarter of 2024 compared to 15.8 million in the second quarter of 2023.

Mike LeSanto: Thank you, Michael. Second quarter 2024 revenue was relatively flat as we produced $15.8 million in the second quarter of 2024 compared to $15.8 million in the second quarter of 2023.

Michael LeSanto: The company's gap net loss attributable common stockholders was 91.9 million in the second quarter of 2024 compared to a net loss of 10.9 million in the second quarter of 2023. Do primarily to the non-cash impairment Michael discussed earlier. For the second quarter of 2024, adjusted EBITDA was 4.5 million compared to 3 million in the second quarter of 2023. The growth was achieved through reduction in cash paid for GNA and operating expenses, coupled with our ongoing leasing success. Cash net operating income was nearly flat at 7.4 million compared to 7.5 million in the second quarter of 2023.

Mike LeSanto: The company's gap net loss attributed with common stockholders was $91.9 million in the second quarter of 2024, compared to a net loss of $10.9 million in the second quarter of 2023, due primarily to the non-cash impairment Michael discussed earlier.

Mike LeSanto: For the second quarter of 2024, adjusted EBITDA was $4.5 million, compared to $3 million in the second quarter of 2023. The growth was achieved through a reduction in cash paid for G&A and operating expenses, coupled with our ongoing leasing success.

Michael LeSanto: The growth was achieved through a reduction in cash paid for G&A and operating expenses, coupled with our ongoing leasing success. Cash net operating income was nearly flat at $7.4 million compared to $7.5 million in the second quarter of 2023. As always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release and quarterly supplemental on our website. At quarter end, we had a relatively conservative balance sheet based on net leverage of approximately 56 percent, a weighted average interest rate of 4.9 percent, and 2.7 years of weighted average debt maturity. I'll now turn the call back to Michael for some closing remarks.

Michael Anderson: Cash net operating income was nearly flat at $7.4 million compared to $7.5 million in the second quarter of 2023.

Michael LeSanto: As always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release and quarterly supplemental on our website. At quarter end, we had a relatively conservative balance sheet based on net leverage of across many 56 percent, a weighted average interest rate of 4.9 percent, and 2.7 years of weighted average debt maturity.

Michael Anderson: As always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release and quarterly supplemental on our website.

Michael Anderson: At quarter end, we had a relatively conservative balance sheet based on net leverage of approximately 56%, a weighted average interest rate of 4.9%, and 2.7 years of weighted average debt maturity.

Michael Anderson: I'll now turn the call back to Michael for some closing remarks. Thanks, Mike. Thank you all for joining us today. Our strong performance this quarter, marked by increased occupancy and growing adjusted depita, is a direct result of our strategic portfolio management efforts.

Michael Anderson: I'll now turn the call back to Michael for some closing remarks.

Michael Anderson: Thanks, Mike. Thank you all for joining us today.

Michael Anderson: Our strong performance this quarter, marked by increased occupancy and growing adjusted EBITDA, is a direct result of our strategic portfolio management. As we initiate the divestment of certain Manhattan assets, we anticipate generating substantial cash proceeds and reducing our leverage. These funds will be instrumental in expanding our portfolio into new, higher-yielding opportunities. We believe that this is a strategic opportunity to enhance shareholder value and are committed to providing updates on our progress. Operator, please open the lines for questions.

Michael Anderson: Thanks, Mike. Thank you all for joining us today. Our strong performance this quarter marked by increased occupancy and growing adjusted EBITDA is a direct result of our strategic portfolio management efforts.

Michael Anderson: As we initiate the divestment of certain Manhattan assets, we anticipate generating substantial cash proceeds and reducing our leverage. These funds will be instrumental in expanding our portfolio into new, higher yielding opportunities. We believe that this is a strategic opportunity to enhance shareholder value and are committed to providing updates on our progress.

Speaker Change: As we initiate the divestment of certain Manhattan assets, we anticipate generating substantial cash proceeds and reducing our leverage.

Speaker Change: These funds will be instrumental in expanding our portfolio into new, higher-yielding opportunities.

Speaker Change: We believe that this is a strategic opportunity to enhance shareholder value and are committed to providing updates on our progress.

Bailey: Operator, please open the lines for questions. In order to ask a question, press star at the number one on your telephone keypad.

Speaker Change: Operator, please open the lines for questions.

Bailey: In order to ask a question, press star then the number 1 on your telephone keypad. Your first question comes from the line of Bryan Maher with B. Brierley Securities. Your line is open.

Speaker Change: In order to ask a question, press star then the number 1 on your telephone keypad.

Bryan Maher: Your first question comes from the line of Bryan Maher with Bradley Securities. Your line is open.

Speaker Change: Your first question comes from the line of Brian Maher with B. Reilly Securities. Your line is open.

Bryan Maher: Thank you and good morning. Just a few for me this morning, Michael. You continue to be a little bit vague about the redeployment of the proceeds if and when you sell 123 William and 196 Orchids.

Bryan Maher: Thank you and good morning. Just a few from me this morning, Michael.

Bryan Mayer: Thank you and good morning. Just a few for me this morning, Michael.

Bryan Maher: You continue to be a little bit vague about the redeployment of the proceeds if and when you sell 123 William and 196 Orchard. Can you give us any color on that, are you willing to share anything more on the kind of location or asset type? Has that evolved at all in a way that you can share that with us?

Bryan Mayer: You continue to be a little bit vague about the redeployment of the proceeds if and when you sell 123 William and 196 Orchard.

Michael Anderson: Can you give us any more color on, you want to share anything more on kind of location or asset type as that evolved at all in a way that you can share that with us? Sure, so we obviously don't have anything specifically identified at this point as we do continue to undertake the divestment process for 123 William and 196 Orchids. But I do envision that likely deployment of assets in the New England region and real estate coupled with operating business type investments that we were precluded from touching in our prior re-structured because of the operating nature of some of the businesses.

Speaker Change: Can you give us any color on, are you willing to share anything more on kind of location or asset type? Has that evolved at all in a way that you can share that with us?

Michael Anderson: Sure. So, you know, we obviously don't have anything specifically identified at this point as we do continue to undertake the divestment process for 123 William and 196 Orchard, but I do envision that, likely deployment of assets in the New England region, and real estate coupled with operating business-type investments that we were precluded from touching in our prior REIT structure because of the operating nature of some of the businesses. And so I think that those are the types of assets and opportunities that we see, fitting well within the portfolio and within our

Speaker Change: Sure. So, you know, we obviously don't have anything specifically identified at this point as we do continue to undertake the divestment process for 123 William and 196 Orchard. But I do envision that

Speaker Change: likely deployment of assets in the New England region.

Speaker Change: and real estate coupled with operating business type investments that we were precluded from.

Speaker Change: touching in our prior REIT structure because of the operating nature of some of the businesses and so I think that those are the types of assets and opportunities that we see

Michael Anderson: And so I think that those are the types of assets and opportunities that we see getting well within the portfolio and within our skill set.

Speaker Change: fitting well within the portfolio and within our skill set.

Michael Anderson: And as it relates to those two assets, can you share maybe the level of interest? And if you don't want to go down that road, per se, do you think it's something that either or both of those properties are under contract sometime in the back half of this year? Is it more likely to be the first half of next year? Yes, so we've not accepted any offers on either of those, but we have begun recently to receive offers on both and have ramped up the marketing process there. Our focus was certainly on 9 Times Square as we had in your term debt maturity there.

Michael Anderson: And as it relates to those two assets, can you share, you know, maybe the level of interest? And if you don't want to go down that road per se, do you think it's something that either or both of those properties could be under contract sometime in the back half of this year? Or is it more likely to be the first half of next year?

Speaker Change: And as it relates to those two assets, can you share, you know, maybe the level of interest and if you don't want to go down that road per se, do you think it's something that either or both of those properties are under contract sometime in the back half of this year or is it more likely to be the first half of next year?

Michael Anderson: Yes, so we've not accepted any offers on either of those, but we have recently begun to receive offers on both and have ramped up the marketing process there, certainly on Mindtime Square, as you had a near-term debt maturity there. But I do think that it's entirely possible, if not likely, that we see both of those assets under contract.

Speaker Change: Yes, we've not accepted any offers on either of those, but we have begun recently to receive offers on both and have ramped up the marketing process there. Our focus was.

Speaker Change: Certainly on nine times square as we had a near-term debt maturity there, but I do think that it's

Michael Anderson: But I do think that it's entirely possible; it's not likely that we see both of those assets under contract by year end.

Speaker Change: entirely possible, if not likely, that we see both of those assets under contract by year-end.

Michael Anderson: Great, that's helpful. And then on Nine Times Square, I think you said you went definitive recently on that. Do you have a hard deposit on that that the potential buyer cannot take back? We do, yeah.

Michael Anderson: Great, this is helpful. And then on 9 Times Square, I think you said you went definitive recently on that. Do you have a hard deposit on that, that the potential buyer cannot take back? We did, yes, the buyer put up approximately 10% of the purchase price as a non-refundable deposit about a week ago.

Speaker Change: Great, that's helpful. And then on nine times square, I think you said you went definitive recently on that. Do you have a hard deposit on that that the potential buyer cannot take back?

Michael Anderson: We do, yes. The buyer put up approximately 10% of the purchase price as a non-refundable deposit about a week ago, and we expect to close that transaction no later than mid-fourth quarter.

Speaker Change: We do, yes. The buyer put up approximately 10% of the purchase price as a non-refundable deposit about a week ago, and we expect to close that transaction no later than mid-fourth quarter.

Michael Anderson: And we expect to close that transaction no later than the fourth quarter. And as it relates to occupancy in the quarter, 123 was down a little bit. 1140 was up a bit higher than our expectations.

Michael Anderson: And as it relates to occupancy in the quarter, 123 was down a little bit, and 1140 was up a bit, higher than our expectations. Anything going on with either of those two properties that we should know about from the lease?

Speaker Change: Excellent.

Speaker Change: and as it relates to occupancy in the quarter,

Speaker Change: 123 was down a little bit, 1140 was up a bit, higher than our expectations. Anything going on with either of those two properties that we should know about from a leasing standpoint?

Michael Anderson: Anything going on with either those two properties that we should know about from a leasing standpoint? Yeah, I think the real story at 123 is we do have a lot of interest and volume there in the works. Nothing signed or extended at this point, but we're seeing a lot of interesting, existing tenants expanding their footprint. Kind of an organic growth of those core tenants in the property. And we do continue to see a lot of traffic out of 1140, as you noted, and have a handful of leasing transactions in the works. And then you flashed from the quarter.

Speaker Change: Yeah, I think, um...

Speaker Change: The real story at 123 is we do have a lot of interest and volume there in the works. Nothing signed or definitive at this point, but we're seeing a lot of interest in existing tenants expanding their footprint.

Speaker Change: It's kind of an organic growth of those core tenants in the property, and we do continue to see a lot of traffic at 1140, as you noted, and have a handful of

Speaker Change: leasing transactions in the works.

Michael Anderson: Last and kind of an open-ended question. I don't know if you saw last night CNBC did a pretty meaningfully sized piece in the evening on the prospect that office has bottomed, possibly even bottomed last year. Are you seeing any signs of this, and in general and specifically in New York? Are you seeing any kind of increased interest in leasing activity in your office buildings that maybe you didn't see just a couple of quarters ago?

Michael Anderson: Last and kind of an open-ended question, I don't know if you saw last night CNBC did a pretty meaningfully sized piece in the evening on the prospect that office has bottomed, possibly even if it bottomed last year. Are you seeing any signs of this, and, in general, and specifically in New York, are you seeing any kind of increased interest in leasing activity in your office buildings that maybe you didn't see just a couple quarters ago? Yeah, I think I think that's an accurate assessment.

Speaker Change: and then two blacks from the corner.

Speaker Change: Last question, and kind of an open-ended question, I don't know if you saw last night CNBC did a...

Speaker Change: a pretty meaningfully sized piece in the evening on the prospect that office has bottomed, possibly even bottomed last year. Are you seeing any signs of this?

Speaker Change: And in general, and specifically in New York, are you seeing any kind of increased interest in leasing activity in your office buildings that maybe you didn't see just a couple quarters ago?

Michael Anderson: Yeah, I think that's an accurate assessment. We have seen more foot traffic; I think, in office policies have become the standard at this point that wasn't necessarily the standard 12 months ago. And so I think seeing a lot more foot traffic in the mid-town and financial district markets with return to work. And we're seeing more foot traffic with our existing tenants looking to expand. I think tenants that took space during COVID or shortly after COVID are now needing additional space because of increased return to work requirements. And I think that we're starting to see some pricing come back in landlords' favor over where we were six months ago.

Michael Anderson: We have seen more foot traffic, I think, in office. Policies have become the standard at this point that weren't necessarily the standard 12 months ago. And so I think we're seeing a lot more foot traffic in the midtown and financial district markets, return to work, and we're seeing more foot traffic with our existing tenants looking to expand, and I think tenants that took space during COVID or shortly after COVID are now needing additional space because of increased return to work requirements. And I think that we're starting to see some prices come back in the landlord's favor over where we were. Great It's good news to hear.

Speaker Change: Yeah, I think that's an accurate assessment. We have seen more foot traffic, I think.

Speaker Change: In-office policies have become the standard at this point that wasn't necessarily the standard 12 months ago And so I've been seeing a lot more foot traffic in in the midtown and financial district markets with return to work

Speaker Change: and we're seeing more.

Speaker Change: foot traffic with our existing tenants looking to to expand. I think tenants that took space during

Speaker Change: COVID or shortly after COVID are now needing additional space because of increased return to work requirements.

Speaker Change: And I think that we're starting to see some pricing come back in landlords' favor.

Michael Anderson: Great. Good news to hear. Thanks.

Bryan Maher: Great. Good news to hear. Thanks. That's all for me.

Speaker Change: over where we were six months ago.

Bryan Maher: That's all from me. Thanks for having me.

Speaker Change: Great. Good news to see here. Thanks. That's all for me.

Brian: Thanks, Brian.

Bailey: There are no further questions at this time.

Bailey: There are no further questions at this time. I would now like to turn it back over to management for closing remarks.

Curtis Parker: I would now like to turn it back over to management for closing remarks.

Speaker Change: There are no further questions at this time. I would now like to turn it back over to management for closing remarks.

Curtis Parker: Thank you.

Michael Anderson: Thank you. And again, thank you all for joining us this morning. We're excited about the quarter that we've had and what the future holds for us, particularly with our divestment and reinvestment strategy, and we're looking forward to sharing additional updates as we have them in future quarters.

Michael Anderson: And again, thank you all for joining us this morning. We're excited about the quarter that we've had and what we what holds in the future for us, particularly with our divestment and reinvestment strategy. And we're looking forward to sharing additional updates as we have them in future quarters. Thank you.

Speaker Change: Thank you and again thank you all for joining us this morning. We're excited about the the quarter that we've had and what we what holds

Speaker Change: in the future for us, particularly with our divestment and reinvestment strategy. And we're looking forward to sharing additional updates as we have them in future quarters.

Bailey: Thank you. This does conclude today's conference call. You may now disconnect.

Bailey: This does conclude today's conference call. You may now disconnect. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Thank you. This does conclude today's conference call. You may now disconnect.

Speaker Change: Ingredients list you need for the base.

Michael Anderson: Yeah, I think, um. The real story at 123 is that we do have a lot of interest and volume there in the works. Nothing signed or definitive at this point, but we're seeing a lot of interest in existing tenants expanding their footprint, kind of an organic growth of those core tenants in the property. We do continue to see a lot of traffic at 1140, as you noted, and have a handful of leasing transactions in the way. And then, just last, for me, a quarter.

Bailey: Order Earnings Call. My name is Bailey, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise.

Bailey: After this beaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and one.

Curtis Parker: I would now like to turn the conference over to Curtis Parker, Senior Vice President. Please go ahead.

Curtis Parker: Good morning, everyone, and thank you for joining us for our second quarter, 2024 Earnings Call. This event is also being webcast in the Investor Relations section of our website.

Curtis Parker: Joining me today on the call to discuss the quarter's results are Michael Anderson, American Strategic Investment Company's Chief Executive Officer, and Michael LeSanto, the Chief Financial Officer. The following information contains forward-looking statements within the meaning of the private security's litigation reform act of 1995, which are subject to risks and uncertainties. Please review the forward-looking and cautionary statement section at the end of the second quarter, 2024 Earnings Release, for various factors that could cause actual results to differ materially from forward-looking statements made during our call today.

Curtis Parker: Should one or more of these risks or uncertainties materialize, actual results made differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings, including the Form 10K filed for the year ended December 31, 2023, filed on April 1, 2024, and all subsequent SEC filings for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are only made as of the date of this call.

Curtis Parker: As stated in our SEC filings, the company disclaims any intent or obligation to update or revise these forward-looking statements, except as required by law. Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered an isolation, or as a substitute for our financial results prepared in accordance with GAAP. A recommended affiliation of these measures to the most directly comparable GAAP measure is available in our earnings release, which is posted on our website at www.americanstrategicinvestment.com. We also refer to our earnings release for more detailed information about what we consider to be implied investment-grade tenants a term we will use throughout today's call.

Michael Anderson: I will now turn the call over to Michael Anderson, Chief Executive Officer. Please go ahead, Michael. Thanks, Curtis. Good morning, and thank you all for joining us. Our positive results for the second quarter included adjusted EBDA growth of nearly 50 percent compared to the second quarter of 2023. We achieved this growth through a reduction in G&A and operating expenses coupled with our ongoing leasing success. We also delivered an 80 basis point expansion and occupancy to 85.9 percent compared to the same quarter in 2023.

Michael Anderson: Additionally, as we previously announced, we signed a non-binding agreement to sell our property at 9 times square for $63.5 million, which became definitive last week. The sale of this property would reduce leverage on our balance sheet and generate net proceeds at approximately $13.5 million, strengthening our cash position.

Michael Anderson: While we are committed to value creation, we are focused on our current assets. As of June 30, 2024, our portfolio weighted average remaining lease term was 6.3 years, as 45% of our lease is extended beyond the year 2030 based on annualized straight line rent, which we believe enhances the stability of the real estate we own. Of the top 10 tenants, 81% are investment grade or implied investment grade, showing the quality of our tenant roster.

Michael Anderson: These tenants had a remaining lease term of 7.9 years providing further stability to our portfolio. We believe our proactive asset management strategy has enhanced the marketability of our $593 million, $1.2 million square foot New York City real estate portfolio. Concentrated primarily in Manhattan are seven office and retail properties, both to strong tenant pace, including several large investment grade firms. That's focusing on resilient industries like finance and healthcare and strategically locating our properties in desirable transit oriented areas.

Michael Anderson: We believe we positioned ourselves for success. Our second quarter results underscore the value of our consistent portfolio management approach. By prioritizing tenant retention, property enhancement and cost control, we've created a solid foundation for maximizing shareholder value. As we embark on divesting certain Manhattan assets to reduce leverage and pursue higher yield and opportunities, we are confident in our ability to execute on the strategy.

Michael LeSanto: With that, I'll turn it over to Michael Santos to go for the second quarter results. Mike. Thank you, Michael. Second quarter, 2024 revenue was relatively flat as we produced 15.8 million in the second quarter of 2024 compared to 15.8 million in the second quarter of 2023. The company's gap net loss attributable common stockholders was 91.9 million in the second quarter of 2024 compared to a net loss of 10.9 million in the second quarter of 2023.

Michael LeSanto: Do primarily to the non cash impairment Michael discussed earlier. For the second quarter of 2024, adjusted EBITDA was 4.5 million compared to 3 million in the second quarter of 2023. The growth was achieved through reduction in cash paid for GNA and operating expenses, coupled with our ongoing leasing success. Cash net operating income was nearly flat at 7.4 million compared to 7.5 million in the second quarter of 2023.

Michael LeSanto: As always, a reconciliation of gap net income to non-gap measures can be found in our earnings release and quarterly supplemental on our website. At quarter end, we had a relatively conservative balance sheet based on net leverage of across many 56 percent, a weighted average interest rate of 4.9 percent, and 2.7 years of weighted average debt maturity.

Michael Anderson: I'll now turn the call back to Michael for some closing remarks.

Michael Anderson: Thanks Mike, thank you all for joining us today. Our strong performance this quarter marked by increased occupancy and growing adjusted depita is a direct result of our strategic portfolio management efforts.

Bailey: Operator, please open the lines for questions. In order to ask a question, press star at the number one on your telephone keypad.

Bryan Maher: Your first question comes from the line of Bryan Maher with the Bradley Securities. Your line is open.

Michael Anderson: Thank you and good morning. Just a few for me this morning Michael. You continue to be a little bit vague about the redeployment of the proceeds if and when you sell 123 William and 196 orchids. Can you give us any more color on, you want to share anything more on kind of location or asset type as that evolved at all in a way that you can share that with us? Sure, so we obviously don't have anything specifically identified at this point as we do continue to undertake the divestment process for 123 William and 196 orchids.

Michael Anderson: But I do envision that likely deployment of assets in the New England region and real estate coupled with operating business type investments that we were precluded from touching in our prior re-structured because of the operating nature of some of the businesses. And so I think that those are the types of assets and opportunities that we see getting well within the portfolio and within our skill set. And as it relates to those two assets, can you share maybe the level of interest?

Michael Anderson: And if you don't want to go down that road, per se, do you think it's something that either or both of those properties are under contract sometime in the back half of this year? Is it more likely to be the first half of next year? Yes, so we've not accepted any offers on either of those but we have begun recently to receive offers on both and have ramped up the marketing process there.

Michael Anderson: Our focus was certainly on 9 times square as we had in your term debt maturity there. But I do think that it's entirely possible, it's not likely that we see both of those assets under contract but year end. Great, this is helpful. And then on 9 times square, I think you said you went definitive recently on that. Do you have a hard deposit on that that the potential buyer cannot take back?

Michael Anderson: We did, yes, the buyer put up approximately 10% of the purchase price as a non-refundable deposit about a week ago. And we expect to close that transaction no later than the four-quarter. And as it relates to occupancy in the quarter, 123 was down a little bit. 1140 was up a bit higher than our expectations. Anything going on with either those two properties that we should know about from a leasing standpoint? Yeah, I think the real story at 123 is we do have a lot of interest and volume there in the works.

Michael Anderson: Nothing signed or extended at this point, but we're seeing a lot of interesting, existing tenants expanding their footprint. Kind of an organic growth of those core tenants in the property. And we do continue to see a lot of traffic out of 1140, as you noted, and have a handful of leasing transactions in the works. And then you flashed from the quarter.

Michael Anderson: Last and kind of an open-ended question. I don't know if you saw last night CNBC did a pretty meaningfully sized piece in the evening on the prospect that office has bottomed possibly even bottomed last year. Are you seeing any signs of this and in general and specifically in New York? Are you seeing any kind of increased interest in leasing activity in your office buildings that maybe you didn't see just a couple quarters ago?

Michael Anderson: Yeah, I think that's an accurate assessment. We have seen more foot traffic, I think, in office policies have become the standard at this point that wasn't necessarily the standard 12 months ago. And so I think seeing a lot more foot traffic in the mid-town and financial district markets with return to work. And we're seeing more foot traffic with our existing tenants looking to expand. I think tenants that took space during COVID or shortly after COVID are now needing additional space because of increased return to work requirements. And I think that we're starting to see some pricing come back in landlord's favor over where we were six months ago. Great. Good news to hear. Thanks.

Bryan Maher: That's all from me. Thanks for having me.

Bailey: There are no further questions at this time.

Michael Anderson: I would now like to turn it back over to management for closing remarks. Thank you. And again, thank you all for joining us this morning. We're excited about the quarter that we've had and what we what holds in the future for us, particularly with our divestment and reinvestment strategy. And we're looking forward to sharing additional updates as we have them in future quarters. Thank you.

Bailey: This does conclude today's conference call. You may now disconnect.

Bailey: Award Award Award Award[inaudible]

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