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DATE
Friday, Aug. 8, 2025 at 3:00 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Nicholas Schorsch, Jr.
Chief Financial Officer — Michael LeSanto
[Investor Relations Moderator] — Curtis Parker
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RISKS
The lender for 1140 Avenue of the Americas commenced foreclosure proceedings on the property during the quarter.
GAAP net loss attributable to common stockholders was $41.7 million in fiscal Q2 2025 (period ended June 30, 2025), primarily due to an impairment related to a property sale.
TAKEAWAYS
Occupancy rate-- 82% occupancy at the end of fiscal Q2 2025 (period ended June 30, 2025), unchanged from the previous quarter.
Adjusted EBITDA-- Adjusted EBITDA was $400,000 in fiscal Q2 2025, down from $4.5 million in fiscal Q2 2024 due to property dispositions.
Lease expirations-- Near-term expirations reduced to 7% of annualized straight-line rent as of fiscal Q2 2025, an improvement from 12% at the prior quarter's end.
Lease term-- Weighted average remaining lease term extended to six years at the end of fiscal Q2 2025 due to two lease renewals.
Tenant quality-- As of fiscal Q2 2025, 77% of the top 10 tenants are investment grade or implied investment grade, supporting portfolio stability.
Strategic asset sales-- Marketing of 123 William Street and 196 Orchard for sale continues, with plans to use proceeds for debt retirement and higher-yield reinvestment.
Foreclosure event-- Foreclosure initiated on 1140 Avenue of the Americas, with further updates pending.
SUMMARY
American Strategic Investment(NYC -6.32%) maintained an 82% occupancy rate in fiscal Q2 2025 (period ended June 30, 2025). Management described ongoing efforts to reduce near-term lease expirations and extend portfolio lease terms, citing successful lease renewals during the quarter. The current strategy centers on asset sales intended to reduce leverage and pivot toward higher-return opportunities. The initiation of foreclosure proceedings on a key Manhattan property was disclosed as a significant development requiring future updates.
The company's portfolio consists of six office and retail properties concentrated in Manhattan, totaling approximately 1 million square feet and valued at $440 million as of fiscal Q2 2025.
Chief Executive Officer Schorsch, Jr. stated, "We view this repositioning as fundamental to maximizing shareholder returns, and we'll provide regular updates on our progress."
INDUSTRY GLOSSARY
Implied investment grade tenant: A tenant not directly rated by a major ratings agency but whose financial strength or parent guarantees are determined by the company to be consistent with investment-grade standards.
Cash net operating income: Rental income from properties minus operating expenses, excluding non-cash items and certain one-time charges, used as a measure of core property performance.
Straight-line rent: Rental revenue recognized on a straight-line basis over the term of a lease, smoothing variations due to free rent periods or rent escalations.
Full Conference Call Transcript
Curtis Parker: Thank you. Morning, everyone, and thank you for joining us for our second quarter 2025 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 Nicholas Schorsch, Jr., 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 Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties.
Please review the forward-looking and cautionary statements at the end of the second quarter 2025 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Could 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-Ks filed for the year ended 12/31/2024 filed on 03/19/2025, 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. 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 reconciliation 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.
Please 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'll now turn the call over to Nicholas Schorsch, Jr., Chief Executive Officer. Please go ahead, Nick.
Nicholas Schorsch: Thanks, Curtis. Good morning, and thank you all for joining us. Our second quarter results were largely in line with the first quarter, with occupancy flat at 82% and a continued focus on leasing up available space. We remain committed to operating and creating value at our current assets, with a focus on tenant retention, property improvements, and cost efficiency. During the quarter, we executed two lease renewals, one each at 123 William and 1140 Avenue of the Americas, extending the weighted average remaining lease term of the portfolio to six years at quarter end.
As a result of our leasing progress, we have reduced near-term lease expirations to only 7% of annualized straight-line rent from 12% at the end of the last quarter. Further, 54% of our leases now extend beyond 2030, up from 51% last quarter. We believe that this term, coupled with a high-quality tenant base featuring top 10 tenants who are 77% investment grade or implied investment grade, provides significant portfolio stability. As a key part of our strategy to unlock value, diversify our holdings, and strengthen our balance sheet, we are continuing to market 123 William Street and 196 Orchard for sale.
Assuming we can sell these properties on favorable terms, upon closing, we expect to use the net proceeds to retire debt and reinvest in higher-yielding assets to enhance our long-term portfolio value. Our $440 million, approximately 1 million square foot New York City real estate portfolio is located primarily in Manhattan. With six office and retail properties, we benefit from a strong tenant base that includes large investment-grade firms. By focusing on resilient industries near transit-oriented locations, we believe the portfolio is well-positioned. With that, I'll turn it over to Michael LeSanto to go over the second quarter results. Michael?
Michael LeSanto: Thank you, Nick. Second quarter 2025 revenue was $12.2 million compared to $15.8 million in 2024, principally due to the sale of 9 Times Square in 2024. The company's GAAP net loss attributable to common stockholders was $41.7 million in 2025 compared to a net loss of $91.9 million in 2024 due primarily to an impairment recorded in the quarter related to the sale of 9 Times Square. For 2025, adjusted EBITDA was $400,000 compared to $4.5 million in 2024. Cash net operating income was $4.2 million compared to $7.4 million in 2024. 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.
Additionally, during the second quarter, the lender for 1140 Avenue of the Americas commenced foreclosure proceedings with respect to the property. As further updates on this process become available, we will share them with you. I'll now turn the call back to Nick for some closing remarks.
Nicholas Schorsch: Thank you, Michael. Our ongoing sale process of select Manhattan properties represents a deliberate strategy designed to unlock substantial capital while reducing our debt burden. If consummated on the anticipated terms, we believe the proceeds from these potential sales would provide essential funding to pursue new investment opportunities with superior return compared to the assets in our current portfolio. We view this repositioning as fundamental to maximizing shareholder returns, and we'll provide regular updates on our progress.
Curtis Parker: Thank you.
Operator: This concludes today's conference. Disconnect your lines at this time. Thank you for your participation. Have a wonderful day.