American Strategic Investment Co 10-Q for FY2026 Q3
American Strategic Investment Co. (NYC)
10-Q
2026-11-13
For: 2026-09-30
View Original
Added on
November 14, 2026
About this 10-Q
American Strategic Investment Co filed this 10-Q on November 13, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
American Strategic Investment Co. reported portfolio occupancy of 74.0% as of September 30, 2026, down from 80.9%; two mortgages aggregating $60.0 million were in default and/or cash-trap events, and nine-month net loss widened to $22.8 million from $14.5 million. AI summary
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
| OR | |||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _________ to __________
Commission file number: 001-39448
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant's telephone number, including area code: (212 ) 415-6500
| Securities registered pursuant to Section 12(b) of the Act: None. | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||
| ☒ | Smaller reporting company | |||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of November 6, 2026, the registrant had 3,568,650 shares of Class A common stock outstanding.
AMERICAN STRATEGIC INVESTMENT CO.
INDEX TO FINANCIAL STATEMENTS
| Page | |||||
Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 (Unaudited) | |||||
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2026 and 2025 (Unaudited) | |||||
Condensed Consolidated Statement of Changes in Equity for the Three and Nine Months Ended September 30, 2026 (Unaudited) | |||||
Condensed Consolidated Statement of Changes in Equity for the Three and Nine Months Ended September 30, 2025 (Unaudited) | |||||
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 (Unaudited) | |||||
2
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
AMERICAN STRATEGIC INVESTMENT CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)
| September 30, 2026 | December 31, 2025 | |||||||||||||
| ASSETS | ||||||||||||||
| Real estate investments, at cost: | ||||||||||||||
Land | $ | $ | ||||||||||||
Buildings and improvements | ||||||||||||||
Acquired intangible assets | ||||||||||||||
Total real estate investments, at cost | ||||||||||||||
Less accumulated depreciation and amortization | ( | ( | ||||||||||||
Total real estate investments, net | ||||||||||||||
| Cash and cash equivalents | ||||||||||||||
| Restricted cash | ||||||||||||||
| Contract asset | ||||||||||||||
| Prepaid expenses and other assets | ||||||||||||||
| Straight-line rent receivable | ||||||||||||||
| Deferred leasing costs, net | ||||||||||||||
Total assets | $ | $ | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Mortgage notes payable, net | $ | $ | ||||||||||||
| Debt associated with property in receivership | ||||||||||||||
| Accrued interest associated with property in receivership | ||||||||||||||
Accounts payable, accrued expenses and other liabilities (including amounts due to/(from) related parties of $ | ||||||||||||||
| Note payable to related parties | ||||||||||||||
| Below-market lease liabilities, net | ||||||||||||||
| Deferred revenue | ||||||||||||||
Total liabilities | ||||||||||||||
Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
| Total equity | ||||||||||||||
Total liabilities and equity | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
AMERICAN STRATEGIC INVESTMENT CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share data)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Revenue from tenants | $ | $ | $ | $ | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Asset and property management fees to related parties | ||||||||||||||||||||||||||
| Property operating | ||||||||||||||||||||||||||
| Impairment of real estate investments | ||||||||||||||||||||||||||
| Equity-based compensation | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||
| Operating loss before gain on disposition of real estate investments | ( | ( | ( | ( | ||||||||||||||||||||||
| Gain on disposition of real estate investments | ||||||||||||||||||||||||||
| Operating income (loss) | ( | ( | ||||||||||||||||||||||||
| Other expense | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Interest expense associated with property in receivership | ( | ( | ( | ( | ||||||||||||||||||||||
| Other income (expense) | ( | |||||||||||||||||||||||||
| Total other expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Operating income (loss) before income tax | ( | ( | ( | |||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||
| Net income (loss) | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Weighted-average shares outstanding — Basic | ||||||||||||||||||||||||||
| Net income (loss) per share attributable to common stockholders — Basic | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Weighted-average shares outstanding — Diluted | ||||||||||||||||||||||||||
| Net income (loss) per share attributable to common stockholders — Diluted | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
AMERICAN STRATEGIC INVESTMENT CO.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for share data)
(Unaudited)
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
| — | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock withheld upon vesting of restricted stock | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Forfeiture of restricted shares | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
| — | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | $ | — | $ | — | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | ( | ||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
AMERICAN STRATEGIC INVESTMENT CO.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for share data)
(Unaudited)
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
AMERICAN STRATEGIC INVESTMENT CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Amortization of deferred financing costs | ||||||||||||||
| Accretion of below- and amortization of above-market lease liabilities and assets, net | ( | ( | ||||||||||||
| Equity-based compensation | ||||||||||||||
| Common stock issued to the Advisor in connection with Advisor related fees (see Note 8) | ||||||||||||||
| Gain on disposition of real estate | ( | |||||||||||||
| Impairments of real estate investments | ||||||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Straight-line rent receivable | ( | |||||||||||||
| Straight-line rent payable | ( | |||||||||||||
| Prepaid expenses, other assets and deferred costs | ( | |||||||||||||
| Accounts payable, accrued expenses and other liabilities | ||||||||||||||
| Deferred revenue | ||||||||||||||
| Net cash provided by (used in) operating activities | ( | |||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Reduction of cash from disposal of assets | ( | |||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds from notes payable to related parties | ||||||||||||||
| Repayments of notes payable to related parties | ( | |||||||||||||
| Net cash provided by financing activities | ||||||||||||||
| Net change in cash, cash equivalents and restricted cash | ( | |||||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||||||||
| Supplemental Disclosures: | ||||||||||||||
| Cash paid for interest | $ | $ | ||||||||||||
| Non-Cash Investing and Financing Activities: | ||||||||||||||
| Net change in accrued capital expenditures for the period | ( | ( | ||||||||||||
| Debt associated with property in receivership | ||||||||||||||
| Accrued interest associated with property in receivership | ||||||||||||||
| Contract asset | ( | ( | ||||||||||||
| Derecognition of property in receivership | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 1 — Organization
American Strategic Investment Co. (including, New York City Operating Partnership L.P., (the “OP”) and its subsidiaries, the “Company”) is an externally managed company that currently owns a portfolio of commercial real estate located within the five boroughs of New York City, primarily Manhattan. The Company’s real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities. As of September 30, 2026, the Company owned five properties consisting of 0.7 million rentable square feet, which excludes one property, 1140 Avenue of the Americas, which is in a consensual foreclosure process.
Substantially all of the Company’s business is conducted through the OP and its wholly-owned subsidiaries. The Company’s advisor, New York City Advisors, LLC (the “Advisor”), manages the Company’s day-to-day business with the assistance of the Company’s property manager, New York City Properties, LLC (the “Property Manager”). The Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to the Company. The Company also reimburses these entities for certain expenses they incur in providing these services. Please see Note 10 — Related Party Transactions and Arrangements for additional information on the Company’s Advisor and affiliates of the Advisor, including ownership percentages.
Note 2 — Going Concern
The Company’s objectives when managing its capital are to seek to ensure that there are adequate capital resources to safeguard the Company’s ability to continue operating and maintain adequate levels of funding to support its ongoing operations. The Company’s management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued.
For the three and nine months ended September 30, 2026, the Company continued to incur recurring losses from operations and net cash provided by operating activities for the nine months ended September 30, 2026 was approximately $1.0 million. As of September 30, 2026, the Company had unrestricted cash of approximately $5.3 million and restricted cash of approximately $6.2 million, and current liabilities exceeded current assets. The Company experienced events of default and acceleration on loans encumbering two of the Company’s properties (see Note 5 — Mortgage Notes Payable, Net). In October 2026, a receiver was appointed for the Company’s 400 East 67th Street and 200 Riverside Blvd. properties. Since the appointment of the receiver, the Company has no access to the cash flows generated by these properties, and such cash flows are not available to fund the Company’s other obligations. The accelerated mortgage obligations secured by these properties total approximately $50.0 million and are collateralized by the properties. See the disclosure with respect to the foreclosure litigation initiated as a result of alleged defaults under the loan agreement governing the indebtedness secured by the 400 E. 67th Street/200 Riverside Blvd. properties set forth in Note 5 — Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation. The Company’s non-recourse mortgage secured by 123 William Street, with an outstanding principal balance of approximately $140.0 million, matures within one year of the date of issuance of these financial statements. These conditions, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of issuance of the September 30, 2026 financial statements.
Management’s plans to address these conditions include paying related party fees in shares rather than cash, pursuing the refinancing or disposition of the 123 William Street property, and pursuing orderly resolution of the debt matters affecting other properties. The Advisor has indicated a willingness to lend funds to the Company for liquidity requirements as needed. Notwithstanding these plans, management has concluded that substantial doubt about the Company’s ability to continue as a going concern has not been alleviated.
8
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 3 — Summary of Significant Accounting Policies
Basis of Accounting
The accompanying condensed consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. The results of operations for the three and nine months ended September 30, 2026 and 2025 are not necessarily indicative of the results for the entire year or any subsequent interim period.
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on April 15, 2026. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2026.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. The Company has determined the OP is a VIE of which the Company is the primary beneficiary.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, fair value measurements, and undiscounted cash flow models used to determine whether impairments of real estate investments exist, as applicable.
Continued Challenging Office Market Conditions
The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company has continued to incur increased unreimbursed property operating expenses because the Company’s occupancy has not fully recovered to pre-COVID-19 pandemic levels, and these increased expenses have been compounded by inflation. The pace of recovery in the New York City office market from the COVID-19 pandemic continues to be challenging as leasing and occupancy trends for the broader market have slowed, leading political, community and business leaders to propose repositioning plans for many New York City office assets that are experiencing high vacancy rates. Some businesses continue to maintain hybrid or all work-from-home arrangements in response to employee desire for more flexibility, which may lead to continued challenges in the commercial real estate market and potentially represents a long-term negative impact on the New York City real estate market. There can be no assurance that the Company will be able to lease all or any portion of the currently vacant space at any property on acceptable or favorable terms, or at all.
9
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Cash Collection and Mortgage Covenant non-compliance
Rent collections from the Company’s tenants have generally been timely in the nine months ended September 30, 2026 and 2025. As of September 30, 2026 and 2025 the occupancy and operating results at (i) 8713 Fifth Avenue and (ii) 400 E. 67th Street/200 Riverside Blvd. have not yet fully recovered from the COVID-19 pandemic, which has caused non-compliance of certain mortgage debt covenants or cash trap or cash sweep events under their non-recourse mortgages in the past several quarters and in the current quarter. In the Company’s 400 E. 67th Street property, one major tenant's lease expired in September 2024 and the Company subsequently entered into a month to month lease with that tenant. This tenant later vacated the property during the year ended December 31, 2024 after the month to month lease ended. In addition at the Company’s 400 E. 67th Street property, another major tenant paid through the end of their lease, which was September 2025; however, they moved out of the space in the third quarter of 2024. See Note 5 — Mortgage Notes Payable, Net for further details regarding the status of the debt covenants under the above mentioned mortgages as of September 30, 2026.
Revenue Recognition
The Company’s revenues, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. As of September 30, 2026, these leases had a weighted-average remaining lease term of 6.0 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires that the Company record a receivable for, and include in revenue from tenants, unbilled rent receivables that the Company will receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses (recorded in total revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. To the extent such costs exceed the applicable tenant’s base year, many but not all of the Company’s leases require the tenant to pay its allocable share of increases in operating expenses, which may include common area maintenance costs, real estate taxes and insurance. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under ASC 842, the Company has reflected them on a net basis.
The Company continually reviews receivables related to rent and unbilled rents receivable and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under the leasing standard, the Company is required to assess, based on credit risk, if it is probable that the Company will collect virtually all of the lease payments at the lease commencement date, and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that it is probable that it will collect virtually all of the lease payments (base rent and additional rent), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and the straight-line rent receivable accrued will be written off, as well as any accounts receivable, where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants in accordance with current accounting rules, on the accompanying condensed consolidated statements of operations in the period the related costs are incurred, as applicable.
In accordance with lease accounting rules the Company records uncollectible amounts as reductions in revenue from tenants. During the nine months ended September 30, 2026 and 2025, the Company had no such reductions in revenue.
10
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Accounting for Leases
Lessor Accounting
In accordance with the lease accounting standard, all leases as lessor are accounted for as operating leases. The Company evaluates new leases (by the Company or by a predecessor lessor/owner) pursuant to the guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than major part of remaining economic useful life of the asset (e.g., equal to or greater than 75%), the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or the asset so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases are evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor. As of September 30, 2026, the Company did not have any leases as a lessor that would be considered as sales-type leases or financing under sales-leaseback rules.
As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.
Lessee Accounting
The Company was the lessee under a land lease associated with 1140 Avenue of the Americas. In September 2025, a court appointed receiver took control of the property at 1140 Avenue of the Americas, and the Company derecognized the property including the associated land lease from the condensed consolidated balance sheet.
Impairment of Long-Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the property for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the condensed consolidated statements of operations and comprehensive income to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held for use. For properties held for sale, the impairment loss recorded would equal the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net loss because recording an impairment loss results in an immediate negative adjustment to earnings.
11
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Recently Issued Accounting Pronouncements
Not Yet Adopted as of September 30, 2026
In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220) — Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses. The new standard requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. Public entities must apply the new standard to annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements and disclosures.
Note 4 — Real Estate Investments
There were no real estate assets acquired or liabilities assumed during the nine months ended September 30, 2026 or 2025.
The following table discloses amounts recognized within the consolidated statements of operations loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
In-place leases | $ | $ | $ | $ | ||||||||||||||||||||||
| Other intangibles | ||||||||||||||||||||||||||
| Total included in depreciation and amortization | $ | $ | $ | $ | ||||||||||||||||||||||
| Above-market lease intangibles | $ | $ | $ | $ | ||||||||||||||||||||||
Below-market lease liabilities | ( | ( | ( | ( | ||||||||||||||||||||||
| Total included in revenue from tenants | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Below-market ground lease, included in property operating expenses | $ | $ | $ | $ | ||||||||||||||||||||||
The following table provides the projected amortization expense and adjustments to revenues for the next five years as of September 30, 2026:
| (In thousands) | 2026 (remainder) | 2027 | 2028 | 2029 | 2030 | 2031 | ||||||||||||||||||||||||||||||||
| In-place leases | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Total to be included in depreciation and amortization | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Above-market lease assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Below-market lease liabilities | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||
| Total to be included in revenue from tenants | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||
Significant Tenants
As of September 30, 2026 and September 30, 2025, there were two and one tenants, respectively, whose annualized rental income on a straight-line basis, based on leases commenced, represented greater than 10 % of total annualized rental income for all portfolio properties on a straight-line basis.
12
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Assets Held for Use
When circumstances indicate the carrying value of a property classified as held for use may not be recoverable, the Company reviews the property for impairment. For the Company, the most common triggering events are (i) concerns regarding the tenant (i.e., credit or expirations) in the Company’s single-tenant properties or significant vacancy in the Company’s multi-tenant properties and (ii) changes to the Company’s expected holding period as a result of business decisions or non-recourse debt maturities. If a triggering event is identified, the Company considers the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of the properties based on the expected cash flows on an undiscounted basis over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. Where more than one possible scenario exists, the Company uses a probability weighted approach in estimating cash flows. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses for impairment may be realized in the future. If the undiscounted cash flows over the expected hold period are less than the carrying value, the Company reflects an impairment charge to write the asset down to its fair value.
Impairment Charges
The Company recorded an impairment charge of $7.1
The Company recorded impairment charges totaling $13.1 million for the nine months ended September 30, 2025, related to its 400 E. 67th Street/200 Riverside property. These charges were recognized to reduce the carrying value of the property to its estimated fair value.
The Company recorded impairment charges totaling $10.3 million for the nine months ended September 30, 2025, related to its 196 Orchard Street property. These charges were recognized to reduce the carrying value of the property to its estimated fair value.
For additional information and disclosures related to the Company’s impairment charges, see Note 5 — Mortgage Notes Payable, Net.
Note 5 — Mortgage Notes Payable, Net
The Company’s mortgage notes payable, net as of September 30, 2026 and December 31, 2025 are as follows:
| Outstanding Loan Amount | ||||||||||||||||||||||||||||||||||||||
| Portfolio | Encumbered Properties | September 30, 2026 | December 31, 2025 | Effective Interest Rate | Interest Rate | Contractual Maturity | ||||||||||||||||||||||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||
| 123 William Street | $ | $ | % | Fixed | Mar. 2027 | |||||||||||||||||||||||||||||||||
400 E. 67th Street - Laurel Condominium / 200 Riverside Blvd. - ICON Garage (1) (3) | % | Fixed | Nov. 2025 | |||||||||||||||||||||||||||||||||||
8713 Fifth Avenue (1) | % | Fixed | Nov. 2028 | |||||||||||||||||||||||||||||||||||
| 196 Orchard Street | % | Fixed | Aug. 2029 | |||||||||||||||||||||||||||||||||||
| Mortgage notes payable, gross | % | |||||||||||||||||||||||||||||||||||||
Less: deferred financing costs, net (2) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Mortgage notes payable, net | $ | $ | ||||||||||||||||||||||||||||||||||||
_______
(1)These mortgage notes payable are currently either in an event of default, in breach of a debt covenant that may result in further restrictions as specified by the terms of the covenants or a cash sweep event of a debt covenant that may result in further restrictions as specified by the terms of the covenants. For
13
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
more information please see “Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation” section below.
(2)Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
(3)The Company was informed by the lender pursuant to letters dated in November 2024, December 2024, January 2025 and June 2025 that the Company was in default under the loan agreement governing the loan secured by the non-recourse mortgage on the property for events that first occurred in the third and fourth quarters of 2023, specifically the Company’s failure to establish a cash management account for excess cash sweeps over monthly debt service requirements failure to cooperate with the lender to cure the alleged cash management procedure failures, and failure to pay outstanding amounts due under such loan agreement beginning in April 2025. The Company responded to notices of default sent in November 2024, December 2024 and January 2025, rejecting the assertions made by the lender, and has not received a response from the lender. The Company has not responded to the notice of default received in June 2025. On November 6, 2025, the Company received a notice of acceleration from the special servicer on behalf of the lender with respect to the loan secured by this property. On January 21, 2026, the lender initiated a foreclosure action, naming the Company’s subsidiary borrowers and the OP as defendants. On May 22, 2026, the lender filed a motion in the foreclosure action seeking the appointment of a receiver. On June 3, 2026, the lender, the Company’s subsidiary borrowers and OP entered into a settlement agreement that provides for the resolution of the foreclosure action, including consent to the appointment of a receiver and the entry of a judgment of foreclosure and sale, subject to the terms of the agreement. The lender filed the stipulation for appointment of a receiver on June 8, 2026, but it was opposed by the Board of Managers of 200 Riverside Blvd. at Trump Place Condominium (the “Condo Board”) because it asserts that it should be entitled to the rents from the property in satisfaction of common charges that it asserts are owed by the Company’s subsidiary borrower and that its right to payment of the common charges has priority over the rights of the lender. As of September 30, 2026, the Company retained control of the property. On October 1, 2026, the New York County Court entered an order granting the lender’s request for a receiver over the Condo Board’s objection and directed the receiver to pay prospective common charges to the Condo Board. On October 21, 2026, the court-appointed receiver became took control of the property and the Company ceased managing the property. For more information, please see “Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation” section below.
Collateral and Principal Payments
Real estate assets and intangible assets of $384.8 million, at cost (net of below-market lease liabilities), as of September 30, 2026 have been pledged as collateral to the Company’s mortgage notes payable and are not available to satisfy the Company’s other obligations unless first satisfying the mortgage note payable on the applicable property. This balance excludes the 1140 Avenue of the Americas property in court appointed receivership, which is held by the receiver as collateral for the underlying mortgage note payable. The Company is required to make payments of interest on its mortgage notes payable on a monthly basis.
14
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
The following table summarizes the scheduled aggregate principal payments subsequent to September 30, 2026:
| (In thousands) | Future Minimum Principal Payments | |||||||
2026 (remainder) (1) | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
_______
(1)On November 6, 2025, the Company was informed by the special servicer acting on behalf of the lender under the loan secured by the 400 E. 67th Street/200 Riverside Blvd. properties that the principal amount under the loan agreement had been accelerated and all amounts under such loan agreement were due and payable. The current outstanding principal amount of $50,000,000 is currently reflected in the above chart for the year 2026. On October 1, 2026, the New York County Court entered an order granting the lender’s request for a receiver over the Condo Board’s objection and directed the receiver to pay prospective common charges to the Condo Board. On October 21, 2026, the court-appointed receiver took control of the property and the Company ceased managing the property. See also Note 5 – Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation
1140 Avenue of the Americas
The Company has breached both a debt service coverage provision and a reserve fund provision under its non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 24 quarters ended September 30, 2026. The principal amount of the loan was $99.0 million and reflected as debt associated with property in receivership on the condensed consolidated balance sheet as of September 30, 2026 (refer to Note 6 — Property Disposition).
The Company was informed by the lender on February 19, 2025 that the Company was in default under the loan agreement for failure to make certain scheduled interest payments. The Company made the payments in question in full on the same day the default notice was received by the Company as a cure for the February event of default. On April 7, 2025, the lender notified the Company that the principal balance due under such loan agreement had been accelerated and all amounts under such loan agreement were due and payable as a result of a default described in the notice, together with interest at the default rate set forth in the loan document, which is a rate per annum equal to the lesser of (i) the maximum nonusurious interest rate or (ii) 5 % above the interest rate of 4.109 % per annum. Such amounts include, but are not limited to, the $99.0 million principal amount of the mortgage note. Based on the above, total effective interest is 9.11 %, including 5.00 % default interest, and as of September 30, 2026, the Company has $16.5 million in accrued interest.
On June 27, 2025, the trustee appointed to act on behalf of the lenders filed a complaint with the Supreme Court of the State of New York in the County of New York (the “New York County Court”), naming the OP and the Company’s subsidiary borrower under such loan agreement as defendants, requesting the New York County Court initiate foreclosure proceedings on the mortgage on the property and that the OP and such borrower pay the lenders the amount of the debt, inclusive of certain accrued fees and expenses, remaining unsatisfied after the sale of the property. On July 21, 2025, the trustee filed a motion with the New York County Court to appoint a receiver with respect to the property. On August 6, 2025, the Company filed its answer to such complaint, which admitted in part, denied in part the material allegations and stated that the Company has insufficient knowledge and information upon which to form a belief as to whether it has, as of yet, unstated affirmative defenses available. Notwithstanding the OP being named as defendant in the complaint, the complaint does not allege events giving rise to a recourse obligation by the OP under the guaranty agreement related to the loan agreement, and the Company does not believe that any of the allegations against the OP are sufficient to trigger any such recourse obligation of the OP under the guaranty agreement.
15
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
In September 2025, the Company and the lender agreed to pursue a cooperative consensual foreclosure. On September 11, 2025, the New York County Court appointed a receiver and the Company ceased managing the property. As a result of the consensual foreclosure and appointment of receiver, the Company removed its related assets and liabilities from the condensed consolidated balance sheet as of December 31, 2025 and recognized a gain of $47.9 million which is reflected in the consolidated statements of operations for the year ended December 31, 2025. As of September 30, 2026, the foreclosure has not concluded and therefore the Company continues to record accrued default interest. As a result, during the three and nine months ended September 30, 2026, the Company recognized an additional gain of $2.3 million and $6.8 million, respectively, which is reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2026. For additional information, see Note 6 — Property Disposition.
8713 Fifth Avenue
The Company has breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue in each of the last 24 quarters ended September 30, 2026. The principal amount for the loan was $10.0 million as of September 30, 2026. The breach of the first part of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period that has been ongoing. The excess cash flow sweep period will continue until the covenant breaches are cured in accordance with the terms of the loan agreement. This property has not generated any excess cash since the breach occurred, and thus no cash has ever been trapped related to this property.
Separately, in the event that (i) the debt service coverage ratio is in breach for two consecutive calendar quarters and (ii) the lender reasonably determines that such breach is due to the property being imprudently managed by the current manager, the lender has the right, but not the obligation, to require that the Company replace the current manager with a third party manager chosen by the Company. As of September 30, 2026, the Company has been in breach for one quarter, although, the lender has not notified the Company of a determination that a breach of the debt service coverage ratio is due to imprudent management.
400 E. 67th Street/200 Riverside Blvd.
The Company entered a lease sweep period under the non-recourse mortgage secured by 400 E. 67th Street/200 Riverside Blvd. in the year ended December 31, 2024, resulting from a near-maturity lease with a major tenant at the property which expired in the third quarter of 2024. The principal amount for the loan was $50.0 million as of September 30, 2026. Under the loan agreement, a lease sweep period is triggered upon (i) the date that is twelve months prior to the end of the term of the major lease, (ii) the date required by the major tenant to give notice of its exercise of a renewal option, (iii) any major tenant lease being surrendered or terminated prior to the expiration date, (iv) the major tenant discontinuing its operations, if the major tenant’s long-term debt is rated lower than investment grade, (v) any material default under the major tenant’s lease, and (vi) any major tenant insolvency proceeding.
Under the lease sweep period, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral. As of September 30, 2026 and December 31, 2025 the Company had $3.1 million and $3.7 million, respectively, in cash swept that is retained by the lender and recorded within restricted cash on the Company’s condensed consolidated balance sheet.
16
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
On November 19, 2024, the lender sent a notice to the Company alleging that the Company was in default under the loan agreement governing the loan secured by the non-recourse mortgage on the property for events that occurred in the third and fourth quarters of 2023, specifically the Company’s failure to establish a cash management account for excess cash sweeps over monthly debt service requirements. The lender had been remitting excess cash on their own accord until the period of cash sweep was put into effect in 2024 as described above. In that notice of default, the lender asserted the Company owes an estimated $1.0 million in excess cash to be deposited into the loan reserve account. The Company responded to such notice of default on February 20, 2025 rejecting the assertions made by the lender, which the Company believed were without merit as a result of the lender's failure to implement a cash management account and the Company’s inability to take such action unilaterally due to the mechanics for receipt of lease payments provided for by the loan agreement. Beginning in March 2025, the lender began charging default interest to the Company, currently totaling $6.5 million. On June 10, 2025, the lender sent a second notice to the Company alleging defaults under such loan agreement as a result of (i) the Company’s failure to pay the outstanding amount due thereunder beginning in April 2025 and (ii) the Company’s failure to cooperate with the lender to comply with the aforementioned cash management procedures. The second default notice reaffirmed that, as a result of the aforementioned defaults, interest was accruing at the default rate under the loan agreement and made a demand that all unpaid amounts due under the loan agreement be paid. As of the date of this Quarterly Report on Form 10-Q, the Company has not responded to the second default notice. Further, the Company incurred a liability related to default interest as of September 30, 2026 in relation to the June 10, 2025 default notice. On November 6, 2025, the Company received a notice of acceleration from the special servicer on behalf of the lender with respect to the loan secured by this property identifying certain additional events of default, specifically incurrence of indebtedness that does not constitute permitted indebtedness and incurrence of liens that are not in favor of the lender or permitted encumbrances, subject to certain exceptions, as a result of our alleged failure to make certain additional payments and certain liens filed on the properties as a result thereof. In such notice, the lender notified the Company that, due to the alleged events of default under the loan agreement governing such indebtedness, the loan had been accelerated, and all amounts under such loan agreement were due and payable, together with interest at the default rate set forth in the loan agreement, which is a rate per annum equal to the lesser of (i) the maximum rate permitted by applicable law, or (ii) four percent (4 %) above the interest rate of 4.516 % per annum, compounded monthly. Such amounts include, but are not limited to, the $50.0 million principal amount of the promissory notes evidencing the loan agreement.
On January 21, 2026, the trustee appointed to act on behalf of the lenders filed a complaint with the New York County Court, naming the OP and the Company’s subsidiary borrowers under such loan agreement as defendants, requesting the court enter a judgment of foreclosure on the property and that the OP and such subsidiary borrowers pay the lender the amount of the debt, inclusive of certain accrued fees and expenses, remaining unsatisfied after the sale of the property.
On March 16, 2026, the Company’s subsidiary borrowers and OP filed their answer to such complaint, which admitted in part and denied in part the material allegations and asserted certain affirmative defenses. While the OP is named as a defendant in the complaint and the complaint alleges facts that under certain circumstances could give rise to limited recourse obligation by the OP under the guaranty agreement related to the loan agreement, the Company does not believe that any of the allegations against the OP are sufficient to trigger any such recourse obligation of the OP under the guaranty agreement.
On June 3, 2026, the trustee, the Company’s borrower subsidiaries and OP entered into a settlement agreement that provides for the resolution of the foreclosure action, including consent to the appointment of a receiver and the entry of a judgment of foreclosure and sale, subject to the terms of the agreement.
The lender filed the stipulation for appointment of a receiver on June 8, 2026, but it was opposed by the Condo Board because it asserts that, pursuant to the Condominium’s declaration and by-laws, its right to collect rents in satisfaction of allegedly unpaid common charges from the Company’s subsidiary borrower’s unit is prior and superior to the lender's right under the mortgage. The Condo Board has a separate action pending in the New York County Court asserting claims against the lender, the Company’s subsidiary borrower, and the tenant with respect to the collection and retention of rents from the unit, which the Condo Board asserts should be used to satisfy common charges. As of September 30, 2026, the Company retained control of the property.
On October 1, 2026, the New York County Court entered an order granting the lender’s request for a receiver over the Condo Board’s objection and directed the receiver to pay prospective common charges to the Condo Board. On October 21, 2026, the court-appointed receiver took control of the property and the Company ceased managing the property.
17
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Other Debt Covenants
The Company was in compliance with the remaining covenants under its other mortgage notes payable as of September 30, 2026 and, it continues to monitor compliance with those provisions. If the Company experiences additional lease terminations, due to tenant bankruptcies, tenants placed on a cash basis continue to not pay rent, or otherwise, it is possible that certain of the covenants on other loans may be breached and the Company may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, the Company’s other mortgages also contain cash management provisions that are not considered events of default, and as such, acceleration of principal would only occur upon an event of default.
Note 6 — Property Disposition
During the year ended December 31, 2025, the Company lost its economic interest and control and, therefore, disposed of its 1140 Avenue of the Americas property. In September 2025, the Company and the lender pursued a cooperative consensual foreclosure. On September 11, 2025, the New York County Court appointed a receiver and the Company ceased managing the property.
In connection with this, the Company removed its related assets and liabilities from the consolidated balance sheet effective September 11, 2025, the date the New York County Court appointed receiver took control of the property (excluding accounts payable and accrued expenses totaling approximately $2.0 million, retained by the Company), and recognized a gain of $47.9 million which is reflected in the condensed consolidated statements of operations for the year ended December 31, 2025. As of September 30, 2026, the foreclosure has not concluded and therefore the Company continues to record accrued default interest. As a result, during the three and nine months ended September 30, 2026 the Company recognized an additional gain of $2.3 million and $6.8 million, respectively, which is reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2026.
The Company also recorded a contract asset of $108.6 million and the related debt associated with property under receivership and accrued interest associated with property under receivership of $99.0 million and $9.6 million, respectively, are included in the consolidated balance sheet as of December 31, 2025. This contract asset represents the Company’s right to debt extinguishment once the foreclosure process on the 1140 Avenue of the Americas property is completed. As a result of the additional gain recognized during the nine months ended September 30, 2026, the total contract asset recorded on the balance sheet as of September 30, 2026 is $115.5 million and the total accrued interest associated with property under receivership recorded on the balance sheet as of September 30, 2026 is $16.5 million.
On October 1, 2026, the New York County Court entered an order granting the lender’s request for a receiver over the Condo Board’s objection and directed the receiver to pay prospective common charges to the Condo Board for the Company’s 400 E 67th/200 Riverside Blvd. properties. On October 21, 2026, the court-appointed receiver took control of the property and the Company ceased managing the property. Due to the receiver taking control of the property, the Company no longer controls the property or its related cash flows. The Company is evaluating the impact on its consolidated financial statements. For more information please see Note 5 — Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation.
18
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 7 — Fair Value of Financial Instruments
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the instrument. This alternative approach also reflects the contractual terms of the instrument, as applicable, including the period to maturity, and may use observable market-based inputs, including interest rate curves and implied volatilities, and unobservable inputs, such as expected volatility. The guidance defines three levels of inputs that may be used to measure fair value:
| Level 1 | — | Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. | |||||||||
| Level 2 | — | Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. | |||||||||
| Level 3 | — | Unobservable inputs that reflect the entity’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. | |||||||||
Financial Instruments That Are Not Reported at Fair Value
The Company is required to disclose at least annually the fair value of financial instruments for which it is practicable to estimate the value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other assets, accounts payable and distributions payable approximate their carrying value on the condensed consolidated balance sheets due to their short-term nature.
The fair value of the mortgage notes payable is estimated using a discounted cash flow analysis, based on the Advisor’s experience with similar types of borrowing arrangements.
The fair values of the Company’s financial instruments that are not reported at fair value on the condensed consolidated balance sheet are reported below:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||
| (In thousands) | Level | Gross Principal Balance | Fair Value | Gross Principal Balance | Fair Value | |||||||||||||||||||||||||||
Mortgage note payable — 123 William Street | 3 | |||||||||||||||||||||||||||||||
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Blvd. - ICON Garage(1) | 3 | |||||||||||||||||||||||||||||||
Mortgage note payable — 8713 Fifth Avenue | 3 | |||||||||||||||||||||||||||||||
Mortgage note payable — 196 Orchard Street | 3 | |||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||
_______
(1)The Company recorded impairment charges of $3.1 million and $9.9 million during the three months ended June 30, 2025 for its 400 E. 67th Street and 200 Riverside Blvd. properties, respectively. As a result, the Company adjusted the fair value of the 400 E. 67th Street/200 Riverside allocable mortgage balance to the property's current carrying value. On October 1, 2026, the New York County Court entered an order granting the lender’s request for a receiver over the Condo Board’s objection and directed the receiver to pay prospective common charges to the Condo Board. On October 21, 2026, the court-appointed receiver took control of the property and the Company ceased managing the property.
19
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 8 — Stockholders’ Equity
As of September 30, 2026 and December 31, 2025, the Company had 3.3 million and 2.7 million shares of common stock outstanding including unvested restricted shares, respectively. As of September 30, 2026, all of the Company’s shares of common stock outstanding were Class A common stock, including unvested restricted shares.
Class A Common Stock Issued to the Advisor In Lieu of Cash
Pursuant to the terms of the second amended and restated advisory agreement with the Advisor dated as of November 16, 2018 (as amended and restated from time to time, the “Advisory Agreement”), and the property management agreement, as amended, the Advisor may elect to receive shares of the Company’s Class A common stock in lieu of cash as payment for the monthly services it provides. For more information on the Advisory Agreement, please see Note 10 — Related Party Transactions and Arrangements. There were 160,766 and 644,567 shares issued in lieu of cash for asset management and property management services rendered during the three and nine months ended September 30, 2026, respectively. There were no
| Period of Issuance | Recipient | Agreement | Shares Issued | Closing Share Price | |||||||||||||||||||||||||
| April 2026 | The Advisor | Advisory Agreement | $ | ||||||||||||||||||||||||||
| June 2026 | The Advisor | Advisory Agreement | $ | ||||||||||||||||||||||||||
| August 2026 | The Advisor | Advisory Agreement | $ | ||||||||||||||||||||||||||
Distribution Reinvestment Plan
An amendment and restatement of the distribution reinvestment plan (the “A&R DRIP”) in connection with the listing of the Company’s shares on the New York Stock Exchange (“NYSE”) became effective on August 28, 2020. The A&R DRIP allows stockholders who have elected to participate to have dividends paid with respect to all or a portion of their shares of Class A common stock and Class B common stock reinvested in additional shares of Class A common stock. Shares received by participants in the A&R DRIP will represent shares that are, at the election of the Company, either (i) acquired directly from the Company, which would issue new shares, at a price based on the average of the high and low sales prices of Class A common stock on the NYSE on the date of reinvestment, or (ii) acquired through open market purchases by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with proceeds from reinvested dividends to participants for the related quarter, less a per share processing fee.
Shares issued by the Company pursuant to the A&R DRIP, if any, would be recorded within stockholders’ equity in the condensed consolidated balance sheets in the period dividends or other distributions are declared. During the nine months ended September 30, 2026 and year ended December 31, 2025, any DRIP transactions were settled through open market transactions and no shares were issued by the Company.
Note 9 — Commitments and Contingencies
Lessee Arrangement - Ground Lease
The Company entered into a ground lease agreement in 2016 related to the acquisition of 1140 Avenue of the Americas under a leasehold interest arrangement and recorded an ROU asset and lease liability related to this lease upon adoption of ASU 2016-02 during the year ended December 31, 2019. The ground lease is considered an operating lease. In computing the lease liabilities, the Company discounts future lease payments at an estimated incremental borrowing rate at adoption or acquisition if later. The term of the Company’s ground lease is significantly longer than the term of borrowings available to the Company on a fully-collateralized basis. The Company’s estimate of the incremental borrowing rate required significant judgment.
For the three and nine months ended September 30, 2026, the Company paid cash of $0.0 0.0 1.2 million and $2.4 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million and $2.4 million on a straight-line basis in accordance with the standard.
20
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Upon disposition of the 1140 Avenue of the Americas property, the Company removed the ground lease agreement ROU asset and lease liability from the condensed consolidated balance sheet.
Litigation and Regulatory Matters
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. Other
than the foreclosure litigation initiated as a result of alleged defaults under the loan agreement governing the indebtedness secured by our 1140 Avenue of the Americas and 400 E. 67th Street/200 Riverside Blvd. properties as set forth Note 5 — Mortgage Notes Payable— Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation there are no material legal proceedings pending or known to be contemplated against the Company as of September 30, 2026.
On August 26, 2025 the Company received a written notice (the “Notice”) from the NYSE that the Company did not presently satisfy the NYSE’s continued listing standards under Section 802.01B of the NYSE Listed Company Manual (the “Manual”), which requires the Company’s 30 -trading day average market capitalization to be not less than $50 million and the Company’s stockholders’ equity to be not less than $50 million. As set forth in the Notice, as of August 25, 2025, the Company’s 30 -trading day average market capitalization was approximately $34.3 million and the Company’s last reported stockholders’ equity as of June 30, 2025 was approximately $35.5 million.
In accordance with applicable NYSE procedures, within 45 days from receipt of the Notice, the Company was required to submit to NYSE a business plan that demonstrates compliance with Section 802.01B of the Manual within 18 months of receipt of the Notice. The Listing Operations Committee of NYSE reviewed and accepted the business plan provided by the Company, and at which time the Company is subject to ongoing quarterly monitoring for compliance with the business plan.
The Notice had no immediate effect on the listing of the Company’s Class A common stock, which continued to be listed and traded on NYSE during the cure periods outlined above, subject to the Company’s compliance with other NYSE continued listing requirements.
On July 22, 2026, the NYSE notified the Company that it is now considered back in compliance with the NYSE's minimum market capitalization and stockholders' equity requirements under Section 802.01B of the Manual. The Company will be subject to normal continued listing monitoring in accordance with the NYSE Manual. If the Company is again determined to be below any of the continued listing standards within 12 months of the date of the notification letter, the NYSE will review the reason(s) for falling below such standards, which may include a re-evaluation of the Company’s original method of financial recovery. The NYSE will then take the appropriate action, which, depending on circumstances, may include truncating the compliance procedures described in the NYSE Manual or beginning the initiation of NYSE trading suspension procedures.
The below-compliance indicator (BC) previously transmitted with respect to the Company's Class A common stock is no longer being transmitted and the Company has been removed from the list of NYSE noncompliant issuers on the NYSE’s website.
In August 2025, the Company entered into a real estate tax payment plan with the New York City Department of Finance for its 123 William Street property. In April 2026, the Company rolled the original plan into a second plan regarding $6,219,212.92 in outstanding principal of real estate taxes at 123 William Street with a term of 2 years and an interest rate of 16 % set by the New York City Department of Finance. The Company is required to make monthly payments of $304,819.93 . Payments began in July 2026.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of September 30, 2026, the Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.
Note 10 — Related Party Transactions and Arrangements
As of September 30, 2026 and December 31, 2025, entities wholly owned by AR Global owned 1,180,819 and 536,252 shares of the Company’s outstanding Class A common stock, respectively. As of September 30, 2026 and December 31, 2025, Bellevue owned approximately 68.2 % and 58.3 % of outstanding shares of the Company, respectively, which includes shares owned by AR Global.
21
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Fees and Participations Incurred in Connection with the Operations of the Company
Summary of Advisory Agreement
Pursuant to the Advisory Agreement, the Advisor manages the Company’s day-to-day operations. The initial term of the Advisory Agreement ends in July 2030 and will automatically renew for successive five-year terms unless either party gives written notice of its election not to renew at least 180 days prior to the then-applicable expiration date. The Company may only elect not to renew the Advisory Agreement on this basis with the prior approval of at least two-thirds of the Company’s independent directors, and no change of control fee (as defined in the Advisory Agreement) is payable if the Company makes this election.
Asset Management Fees and Variable Management/Incentive Fees
Overview
The Company pays the Advisor a base asset management fee on the first business day of each month equal to (x) $0.5 million plus (y) a variable amount equal to (a) 1.25 % of the equity proceeds received after November 16, 2018, divided by (b) 12. The base asset management fee is payable in cash, shares of common stock, units of limited partnership interest in the OP, or a combination thereof, at the Advisor’s election. Equity proceeds are defined as, with respect to any period, cumulative net proceeds of all common and preferred equity and equity-linked securities issued by the Company and its subsidiaries during the period, including: (i) any equity issued in exchange or conversion of exchangeable notes based on the stock price at the date of issuance and convertible equity; (ii) any other issuances of equity, including but not limited to units in the OP (excluding equity-based compensation but including issuances related to an acquisition, investment, joint-venture or partnership); and (iii) effective following the time the Company commences paying a dividend of at least $0.05 per share per annum to its stockholders, (which occurred in October 2020), any cumulative Core Earnings (as defined in the Advisory Agreement) in excess of cumulative distributions paid on the Company’s common stock since November 16, 2018, the effective date of the most recent amendment and restatement of the Advisory Agreement.
The Advisory Agreement also entitles the Advisor to an incentive variable management fee. In August 2020, the Company entered into an amendment to the Advisory Agreement to adjust the quarterly thresholds of Core Earnings Per Adjusted Share (as defined in the Advisory Agreement) the Company must reach on a quarterly basis for the Advisor to receive the variable management fee to reflect the Reverse Stock Split. Prior to this amendment, the variable management fee was equal to (i) the product of (a) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (b) 15.0 % multiplied by (c) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.1458 (before any adjustment for the Reverse Stock Split), plus (ii) the product of (x) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (y) 10.0 % multiplied by (z) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.1944 (before any adjustment for the Reverse Stock Split). The variable management fee is payable quarterly in arrears in cash, shares of common stock, units of limited partnership interest in the OP or a combination thereof, at the Advisor’s election. No incentive variable management fees were earned during the three months ended September 30, 2026 or 2025.
22
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Management Fee Expense
The Company recorded expense of $1.4 million and $4.5 million for the base asset management fees during the three and nine months ended September 30, 2026, respectively, and $1.5 million and $4.5 million for the base asset management fees during the three and nine months ended September 30, 2025, respectively. There were no variable management fees incurred in either of these periods. The base asset management fees and monthly management fees for the three and nine months ended September 30, 2026 were paid partially with cash and partly with shares of the Company’s Class A common stock. The Advisor may elect to but is not obligated to accept shares in lieu of cash for these management fees and makes this election on a monthly basis. The base asset management fees and monthly management fees for the three and nine months ended September 30, 2025 were paid in cash.
Property Management Fees
Pursuant to the Property Management and Leasing Agreement (the “PMA”), as most recently amended on March 29, 2024 except in certain cases where the Company contracts with a third party, the Company pays the Property Manager a property management fee equal to: (i) for non-hotel properties, 3.25 % of gross revenues from the properties managed, plus market-based leasing commissions; and (ii) for hotel properties, a market-based fee based on a percentage of gross revenues. The term of the PMA is coterminous with the term of the Advisory Agreement.
Pursuant to the PMA, the Company reimburses the Property Manager for property-level expenses. These reimbursements are not limited in amount and may include reasonable salaries, bonuses, and benefits of individuals employed by the Property Manager, except for the salaries, bonuses, and benefits of individuals who also serve as one of the Company’s executive officers or as an executive officer of the Property Manager or any of its affiliates. The Property Manager may also subcontract the performance of its property management and leasing services duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services.
On April 13, 2018, in connection with the loan for its 400 E. 67th Street - Laurel Condominium and 200 Riverside Blvd. properties, the Company entered into a new property management agreement with the Property Manager (the “April 2018 PMA”) to manage the properties secured by the loan. With respect to these properties, the substantive terms of the April 2018 PMA are identical to the terms of the PMA, except that the property management fee for non-hotel properties is 4.0 % of gross revenues from the properties managed, plus market-based leasing commissions. The April 2018 PMA has an initial term of one year that is automatically extended for an unlimited number of successive one-year terms at the end of each year unless any party gives 60 days’ written notice to the other parties of its intention to terminate.
In March 2024, the Company and the Property Manager amended the PMA to allow the Property Manager to elect to receive Class A Units or shares of the Company’s common stock in lieu of cash for all fees payable to the Property Manager.
The Company incurred approximately $0.2 million and $0.5 million in property management fees during the three and nine months ended September 30, 2026, respectively, and $0.4 million and $0.9 million in property management fees during the three and nine months ended September 30, 2025, respectively. The property management fees for the three and nine months ended September 30, 2026 were paid partially with cash and partly with shares of the Company’s Class A common stock. The property management fees for the three and nine months ended September 30, 2025 were paid in cash.
Professional Fees and Other Reimbursements
The Company pays directly or reimburses the Advisor monthly in arrears, for all the expenses paid or incurred by the Advisor or its affiliates in connection with the services it provides to the Company under the Advisory Agreement, subject to the following limitations:
•(a) With respect to administrative and overhead expenses of the Advisor, including administrative and overhead expenses of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services but not including their salaries, wages, and benefits, these costs may not exceed in any fiscal year,
(i) $0.4 million, or
(ii) if the Asset Cost (as defined in the Advisory Agreement) as of the last day of the fiscal quarter immediately preceding the month is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal quarter multiplied by (y) 0.10 %.
•(b) With respect to the salaries, wages, and benefits of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services (including the Company’s executive officers), these amounts must be comparable to market rates and reimbursements may not exceed, in any fiscal year,
23
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
(i) $3.0 million, or
(ii) if the Asset Cost as of the last day of the fiscal year is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal year multiplied by (y) 0.30 %.
Professional fees and other reimbursement include reimbursements to the Advisor for administrative, overhead and personnel services, which are subject to the limits noted above, as well as costs associated with directors and officers insurance which are not subject to those limits.
Professional fees and other reimbursements for the three and nine months ended September 30, 2026 were $1.2 million and $3.9 million, respectively. The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the three months ended September 30, 2026 were $1.2 million ($1.0 million were for salaries, wages, and benefits and $0.2 million related to administrative and overhead expenses). The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the nine months ended September 30, 2026 were $3.9 million ($3.0 million were for salaries, wages, and benefits and $0.9 million related to administrative and overhead expenses).
Professional fees and other reimbursements for the three and nine months ended September 30, 2025 were $0.9 million and $3.5 million. The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the three months ended September 30, 2025 was $0.9 million ($0.7 million were for salaries, wages, and benefits and $0.2 million related to administrative and overhead expenses). The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the nine months ended September 30, 2025 was $3.5 million ($2.6 million were for salaries, wages, and benefits and $1.0 million related to administrative and overhead expenses).
Notes Payable to Related Parties
Pursuant to the terms of a promissory note executed during the three months ended December 31, 2025 between the Company and the Advisor, the Company borrowed $0.7 million from the Advisor for working capital needs. The Company recorded this borrowing as a note payable to related parties as of December 31, 2025 on the Company’s consolidated balance sheet. The promissory note bore interest at an annual rate of 7.67 % and would have been callable on or after June 30, 2026. Amounts repaid under the promissory note may not be reborrowed. During the first quarter of 2026, the Company repaid all amounts outstanding under this promissory note with the Advisor with cash on hand including interest, which was immaterial.
Pursuant to the terms of a promissory note executed during the three months ended March 31, 2026 between the Company and the Advisor, the Company borrowed $1.1 million from the Advisor for working capital needs. The Company recorded this borrowing as a note payable to related parties as of March 31, 2026 on the Company’s consolidated balance sheet. The promissory note bore interest at an annual rate of 7.67 % and would have been callable on or after June 30, 2026. Amounts repaid under the promissory note may not be reborrowed. During the second quarter of 2026, the Company repaid all amounts outstanding under this promissory note with the Advisor with cash on hand including interest, which was immaterial.
Pursuant to the terms of a promissory note executed during the three months ended June 30, 2026 between the Company and the Advisor, the Company borrowed $0.9 million from the Advisor for working capital needs. The Company recorded this borrowing as a note payable to related parties as of June 30, 2026 on the Company’s consolidated balance sheet. The promissory note bore interest at an annual rate of 7.67 % and would have been callable on or after September 30, 2026. Amounts repaid under the promissory note may not be reborrowed. During the third quarter of 2026, the Company repaid all amounts outstanding under this promissory note with the Advisor with cash on hand including interest, which was immaterial.
Pursuant to the terms of a promissory note executed during the three months ended September 30, 2026 between the Company and the Advisor, the Company borrowed $3.9 million from the Advisor for working capital needs. The Company recorded this borrowing as a note payable to related parties as of September 30, 2026 on the Company’s consolidated balance sheet. The promissory note bore interest at an annual rate of 7.67 % and would have been callable on or after December 31, 2026. Amounts repaid under the promissory note may not be reborrowed. During the fourth quarter of 2026, the Company repaid all amounts outstanding under this promissory note with the Advisor with cash on hand including interest, which was immaterial.
24
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Summary of Fees, Expenses and Related Payables
The following table details amounts incurred in connection with the Company’s operations-related services described above as of and for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | Payable (receivable) as of | |||||||||||||||||||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Ongoing fees: | |||||||||||||||||||||||||||||||||||||||||
| Asset and property management fees to related parties | $ | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
Professional fees and other reimbursements (1) | |||||||||||||||||||||||||||||||||||||||||
Total related party operation fees and reimbursements | $ | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
________
(1)Amounts for the three and nine months ended September 30, 2026 and 2025 are included in general and administrative expenses in the unaudited condensed consolidated statements of operations.
Termination Fees Payable to the Advisor
The Advisory Agreement requires the Company to pay a termination fee to the Advisor in the event the Advisory Agreement is terminated prior to the expiration of the initial term in certain limited scenarios. The termination fee will be payable to the Advisor if either the Company or the Advisor exercises the right to terminate the Advisory Agreement in connection with the consummation of the first change of control (as defined in the Advisory Agreement). The termination fee is equal to $15 million plus an amount equal to the product of: (i) three (if the termination was effective on or prior to June 30, 2020) or (ii) four (if the termination is effective after June 30, 2020), multiplied by applicable Subject Fees (defined below).
The “Subject Fees” are equal to the product of 12 and the actual base management fee for the month immediately prior to the month in which the Advisory Agreement is terminated, plus the product of four and the actual variable management fee for the quarter immediately prior to the quarter in which the Advisory Agreement is terminated, plus without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity issued by the Company and its subsidiaries in respect of the fiscal quarter immediately prior to the fiscal quarter in which the Advisory Agreement is terminated.
In connection with the termination or expiration of the Advisory Agreement, the Advisor will be entitled to receive (in addition to any termination fee) all amounts then accrued and owing to the Advisor, including an amount equal to then-present fair market value of its shares of the Company’s Class A common stock and interest in the OP.
Note 11 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services, transaction management services and investor relations.
As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.
25
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 12 — Equity-Based Compensation
Equity Plans
Restricted Share Plan
Prior to the Company listing its shares on the NYSE, the Company had an employee and director incentive restricted share plan (as amended, the “RSP”). The RSP provided for the automatic grant of the number of restricted shares equal to $30,000 divided by the then-current Estimated Per-Share NAV, which were made without any further approval by the Company’s board of directors or the stockholders, after initial election to the board of directors and after each annual stockholder meeting, with such restricted shares vesting annually over a five-year period following the grant date in increments of 20.0 % per annum. The RSP also provided the Company with the ability to grant awards of restricted shares to the Company’s board of directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.
2020 Equity Plan
Effective at the time of the listing, the Company’s independent directors approved an equity plan for the Advisor (the “Advisor Plan”) and an equity plan for individuals (the “Individual Plan” and together with the Advisor Plan, the “2020 Equity Plan”). The Advisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Awards under the Individual Plan are open to the Company’s directors, officers and employees (if the Company ever has employees), employees, officers and directors of the Advisor and as a general matter, employees of affiliates of the Advisor that provide services to the Company. Awards under the Advisor Plan may only be granted to the Advisor and its affiliates (including any person to whom the Advisor subcontracts substantially all of responsibility for directing or performing the day-to-day business affairs of the Company).
The 2020 Equity Plan succeeded and replaced the then existing RSP. Following the effectiveness of the 2020 Equity Plan at the listing of its shares on the NYSE, no further awards have been or will be granted under the RSP; provided, however, any outstanding awards under the RSP, such as unvested restricted shares held by the Company’s independent directors, will remain in effect in accordance with their terms and the terms of the RSP, until all those awards are exercised, settled, forfeited, canceled, expired or otherwise terminated. The Company accounts for forfeitures when they occur. While the RSP provided only for awards of restricted shares, the 2020 Equity Plan has been expanded to also permit awards of restricted stock units, stock options, stock appreciation rights, stock awards, LTIP Units and other equity awards. In addition, the 2020 Equity Plan eliminates the “automatic grant” provisions of the RSP that dictated the terms and amount of the annual award of restricted shares to independent directors. Grants to independent directors are made in accordance with the Company’s new director compensation program, as described below under “—Director Compensation.” The 2020 Equity Plan has a term of 10 years, expiring August 18, 2030. The number of shares of the Company’s capital stock that may be issued or subject to awards under the 2020 Equity Plan, in the aggregate, is equal to 20.0 % of the Company’s outstanding shares of Class A common stock on a fully diluted basis at any time. Shares subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a one -for-one basis and vice versa.
Director Compensation
On August 18, 2020 the Company listed its shares of Class A common stock on the NYSE, and effective on that date, the Company’s independent directors approved a change to the Company’s director compensation program. Starting with the annual award of restricted shares made in connection with the Company’s 2021 annual meeting of stockholders, the amount of the annual award was increased from $30,000 to $65,000 . No other changes have been made to the Company’s director compensation program.
Restricted Shares
Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares receive cash dividends on the same basis as dividends paid on shares of common stock, if any, prior to the time that the restrictions on the restricted shares have lapsed and thereafter. Any dividends payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.
26
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
In March 2022, the compensation committee delegated authority to the Company’s chief executive officer to award up to 25,000 restricted shares (adjusted for the Reverse Stock Split) to employees of the Advisor or its affiliates who are involved in providing services to the Company, including the Company’s chief financial officer, subject to certain limits and restrictions imposed by the compensation committee. The compensation committee remains responsible for approving and administering all grants of awards to the Company’s chief financial officer or any other executive officer of the Company, including any award of restricted shares recommended by the Company’s chief executive officer. No awards under the 2020 Equity Plan may be made pursuant to this delegation of authority to anyone who is also a partner, member or equity owner of the parent of the Advisor. As of September 30, 2026, there have been no shares awarded to anyone who is also a partner, member or equity owner of the parent of the Advisor.
Restricted share awards that have been granted to the Company’s directors provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient’s voluntary termination or the failure to be re-elected to the Company’s board of directors.
The following table displays restricted share award activity during the nine months ended September 30, 2026:
| Number of Restricted Shares | Weighted-Average Issue Price | |||||||||||||
| Unvested, December 31, 2025 | $ | |||||||||||||
| Granted | ||||||||||||||
| Vested | ( | |||||||||||||
| Forfeitures | ( | |||||||||||||
Unvested, September 30, 2026 | $ | |||||||||||||
As of September 30, 2026, the Company had $0.4 million of unrecognized compensation cost related to unvested restricted share awards granted and is expected to be recognized over a weighted-average period of 1.9 years. Restricted share awards are expensed in accordance with the service period required. Compensation expense related to restricted share awards was approximately $0.0 million and $0.2 million for the three and nine months ended September 30, 2026, respectively. Compensation expense related to restricted share awards was approximately $0.1 million and $0.2 million for the three and nine months ended September 30, 2025, respectively. Compensation expense related to restricted share awards is recorded as equity-based compensation in the accompanying unaudited condensed consolidated statements of operations.
Note 13 — Income Taxes
The Company is subject to U.S. federal, state and local income taxes. For deferred items, the Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. Because of the Company’s recent operating history of taxable losses and the continuing adverse economic impacts since the COVID-19 pandemic on the Company’s results of operations, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets; thus the Company has provided a 100
There was no zero no income tax expense or benefit (after considering changes in the valuation allowance) for the nine months ended September 30, 2026. The Company remains in a net deferred tax asset position with a full valuation allowance as of both September 30, 2026 and December 31, 2025. As of September 30, 2026, the Company had no material uncertain tax positions.
27
AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 14 — Net Income (Loss) Per Share
The following is a summary of the basic and diluted net loss per share computation for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
| (In thousands, except share and per share data) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders - Basic | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
| Adjustments to net income (loss) attributable to common stockholders | ( | |||||||||||||||||||||||||||||||
| Adjusted net income (loss) attributable to common stockholders - Diluted | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||||||||
| Weighted average shares outstanding — Basic | ||||||||||||||||||||||||||||||||
| Dilutive effect of restricted shares and Class A Units | ||||||||||||||||||||||||||||||||
| Weighted average shares outstanding — Diluted | ||||||||||||||||||||||||||||||||
| Net income (loss) per share attributable to common stockholders — Basic | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
| Net income (loss) per share attributable to common stockholders — Diluted | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted shares contain rights to receive distributions considered to be non-forfeitable, except in certain limited circumstances, and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share above adjusts net loss to exclude the distributions to the unvested restricted shares. On July 1, 2022, the Company announced that it suspended its policy regarding dividends paid on its Class A common stock, beginning with the dividend that would have been payable for the quarter ended June 30, 2022.
Diluted net income (loss) per share assumes the conversion of all Class A common stock share equivalents into an equivalent number of shares of Class A common stock, unless the effect is anti-dilutive. The Company considers unvested restricted shares and Class A Units to be common share equivalents. The following table shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted earnings per share as their effect would have been antidilutive for the periods presented.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
Unvested restricted shares (1) | ||||||||||||||||||||||||||
| Total weighted-average anti-dilutive common share equivalents | ||||||||||||||||||||||||||
(1)There were 110,193 and 75,202 unvested restricted shares outstanding as of September 30, 2026 and 2025, respectively.
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AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 15 — Segment Reporting
We are an externally managed company that owns a portfolio of commercial real estate located within New York City, primarily Manhattan. The Company’s real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities. Our Chief Operating Decision Maker (“CODM”), which is our Chief Executive Officer, does not distinguish or group operations based on geography, size, type or other basis when assessing the financial performance of our properties. Our operating properties have similar economic characteristics and provide similar products and services to consumers. Accordingly, we manage and evaluate our operations as a single reportable segment based on our condensed consolidated financial statements for financial reporting and disclosure purposes.
The CODM is responsible for overseeing our operations and making key strategic decisions, including the allocation of resources, evaluating financial performance, and determining the overall direction of our Company. The CODM receives condensed consolidated financial and operational data to assess performance and make these decisions. Our measure of segment profit or loss is net earnings (loss). The CODM also reviews significant expenses associated with the Company’s single reportable segment which are presented in the Condensed Consolidated Statements of Operations.
The CODM reviews net earnings (loss) and the relevant components thereof that are directly reflected on our Condensed Consolidated Statements of Operations. The CODM is also regularly provided the reportable segment level asset information, real estate investments, net, which is directly reflected on the Condensed Consolidated Balance Sheets. Refer to the descriptions below for further details:
•Net earnings (loss): this metric represents the total profit after accounting for all revenues, expenses and other costs. It reflects our overall financial performance and profitability. Net earnings (loss) is used by our CODM to identify underlying trends in the performance of our business and make comparisons with the financial performance of our competitors. Net earnings (loss) are reported in the Condensed Consolidated Statement of Operations.
•Revenue from tenants: a component of net earnings (loss), this balance represents the total income derived from long-term leases with tenants. It is the primary source of revenue for us and reflects the effectiveness of our real estate portfolio in generating rental income. Revenue from tenants is reported in the Revenue section of the Condensed Consolidated Statement of Operations.
•Total Operating Expenses: a component of net earnings (loss), operating expenses include all costs related to the maintenance and management of the properties, including property costs and general and administrative expenses. These expenses are critical to maintaining the portfolio’s long-term profitability and are disclosed under the Operating Expenses section of the Condensed Consolidated Statement of Operations.
•Real Estate Investments, net: this total represents the value of properties that we actively use to generate rental income. It is a core asset-based metric and a key driver of our long-term growth. Managing real estate held for use is essential for value appreciation and strategic portfolio management, which enables us to make informed decisions regarding acquisitions, divestitures, and overall asset allocation to support sustainable growth and are disclosed under the Real Estate section of the Condensed Consolidated Balance Sheets.
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AMERICAN STRATEGIC INVESTMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(Unaudited)
Note 16 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that other than as disclosed, there have not been any additional events that have occurred that would require adjustments to disclosures in the condensed consolidated financial statements.
400 E. 67th Street/200 Riverside Blvd. Foreclosure Litigation
See the disclosure with respect to the foreclosure litigation initiated as a result of alleged defaults under the loan agreement governing the indebtedness secured by the 400 E. 67th Street/200 Riverside Blvd. properties set forth in Note 5 — Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation.
Class A Common Stock Issued to the Advisor In Lieu of Cash
Pursuant to the terms of the second amended and restated advisory agreement with the Advisor, and the property management agreement, the Advisor may elect to receive shares of the Company’s Class A common stock in lieu of cash as payment for the monthly services it provides. On October 23, 2026, the Company issued 244,480 shares in lieu of cash for asset management and property management services rendered during the three and nine months ended September 30, 2026. For more information on the Advisory Agreement, please see Note 10 — Related Party Transactions and Arrangements.
Notes Payable to Related Parties
Pursuant to the terms of a promissory note executed during the fourth quarter between the Company and the Advisor, the Company borrowed $0.3 million from the Advisor for working capital needs. The promissory note bore interest at an annual rate of 8.15 % and would have been callable on or after January 21, 2027. Amounts repaid under the promissory note may not be reborrowed. During the fourth quarter of 2026, the Company repaid all amounts outstanding under this promissory note with the Advisor with cash on hand including interest, which was immaterial.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements regarding the intent, belief or current expectations of American Strategic Investment Co. (including, as required by context, New York City Operating Partnership, L.P. (the “OP”) and its subsidiaries, “we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements. We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.
These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include anticipated benefits of our election to terminate our status as a real estate investment trust; whether we will be able to successfully acquire new assets or businesses; potential adverse effects of the geopolitical instability; the ongoing military conflicts between Russia and Ukraine, Israel and Hamas and the United States (“U.S.”) and Israel conflict with Iran, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on us, our tenants and the global economy and financial markets; inflationary conditions and higher interest rate environment; economic uncertainties about the ultimate impact of tariffs imposed by, or imposed on, the United States and its trading relationships; and that any potential future acquisition or disposition is subject to market conditions and capital availability and may not be identified or completed on favorable terms. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on April 15, 2026 (the “2025 Annual Report”), this and our other Quarterly Reports on Form 10-Q and our other filings with the SEC.
Overview
We are an externally managed company that owns a portfolio of commercial real estate located within the five boroughs of New York City, primarily Manhattan. Our real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities and parking garages that do not accompany office spaces. As of September 30, 2026, we owned five properties consisting of approximately 0.7 million rentable square feet, acquired for an aggregate purchase price of $442.7 million with an overall occupancy of 74.0%, which excludes one property, 1140 Avenue of the Americas, which is in a consensual foreclosure process.
Substantially all of our business is conducted through the OP and its wholly owned subsidiaries. Our Advisor manages our day-to-day business with the assistance of our Property Manager. Our Advisor and Property Manager are under common control with AR Global and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.
Management Update on the New York City Real Estate Market
The pace of recovery in the New York City office market from the COVID-19 pandemic continues to be challenged as leasing and occupancy trends for the broader market have slowed, leading political, community, and business leaders to propose repositioning plans for many New York City office assets that are experiencing high vacancy rates.
The adverse economic impacts since the onset of the COVID-19 pandemic have caused us to experience challenges in leasing up available space and maintaining occupancy in our properties. These challenges with leasing activity have negatively impacted, and continue to impact, our results of operations, cash flows, and ability to comply with certain mortgage debt covenants. For additional information on our leasing activity for the nine months ended September 30, 2026 and 2025, please see Results of Operations — Leasing Activity below.
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As of September 30, 2026 two of our mortgages encumbering three of our properties aggregating $60.0 million in principal are in default and/or remained in a cash trap events, as described in detail further below in the Liquidity and Capital Resources section. The lenders of one mortgage in default, which is in respect of our 1140 Avenue of the Americas property, have accelerated the debt outstanding under the applicable loan agreement and in June 2025 initiated foreclosure litigation as a result of alleged defaults. In September 2025, the Company and the lender agreed to pursue a cooperative consensual foreclosure. On September 11, 2025, the New York County Court appointed a receiver, and the Company ceased managing the property. As a result of the consensual foreclosure and the appointment of the receiver, the Company removed its related assets and liabilities from the consolidated balance sheet as of September 30, 2025. In addition, the 400 E. 67th Street/200 Riverside Blvd. properties are also in default and the lenders have accelerated the debt outstanding under the applicable loan agreement. See also Note 5 – Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
Our portfolio is primarily comprised of office and retail tenants. We have collected 98% of cash rent due across our entire portfolio for the nine months ended September 30, 2026 (based on annualized straight-line rent as of September 30, 2026). We expect our cash rent collections will stay at that level, however there can be no assurance that we will be able to collect cash rent due in the future.
We intend to continue focusing on selling performing properties, entering into new leases, and divesting from underperforming assets. However, we cannot predict with certainty the outcome of these actions in terms of generating liquidity.
We face significant liquidity constraints due to a combination of factors, including sustained declines in rental income, constrained cash flow from operations, and ongoing debt service obligations. Our portfolio consists primarily of office properties located in Manhattan, which have been adversely impacted by shifts in market demand following the COVID-19 pandemic. While we have successfully executed lease transactions to mitigate vacancy risk, new leases have been signed at market rental rates below prior contractual rates, resulting in decreased revenue compared to historical levels.
Our cash outlays consist principally of professional fees, consultant fees, legal fees, insurance costs, auditing costs, general and administrative expenses, principal and interest payments on debts, property maintenance, property taxes, and other property-related expenses not covered by tenants. To the extent we need to raise additional capital to meet our obligations, there can be no assurance that financing will be available when needed. If we are unable to sell certain assets as anticipated or at expected prices, we may not have sufficient cash to fund operations and commitments. Although there can be no assurance that external financing will be available on favorable terms when needed, our Advisor has indicated both the ability and willingness to lend us funds pursuant to promissory notes to address liquidity requirements, if necessary.
Significant Accounting Estimates and Critical Accounting Policies
For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our 2025 Annual Report. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.
Recently Issued Accounting Pronouncements
See Note 3 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
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Properties
The following table presents certain information about the investment properties we owned as of September 30, 2026:
| Portfolio | Acquisition Date | Number of Properties | Rentable Square Feet | Occupancy | Remaining Lease Term (1) | |||||||||||||||||||||||||||
| 400 E. 67th Street - Laurel Condominium | Sept. 2014 | 1 | 58,750 | 44.3 | % | 10.8 | ||||||||||||||||||||||||||
200 Riverside Blvd. - ICON Garage (2) | Sept. 2014 | 1 | 61,475 | 100.0 | % | 10.8 | ||||||||||||||||||||||||||
| 123 William Street | Mar. 2015 | 1 | 544,610 | 70.5 | % | 4.2 | ||||||||||||||||||||||||||
| 8713 Fifth Avenue | Oct. 2018 | 1 | 17,500 | 100.0 | % | 8.1 | ||||||||||||||||||||||||||
| 196 Orchard Street | Jul. 2019 | 1 | 60,297 | 100.0 | % | 9.2 | ||||||||||||||||||||||||||
| Total portfolio | 5 | 742,632 | 74.0 | % | 6.0 | |||||||||||||||||||||||||||
______
(1)Calculated on a weighted-average basis as of September 30, 2026, as applicable.
(2)On November 6, 2025, the Company received a notice of acceleration from the special servicer on behalf of the lender with respect to the loan secured by the property (See also Note 5 — Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion).
Results of Operations
Leasing Activity for the Nine Months Ended September 30, 2026
The following table is a summary of our quarterly leasing activity during the nine months ended September 30, 2026:
| Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||
| Leasing activity: | ||||||||||||||||||||
| New and replacement leases: | ||||||||||||||||||||
| New and replacement leases commenced | — | — | 2 | |||||||||||||||||
| Total square feet leased | — | — | 34,190 | |||||||||||||||||
Annualized straight-line rent per square foot (1) | $ | — | $ | — | $ | 42.26 | ||||||||||||||
Weighted-average lease term (years) (2) | — | — | 5.7 | |||||||||||||||||
| Terminated or expired leases: | ||||||||||||||||||||
| Number of leases terminated or expired | 3 | 1 | — | |||||||||||||||||
| Square feet | 29,217 | 11,521 | — | |||||||||||||||||
Annualized straight-line rent per square foot (1) | $ | 47.64 | $ | 12.29 | $ | — | ||||||||||||||
______
(1)Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries.
(2)The weighted-average remaining lease term (years) is based on annualized straight-line rent.
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Leasing Activity for the Nine Months Ended September 30, 2025
The following table is a summary of our quarterly leasing activity during the nine months ended September 30, 2025:
| Q1 2025 | Q2 2025 | Q3 2025 | ||||||||||||||||||
| Leasing Activity: | ||||||||||||||||||||
| New and replacement leases: | ||||||||||||||||||||
| New and replacement leases commenced | 1 | 6 | 3 | |||||||||||||||||
| Total square feet leased | 11,521 | 72,016 | 20,308 | |||||||||||||||||
Annualized straight-line rent per square foot (1) | $ | 9.50 | $ | 252.93 | $ | 72.72 | ||||||||||||||
Weighted-average lease term (years) (2) | 0.1 | 13.9 | 13.3 | |||||||||||||||||
| Terminated or Expired Leases: | ||||||||||||||||||||
| Number of leases terminated or expired | — | 2 | 3 | |||||||||||||||||
| Total square feet terminated or expired | — | 32,356 | 24,116 | |||||||||||||||||
Annualized straight-line rent per square foot (1) | $ | — | $ | 6.51 | $ | 52.02 | ||||||||||||||
______
(1)Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries.
(2)The weighted-average remaining lease term (years) is based on annualized straight-line rent.
Our total overall portfolio occupancy decreased as of September 30, 2026 to 74.0% from a total portfolio occupancy of 80.9% as of September 30, 2025 from the following:
•Occupancy at our property located at 400 E. 67th Street remained the same at 44.3% for the period ended September 30, 2026 and 2025.
•Occupancy at our property located at 200 Riverside Blvd. remained the same at 100% for the period ended September 30, 2026 and 2025.
•Occupancy at our property located at 196 Orchard Street remained the same at 100% for the period ended September 30, 2026 and 2025.
•Occupancy at our property located at 8713 Fifth Avenue remained the same at 100.0% for the period ended September 30, 2026 and 2025.
•Occupancy at 123 William Street decreased to 70.5% as of September 30, 2026 compared to 80.0% as of September 30, 2025. The decrease in occupancy was due to a lease expiration and a tenant occupying less space.
We continue to focus on increasing occupancy of the portfolio by seeking new and replacement tenants for leases that expired or otherwise have been terminated. We believe that certain market tenant incentives we have used and expect to continue to use, including free rent periods and tenant improvements, will support our occupancy rate and extend the average duration of our leases upon commencement of executed leases. These incentives have delayed, and may delay or reduce cash flow in the future for some period. Our ability to generate net cash from our property operations depends, in part on the amount of additional cash we can generate through new or renewal leases, which is not assured, and on our ability to access any excess cash we are able to generate from properties that are encumbered by mortgages where a cash trap event has occurred (see below for more details), which also is not assured.
Comparison of Three Months Ended September 30, 2026 and 2025
As of September 30, 2026, we owned five properties, which excludes one property, 1140 Avenue of the Americas, which is in a consensual foreclosure process, all of which were acquired prior to January 1, 2025. Our results of operations for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 primarily reflect changes due to leasing activity and occupancy.
Net income (loss) Attributable to Common Stockholders
Net loss attributable to common stockholders was $6.7 million for the quarter ended September 30, 2026, as compared to net income of $35.8 million for the quarter ended September 30, 2025. The change in net income (loss) attributable to common stockholders is discussed in detail for each line item of the condensed consolidated statements of operations in the sections that follow.
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| Quarter Ended September 30, | Increase (Decrease) | |||||||||||||||||||
| (in thousands) | 2026 | 2025 | $ | |||||||||||||||||
| Revenue from tenants | $ | 7,118 | $ | 12,269 | $ | (5,151) | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
Asset and property management fees to related parties | 1,656 | 1,929 | (273) | |||||||||||||||||
| Property operating | 3,723 | 6,640 | (2,917) | |||||||||||||||||
| Equity-based compensation | 48 | 90 | (42) | |||||||||||||||||
| General and administrative | 1,804 | 1,754 | 50 | |||||||||||||||||
| Depreciation and amortization | 2,490 | 3,086 | (596) | |||||||||||||||||
Total operating expenses | 9,721 | 13,499 | (3,778) | |||||||||||||||||
| Operating loss before gain on disposition of real estate investments | (2,603) | (1,230) | (1,373) | |||||||||||||||||
| Gain on disposition of real estate investments | 2,305 | 44,268 | (41,963) | |||||||||||||||||
| Operating income (loss) | (298) | 43,038 | (43,336) | |||||||||||||||||
| Other income (expenses): | ||||||||||||||||||||
| Interest expense | (4,124) | (4,124) | — | |||||||||||||||||
| Interest expense associated with property in receivership | (2,305) | (3,151) | 846 | |||||||||||||||||
| Other income | 3 | (8) | 11 | |||||||||||||||||
Total other expenses | (6,426) | (7,283) | 857 | |||||||||||||||||
| Net income (loss) before income taxes | (6,724) | 35,755 | (42,479) | |||||||||||||||||
| Income tax expense | — | — | — | |||||||||||||||||
| Net income (loss) | $ | (6,724) | $ | 35,755 | $ | (42,479) | ||||||||||||||
Revenue from Tenants
Revenue from tenants decreased to $7.1 million for the three months ended September 30, 2026 as compared to $12.3 million for the three months ended September 30, 2025 primarily due to the disposition of our 1140 Avenue of the Americas property during the year ended December 31, 2025, resulting in a $5.2 million decrease in revenue from tenants.
Asset and Property Management Fees to Related Parties
We incurred $1.7 million and $1.9 million in fees for asset and property management services paid to our Advisor and Property Manager for the three months ended September 30, 2026 and 2025, respectively. See Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager.
Property Operating Expenses
Property operating expenses decreased to $3.7 million for the three months ended September 30, 2026 as compared to $6.6 million for the three months ended September 30, 2025. The decrease in expenses is primarily related to the disposition of our 1140 Avenue of the Americas property during the year ended December 31, 2025.
Gain on Disposition of Real Estate Investments
During the three months ended September 30, 2026, we recorded a gain on disposition of real estate investments of $2.3 million related to our 1140 Avenue of the Americas property, which represents the Company’s right to debt extinguishment on additional default interest incurred for the three months ended September 30, 2026 once the foreclosure process on the 1140 Avenue of the Americas property is completed. During the three months ended September 30, 2025, we recorded a gain on disposition of real estate investments of $44.3 million related to our 1140 Avenue of the Americas property.
Equity-Based Compensation
Equity-based compensation remained materially consistent at $0.0 million and $0.1 million for the three months ended September 30, 2026 and 2025. These amounts are comprised of restricted share amortization expense.
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General and Administrative Expenses
General and administrative expenses remained materially consistent at $1.8 million for the three months ended September 30, 2026 and 2025.
Total reimbursement expenses for administrative and personnel services provided by the Advisor, were $1.2 million during the three months ended September 30, 2026 and $0.9 million, during the three months ended September 30, 2025.
Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits, of which, $3.0 million is related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. See Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
Depreciation and Amortization
Depreciation and amortization expense decreased to $2.5 million for the three months ended September 30, 2026 as compared to $3.1 million for the three months ended September 30, 2025. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to the disposition of our 1140 Avenue of the Americas property during the year ended December 31, 2025. For more information, please see our 2025 Annual Report.
Interest Expense
Interest expense remained materially consistent at $4.1 million for the three months ended September 30, 2026 and 2025.
Interest Expense Associated with Property in Receivership
Interest expense associated with property in receivership decreased to $2.3 million for the three months ended September 30, 2026 as compared to $3.2 million for the three months ended September 30, 2025. The decrease in interest expense associated with property in receivership is due to interest and default interest expense recorded during the three months ended September 30, 2025 while the property remained in our control. Following the appointment of the receiver, only default interest expense is recognized.
Comparison of Nine Months Ended September 30, 2026 and 2025
As of September 30, 2026, we owned five properties, which excludes one property, 1140 Avenue of the Americas, which is in a consensual foreclosure process, all of which were acquired prior to January 1, 2025. Our results of operations for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 primarily reflect changes due to leasing activity and occupancy.
Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders was $22.8 million for the nine months ended September 30, 2026, as compared to $14.5 million for the nine months ended September 30, 2025. The change in net loss attributable to common stockholders is discussed in detail for each line item of the condensed consolidated statements of operations in the sections that follow.
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| Nine Months Ended September 30, | Increase | |||||||||||||||||||
| (in thousands) | 2026 | 2025 | (Decrease) | |||||||||||||||||
| Revenue from tenants | $ | 21,781 | $ | 36,799 | $ | (15,018) | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Asset and property management fees to related parties | 4,998 | 5,479 | (481) | |||||||||||||||||
| Property operating | 12,628 | 22,764 | (10,136) | |||||||||||||||||
| Impairment of real estate investments | — | 30,558 | (30,558) | |||||||||||||||||
| Equity-based compensation | 202 | 274 | (72) | |||||||||||||||||
| General and administrative | 7,002 | 7,062 | (60) | |||||||||||||||||
| Depreciation and amortization | 7,500 | 10,222 | (2,722) | |||||||||||||||||
| Total operating expenses | 32,330 | 76,359 | (44,029) | |||||||||||||||||
| Operating loss before gain on disposition of real estate investments | (10,549) | (39,560) | 29,011 | |||||||||||||||||
| Gain on disposition of real estate investments | 6,839 | 44,268 | (37,429) | |||||||||||||||||
| Operating loss | (3,710) | 4,708 | (8,418) | |||||||||||||||||
| Other income (expenses): | — | |||||||||||||||||||
| Interest expense | (12,258) | (11,194) | (1,064) | |||||||||||||||||
| Interest expense associated with property in receivership | (6,839) | (8,013) | 1,174 | |||||||||||||||||
| Other income | 9 | 2 | 7 | |||||||||||||||||
| Total other expense | (19,088) | (19,205) | 117 | |||||||||||||||||
| Net loss before income taxes | (22,798) | (14,497) | (8,301) | |||||||||||||||||
| Income tax expense | — | — | — | |||||||||||||||||
| Net loss and net loss attributable to common stockholders | (22,798) | (14,497) | (8,301) | |||||||||||||||||
Revenue from Tenants
Revenue from tenants decreased to $21.8 million for the nine months ended September 30, 2026, from $36.8 million for the nine months ended September 30, 2025. The decrease was primarily due to the disposition of 1140 Avenue of the Americas during the year ended December 31, 2025, resulting in a $15.0 million decrease in revenue from tenants.
Asset and Property Management Fees to Related Parties
Fees for asset and property management services paid to our Advisor and Property Manager were $5.0 million and $5.5 million for the nine months ended September 30, 2026 and 2025, respectively. See Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager.
Property Operating Expenses
Property operating expenses decreased to $12.6 million for the nine months ended September 30, 2026 as compared to $22.8 million for the nine months ended September 30, 2025. The decrease in expenses is primarily related to the disposition of 1140 Avenue of the Americas during the year ended December 31, 2025.
Impairments of Real Estate Investments
During the nine months ended September 30, 2025, we recorded an impairment charge of $7.1 million on our 1140 Avenue property. This charge was recognized to reduce the property's carrying value to its estimated fair value.
During the nine months ended September 30, 2025, we recorded impairment charges totaling $13.1 million, related to our 400 E. 67th Street/200 Riverside property. These charges were recognized to reduce the carrying value of the property to its estimated fair value.
During the nine months ended September 30, 2025, we recorded impairment charges totaling $10.3 million, related to our 196 Orchard Street property. These charges were recognized to reduce the carrying value of the property to its estimated fair value.
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Gain on Disposition of Real Estate Investments
During the nine months ended September 30, 2026, we recorded a gain on disposition of real estate investments of $6.8 million related to our 1140 Avenue of the Americas property, which represents the Company’s right to debt extinguishment on additional default interest incurred for the nine months ended September 30, 2026 once the foreclosure process on the 1140 Avenue of the Americas property is completed. During the nine months ended September 30, 2025, we recorded a gain on disposition of real estate investments of $44.3 million related to our 1140 Avenue of the Americas property.
Equity-Based Compensation
Equity-based compensation remained materially consistent at $0.2 million and $0.3 million for the nine months ended September 30, 2026 and 2025, respectively. These amounts are comprised of restricted share amortization expense.
General and Administrative Expenses
General and administrative expenses decreased to $7.0 million for the nine months ended September 30, 2026 compared to $7.1 million for the nine months ended September 30, 2025.
Total reimbursement expenses for administrative and personnel services provided by the Advisor were $3.9 million during the nine months ended September 30, 2026 and were $3.5 million during the nine months ended September 30, 2025.
Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits, of which $3.0 million is related to salaries, wages, and benefits and $0.4 million is related to administrative and overhead expenses. See Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
Depreciation and Amortization
Depreciation and amortization expense decreased to $7.5 million for the nine months ended September 30, 2026, compared to $10.2 million for the nine months ended September 30, 2025. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to the disposition of our 1140 Avenue of the Americas property during the year ended December 31, 2025. For more information, please see our 2025 Annual Report.
Interest Expense
Interest expense increased to $12.3 million for the nine months ended September 30, 2026 as compared to $11.2 million for the nine months ended September 30, 2025. The increase in interest expense can primarily be attributed to additional default interest accrued related to our 400 E. 67th/200 Riverside Blvd. properties.
Interest Expense Associated with Property in Receivership
Interest expense associated with property in receivership decreased to $6.8 million for the nine months ended September 30, 2026 as compared to $8.0 million for the nine months ended September 30, 2025. The decrease in interest expense associated with property in receivership is due to interest and default interest expense recorded during the nine months ended September 30, 2025 while the property remained in our control. Following the appointment of the receiver, only default interest expense is recognized.
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Cash Flows from Operating Activities
The following table represents a reconciliation of our net cash used in operations from our net loss for the nine months ended September 30, 2026 and 2025:
| Nine Months Ended September 30, | Increase | |||||||||||||||||||
| 2026 | 2025 | (Decrease) | ||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net loss | $ | (22,798) | $ | (14,497) | $ | (8,301) | ||||||||||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||||||
| Depreciation and amortization | 7,500 | 10,222 | (2,722) | |||||||||||||||||
| Amortization of deferred financing costs | 514 | 1,010 | (496) | |||||||||||||||||
| Accretion of below- and amortization of above-market lease liabilities and assets, net | (53) | (273) | 220 | |||||||||||||||||
| Equity-based compensation | 202 | 274 | (72) | |||||||||||||||||
| Gain on disposition of real estate | — | (44,268) | 44,268 | |||||||||||||||||
| Common stock issued to the Advisor in connection with Advisor related fees (see Note 8) | 5,092 | — | 5,092 | |||||||||||||||||
| Impairments of real estate investments | — | 30,558 | (30,558) | |||||||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||||||
| Straight-line rent receivable | (459) | — | (459) | |||||||||||||||||
| Straight-line rent payable | — | (188) | 188 | |||||||||||||||||
| Prepaid expenses, other assets and deferred costs | 739 | (406) | 1,145 | |||||||||||||||||
| Accounts payable, accrued expenses and other liabilities | 9,929 | 11,818 | (1,889) | |||||||||||||||||
| Deferred revenue | 323 | 988 | (665) | |||||||||||||||||
| Net cash provided by (used in) operating activities | 989 | (4,762) | $ | 5,751 | ||||||||||||||||
The level of cash flows used in or provided by operating activities is affected by the volume of the restricted cash we are required to maintain, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses.
Cash Flows from Investing Activities
The following table represents a reconciliation of our net cash used in investing activities for the nine months ended September 30, 2026 and 2025:
| Nine Months Ended September 30, | Increase | |||||||||||||||||||
| 2026 | 2025 | (Decrease) | ||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Reduction of cash from derecognition of assets | — | (3,028) | $ | 3,028 | ||||||||||||||||
| Capital expenditures | (822) | (723) | $ | (99) | ||||||||||||||||
| Net cash used in investing activities | (822) | (3,751) | $ | 2,929 | ||||||||||||||||
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Cash Flows from Financing Activities
The following table represents a reconciliation of our net cash provided by financing activities for the nine months ended September 30, 2026 and 2025.
| Nine Months Ended September 30, | Increase | |||||||||||||||||||
| 2026 | 2025 | (Decrease) | ||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Proceeds from notes payable to related parties | 5,840 | — | 5,840 | |||||||||||||||||
| Repayments of notes payable to related parties | (2,570) | — | (2,570) | |||||||||||||||||
| Net cash provided by financing activities | 3,270 | — | 3,270 | |||||||||||||||||
Liquidity and Capital Resources
Our principal demands for cash are to fund operating and administrative expenses, capital expenditures, tenant improvement and leasing commission costs related to our properties, our debt service obligations and, subject to capital availability, acquisitions. We did not make any new acquisitions or investments in the quarter ended September 30, 2026.
Cash, Cash Equivalents and Restricted Cash
As of September 30, 2026, we had cash and cash equivalents of $5.3 million as compared to $1.3 million for the year ended December 31, 2025.
We had restricted cash of $6.2 million as of September 30, 2026 as compared to $6.8 million as of December 31, 2025. Our restricted cash balance includes cash sweeps for 400 E 67th Street for $3.1 million and $3.7 million as of September 30, 2026 and December 31, 2025, respectively. The remaining balance of restricted cash is comprised of various escrow accounts and other cash accounts with restricted uses. We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures. As a result, some of the property operating expenses and capital expenditures that will be paid with restricted cash may reside in accounts payable and accrued expenses on our condensed consolidated balance sheet as of September 30, 2026.
Segregated Cash Accounts - Loan Covenant Breaches
The New York City real estate market continues to be challenged as a result of the impacts of the COVID-19 pandemic and the related changing nature of in-office working arrangements, which previously caused, and may in the future cause certain of our tenants to be unable to make rent payments to us timely, or at all, and could continue to have, an adverse effect on the amount of cash we receive from our operations and therefore our ability to fund operating expenses and other capital requirements. Beginning in the third and fourth quarters of 2020, the operating results at some of our properties, including our 1140 Avenue of the Americas and 8713 Fifth Avenue properties, were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages, where excess operating cash flow from the property, if any, after debt service was held in restricted cash as additional collateral for the loan, for those properties to be triggered. Thus, we were not able to use excess cash flow, if any, from the properties while the cash trap events were active (see below), to fund operating expenses at our other properties and other capital requirements during the quarter ended September 30, 2026.
As of September 30, 2026, we are operating under three cash traps at 400 E. 67th Street/200 Riverside Blvd. and 8713 Fifth Avenue, which together, represent 19% of the rentable square feet in our portfolio as of September 30, 2026. However, our 8713 Fifth Avenue property has not generated enough excess cash after debt service and as of September 30, 2026 there is no related cash maintained in a segregated and restricted cash account for that property. Additionally, as of September 30, 2026, we are operating under one cash sweep at our 400 E. 67th Street/200 Riverside Blvd. properties. Under these lease sweep periods, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral. This swept cash is classified as restricted cash on our condensed consolidated balance sheet. As of September 30, 2026 we had $3.1 million retained by the lender in a restricted cash account for our 400 E. 67th Street/200 Riverside Blvd. properties. See also Note 5 — Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
Financings
We define our leverage as the ratio between our net debt, which is calculated as our gross debt of $251.0 million less cash and cash equivalents of $5.3 million divided by our gross asset value, which is calculated as the carrying value of our total assets of $448.4 million plus our accumulated depreciation and amortization of $86.6 million less our contract asset of $115.5 million. As of September 30, 2026, our net debt was $245.7 million, our gross asset value was $419.5 million and our leverage was 58.6%.
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As of September 30, 2026 our gross borrowings totaled $251.0 million, which bore interest at a weighted-average annual rate of 4.56%, excluding default interest, and had a weighted-average maturity of 1.1 years. All of our properties are encumbered under mortgage notes payable, and are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable, unless the existing indebtedness associated with the property is satisfied.
We do not currently have a commitment for a corporate-level revolving credit facility or any other corporate-level indebtedness, and there can be no assurance we would be able to obtain corporate-level financing on favorable terms, or at all.
Mortgage Notes Payable
We had four mortgage loans secured by our five properties with an aggregate balance of $251.0 million as of September 30, 2026 with a weighted-average effective interest rate of 4.56%, excluding default interest. All our mortgage loans bear interest at a fixed rate. This excludes our 1140 Avenue of the Americas property, which is in a consensual foreclosure process.
Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation
1140 Avenue of the Americas
We have breached both a debt service coverage provision and a reserve fund provision under our non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 24 quarters ended September 30, 2026. The principal amount of the loan was $99.0 million and reflected as debt associated with property in receivership on the condensed consolidated balance sheet as of September 30, 2026 (refer to Note 6 - Property Disposition to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q).
We were informed by the lender on February 19, 2025 that we were in default under the loan agreement for failure to make certain scheduled interest payments. We made the payments in question in full on the same day the default notice was received by us as a cure for the February event of default. On April 7, 2025, the lender notified us that the principal balance due under such loan agreement had been accelerated and all amounts under such loan agreement were due and payable as a result of a default described in the notice, together with interest at the default rate set forth in the loan document, which is a rate per annum equal to the lesser of (i) the maximum nonusurious interest rate or (ii) five percent (5%) above the interest rate of 4.109% per annum. Such amounts include, but are not limited to, the $99.0 million principal amount of the mortgage note.
On June 27, 2025, the trustee appointed to act on behalf of the lenders filed a complaint with the New York County Court, naming the OP and our subsidiary borrower under such loan agreement as defendants, requesting the New York County Court initiate foreclosure proceedings on the mortgage on the property and that the OP and such borrower pay the lenders the amount of the debt, inclusive of certain accrued fees and expenses, remaining unsatisfied after the sale of the property. On July 21, 2025, the trustee filed a motion with the New York County Court to appoint a receiver with respect to the property. On August 6, 2025, we filed our answer to such complaint, which admitted in part, denied in part the material allegations and stated that we have insufficient knowledge and information upon which to form a belief as to whether we have, as of yet, unstated affirmative defenses available. Notwithstanding the OP being named as defendant in the complaint, the complaint does not allege events giving rise to a recourse obligation by the OP under the guaranty agreement related to the loan agreement, and we do not believe that any of the allegations against the OP are sufficient to trigger any such recourse obligation of the OP under the guaranty agreement.
In September 2025, we agreed with the lender to pursue a consensual foreclosure. On September 11, 2025, the New York County Court appointed a receiver and we ceased managing the property. As a result of the consensual foreclosure and the appointment of the receiver, we removed our related assets and liabilities from the condensed consolidated balance sheet as of December 31, 2025 and recognized a gain of $47.9 million which is reflected in the consolidated statements of operations for the year ended December 31, 2025. As of September 30, 2026, the foreclosure has not concluded and therefore we continue to record accrued default interest. As a result, during the three and nine months ended September 30, 2026, we recognized an additional gain of $2.3 million and $6.8 million, respectively, which is reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2026.
We also recorded a contract asset of $108.6 million and the related debt associated with property under receivership and accrued interest associated with property under receivership of $99.0 million and $9.6 million, respectively, are included in the consolidated balance sheet as of December 31, 2025. This contract asset represents our right to debt extinguishment once the foreclosure process on the 1140 Avenue of the Americas property is completed. As a result of the additional gain recognized during the nine months ended September 30, 2026, the total contract asset recorded on the balance sheet as of September 30, 2026 is $115.5 million and the total accrued interest associated with property under receivership recorded on the balance sheet as of September 30, 2026 is $16.5 million.
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In addition, the 1140 Avenue of the Americas property includes a ground lease agreement, for more information on the ground lease please see Note 9 - Commitments and Contingencies to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Upon disposition of the 1140 Avenue of the Americas property, we removed the related ROU asset and lease liability from the condensed consolidated balance sheet.
8713 Fifth Avenue
We have breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue in each of the last 24 quarters ended September 30, 2026. The principal amount for the loan was $10.0 million as of September 30, 2026. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period that has been ongoing. The excess cash flow sweep period will continue until the covenant breaches are cured in accordance with the terms of the loan agreement. This property has not generated any excess cash since the breach occurred, and thus no cash has ever been trapped related to this property.
Additionally, in the event that (i) the debt service coverage ratio covenant remains in breach at or below the current level for two consecutive calendar quarters and (ii) the lender reasonably determines that such breach is due to the property being imprudently managed by the current manager, the lender has the right, but not the obligation, to require that we replace the current manager with a third party manager chosen by us. As of September 30, 2026, we have been in breach for one quarter, although, the lender has not notified us of a determination that a breach of the debt service coverage ratio is due to imprudent management.
400 E. 67th Street/200 Riverside Blvd.
We entered a lease sweep period under the non-recourse mortgage secured by 400 E. 67th Street/200 Riverside Blvd. in the year ended December 31, 2024, resulting from a near-maturity lease with a major tenant at the property which expired in the third quarter of 2024. The principal amount for the loan was $50.0 million as of September 30, 2026. Under the loan agreement, a lease sweep period is triggered upon (i) the date that is twelve months prior to the end of the term of the major lease, (ii) the date required by the major tenant to give notice of its exercise of a renewal option, (iii) any major tenant lease being surrendered or terminated prior to the expiration date, (iv) the major tenant discontinuing its operations, if the major tenant’s long-term debt is rated lower than investment grade, (v) any material default under the major tenant’s lease, and (vi) any major tenant insolvency proceeding.
Under the lease sweep period, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral. As of September 30, 2026 and December 31, 2025 we had $3.1 million and $3.7 million, respectively, in cash swept that is retained by the lender and recorded within restricted cash on our condensed consolidated balance sheet.
On November 19, 2024, the lender sent a notice to us alleging that we were in default under the loan agreement governing the loan secured by the non-recourse mortgage on the property for events that occurred in the third and fourth quarters of 2023, specifically our failure to establish a cash management account for excess cash sweeps over monthly debt service requirements. The lender had been remitting excess cash on their own accord until the period of cash sweep was put into effect in 2024 as described above. In that notice of default, the lender asserted we owe an estimated $1.0 million in excess cash to be deposited into the loan reserve account. We responded to such notice of default on February 20, 2025 rejecting the assertions made by the lender, which we believed were without merit as a result of the lender's failure to implement a cash management account and our inability to take such action unilaterally due to the mechanics for receipt of lease payments provided for by the loan agreement. Beginning in March 2025, the lender began charging default interest to us, currently totaling $6.5 million. On June 10, 2025, the lender sent a second notice to us alleging defaults under such loan agreement as a result of (i) our failure to pay the outstanding amount due thereunder beginning in April 2025 and (ii) our failure to cooperate with the lender to comply with the aforementioned cash management procedures. The second default notice reaffirmed that, as a result of the aforementioned defaults, interest was accruing at the default rate under the loan agreement and made a demand that all unpaid amounts due under the loan agreement be paid. As of the date of this Quarterly Report on Form 10-Q, we have not responded to the second default notice. Further, we incurred a liability as of June 30, 2025 in relation to the June 10, 2025 default notice.
On November 6, 2025, we received a notice from the special servicer on behalf of the lender identifying certain additional events of default, specifically incurrence of indebtedness that does not constitute permitted indebtedness and incurrence of liens that are not in favor of the lender or permitted encumbrances, subject to certain exceptions, as a result of our alleged failure to make certain additional payments and certain liens filed on the property as a result thereof. In such notice, the lender notified us that, due to the alleged events of default under the loan agreement, the loan had been accelerated, and all amounts under the loan agreement were due and payable, together with interest at the default rate set forth in the loan agreement, which is a rate per annum equal to the lesser of (i) the maximum rate permitted by applicable law, or (ii) four percent (4%) above the interest rate of 4.516% per annum, compounded monthly. Such amounts include, but are not limited to, the $50.0 million principal amount of the promissory notes evidencing the loan agreement. We are evaluating our options with respect to the property and there can be no assurance as to the resolution of these matters with the lender.
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On January 21, 2026, the trustee appointed to act on behalf of the lenders filed a complaint with the New York County Court, naming the OP and our subsidiary borrowers under such loan agreement as defendants, requesting the court enter a judgment of foreclosure on the property and that the OP and such borrower pay the lenders the amount of the debt, inclusive of certain accrued fees and expenses, remaining unsatisfied after the sale of the property.
On March 16, 2026, we filed our answer to such complaint, which admitted in part and denied in part the material allegations and asserted certain affirmative defenses. While the OP is named as a defendant in the complaint and the complaint alleges facts that under certain circumstances could give rise to limited recourse obligation by the OP under the guaranty agreement related to the loan agreement, we do not believe that any of the allegations against the OP are sufficient to trigger any such recourse obligation of the OP under the guaranty agreement.
On June 3, 2026, we entered into a settlement agreement that provides for the resolution of the foreclosure action, including consent to the appointment of a receiver and the entry of a judgment of foreclosure and sale, subject to the terms of the agreement.
The lender filed the stipulation for appointment of a receiver on June 8, 2026, but it was opposed by the Condominium Board of the property (the “Condo Board”) because it asserts that, pursuant to the Condominium’s declaration and by-laws, its right to collect rents in satisfaction of allegedly unpaid common charges from our unit is prior and superior to the lender's right under the mortgage. The Condo Board has a separate action pending in the New York County Court asserting claims against the lender, us, and the tenant with respect to the collection and retention of rents from the unit, which the Condo Board asserts should be used to satisfy such common charges.
On October 1, 2026, the New York County Court entered an order granting the lender’s request for a receiver over the Condo Board’s objection and directed the receiver to pay prospective common charges to the Condo Board. On October 21, 2026, the court-appointed receiver became qualified to take charge of the property, and we ceased managing the property. As a result, we expect to deconsolidate both properties and recognize a gain on deconsolidation impacting our financial statements for the year ending December 31, 2026. The impacts of this event will be reflected in our fourth quarter and year-end 2026 financial statements.
Other Debt Covenants
We were in compliance with the remaining covenants under our other mortgage notes payable as of September 30, 2026 and continue to monitor compliance with those provisions. If we experience additional lease terminations, due to tenant bankruptcies or otherwise, or tenants placed on a cash basis continue to not pay rent, it is possible that certain of the covenants on other loans may be breached and we may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, our other mortgages also contain cash management provisions that are not considered events of default, and as such, acceleration of principal would only occur upon an event of default.
The loan agreements for 123 William Street, 8713 Fifth Avenue and 196 Orchard do not contain cross-default provisions such that the default matters related to 1140 Avenue of the Americas or 400 E. 67th Street/200 Riverside Blvd., and the acceleration of the outstanding obligation under the loan agreement related to the 1140 Avenue of the Americas or the 400 E. 67th/200 Riverside Blvd. properties, is not expected to have an impact on those properties under such loan agreements.
Capital Expenditures
For the nine months ended September 30, 2026, we funded an aggregate of $0.8 million of capital expenditures primarily related to provisions for tenant improvements at certain of our properties.
We may invest in additional capital expenditures to further enhance the value of our properties. Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances. The amount we expect to invest in capital expenditures during the full year 2026, including amounts we expect to fund under new or replacement leases, will likely be similar to the amount invested in 2025.
We funded our capital expenditures during the nine months ended September 30, 2026 with (i) cash on hand, which included proceeds from previous financings, and (ii) cash retained from the Advisor either from (a) deferring payment of related-party management fees to the Advisor as needed or (b) providing a bridge loan when necessary.
Acquisitions and Dispositions
We had no acquisitions during the nine months ended September 30, 2026 or 2025. During the nine months ended September 30, 2025, we lost our economic interest and control therefore disposed of our 1140 Avenue of the Americas property. Please see Note 6 — Property Dispositions.
Non-GAAP Financial Measures
This section discusses the non-GAAP financial measures we use to evaluate our performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) as well as adjusted EBITDA.
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EBITDA and adjusted EBITDA are both non-GAAP metrics and should not be construed to be more relevant or accurate than other metrics calculated and presented in accordance with GAAP, including net income (loss), in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than non-GAAP metrics.
We consider EBITDA and adjusted EBITDA useful indicators of our performance. Because these metrics’ calculations exclude such factors as depreciation and amortization of real estate assets, interest expense, impairment charges, equity-based compensation, gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), these metrics’ presentations facilitate comparisons of operating performance between periods and between other companies that use these measures.
As a result, we believe that the use of these non-GAAP metrics together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, these non-GAAP metrics are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends and capital expenditures. Investors are cautioned that these non-GAAP metrics should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
We define adjusted EBITDA as net income (loss) excluding (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization expense, (iv) impairment charges, (v) interest income and other income or expense, (vi) gains or losses on debt extinguishment, (vii) equity-based compensation expense, (viii) acquisition and transaction costs, (ix) gain or loss on asset sales and (x) expenses paid with issuances of our common stock in lieu of cash.
The below table presents a reconciliation of our EBITDA and our adjusted EBITDA from net income (loss) for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| (in thousands) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | ||||||||||||||||||||||
| Net income (loss) and net income (loss) attributable to common stockholders (in accordance with GAAP) | $ | (6,724) | $ | 35,755 | $ | (22,798) | $ | (14,497) | ||||||||||||||||||
| Interest expense | 4,124 | 4,124 | 12,258 | 11,194 | ||||||||||||||||||||||
| Interest expense associated with property in receivership | 2,305 | 3,151 | 6,839 | 8,013 | ||||||||||||||||||||||
| Tax expense (benefit) | — | — | — | — | ||||||||||||||||||||||
| Depreciation and amortization | 2,490 | 3,086 | 7,500 | 10,222 | ||||||||||||||||||||||
| EBITDA | 2,195 | 46,116 | 3,799 | 14,932 | ||||||||||||||||||||||
| Impairment of real estate investments | — | — | — | 30,558 | ||||||||||||||||||||||
| Gain on disposition of real estate investments | (2,305) | (44,268) | (6,839) | (44,268) | ||||||||||||||||||||||
| Equity-based compensation | 48 | 90 | 202 | 274 | ||||||||||||||||||||||
| Other income | (3) | 8 | (9) | (2) | ||||||||||||||||||||||
| Management fees paid in common stock to the Advisor in lieu of cash | 1,026 | — | 5,092 | — | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 961 | $ | 1,946 | $ | 2,245 | $ | 1,494 | ||||||||||||||||||
Inflation
We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates. As of September 30, 2026, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.7%. To help mitigate the adverse impact of inflation, approximately 76% of our leases with our tenants contain rent escalation provisions which increase the cash rent that is due under these leases over time by an average cumulative increase of 2.2% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures. As of September 30, 2026, based on straight-line rent, approximately 76% are fixed rate, scheduled escalation increases recorded on a straight-line basis, and 24% do not contain any escalation provisions.
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In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation. Currently, the impact of inflation has had an immaterial impact on operating costs. However, to the extent such costs exceed the tenants base year, certain but not all of our leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in costs and operating expenses resulting from inflation. As the costs of general goods and services continue to rise, we may be adversely impacted by increases in general and administrative costs due to overall inflation.
Related-Party Transactions and Agreements
Please see Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There has been no material change in our exposure to market risk during the nine months ended September 30, 2026. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our 2025 Annual Report.
Item 4. Controls and Procedures.
In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30, 2026, the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, and as a result of the material weaknesses described below, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2026. We identified material weaknesses as of December 31, 2025 in our internal control over financial reporting, which were not fully remediated as of September 30, 2026. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We concluded that our internal control over financial reporting was not effective as of December 31, 2025, and the following material weaknesses were not fully remediated as of September 30, 2026: (i) a lack of segregation of duties over journal entry preparation, posting, and approval, and the absence of a standardized, documented independent review and approval process of journal entries following the end of each quarterly period to allow for a detailed review of accounting transactions that would identify errors in a timely manner, (ii) internal control over financial reporting where evidence of the sufficiency of management’s review controls could not be determined including the objectives, review procedures, precision/thresholds, timing, and evidence of performance, which were not sufficiently defined or retained, and (iii) internal control over the safeguarding, segregation, and financial reporting of tenant security deposits.
As of the date of this Quarterly Report on Form 10-Q, management is in the process of evaluating and implementing remediation measures to address the identified material weaknesses. However, the material weaknesses will not be considered remediated until these controls have been designed, implemented, and operating effectively for a sufficient period of time.
No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended September 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
45
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
Other than the consensual foreclosure process with respect to our 1140 Avenue of the Americas property and the foreclosure action and related settlement agreement with respect to our 400 E. 67th Street/200 Riverside Blvd. properties, each as described in Note 5 — Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, as of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to any material pending legal proceedings.
46
Item 1A. Risk Factors.
There have been no material changes to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our 2025 Annual Report, and we direct your attention to those risk factors.
47
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchase of Equity Securities.
Pursuant to the terms of the Advisory Agreement and the property management agreement, as amended, the Advisor may elect to receive shares of the Company’s Class A common stock in lieu of cash as payment for the monthly services it provides. During the three months ended September 30, 2026, the Company issued 160,766 shares of Class A common stock to the Advisor in lieu of cash for asset management and property management services rendered. These shares were issued to the Advisor pursuant to an exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Trading Plans
During the quarter ended September 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted terminated
Item 6. Exhibits.
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 (and are numbered in accordance with Item 601 of Regulation S-K).
| Exhibit No. | Description | |||||||
| Composite Articles of Amendment and Restatement | ||||||||
| Second Amended and Restated Bylaws of American Strategic Investment Co. | ||||||||
31.1 * | Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
31.2 * | Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
32 + | Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS * | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH * | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL * | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF * | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB * | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE * | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 * | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
_______
* Filed herewith
+ Furnished herewith
(1)Filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on November 12, 2024.
(2)Filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on August 11, 2023.
48
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AMERICAN STRATEGIC INVESTMENT CO. | ||||||||
| By: | /s/ Nicholas S. Schorsch, Jr. | |||||||
| Nicholas S. Schorsch, Jr. | ||||||||
| Chief Executive Officer (Principal Executive Officer) | ||||||||
| By: | /s/ Michael LeSanto | |||||||
| Michael LeSanto | ||||||||
| Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||||||||
Dated: November 13, 2026
49
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Nicholas S. Schorsch, Jr., certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of American Strategic Investment Co.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated this 13th day of November, 2026 | /s/ Nicholas S. Schorsch, Jr. | |||||||
Nicholas S. Schorsch, Jr. | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Michael LeSanto, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of American Strategic Investment Co.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated this 13th day of November, 2026 | /s/ Michael LeSanto | |||||||
Michael LeSanto | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||||
Exhibit 32
SECTION 1350 CERTIFICATIONS
This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
The undersigned, who are the Chief Executive Officer and Chief Financial Officer of American Strategic Investment Co. (the “Company”), each hereby certify as follows:
The Quarterly Report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated this 13th day of November, 2026
/s/ Nicholas S. Schorsch, Jr. | |||||
Nicholas S. Schorsch, Jr. | |||||
| Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
/s/ Michael LeSanto | |||||
Michael LeSanto | |||||
Chief Financial Officer | |||||
| (Principal Financial Officer and Principal Accounting Officer) | |||||