American Strategic Investment Q1 2025 Earnings Call Transcript

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May 9, 2025

There are 4 speakers on the call.

Operator

Good morning, and welcome to the American Strategic Investment Company's First Quarter Earnings Call. At this time, all participants are in a listen only I would now like to turn the conference over to Curtis Parker, Senior Vice President. Please go ahead.

Speaker 1

Thank you. Good morning, everyone, and thank you for joining us for our first quarter twenty twenty five earnings call. This event is also being webcast at the Investor Relations section of our website. Joining me today on the call to discuss the quarter's results are Nick Shorz, Jr, American Strategic Investment Company's Chief Executive Officer and Michael Lisanto, the Chief Financial Officer. The following information contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties.

Speaker 1

Please review the forward looking and cautionary statements section at the end of the first quarter twenty twenty five earnings release for various factors that could cause actual results to differ materially from forward looking statements made during our call today. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward looking statements. We refer all of you to our SEC filings, including the Form 10 ks filed for the year ended 12/31/2024, filed on 03/19/2025, and all subsequent SEC filings for a more detailed discussion of the risk factors that could cause these differences. Any forward looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, the company disclaims any intent or obligation to update or revise these forward looking statements, except as required by law.

Speaker 1

Also, during today's call, we will discuss non GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release, which is posted on our website at www.americanstrategicinvestment.com. Please also refer to our earnings release for more detailed information about what we consider to be implied investment grade tenants, a term we will use throughout today's call. We also want to invite all shareholders to join us for our annual meeting of shareholders, which will be held virtually on Thursday, 05/29/2025 at two p.

Speaker 1

M. Eastern Time. I will now turn the call over to Nick Shorz, Jr, Chief Executive Officer. Please go ahead, Nick.

Speaker 2

Thanks, Curtis. Good morning and thank you all for joining us. I'm pleased to be hosting my first earnings call as CEO of ASIC. In the first quarter, we remained focused on leasing available space in our portfolio and extending leases with existing tenants. Compared to the fourth quarter, we delivered 120 basis points of occupancy growth to 82%.

Speaker 2

As of May 1, we have an active leasing pipeline across several properties. Importantly, we are engaged with both new and existing tenants and we expect to close on additional leasing and renewals in the second quarter. As part of our strategy to unlock value and diversify our holdings while further strengthening our balance sheet, We are actively marketing 123 William Street and 196 Orchard for sale. We believe that these properties are well positioned to generate significant returns upon closure. We plan to use the net proceeds from any sale to retire debt and diversify our portfolio into higher yielding assets, which we believe has the potential to increase long term value.

Speaker 2

We also remain committed to operating and creating value at our current assets. Our portfolio's weighted average remaining lease term was five point four years at quarter end with 51% of our leases extending beyond 02/1930 based on annualized straight line rent. We believe that this term coupled with a high quality tenant base featuring top 10 tenants who are 77% investment grade or implied investment grade provides significant portfolio stability. Our $488,000,000 1 million square foot New York City real estate portfolio is located primarily in Manhattan. With six office and retail properties, we benefit from a strong tenant base that includes large investment grade firms.

Speaker 2

By focusing on resilient industries near transit oriented locations, we believe the portfolio is well positioned. We've established a strong base for maximizing shareholder value by focusing on tenant retention, property improvements and cost efficiency. Our strategy to divest select Manhattan assets was designed to reduce leverage and allow us to pursue more profitable ventures, which we anticipate will further enhance our ability to deliver shareholder value. With that, I'll turn it over to Michael Lefanto to go over the first quarter results. Michael?

Speaker 3

Thank you, Nick. First quarter twenty twenty five revenue was $12,300,000 compared to $15,500,000 in the first quarter of twenty twenty four, principally due to the sale of Nine Times Square in the fourth quarter of twenty twenty four. The company's GAAP net loss attributable to common stockholders was $8,600,000 in the first quarter of twenty twenty five compared to a net loss of $7,600,000 in the first quarter of twenty twenty four. For the first quarter of twenty twenty five, adjusted EBITDA was negative $800,000 compared to $2,900,000 in the first quarter of twenty twenty four. Cash net operating income was $4,200,000 compared to $7,000,000 in the first quarter of twenty twenty four.

Speaker 3

As always, a reconciliation of GAAP net income to non GAAP measures can be found in our earnings release and quarterly supplemental on our website. At quarter end, our balance sheet included net leverage of approximately 58%, a weighted average interest rate of four point four percent and two point three years of weighted average debt maturity. I'll now turn the call back to Nick for some closing remarks.

Speaker 2

Thank you Michael. Our continued divestiture of certain Manhattan assets is a strategic initiative anticipated to generate significant cash and decrease our leverage. This capital will be vital for expanding into new higher return opportunities. We believe this approach is key to enhancing shareholder value and will keep you informed of our advancements. Thank you all for joining us today and please join us for our virtual annual meeting of shareholders on May 29.

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Key Takeaways

  • In Q1 2025 the company drove 120 bps occupancy growth to 82% with an active leasing pipeline expected to close additional deals in Q2.
  • ASIC is marketing 123 William Street and 196 Orchard for sale to generate proceeds for debt repayment and diversify into higher-yielding assets.
  • The portfolio comprises six Manhattan office/retail properties valued at $488 million (1 million sq ft) with a 5.4-year weighted average lease term and 77% rent from investment-grade or implied investment-grade tenants.
  • Q1 financials included revenue of $12.3 million (down from $15.5 million YoY), a GAAP net loss of $8.6 million, adjusted EBITDA of –$0.8 million, and cash NOI of $4.2 million.
  • At quarter end, net leverage was ~58% with a weighted average interest rate of 4.4% and 2.3 years of average debt maturity, supporting plans to lower leverage through asset sales.
AI Generated. May Contain Errors.
Earnings Conference Call
American Strategic Investment Q1 2025
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