American Strategic Investment Co. (ASIC) reported significant financial challenges in its 10-Q filing for the quarter and nine months ended September 30, 2024. The company experienced a notable decline in total real estate investments, which decreased to $489.9 million from $725.1 million at the end of 2023. Net real estate investments also fell to $402.0 million from $580.2 million, contributing to a total asset reduction to $567.9 million from $694.2 million. Total liabilities increased slightly to $475.5 million, while total equity plummeted to $92.4 million from $224.8 million.

Revenue from tenants for the third quarter of 2024 was $15.4 million, down from $16.0 million in the same period of 2023. For the nine-month period, tenant revenue decreased to $46.7 million from $47.3 million. The company reported total operating expenses of $44.7 million for the third quarter, a substantial increase from $20.7 million in the prior year, leading to an operating loss of $29.2 million compared to a loss of $4.7 million in Q3 2023. For the nine months ended September 30, 2024, the operating loss reached $118.8 million, up from $18.0 million in 2023. The net loss attributable to common stockholders for the third quarter was $34.5 million, compared to $9.4 million in the same quarter of the previous year, and for the nine months, the loss was $133.9 million, significantly higher than $32.0 million in 2023.

A key factor in the financial downturn was the impairment of real estate investments, which totaled $112.5 million for the nine months ended September 30, 2024, compared to just $0.5 million in the same period of 2023. The company recorded impairment charges of $25.8 million related to the 400 E. 67th Street property and $86.6 million for the 9 Times Square property, which is currently under a purchase and sale agreement for $63.5 million, expected to close by January 2025.

Strategically, ASIC terminated its election to be taxed as a Real Estate Investment Trust (REIT) effective January 1, 2023, allowing for a broader asset scope, including hotels and co-working spaces. The company also executed a 1-for-8 reverse stock split in January 2023 and changed its name from New York City REIT, Inc. to American Strategic Investment Co. in January 2023. Despite these changes, occupancy levels across the portfolio remained below pre-pandemic levels, with an overall occupancy rate of 85.8% as of September 30, 2024, slightly improved from 85.1% a year earlier.

The company continues to face challenges with mortgage debt covenants, having breached several provisions for multiple properties, including the 1140 Avenue of the Americas and 8713 Fifth Avenue. The financial outlook remains uncertain as ASIC navigates these operational and financial hurdles.