American Strategic Investment Co. Q1 2026 Earnings Call - Revenue Halves After Foreclosure, Lease Staggering Improves
Summary
American Strategic Investment Co.'s first quarter 2026 results were defined by a sharp revenue contraction following the consensual foreclosure of 1140 Avenue of the Americas. Reported revenue fell to $7.3 million from $12.3 million in the year-ago period, dragging adjusted EBITDA into negative territory. The company is actively pruning its balance sheet, with management emphasizing tenant retention, cost efficiency, and the strategic disposal of non-core assets to position the remaining portfolio for future growth.
Despite the top-line decline, the underlying portfolio quality remains a focal point. Leases extending beyond 2030 have increased to 60%, and 69% of the top 10 tenants are rated investment grade or implied investment grade. Management is prioritizing the management of the remaining $388 million New York City real estate portfolio, with ongoing efforts to fill vacancies and explore refinancing options for upcoming debt maturities. The quarter reflects a transitional period where short-term financial pain is being accepted to unlock long-term value through disciplined asset management.
Key Takeaways
- Revenue dropped 41% to $7.3 million from $12.3 million in Q1 2025, primarily due to the consensual foreclosure of 1140 Avenue of the Americas in late 2025.
- GAAP net loss attributable to common stockholders widened slightly to $7.8 million from $8.6 million in the year-ago quarter, though the prior year included an impairment from the sale of 9 Times Square.
- Adjusted EBITDA deteriorated to negative $1.1 million from negative $0.8 million in Q1 2025, reflecting the loss of revenue from the foreclosed property.
- Cash net operating income declined to $2.8 million from $4.2 million in the prior year quarter, underscoring the immediate cash flow impact of the asset disposition.
- The company successfully extended its lease maturity profile, with 60% of leases now extending beyond 2030, up from 57% in the previous quarter.
- Near-term lease expirations represent only 6% of annualized straight-line rent, providing a buffer against immediate occupancy risk.
- 69% of the top 10 tenants are classified as investment grade or implied investment grade, highlighting the high quality of the remaining tenant base.
- The remaining $388 million New York City real estate portfolio consists of five properties, mostly in Manhattan, focusing on resilient sectors and transit-adjacent locations.
- Management is actively reviewing strategies for 123 William Street and 196 Orchard to maximize long-term portfolio value through selective asset sales or other approaches.
- The company is prioritizing the reduction of recurring expenses, tenant retention, and property improvements while simultaneously pruning exposure to non-core assets.
- A $2.3 million non-cash gain was recorded in Q1 2026, partially offsetting the impact of a $5 million decrease in tenant revenue related to the foreclosure.
- Management remains focused on filling vacant units, exploring refinancing options for upcoming debt maturities, and closely monitoring operating costs to improve operational adaptability.
Full Transcript
Conference Operator: Good morning, welcome to the American Strategic Investment Co.’s first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Curtis Parker, Senior Vice President. Please go ahead.
Curtis Parker, Senior Vice President, American Strategic Investment Co.: Thank you. Good morning, everyone, and thank you for joining us for our first quarter 2026 earnings call. This event is also being webcast in the investor relations section of our website. Joining me today on the call to discuss the quarter’s results are Nicholas Schorsch Jr., American Strategic Investment Co.’s Chief Executive Officer, and Michael LeSanto, the Chief Financial Officer. The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. Please review the forward-looking and cautionary statements section at the end of the first quarter 2026 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements.
We refer all of you to our SEC filings, including the Form 10-K filed for the year ended December 31, 2025, filed on April 15, 2026, 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 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. Please note that all first quarter 2026 financial information is unaudited. Also, during today’s call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company’s financial and operating 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 that we use throughout today’s call. I’ll now turn the call over to Nicholas Schorsch Jr., Chief Executive Officer. Please go ahead, Nick.
Nicholas Schorsch Jr., Chief Executive Officer, American Strategic Investment Co.: Thanks, Curtis. Good morning, and thank you all for joining us today. Our first quarter was focused on continuous proactive management of the company, with particular attention to the reduction of reoccurring expenses and management of our balance sheet. We remain committed to operating and unlocking value at our current assets with a focus on tenant retention, property improvements and cost efficiency while simultaneously pruning our exposure to non-core assets. Near-term lease expirations represented only 6% of annualized straight-line rent, and 60% of our leases now extend beyond 2030, up from 57% last quarter. We believe that this extended term, coupled with a high-quality tenant base featuring our top 10 tenants who are 69% investment grade or implied investment grade, provides significant portfolio stability.
Our $388 million New York City real estate portfolio encompasses roughly 743,000 sq ft and consists of five properties, most of which are situated in Manhattan. The office and retail spaces we manage attract a robust group of tenants, including several major investment-grade tenants. With an emphasis on resilient sectors and properties located near convenient transit options, we are confident that our portfolio is strategically placed to support both increased occupancy and strong tenant retention. Beyond prioritizing the improvement of our real estate portfolio, our efforts to identify additional profitable investment opportunities is ongoing. The dispositions we have completed over the last year have, in our opinion, positioned us to be better prepared to seize future investment prospects that support our portfolio’s sustained development. Our aim is to create a portfolio that will enhance shareholder returns.
With that, I’ll hand it over to Michael LeSanto to go over the first quarter results. Michael?
Michael LeSanto, Chief Financial Officer, American Strategic Investment Co.: Thank you, Nick. First quarter 2026 revenue was $7.3 million, compared to $12.3 million in the first quarter of 2025, principally due to the disposition of 1140 Avenue of the Americas through a consensual foreclosure with the lenders for that property in late 2025. The company’s GAAP net loss attributable to common stockholders was $7.8 million in the first quarter of 2026, impacted by a $2.3 million non-cash gain and a $5 million decrease in tenant revenue related to the foreclosure at 1140 Avenue of the Americas. This is compared to a net loss of $8.6 million in the first quarter of 2025, which was impacted by an impairment recorded in the quarter related to the sale of 9 Times Square.
For the first quarter of 2026, adjusted EBITDA was negative $1.1 million, compared to negative $0.8 million in the first quarter of 2025. Cash net operating income was $2.8 million, compared to $4.2 million in the first quarter of 2025. As always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release and quarterly supplemental information on our website. Nick, I’ll turn it back to you for some closing remarks.
Nicholas Schorsch Jr., Chief Executive Officer, American Strategic Investment Co.: Thank you, Michael. Our ongoing efforts are aimed at improving operational adaptability, including selective asset sales. We are currently reviewing various approaches for our properties located at 123 William Street and 196 Orchard to maximize long-term portfolio value. The team remains committed to filling vacant units, exploring alternatives for refinancing upcoming debt maturities, renewing agreements with present tenants, and closely monitoring costs. We appreciate your participation today and invite you to attend our annual stockholders meeting online on June 2 at 2:00 P.M. Eastern.
Conference Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
