Trinity Place Holdings Inc.: Form 10-Q for the period ended Sep 30, 2023

Filed with the SEC on Nov 14, 2023 and accepted by EDGAR at Nov 14, 2023, 17:07 ET.

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Management's discussion and analysis

As filed, 87,359 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.

Overview

Trinity Place Holdings Inc., which we refer to as “Trinity,” “we,” “our,” or “us,” is a real estate holding, investment, development and asset management company. Our largest asset is a property located at 77 Greenwich Street in Lower Manhattan (“77 Greenwich”), which is substantially complete as a mixed-use project consisting of a 90-unit residential condominium tower, retail space and a New York City elementary school. We also own a 105-unit, 12-story multi-family property located at 237 11th Street in Brooklyn, New York (“237 11th”), as well as a property occupied by a retail tenant in Paramus, New Jersey. See “Properties” below for a more detailed description of our properties owned as of September 30, 2023.

We also control a variety of intellectual property assets focused on the consumer sector, a legacy of our predecessor, Syms Corp. (“Syms”), including FilenesBasement.com, our rights to the Stanley Blacker® brand, as well as the intellectual property associated with the Running of the Brides® event and An Educated Consumer is Our Best Customer® slogan. In addition, we also had approximately $305.4 million of federal net operating loss carryforwards (“NOLs”) at September 30, 2023, as well as various state and local NOLs, which can be used to reduce our future taxable income and capital gains.

Liquidity and Going Concern; Management’s Plans; Recent Developments

The COVID-19 pandemic and related matters, including government actions, delayed the completion date of 77 Greenwich, resulting in our needing to fund condominium related carry costs, inclusive of operating costs and real estate taxes, through a delayed and longer sellout period. In addition, shifts in residential consumer sentiment and changes to the broader and local economies, have had a significant adverse impact on our business. More recently, world events, the economic downturn, regional bank failures, an unprecedented rapid increase in interest rates, tighter lending standards and a corresponding decrease in lending, decrease in stock market valuations, higher levels of inflation, and current financial market challenges have also materially adversely impacted our business. While we believe many of these trends will reverse or stabilize over time, the New York City economy and residential real estate markets have been negatively affected by these trends. Given our focus on New York City residential real estate, our business has been materially adversely impacted. As of September 30, 2023, we had total cash and restricted cash of $9.0 million, of which approximately $809,000 was cash and cash equivalents and approximately $8.2 million was restricted cash. The Company’s cash and cash equivalents will not be sufficient to fund the Company’s operations, debt service, amortization and maturities and corporate expenses beyond the next few months, unless we are able to both extend or refinance or otherwise resolve our maturing debt and also raise additional capital or enter into a strategic transaction, creating substantial doubt about our ability to continue as a going concern. As of October 31, 2023, our cash and cash equivalents totaled approximately $583,000.

The Company continues to explore a range of strategic and financing alternatives to maximize stockholder value, and to engage with parties that have expressed interest in the Company’s attributes and assets and may see the Company as a potential vehicle for growth, with potential opportunities to recapitalize the Company at a lower cost of capital. The Company has engaged Houlihan Lokey and Ackman-Ziff to act as advisors (the “Advisors”) in connection with our strategic review process and to assist us in identifying and evaluating potential alternatives, including among others securing an equity and/or debt financing of the Company, refinancing of existing debt, and/or a sale or merger or reverse merger of the Company. In that regard, in August 2023, the Company entered into term sheets with a large unaffiliated asset manager with investment expertise in, among other things, real estate in the public and private markets (the “Potential Strategic Party”), and an affiliate of its corporate credit facility lender and mezzanine lender, for purposes of finalizing due diligence and negotiating definitive documentation for investments in the Company and a modification of the Company’s debt, respectively. The Potential Strategic Party recently indicated to the Company its intent to not proceed with the transaction on the terms provided for under the term sheet, although discussions continue. As of November 14, 2023, no strategic transaction has been entered into. Company is in active discussions with an affiliate of our CCF lender with respect to a potential transaction.

The Company has entered into several amendments, extensions and forbearances with its lenders during 2023. In August 2023, the Company entered into forbearance agreements with the lenders under its mezzanine loan and corporate credit facility pursuant to which each of the lenders agreed to forbear from exercising their respective rights and remedies with respect to certain existing defaults under those agreements until December 31, 2023, unless earlier terminated under the terms and conditions of the forbearance agreements, including if the Potential Strategic Party states in writing that it is no longer pursuing a transaction with the Company and is not replaced by a third party pursuing a substantially similar transaction within thirty days. In September 2023, the Company also entered into a forbearance agreement with the 77 Mortgage Lender pursuant to which the lender agreed to forbear from exercising its rights and remedies with respect to certain defaults under the 77 Greenwich mortgage loan until November 15, 2023, unless earlier terminated in accordance with its terms. A condition to continued forbearance in this agreement was not met, but the Company is in active discussions with its 77 Mortgage Lender with respect to additional forbearance and a restructuring and extension of the 77 Mortgage Loan, in connection with the potential strategic transaction. There is no certainty that terms will be agreed upon or, if agreed, the timing of such restructuring, if any. See Note 6 – Loans Payable and Secured Line of Credit to our consolidated financial statements for more information regarding the forbearance agreements.

We are considering all possible alternatives to conserve cash, including any capital that may be raised in the future, if any, which may include, in addition to continuing to reduce general and administrative expenses as much as possible, de-listing our common stock and “going dark” and ceasing to file SEC reports, taking into account contractual, regulatory and other considerations. We are also evaluating additional alternatives in restructuring our business and our capital structure, including but not limited to, a transaction with an affiliate of our CCF lender to holistically resolve the liabilities under the CCF and address other material liabilities, the restructuring of the 77 Greenwich mortgage loan, filing for bankruptcy protection, liquidating, dissolving and/or seeking another in-court or out-of-court restructuring of our liabilities. Given the Company’s very limited operating cash position, continued challenging credit markets, significantly higher costs of capital, extreme volatility and a slowdown in the residential condominium sales market, there can be no assurance that we will be able to extend or renew all or any of the forbearance agreements, or enter into a strategic transaction or otherwise repay the corporate credit facility or mezzanine loan or mortgage loan before the forbearance agreements terminate, that our cash position will extend through the date on which forbearance terminates or a strategic transaction can be consummated, or that we will be able to secure any particular amount of funds. Whether or not we are able to enter into a transaction, we may not have sufficient resources to pay our advisors and service providers amounts due or claimed. There are also no assurances that we will be able to enter into any future extensions, amendments or waivers with these or other lenders, raise additional capital, refinance indebtedness or enter into other financing arrangements or engage in asset sales or strategic partnerships sufficient to fund our cash needs, on terms satisfactory to us, if at all. See Part II. Item 1A. Risk Factors of this Quarterly Report on Form 10-Q and Part I. Item 1A. Risk Factors to our 2022 Annual Report on Form 10-K for further information.

Construction at 77 Greenwich has taken longer than projected due to the impact of the pandemic. Sales of residential condominiums at 77 Greenwich have been impeded due to broader economic conditions and outlook, including significantly higher interest rates and the ability to obtain financing due to tighter lending standards. We closed on the sale of 10 residential condominium units since December 31, 2022, for a total of 38 units as of September 30, 2023, of which three were sold in the third quarter of 2023.

The units that remain available to be sold are larger, higher floor units. The substantial majority of the construction is completed with exterior punch-list work and the 12th floor terrace expected to be completed within the next few months. Following the failure of Silicon Valley Bank in March 2023 and subsequent additional bank failures and related stresses, the pace of signing and closing contracts on residential condominium units has slowed markedly, with six contracts being closed since that time period. Although we anticipate the pace will normalize to historical trends, predictions are inherently uncertain and there can be no assurances that it will do so in the near term or at all.

Properties

Below is certain information regarding our real estate properties as of September 30, 2023:

Property Location Owned Locations	Type of Property	Building Size (estimated rentable square feet)	Number of Units	Leased at September 30, 2023
77 Greenwich, New York, New York (1)	Residential condominium units for sale	—	—	N/A

Paramus, New Jersey (2)	Retail	77,000	—	94.8%

237 11th Street, Brooklyn, New York (3)	Multi-family	80,000	105	97.1%

Total		157,000	105

(1) 77 Greenwich. We are nearing completion of an over 300,000 gross square foot mixed-use building that corresponds to the approximate total of 233,000 zoning square feet. The property consists of 90 luxury residential condominium apartments, 7,500 square feet of retail space, almost all of which is street level, a 476-seat elementary school serving New York City District 2, including the adaptive reuse of the landmarked Robert and Anne Dickey House. As of March 3, 2023, we had received our temporary certificates of occupancy (“TCOs”) for 100% of the condominium units, lobby, Cloud Club (lounge, terrace, game room, dining room, kitchen and kids play room), mechanical rooms, and portions of the cellar (including the bike and storage rooms.) We have closed on the sale of 38 residential condominium units through September 30, 2023, with 52 remaining units to sell as of September 30, 2023.

We entered into an agreement with the New York City School Construction Authority (the “SCA”), whereby we constructed a school sold to the SCA as part of our condominium development at 77 Greenwich. Pursuant to the agreement, the SCA agreed to pay us $41.5 million for the purchase of their condominium unit and reimburse us for the costs associated with constructing the school, including a construction supervision fee of approximately $5.0 million. Payments for construction are being made by the SCA to the general contractor in installments as construction on their condominium unit progresses. Payments to us for the land and construction supervision fee commenced in January 2018 and continued through October 2019 for the land and will continue through completion of the SCA buildout for the construction supervision fee. An aggregate of $46.4 million had been paid to us by the SCA as of September 30, 2023 with approximately $179,000 remaining to be paid. We have also received an aggregate of $56.0 million in reimbursable construction costs from the SCA through September 30, 2023. In April 2020, the SCA closed on the purchase of the school condominium unit from us, at which point title transferred to the SCA. The SCA has completed the buildout of the interior space, which is a public elementary school with approximately 476 seats. The school received its final TCO and opened to students in September 2022.

Due to the Company's core business of investing in, developing and operating real estate assets, there is an inherent risk that the development and sales of residential condominiums may be subject to unknown potential changes in internal and external financial and economic conditions, such as inflation and rising interest rates, and general market conditions, which could impact the Company's business and potential buyers of the residential condominiums for sale. The Company believes it is possible to incur real estate impairment charges in the future in the event these conditions deteriorate.

(2) Paramus Property. The Paramus property consists of a one-story and partial two-story, 73,000 square foot freestanding building and an outparcel building of approximately 4,000 square feet, for approximately 77,000 total square feet of rentable space. The primary building is comprised of approximately 47,000 square feet of ground floor space, and two separate mezzanine levels of approximately 21,000 and 5,000 square feet. The 73,000 square foot building is leased to Restoration Hardware Holdings, Inc. (NYSE: RH) pursuant to a license agreement that began on June 1, 2016, is terminable upon three months’ notice, and currently is scheduled to end on March 31, 2024. The outparcel building was leased to a long-term tenant whose lease expired on March 31, 2023 and elected not to renew its lease. We entered into a short-term license agreement for the outparcel building with a tenant whose lease began on October 1, 2023 and ends March 30, 2024. The land area of the Paramus property consists of approximately 292,000 square feet, or approximately 6.7 acres.

The Paramus property had been under contract for sale pursuant to a purchase and sale agreement, which was subject to site plan approval. The agreement was terminated by the buyer in January 2023. The property was under contract for sale subsequently, which agreement was also terminated by the buyer under that contract. We are currently exploring options with respect to the Paramus property, including development, redevelopment or sale, among others.

(3) 237 11th Street. In 2018, we acquired a 105-unit, 12-story multi-family apartment building encompassing approximately 93,000 gross square feet (approximately 80,000 rentable square feet) located at 237 11th Street, Park Slope, Brooklyn, New York for a purchase price of $81.2 million, excluding transaction costs of approximately $0.7 million. The property also includes 6,264 square feet of retail space, all of which is leased to Starbucks Inc. (NQGS:SBUX), an oral surgeon and a health and wellness tenant. Located on the border of the Park Slope and Gowanus neighborhoods of Brooklyn, the property is located one block from the 4th Avenue/9th Street subway station. The 237 11th property offers an array of modern amenities that surpass what is available in the neighborhood’s “brownstone” housing stock. The property also benefits from a 15-year Section 421-a real estate tax exemption. Although all apartments are market rate units, they are subject to New York City’s rent stabilization law during the remaining term of the Section 421-a real estate tax exemption. Due to the approval of the Gowanus up-zoning, this property benefitted to the extent of approximately 30,000 square feet of air rights.

Due to water damage in apartment units and other property at 237 11th resulting from construction defects which we believe were concealed by the prior ownership team and its contractor, we submitted a notice of claim to our insurance carrier for property damage and business interruption (lost revenue) in September 2018. The insurance carrier subsequently disclaimed coverage for the losses and we filed a complaint against the carrier alleging that it breached the insurance policy by denying coverage. We also filed legal claims against the seller, its parent company, and the general contractor to recover damages arising from defective construction of the building, including defects that resulted in water damage as well as other defects. In addition, the general contractor impleaded into that litigation several subcontractors who performed work on the property. Management expects to recover some portion of the cost incurred to repair the property through the litigations and/or settlement negotiations with the seller, its parent company, the general contractor, the subcontractors, and the insurance carrier, although the amount of damages that may be recoverable in litigation and/or potential settlement negotiations are uncertain at this time, as is the timing of receipt of any such payments. We continue to pursue all legal remedies. We incurred significant cash outflows for costs associated with these repairs and remediation, which commenced in September 2019 and were completed as of December 31, 2021.

Lease Expirations

As of September 30, 2023, we have one retail lease at our Paramus property with 73,000 square feet of leased space with annualized rent of $516,000 per year which lease expires in March 2024. The short-term license for the outparcel building began October 1, 2023 and expires in March 2024. We also have a retail lease at the 237 11th property with 2,006 square feet of leased space with annualized rent of $130,000 per year that expires in 2027, a second retail lease at the 237 11th property with 1,074 square feet of leased space with average annualized rent of $94,506 per year that expires in 2036 and a third retail lease at the 237 11th property with 2,208 square feet of leased space with average annualized rent of $153,366 per year that expires in 2032. We also have a retail lease at 77 Greenwich with 1,061 square feet of leased space with an average annualized rent of $88,085 per year that expires in 2032. All our other leases are residential leases most of which expire within twelve or twenty-four months of the commencement date.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that could affect the reported amounts in our consolidated financial statements. Actual results could differ from these estimates. A summary of our significant accounting policies that management believes are critical to the preparation of the consolidated financial statements are included in this report (see Note 2 - Summary of Significant Accounting Policies - Basis of Presentation to our consolidated financial statements for further information). Certain of the accounting policies used in the preparation of these consolidated financial statements are particularly important for an understanding of the financial position and results of operations presented in the historical consolidated financial statements included in this report and require the application of significant judgment by management and, as a result, are subject to a degree of uncertainty. We believe there have been no material changes to the items that we disclosed as our critical accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2022 Annual Report on Form 10-K (the “2022 Annual Report”) for the year ended December 31, 2022.

The following discussion and analysis is intended to assist readers in understanding our financial condition and results of operations during the three and nine months ended September 30, 2023 and 2022 and should be read in conjunction with the consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and our 2022 Annual Report.

Results of Operations for the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

Rental revenues in total decreased by approximately $17,000 to $1.5 million for three months ended September 30, 2023 from $1.5 million for the three months ended September 30, 2022. This consisted of an increase in rent revenues of approximately $2,000 to $1.4 million for the three months ended September 30, 2023 from $1.4 million for the three months ended September 30, 2022, offset by a decrease in tenant reimbursements of approximately $19,000 to $46,000 for the three months ended September 30, 2023 from $65,000 for the three months ended September 30, 2022. The slight decrease in total rental revenues and its related components was mainly due to lower common area maintenance fees due to the vacancy at the Paramus location during the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

Other income increased by approximately $9,000 to $29,000 for the three months ended September 30, 2023 from $20,000 for the three months ended September 30, 2022. This increase is due to a slight increase in the SCA’s construction supervision fee.

Sales of residential condominium units at 77 Greenwich decreased by approximately $8.3 million to $9.2 million for the three months ended September 30, 2023 from $17.5 million for the three months ended September 30, 2022. We closed on three and six residential condominium units during the three months ended September 30, 2023 and 2022, respectively. Units that we closed during 2022 were generally lower priced, smaller units on the building’s lower floors, many of which entered into contract during the height of the pandemic.

Property operating expenses decreased by approximately $434,000 to $786,000 for the three months ended September 30, 2023 from $1.2 million for the three months ended September 30, 2022. The decrease was principally due to lower marketing and operating costs at 77 Greenwich due to 13 fewer residential condominium units having closed. This was partially offset by fewer capitalized operating costs associated with 77 Greenwich during the three months ended September 30, 2023 compared to the three months ended September 30, 2022. Property operating expenses consisted primarily of expenses incurred for utilities, payroll, COVID-19 related supplies and general operating expenses as well as repairs and maintenance and leasing commission at 237 11th, general operating expenses at 77 Greenwich, including marketing costs, and to a lesser extent expenses related to the Paramus, New Jersey property.

Real estate tax expense increased by approximately $182,000 to $668,000 for the three months ended September 30, 2023 from $486,000 for the three months ended September 30, 2022. This increase was mainly due to a higher assessed values for the unsold residential condominium units as well as less capitalized real estate tax expenses for those units at 77 Greenwich for the three months ended September 30, 2023 as compare to the three months ended September 30, 2022.

General and administrative expenses increased by approximately $80,000 to $1.5 million for the three months ended September 30, 2023 from $1.4 million for the three months ended September 30, 2022. For the three months ended September 30, 2023, approximately $79,000 related to stock-based compensation, $609,000 related to payroll and payroll related expenses, $464,000 related to other corporate expenses, including board fees, corporate office rent and insurance and $359,000 related to legal, accounting and other professional fees. For the three months ended September 30, 2022, approximately $118,000 related to stock-based compensation, $628,000 related to payroll and payroll related expenses, $441,000 related to other corporate expenses, including board fees, corporate office rent and insurance and $244,000 related to legal, accounting and other professional fees.

Pension related costs remained relatively flat at $144,000 for the three months ended September 30, 2023 compared to $158,000 for the three months ended September 30, 2022. These costs represent professional fees and other periodic pension costs incurred in connection with the legacy Syms Pension Plan (see Note 8 – Pension Plan to our consolidated financial statements for further information).

Cost of sales – residential condominium units decreased by approximately $6.9 million to $9.8 million for the three months ended September 30, 2023 from $16.7 million for the three months ended September 30, 2022. We closed on three and six residential condominium units during the three months ended September 30, 2023 and 2022, respectively. Cost of sales consists of construction and capitalized operating costs that are allocated to the respective condominium units being sold, as well as closing costs of the residential condominium units. Units that we closed during 2022 were generally lower priced, smaller units on the building’s lower floors, many of which entered into contract during the height of the pandemic.

Depreciation and amortization remained consistent at $1.0 million for the three months ended September 30, 2023 and 2022, respectively. For the three months ended September 30, 2023, depreciation and amortization expense consisted of depreciation for the Paramus, New Jersey property of approximately $284,000, depreciation for 237 11th of approximately $416,000, the amortization of lease commissions and acquired in-place leases of approximately $192,000 for 237 11th, and amortization of warrants for $114,000. For the three months ended September 30, 2022, depreciation and amortization expense consisted of depreciation for the Paramus, New Jersey property of approximately $287,000, depreciation for 237 11th of approximately $412,000, the amortization of lease commissions and acquired in-place leases of approximately $193,000 for 237 11th, and amortization of warrants of approximately $114,000.

Equity in net income from unconsolidated joint ventures was $14,000 for the three months ended September 30, 2022. Equity in net income from unconsolidated joint ventures represented our 10% share in 250 North 10th, which was sold in February 2023, and our 50% share in The Berkley, which was sold in April 2022. For the three months ended September 30, 2022, our share of the net income is primarily comprised of operating income before depreciation of $171,000 offset by depreciation and amortization of $114,000 and interest expense of $71,000.

Unrealized gain on warrants decreased by approximately $50,000 to $14,000 for the three months ended September 30, 2023 from $64,000 for the three months ended September 30, 2022. This represents the change in the fair market valuation of the warrants due mainly to the change in our stock price on the measurement date.

Interest expense, net increased by approximately $4.4 million to $7.9 million for the three months ended September 30, 2023 from $3.5 million for the three months ended September 30, 2022. For the three months ended September 30, 2023, there was approximately $7.9 million of gross interest expense incurred and no amounts were capitalized into residential condominium units for sale. For the three months ended September 30, 2022, there was approximately $4.9 million of gross interest expense incurred, $1.4 million of which was capitalized into residential condominium units for sale. The increase in gross interest expense was mainly due to higher overall interest rates on our loans after September 30, 2022.

Interest expense - amortization of deferred finance costs decreased approximately $5,000 to $758,000 for the three months ended September 30, 2023 from $763,000 for the three months ended September 30, 2022.

We recorded a no tax expense for the three months ended September 30, 2023 compared to $82,000 for the three months ended September 30, 2022.

Net loss attributable to common stockholders increased by approximately $5.5 million to $11.9 million for the three months ended September 30, 2023 from $6.4 million for the three months ended September 30, 2022. This is a result of the changes discussed above, principally due to the increased net interest expense.

Results of Operations for the Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Rental revenues in total increased by approximately $428,000 to $4.4 million for nine months ended September 30, 2023 from $4.0 million for the nine months ended September 30, 2022. This consisted of an increase in rent revenues of approximately $426,000 to $4.2 million for the nine months ended September 30, 2023 from $3.8 million for the nine months ended September 30, 2022, as well as an increase in tenant reimbursements of approximately $2,000 to $157,000 for the nine months ended September 30, 2023 from $155,000 for the nine months ended September 30, 2022. The increase in total rental revenues and its related components was due to higher occupancy, higher base rents and fewer rent concessions at 237 11th during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 due to completion of remediation of the construction related defects in December 2021.

Other income increased by approximately $127,000 to $173,000 for the nine months ended September 30, 2023 from $46,000 for the nine months ended September 30, 2022. This increase is due to a contractual payment received as a result of the cancelation of the purchase and sale agreement for the Paramus, New Jersey property in January 2023, as well as a slight increase in the SCA’s construction supervision fee.

Sales of residential condominium units at 77 Greenwich decreased by approximately $1.2 million to $27.5 million for the nine months ended September 30, 2023 from $28.7 million for the nine months ended September 30, 2022. We closed on 10 and 11 residential condominium units during the nine months ended September 30, 2023 and 2022, respectively. Units that we closed during 2022 were generally lower priced, smaller units on the building’s lower floors, many of which entered into contract during the height of the pandemic.

Property operating expenses increased by approximately $74,000 to $2.9 million for the nine months ended September 30, 2023 from $2.8 million for the nine months ended September 30, 2022. The increase was principally due to increased legal expenses associated with the ongoing legal claims against the seller of the property at 237 11th, as well as less capitalized operating costs associated with 77 Greenwich during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. Property operating expenses consisted primarily of expenses incurred for utilities, payroll, COVID-19 related supplies and general operating expenses as well as repairs and maintenance and leasing commission at 237 11th, general operating expenses at 77 Greenwich, including marketing costs, and to a lesser extent expenses related to the Paramus, New Jersey property.

Real estate tax expense increased by approximately $290,000 to $1.6 million for the nine months ended September 30, 2023 from $1.3 million for the nine months ended September 30, 2022. This increase was mainly due to less capitalized real estate tax expenses for 77 Greenwich for the nine months ended September 30, 2023 as compare to the nine months ended September 30, 2022.

General and administrative expenses increased by approximately $354,000 to $4.8 million for the nine months ended September 30, 2023 from $4.4 million for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, approximately $286,000 related to stock-based compensation, $1.9 million related to payroll and payroll related expenses, $1.3 million related to other corporate expenses, including board fees, corporate office rent and insurance and $1.3 million related to legal, accounting and other professional fees. For the nine months ended September 30, 2022, approximately $343,000 related to stock-based compensation, $2.1 million related to payroll and payroll related expenses, $1.1 million related to other corporate expenses, including board fees, corporate office rent and insurance and $924,000 related to legal, accounting and other professional fees.

Pension related costs decreased by approximately $42,000 to $431,000 for the nine months ended September 30, 2023 compared to $473,000 for the nine months ended September 30, 2022. These costs represent professional fees and other periodic pension costs incurred in connection with the legacy Syms Pension Plan (see Note 8 – Pension Plan to our consolidated financial statements for further information).

Cost of sales – residential condominium units increased by approximately $19,000 to $27.3 million for the nine months ended September 30, 2023 from $27.2 million for the nine months ended September 30, 2022. We closed on 10 and 11 residential condominium units during the nine months ended September 30, 2023 and 2022, respectively. Cost of sales consists of construction and capitalized operating costs that are allocated to the respective condominium units being sold, as well as closing costs of the residential condominium units. Units that we closed during 2022 were generally lower priced, smaller units on the building’s lower floors, many of which entered into contract during the height of the pandemic.

Depreciation and amortization remained consistent at $3.0 million for the nine months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, 2023, depreciation and amortization expense consisted of depreciation for the Paramus, New Jersey property of approximately $845,000, depreciation for 237 11th of approximately $1.2 million, the amortization of lease commissions and acquired in-place leases of approximately $577,000 for 237 11th, and amortization of warrants for $342,000. For the nine months ended September 30, 2022, depreciation and amortization expense consisted of depreciation for the Paramus, New Jersey property of approximately $850,000, depreciation for 237 11th of approximately $1.2 million, the amortization of lease commissions and acquired in-place leases of approximately $580,000 for 237 11th, and amortization of warrants of approximately $342,000.

Equity in net loss from unconsolidated joint ventures increased by approximately $806,000 to $4,000 for the nine months ended September 30, 2023 from equity in net income of $802,000 for the nine months ended September 30, 2022. Equity in net loss from unconsolidated joint ventures represented our 10% share in 250 North 10th, which was sold in February 2023, and our 50% share in The Berkley, which was sold in April 2022. For the nine months ended September 30, 2023, our share of the net loss is primarily comprised of operating income before depreciation of $121,000 offset by depreciation and amortization of $77,000 and interest expense of $48,000 for 250 North 10th. For the nine months ended September 30, 2022, our share of the net income is primarily comprised of operating income before depreciation of $779,000 offset by depreciation and amortization of $658,000, interest expense of $359,000, gain from the change in the fair market value of the interest rate swap of $37,000 and a gain on the settlement of the interest rate swap of $1.0 million upon the sale of The Berkley in April 2022.

Equity in net gain on sale of unconsolidated joint venture property represents the February 2023 sale of our interest in the joint venture that owned 250 North 10th to our joint venture partner resulting in net proceeds of approximately $1.2 million after repayment of our Partner Loan, where we recognized an approximate $3.1 million gain, and in April 2022 the sale of The Berkley property with our joint venture partner for a sale price of $70.8 million, where our share of the gain was approximately $4.5 million.

Unrealized gain on warrants decreased by approximately $925,000 to $70,000 for the nine months ended September 30, 2023 from $995,000 for the nine months ended September 30, 2022. This represents the change in the fair market valuation of the warrants due mainly to the change in our stock price on the measurement date.

Interest expense, net increased by approximately $11.8 million to $21.4 million for the nine months ended September 30, 2023 from $9.6 million for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, there was approximately $22.1 million of gross interest expense incurred, $689,000 of which was capitalized into residential condominium units for sale. For the nine months ended September 30, 2022, there was approximately $13.8 million of gross interest expense incurred, $4.2 million of which was capitalized into residential condominium units for sale. The increase in gross interest expense was mainly due to higher overall interest rates on our loans after September 30, 2022.

Interest expense - amortization of deferred finance costs increased approximately $1.0 million to $2.6 million for the nine months ended September 30, 2023 from $1.6 million for the nine months ended September 30, 2022. The increase was principally due to less capitalized amortization of finance costs for our loans as part of residential condominium units for sale.

We recorded a $175,000 tax expense for the nine months ended September 30, 2023 compared to $272,000 for the nine months ended September 30, 2022.

Net loss attributable to common stockholders increased by approximately $17.3 million to $29.0 million for the nine months ended September 30, 2023 from $11.7 million for the nine months ended September 30, 2022. This is a result of the changes discussed above, principally due to the increased net interest expense, amortization of deferred finance costs and increased operating expenses at 77 Greenwich, as well as a smaller gain on the sale of our joint venture property in 2023 compared to 2022.

Liquidity and Capital Resources

The COVID-19 pandemic and related matters, including government actions, shifts in residential consumer sentiment and changes to the broader and local economies, have had a significant adverse impact on our business. More recently, world events, the economic downturn, increased interest rates, high inflation, tighter lending standards and current financial market challenges have also adversely impacted our business. While we believe many of these trends will reverse or stabilize over time, the New York City economy and residential real estate markets have been negatively affected by these trends. Given our focus on New York City residential real estate, our business has been materially adversely impacted, and may continue to be, as described elsewhere in this Quarterly Report on Form 10-Q.

We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital and repayments of outstanding indebtedness and other costs will include some or all of the following:

(1) proceeds from new debt financings, increases to existing debt financings and/or other forms of secured or unsecured debt financing;

(2) proceeds from equity or equity-linked offerings, including rights offerings or convertible debt or equity or equity-linked securities issued in connection with debt financings;

(3) cash on hand;

(4) cash flow from operations; and

(5) net proceeds from divestitures of properties or interest in properties.

Cash flow from operations is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates achieved on our leases, the collectability of rent, operating escalations and recoveries from our tenants and the level of operating and other costs which will be affected by inflation and rising interest rates, among other factors.

As of September 30, 2023, we had total cash and restricted cash of $9.0 million, of which approximately $809,000 was cash and cash equivalents and approximately $8.2 million was restricted cash. Restricted cash represents amounts required to be restricted under our loan agreements, letter of credit (see Note 6 – Loans Payable and Secured Line of Credit to our consolidated financial statements for further information), deposits on residential condominium sales at 77 Greenwich, condominium sales proceeds that have not yet been transferred to the lender, and tenant related security deposits.

Cash Position

The Company’s cash and cash equivalents will not be sufficient to fund the Company’s operations, debt service, amortization and maturities and corporate expenses beyond the next few months, unless we are able to both extend or refinance or otherwise resolve our maturing debt and also raise additional capital or enter into a strategic transaction, creating substantial doubt about our ability to continue as a going concern. As of October 31, 2023, our cash and cash equivalents totaled approximately $583,000.

The Company continues to explore a range of strategic and financing alternatives to maximize stockholder value, and to engage with parties that have expressed interest in the Company’s attributes and assets and may see the Company as a potential vehicle for growth, with potential opportunities to recapitalize the Company at a lower cost of capital. The Company has engaged Advisors in connection with our strategic review process and to assist us in identifying and evaluating potential alternatives, including among others securing an equity and/or debt financing of the Company, refinancing of existing debt, and/or a sale or merger or reverse merger of the Company. In that regard, in August 2023, the Company entered into term sheets with a large unaffiliated asset manager with investment expertise in, among other things, real estate in the public and private markets (the “Potential Strategic Party”), and an affiliate of its corporate credit facility lender and mezzanine lender, for purposes of finalizing due diligence and negotiating definitive documentation for investments in the Company and a modification of the Company’s debt, respectively. The Potential Strategic Party recently indicated to the Company its intent to not proceed with the transaction on the terms provided for under the term sheet, although discussions continue. As of November 14, 2023, no strategic transaction has been entered into. The Company is in active discussions with an affiliate of our corporate credit facility lender with respect to a potential transaction.

Mortgage Lender pursuant to which the lender agreed to forbear from exercising its rights and remedies with respect to certain defaults under the 77 Greenwich mortgage loan until November 15, 2023, unless earlier terminated in accordance with its terms. A condition to continued forbearance in this agreement was not met, but the Company is in active discussions with its 77 Mortgage Lender with respect to additional forbearance and a restructuring and extension of the 77 Mortgage Loan, in connection with the potential strategic transaction. There is no certainty that terms will be agreed upon or, if agreed, the timing of such restructuring, if any. See Note 6 – Loans Payable and Secured Line of Credit to our consolidated financial statements for more information regarding the forbearance agreements.

Corporate Credit Facility

In December 2019, we entered into a credit agreement (the “Corporate Credit Facility” or “CCF”) with an affiliate of a global institutional investment management firm as initial lender (the “CCF Lender”) and Trimont Real Estate Advisors, LLC, as administrative agent (the “Corporate Facility Administrative Agent”), pursuant to which the CCF Lender agreed to extend us credit in multiple draws aggregating $70.0 million, subject to increase by $25.0 million upon satisfaction of certain conditions and the consent of the CCF Lender. The CCF matures on December 19, 2024, subject to extensions until December 19, 2025 and June 19, 2026, respectively, under certain circumstances. The CCF provided for the proceeds of the Corporate Credit Facility to be used for investments in certain multi-family apartment buildings in the greater New York City area and certain non-residential real estate investments approved by the CCF Lender in its reasonable discretion, as well as in connection with certain property recapitalizations and in specified amounts for general corporate purposes and working capital. The CCF bears interest at a rate per annum equal to the sum of (i) 5.25% and (ii) a scheduled interest rate (the “Cash Pay Interest Rate”) based on six-month periods from the initial closing date, which Cash Pay Interest Rate, from the Closing Date until the six-month anniversary of the initial closing date initially equaled 4.0% and increases by 125 basis points in each succeeding six-month period, subject to increase during the extension periods. A $2.45 million commitment fee was payable 50% on the initial draw and 50% as amounts under the CCF are drawn, with any remaining balance due on the last date of the draw period, and a 1.0% exit fee is payable in respect of CCF repayments. As of September 30, 2023, we had paid $1.85 million of the commitment fee. With the reduction of the committed amount under the CCF as described below, no further commitment fee is due. The CCF may be prepaid at any time subject to a prepayment premium on the portion of the CCF being repaid.

In connection with the December 2020 transaction noted under “Mezzanine Loan” below, the Company entered into an amendment to the Corporate Credit Facility (the “Corporate Facility Amendment”) pursuant to which, among other things, (i) the CCF Lender and the Corporate Facility Administrative Agent permitted the Company to enter into the Mezzanine Loan Agreement (as defined below) and related documents, (ii) the commitment made by the CCF Lender under the Corporate Credit Facility was reduced by the amount of the Mezzanine Loan (as defined below) from $70.0 million to $62.5 million, subject to increase by $25.0 million upon satisfaction of certain conditions and the consent of the CCF Lender, and (iii) the multiple on invested capital, or MOIC, amount that would be due and payable by the Company upon the final repayment of the loan pursuant to the CCF if no event of default exists and is continuing under the CCF at any time prior to December 22, 2022, was amended to combine the CCF and the Mezzanine Loan for purposes of calculating the MOIC, to the extent not previously paid, if any. See Note 6 – Loans Payable and Secured Line of Credit to our consolidated financial statements for further discussion.

In connection with the closing of the 77 Mortgage Loan and amendment to the Mezzanine Loan described below, we entered into amendments to our CCF in October 2021 and November 2021, pursuant to which, among other things, the parties agreed that (a) no additional funds will be drawn under the CCF, (b) the minimum liquidity requirement was made consistent with the 77 Mortgage Loan Agreement until May 1, 2023, (c) the Company will repay the outstanding principal balance of the CCF in an amount no less than $7.0 million on or prior to May 1, 2023 and (d) the MOIC provisions were revised to provide that (i) the MOIC amount due upon final repayment of the CCF was amended to be consistent with the Mezzanine Loan such that if no event of default exists and is continuing under the CCF at any time prior to June 22, 2023, the amount due will be combined with the Mezzanine Loan, to the extent not previously paid, if any, and (ii) the amount of the CCF used to calculate the MOIC was reduced to $35.75 million. We entered into an amendment in November 2022, which eliminated the minimum liquidity requirement.

In April 2023, the Company amended the CCF to provide that cash interest payments and the $7.0 million repayment due May 1, 2023 would be deferred until August 31, 2023 (the “Restricted Period”). If the Company has an executed commitment for a financing, sale transaction or other strategic transaction which results in the repayment in full of the obligations under the CCF (a “Strategic Transaction”), the Restricted Period will be extended automatically for 30 days and may be further extended for an additional 30 days upon the approval of the CCF Lender, not to be unreasonably withheld. The CCF Amendment also provides, among other things, that (i) the Company shall either enter into a Strategic Transaction that results in the repayment of the CCF or repay the CCF by $5.0 million from equity proceeds on or prior to the end of the Restricted Period; (ii) the Company shall provide certain additional periodic financial reporting; and (iii) the ability of the Company to make certain previously permitted investments and other payments is suspended until the end of the Restricted Period. In June 2023, we further amended the CCF, which amendment provided, among other things, that (i) the CCF would be increased by up to $5,000,000, with $3,000,000 to be used for general corporate purposes and certain other items if applicable, and up to $2,000,000 to be used in connection with the extension of the loans in respect of 237 11th, including the purchase of an interest rate cap, (ii) the interest rate of the CCF was increased by 0.20%, and (iii) certain covenants and other terms of the CCF were revised, including that a refinancing of 237 11th (excluding the extension of the existing loans) and/or the property in Paramus, New Jersey requires the prior written consent of the CCF Lender; the Company was required to meet with the CCF Lender to review the results of the Company’s strategic process, endeavor in good faith to establish mutually acceptable next steps, and provide copies of written term sheets received from participants in the strategic process, including at least one that addresses repayment or purchase of the CCF; and the removal of the ability of the Company to incur certain types of previously permitted debt and make previously permitted investments and other restricted payments.

In August 2023, the Company entered into a forbearance agreement (the “CCF Forbearance Agreement”), pursuant to which the CCF Lender agreed to forbear from exercising its rights and remedies during the Forbearance Period (defined below) with respect to (i) any failure by the Company, as borrower, to make payments under the CCF including, without limitation, the amortization payment in the amount of $7,000,000 on or prior to August 31, 2023 and any cash interest payments and (ii) any failure by the Company, as borrower, to consummate a Strategic Transaction on or prior to August 31, 2023 (the “CCF Forbearance Defaults”).

Under the CCF Forbearance Agreement, the period of forbearance (the “Forbearance Period”) ends on the earliest of (i) the consummation of a Strategic Transaction, (ii) an event of default other than the CCF Forbearance Defaults, (iii) the failure of the Company to have entered into term sheets with respect to a Strategic Transaction by August 31, 2023 or to have consummated a Strategic Transaction by December 31, 2023, (iv) a representation made by the Company in the CCF Forbearance Agreement shall fail to be correct in all material respects, (v) the filing of a complaint by the Mortgage Lender to foreclose a Mortgage, as defined in the Mortgage Loan Agreement, or a comparable exercise of remedy thereunder, or (vi) the Potential Strategic Party states in writing that it is no longer pursuing a transaction with the Company and is not replaced by a third party pursuing a substantially similar transaction within thirty days.

In connection with the CCF, we also entered into a warrant agreement with the CCF Lender pursuant to which we issued to the CCF Lender ten-year warrants (the “Warrants”) to purchase up to 7,179,000 shares of our common stock. In connection with the Corporate Facility Amendment, the exercise price of the Warrants was amended from $6.50 per share to $4.31 per share, payable in cash or pursuant to a cashless exercise. In connection with the June 2023 amendment to the

CCF, the parties entered into an amendment to the Warrant Agreement, pursuant to which the number of shares of common stock purchasable under the Warrants was reduced by 750,000 shares, and the Company issued 750,000 shares of common stock to the CCF Lender. See Note 11 – Stockholders Equity – Warrants to our consolidated financial statements for further discussion regarding the warrants.

At September 30, 2023, the CCF had an outstanding balance of $40.75 million, excluding deferred finance fees of $581,000, and an effective interest rate of 10.325%. Accrued interest totaled approximately $9.1 million at September 30, 2023.

As of September 30, 2023, the CCF was fully drawn.

77 Mortgage Loan

In October 2021, a wholly-owned subsidiary of ours (the “Mortgage Borrower”) entered into a loan agreement with Macquarie PF Inc., a part of Macquarie Capital, the advisory, capital markets and principal investment arm of Macquarie Group, as lender and administrative agent (the “77 Mortgage Lender”), pursuant to which 77 Mortgage Lender agreed to extend credit to Mortgage Borrower in the amount of up to $166.7 million (the “77 Mortgage Loan”), subject to the satisfaction of certain conditions (the “77 Mortgage Loan Agreement”). We borrowed $133.1 million on the closing date of the 77 Mortgage Loan and a portion of the proceeds of the 77 Mortgage Loan, together with the proceeds of an increase in the Mezzanine Loan, the Berkley Partner Loan and funds raised through the Private Placement were used to repay the 77 Greenwich construction facility that the Company entered into in December 2017. At the time of the closing of the 77 Mortgage Loan in October 2021, $33.6 million was available to be used to, among other things, complete construction of 77 Greenwich and fund carry costs while the residential condominium units are being sold, $30.6 million of such amount had been drawn by September 30, 2023. The $3.0 million additional amount remained undrawn at September 30, 2023.

The 77 Mortgage Loan had a two-year term and matured on October 1, 2023. The 77 Mortgage Loan is secured by the Mortgage Borrower’s fee interest in 77 Greenwich. In May 2023, the loan benchmark was converted from LIBOR to SOFR. The all-in interest rate 12.05% at September 30, 2023. The 77 Mortgage Loan bears interest at a rate per annum equal to the greater of (i) 7.00% in excess of SOFR and (ii) 7.25%; provided that, if, on April 22, 2023, the outstanding principal balance of the 77 Mortgage Loan, together with any accrued and unpaid PIK Interest and unpaid Additional Unused Fee (as those terms are defined below) is equal to or greater than $91.0 million, the rate per annum will be equal to the greater of (i) 9.00% in excess of SOFR and (ii) 9.25%. If cash flow from 77 Greenwich (including proceeds from the sales of residential units) is insufficient to pay interest payments when due, any accrued but unpaid interest will remain unpaid and interest will continue to accrue on such unpaid amounts (“PIK Interest”) until the cumulative PIK Interest and Additional Unused Fee accrues to $4.5 million (the “Threshold Amount”), after which all such amounts in excess of the Threshold Amount shall be paid in cash on a monthly basis until such amounts are less than the Threshold Amount. As advances of the 77 Mortgage Loan are made to Mortgage Borrower and the outstanding principal balance of the 77 Mortgage Loan increases, net proceeds from the sales of condominium units will be paid to 77 Mortgage Lender to reduce the outstanding balance of the 77 Mortgage Loan. A 1% per annum fee (the “Additional Unused Fee”) on a $3.0 million portion (the “Additional Amount”) of the 77 Mortgage Loan, is payable on a monthly basis on the undrawn portion of such Additional Amount. To the extent the 77 Mortgage Loan was not fully funded by October 22, 2022 (April 22, 2023 in the case of amounts with respect to construction work related to the new handicapped accessible subway entrance on Trinity Place), 77 Mortgage Lender had the discretion to force fund the remaining balance other than the Additional Amount into a reserve account held by 77 Mortgage Lender and disbursed in accordance with the terms of the 77 Mortgage Loan Agreement. The 77 Mortgage Lender elected to force fund the 77 Mortgage Loan in October 2022. The 77 Mortgage Loan is prepayable without penalty, subject to 77 Mortgage Lender receiving a minimum total return of $15.26 million, or if an advance has been made of the Additional Amount, the sum of $15.26 million, plus 10% of the Additional Amount that has been disbursed, in each case, inclusive of interest and fees, and must be prepaid in part in certain circumstances such as in the event of the sale of residential and retail condominium units. Mortgage Borrower was required to achieve completion of the construction work and the improvements for the project on or before July 1, 2022, subject to certain exceptions. In November 2022, we amended the 77 Mortgage Loan to, amongst other things, extend the Final Completion date to September 29, 2023 and eliminate the liquidity requirement. The Company is in discussions with the 77 Mortgage Lender to amend the 77 Mortgage Loan, inclusive of an extension of the Final Completion date. At that time, we drew down $3.0 million under the letter of credit to fund an interest reserve and $1.0 million to pay down the PIK balance. The 77 Mortgage Loan Agreement also includes additional customary affirmative and negative covenants for loans of this type.

In September 2023, the Company and the Mortgage Borrower entered into a forbearance agreement effective as of September 1, 2023 (the “Mortgage Loan Forbearance Agreement”), for the purpose of providing additional time for the Company to pursue a potential strategic transaction, pursuant to which the Mortgage Lender agreed to forbear from exercising its rights and remedies during the Forbearance Period, as defined below, with respect to any failure by the Mortgage Borrower to (i) make payments under the Mortgage Loan Agreement, including, without limitation, interest payments due on September 1, 2023 and principal and interest payments due at maturity and (ii) achieve any Milestone Construction Hurdles or to satisfy the Quarterly Sales Hurdle (each as defined in the Mortgage Loan Agreement) or make the related prepayment as and when required (the “MLA Forbearance Defaults”) , for a period ending on the earlier of November 15, 2023 or the occurrence of other events specified therein. A condition to continued forbearance in this agreement was not met, but the Company is in active discussions with its 77 Mortgage Lender with respect to additional forbearance and a restructuring and extension of the 77 Mortgage Loan, in connection with the potential strategic transaction.

In connection with the 77 Mortgage Loan Agreement, we entered into guarantees with the 77 Mortgage Lender pursuant to which we guaranteed the completion and payment of costs and expenses related to the construction; the payment of accrued and unpaid interest and other fees, costs, expenses and payments due and payable with respect to the 77 Mortgage Loan or 77 Greenwich; and the payment when due of all amounts due to 77 Mortgage Lender, as a result of “bad-boy” provisions. Mortgage Borrower and the Company also entered into an environmental compliance and indemnification undertaking for the benefit of 77 Mortgage Lender.

Through September 30, 2023, the 77 Mortgage Loan had been paid down by approximately $69.9 million of proceeds from closed sales of residential condominium units to a balance of $100.5 million, which includes $6.7 million in PIK interest.

Mezzanine Loan

In December 2020, we entered into a mezzanine loan agreement with an affiliate of the CCF Lender (the “Mezzanine Loan Agreement”, and the loan thereunder, the “Mezzanine Loan”). The Mezzanine Loan was originally in the amount of $7.5 million and has a term of three years with two one-year extension options, exercisable under certain circumstances. The collateral for the Mezzanine Loan was the borrower’s equity interest in its direct, wholly-owned subsidiary. As of September 30, 2023, the blended interest rate for the 77 Mortgage Loan and the Mezzanine Loan was 12.05% on an annual basis. Interest on the Mezzanine Loan is not payable on a monthly basis but instead is automatically added to the unpaid principal amount on a monthly basis (and therefore accrues interest) and is payable in full on the maturity date of the Mezzanine Loan. Upon final repayment of the Mezzanine Loan, a MOIC will be due on substantially the same terms as provided for in the CCF. Subject to the prior sentence the Mezzanine Loan may be prepaid in whole or in part, without penalty or premium (other than payment of the MOIC amount, if applicable, as provided above), upon prior written notice to the lender under the Mezzanine Loan. In connection with the Mezzanine Loan, the Company entered into a completion guaranty, carry guaranty, equity funding guaranty, recourse guaranty and environmental indemnification undertaking.

In October 2021, the Mezzanine Loan Agreement was amended and restated to, among other things, (i) increase the amount of the loan thereunder by approximately $22.77 million, of which $0.77 million reflected interest previously accrued under the original Mezzanine Loan, (ii) reflect the pledge of the equity interests in the Mortgage Borrower to the Mezzanine Lender as additional collateral for the Mezzanine Loan and (iii) conform certain of the covenants to those included in the 77 Mortgage Loan Agreement, as applicable. Additionally, the existing completion guaranty, carry guaranty, recourse guaranty and environmental indemnification executed in connection with the original Mezzanine Loan Agreement were amended to conform to the mortgage guarantees and mortgage environmental indemnity made in connection with the 77 Mortgage Loan (and the existing equity funding guaranty was terminated). In November 2022, the Mezzanine Loan was amended to, amongst other things, extend the Final Completion date to September 29, 2023 and eliminate the liquidity requirement. The Company is in discussions with the 77 Mortgage Lender to amend the 77 Mortgage Loan, inclusive of an extension of the Final Completion date.

In August 2023, the Company and its subsidiary borrower (the “Mezzanine Borrower”) entered into a forbearance agreement (the “Mezzanine Loan Forbearance Agreement”), pursuant to which the Mezzanine Lender agreed to forbear from exercising its rights and remedies during the Forbearance Period, as defined below, with respect to (i) the failure by the Mortgage Borrower, or the Mezzanine Borrower, to make payments under the Mortgage Loan Agreement or the Mezzanine Loan Agreement, respectively, including regular monthly interest payments and principal and interest due at maturity, and (ii) the failure by the Mortgage Borrower or the Mezzanine Borrower to achieve any Milestone Construction

Hurdles, or satisfy the Quarterly Sales Hurdle, as such terms are defined in the Mortgage Loan Agreement and Mezzanine Loan Agreement, respectively, or make the related prepayment as and when required (the “Mezzanine Forbearance Defaults”). The Mezzanine Loan Forbearance Agreement provides that the period of forbearance (the “Forbearance Period”) ends on the earliest of (i) the consummation of a Strategic Transaction, (ii) an event of default other than the Mezzanine Forbearance Defaults, (iii) the failure of the Company to have entered into term sheets with respect to a Strategic Transaction by August 31, 2023 or to have consummated a Strategic Transaction by December 31, 2023, (iv) a representation made by the Company in the Mezzanine Forbearance Agreement shall fail to be correct in all material respects, (v) the filing of a complaint by the Mortgage Lender to foreclose a Mortgage, as defined in the Mortgage Loan Agreement, or a comparable exercise of remedy thereunder, or (vi) the Potential Strategic Party states in writing that it is no longer pursuing a transaction with the Company and is not replaced by a third party pursuing a substantially similar transaction within thirty days.

As of September 30, 2023, the Mezzanine Loan had a balance of $30.3 million and accrued interest totaled approximately $9.8 million. See Note 6 – Loans Payable and Secured Line of Credit to our consolidated financial statements for further discussion.

237 11th Loans

In June 2021, we entered into a $50.0 million senior loan (the “237 11th Senior Loan”) provided by Natixis, and a $10 million mezzanine loan (the “237 11th Mezz Loan” and together with the 237 11th Senior Loan, the “237 11th Loans”), provided by an affiliate of LibreMax, (together the “237 11th Lenders”), bearing interest at a blended rate of 3.05% per annum at that time. The SOFR-based floating rate 237 11th Loans have an initial term of two years and three one-year extension options. The first extension option, which was exercised in July 2023, was not subject to satisfaction of any financial tests, but required a new interest rate cap be purchased by the Company. New interest rate caps were purchased in July 2023. The Company has obtained covenant waivers (Liquidity and Net Worth) from the 237 11th Lenders.

From time to time, properties that we own, acquire or develop may experience defects, including concealed defects, or damage due to natural causes, defective workmanship or other reasons. In these situations, we pursue our rights and remedies as appropriate with insurers, contractors, sellers and others. Due to water damage in apartment units and other property at 237 11th resulting from construction defects which we believe were concealed by the prior ownership team and its contractor, we submitted a notice of claim to our insurance carrier for property damage and business interruption (lost revenue) in September 2018. The insurance carrier subsequently disclaimed coverage for the losses and we filed a complaint against the carrier alleging that it breached the insurance policy by denying coverage. We also filed legal claims against the seller, its parent company, and the general contractor to recover damages arising from defective construction of the building, including defects that resulted in water damage as well as other defects. In addition, the general contractor has impleaded into that litigation several subcontractors who performed work on the property. Management expects to recover some portion of the cost incurred to repair the property through the litigations and/or settlement negotiations with the seller, its parent company, the general contractor, the subcontractors, and the insurance carrier, although the amount of damages that may be recoverable in litigation and/or potential settlement negotiations are uncertain at this time, as is the timing of receipt of any such payments. We continue to pursue all legal remedies. We incurred significant cash outflows for costs associated with these repairs and remediation, which commenced in September 2019 and was completed by December 31, 2021.

There was an outstanding balance of $50.0 million on the 237 11th Senior Loan and $10.0 million on the 237 11th Mezz Loan at September 30, 2023. As of September 30, 2023, the blended interest rate was 5.35% per annum.

Secured Line of Credit

Our $11.75 million line of credit with Webster Bank (formerly known as Sterling National Bank) is secured by the Paramus, New Jersey property, and guaranteed by Trinity Place Holdings Inc. The Paramus property had been under contract for sale pursuant to a purchase and sale agreement, which was subject to site plan approval. The agreement was terminated by the buyer in January 2023. The secured line of credit was scheduled to mature on May 22, 2023 and bore interest at the prime rate. Effective with an April 2023 amendment, the maturity date was extended to March 22, 2024 and the interest rate was reduced to 2.5% during the period from April 2023 to the new maturity date. The secured line of credit is pre-payable at any time without penalty. As of September 30, 2023, the secured line of credit had an outstanding balance of $11.75 million.

Note Payable (250 North 10th Partner Loan)

We owned a 10% interest in a joint venture with TF Cornerstone (the “250 North 10th JV”) formed to acquire and operate 250 North 10th, a 234-unit apartment building in Williamsburg, Brooklyn, New York. In January 2020, the 250 North 10th JV closed on the acquisition of the property for a purchase price of $137.75 million, of which $82.75 million was financed through a 15-year mortgage loan (the “250 North 10th Note”) secured by 250 North 10th and the balance was paid in cash. Our share of the equity totaling approximately $5.9 million was funded through a loan (the “Partner Loan”) from our joint venture partner. The Partner Loan bore interest at 7.0% and was prepayable any time within its four year term. We sold our interest in 250 North 10th to our joint venture partner in February 2023 resulting in net proceeds of approximately $1.2 million after repayment of our Partner Loan and release from the mortgage guaranty, and we realized a net gain on the sale of approximately $3.1 million.

Cash Flows

Cash Flows for the Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Net cash used in operating activities increased by approximately $7.8 million to $1.0 million for the nine months ended September 30, 2023 from net cash provided by operating activities of $6.8 million for the nine months ended September 30, 2022. This increase was mainly due to the sale of 10 residential condominium units at 77 Greenwich for the nine months ended September 30, 2023 as compared to the sale of 11 residential condominium units for the nine months ended September 30, 2022, an increase in accounts payable and accrued expenses over the same period last year, and an increase in prepaid expenses and other assets, net and receivables compared to the same period last year.

Net cash provided by investing activities decreased by approximately $10.2 million to $7.1 million for the nine months ended September 30, 2023 from $17.3 million for the nine months ended September 30, 2022. The decrease in cash provided by investing activities was due to $17.4 million in sale proceeds from the sale of our 50% interest in The Berkley in April 2022 as compared to $7.2 million in sale proceeds from the sale of our 10% interest in the 250 North 10th joint venture property in February 2023.

Net cash used in financing activities decreased by approximately $18.2 million to $19.1 million for the nine months ended September 30, 2023 from $37.3 million for the nine months ended September 30, 2022. The decrease in net cash used in financing activities primarily relates to the approximate $25.9 million in repayments of loans and notes payable and $7.0 million in borrowings for the nine months ending September 30, 2023 as compared to $45.4 million in repayments of loans and the secure line of credit and $8.4 million of borrowings for the nine months ending September 30, 2022.

Net Operating Losses

We believe that our U.S. federal NOLs as of the emergence date of the Syms bankruptcy were approximately $162.8 million and believe our U.S. federal NOLs as of September 30, 2023 were approximately $305.4 million. In connection with the conveyance of the school condominium to the SCA, we applied approximately $11.6 million of federal NOLs against taxable capital gains of approximately $18.5 million. Since 2009 through September 30, 2023, we have utilized approximately $20.1 million of the federal NOLs.

Based on management’s assessment, it is more likely than not that the entire deferred tax assets will not be realized by future taxable income or tax planning strategies. Accordingly, a valuation allowance of $88.2 million was recorded as of September 30, 2023.

We believe that certain of the transactions that occurred in connection with our emergence from bankruptcy in September 2012, including the rights offering and the redemption of the Syms shares owned by the former majority shareholder of Syms in accordance with the Plan, resulted in us undergoing an “ownership change,” as that term is used in Section 382 of the Code. However, while the analysis is complex and subject to subjective determinations and uncertainties, we believe that we should qualify for treatment under Section 382(l)(5) of the Code. As a result, we believe that our NOLs are not subject to an annual limitation under Section 382. However, if we were to undergo a subsequent ownership change in the future, our ability to utilize our NOLs could be subject to limitation under Section 382. In addition, the TCJA limited the deductibility of NOLs arising in tax years beginning after December 31, 2017 to 80 percent of taxable income (computed without regard to the net operating loss deduction) for the taxable year. However, the CARES Act suspended the 80% limitation on the use of NOLs for tax years beginning before January 1, 2021, and allowed losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021 to be carried back up to five years.

Even if all of our regular U.S. federal income tax liability for a given year is reduced to zero by virtue of utilizing our NOLs, we may still be subject to state, local or other non-federal income taxes.

Our certificate of incorporation includes a provision intended to help preserve certain tax benefits primarily associated with our NOLs. This provision generally prohibits transfers of stock that would result in a person or group of persons becoming a 4.75% stockholder, or that would result in an increase or decrease in stock ownership by a person or group of persons that is an existing 4.75% stockholder.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including information included or incorporated by reference in this Quarterly Report on or any supplement to this Quarterly Report, may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and information relating to us that are based on the beliefs of management as well as assumptions made by and information currently available to management. These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “may,” “will,” “expects,” “believes,” “plans,” “estimates,” “potential,” or “continues,” or the negative thereof or other and similar expressions. In addition, in some cases, you can identify forward-looking statements by words or phrases such as “trend,” “potential,” “opportunity,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions. Such statements reflect our current views with respect to future events, the outcome of which is subject to certain risks, including among others;

we are currently in default of covenants under the 77 Mortgage Loan, Mezzanine Loan and Corporate Credit Facility. While we entered into a forbearance agreement with respect to the 77 Mortgage Loan and are in active discussions with the lender regarding an extension, a condition to continued forbearance was not met and the agreement terminates in any event on November 15, 2023, unless extended or additional forbearance is granted. Similarly, while we have entered into forbearance agreements with the respective lenders under the Mezzanine Loan and Corporate Credit Facility, the forbearance period under these agreements expires on December 31, 2023, in each case if not terminated earlier in accordance with their terms. Although we are in active discussions with our 77 Mortgage Lender regarding an extension or additional forbearance, outstanding borrowings thereunder are or may become due and payable on November 15, 2023, and outstanding borrowings under the other facilities could be accelerated and become immediately payable on or prior to December 31, 2023, in each case if we are not able to enter into additional forbearance or amendment agreements with these lenders prior to the exercise of remedies by them at any time forbearance agreements are not in effect;
the Potential Strategic Party has indicated to the Company its intent to not proceed at this time with the potential strategic transaction on the terms provided for in the previously disclosed term sheet with such party, and a new strategic counterparty may not be identified and/or definitive agreements entered into or a closing occur, before the Company’s cash resources are expended, absent a new financing, which cannot be assured;
our existing capital resources will not be sufficient to fund our operations beyond the next few months if we are not successful in consummating a strategic transaction and/or raising additional capital, and extending, restructuring, amending or otherwise resolving our debt maturities;
risks and uncertainties as to the terms, timing, structure, benefits and costs of capital raising or strategic transaction or restructuring in or out of court, and whether one will be consummated on terms acceptable to us or at all, and if it is, what the benefits to shareholders will be, if any;
our limited cash resources, generation of minimal revenues from operations, and our reliance on external sources of financing to fund operations in the future;
risks associated with our debt and upcoming debt maturities and other payment obligations and the risk of defaults on our obligations, debt service requirements and covenant compliance;
our ability to obtain additional financing and refinance existing loans and on favorable terms;
risks associated with covenant restrictions in our loan documents that could limit our flexibility to execute our business plan;
our ability to execute our business plan, including as it relates to the development of and sale of residential condominium units at our largest asset, 77 Greenwich;
risks associated with the Company evaluating and potentially consummating a strategic transaction, including the risk that the Company may fail to realize the anticipated benefits of any such transaction;
our investment in property development may be more costly than anticipated and investment returns from our properties planned to be developed may be less than anticipated;
adverse trends in the New York City residential condominium market;
general economic and business conditions, including with respect to real estate, and their effect on the New York City residential real estate market in particular;
our ability to enter into new leases and renew existing leases with tenants at our commercial and residential properties;
we may acquire properties subject to unknown or known liabilities, with limited or no recourse to the seller;
risks associated with the effect that rent stabilization regulations may have on our ability to raise and collect rents;
competition for new acquisitions and investments;
risks associated with acquisitions and investments in owned and leased real estate;
risks associated with joint ventures;
our ability to maintain certain state tax benefits with respect to certain of our properties;
our ability to obtain required permits, site plan approvals and/or other governmental approvals in connection with the development or redevelopment of our properties;
costs associated with complying with environmental laws and environmental contamination, as well as the Americans with Disabilities Act or other safety regulations and requirements;
loss of key personnel;
the effects of new tax laws;
our ability to utilize our NOLs to offset future taxable income and capital gains for U.S. Federal, state and local income tax purposes;
risks associated with current political and economic uncertainty, and developments related to the outbreak of contagious diseases;
risks associated with breaches of information technology systems;
stock price volatility and other risks associated with a lightly traded stock;
stockholders may be diluted by the issuance of additional shares of common stock or securities convertible into common stock in the future;
a declining stock price may make it more difficult to raise capital in the future;
the influence of certain significant stockholders;
limitations in our charter on transactions in our common stock by substantial stockholders, designed to protect our ability to utilize our NOLs and certain other tax attributes, may not succeed and/or may limit the liquidity of our common stock;
certain provisions in our charter documents and Delaware law may have the effect of making more difficult or otherwise discouraging, delaying or deterring a takeover or other change of control of us;
certain provisions in our charter documents may have the effect of limiting our stockholders’ ability to obtain a favorable judicial forum for certain disputes; and
unanticipated difficulties which may arise and other factors which may be outside our control or that are not currently known to us or which we believe are not material.

In evaluating such statements, you should specifically consider the risks identified under the section entitled “Risk Factors” in our 2022 Annual Report for the year ended December 31, 2022, as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2023, and under the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q, any of which could cause actual results to differ materially from the anticipated results. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those contemplated by any forward looking statements. Subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere described in our 2022 Annual Report, this Form 10-Q and other reports filed with the SEC. All forward-looking statements speak only as of the date of this Form 10-Q or, in the case of any documents incorporated by reference in this Form 10-Q, the date of such document, in each case based on information available to us as of such date, and we assume no obligation to update any forward-looking statements, except as required by law.

Controls and procedures

As filed, 4,937 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.

a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e) of the Exchange Act. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in our periodic reports.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of September 30, 2023, our disclosure controls and procedures were effective.

b) Internal Control Over Financial Reporting

Other than changes related to the remediation of the material weaknesses described below, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Previously Reported Material Weakness in Internal Control over Financial Reporting

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. In connection with the preparation of our consolidated financial statements as of and for the quarter ended June 30, 2022, our management identified two material weaknesses in our internal control over financial reporting related to errors identified in connection with the accounting treatment regarding the overcapitalization of internally allocated construction related costs related to the development project at 77 Greenwich and a disclosure error in the classification on the balance sheets of our 77 Greenwich property which was classified as real estate under development in real estate and is now classified as residential condominium units for sale. There was also a restatement on the statement of cash flows from investing activities to operating activities related to this error. Our management communicated the results of its assessment to the Audit Committee of the Board of Directors of the Company.

As disclosed in Item 4. “Controls and Procedures” of our Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2022 and June 30, 2022, we previously identified a material weakness in our internal control over financial reporting related to an error identified in connection with the classification of a property as real estate under development which was not subsequently reported as an operating property when circumstances at the property changed, resulting in the incorrect capitalization of certain costs.

Remediation

The Company’s management is committed to maintaining a strong internal control environment. In response to the material weaknesses identified above, management, with the oversight of the Audit Committee of the Board of Directors, evaluated the material weaknesses described above and designed a remediation plan to enhance the Company’s internal control environment. To remediate the material weaknesses, the Company’s management performed an evaluation of the relevant controls, and implemented procedures to enhance documentation, and retain incremental evidence that supports the effectiveness of controls related to the additional procedures to ensure the properties we own are properly classified as either an operating property or property under development, and that we are capitalizing the appropriate amount of internally allocated construction related costs related to the development project at 77 Greenwich Street. These enhanced procedures were implemented as of January 1, 2023, and have been monitored for effectiveness. Based on the successful monitoring of these enhanced procedures, the Company concluded that the material weaknesses identified above have been remediated as of the date of this report.

Risk factors

As filed, 9,141 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.

Numerous factors affect our business and results of operations, many of which are beyond our control. In addition to information set forth in this Quarterly Report, you should carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our Annual Report on Form 10-K for the year ended December 31, 2022, which describe significant risks that may cause our actual results of operations in future periods to differ materially from those currently anticipated or expected.

We are currently in default of covenants under the 77 Mortgage Loan, Mezzanine Loan and Corporate Credit Facility. While we entered into a forbearance agreement with respect to the 77 Mortgage Loan and are in active discussions with the lender regarding an extension, a condition to continued forbearance was not met and the agreement terminates in any event on November 15, 2023, unless extended or additional forbearance is granted. Similarly, while we have entered into forbearance agreements with the respective lenders under the Mezzanine Loan and Corporate Credit Facility, the forbearance period under these agreements expires on December 31, 2023, in each case if not terminated earlier in accordance with their terms. Although we are in active discussions with our 77 Mortgage Lender regarding an extension or additional forbearance, outstanding borrowings thereunder are or may become due and payable on November 15, 2023, and outstanding borrowings under the other facilities could be accelerated and become immediately payable on or prior to December 31, 2023, in each case if we are not able to enter into additional forbearance or amendment agreements with these lenders prior to the exercise of remedies by them at any time forbearance agreements are not in effect.

As of September 30, 2023 and November 14, 2023, we were in default under the 77 Mortgage Loan, Mezzanine Loan and Corporate Credit Facility as a result of the MLA Forbearance Defaults, Mezzanine Forbearance Defaults and CCF Forbearance Defaults, respectively. We entered into forbearance agreements with the lenders under these facilities. A condition to continued forbearance in the 77 Mortgage Loan Agreement was not met and in any event the forbearance period expires on November 15, 2023, although the Company is in active discussions with its 77 Mortgage Lender regarding an extension of the forbearance period. In addition, the forbearance periods under the Mezzanine Loan and Corporate Credit Facility terminate no later than December 31, 2023. See Note 6 - Loans Payable and Secured Line of Credit for a discussion regarding the defaults and the terms of the forbearance agreements. Although the Company is in active discussions with the 77 Mortgage Lender regarding additional forbearance and a restructuring of its loan, there is no assurance that agreements will be entered into and that the lender will not exercise its rights and remedies, including seeking to foreclose on the property and assets securing the loan, among other remedies. In addition, if the Company is not able to resolve the defaults with the other lenders through a waiver or other amendment, and/or refinance of the obligations under the facilities, those lenders will also have the right, following the forbearance period, to exercise their rights and remedies with respect to such defaults. In such event, the lenders could demand immediate repayment of the outstanding borrowings and terminate the facilities and they could also seek to foreclose on the assets securing the loans among other remedies. The exercise of any such rights and remedies by the 77 Mortgage or Mezzanine Lenders may also trigger claims by purchasers under signed residential unit contracts at 77 Greenwich to rescind such contracts or an order from the NYS Department of Law to make an offer of rescission. We do not have sufficient liquidity to repay the indebtedness under the 77 Mortgage Loan or the other facilities. We are seeking a resolution with our lenders prior to exercise of remedies by any lenders; however, there can be no assurance that we will be able to obtain additional forbearance from the 77 Mortgage Lender or the other lenders or complete a restructuring or refinancing and/or obtain an acceptable waiver or amendment under all or any of the facilities on terms acceptable to us, or at all. Failure to obtain additional forbearance from our 77 Mortgage Lender or other lenders before they exercise remedies, and failure to secure additional waivers, amendments or alternative financings prior to the exercise of remedies by any of our lenders, would have a material adverse effect on the Company and its financial condition and we would be forced to consider all available alternatives, including filing for bankruptcy protection, liquidating or dissolving.

We have a limited amount of unrestricted cash and liquidity and variable cash needs. If we are not successful in identifying a strategic party and consummating a strategic transaction, raising significant additional capital and/or receiving significant amounts on account of our claims involving 237 11th in a timely manner, we will have insufficient cash and liquidity to service our debt and pay operating expenses and other obligations beyond the next few months, which would have a material adverse effect on our business and financial condition and we would be forced to consider all available alternatives, including filing for bankruptcy protection, liquidating or dissolving.

We have a limited amount of unrestricted cash and liquidity available for working capital and our cash needs are significant and variable under different circumstances, including near term debt maturities and other payment obligations. The Company’s cash and cash equivalents will not be sufficient to fund the Company’s operations, debt service, amortization and maturities and corporate expenses beyond the next few months, unless we are able to both extend or refinance our maturing debt and also raise additional capital or enter into a strategic transaction, creating substantial doubt about our ability to continue as a going concern. Whether or not we are able to enter into a transaction, we may not have sufficient resources to pay our advisors and service providers amounts due or claimed. Management is currently in active discussions with the Company’s lenders regarding the deferment of upcoming payments and exploring opportunities to secure additional funding through the sale of assets, refinancings of outstanding indebtedness, and equity or debt financings or other sources. The Company also continues to explore a range of strategic and financing alternatives to maximize stockholder value. We have engaged the Advisors in connection with our strategic review process and to assist us in identifying and evaluating potential alternatives. Potential strategic alternatives being evaluated include securing an equity and/or debt financing of the Company, refinancing of existing debt, and/or a sale or merger or reverse merger of the Company.

However, there is no assurance that we will be successful in reaching agreements with our lenders, consummating any such strategic transaction or obtaining capital sufficient to meet our operating needs, in each case, on terms or a timeframe acceptable to us or at all. In August 2023, the Company entered into term sheets with the Potential Strategic Party, and an affiliate of its current CCF Lender and Mezzanine Lender; however, the Potential Strategic Party recently indicated to the Company its intent to not proceed with the strategic transaction and there can be no assurance that the Company will be able to complete a strategic transaction. In addition, if funds are raised by issuing equity securities, dilution to existing shareholders will result and future investors may purchase shares at prices below current market values and/or be granted rights superior to those of existing shareholders. Even if a strategic transaction and/or other transaction is entered into, the benefits to shareholders, if any, of such transactions are uncertain. Further, in the event that we are unable to identify or consummate such transactions, we would be required to evaluate additional alternatives in restructuring our business and our capital structure, including but not limited to, a transaction with our corporate facility lender and/or an affiliate to holistically resolve the liabilities under the corporate credit facility and address other material liabilities, the restructuring of the 77 Greenwich Mortgage Loan, filing for bankruptcy protection, liquidating, dissolving and/or seeking another out-of-court restructuring of our liabilities or liquidation. See Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation - Liquidity and Capital Resources and Note 1 - Business to our consolidated financial statements for more information regarding our ability to continue as a going concern and related matters.

Figures reported in this filing

Standardized line items from the XBRL in this filing, for the period ended 2023-09-30. Comparative periods it repeats are left out.

Figures reported in this filing
Line item	Period	Value	XBRL concept
Revenue	3 months2023-07-01 to 2023-09-30	$10.7m	us-gaap:Revenues
Revenue	9 months2023-01-01 to 2023-09-30	$32.1m	us-gaap:Revenues
Operating income	3 months2023-07-01 to 2023-09-30	−$3.2m	us-gaap:OperatingIncomeLoss
Operating income	9 months2023-01-01 to 2023-09-30	−$8.0m	us-gaap:OperatingIncomeLoss
Income tax	9 months2023-01-01 to 2023-09-30	$175.0k	us-gaap:IncomeTaxExpenseBenefit
Net income	3 months2023-07-01 to 2023-09-30	−$11.9m	us-gaap:NetIncomeLoss
Net income	9 months2023-01-01 to 2023-09-30	−$29.0m	us-gaap:NetIncomeLoss
Diluted EPS	3 months2023-07-01 to 2023-09-30	−$0.30	us-gaap:EarningsPerShareDiluted
Diluted EPS	9 months2023-01-01 to 2023-09-30	−$0.75	us-gaap:EarningsPerShareDiluted
Basic EPS	3 months2023-07-01 to 2023-09-30	−$0.31	us-gaap:EarningsPerShareBasic
Basic EPS	9 months2023-01-01 to 2023-09-30	−$0.76	us-gaap:EarningsPerShareBasic
Diluted shares (weighted)	3 months2023-07-01 to 2023-09-30	38,789,000 shares	us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding
Diluted shares (weighted)	9 months2023-01-01 to 2023-09-30	38,134,000 shares	us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding
Operating cash flow	9 months2023-01-01 to 2023-09-30	−$1.0m	us-gaap:NetCashProvidedByUsedInOperatingActivities
Cash and equivalents	At period end2023-09-30	$809.0k	us-gaap:CashAndCashEquivalentsAtCarryingValue
Total assets	At period end2023-09-30	$267.7m	us-gaap:Assets
Total liabilities	At period end2023-09-30	$268.9m	us-gaap:Liabilities
Shareholders' equity	At period end2023-09-30	−$1.2m	us-gaap:StockholdersEquity

Source: SEC EDGAR, the filing index for accession 0001558370-23-019061. Last ingested by Listed: Oct 24, 2026, 14:55 ET. Listed shows no prices and gives no investment advice.