American Strategic Investment Co.: Form 10-Q for the period ended Jun 30, 2026

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements regarding the intent, belief or current expectations of American Strategic Investment Co. (including, as required by context, New York City Operating Partnership, L.P. (the “OP”) and its subsidiaries, “we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions are intended to identify forward looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements. We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.

These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include anticipated benefits of our election to terminate our status as a real estate investment trust; whether we will be able to successfully acquire new assets or businesses; potential adverse effects of the geopolitical instability; the ongoing military conflicts between Russia and Ukraine, Israel and Hamas and the United States (“U.S.”) and Israel conflict with Iran, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on us, our tenants and the global economy and financial markets; inflationary conditions and higher interest rate environment; economic uncertainties about the ultimate impact of tariffs imposed by, or imposed on, the United States and its trading relationships; that any potential future acquisition or disposition is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all, and that we may not be able to regain compliance with New York Stock Exchange’s (“NYSE”) continued listing requirements and rules, and the NYSE may delist the Company’s common stock, which could negatively affect the Company, the price of the Company’s common stock and shareholders’ ability to sell the Company’s common stock. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on April 15, 2026 (the “2025 Annual Report”), this and our other Quarterly Reports on Form 10-Q and our other filings with the SEC.

Overview

We are an externally managed company that owns a portfolio of commercial real estate located within the five boroughs of New York City, primarily Manhattan. Our real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities and parking garages that do not accompany office spaces. As of June 30, 2026, we owned five properties consisting of approximately 0.7 million rentable square feet, acquired for an aggregate purchase price of $442.7 million with an overall occupancy of 74.8%, which excludes one property, 1140 Avenue of the Americas, which is in a consensual foreclosure process.

Substantially all of our business is conducted through the OP and its wholly owned subsidiaries. Our Advisor manages our day-to-day business with the assistance of our Property Manager. Our Advisor and Property Manager are under common control with AR Global and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.

Management Update on the New York City Real Estate Market

The pace of recovery in the New York City office market from the COVID-19 pandemic continues to be challenged as leasing and occupancy trends for the broader market have slowed, leading political, community, and business leaders to propose repositioning plans for many New York City office assets that are experiencing high vacancy rates.

The adverse economic impacts since the onset of the COVID-19 pandemic have caused us to experience challenges in leasing up available space and maintaining occupancy in our properties. These challenges with leasing activity have negatively impacted, and continue to impact, our results of operations, cash flows, and ability to comply with certain mortgage debt covenants. For additional information on our leasing activity for the six months ended June 30, 2026 and 2025, please see Results of Operations — Leasing Activity below.

As of June 30, 2026 two of our mortgages encumbering three of our properties aggregating $60.0 million in principal are in default and/or remained in a cash trap events, as described in detail further below in the Liquidity and Capital Resources section. The lenders of one mortgage in default, which is in respect of our 1140 Avenue of the Americas property, have accelerated the debt outstanding under the applicable loan agreement and in June 2025 initiated foreclosure litigation as a result of alleged defaults. In September 2025, the Company and the lender agreed to pursue a cooperative consensual foreclosure. On September 11, 2025, the New York County Court appointed a receiver, and the Company ceased managing the property. As a result of the consensual foreclosure and the appointment of the receiver, the Company removed its related assets and liabilities from the consolidated balance sheet as of September 30, 2025. In addition, the 400 E. 67th Street/200 Riverside Blvd. properties are also in default and the lenders have accelerated the debt outstanding under the applicable loan agreement. See also Note 5 – Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Our portfolio is primarily comprised of office and retail tenants. We have collected 98% of cash rent due across our entire portfolio for the six months ended June 30, 2026 (based on annualized straight-line rent as of June 30, 2026). We expect our cash rent collections will stay at that level, however there can be no assurance that we will be able to collect cash rent due in the future.

We intend to continue focusing on selling performing properties, entering into new leases, and divesting from underperforming assets. However, we cannot predict with certainty the outcome of these actions in terms of generating liquidity.

We face significant liquidity constraints due to a combination of factors, including sustained declines in rental income, constrained cash flow from operations, and ongoing debt service obligations. Our portfolio consists primarily of office properties located in Manhattan, which have been adversely impacted by shifts in market demand following the COVID-19 pandemic. While we have successfully executed lease transactions to mitigate vacancy risk, new leases have been signed at market rental rates below prior contractual rates, resulting in decreased revenue compared to historical levels.

Our cash outlays consist principally of professional fees, consultant fees, legal fees, insurance costs, auditing costs, general and administrative expenses, principal and interest payments on debts, property maintenance, property taxes, and other property-related expenses not covered by tenants. To the extent we need to raise additional capital to meet our obligations, there can be no assurance that financing will be available when needed. If we are unable to sell certain assets as anticipated or at expected prices, we may not have sufficient cash to fund operations and commitments. Although there can be no assurance that external financing will be available on favorable terms when needed, our Advisor has indicated both the ability and willingness to lend us funds pursuant to promissory notes to address liquidity requirements, if necessary.

Significant Accounting Estimates and Critical Accounting Policies

For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our 2025 Annual Report. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.

Recently Issued Accounting Pronouncements

See Note 3 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Properties

The following table presents certain information about the investment properties we owned as of June 30, 2026:

(1) Calculated on a weighted-average basis as of June 30, 2026, as applicable.

(2) On November 6, 2025, the Company received a notice of acceleration from the special servicer on behalf of the lender with respect to the loan secured by the property (See also Note 5 — Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion).

Results of Operations

Leasing Activity for the Six Months Ended June 30, 2026

The following table is a summary of our quarterly leasing activity during the six months ended June 30, 2026:

(1) Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries.

(2) The weighted-average remaining lease term (years) is based on annualized straight-line rent.

Leasing Activity for the Six Months Ended June 30, 2025

The following table is a summary of our quarterly leasing activity during the six months ended June 30, 2025:

(1) Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries.

(2) The weighted-average remaining lease term (years) is based on annualized straight-line rent.

Our total overall portfolio occupancy decreased as of June 30, 2026 to 74.8% from a total portfolio occupancy of 82.0% as of June 30, 2025 from the following:

• Occupancy at our property located at 400 E. 67th Street remained the same at 44.3% for the period ended June 30, 2026 and 2025.
• Occupancy at our property located at 200 Riverside Blvd. remained the same at 100% for the period ended June 30, 2026 and 2025.
• Occupancy at our property located at 196 Orchard Street remained the same at 100% for the period ended June 30, 2026 and 2025.
• Occupancy at our property located at 8713 Fifth Avenue remained the same at 100.0% for the period ended June 30, 2026 and 2025.
• Occupancy at 123 William Street decreased to 71.7% as of June 30, 2026 compared to 84.4% as of June 30, 2025. The decrease in occupancy was due to a lease amendment and a tenant occupying less space and an early termination with a tenant during the quarter ended September 30, 2025.

We continue to focus on increasing occupancy of the portfolio by seeking new and replacement tenants for leases that expired or otherwise have been terminated. We believe that certain market tenant incentives we have used and expect to continue to use, including free rent periods and tenant improvements, will support our occupancy rate and extend the average duration of our leases upon commencement of executed leases. These incentives have delayed, and may delay or reduce cash flow in the future for some period. Our ability to generate net cash from our property operations depends, in part on the amount of additional cash we can generate through new or renewal leases, which is not assured, and on our ability to access any excess cash we are able to generate from properties that are encumbered by mortgages where a cash trap event has occurred (see below for more details), which also is not assured.

Comparison of Three Months Ended June 30, 2026 and 2025

As of June 30, 2026, we owned five properties, with one property, 1140 Avenue of the Americas, in a consensual foreclosure process, all of which were acquired prior to January 1, 2025. Our results of operations for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 primarily reflect changes due to leasing activity and occupancy.

Net loss Attributable to Common Stockholders

Net loss attributable to common stockholders was $8.3 million for the quarter ended June 30, 2026, as compared to $41.7 million for the quarter ended June 30, 2025. The change in net loss attributable to common stockholders is discussed in detail for each line item of the condensed consolidated statements of operations in the sections that follow.

(in thousands)

Revenue from Tenants

Revenue from tenants decreased to $7.3 million for the three months ended June 30, 2026 as compared to $12.2 million for the three months ended June 30, 2025 primarily due to the disposition of our 1140 Avenue of the Americas property during the year ended December 31, 2025, resulting in a $4.9 million decrease in revenue from tenants.

Asset and Property Management Fees to Related Parties

We incurred $1.8 million and $1.7 million in fees for asset and property management services paid to our Advisor and Property Manager for the three months ended June 30, 2026 and 2025, respectively. See Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager.

Property Operating Expenses

Property operating expenses decreased to $4.3 million for the three months ended June 30, 2026 as compared to $8.0 million for the three months ended June 30, 2025. The decrease in expenses is primarily related to the disposition of our 1140 Avenue of the Americas property during the year ended December 31, 2025.

Impairments of Real Estate Investments

During the three months ended June 30, 2025, we recorded an impairment charge of $7.1 million on our 1140 Avenue property. This charge was recognized to reduce the property's carrying value to its estimated fair value.

During the three months ended June 30, 2025 we recorded impairment charges totaling $13.1 million, related to our 400 E. 67th Street/200 Riverside property. These charges were recognized to reduce the carrying value of the property to its estimated fair value.

During the three months ended June 30, 2025 we recorded impairment charges totaling $10.3 million, related to our 196 Orchard Street property. These charges were recognized to reduce the carrying value of the property to its estimated fair value.

Gain on Disposition of Real Estate Investments

During the three months ended June 30, 2026, we recorded a gain on disposition of real estate investments of $2.3 million related to our 1140 Avenue of the Americas property, which represents the Company’s right to debt extinguishment on additional default interest incurred for the three months ended June 30, 2026 once the foreclosure process on the 1140 Avenue of the Americas property is completed. We did not record any gain on disposition of real estate investments for the three months ended June 30, 2025.

Equity-Based Compensation

Equity-based compensation remained materially consistent at $0.1 million for the three months ended June 30, 2026 and 2025. These amounts are comprised of restricted share amortization expense.

General and Administrative Expenses

General and administrative expenses increased to $2.9 million for the three months ended June 30, 2026 as compared to $2.2 million for three months ended June 30, 2025.

Total reimbursement expenses for administrative and personnel services provided by the Advisor, were $1.3 million during the three months ended June 30, 2026 and $1.0 million, during the three months ended June 30, 2025.

Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits, of which, $3.0 million is related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. See Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Depreciation and Amortization

Depreciation and amortization expense decreased to $2.5 million for the three months ended June 30, 2026 as compared to $3.5 million for the three months ended June 30, 2025. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to the disposition of our 1140 Avenue of the Americas property during the year ended December 31, 2025. For more information, please see our 2025 Annual Report.

Interest Expense

Interest expense decreased from $4.1 million for the three months ended June 30, 2026, as compared to $7.9 million for the three months ended June 30, 2025. The decrease in interest expense can primarily be attributed to the interest expense related to the 1140 Avenue of the Americas property in court appointed receivership.

Interest Expense Associated with Property in Receivership

Interest expense increased to $2.3 million for the three months ended June 30, 2026 as compared to $0.0 million for the three months ended June 30, 2025. The increase in interest expense associated with property in receivership is due to the court appointment of a receiver for 1140 Avenue of the Americas.

Comparison of Six Months Ended June 30, 2026 and 2025

As of June 30, 2026, we owned five properties, with one property, 1140 Avenue of the Americas, in a consensual foreclosure process, all of which were acquired prior to January 1, 2025. Our results of operations for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 primarily reflect changes due to leasing activity and occupancy.

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders was $16.1 million for the six months ended June 30, 2026, as compared to $50.3 million for the six months ended June 30, 2025. The change in net loss income attributable to common stockholders is discussed in detail for each line item of the condensed consolidated statements of operations in the sections that follow.

(in thousands)

Revenue from Tenants

Revenue from tenants decreased to $14.7 million for the six months ended June 30, 2026, from $24.5 million for the six months ended June 30, 2025. The decrease was primarily due to the disposition of 1140 Avenue of the Americas during the year ended December 31, 2025, resulting in a $9.9 million decrease in revenue from tenants.

Asset and Property Management Fees to Related Parties

Fees for asset and property management services paid to our Advisor and Property Manager were $3.3 million and $3.6 million for the six months ended June 30, 2026 and 2025, respectively. See Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor and Property Manager.

Property Operating Expenses

Property operating expenses decreased to $8.9 million for the six months ended June 30, 2026 as compared to $16.1 million for the six months ended June 30, 2025. The decrease in expenses is primarily related to the disposition of 1140 Avenue of the Americas during the year ended December 31, 2025.

Impairments of Real Estate Investments

During the six months ended June 30, 2025, we recorded an impairment charge of $7.1 million on our 1140 Avenue property. This charge was recognized to reduce the property's carrying value to its estimated fair value.

During the six months ended June 30, 2025 we recorded impairment charges totaling $13.1 million, related to our 400 E. 67th Street/200 Riverside property. These charges were recognized to reduce the carrying value of the property to its estimated fair value.

During the six months ended June 30, 2025 we recorded impairment charges totaling $10.3 million, related to our 196 Orchard Street property. These charges were recognized to reduce the carrying value of the property to its estimated fair value.

Gain on Disposition of Real Estate Investments

During the six months ended June 30, 2026, we recorded a gain on disposition of real estate investments of $4.5 million related to our 1140 Avenue of Americas property, which represents the Company’s right to debt extinguishment on additional default interest incurred for the six months ended June 30, 2026 once the foreclosure process on the 1140 Avenue of the Americas property is completed. We did not record any gain on disposition of real estate investments for the six months ended June 30, 2025.

Equity-Based Compensation

Equity-based compensation remained materially consistent at $0.2 million for the six months ended June 30, 2026 and 2025. These amounts are comprised of restricted share amortization expense.

General and Administrative Expenses

General and administrative expenses decreased to $5.2 million for the six months ended June 30, 2026 compared to $5.3 million for the six months ended June 30, 2025.

Total reimbursement expenses for administrative and personnel services provided by the Advisor were $2.7 million during the six months ended June 30, 2026 and were $2.6 million during the six months ended June 30, 2025.

Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits. Of which $3.0 million is related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. See Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Depreciation and Amortization

Depreciation and amortization expense decreased to $5.0 million for the six months ended June 30, 2026, compared to $7.1 million for the six months ended June 30, 2025. The decrease was primarily due to a lower depreciable asset base between periods primarily relating to the disposition of our 1140 Avenue of the Americas property during the year ended December 31, 2025. For more information, please see our 2025 Annual Report.

Interest Expense

Interest expense decreased to $8.1 million for the six months ended June 30, 2026 as compared to $11.9 million for the six months ended June 30, 2025. The decrease in interest expense can primarily be attributed to the interest expense related to the 1140 Avenue of the Americas property in court appointed receivership.

Interest Expense Associated with Property in Receivership

Interest expense increased to $4.5 million for the six months ended June 30, 2026 as compared to $0.0 million for the six months ended June 30, 2025. The increase in interest expense associated with property in receivership is due to the court appointment of a receiver for 1140 Avenue of Americas.

Cash Flows from Operating Activities

The following table represents a reconciliation of our net cash used in operations from our net loss for the six months ended June 30, 2026 and 2025:

The level of cash flows used in or provided by operating activities is affected by the volume of the restricted cash we are required to maintain, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses.

Cash Flows from Investing Activities

The following table represents a reconciliation of our net cash used in investing activities for the six months ended June 30, 2026 and 2025:

Cash Flows from Financing Activities

The following table represents a reconciliation of our net cash provided by financing activities for the six months ended June 30, 2026 and 2025.

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Liquidity and Capital Resources

Our principal demands for cash are to fund operating and administrative expenses, capital expenditures, tenant improvement and leasing commission costs related to our properties, our debt service obligations and, subject to capital availability, acquisitions. We did not make any new acquisitions or investments in the quarter ended June 30, 2026.

Cash, Cash Equivalents and Restricted Cash

As of June 30, 2026, we had cash and cash equivalents of $2.4 million as compared to $1.3 million for the year ended December 31, 2025.

We had restricted cash of $5.5 million as of June 30, 2026 as compared to $6.8 million as of December 31, 2025. Our restricted cash balance includes cash sweeps for 400 E 67th Street for $3.3 million and $3.7 million as of June 30, 2026 and December 31, 2025, respectively. The remaining balance of restricted cash is comprised of various escrow accounts and other cash accounts with restricted uses. We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures. As a result, some of the property operating expenses and capital expenditures that will be paid with restricted cash may reside in accounts payable and accrued expenses on our condensed consolidated balance sheet as of June 30, 2026.

Segregated Cash Accounts - Loan Covenant Breaches

The New York City real estate market continues to be challenged as a result of the impacts of the COVID-19 pandemic and the related changing nature of in-office working arrangements, which previously caused, and may in the future cause certain of our tenants to be unable to make rent payments to us timely, or at all, and could continue to have, an adverse effect on the amount of cash we receive from our operations and therefore our ability to fund operating expenses and other capital requirements. Beginning in the third and fourth quarters of 2020, the operating results at some of our properties, including our 1140 Avenue of the Americas and 8713 Fifth Avenue properties, were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages, where excess operating cash flow from the property, if any, after debt service was held in restricted cash as additional collateral for the loan, for those properties to be triggered. Thus, we were not able to use excess cash flow, if any, from the properties while the cash trap events were active (see below), to fund operating expenses at our other properties and other capital requirements during the quarter ended June 30, 2026.

As of June 30, 2026, we are operating under three cash traps at 400 E. 67th Street/200 Riverside Blvd. and 8713 Fifth Avenue, which together, represent 19% of the rentable square feet in our portfolio as of June 30, 2026. However, our 8713 Fifth Avenue property has not generated enough excess cash after debt service and as of June 30, 2026 there is no related cash maintained in a segregated and restricted cash account for that property. Additionally, as of June 30, 2026, we are operating under one cash sweep at our 400 E. 67th Street/200 Riverside Blvd. properties. Under these lease sweep periods, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral. This swept cash is classified as restricted cash on our condensed consolidated balance sheet. As of June 30, 2026 we had $3.3 million retained by the lender in a restricted cash account for our 400 E. 67th Street/200 Riverside Blvd. properties. See also Note 5 — Mortgage Notes Payable, Net — Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Financings

We define our leverage as the ratio between our net debt, which is calculated as our gross debt of $251.0 million less cash and cash equivalents of $2.4 million divided by our gross asset value, which is calculated as the carrying value of our total assets of $444.8 million plus our accumulated depreciation and amortization of $85.3 million less our contract asset of $113.2 million. As of June 30, 2026, our net debt was $248.6 million, our gross asset value was $416.8 million and our leverage was 59.6%.

As of June 30, 2026 our gross borrowings totaled $251.0 million, which bore interest at a weighted-average annual rate of 4.56%, excluding default interest, and had a weighted-average maturity of 1.1 years. All of our properties are encumbered under mortgage notes payable, and are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable, unless the existing indebtedness associated with the property is satisfied.

We do not currently have a commitment for a corporate-level revolving credit facility or any other corporate-level indebtedness, and there can be no assurance we would be able to obtain corporate-level financing on favorable terms, or at all.

Mortgage Notes Payable

We had four mortgage loans secured by our five properties with an aggregate balance of $251.0 million as of June 30, 2026 with a weighted-average effective interest rate of 4.56%, excluding default interest. All our mortgage loans bear interest at a fixed rate. This excludes our 1140 Avenue of the Americas property, which is in a consensual foreclosure process.

Debt Covenant Non-Compliance, Cash Sweep Events, Notices of Defaults and of Acceleration and Foreclosure Litigation

1140 Avenue of the Americas

We have breached both a debt service coverage provision and a reserve fund provision under our non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 23 quarters ended June 30, 2026. The principal amount of the loan was $99.0 million and reflected as debt associated with property in receivership on the condensed consolidated balance sheet as of June 30, 2026 (refer to Note 6 - Property Disposition to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q).

We were informed by the lender on February 19, 2025 that we were in default under the loan agreement for failure to make certain scheduled interest payments. We made the payments in question in full on the same day the default notice was received by us as a cure for the February event of default. On April 7, 2025, the lender notified us that the principal balance due under such loan agreement had been accelerated and all amounts under such loan agreement were due and payable as a result of a default described in the notice, together with interest at the default rate set forth in the loan document, which is a rate annum equal to the lesser of (i) the maximum nonusurious interest rate or (ii) five percent (5%) above the interest rate of 4.109% per annum. Such amounts include, but are not limited to, the $99.0 million principal amount of the mortgage note.

On June 27, 2025, the trustee appointed to act on behalf of the lenders filed a complaint with the New York County Court, naming the OP and our subsidiary borrower under such loan agreement as defendants, requesting the New York County Court initiate foreclosure proceedings on the mortgage on the property and that the OP and such borrower pay the lenders the amount of the debt, inclusive of certain accrued fees and expenses, remaining unsatisfied after the sale of the property. On July 21, 2025, the trustee filed a motion with the New York County Court to appoint a receiver with respect to the property. On August 6, 2025, we filed our answer to such complaint, which admitted in part, denied in part the material allegations and stated that we have insufficient knowledge and information upon which to form a belief as to whether we have, as of yet, unstated affirmative defenses available. Notwithstanding the OP being named as defendant in the complaint, the complaint does not allege events giving rise to a recourse obligation by the OP under the guaranty agreement related to the loan agreement, and we do not believe that any of the allegations against the OP are sufficient to trigger any such recourse obligation of the OP under the guaranty agreement.

In September 2025, we agreed with the lender to pursue a consensual foreclosure. On September 11, 2025, the New York County Court appointed a receiver and we ceased managing the property. As a result of the consensual foreclosure and the appointment of the receiver, we removed our related assets and liabilities from the condensed consolidated balance sheet as of December 31, 2025 and recognized a gain of $47.9 million which is reflected in the consolidated statements of operations for the year ended December 31, 2025. As of June 30, 2026, the foreclosure has not concluded and therefore we continue to record accrued default interest. As a result, during the three and six months ended June 30, 2026, the Company recognized an additional gain of $2.3 million and $4.5 million which is reflected in the condensed consolidated statements of operations for the three and six months ended June 30, 2026.

We also recorded a contract asset of $108.6 million and the related debt associated with property under receivership and accrued interest associated with property under receivership of $99.0 million and $9.6 million, respectively, are included in the consolidated balance sheet as of December 31, 2025. This contract asset represents our right to debt extinguishment once the foreclosure process on the 1140 Avenue of the Americas property is completed. As a result of the additional gain recognized during the six months ended June 30, 2026, the total contract asset recorded on the balance sheet as of June 30, 2026 is $113.2 million and the total accrued interest associated with property under receivership recorded on the balance sheet as of June 30, 2026 is $14.2 million.

In addition, the 1140 Avenue of the Americas property includes a ground lease agreement, for more information on the ground lease please see Note 9 - Commitments and Contingencies to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Upon disposition of the 1140 Avenue of the Americas property, we removed the related ROU asset and lease liability from the condensed consolidated balance sheet.

8713 Fifth Avenue

We have breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue in each of the last 23 quarters ended June 30, 2026. The principal amount for the loan was $10.0 million as of June 30, 2026. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period that has been ongoing. The excess cash flow sweep period will continue until the covenant breaches are cured in accordance with the terms of the loan agreement. This property has not generated any excess cash since the breach occurred, and thus no cash has ever been trapped related to this property.

Additionally, in the event that (i) the debt service coverage ratio covenant remains in breach at or below the current level for two consecutive calendar quarters and (ii) the lender reasonably determines that such breach is due to the property being imprudently managed by the current manager, the lender has the right, but not the obligation, to require that we replace the current manager with a third party manager chosen by us. As of June 30, 2026, although, the lender has not notified the Company of a determination that a breach of the debt service coverage ratio is due to imprudent management.

400 E. 67th Street/200 Riverside Blvd.

We entered a lease sweep period under the non-recourse mortgage secured by 400 E. 67th Street/200 Riverside Blvd. in the year ended December 31, 2024, resulting from a near-maturity lease with a major tenant at the property which expired in the third quarter of 2024. The principal amount for the loan was $50.0 million as of June 30, 2026. Under the loan agreement, a lease sweep period is triggered, when (i) the date that is twelve months prior to the end of the term of the major lease, (ii) the date required by the major tenant to give notice of its exercise of a renewal option, (iii) any major tenant lease is surrendered or terminated prior to the expiration date, (iv) if the major tenant discontinues its operations and the major tenants long term debt is not rated lower than investment grade, (v) any material default under the major tenant’s lease, (vi) any major tenant insolvency proceeding.

Under the lease sweep period, any excess cash generated, if any, is to be held in a segregated reserve account controlled by the lender as additional collateral. As of June 30, 2026 and December 31, 2025 we had $3.3 million and $3.7 million, respectively, in cash swept that is retained by the lender and recorded within restricted cash on our condensed consolidated balance sheet.

On November 19, 2024, the lender sent a notice to us alleging that we were in default under the loan agreement governing the loan secured by the non-recourse mortgage on the property for events that occurred in the third and fourth quarters of 2023, specifically our failure to establish a cash management account for excess cash sweeps over monthly debt service requirements. The lender had been remitting excess cash on their own accord until the period of cash sweep was put into effect in 2024 as described above. In that notice of default, the lender asserted we owe an estimated $1.0 million in excess cash to be deposited into the loan reserve account. We responded to such notice of default on February 20, 2025 rejecting the assertions made by the lender, which we believed were without merit as a result of the lender's failure to implement a cash management account and our inability to take such action unilaterally due to the mechanics for receipt of lease payments provided for by the loan agreement. Beginning in March 2025, the lender began charging default interest to us, currently totaling $5.4 million. On June 10, 2025, the lender sent a second notice to us alleging defaults under such loan agreement as a result of (i) our failure to pay the outstanding amount due thereunder beginning in April 2025 and (ii) our failure to cooperate with the lender to comply with the aforementioned cash management procedures. The second default notice reaffirmed that, as a result of the aforementioned defaults, interest was accruing at the default rate under the loan agreement and made a demand that all unpaid amounts due under the loan agreement be paid. As of the date of this Quarterly Report on Form 10-Q, we have not responded to the second default notice. Further, we incurred a liability as of June 30, 2025 in relation to the June 10, 2025 default notice.

On November 6, 2025, we received a notice from the special servicer on behalf of the lender identifying certain additional events of default, specifically incurrence of indebtedness that does not constitute permitted indebtedness and incurrence of liens that are not in favor of the lender or permitted encumbrances, subject to certain exceptions, as a result of our alleged failure to make certain additional payments and certain liens filed on the property as a result thereof. In such notice, the lender notified us that, due to the alleged events of default under the loan agreement, the loan had been accelerated, and all amounts under the loan agreement were due and payable, together with interest at the default rate set forth in the loan agreement, which is a rate annum equal to the lesser of (i) the maximum rate permitted by applicable law, or (ii) four percent (4%) above the interest rate of 4.516% per annum, compounded monthly. Such amounts include, but are not limited to, the $50.0 million principal amount of the promissory notes evidencing the loan agreement. We are evaluating our options with respect to the property and there can be no assurance as to the resolution of these matters with the lender.

On January 21, 2026, the trustee appointed to act on behalf of the lenders filed a complaint with the New York County Court, naming the OP and our subsidiary borrowers under such loan agreement as defendants, requesting the court enter a judgment of foreclosure on the property and that the OP and such borrower pay the lenders the amount of the debt, inclusive of certain accrued fees and expenses, remaining unsatisfied after the sale of the property.

On March 16, 2026, we filed our answer to such complaint, which admitted in part and denied in part the material allegations and asserted certain affirmative defenses. While the OP is named as a defendant in the complaint and the complaint alleges facts that under certain circumstances could give rise to limited recourse obligation by the OP under the guaranty agreement related to the loan agreement, we do not believe that any of the allegations against the OP are sufficient to trigger any such recourse obligation of the OP under the guaranty agreement.

On June 3, 2026, we entered into a settlement agreement that provides for the resolution of the foreclosure action, including consent to the appointment of a receiver and the entry of a judgment of foreclosure and sale, subject to the terms of the agreement.

The lender filed the stipulation for appointment of a receiver on June 8, 2026, but it was opposed by the Condominium Board of the property (the “Condo Board”) because it asserts that, pursuant to the Condominium’s declaration and by-laws, its right to collect rents in satisfaction of allegedly unpaid common charges from our unit is prior and superior to the lender's right under the mortgage. The Condo Board has a separate action pending in the New York County Court asserting claims against the lender, us, and the tenant with respect to the collection and retention of rents from the unit, which the Condo Board asserts should be used to satisfy such common charges.

Other Debt Covenants

We were in compliance with the remaining covenants under our other mortgage notes payable as of June 30, 2026 and continue to monitor compliance with those provisions. If we experience additional lease terminations, due to tenant bankruptcies or otherwise, or tenants placed on a cash basis continue to not pay rent, it is possible that certain of the covenants on other loans may be breached and we may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, our other mortgages also contain cash management provisions that are not considered events of default, and as such, acceleration of principal would only occur upon an event of default.

The loan agreements for 123 William Street, 8713 Fifth Avenue and 196 Orchard do not contain cross-default provisions such that the default matters related to 1140 Avenue of the Americas or 400 E. 67th Street/200 Riverside Blvd., and the acceleration of the outstanding obligation under the loan agreement related to the 1140 Avenue of the Americas or the 400 E. 67th/200 Riverside Blvd. properties, is not expected to have an impact on those properties under such loan agreements.

Capital Expenditures

For the six months ended June 30, 2026, we funded an aggregate of $0.5 million of capital expenditures primarily related to provisions for tenant improvements at certain of our properties.

We may invest in additional capital expenditures to further enhance the value of our properties. Additionally, many of our lease agreements with tenants include provisions for tenant improvement allowances. The amount we expect to invest in capital expenditures during the full year 2026, including amounts we expect to fund under new or replacement leases, will likely be similar to the amount invested in 2025.

We funded our capital expenditures during the six months ended June 30, 2026 with (i) cash on hand, which included proceeds from previous financings, and (ii) cash retained from the Advisor either from (a) deferring payment of related-party management fees to the Advisor as needed or (b) providing a bridge loan when necessary.

Acquisitions and Dispositions

We had no acquisitions or dispositions during the six months ended June 30, 2026 or 2025.

Non-GAAP Financial Measures

This section discusses the non-GAAP financial measures we use to evaluate our performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) as well as adjusted EBITDA.

EBITDA and adjusted EBITDA are both non-GAAP metrics and should not be construed to be more relevant or accurate than other metrics calculated and presented in accordance with GAAP, including net income (loss), in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than non-GAAP metrics.

We consider EBITDA and adjusted EBITDA useful indicators of our performance. Because these metrics’ calculations exclude such factors as depreciation and amortization of real estate assets, interest expense, impairment charges, equity-based compensation, gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), these metrics’ presentations facilitate comparisons of operating performance between periods and between other companies that use these measures.

As a result, we believe that the use of these non-GAAP metrics together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, these non-GAAP metrics are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends and capital expenditures. Investors are cautioned that these non-GAAP metrics should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization

We define adjusted EBITDA as net loss excluding (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization expense, (iv) impairment charges, (v) interest income and other income or expense, (vi) gains or losses on debt extinguishment, (vii) equity-based compensation expense, (vii) acquisition and transaction costs, (viii) gain or loss on asset sales and (ix) expenses paid with issuances of our common stock in lieu of cash.

The below table presents a reconciliation of our EBITDA and our adjusted EBITDA from net income (loss) for the three and six months ended June 30, 2026 and 2025:

(in thousands)

Inflation

We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates. As of June 30, 2026, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.5%. To help mitigate the adverse impact of inflation, approximately 72% of our leases with our tenants contain rent escalation provisions which increase the cash rent that is due under these leases over time by an average cumulative increase of 2.2% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or other measures. As of June 30, 2026, based on straight-line rent, approximately 72% are fixed rate, scheduled escalation increases recorded on a straight-line basis, and 28% do not contain any escalation provisions.

In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation. Currently, the impact of inflation has had an immaterial impact to operating costs. However, to the extent such costs exceed the tenants base year, certain but not all of our leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in costs and operating expenses resulting from inflation. As the costs of general goods and services continue to rise, we may be adversely impacted by increases in general and administrative costs due to overall inflation.

Related-Party Transactions and Agreements

Please see Note 10 — Related Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

There has been no material change in our exposure to market risk during the six months ended June 30, 2026. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our 2025 Annual Report.

In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of June 30, 2026, the end of the period covered by this Quarterly Report on Form 10-Q. We identified a material weakness as of December 31, 2025 in our internal control over financial reporting, which was not fully remediated as of June 30, 2026. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We concluded that our internal control over financial reporting was not effective as of December 31, 2025 and was not fully remediated as of June 30, 2026 with respect to the following: (i) a lack of segregation of duties over journal entry preparation, posting, and approval, and the absence of a standardized, documented independent review and approval process of journal entries following the end of each quarterly period to allow for a detailed review of accounting transaction that would identify errors in a timely manner, (ii) internal control over financial reporting where evidence of the sufficiency of managements review controls could not be determined including the objectives, review procedures, precision/thresholds, timing, and evidence of performance, which were not sufficiently defined or retained, and (iii) internal control over the safeguarding, segregation, and financial reporting of tenant security deposits.

As of the date of this Quarterly Report on Form 10-Q, management is in the process of evaluating and implementing remediation measures to address the identified material weaknesses. However, the material weaknesses will not be considered remediated until these controls have been designed, implemented, and operating effectively for a sufficient period of time.

Other than as described above, no change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our 2025 Annual Report, and we direct your attention to those risk factors.