UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 2017
2023
OR
☐OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________
Commission file number: 000-55393001-39448
arcnycsmalllogotransa07.jpgPicture1.jpg
American Realty Capital New York City REIT, Inc.Strategic Investment Co.
(Exact name of registrant as specified in its charter)
Maryland46-4380248
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
405 Park Ave., 4th Floor, New York, NY
10022
(Address of principal executive offices)(Zip Code)
(212) 415-6500
(Registrant's telephone number, including area code)

650 Fifth Ave., 30th Floor, New York, NY                 10019
______________________________________________________________________________________ _________________________________________________________________________
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (212) 415-6500
Former name, former address and former fiscal year, if changed since last report: Not Applicable
Securities registered pursuant to Section 12(b) of the Act: None.
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.01 par value per shareNYCNew York Stock Exchange
Class A Preferred Stock Purchase RightsNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically, and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No o

☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.  See definitionthe definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☒
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company x
Emerging growth companyx
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes x☒ No

As of October 31, 2017,August 8, 2023, the registrant had 31,237,3262,326,993 shares of Class A common stock outstanding.



AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


INDEX TO FINANCIAL STATEMENTS

Page
Page
Item 1. Financial Statements
Consolidated Balance Sheets as of September June 30 2017, 2023 (Unaudited) and December 31, 20162022
3
Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Six Months Ended September 30, 2017June 30, 2023 and 20162022 (Unaudited)
4
Consolidated StatementStatements of Changes in Equity for the Nine Three and Six Months Ended SeptemberJune 30 2017, 2023 (Unaudited)
5
Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2022 (Unaudited)
6
Consolidated Statements of Cash Flows for the Three and NineSix Months Ended September June 30 2017, 2023 and 20162022 (Unaudited)
67
Notes to Consolidated Financial Statements (Unaudited)
78
2433
4045
4145
4246
4246
4246
4246
4346
4346
4446
4446
4548




2

Table of Contents

PartPART I — FINANCIAL INFORMATION
Item 1. Financial Statements.


AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)

June 30,
2023		December 31,
2022
ASSETS(Unaudited) 
Real estate investments, at cost:
Land$192,489 $192,600 
Buildings and improvements577,761 576,686 
Acquired intangible assets63,445 71,848 
Total real estate investments, at cost833,695 841,134 
Less accumulated depreciation and amortization(171,721)(167,978)
Total real estate investments, net661,974 673,156 
Cash and cash equivalents7,052 9,215 
Restricted cash6,112 6,902 
Operating lease right-of-use asset54,846 54,954 
Prepaid expenses and other assets5,540 5,624 
Derivative asset, at fair value1,184 1,607 
Straight-line rent receivable29,203 29,116 
Deferred leasing costs, net9,581 9,881 
Total assets$775,492 $790,455 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Mortgage notes payable, net$394,931 $394,159 
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $401 and $118 at June 30, 2023 and December 31, 2022, respectively)12,045 12,787 
Operating lease liability54,687 54,716 
Below-market lease liabilities, net2,495 3,006 
Deferred revenue3,835 4,211 
Total liabilities467,993 468,879 
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at June 30, 2023 and December 31, 2022— — 
Common stock, $0.01 par value, 300,000,000 shares authorized, 2,302,950 and 1,886,298 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively23 19 
Additional paid-in capital703,587 698,761 
Accumulated other comprehensive income1,203 1,637 
Distributions in excess of accumulated earnings(422,012)(399,355)
Total stockholders’ equity282,801 301,062 
Non-controlling interests24,698 20,514 
Total equity307,499 321,576 
Total liabilities and equity$775,492 $790,455 

  September 30, 2017 December 31, 2016
ASSETS (Unaudited)  
Real estate investments, at cost:    
Land $133,380
 $133,380
Buildings and improvements 510,291
 502,067
Acquired intangible assets 107,131
 109,498
Total real estate investments, at cost 750,802
 744,945
Less accumulated depreciation and amortization (57,726) (37,889)
Total real estate investments, net 693,076
 707,056
Cash and cash equivalents 30,471
 47,671
Restricted cash 28,519
 2,150
Investment securities, at fair value —
 477
Prepaid expenses and other assets (including amounts due from related parties of $83 and $670 at September 30, 2017 and December 31, 2016, respectively) 17,879
 13,017
Deferred leasing costs, net 5,324
 3,233
Total assets $775,269
 $773,604
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Mortgage notes payable, net of deferred financing costs $233,361
 $191,328
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $72 and $167 at September 30, 2017 and December 31, 2016, respectively) 10,621
 6,580
Below-market lease liabilities, net 25,820
 28,528
Deferred revenue 5,557
 3,024
Distributions payable 3,873
 3,953
Total liabilities 279,232
 233,413
     
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2017 and December 31, 2016 —
 —
Common stock, $0.01 par value, 300,000,000 shares authorized, 31,164,225 and 30,856,841 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 312
 309
Additional paid-in capital 687,342
 680,476
Accumulated other comprehensive income —
 10
Accumulated deficit (191,617) (140,604)
Total stockholders' equity 496,037
 540,191
Total liabilities and stockholders' equity $775,269
 $773,604


The accompanying notes are an integral part of these unaudited consolidated financial statements.



3
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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except for share and per share data)
(Unaudited)






 Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Revenue from tenants$15,782 $16,231 $31,316 $31,877 
Operating expenses:   
Asset and property management fees to related parties1,988 1,785 3,872 3,707 
Property operating8,353 8,329 16,774 16,926 
Impairment of real estate investments151 — 151 — 
Equity-based compensation2,304 2,201 4,504 4,321 
General and administrative2,439 5,175 5,620 8,161 
Depreciation and amortization6,749 7,041 13,701 14,022 
Total operating expenses21,984 24,531 44,622 47,137 
Operating loss(6,202)(8,300)(13,306)(15,260)
Other income (expense):
Interest expense(4,707)(4,703)(9,370)(9,418)
Other income (expense)10 2 19 (35)
Total other expense(4,697)(4,701)(9,351)(9,453)
Net loss and Net loss attributable to common stockholders$(10,899)$(13,001)$(22,657)$(24,713)
Other comprehensive income (loss):
Change in unrealized (loss) gain on derivative(52)622 (434)2,372 
    Other comprehensive (loss) income(52)622 (434)2,372 
Comprehensive loss$(10,951)$(12,379)$(23,091)$(22,341)
Weighted-average shares outstanding — Basic and Diluted2,286,797 1,679,211 (1)2,163,524 1,670,880 (1)
Net loss per share attributable to common stockholders — Basic and Diluted$(4.77)$(7.77)(1)$(10.47)$(14.84)(1)
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Revenues:        
Rental income $13,345
 $13,441
 $40,009
 $30,759
Operating expense reimbursements and other revenue 1,130
 967
 3,554
 2,208
Total revenues 14,475
 14,408
 43,563
 32,967
         
Operating expenses:        
Property operating 6,848
 6,357
 19,882
 13,871
Operating fees incurred from related parties 1,515
 1,525
 4,566
 3,676
Acquisition and transaction related —
 24
 6
 4,327
General and administrative 2,066
 1,268
 5,634
 3,770
Depreciation and amortization 7,125
 7,272
 21,349
 16,776
Total operating expenses 17,554
 16,446
 51,437
 42,420
Operating loss (3,079) (2,038) (7,874) (9,453)
Other income (expense):        
Interest expense (2,866) (2,387) (8,365) (5,027)
Income from investment securities and interest 68
 56
 190
 305
Gain on sale of investment securities —
 —
 24
 —
Total other expense (2,798) (2,331) (8,151) (4,722)
Net loss $(5,877) $(4,369) $(16,025) $(14,175)
         
Other comprehensive income (loss):        
Unrealized gain on investment securities —
 10
 —
 32
Reversal of accumulated unrealized gain on investment securities —
 —
 (10) —
Comprehensive loss $(5,877) $(4,359) $(16,035) $(14,143)
         
Basic and diluted weighted average shares outstanding 31,106,250
 30,556,494
 30,956,152
 30,634,400
Basic and diluted net loss per share $(0.19) $(0.14) $(0.52) $(0.46)
Dividends declared per common share $0.39
 $0.38
 $1.13
 $1.13
______

(1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1 — Organization to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information).

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY
For the Nine Months Ended September 30, 2017
(In thousands, except for share data)
(Unaudited)






Six Months Ended June 30, 2023
Class A Common Stock
Number of
Shares		Par ValueAdditional
Paid-in
Capital		Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, December 31, 20221,886,298 $19 $698,761 $1,637 $(399,355)$301,062 $20,514 $321,576 
Common stock issued related to Rights Offering386,100 4 4,055 — — 4,059 — 4,059 
Common stock issued to the Advisor in connection with management fees (see Note 7)
31,407 — 485 — — 485 — 485 
Redemption of fractional shares of common stock(1,948)— (24)— — (24)— (24)
Equity-based compensation2,054 — 320 — — 320 4,184 4,504 
Common stock shares withheld
upon vesting of restricted stock
(961)— (10)— — (10)— (10)
Net loss— — — — (22,657)(22,657)— (22,657)
  Other comprehensive income— — — (434)— (434)— (434)
Balance, June 30, 20232,302,950 $23 $703,587 $1,203 $(422,012)$282,801 $24,698 $307,499 
 Common Stock        
 
Number of
Shares
 Par Value 
Additional
Paid-in
Capital
 Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders' Equity
Balance, December 31, 201630,856,841
 $309
 $680,476
 $10
 $(140,604) $540,191
Common stock issued through distribution reinvestment plan666,842
 7
 14,163
 —
 —
 14,170
Common stock repurchases(359,458) (4) (7,333) —
 —
 (7,337)
Share-based compensation—
 —
 36
 —
 —
 36
Distributions declared—
 —
 —
 —
 (34,988) (34,988)
Net loss—
 —
 —
 —
 (16,025) (16,025)
Reversal of unrealized gain upon realization of investment securities—
 —
 —
 (10) —
 (10)
Balance, September 30, 201731,164,225
 $312
 $687,342
 $—
 $(191,617) $496,037


Three Months Ended June 30, 2023
Class A Common Stock
Number of
Shares		Par Value
Additional
Paid-in
Capital (1)
Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, March 31, 20232,303,895 $23 $703,385 $1,255 $(411,113)$293,550 $22,606 $316,156 
Equity-based compensation16 — 212 — — 212 2,092 2,304 
Common stock shares withheld
upon vesting of restricted stock
(961)— (10)— — (10)— (10)
Net loss— — — — (10,899)(10,899)— (10,899)
Other comprehensive income— — — (52)— (52)— (52)
Balance, June 30, 20232,302,950 $23 $703,587 $1,203 $(422,012)$282,801 $24,698 $307,499 


The accompanying notes are an integral part of these unaudited consolidated financial statements.



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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.

CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN EQUITY
(In thousands)thousands, except for share data)
(Unaudited)



 Nine Months Ended September 30,
 2017 2016
Cash flows from operating activities:   
Net loss$(16,025) $(14,175)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:   
Depreciation and amortization21,349
 16,776
Amortization of deferred financing costs964
 1,823
Accretion of below- and amortization of above-market lease liabilities and assets, net(1,570) (1,868)
Share-based compensation36
 49
Gain on sale of investment securities(24) —
Changes in assets and liabilities:   
Prepaid expenses, other assets and deferred costs(7,236) (6,323)
Accounts payable, accrued expenses and other liabilities3,901
 1,399
Deferred revenue2,533
 1,732
Restricted cash(1,549) —
Net cash provided by (used in) operating activities2,379
 (587)
Cash flows from investing activities:   
Investments in real estate—
 (79,162)
Purchase of investment securities, net—
 (4)
Proceeds from the sale of investment securities491
 —
Capital expenditures(8,084) (12,401)
Net cash used in investing activities(7,593) (91,567)
Cash flows from financing activities:   
Proceeds from mortgage note payable115,180
 —
Payment of mortgage note payable(96,000) —
Payments of financing costs(2,931) (3,327)
Distributions paid(20,898) (18,713)
Repurchases of common stock(7,337) (12,490)
Restricted cash—
 (2,866)
Net cash used in financing activities(11,986) (37,396)
Net change in cash and cash equivalents(17,200) (129,550)
Cash and cash equivalents, beginning of period47,671
 182,700
Cash and cash equivalents, end of period$30,471
 $53,150
    
Supplemental Disclosures:   
Cash paid for interest$6,976
 $2,914
Non-Cash Investing and Financing Activities   
Mortgage note payable used to acquire investments in real estate—
 99,000
Distributions payable3,873
 3,800
Accrued capital expenditures140
 284
Other liabilities assumed in real estate transactions—
 353
Common stock issued through distribution reinvestment plan14,170
 16,098
Mortgage notes payable proceeds classified as restricted cash24,820
 —

Six Months Ended June 30, 2022
Common Stock
Number of
Shares (1)
Par Value (1)
Additional
Paid-in
Capital (1)
Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, December 31, 20211,659,717 $17 $691,234 $(1,553)$(350,709)$338,989 $12,147 $351,136 
Common stock issued to the Advisor in connection with management fees (see Note 7)
26,913 — 2,321 — — 2,321 — 2,321 
Equity-based compensation16,963 — 138 — — 138 4,183 4,321 
Common stock issued to
directors in lieu of cash for
board fees		1,255 — 121 — — 121 — 121 
Dividends declared on common stock, $0.20 per share— — — — (2,670)(2,670)— (2,670)
Distributions paid to non-controlling interest holders(80)(80)(80)
Net loss— — — — (24,713)(24,713)— (24,713)
  Other comprehensive income— — — 2,372 — 2,372 — 2,372 
Balance, June 30, 20221,704,848 $17 $693,814 $819 $(378,172)$316,478 $16,330 $332,808 
________

(1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).

Three Months Ended June 30, 2022
Common Stock
Number of
Shares (1)
Par Value (1)
Additional
Paid-in
Capital (1)
Accumulated Other Comprehensive LossDistributions in excess of accumulated earningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, March 31, 20221,671,476 $17 $692,329 $197 $(363,790)$328,753 $14,239 $342,992 
Common stock issued to the Advisor in connection with management fees (see Note 7)
15,803 — 1,313 — — 1,313 — 1,313 
Equity-based compensation16,963 — 110 — — 110 2,091 2,201 
Common stock issued to
directors in lieu of cash for
board fees		606 — 62 — — 62 — 62 
Dividends declared on common stock, $0.10 per share— — — — (1,341)(1,341)— (1,341)
Distributions paid to non-controlling interest holders— — — — (40)(40)— (40)
Net loss— — — — (13,001)(13,001)— (13,001)
  Other comprehensive income— — — 622 — 622 — 622 
Balance, June 30, 20221,704,848 $17 $693,814 $819 $(378,172)$316,478 $16,330 $332,808 
_________

(1) Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).


The accompanying notes are an integral part of these unaudited consolidated financial statements.


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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
20232022
Cash flows from operating activities:  
Net loss$(22,657)$(24,713)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization13,701 14,022 
Amortization of deferred financing costs771 771 
Accretion of below- and amortization of above-market lease liabilities and assets, net(9)(101)
Equity-based compensation4,504 4,321 
Management fees paid/reinvested in common stock by the Advisor485 2,321 
Impairments of real estate investments151 — 
Changes in assets and liabilities:
Straight-line rent receivable(84)(2,233)
Straight-line rent payable54 54 
Prepaid expenses, other assets and deferred costs(471)(499)
Accounts payable, accrued expenses and other liabilities(246)9,197 
Deferred revenue(376)(1,403)
Net cash provided by (used in) operating activities(4,177)1,737 
Cash flows from investing activities:
Capital expenditures(2,801)(1,374)
Net cash used in investing activities(2,801)(1,374)
Cash flows from financing activities:  
Payments on mortgage note payable— (5,500)
  Proceeds from Rights Offering, net (see Note 7)
4,059 — 
Dividends paid on common stock— (2,670)
Redemption of fractional shares of common stock and restricted shares(24)— 
Distributions to non-controlling interest holders— (80)
Common stock shares withheld upon vesting of restricted shares(10)— 
Net cash provided by (used in) financing activities4,025 (8,250)
Net change in cash, cash equivalents and restricted cash(2,953)(7,887)
Cash, cash equivalents and restricted cash, beginning of period16,117 28,428 
Cash, cash equivalents and restricted cash, end of period$13,164 $20,541 
Cash and cash equivalents$7,052 $8,097 
Restricted cash6,112 12,444 
Cash, cash equivalents and restricted cash, end of period$13,164 $20,541 
Supplemental Disclosures:
Non-Cash Investing and Financing Activities:
Common stock issued to directors in lieu of cash for board fees$— $121 
Net change in accrued capital expenditures for the period496 685 
Common stock issued to the Advisor in connection with management fees (see Note 7)
485 2,321 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)



Note 1 — Organization
American Realty Capital New York City REIT, Inc.Strategic Investment Co. (including, as required by context, New York City Operating Partnership L.P., (the "OP"“OP”), and its subsidiaries, the “Company”) was formed to invest its assets in properties inis an externally managed company that currently owns a portfolio of commercial real estate located within the five boroughs of New York City, with a focus onprimarily Manhattan. The Company may also purchase for investment purposesCompany’s real estate assets consist of office properties and certain real estate investment assets that accompany office properties, including retail spaces and amenities, as well as hospitality assets, residential assets and otheramenities. At the Company’s 1140 Avenue of the Americas property, types exclusively in New York City. All such properties may be acquired and owned byduring the third quarter of 2021, the Company alone or jointly with another party.also began operating Innovate NYC, a co-working company that is specific to this property only, that offers move-in ready private offices, virtual offices, and meeting space on bespoke terms to clients. As of SeptemberJune 30, 2017,2023, the Company owned sixeight properties consisting of 1.11.2 million rentable square feet, acquired for an aggregate purchase price of $686.1$790.7 million.
On December 30, 2022, the Company announced that it was changing its business strategy by expanding the scope of the assets and businesses it may own and operate. The Company was incorporated on December 19, 2013may now seek to acquire assets such as a Maryland corporationhotels, expand its co-working office space business and electedseek to invest in and qualified to be taxedoperate businesses such as hotel or parking lot management companies. By investing in other asset types, the Company may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”) beginning. Excluding hotels, these additional assets do not generate REIT-qualifying income and are operating businesses. As a result, on January 9, 2023, the Company’s board of directors authorized termination of the Company’s REIT election which became effective on January 1, 2023. Historically, the Company filed an election to be taxed as a REIT commencing with its taxable year ended December 31, 2014. 2014, which remained in effect with respect to each taxable year ending on or before December 31, 2022.
As a consequence of the Company’s decision to terminate its election to be taxed as a REIT, the ownership limitations set forth in Section 5.7 of its charter, including, without limitation, the “Aggregate Share Ownership Limit,” as defined therein, no longer apply. The Company filed with the State Department of Assessments and Taxation of Maryland a Certificate of Notice reflecting the board’s determination that it is no longer in its best interest to continue to qualify as a REIT and that therefore the Aggregate Share Ownership Limit will no longer be in effect.
On January 11, 2023 the Company effected a 1-for-8 reverse stock split that was previously approved by the Company’s board of directors, resulting in each outstanding share of Class A common stock being converted into 0.125 shares of common stock, with no fractional shares being issued (the “Reverse Stock Split”). All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Reverse Stock Split.
Also, effective January 19, 2023, the Company amended its charter to change its name to “American Strategic Investment Co.” from “New York City REIT, Inc.” Trading of the Company’s Class A common stock on the New York Stock Exchange under the new name began on January 20, 2023 under the existing trading symbol “NYC.” Shares of the Company’s Class A common stock were first listed on the New York Stock Exchange (“NYSE”) on August 18, 2020. Also, on February 22, 2023, the Company completed a non-transferable rights offering raising gross proceeds of $5.0 million. As a result, the Company issued 386,100 shares of its Class A common stock subscribed for in the Rights Offering on February 27, 2023.
Substantially all of the Company’s business is conducted through the OP.
On April 24, 2014, the Company commencedOP and its initial public offering (the "IPO") on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million.wholly-owned subsidiaries. The Company closed its IPO on May 31, 2015. As of September 30, 2017, the Company had 31.2 million shares of common stock outstanding, including unvested restricted shares of common stock ("restricted shares") and shares issued pursuant to a distribution reinvestment plan (the "DRIP"), and had received total gross proceeds from the IPO of $771.6 million, inclusive of $60.1 million from the DRIP and net of repurchases.
The Company first established an estimated net asset value per share of its common stock (“Estimated Per-Share NAV”) in 2016. On October 24, 2016, the Company’s board of directors approved an Estimated Per-Share NAV as of June 30, 2016 (the “2016 Estimated Per-Share NAV”), which was published on October 26, 2016 (the “NAV Pricing Date”). Prior to the NAV Pricing Date, the Company had offered shares pursuant to the DRIP and had repurchased shares pursuant to the Share Repurchase Program (“SRP”) at a price based on $23.75 per share, the offering price in the IPO. Beginning with the NAV Pricing Date, the Company began to offer shares pursuant to the DRIP and repurchase shares pursuant to its SRP at a price based on Estimated Per-Share NAV.
On October 25, 2017, the Company's board of directors approved an Estimated Per-Share NAV as of June 30, 2017 (the "2017 Estimated Per-Share NAV"), which was published on October 26, 2017. This is the first annual update of Estimated Per-Share NAV the Company has published. The Company intends to publish subsequent valuations of Estimated Per-Share NAV at least once annually, at the discretion of the Company’s board of directors.
The Company has no employees.advisor, New York City Advisors, LLC (the "Advisor"“Advisor”) has been retained by, manages the Company to manageCompany’s day-to-day business with the Company's affairs on a day to-day basis. The Company has retainedassistance of the Company’s property manager, New York City Properties, LLC (the “Property Manager”) to serve as the Company's property manager.. The Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business(“AR Global”) and these related parties receive compensation and fees for providing services to AR Capital, LLC, "AR Global"), the parentCompany. The Company also reimburses these entities for certain expenses they incur in providing these services. Please see Note 9 — Related Party Transactions and Arrangements for additional information on the Company’s Advisor and affiliates of the Company's sponsor, American Realty Capital III, LLC (the "Sponsor"), as a result of which they are related parties, and each of these entities has received or will receive compensation, fees and expense reimbursements for services related to the IPO and the investment and management of the Company's assets.Advisor, including ownership percentages.
The Company is the sole general partner and holds substantially all of the units of limited partner interests in the OP (“OP units”). The Advisor contributed $2,020 to the OP in exchange for 90 OP units, which represents a nominal percentage of the aggregate OP ownership. A holder of OP units has the right to convert OP units for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, in accordance with the limited partnership agreement of the OP, provided, however, that such OP units must have been outstanding for at least one year. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.


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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

Note 2 — Summary of Significant Accounting Policies
Basis of Accounting
The accompanying consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"(“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentationstatement of results for the interim periods. The results of operations for the ninethree and six months ended SeptemberJune 30, 20172023 and 2022, respectively, are not necessarily indicative of the results for the entire year or any subsequent interim period.
These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2016,2022, which are included in the Company'sCompany’s Annual Report on Form 10-K filed with the SECSecurities and Exchange Commission (the “SEC”) on March 28, 2017. There16, 2023. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company'sCompany’s significant accounting policies during the ninesix months ended SeptemberJune 30, 2017,2023.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other thanpartners or members as well as whether the updatesentity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. The Company has determined the OP is a VIE of which the Company is the primary beneficiary.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable.
Non-controlling Interests
The non-controlling interests represent the portion of the equity in the OP that is not owned by the Company. Under the multi-year outperformance agreement with the Advisor (the “2020 OPP”), the OP issued a class of units of limited partnership (“LTIP Units”) during 2020, which are reflected as part of non-controlling interest as of June 30, 2023 and December 31, 2022 (see Note 7 - Stockholders’ Equity and Note 11 - Equity-Based Compensation for additional information).
Impacts of the COVID-19 Pandemic
The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. During the first quarter of 2020, the global COVID-19 pandemic commenced. The impact of the COVID-19 pandemic evolved rapidly and resulted in a decrease in economic activity. One of the hardest hit locations, New York City, is where all of the Company’s properties are located.
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
The negative effects of the global pandemic did impact the ability of some of the Company’s tenants to pay their monthly rent during 2020 and 2021, which in some cases led to breaches of certain debt covenants, some of which are still in effect (see below). However, with the exception of one minor lease deferral during the third quarter of 2022, which was unrelated to the impact of COVID-19, the trend of tenants not paying monthly rent did not continue during 2022 or in the first two quarters of the year ending December 31, 2023. The Company took a proactive approach to achieve mutually agreeable solutions with some of its tenants and in some cases, during 2020 and 2021, the Company executed different types of lease amendments with multiple tenants which included deferrals, abatements, extensions to the term of the leases, and in one instance, a reduction of the lease term and the Company continues to modify leases as opportunities arise. During the quarter ended June 30, 2023 we had three tenant leases naturally expire and one tenant elect an early termination for October of 2023, which were unrelated to the impact of COVID-19, and four new leases that commenced.

As a result of the financial difficulties of some of the Company’s tenants during 2020 and 2021, as described below:above, the Company has had breaches of debt covenants on mortgages secured by its 9 Times Square, 1140 Avenue of Americas, Laurel/Riverside and 8713 Fifth Avenue properties under the non-recourse mortgages for those properties. These breaches caused cash trap events, where operating cash flow from the property after debt service was held in restricted cash as additional collateral for the loan, that continued through the quarter ended June 30, 2023 (except for the 9 Times Square and Laurel/Riverside properties), but were not events of default. Currently, the Company is no longer in breach of the covenants for the Laurel/Riverside property or for its 9 Times Square property. The Company remains in breach of the 1140 Avenue of the Americas and 8713 Fifth Avenue loans as of June 30, 2023. See Note 4 — Mortgage Notes Payable, Net for further details regarding the current status, as of June 30, 2023, of the debt covenants under the mortgages secured by these properties.
Recent Accounting Pronouncements
In May 2014,For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which does not apply to leases subsequently modified). However, in light of the COVID-19 pandemic in which many leases are being modified, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU 2014-09”and U.S. Securities and Exchange Commission (the “SEC”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09,have provided relief that allows companies to make a policy election as amended by subsequent ASUs onto whether they treat COVID-19 related lease amendments as a provision included in the topic, establishespre-concession arrangement, and therefore, not a comprehensive model for entitieslease modification, or to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflectstreat the consideration to which the entity expectslease amendment as a modification. In order to be entitled in exchangeconsidered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. For COVID-19 relief qualified changes, there are two methods to potentially account for those goodssuch rent deferrals or services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may applyabatements under the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equityrelief, (1) as ofif the beginning of the fiscal year of adoption or a full retrospective approach. The Company will adopt this guidance effective January 1, 2018 and currently expects to utilize the modified retrospective approach upon adoption and does not expect that this will result in a significant cumulative-effect adjustment to equity.
The Company has progressed in its project plan in evaluating its various revenue streams in order to identify any differenceschanges were originally contemplated in the timing, measurementlease contract or presentation of revenue recognition under ASC 606 and ASC Topic 842, Leases (“ASC 842”). Based on(2) as if the Company’s evaluation of its various revenue streams,deferred payments are variable lease payments contained in the Company believeslease contract. For all other lease changes that gains on sales of real estate could be impacted by adoption of ASC 606. The Company expects that this standard could have an impact on the timing of gains on certain sales of real estate as a result of more transactions generally qualifying as sales of real estate and revenue being recognized at an earlier date than under current accounting guidance. Specifically, the Company expects that this would impact partial sales of real estate in situations where the Company no longer retains a controlling financial interest. If the Company were to enter into partial sales of real estate,did not qualify for FASB relief, the Company would derecognizebe required to apply modification accounting including assessing classification under ASC 842.
Some, but not all of the real estate asset consistentCompany’s lease modifications qualify for the FASB relief. In accordance with the principles outlinedrelief provisions, instead of treating these qualifying leases as modifications, the Company has elected to treat the modifications as if previously contained in ASC 606the lease and any retained non-controlling ownership interestrecast rents receivable prospectively (if necessary). Under that accounting, for modifications that were deferrals only, there would be measured at fair value consistentno impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease.
For leases not qualifying for this relief, the Company applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.
Revenue Recognition
The Company’s revenues, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the guidanceterms of each lease reported on noncash considerationa straight-line basis over the initial term of the lease. As of June 30, 2023, these leases had a weighted-average remaining lease term of 6.8 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires that the Company record a receivable for, and include in ASC 606.revenue from tenants, unbilled rent receivables that the Company will receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. The Company has not entered into any partial sales of real estate.
The Company is continuing to evaluate any differences indefers the timing, measurement, or presentation of revenue recognition and the impact on the Company's consolidated financial statements and internal accounting processes resulting from ASC 606 as well as ASC 842, Leases as discussed below.
In January 2016, the FASB issued an update that amends the recognition and measurement of financial instruments. The new guidance revises an entity’s accounting related to equity investments and the presentationlease payments received from tenants in advance of their due dates. Pursuant to certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is not permitted for most of the amendments in the update. The Company is currently evaluating the impact of the new guidance.
In February 2016, the FASB issued an update to ASU 2016-02 establishing ASC 842, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASC 842 supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. ASC 842 will impact theCompany’s lease accounting model for both lessees and lessors. The Company will adopt this guidance effective January 1, 2019.

agreements, tenants are required
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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

to reimburse the Company for certain property operating expenses (recorded in total revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. To the extent such costs exceed the applicable tenant’s base year, many but not all of the Company’s leases require the tenant to pay its allocable share of increases in operating expenses, which may include common area maintenance costs, real estate taxes and insurance. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.    
The Company is a lessee for a propertycontinually reviews receivables related to rent and unbilled rents receivable and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under the leasing standard, the Company is required to assess, based on credit risk, if it has a ground lease as of September 30, 2017. For this lease,is probable that the Company will collect virtually all of the lease payments at the lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. In fiscal year ended December 31, 2022, 2021 and 2020, respectively, this assessment included consideration of the impacts of the COVID-19 pandemic on the Company’s tenant’s ability to pay rents in accordance with their contracts. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that it is probable that it will collect virtually all of the lease payments (base rent and additional rent), the lease will continue to be requiredaccounted for on an accrual basis (i.e. straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and the straight-line rent receivable accrued will be written off, as well as any accounts receivable, where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants in accordance with current accounting rules, on the accompanying consolidated statements of operations and comprehensive loss in the period the related costs are incurred, as applicable.
In accordance with lease accounting rules the Company records uncollectible amounts as reductions in revenue from tenants. During the six months ended June 30, 2023 and 2022, the Company had no such reductions in revenue which excludes rents from tenants on a cash basis not collected.
Accounting for Leases
Lessor Accounting
In accordance with the lease accounting standard, all leases as lessor prior to recordadoption were accounted for as operating leases. The Company evaluates new leases originated after the adoption date (by the Company or by a right-of-usepredecessor lessor/owner) pursuant to the new guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than major part of remaining economic useful life of the asset and lease liability(e.g., equal to or greater than 75%), the present value of the remainingminimum lease payments upon adoptionrepresents substantially all (e.g., equal to or greater than 90%) of this update. Thethe leased property’s fair value at lease inception, or the asset so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases are evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor. For the three year period ended December 31, 2022, the Company did not have any leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.
As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.
Lessee Accounting
For lessees, the accounting standard requires lessees to applythe application of a dual lease classification approach, classifying leases as either financeoperating or operatingfinance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whetherLease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to recordlease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a termFurther, certain transactions where at inception of 12 months or less will bethe lease the buyer-lessor accounted for similar to existing guidance for operating leases today.
From a lessor perspective the Company expects that the new standard will impact the presentation of lease and non-lease components of revenue such as rent, and operating expense reimbursements including common area maintenance, taxes, and insurance from leases for which the Company is a lessor. The Company does not expect this guidance to impact its existing lessor revenue recognition pattern. The Company anticipates that it will elect the following practical expedients, which must be electedtransaction as a package and applied consistently by an entity to all of its leases, which allow the Company to not have to reassess the following upon adoption: (i) whether any expired or existing contract contains a lease, (ii) lease classification related to expired or existing leases, or (iii) whether costs incurred on existing leases qualify as initial direct costs. The Company is continuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of the new lessee accounting model on the Company’s consolidated financial position, results of operations and disclosures.
In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance.
In November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance.
In May 2017, the FASB issued guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, does not change as a result of the modification. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for reporting periods for which financial statements have not yet been issued. The Company is currently evaluating the impact of this new guidance.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 8- Commitments and Contingencies.
We are the lessee under a land lease which was previously classified as an operating lease prior to adoption of lease accounting and will continue to be classified as an operating lease under transition elections unless subsequently modified. This lease is reflected on the Company’s consolidated balance sheets and the rent expense is reflected on a straight-line basis over the lease term.
Recently AdoptedIssued Accounting Pronouncements
In October 2016,March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance where a reporting entityin Topic 848 is optional and may be elected over the period March 12, 2020 through June 30, 2022 as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that the Company’s hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will need to evaluate if it should consolidate a variable interest entity ("VIE"). The amendments changebe based matches the evaluationindex on the corresponding derivatives. Application of whether a reporting entity isthese expedients preserves the primary beneficiarypresentation of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common controlCompany’s derivatives, which will be consistent with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted.our past presentation. The Company has adopted the provisions of this guidance beginning January 1, 2017 and determined that there is no impact to the Company's consolidated financial position, resultsas of operations and cash flows.June 30, 2023.
In January 2017, the FASB issued guidance that revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single asset or group of similar assets, the assets acquired (or disposed of) would not be considered a business. The revised guidance is effective for reporting periods beginning after December 15, 2017, and the amendments will be applied prospectively. Early application is permitted only for transactions that have not previously been reported in issued financial statements. The Company has assessed this revised guidance and expects, based on historical acquisitions, future properties acquired to qualify as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. The Company adopted this guidance for the nine months ended September 30, 2017. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Note 3 — Real Estate Investments
There were no real estate assets acquired or liabilities assumed during the ninesix months ended SeptemberJune 30, 2017. On2023 or 2022. Also, there were no dispositions of real estate during the six months ended June 15, 2016,30, 2023 or 2022. However, the Company throughis evaluating its options for its 421 W. 54th Street - Hit Factory property, which include current discussions to potentially sell or lease the property to a wholly-owned subsidiarythird party. As no agreement has been reached, the property does not qualify to be classified as held for sale on the consolidated balance sheet as of June 30, 2023. During the quarter ended June 30, 2023, the Company recorded an impairment charge of $0.2 million for this property as it was determined that the carrying value exceeded the Company’s most recent estimate of fair market value of the OP, completed its acquisitionproperty as of the leasehold interest in an institutional-quality office building located at 1140 Avenue of the Americas in Manhattan, New York ("1140 Avenue of the Americas"). 1140 Avenue of the Americas comprises 249,703 square feet and is subject to a ground lease held by 1140 Sixth Avenue LLC. The contract purchase price for 1140 Avenue of the Americas was $180.0 million, exclusive of closing costs.
The following table presents the allocation of the real estate assets acquired and liabilities assumed during the nine months ended SeptemberJune 30, 2016:
  Nine Months Ended September 30,
  2016
(Dollar amounts in thousands) Total Assets Acquired
Real estate investments, at cost:  
Land $—
Building and improvements 148,647
Total tangible assets 148,647
Acquired intangibles:  
In-place leases 27,433
Above-market lease assets 5,230
Other intangibles —
Below-market lease liabilities (5,277)
Below-market ground lease asset 2,482
Total intangible assets, net 29,868
Total assets acquired, net 178,515
Mortgage notes payable used to acquire real estate investments (99,000)
Premiums on mortgages assumed —
Other assets acquired —
Other liabilities assumed (353)
Cash paid for acquired real estate investment $79,162
Number of properties purchased 1
Future Minimum Cash Rent

The following table presents future minimum base cash rental payments due to the Company subsequent to September 30, 2017. These amounts exclude contingent rent payments, as applicable, that may be collected based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.
(In thousands) Future Minimum Base Cash Rent Payments
2017 $11,180
2018 48,411
2019 47,063
2020 43,039
2021 39,069
Thereafter 139,430
  $328,192

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

2023.
Significant TenantTenants
As of SeptemberJune 30, 20172023 and 2016,December 31, 2022, there were no tenants whose annualized rental income on a straight-line basis, based on leases signed,commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.
Intangible Assets and Liabilities
Acquired intangible assets and lease liabilities consist of the following as of September 30, 2017 and December 31, 2016:
12
  September 30, 2017
(In thousands) 
Gross Carrying
 Amount
 
Accumulated
 Amortization
 
Net Carrying
Amount
Intangible assets:      
In-place leases $63,177
 $19,918
 $43,259
Other intangibles 31,447
 3,475
 27,972
Below-market ground lease 2,482
 64
 2,418
Above-market leases 10,025
 2,719
 7,306
Acquired intangible assets $107,131
 $26,176
 $80,955
Intangible liabilities:      
Below-market lease liabilities $34,069
 $8,249
 $25,820
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AMERICAN STRATEGIC INVESTMENT CO.
  December 31, 2016
(In thousands) 
Gross Carrying
 Amount
 
Accumulated
 Amortization
 
Net Carrying
Amount
Intangible assets:      
In-place leases $65,544
 $14,045
 $51,499
Other intangibles 31,447
 2,601
 28,846
Below-market ground lease 2,482
 27
 2,455
Above-market leases 10,025
 1,618
 8,407
Acquired intangible assets $109,498
 $18,291
 $91,207
Intangible liabilities:      
Below-market lease liabilities $34,471
 $5,943
 $28,528

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Amortization of in-place leases and other intangibles(1)
 $2,877
 $3,607
 $9,113
 $8,642
Amortization and (accretion) of above- and below-market leases, net(2)
 $(512) $(631) $(1,607) $(1,882)
Amortization of below-market ground lease(3)
 $13
 $14
 $37
 $14
_______________
(1)Reflected within depreciation and amortization expense.
(2)Reflected within rental income.
(3)Reflected within property operating expense.


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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
In-place leases$909 $1,326 $2,003 $2,606 
Other intangibles177 177 354 354 
Total included in depreciation and amortization$1,086 $1,503 $2,357 $2,960 
Above-market lease intangibles$197 $263 $477 $526 
Below-market lease liabilities(255)(326)(511)(652)
Total included in revenue from tenants$(58)$(63)$(34)$(126)
Below-market ground lease, included in property operating expenses$12 $12 $25 $25 
The following table provides the projected amortization expense and adjustments to revenues for the next five years as of SeptemberJune 30, 2017:2023:
(In thousands)2023 (remainder)2024202520262027
In-place leases$1,330 $2,259 $1,200 $632 $624 
Other intangibles354 708 708 708 708 
Total to be included in depreciation and amortization$1,684 $2,967 $1,908 $1,340 $1,332 
Above-market lease assets$349 $314 $123 $117 $117 
Below-market lease liabilities(434)(850)(503)(183)(180)
Total to be included in revenue from tenants$(85)$(536)$(380)$(66)$(63)
(In thousands) October 1, 2017- December 31, 2017 2018 2019 2020 2021
In-place leases $2,576
 $9,372
 $8,588
 $6,718
 $5,332
Other intangibles 291
 1,165
 1,165
 1,165
 937
Total to be included in depreciation and amortization $2,867
 $10,537
 $9,753
 $7,883
 $6,269
           
Above-market lease assets $(366) $(1,369) $(1,305) $(1,164) $(1,064)
Below-market lease liabilities 874
 3,435
 3,092
 2,679
 2,371
Total to be included in rental income $508
 $2,066
 $1,787
 $1,515
 $1,307

Note 4 — Investment Securities
As of September 30, 2017, the Company had no investment in equity securities. As of December 31, 2016, the Company had an investment in an equity security with a fair value of $0.5 million. This investment was considered to be an available-for-sale security and therefore increases or decreases in the fair value of this investment were recorded in accumulated other comprehensive income (loss) as a component of equity on the consolidated balance sheets unless the security was considered to be other-than-temporarily impaired, at which time the losses would be reclassified to expense. In addition, the unrealized gain or loss recorded in accumulated other comprehensive income (loss) were reversed on the date of the sale. On June 15, 2017, the Company redeemed its investment in equity securities at approximately $491,000 with a cost basis of approximately $467,000 and realized approximately $24,000 gain as of September 30, 2017.
The following table details the unrealized gains and losses on the investment security by security type as of December 31, 2016:
(In thousands) Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
December 31, 2016        
Equity security $467
 $10
 $—
 $477

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

Note 54 — Mortgage Notes Payable, Net
The Company'sCompany’s mortgage notes payable, net as of SeptemberJune 30, 20172023 and December 31, 20162022 are as follows:
Outstanding Loan Amount
PortfolioEncumbered PropertiesJune 30,
2023		December 31,
2022		Effective Interest RateInterest RateMaturity
(In thousands)(In thousands)
123 William Street (1)
1$140,000 $140,000 4.73 %FixedMar. 2027
9 Times Square149,500 49,500 3.72 %Fixed(2)Apr. 2024
1140 Avenue of the Americas (3)
199,000 99,000 4.17 %FixedJul. 2026
400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage250,000 50,000 4.58 %FixedMay 2028
8713 Fifth Avenue (4)
110,000 10,000 5.04 %FixedNov. 2028
196 Orchard Street151,000 51,000 3.90 %FixedAug. 2029
Mortgage notes payable, gross7399,500 399,500 4.35 %
Less: deferred financing costs, net (5)
(4,569)(5,341)
Mortgage notes payable, net$394,931 $394,159 
    Outstanding Loan Amount       
Portfolio Encumbered Properties September 30,
2017		 December 31,
2016		 Effective Interest Rate Interest Rate Maturity 
    (In thousands) (In thousands)       
123 William Street(1)
 1 $140,000
 $96,000
 4.73% Fixed Mar. 2027 
1140 Avenue of the Americas 1 99,000
 99,000
 4.17% Fixed Jul. 2026 
Less: deferred financing costs, net   (5,639) (3,672)       
Mortgage note payable, net of deferred financing costs 2 $233,361
 $191,328
 4.61%     
_______
_____________________
(1)As of June 30, 2023, $0.9 million was in escrow in accordance with the conditions under the loan agreement and presented as part of restricted cash on the consolidated balance sheet. The restricted cash can be used to fund leasing activity, tenant improvements and leasing commissions related to this property.
(1)The Company entered into a loan agreement with Barclays Bank PLC, in the amount of $140.0 million, on March 6, 2017. A portion of the proceeds from the loan was used to repay the outstanding principal balance of approximately $96.0 million on the existing mortgage loan secured by the property. At closing, the lender placed $24.8 million of the proceeds in escrow, to be released to the Company in accordance with the conditions under the loan, in connection with leasing activity, tenant improvements, leasing commissions and free rent obligations related to this property. As of September 30, 2017, the $24.8 million of the proceeds remained in escrow and is included in restricted cash on the unaudited consolidated balance sheet.
(2)Fixed as a result of the Company having entered into a “pay-fixed” interest rate swap agreement, which is included in derivatives, at fair value on the consolidated balance sheet as of June 30, 2023 (see Note 6 — Derivatives and Hedging Activities for additional information).
(3)Due to covenant breaches resulting in cash trap for this property, all cash generated from operating this property is being held in a segregated account, and the Company will not have access to the excess cash flows until the covenant breaches are cleared. As of June 30, 2023 and December 31, 2022, there was $2.3 million and $3.6 million, respectively, held in a cash management account, which is part of the Company’s restricted cash on its consolidated balance sheet. See “Debt Covenants” section below for additional details
(4)Due to covenant breaches resulting in cash trap for this property, all cash generated from operating this property, if any, is required to be held segregated account, and the Company will not have access to the excess cash flows until the covenant breaches are cleared. As of June 30, 2023 and December 31, 2022, no cash was trapped related to this property. The Company signed a lease with a new tenant at this property in November 2021, and the tenant began occupying a portion of the leased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of the space in the fourth quarter ending December 31, 2023, which will bring the occupancy to 100.0%.
(5)Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
Collateral and Principal Payments
Real estate assets and intangible assets of $447.5$818.5 million, at cost (net of below-market lease liabilities), at Septemberas of June 30, 20172023 have been pledged as collateral to the Company'sCompany’s mortgage notenotes payable and are not available to satisfy the Company'sCompany’s other obligations unless first satisfying the mortgage note payable on the property. The Company is required to make payments of interest on its mortgage notenotes payable on a monthly basis.
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
The following table summarizes the scheduled aggregate principal payments subsequent to SeptemberJune 30, 2017:2023:
(In thousands)Future Minimum Principal Payments
2023 (remainder)$— 
202449,500 
2025— 
202699,000 
2027140,000 
Thereafter111,000 
Total$399,500 
(In thousands) Future Minimum Principal Payments
2017 $—
2018 —
2019 —
2020 —
2021 —
Thereafter 239,000
Total $239,000

Debt Covenants
1140 Avenue of the Americas
The Company has breached both a debt service coverage provision and a reserve fund provision under its non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 12 quarters ended June 30, 2023. The principal amount of the loan was $99.0 million as of June 30, 2023. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after paying operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured if the Company satisfies the required debt service coverage ratio for two consecutive quarters, whereupon the additional collateral will be released. The Company can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications. As of June 30, 2023 and December 31, 2022 the Company had $2.3 million and $3.6 million, respectively, in cash that is retained by the lender and maintained in restricted cash on the Company’s consolidated balance sheet as of those dates.
8713 Fifth Avenue
The Company'sCompany breached a debt service coverage ratio covenant under the non-recourse mortgage notes payable require compliance with certain property-level debt covenants.secured by 8713 Fifth Avenue in each of the last 12 quarters ended June 30, 2023. The principal amount for the loan was $10.0 million as of June 30, 2023. The breach of this covenant did not result in an event of default but rather triggered an excess cash flow sweep period. The Company has the ability to avoid the excess cash flow sweep period by electing to fund a reserve in the amount of $125,000 of additional collateral in cash or as a letter of credit. As of September 30, 2017, the date of filing this Quarterly Report on Form 10-Q, the Company had not yet determined whether it will do so. If the Company does not elect to continue to fund the $125,000 additional collateral in a subsequent quarter, then the excess flow sweep period would commence in such quarter and continue until the covenant breaches are cured in accordance with the terms of the loan agreement. Additionally, in the event that the debt service coverage ratio covenant remains in breach at or below the current level for two consecutive calendar quarters and the lender reasonably determines that such breach is due to the property not being prudently managed by the current manager, the lender has the right, but not the obligation, to require that the Company replace the current manager with a third party manager chosen by the Company. This property did not generate any excess cash since the breach occurred and thus no cash has ever been trapped related to this property. The Company signed a lease with a new tenant at this property in November 2021, and the tenant began occupying a portion of the leased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of the space in the fourth quarter of the year ending December 31, 2023, which will bring the occupancy to 100.0%
Other Debt Covenants
The Company was in compliance with the debtremaining covenants under its other mortgage note agreements.notes payable as of June 30, 2023, and, it continues to monitor compliance with those provisions. If the Company experiences 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 the Company may also become restricted from accessing excess cash flows from those properties. Similar to the loans discussed above, the Company’s 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.


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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)


LIBOR Transition
The Company had a mortgage loan agreement and a related derivative agreement for a “pay-fixed” interest swap that had terms that were previously based on LIBOR. However, in March of 2022, effective with the 9 Times Square loan modification and the termination and replacement of the “pay-fixed” swaps, both the mortgage loan agreement and the current “pay-fixed” interest swaps are now based on SOFR.
Note 65 — Fair Value of Financial Instruments
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the instrument. This alternative approach also reflects the contractual terms of the instrument, as applicable, including the period to maturity, and may use observable market-based inputs, including interest rate curves and implied volatilities, and unobservable inputs, such as expected volatility. The guidance defines three levels of inputs that may be used to measure fair value.
value:
Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3—Unobservable inputs that reflect the entity'sentity’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.
See Note 4 — Investment Securities. The Company redeemed its investment in an equity securityFinancial Instruments Measured at Fair Value on June 15, 2017. As of December 31, 2016, the Company had an investment in a real estate income fund that was traded in active markets and therefore, due to the availability of quoted market prices in active markets, classified this investment as Level 1 in the fair value hierarchy.Recurring Basis
Derivative Instruments
The following table presents information about the Company's assetsCompany’s derivative instruments are measured at fair value on a recurring basis asbasis. Although the Company has determined that the majority of December 31, 2016, aggregated by the level in the fairinputs used to value hierarchyits derivatives fall within which that instrument falls.
  Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable Inputs  
(In thousands) Level 1 Level 2 Level 3 Total
December 31, 2016        
Investment Securities $477
 $—
 $—
 $477
There were no transfers between levelsLevel 2 of the fair value hierarchy, during 2016.the credit valuation adjustments associated with this derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparty. However, as of June 30, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivatives valuation in its entirety is classified in Level 2 of the fair value hierarchy.
The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
(In thousands)Quoted Prices
in Active
Markets
Level 1		Significant Other
Observable
Inputs
Level 2		Significant
Unobservable
Inputs
Level 3		Total
June 30, 2023    
Interest rate “Pay - Fixed” swaps - assets$— $1,184 $— $1,184 
Total$— $1,184 $— $1,184 
December 31, 2022
Interest rate “Pay - Fixed” swaps - assets$— $1,607 $— $1,607 
Total$— $1,607 $— $1,607 

Financial instruments not carriedInstruments That Are Not Reported at fair valueFair Value
The Company is required to disclose at least annually the fair value of financial instruments for which it is practicable to estimate the value. The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other assets, accounts payable and distributions payable approximates their carrying value on the consolidated balance sheets due to their short-term nature.
The fair values of the Company'sCompany’s financial instruments that are not reported at fair value on the consolidated balance sheet are reported below:
June 30, 2023December 31, 2022
(In thousands)LevelGross Principal Balance Fair ValueGross Principal BalanceFair Value
Mortgage note payable — 9 Times Square3$49,500 $48,478 $49,500 $48,282 
Mortgage note payable — 1140 Avenue of the Americas399,000 87,514 99,000 89,015 
Mortgage note payable — 123 William Street3140,000 123,823 140,000 126,814 
Mortgage note payable — 400 E. 67th Street - Laurel Condominium / 200 Riverside Boulevard - ICON Garage350,000 42,741 50,000 44,023 
Mortgage note payable — 8713 Fifth Avenue310,000 8,642 10,000 8,933 
Mortgage note payable — 196 Orchard Street351,000 43,095 51,000 42,349 
Total$399,500 $354,293 $399,500 $359,416 
Note 6 — Derivatives and Hedging Activities
    September 30, 2017 December 31, 2016
(In thousands) Level Gross Principal Balance  Fair Value Gross Principal Balance Fair Value
Mortgage note payable — 123 William Street 3 $140,000
 $145,483
 * *
Mortgage note payable — 1140 Avenue of the Americas 3 $99,000
 $98,721
 $99,000
 $98,000
Risk Management Objective of Using Derivatives
* The Company currently uses derivative financial instruments, including an interest rate swap, and may in the future use others, including options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company endeavors to only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.
The table below presents the fair value of the mortgage note payable is estimated to be equivalent to its carrying value because it bears interest at a variable rate that fluctuates with marketCompany’s derivative financial instruments as well as their classification on the Company’s consolidated balance sheets as of June 30, 2023 and there has been no significant change in the credit risk. This mortgage note payable was repaid on March 6, 2017.

December 31, 2022.
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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

(In thousands)Balance Sheet LocationJune 30,
2023		December 31, 2022
Derivatives designated as hedging instruments:
Interest Rate “Pay-fixed” SwapDerivative asset (liability), at fair value$1,184 $1,607 
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate collars designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract and payments of variable-rate amounts if interest rates fall below the floor strike rate on the contract.
The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the six months ended June 30, 2023 and year ended December 31, 2022, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. In connection with the modification and partial pay down of the Company’s mortgage loan on its 9 Times Square property in March 2022, the Company terminated its existing $55.0 million notional, LIBOR based “pay-fixed” interest rate swap and replaced it with a new $49.5 million notional, SOFR based “pay-fixed” interest rate swap. In connection with this termination/replacement of the swap derivatives, the Company reflected as a charge (associated with the reduced notional amount) of approximately $38,338 in Other Income (Expense) on the Company’s Statement of Operations for the six month period ended June 30, 2022. At the time of the modification a net carrying amount reflecting the amount paid and the off market value rolled into the new swap and remained in Accumulated Other Comprehensive Income (“AOCI”). The amount will be amortized into interest expense over the term of the hedged item. There was $18,281 of unamortized balance left as of June 30, 2023.
Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates that $1.2 million will be reclassified from other comprehensive income (loss) as a decrease to interest expense.
As of June 30, 2023 and December 31, 2022, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk.
June 30, 2023December 31, 2022
Interest Rate DerivativeNumber of
Instruments		Notional AmountNumber of
Instruments		Notional Amount
(In thousands)(In thousands)
Interest Rate “Pay-fixed” Swap1$49,500 1$49,500 


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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the periods indicated.

Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2023202220232022
Amount of gain recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)$318 $454 $243 $1,878 
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income as interest expense$370 $(168)$678 $(494)
Total interest expense recorded in consolidated statements of operations and comprehensive loss$4,707 $4,703 $9,370 $9,418 
Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of June 30, 2023 and December 31, 2022. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Balance Sheet.
Gross Amounts Not Offset on the Balance Sheet
(In thousands)Gross Amounts of Recognized AssetsGross Amounts of Recognized (Liabilities)Gross Amounts Offset on the Balance SheetNet Amounts of Assets (Liabilities) Presented on the Balance SheetFinancial InstrumentsCash Collateral Received (Posted)Net Amount
June 30, 2023$1,184 $— $— $1,184 $— $— 1,184 
December 31, 2022$1,607 $— $— $1,607 $— $— 1,607 
Credit-risk-related Contingent Features
The Company has agreements with its derivative counterparty that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
As of June 30, 2023, the Company’s did not have any derivatives with a fair value in a net liability position including accrued interest but excluding any adjustment for nonperformance risk. As of June 30, 2023, the Company did not post any collateral related to these agreements and was not in breach of any agreement provisions.
Note 7 — Common StockStockholders’ Equity
As of SeptemberJune 30, 2017,2023 and December 31, 2022, the Company had 31.2 2.3 million and 1.9 million shares (adjusted for the Reverse Stock Split) of common stock outstanding, respectively, including unvested restricted shares. As of June 30, 2023, all of the Company’s shares of common stock outstanding was Class A common stock, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total proceeds from public offerings of $771.6 million, inclusive of $60.1 million from the DRIP and net of repurchases. As of December 31, 2016,shares.
Rights Offering
In February 2023, the Company had 30.9raised gross proceeds of $5.0 million ($4.1 million of net proceeds) from its Rights Offering, which entitled holders of rights to purchase 0.20130805 of a share of its Class A common stock for every right held at a subscription price of $12.95 per whole share. As a result, the Company issued 386,100 shares of its Class A common stock
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
subscribed for in the Rights Offering on February 27, 2023. In connection with the Rights Offering, Bellevue and its affiliates acquired approximately 367,956 shares.
Dividends
During the three months ended March 31, 2022 and June 30, 2022, the Company paid dividends to common stockholders in the amount of $0.80 per share for each quarter (adjusted for the Reverse Stock Split per quarter) of common stock outstanding, including unvested restrictedper year, payable to holders of record on a single quarterly record date. On July 1, 2022, the Company announced that it suspended paying dividends and has not declared or paid dividends, beginning with the quarter ended June 30, 2022.
Class A Common Stock Issued to the Advisor - Side Letter and In Lieu of Cash for the Management Fee
In January 2023, the Advisor elected to receive shares of Class A common stock in lieu of cash in respect of its management fee for that month. The Company issued 31,407 shares of its Class A common stock (adjusted for the Reverse Stock Split) using the 10-day average price of $15.92 (adjusted for the Reverse Stock Split) which was greater than minimum price required by the NYSE rules. The Company has paid the Advisor in cash for the Advisor’s management fees in subsequent months through August 2023.
In accordance with the Side Letter (as defined in Note 9 — Related Party Transactions and Arrangements), the Advisor reinvested base management fees, aggregating approximately $1.0 million and $1.5 million in shares of the Company’s Class A common stock in the first and second quarters of 2022, respectively. As a result, the Company issued 5,672, 5,438, 4,848, 5,031 and 5,924 shares (all adjusted for the Reverse Stock Split) of its Class A common stock in February, March, April, May and June 2022, respectively, in connection with the monthly base management fee earned by the Advisor.
In each of August, September, October, November and December 2022, the Advisor elected to receive shares of Class A common stock in lieu of cash in respect of its management fee. The Company issued 15,586, 18,899, 18,285,19,320 and 24,744 shares (adjusted for the Reverse Stock Split), respectively, using the 10-day average price of $32.08, $26.24, $27.36, $25.92 and $20.24 per share (adjusted for the Reverse Stock Split), respectively, which was greater than the minimum price required under NYSE rules. The Advisor is not obligated to accept shares in lieu of cash for these fees and makes this election monthly.
For accounting purposes, the shares of the Company’s Class A common stock issued in accordance with the Side Letter and the shares issued in lieu of cash for the management fee, as elected by the Advisor, were treated as issued using the closing price on date of issue and the related expense for the year are reflected as $0.5 million for the six months ended June 30, 2023and $1.3 million and $2.3 million for the three and six months ended June 30, 2022, respectively.
Class A Common Stock Issued to the Company’s Independent Board of Directors
During the three months ended March 31, 2022, the Company’s independent board of directors made an election to receive stock in lieu of cash for board services rendered during the fourth quarter for the year ended December 31, 2021 and accordingly, the expense was recorded in the fourth quarter of the year ended December 31, 2021. Also, during the three months ended June 30, 2022, each of the Company’s independent board of directors made an election to receive stock in lieu of cash for board services rendered during the first quarter of the year ended December 31, 2022. Accordingly, the expense was recorded in the first quarter of the year ended December 31, 2022. As a result of these elections, the Company issued:
•649 shares of its Class A common stock (adjusted for the Reverse Stock Split) to the Company’s independent board of directors in the first quarter of 2022 (for services rendered in the fourth quarter of the year ended December 31, 2021), and
•606 shares of its Class A common stock (adjusted for the Reverse Stock Split) to the Company’s independent board of directors in the quarter ended June 30, 2022 (for services rendered in the quarter ended March 31, 2022).
The Company paid all directors fees in cash during the second quarter, third quarter and fourth quarter of the year ended December 31, 2022 as well as the first six months of the year ending December 31, 2023.
Equity Offerings
Class A Common Stock
On October 1, 2020, the Company entered into an Equity Distribution Agreement, pursuant to which the DRIP,Company may, from time to time, offer, issue and had received totalsell to the public, through its sales agents, shares of Class A common stock having an aggregate offering price of up to $250.0 million in an “at the market” equity offering program (the “Common Stock ATM Program”). The Company’s ability to sell shares under its existing shelf registration statement, including under the Common
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
Stock ATM Program, is limited to one third of the Company’s market capitalization or “public float” unless the aggregate value of its Class A Common Stock held by non-affiliates exceeds $75.0 million. Additionally, the shelf registration Statement covering sales under the Common Stock ATM Program will expire on October 1, 2023.
In August 2022, Bellevue Capital Partners, LLC, (“Bellevue”), which is an entity that controls the Advisor, expressed a desire to invest additional capital in the Company. Although no written agreement was entered into, the Company’s board of directors authorized the issuance of up to 125,000 shares of the Company’s Class A common stock (adjusted for the Reverse Stock Split) for these purposes. During the three months ended September 30, 2022, the Company sold 79,114 shares of Class A common stock (adjusted for the Reverse Stock Split) to Bellevue, for gross proceeds of $764.8$2.0 million, inclusivebefore nominal commissions associated with the sale. These shares were issued to Bellevue through block trades executed under the Company’s Common Stock ATM Program. Bellevue may, from time to time at its discretion, purchase additional shares of $46.0 millionClass A common stock from the DRIP and net of repurchases.
In May 2014, the board of directors of the Company authorized, and the Company began paying, a monthly distribution equivalent to $1.5125 per annum, per share of common stock. The distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The board of directors may reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.
The Company has a Share Repurchase Program ("SRP") that enables stockholders, subject to certain conditions and limitations, to sell their sharesthrough additional block trades. However, there is no assurance as to the Company. Under the SRP stockholders may request that the Company repurchase all or any portion of their shares of common stock, if such repurchase does not impair the Company's capital or operations.
On January 25, 2016, the Company's board of directors approved an amendment of the SRP to supersede and replace the existing SRP effective beginning on February 28, 2016. Under the SRP, as amended, repurchasesnumber of shares of the Company'sCompany’s Class A common stock, when requested, are at the sole discretion of the Company's board of directors and generally will be made semiannually (each six-month period ending June 30 or December 31, a "fiscal semester").if any, that Bellevue may seek to purchase.
On October 24, 2016, the Company's board of directors approved the 2016 Estimated Per-Share NAV, and, on October 25, 2017, the Company's board of directors approved the 2017 Estimated Per-Share NAV.Stockholder Rights Plan
On June 14, 2017,In May 2020, the Company announced that its board of directors had adoptedapproved a stockholder rights plan, but did not take actions to declare a dividend for the plan to become effective. In August 2020, in connection with the listing of the Company’s shares on the NYSE and the related bifurcation of common stock into Class A and Class B common stock, the Company entered into an amended and restated rights agreement, which amended and restated the stockholders rights plan approved in May 2020 and declared a dividend payable in August 2020, of one Class A right for and on each share of Class A common stock and one Class B right for and on each share of Class B common stock, in each case, outstanding on the close of business on August 28, 2020 to the stockholders of record on that date. Each right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”), of the Company at a price of $55.00 per one one-thousandth of a share of Series A Preferred Stock, represented by a right, subject to adjustment. The expiration date of these rights has subsequently been extended to August 18, 2025.
Distribution Reinvestment Plan
An amendment and restatement of the SRP that superseded and replaceddistribution reinvestment plan (the “A&R DRIP”) in connection with the existing SRP effective as of July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shareslisting of the Company’s shares on the NYSE became effective on August 28, 2020. The A&R DRIP allows stockholders who have elected to participate to have dividends paid with respect to all or a portion of their shares of Class A common stock orand Class B common stock reinvested in additional shares of Class A common stock. Shares received theirby participants in the A&R DRIP will represent shares that are, at the election of the Company, either (i) acquired directly from the Company, (directly or indirectly) through one or more non-cash transactionswhich would be considered for repurchase. Other terms and provisions of the amended and restated SRP remained consistent with the existing SRP.
In cases of requests for death and disability, the repurchaseissue new shares, at a price is equal to then-current Estimated Per-Share NAV at the time of repurchase. Prior to the establishment of Estimated Per-Share NAV, the repurchase price in these circumstances was equal to the price paid to acquire the shares.
Prior to the establishment of Estimated Per-Share NAV, the purchase price per share for requests other than for death or disability under the SRP depended on the length of time investors had held such shares as follows (in each case, as adjusted for any stock distributions, combinations, splits and recapitalizations):
after one year from the purchase date - the lower of $23.13 and 92.5% of the amount they actually paid for each share; and,
after two years from the purchase date - the lower of $23.75 and 95.0% of the amount they actually paid for each share.
Following the establishment of Estimated Per-Share NAV, the purchase price per share for requests other than for death or disability under the SRP depended on the length of time investors had held such shares as follows (in each case, as adjusted for any stock distributions, combinations, splits and recapitalizations):
after one year from the purchase date - 92.5% of the Estimated Per-Share NAV;
after two years from the purchase date - 95.0% of the Estimated Per-Share NAV;
after three years from the purchase date - 97.5% of the Estimated Per-Share NAV; and,
after four years from the purchase date - 100.0% of the Estimated Per-Share NAV.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Repurchases for any fiscal semester are limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average number of shares of common stock outstanding on December 31st of the previous calendar year. In addition, the Company is only authorized to repurchase shares in a given fiscal semester up to the amount of proceeds received from the DRIP in that same fiscal semester, as well as any reservation of funds the Company's board of directors, may, in its sole discretion, make available for this purpose. If the establishment of an Estimated Per-Share NAV occurs during any fiscal semester, any repurchase requests received during such fiscal semester will be paid at the Estimated Per-Share NAV applicable on the last day of the fiscal semester.
When a stockholder requests a repurchase and the repurchase is approved by the Company's board of directors, the Company will reclassify such obligation from equity to a liability based on the valueaverage of the obligation. high and low sales prices of Class A common stock on the NYSE on the date of reinvestment, or (ii) acquired through open market purchases by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with proceeds from reinvested dividends to participants for the related quarter, less a per share processing fee.
Shares purchased underissued by the SRP will haveCompany pursuant to the status of authorized but unissued shares. The following table reflectsA&R DRIP, if any, would be recorded within stockholders’ equity in the number ofconsolidated balance sheets in the period dividends or other distributions are declared. During the six months ended June 30, 2023 and year ended December 31, 2022, any DRIP transactions were settled through open market transactions and no shares repurchased cumulatively through September 30, 2017.were issued by the Company.
  Numbers of Shares Repurchased Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2016 645,335
 $23.63
Nine months ended September 30, 2017(1)
 359,458
 20.41
Cumulative repurchases as of September 30, 2017 1,004,793
 $22.48
_____________________
(1)Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13.7 thousand at a weighted average price per share of $23.68 and (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.
Note 8 — Commitments and Contingencies
Lessee Arrangement - Ground Lease
The Company entered into a ground lease agreement in 2016 related to the acquisition of 1140 Avenue of the Americas under a leasehold interest arrangement.arrangement and recorded an ROU asset and lease liability related to this lease upon adoption of ASU 2016-02 during the year ended December 31, 2019. The following table reflectsground lease is considered an operating lease. In computing the minimum base cash rental payments due fromlease liabilities, the Company overdiscounts future lease payments at an estimated incremental borrowing rate at adoption or acquisition if later. The term of the next fiveCompany’s ground lease is significantly longer than the term of borrowings available to the Company on a fully-collateralized basis. The Company’s estimate of the incremental borrowing rate required significant judgment.
As of June 30, 2023, the Company’s ground lease had a weighted-average remaining lease term of 43.5 years and thereafter:
(In thousands) Future Minimum Base Cash Rent Payments- Ground Lease
2017 1,187
2018 4,746
2019 4,746
2020 4,746
2021 4,746
Thereafter 221,484
Total $241,655
Thea discount rate of 8.6%. As of June 30, 2023, the Company’s balance sheet includes an ROU asset and liability of $54.8 million and $54.7 million, respectively, which are included in operating lease right-of-use asset and operating lease liability, respectively, on the consolidated balance sheet. For the three and six months ended June 30, 2023, the Company incurred ground rentpaid cash of $1.2 million and $2.4 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million and $3.6$2.4 million, duringrespectively, on a straight-line basis in accordance with the standard. For the three and nine months ended September 30, 2017, respectively. The Company incurred ground rent expense of $1.2 million and $1.4 million during the three and nine months ended September 30, 2016, respectively.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

months ended June 30, 2022, the Company paid cash of $1.2 million and $2.4 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $1.2 million and $2.4 million, respectively, on a straight-line basis in accordance with the standard.
The lease expense is recorded in property operating expenses in the consolidated statements of operations and comprehensive loss. The Company did not enter into any additional ground leases as lessee during the six months ended June 30, 2023 and 2022.
The following table reflects the ground lease rent payments due from the Company and a reconciliation to the net present value of those payments as of June 30, 2023:
(In thousands)Future Base Rent Payments
2023 (remainder)$2,373 
20244,746 
20254,746 
20264,746 
20274,746 
Thereafter193,008 
Total lease payments214,365 
Less: Effects of discounting(159,678)
Total present value of lease payments$54,687 
Litigation and Regulatory Matters
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of SeptemberJune 30, 2017,2023, the Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.
Note 9 — Related Party Transactions and Arrangements
As of September 30, 2017, an entity wholly owned by the Sponsor owned 8,888 shares of the Company’s outstanding common stock.
Realty Capital Securities, LLC (the "Former Dealer Manager") served as the dealer manager of the IPO, which was ongoing from April 2014 to May 2015, and, together with its affiliates, continued to provide the Company with various services through December 31, 2015. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager and certain of its affiliates that provided services to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Global, the parent of the Sponsor. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc. On March 8, 2017, the creditor trust established in connection with the RCAP bankruptcy filed suit against AR Global, the Advisor, advisors of other entities sponsored by AR Global, and AR Global’s principals (including Mr. Weil, the Company's Executive Chairman, Chief Executive Officer, President and Secretary). The suit alleges, among other things, certain breaches of duties to RCAP. The Company is not named in the suit, nor are there allegations related to the services the Advisor provides to the Company. On May 26, 2017, the defendants moved to dismiss. The Advisor has informed the Company that the Advisor believes the suit is without merit and intends to defend against it vigorously.
As of June 30, 2016,2023 and December 31, 2022, entities wholly owned by AR Global owned 290,937 and 129,671 shares (both adjusted for the Reverse Stock Split), respectively, of the Company’s outstanding Class A common stock. As of June 30, 2023 and December 31, 2022, Bellevue owned approximately 35.8% and 20% of outstanding shares of the Company, hadrespectively.
Fees and Participations Incurred in Connection with the Operations of the Company
Summary of Advisory Agreement
Pursuant to the advisory agreement with the Advisor (as amended from time to time, the “Advisory Agreement”), the Advisor manages the Company’s day-to-day operations. The initial term of the Advisory Agreement ends in July 2030 and will automatically renew for successive five-year terms unless either party gives written notice of its election not to renew at least 180 days prior to the then-applicable expiration date. The Company may only elect not to renew the Advisory Agreement on this basis with the prior approval of at least two-thirds of the Company’s independent directors, and no change of control fee (as defined in the Advisory Agreement) is payable if the Company makes this election.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
Asset Management Fees and Variable Management/Incentive Fees
Overview
The Company pays the Advisor a base asset management fee on the first business day of each month equal to (x) $0.5 million invested inplus (y) a mutual fund managed by an affiliatevariable amount equal to (a)1.25% of the Sponsor. Thereequity proceeds received after November 16, 2018, divided by (b) 12. The base asset management fee is no obligationpayable in cash, shares of common stock, units of limited partnership interest in the OP, or a combination thereof, at the Advisor’s election. The Advisor elected to purchasereceive shares of Class A common stock in lieu of cash for the base management fee in in January 2023 (see Note 7 — Stockholders Equity). Equity proceeds are defined as, with respect to any additional sharesperiod, cumulative net proceeds of all common and preferred equity and equity-linked securities issued by the shares can be sold at any time. The Company soldand its investment in a mutual fundsubsidiaries during the fourth quarterperiod, including: (i) any equity issued in exchange or conversion of 2016. Theexchangeable notes based on the stock price at the date of issuance and convertible equity; (ii) any other issuances of equity, including but not limited to units in the OP (excluding equity-based compensation but including issuances related to an acquisition, investment, joint-venture or partnership); and (iii) effective following the time the Company recognized income from investment securities managed by an affiliatecommences paying a dividend of at least $0.05 per share per annum to its stockholders, (which occurred in October 2020), any cumulative Core Earnings (as defined in the Advisory Agreement) in excess of cumulative distributions paid on the Company’s common stock since November 16, 2018, the effective date of the Sponsormost recent amendment and restatement of the Advisory Agreement.
The Advisory Agreement also entitles the Advisor to an incentive variable management fee. Currently and during the year ended December 31, 2021, the variable management fee is equal to (i) the product of (a) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by(b) 15.0% multiplied by (c) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.1458 (before any adjustment for the Reverse Stock Split), plus (ii) the product of (x) the diluted weighted-average outstanding shares of common stock for the calendar quarter (excluding any equity-based awards that are subject to performance metrics that are not currently achieved) multiplied by (y) 10.0% multiplied by (z) the excess of Core Earnings Per Adjusted Share for the previous three-month period in excess of $0.1944 (before any adjustment for the Reverse Stock Split). The variable management fee is payable quarterly in arrears in cash, shares of common stock, units of limited partnership interest in the OP or a combination thereof, at the Advisor’s election. No incentive variable management fees were earned during the three months ended June 30, 2023 or2022.
Side Letter With the Advisor
On February 4, 2022, the Company entered into a side letter (the “Side Letter”) with the Advisor to the Advisory Agreement pursuant to which the Advisor agreed to, from the date of the Side Letter until August 4, 2022, immediately invest all fees received by the Advisor under Section 10(c)(i)-(ii) of the Advisory Agreement in shares of the Company’s Class A common stock, par value $0.01 per share (the “Shares”), in an amount aggregating no more than $3.0 million. The price of the Shares was determined, at each issuance, in accordance with Section 10(c)(iii) of the Advisory Agreement and was not less than the “Minimum Price” as defined in Section 312.04(h) of the New York Stock Exchange Listed Company Manual (the “Listed Company Manual”), which minimum price was $10.55 per share. The Advisor was paid base management fees, aggregating approximately $4,000$1.0 million and $1.5 million in cash and reinvested these fees in shares of the Company’s Class A common stock in the first and second quarters of the year ended December 31, 2022, respectively (see Note 7 — Stockholders Equity for more information).
Management Fee Expense
The Company recorded expense of $1.5 million and $3.0 million for base asset management fees during the three and six months ended June 30, 2016.
Fees2023 and Participations Paid in Connection With the Operations of the Company
The Advisor is paid an acquisition fee of 1.5% of (A) the contract purchase price of each acquired property$1.3 million and (B) the amount advanced for a loan or other investment. The Advisor is also reimbursed for expenses incurred related to selecting, evaluating and acquiring assets on the Company's behalf, regardless of whether the Company actually acquires the related assets. These acquisition expenses may also include insourced expenses for services performed by the Advisor or its affiliates. Such insourced expenses are fixed initially at and may not exceed 0.50% of the contract purchase price of each property and 0.50% of the amount advanced for each loan or other investment, which is paid at the closing of each such investment. The Advisor is also reimbursed for legal expenses incurred in the process of acquiring properties, in an amount not to exceed 0.10% of the contract purchase price. In addition, the Company also pays third parties, or reimburses the Advisor for any investment-related expenses due to third parties. In no event will the total of all acquisition fees, acquisition expenses and any financing coordination fees (as described below) payable with respect to the Company's portfolio of investments exceed 4.5% of (A) the contract purchase price or (B) the amount advanced for all loans or other investments. Once the proceeds from the primary offering have been fully invested, the aggregate amount of acquisition fees and any financing coordination fees may not exceed 1.5% of (A) the contract purchase price and (B) the amount advanced for a loan or other investment, as applicable, for all the assets acquired. The Company incurred no acquisition fees and acquisition expense reimbursements to the Advisor$2.8 million during the three and ninesix months ended SeptemberJune 30, 2017. 2022. There were no variable management fees incurred in either of these periods. The management fees for the quarter ended March 31, 2023 and the first and second quarters of 2022 were paid partially with cash. The Advisor may elect to but is not obligated to accept shares in lieu of cash for these management fees and makes this election on a monthly basis. The management fees for both periods were paid as follows:
•The Company incurred no acquisitionpaid cash base management fees of $1.5 million (for April, May and acquisition expense reimbursements to the Advisor duringJune 2023) in the three months endedSeptember June 30, 20162023 and $3.6it paid $2.5 million during(for February through June 2023) in the ninesix months ended SeptemberJune 30, 2016.
If2023. In addition, the Advisor provides serviceselected to receive shares of Class A common stock in connectionlieu of cash in respect of its management fee for January 2023 and as a result, the Company issued 31,407 shares of its Class A common stock (adjusted for the Reverse Stock Split)using the 10-day average price of $15.92 (adjusted for the Reverse Stock Split).
•The Company paid cash base management fees of $0.5 million (for January 2022) in the three months ended March 31, 2022. Also, in accordance with the origination or refinancing of any debt that the Company obtains and uses to acquire properties or to make other permitted investments, or that is assumed, directly or indirectly, in connection with the acquisition of properties, the Company paysSide Letter, the Advisor a financing coordination fee equal to 0.75% of the amount made available or outstanding under such financing, subject to certain limitations.

was paid base management fees, aggregating
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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

Until September 30, 2015, for its asset management services,approximately $1.0 million and $1.5 million in cash and reinvested these fees in shares of the Company’s Class A common stock in the first and second quarters of the year ended December 31, 2022, respectively. As a result, the Company issued to5,672, 5,438 4,848, 5,031 and 5,924 shares (all adjusted for the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the board Reverse Stock Split) of directors) to the Advisor performance-based, restricted, forfeitable partnership units in the OP designated as “Class B Units” on a quarterly basis in an amount equal to: (i) the product of (y) 0.1875% multiplied by (z) the cost of the Company's assets divided by (ii) the value of one share ofits Class A common stock as of the last day of such calendar quarter, which is equal initially to $22.50 (the primary offering price minus selling commissionsin February, March, April, May and dealer manager fees). The Class B Units are intended to be profits interests and will vest, and no longer be subject to forfeiture, at such time as: (a) the value of the OP's assets plus all distributions made by the Company to its stockholders equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pretax, non-compounded annual return thereon, or the "economic hurdle;" (b) any one of the following events occurs concurrently with or subsequently to the achievement of the economic hurdle described above: (i) a listing of the Company's common stock on a national securities exchange; (ii) a transaction to which the Company or the OP is a party, as a result of which OP units or the Company's common stock are or will be exchanged for or converted into the right, or the holders of such securities will otherwise be entitled, to receive cash, securities or other property or any combination thereof; or (iii) the termination of the advisory agreement without cause by an affirmative vote of a majority of the Company's independent directors after the economic hurdle has been met; and (c) the Advisor pursuant to the advisory agreement is providing services to the Company immediately prior to the occurrence of an event of the type described in clause (b) above (the "performance condition"). The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the performance condition to be probable. As of September 30, 2017, the Company cannot determine the probability of achieving the performance condition. The Advisor receives distributions on Class B Units, whether vested or unvested, at the same rate as distributions received on the Company's common stock. Such distributions on issued Class B Units are expensed in the consolidated statements of operations and comprehensive loss until the performance condition is considered probable to occur. As of September 30, 2017, the Company's board of directors had approved the issuance of 159,159 Class B UnitsJune 2022, respectively, in connection with the arrangement. Beginning onmonthly base management fee earned by the Advisor.
•In each of August, September, October, 1, 2015,November and December 2022, the Advisor elected to receive shares of Class A common stock in lieu of cash in respect of its management fee. The Company issued 15,586, 18,899, 18,285, 19,320 and 24,744 shares (adjusted for the asset management subordinated participation,Reverse Stock Split), respectively. For the Company began paying an asset management fee in cash to the Advisor or its assignees as compensation for services renderedfull year ended December 31, 2022 in connection with the monthly base management fee earned by the Advisor, an aggregate of 129,671 shares were issued (including those issued in the three months ended March 31, 2022).
For accounting purposes, the shares of the Company’s assets. The assetClass A common stock issued in accordance with the Side Letter and the shares issued in lieu of cash for the management fee is payableto the Advisor for January 2023, as elected by the Advisor, are treated as issued using the closing price on date of issue and the first business day of each month in the amount of 0.0625% multiplied by (i) the cost of the Company's assetsrelated expense totaled $0.5 million for the preceding monthly period or (ii) during the period of time after the Company publishes Estimated Per-Share NAV, the lower of the cost of assetssix months ended June 30, 2023 and the estimated fair market value of the Company’s assets as reported in the applicable periodic or current report filed with the SEC disclosing the fair market value. The Company paid $1.4$1.3 million and $4.1$2.3 million in cash asset management fees duringfor the three and ninesix months ended SeptemberJune 30, 2017, respectively. The Company paid $1.3 million2022, respectively.
Property Management Fees
Pursuant to the Property Management and $3.3 millionLeasing Agreement (the “PMA”), as most recently amended on November 16, 2018, except in cash asset management fees during the three and nine months ended September 30, 2016, respectively.
Unlesscertain cases where the Company contracts with a third party, the Company pays the Property Manager a property management fee equal to: (i) for non-hotel properties, 4.0%3.25% of gross revenues from the properties managed, plus market-based leasing commissions; and (ii) for hotel properties, a market-based fee based on a percentage of gross revenues. The term of the PMA is coterminous with the term of the Advisory Agreement.
Pursuant to the PMA, the Company also reimburses the Property Manager for property-level expenses. These reimbursements are not limited in amount and may include reasonable salaries, bonuses, and benefits of individuals employed by the Property Manager, except for the salaries, bonuses, and benefits of individuals who also serve as one of the Company’s executive officers or as an executive officer of the Property Manager or any of its affiliates. The Property Manager may also subcontract the performance of its property management and leasing services duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services.
On April 13, 2018, in connection with the loan for its 400 E. 67th Street - Laurel Condominium and 200 Riverside Boulevard properties, the Company entered into a new property management agreement with the Property Manager (the “April 2018 PMA”) to manage the properties secured by the loan. With respect to these properties, the substantive terms of the April 2018 PMA are identical to the terms of the PMA, except that the property management fee for non-hotel properties is 4.0% of gross revenues from the properties managed, plus market-based leasing commissions. The April 2018 PMA has an initial term of one year that is automatically extended for an unlimited number of successive one-year terms at the end of each year unless any party gives 60 days’ written notice to the other parties of its intention to terminate.
The Company incurred approximately $145,000$0.5 million and $470,000$0.9 million in property management fees during both the three and ninesix months ended SeptemberJune 30, 2017,2023, and June 30, 2022, respectively. The Company incurred $183,000
Professional Fees and $345,000 in property management fees during the three and nine months ended September 30, 2016, respectively.Other Reimbursements
The Company pays directly or reimburses the Advisor’s costs of providing administrativeAdvisor monthly in arrears, for all the expenses paid or incurred by the Advisor or its affiliates in connection with the services it provides to the Company under the Advisory Agreement, subject to the limitation that the Company will not reimbursefollowing limitations:
•(i) With respect to administrative and overhead expenses of the Advisor, forincluding administrative and overhead expenses of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services but not including their salaries, wages, and benefits, these costs may not exceed in any amountfiscal year,
(ii) $0.4 million, or
(iii) if the Asset Cost (as defined in the Advisory Agreement) as of the last day of the fiscal quarter immediately preceding the month is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal quarter multiplied by which(y) 0.10%.
•(i) With respect to the salaries, wages, and benefits of all employees of the Advisor or its affiliates directly or indirectly involved in the performance of services (including the Company’s operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assetsexecutive officers), these amounts must be comparable to market rates and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairments or other similar non-cash expenses and excluding any gain from the sale of assets for that period, unless the Company's independent directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, in which case the excess amount may be reimbursed to the Advisor in subsequent periods. Additionally, the Company reimburses the Advisor for personnel costs in connection with other services; however, the Companyreimbursements may not reimburse the Advisor for personnel costsexceed, in connection with services for which the Advisor receives acquisition fees, acquisition expense reimbursements or real estate commissions and no reimbursement shall be made for salaries, bonuses or benefits to be paid to the Company's executive officer. Total reimbursement of costs and expenses for the three and nine months ended September 30, 2017 were $1.0 million and $2.5 million, respectively. Total reimbursement of costs and expenses for the three and nine months ended September 30, 2016 were $0.5 million and $1.3 million, respectively.

any fiscal year,
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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

(ii) $2.6 million, or
The predecessor(iii) if the Asset Cost as of the last day of the fiscal year is equal to or greater than $1.25 billion, (x) the Asset Cost as of the last day of the fiscal year multiplied by (y) 0.30%.
Professional fees and other reimbursement include reimbursements to the parent of the Sponsor was party to aAdvisor for administrative, overhead and personnel services, agreement with RCS Advisory Services, LLC ("RCS Advisory"), a subsidiary of RCAP, pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by the Sponsor with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. The predecessorare subject to the parent of the Sponsor instructed RCS Advisorylimits noted above, as well as costs associated with directors and officers insurance which are not subject to stop providing such services in November 2015 and no services have since been provided by RCS Advisory.those limits.
The Company was also party to a transfer agency agreement with American National Stock Transfer, LLC ("ANST"), a subsidiary of RCAP, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end Internal Revenue Service ("IRS") reportingProfessional fees and other services), and supervisory services overseeing the transfer agency services performed by DST Systems, Inc. ("DST"), a third-party transfer agent. The Sponsor received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. DST continued to provide the Company with transfer agency services and, on March 10, 2016, the Company entered into a definitive agreement with DST to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). Forreimbursements for the three and ninesix months ended SeptemberJune 30, 20172023 were $1.2 million and 2016,$2.5 million, respectively.
•The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the three months ended June 30, 2023 were $0.8 million ($0.7 million were for salaries, wages, and benefits and $0.1 million related to administrative and overhead expenses). The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the six months ended June 30, 2023 were $1.9 million ($1.5 million were for salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses).
Professional fees and other reimbursements for the three and six months ended June 30, 2022 were $1.2 million and $2.7 million, respectively.
•The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services from DSTprovided by and reimbursed to the Advisor for the three months ended June 30, 2022 were $0.9 million ($0.7 million were for salaries, wages, and benefits and $0.1 million related to administrative and overhead expenses), respectively. The amount of expenses included within professional fees and other reimbursements related to administrative, overhead and personnel services provided by and reimbursed to the Advisor for the six months ended June 30, 2022 was $2.1 million ($1.7 million were for salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses), respectively.
These amounts include reimbursements to the Advisor for administrative, overhead and personnel services, which are included in generalsubject to the limits noted above, as well as costs associated with directors and administrative expenses on the consolidated statementsofficers insurance which are not subject to those limits.
Summary of operationsFees, Expenses and comprehensive loss during the period in which the service was provided.Related Payables
The following table details amounts incurred in connection with the Company'sCompany’s operations-related services described above as of and for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,Payable (receivable) as of
(In thousands)2023202220232022June 30, 2023December 31, 2022
Ongoing fees: 
Asset and property management fees to related parties (1)
$1,988 $1,785 $3,872 $3,707 $401 $118 
Professional fees and other reimbursements (2)
1,167 1,223 2,528 2,739 — — 
Total related party operation fees and reimbursements$3,155 $3,008 $6,400 $6,446 $401 $118 
  Three Months Ended September 30, Nine Months Ended September 30, Payable (receivable) as of
(In thousands) 20172016 2017 2016 September 30, 2017 December 31, 2016
Acquisition fees and reimbursements:               
Acquisition fees and related cost reimbursements $—
 $—
  $—
  $3,600
  $—
 $(646)
Financing coordination fees —
 —
  1,050
  743
  —
 —
Ongoing fees:  
             
Operating fees incurred from related parties 1,515
 1,525
  4,566
  3,676
  (77)
(1) 
(24)
Professional fees and other reimbursements 988
 460
  2,644
  1,286
  66
(2) 
167
Distributions on Class B units 61
 60
  180
  180
  —
 —
Total related party operation fees and reimbursements $2,564
 $2,045
  $8,440
  $9,485
  $(11) $(503)
________
_____________________(1)During the six months ended June 30, 2023, approximately $0.5 million of this expense was paid with shares of the Company’s Class A common stock (see disclosed above) for shares accepted in lieu of cash. During the six months ended June 30, 2022, the Advisor was paid base management fees aggregating $2.3 million in cash and reinvested these fees in shares of the Company’s Class A common stock.
(1)Represents a receivable balance of approximately $83,000 related to property management fees, offset with a payable balance of approximately $6,000 related to asset management fees. The receivable balance is included in prepaid expenses and other assets on the unaudited consolidated balance sheet. The payable balance is included in accounts payable, accrued expense and other liabilities on the unaudited consolidated balance sheet.
(2) The payable balance isAmounts for the three months ended June 30, 2023 and 2022 are included in accounts payable, accrued expensegeneral and other liabilities onadministrative expenses in the unaudited consolidated balance sheet.statements of operations and comprehensive loss.
Termination Fees and Participations Paid in Connection with Liquidation or Listing
The Company will payPayable to the Advisor an annual subordinated performance
The Advisory Agreement requires the Company to pay a termination fee calculated onto the basisAdvisor in the event the Advisory Agreement is terminated prior to the expiration of the Company’s returninitial term in certain limited scenarios. The termination fee will be
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
payable to stockholders, payable annuallythe Advisor if either the Company or the Advisor exercises the right to terminate the Advisory Agreement in arrears, such thatconnection with the consummation of the first change of control (as defined in the Advisory Agreement). The termination fee is equal to
•$15 million plus an amount equal to the product of
i.    three (if the termination was effective on or prior to June 30, 2020) or four (if the termination is effective after
June 30, 2020), multipliedby
ii.    applicable Subject Fees.
The “Subject Fees” are equal to (i) the product of
•12, multiplied by (b) the actual base management fee for any yearthe month immediately prior to the month in which investors receive paymentthe Advisory Agreement is terminated, plus 
ii.    the product of 6.0% per annum,(x) four multiplied by (y) the actual variable management fee for the quarter immediately prior
to the quarter in which the Advisory Agreement is terminated, plus,
iii.    without duplication, the annual increase in the base management fee resulting from the cumulative net
proceeds of any equity issued by the Company and its subsidiaries in respect of the fiscal quarter immediately
prior to the fiscal quarter in which the Advisory Agreement is terminated.
In connection with the termination or expiration of the Advisory Agreement, the Advisor will be entitled to 15.0% of the excess return, provided that the amount paidreceive (in addition to any termination fee) all amounts then accrued and owing to the Advisor, does not exceed 10.0% of the aggregate return for such year, and that the amount paid to the Advisor will not be paid unless investors receive a return of capital contributions. This fee will be paid only upon the sale of assets, distributions or other event which results in the return on stockholders’ capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three and nine months ended September 30, 2017 and 2016.

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

The Company will pay a brokerage commission to the Advisor or its affiliates on the sale of properties, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third party broker is also involved; provided, however, that in no event may the real estate commissions paid to the Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Advisor if the Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. No such fees were incurred during the three and nine months ended September 30, 2017 and 2016.
Upon a liquidation or sale of all or substantially all assets, including through a merger or sale of stock of the Company, the Special Limited Partner will be entitled to receive a subordinated distribution from the OP equal to 15.0% of remaining net sale proceeds after return of capital contributions to investors plus payment to investors of an annual 6.0% cumulative, pre-tax non-compounded return on the capital contributed by investors. The Special Limited Partner will not be entitled to the subordinated participation in net sale proceeds unless the Company’s investors have received a return of their capital plus a 6.0% cumulative non-compounded annual return on their capital contributions. No such participation in net sales proceeds became due and payable during the three and nine months ended September 30, 2017 and 2016.
If the Company’s shares of common stock are listed on a national exchange, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right receive subordinated incentive listing distributions from the OP equal to 15.0% of the amount by which the Company’s market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated incentive listing distributions unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distributions were incurred during the three and nine months ended September 30, 2017 and 2016.
Upon termination or non-renewal of the advisory agreement with or without cause, the Special Limited Partner will be entitled to receive a promissory note as evidencethen-present fair market value of its right to receive subordinated termination distributions from the OP equal to 15.0% of the amount, calculated as of the termination date, by which the sumshares of the Company’s market value plus distributions exceedsClass A common stock and interest in the sum of the aggregate capital contributed by investors plus an amount equal to an annual 6.0% cumulative, pre-tax, non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. The Special Limited Partner may elect to defer its right to receive the subordinated termination distribution until either a listing on a national securities exchange or other liquidity event occurs, subsequently, in which case the Company's market value will be calculated as of the date of the applicable listing or liquidity event. No such distributions were incurred during the three and nine months ended September 30, 2017 and 2016.OP.
The Special Limited Partner and its affiliates can earn only one of the subordinated distribution from the OP described above.
Note 10 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services, transaction management services and investor relations.
As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.
Note 11 — Share-BasedEquity-Based Compensation
Equity Plans
Restricted Share Plan
ThePrior to the Company haslisting its shares on the NYSE, the Company had an employee and director incentive restricted share plan (as amended, to date, the “RSP”). Until an amendment to the RSP in August 2017 (the “RSP Amendment”), theThe RSP provided for the automatic grant of 1,333 restricted shares of common stock (“restricted shares”) to each of the independent directors. Following the RSP Amendment, the number of restricted shares to be issued automatically in those circumstances is equal to $30,000 divided by the then-current Estimated

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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)

Per-Share NAV. In November 2017, the RSP was amended and restated to reflect the RSP Amendment and certain clarifying changes.
These automatic grants areNAV, which were made without any further approval by the Company’s board of directors or the stockholders, after initial election to the board of directors and after each annual stockholder meeting, with such restricted shares vesting annually over a five-year period following the grant date in increments of 20.0% per annum. The RSP providesalso provided the Company with the ability to grant awards of restricted shares to the Company'sCompany’s board of directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.
2020 Equity Plan
Effective at the time of the listing, the Company’s independent directors approved an equity plan for the Advisor (the “Advisor Plan”) and an equity plan for individuals (the “Individual Plan” and together with the Advisor Plan, the “2020 Equity Plan”). The total numberAdvisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Awards under the Individual Plan are open to the Company’s directors, officers and employees (if the Company ever has employees), employees, officers and directors of the Advisor and as a general matter, employees of affiliates of the Advisor that provide services to the Company. Awards under the Advisor Plan may only be granted to the Advisor and its affiliates (including any person to whom the Advisor subcontracts substantially all of responsibility for directing or performing the day-to-day business affairs of the Company).
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
The 2020 Equity Plan succeeded and replaced the existing RSP. Following the effectiveness of the 2020 Equity Plan at the listing of its shares on the NYSE, no further awards have been or will be granted asunder the RSP; provided, however, any outstanding awards under the RSP, shall not exceed 5.0%such as unvested restricted shares held by the Company’s independent directors, will remain in effect in accordance with their terms and the terms of the RSP, until all those awards are exercised, settled, forfeited, canceled, expired or otherwise terminated. The Company accounts for forfeitures when they occur. While the RSP provided only for awards of restricted shares, the 2020 Equity Plan has been expanded to also permit awards of restricted stock units, stock options, stock appreciation rights, stock awards, LTIP Units and other equity awards. In addition, the 2020 Equity Plan eliminates the “automatic grant” provisions of the RSP that dictated the terms and amount of the annual award of restricted shares to independent directors. Grants to independent directors are made in accordance with the Company’s new director compensation program, as described below under “—Director Compensation.” The 2020 Equity Plan has a term of 10 years, expiring August 18, 2030. The number of shares of the Company’s capital stock that may be issued or subject to awards under the 2020 Equity Plan, in the aggregate, is equal to 20.0% of the Company’s outstanding shares of Class A common stock on a fully diluted basis at any timetime. Shares subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a one-for-one basis and vice versa.
Director Compensation
On August 18, 2020 the Company listed shares of its Class A common stock on the NYSE (the “Listing Date”), and effective on that date, the Company’s independent directors approved a change to the Company’s director compensation program. Starting with the annual award of restricted shares made in any event will not exceed 1.5 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).connection with the Company’s 2021 annual meeting of stockholders, the amount of the annual award was increased from $30,000 to $65,000. No other changes have been made to the Company’s director compensation program.
Restricted Shares
Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time. For restricted share awards granted prior to July 1, 2015, such awards would typically be forfeited with respect to the unvested restricted shares upon the termination of the recipient's employment or other relationship with the Company. For restricted share awards granted on or after July 1, 2015, such awards provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient's voluntary termination or the failure to be re-elected to the board. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares receive cash distributionsdividends on the same basis as distributionsdividends paid on shares of common stock, if any, prior to the time that the restrictions on the restricted shares have lapsed and thereafter. Any distributionsdividends payable in shares of common stock will beare subject to the same restrictions as the underlying restricted shares.
In March 2022, the compensation committee delegated authority to the Company’s chief executive officer to award up to 25,000 restricted shares (adjusted for the Reverse Stock Split) to employees of the Advisor or its affiliates who are involved in providing services to the Company, including the Company’s chief financial officer, subject to certain limits and restrictions imposed by the compensation committee. The compensation committee remains responsible for approving and administering all grants of awards to the Company’s chief financial officer or any other executive officer of the Company, including any award of restricted shares recommended by the Company’s chief executive officer. No awards under the 2020 Equity Plan may be made pursuant to this delegation of authority to anyone who is also a partner, member or equity owner of the parent of the Advisor. As of June 30, 2023 there have been no shares awarded to anyone who is also a partner, member or equity owner of the parent of the Advisor.
Restricted share awards that have been granted to the Company’s directors provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient’s voluntary termination or the failure to be re-elected to the Company’s board of directors.
During the second quarter of the year ended December 31, 2022, the Company granted 13,734 and 3,228 restricted shares (adjusted for the Reverse Stock Split) to employees of the Advisor and the Company’s board of directors respectively. The restricted shares granted to employees of the Advisor or its affiliates will vest in 25% increments on each of the first four anniversaries of the grant date. Except in connection with a change in control (as defined in the award agreement) of the Company, any unvested restricted shares will be forfeited if the holder’s employment with the Advisor terminates for any reason. Upon a change in control of the Company, 50% of the unvested restricted shares will immediately vest and the remaining unvested restricted shares will be forfeited. In addition, during the third quarter of the year ended December 31, 2022, the Company issued 762 restricted shares to two former employees of the Advisor working as consultants to the Advisor which, for accounting purposes, the fair value of such grants was fully expensed during the third quarter of the year ended December 31, 2022.

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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
The following table displays restricted share award activity during the ninesix months ended SeptemberJune 30, 2017:2023:
Number of
Restricted Shares		Weighted-Average Issue Price
Unvested, December 31, 202218,134 $90.16 
Granted2,051 $15.41 
Vested(5,917)$(83.65)
Forfeitures— $— 
Unvested, June, 202314,268 $151.49 
  Number of
Restricted Shares		 Weighted-Average Issue Price
Unvested, December 31, 2016 9,065
 $22.50
Granted —
 —
Vested (2,133) 22.50
Forfeited —
 —
Unvested, September 30, 2017
6,932
 $22.50
As of SeptemberJune 30, 2017,2023, the Company had $0.1had $1.1 million of unrecognized compensation cost related to unvested restricted share awards granted under the RSP. That costand is expected to be recognized over a weighted-average period of 3.13.4 years. Restricted share awardsawards are expensed in accordance with the service period required. Compensation expense related to restricted share awards was approximately $12,000approximately $0.2 million and $36,000$0.3 million for the three and ninesix months ended SeptemberJune 30, 2017, respectively. Compensation expense related to restricted share awards was approximately $29,0002023, respectively, and $49,000$109,516 and $137,262 for the three and ninesix months ended SeptemberJune 30, 2016,2022, respectively. Compensation expense related to restricted share awards is recorded as general and administrative expenseequity-based compensation in the accompanying unaudited consolidated statements of operations and comprehensive loss. Also, for the three and nine months ended September 30, 2022, approximately $0.1 million of additional net amortization expense was recorded for the accelerated vesting of restricted shares of one employee of the Advisor and the forfeiture, new issuance and vesting of restricted shares of other former employees of the Advisor who are providing certain consulting services to the Advisor.
Multi-Year Outperformance Award
On the Listing Date, the Company, the OP and the Advisor entered into the 2020 OPP pursuant to which a performance-based equity award was granted to the Advisor. The award was based on the recommendation of the Company’s compensation consultant, and approved by the Company’s independent directors, acting as a group.
Initially, the award under the 2020 OPP was in the form of a single LTIP Unit. On September 30, 2020, the 30th trading day following the Listing Date, in accordance with its terms, the single LTIP Unit automatically converted into 501,605 LTIP Units (adjusted for the Reverse Stock Split), the quotient of $50.0 million divided by $99.68 (adjusted for the Reverse Stock Split), representing the average closing price of one share of Class A common stock over the ten consecutive trading days immediately prior to September 30, 2020. This number of LTIP Units represents the maximum number of LTIP Units that may be earned by the Advisor during a performance period ending on the earliest of (i) August 18, 2023, (ii) the effective date of any Change of Control (as defined in the 2020 OPP) and (iii) the effective date of any termination of the Advisor’s service as advisor of the Company.
For accounting purposes, July 19, 2020 is treated as the grant date (the “Grant Date”), because the Company’s independent directors approved the 2020 OPP and the award made thereunder on that date. The Company engaged third party specialists, who used a Monte Carlo simulation, to calculate the fair value as of the date the single LTIP Unit converted (September 30, 2020), on which date the fair value was also fixed. The total fair value of the LTIP Units of $25.8 million is being recorded over the requisite service period of 3.07 years beginning on the Grant Date and ending on the third anniversary of the Listing Date (August 18, 2023). As a result, during the three and six months ended June 30, 2023 and 2022, the Company recorded equity-based compensation expense related to the LTIP Units of $2.1 million and $4.2 million, respectively. Equity-based compensation expense related to the LTIP Units is recorded in equity-based compensation in the consolidated statements of operations and comprehensive loss. As of June 30, 2023, the Company had $1.1 million of unrecognized compensation expense related to the LTIP Units, which is expected to be recognized over a period of 0.1 years.
LTIP Units/Distributions/Redemption
The rights of the Advisor as the holder of the LTIP Units are governed by the terms of the LTIP Units set forth in the agreement of limited partnership of the OP. Holders of LTIP Units are entitled to distributions on the LTIP Units equal to 10% of the distributions made per Class A Unit (other than distributions of sale proceeds) until the LTIP Units are earned. Distributions paid on a Class A Unit are equal to dividends paid on a share of Class A common stock. Distributions paid on LTIP Units are not subject to forfeiture, even if the LTIP Units are ultimately forfeited. The Advisor is entitled to a priority catch-up distribution on each earned LTIP Unit equal to 90% of the aggregate distributions paid on Class A Units during the applicable performance period. Any LTIP Units that are earned become entitled to receive the same distributions paid on the Class A Units. If and when the Advisor’s capital account with respect to an earned LTIP Unit is equal to the capital account
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
balance of a Class A Unit, the Advisor, as the holder of the earned LTIP Unit, in its sole discretion, is entitled to convert the LTIP Unit into a Class A Unit, which may in turn be redeemed on a one-for-one basis for, at the Company’s election, a share of Class A common stock or the cash equivalent thereof. Through the six months ended June 30, 2022 we paid dividends to our common stockholders at our current annual rate of $3.20 per share of Class A common stock (adjusted for the Reverse Stock Split), or $0.80 per share (adjusted for the Reverse Stock Split) on a quarterly basis. Subsequently, the board decided not to declare any further dividends. There is no assurance as to when or if the board will declare future dividends or the amount of any future dividends that may be declared. Because the LTIP Units only receive distributions when the Class A common stock receives dividends, no distributions have been paid since the quarter ended March 31, 2022.
For the three and six months ended June 30, 2023, the Company did not pay distributions related to the LTIP units and during the three and six months ended June 30, 2022, the Company paid $40,000 and $80,000, respectively, of distributions related to the LTIP units.
Performance Measures
With respect to one-half of the LTIP Units granted under the 2020 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the Company’s achievement of absolute total stockholder return (“TSR”) levels as shown in the table below.
Performance LevelAbsolute TSRPercentage of LTIP Units Earned
Below ThresholdLess than12%0 %
Threshold12%25 %
Target18 %50 %
Maximum24 %or higher100 %

If the Company’s absolute TSR is more than 12% but less than 18%, or more than 18% but less than 24%, the percentage of the Absolute TSR LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively.
With respect to the remaining one-half of the LTIP Units granted under the 2020 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period base on the difference (expressed in terms of basis points, whether positive or negative, as shown in the table below) between the Company’s absolute TSR on the last day of the performance period relative to the average TSR of a peer group consisting of Empire State Realty Trust, Inc., Franklin Street Properties Corp., Paramount Group, Inc. and Clipper Realty Inc. as of the last day of the performance period.
Performance LevelRelative TSR ExcessPercentage of LTIP Units Earned
Below ThresholdLess than-600basis points0 %
Threshold-600basis points25 %
Target0basis points50 %
Maximum+600basis points100 %

If the relative TSR excess is between -600 basis points and zero basis points, or between zero basis points and +600 basis points, the number of LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively.
Other Terms
In the case of a change of control (as defined in the Advisory Agreement) or a termination of the Advisor without Cause (as defined in the Advisory Agreement), the number of LTIP Units that become earned will be calculated based on actual performance through the last trading day prior to the effective date of the change of control (as defined in the Advisory Agreement) or termination (as applicable), with the hurdles for calculating absolute TSR prorated to reflect a performance period of less than three years but without prorating the number of LTIP Units that may become earned to reflect the shortened performance period.
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
In the case of a termination of the Advisor for Cause(as defined in the Advisory Agreement) , the number of LTIP Units that become earned will be calculated based on actual performance through the last trading day prior to the effective date of the termination, with the hurdles for calculating absolute TSR and the number of LTIP Units that may become earned each prorated to reflect a performance period of less than three years.
The award of LTIP Units under the 2020 OPP is administered by the Company’s compensation committee, provided that any of the compensation committee’s powers can be exercised instead by the Company’s board of directors if the board of directors so elect. Promptly following the performance period, the compensation committee will determine the number of LTIP Units earned, (if any) based on calculations prepared by an independent consultant engaged by the Committee and as approved by the compensation committee in its reasonable and good faith discretion. The compensation committee also must approve the transfer of any LTIP Units or any Class A Units into which LTIP Units may be converted in accordance with the terms of the A&R OP Agreement. Any LTIP Units that are not earned will automatically be forfeited effective as of the end of the performance period and neither the Company nor the OP will be required to pay any future consideration in respect thereof.
Other Share-Based Compensation
The Company may issue Class A common stock in lieu of cash to pay fees earned by the Company'sCompany’s board of directors at the respective director'sdirector’s election. There are no restrictions on the shares issued. During the three months ended March 31, 2022, the Company’s independent board of directors made an election to receive stock in lieu of cash for board services rendered during the fourth quarter of the year ended December 31, 2021 and accordingly, the expense was recorded in the fourth quarter of the year ended December 31, 2021. Also, during the three months ended June 30, 2022, the Company’s independent board of directors made an election to receive stock in lieu of cash for board services rendered during the first quarter of the year ended December 31, 2022 and accordingly, the expense was recorded in the first quarter of the year ended December 31, 2022. As a result, the Company issued 649 and 606 shares of its Class A common stock (adjusted for the Reverse Stock Split) to the Company’s independent board of directors in the first and second quarters of the year ended December 31, 2022, respectively, relating to services rendered and expenses recorded in the year ended December 31, 2021 and quarter ended March 31, 2022, respectively. There were no shares of common stock issued in lieu of cash during the three and ninesix months ended SeptemberJune 30, 2017 or 2016.2023.

Note 12 — Income Taxes
On December 30, 2022, the Company announced that it was changing its business strategy by expanding the scope of the assets and businesses the Company may own and operate. By investing in other asset types, the Company may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a REIT. As a result, on January 9, 2023, the Company’s board of directors authorized termination of the Company’s REIT election which became effective on January 1, 2023. Historically, effective with the taxable year ended December 31, 2014 through December 31, 2022, the Company had elected to be taxed as a REIT.
The Company is subject to U.S. federal, state and local income taxes. For deferred items, the Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. Because of the Company’s recent operating history of taxable losses and the impacts of the COVID-19 pandemic on the results of operations, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets; thus the Company has provided a 100% valuation allowance as of June 30, 2023 and as of December 31, 2022. If and when the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in its consolidated statements of comprehensive income (loss).
The effective tax rate was zero for the three and six months ended June 30, 2023 and 2022. The Company expects to have a taxable loss for federal, state and local income taxes for the year ending December 31, 2023. Accordingly, the Company has recorded no income tax expense (after considering changes in the valuation allowance) for the three and six months ended June 30, 2023. The Company remains in a net deferred tax asset position with a full valuation allowance as of both June 30, 2023 and December 31, 2022. As of June 30, 2023, the Company had no material uncertain tax positions.
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AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.STRATEGIC INVESTMENT CO.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20172023
(Unaudited)

Note 1213 — Net Loss Per Share
The following is a summary of the basic and diluted net loss per share computation for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
(In thousands, except share and per share data)2023202220232022
Net loss attributable to common stockholders (in thousands)
$(10,899)$(13,001)$(22,657)$(24,713)
Adjustments to net loss attributable to common stockholders— (40)— (80)
Adjusted net loss attributable to common stockholders$(10,899)$(13,041)$(22,657)$(24,793)
Weighted average shares outstanding — Basic and Diluted2,286,797 1,679,211 (1)2,163,524 1,670,880 (1)
Net loss per share attributable to common stockholders — Basic and Diluted$(4.77)$(7.77)(1)$(10.47)$(14.84)(1)
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Net loss (in thousands)
 $(5,877) $(4,369) $(16,025) $(14,175)
Basic and diluted weighted average shares outstanding 31,106,250
 30,556,494
 30,956,152
 30,634,400
Basic and diluted net loss per share $(0.19) $(0.14) $(0.52) $(0.46)
(1)    Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1).
Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted shares, Class A Units and unearned LTIP Units contain rights to receive distributions considered to be non-forfeitable, except in certain limited circumstances, and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share above adjusts net loss to exclude the distributions to the unvested restricted shares, Class A Units and the unearned LTIP Units that were issued under the 2020 OPP from the numerator. On July 1, 2022, the Company announced that it suspended its policy regarding dividends paid on its Class A common stock, beginning with the dividend that would have been payable for the quarter ended June 30, 2022. Accordingly, there is no adjustment for the three and six month periods ended June 30, 2023 relating to distributions to LTIP Units which are paid in arrears. Accordingly, since the LTIP Units only receive distributions when the Class A common stock receives dividends there were no distributions to the LTIP Units beginning with the distribution that would have been payable for the quarter ended June 30, 2022 and quarterly periods thereafter.
Diluted net loss per share assumes the conversion of all Class A common stock share equivalents into an equivalent number of shares of Class A common stock, unless the effect is anti-dilutive. The Company had theconsiders unvested restricted shares, Class A Units and unvested LTIP Units to be common share equivalents. The following potentially dilutive securities as of September 30, 2017 and 2016, whichtable shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted net lossearnings per share attributable to stockholders as thetheir effect would have been antidilutive:antidilutive for the periods presented.
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Unvested restricted shares (1)
16,399 13,890 18,241 8,548 
LTIP Units (2)
501,605 501,605 501,605 501,605 
Total weighted-average anti-dilutive common share equivalents518,004 515,495 519,846 510,153 
_______
(1) There were 14,268 and 19,434 unvested restricted shares outstanding as of June 30, 2023and2022, respectively (adjusted for the Reverse Stock Split).
(2) There were 501,605 LTIP Units outstanding (adjusted for the Reverse Stock Split) as of June 30, 2023and2022, respectively (see Note 11 — Equity-Based Compensation for additional information).
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AMERICAN STRATEGIC INVESTMENT CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
  Nine Months Ended September 30,
  2017 2016
Unvested restricted shares 6,932
 10,131
OP units 90
 90
Class B units 159,159
 159,159
Total potentially dilutive securities 166,181
 169,380
If dilutive, conditionally issuable shares relating to the 2020 OPP award (see Note 11 — Equity-Based Compensation for additional information) would be included, as applicable, in the computation of fully diluted EPS on a weighted-average basis for and six month periods ended June 30, 2023 and 2022, respectively, based on shares that would be issued if the applicable balance sheet date was the end of the measurement period. No LTIP Unit share equivalents were included in the computation for six month periods ended June 30, 2023 because either or both (i) no LTIP Units would have been earned based on the trading price of Class A common stock including any cumulative dividends paid (since inception of the 2020 OPP) at June 30, 2023 and 2022 or (ii) the Company recorded a net loss to common stockholders for all periods presented and any shares conditionally issuable under the LTIPs would be anti-dilutive.
Note 1314 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements, except for the following disclosures:statements.
Election of Katie P. Kurtz as Chief Financial Officer and Treasurer
On October 5, 2017, Nicholas Radesca notified the Company's board of directors that he intends to retire and therefore resign from his positions as chief financial officer and treasurer of the Company, the Advisor and the Property Manager. Mr. Radesca's resignations will be effective on the later of (i) November 15, 2017 and (ii) the day after the Company files its Quarterly Report on Form 10-Q for the quarter ended September 30, 2017. There were no disagreements between Mr. Radesca and the Company or the Advisor.
On October 9, 2017, the Company's board of directors unanimously elected Katie P. Kurtz as chief financial officer and treasurer of the Company, effective upon the effectiveness of Mr. Radesca’s resignation. Ms. Kurtz has also been appointed as chief financial officer and treasurer of the Advisor and the Property Manager, effective upon the effectiveness of Mr. Radesca's resignation.


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Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements includeincluding statements regarding the intent, belief or current expectations of American Realty Capital New York City REIT, Inc.Strategic Investment Co. (including, as required by context, New York City Operating Partnership, L.P. (the "OP"“OP”) and its subsidiaries, the "Company," "we," "our"“we,” “our” or "us"“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," "intends," "should"“may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. 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.
The followingThese forward-looking statements are somesubject 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. 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:
We have a limited operating history which makes our future performance difficult to predict;
Allstatements are set forth in the Risk Factors section of our executive officers are also officers, managers or holders of a direct or indirect controlling interest in our advisor, New York City Advisors, LLC (our "Advisor") and other entities affiliated with AR Global Investments, LLC (the successor business to AR Capital, LLC, "AR Global"); as a result, our executive officers, our Advisor and its affiliates face conflicts of interest, including significant conflicts created by our Advisor's compensation arrangements with us and other investor entities advised by AR Global affiliates and conflicts in allocating time among these entities and us, which could negatively impact our operating results;
We dependAnnual Report on tenantsForm 10-K for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants;
We may not be able to achieve our rental rate objectives on new and renewal leasesyear ended December 31, 2022, this and our expenses could be greater, which may impact operations;
We do not expect to generate sufficient cash flow from operations in 2017 to fund distributions at our current level. There can be no assurance that additional liquidity will be available to usother Quarterly Reports on favorable terms, or at all, in sufficient amounts to maintain distributions at our current levels. There can be no assurance we will be able to continue paying cash distributions at our current level or at all;
Our properties may be adversely affected by economic cycles and risks inherent to the New York metropolitan statistical area, especially New York City;
We are obligated to pay fees, which may be substantial, to our Advisor and its affiliates;
We may fail to continue to qualify to be treated as a real estate investment trust for United States federal income tax purposes ("REIT");
Because investment opportunities that are suitable for us may also be suitable for other AR Global-advised programs or investors, our Advisor and its affiliates may face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders;
No public market currently exists, or may ever exist, for shares of our common stockForm 10-Q and our shares are,other filings with the Securities and may continue to be, illiquid;Exchange Commission (“SEC”).
Our stockholders are limited in their ability to sell their shares pursuant to our share repurchase program (the “SRP”) and may have to hold their shares for an indefinite period of time;
If we and our Advisor are unable to find suitable investments, then we may not be able to achieve our investment objectives, or pay distributions with cash flows from operations;
We may be deemed to be an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and thus subject to regulation under the Investment Company Act; and
As of September 30, 2017, we owned only six properties and therefore have limited diversification.

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Overview
We were formed to invest our assets in properties inare an externally managed company that owns a portfolio of commercial real estate located within the five boroughs of New York City, with a focus onprimarily Manhattan. We may also purchaseOur real estate assets consist of office properties and certain real estate assets that accompany office properties, including retail spaces and amenities as well as hospitality assets, residential assets and otherparking garages that do not accompany office spaces. At our 1140 Avenue of the Americas property, types exclusively in New York City.during the third quarter of 2021, we also began operating Innovate NYC, a co-working company that is specific to this property only, that offers move-in ready private offices, virtual offices, and meeting space on bespoke terms to clients. As of SeptemberJune 30, 2017,2023, we owned sixeight properties consisting of 1,085,0841.2 million rentable square feet, acquired for an aggregate purchase price of $686.1 million.$790.7 million with an overall occupancy of 85.1%.
WeOn December 30, 2022, we announced that we were incorporated on December 19, 2013changing our business strategy by expanding the scope of the assets and businesses we may own and operate. By investing in other asset types, we may generate income that does not otherwise constitute income that qualifies for purposes of qualifying as a Maryland corporation and elected and qualifiedREIT. As a result, on January 9, 2023, our board of directors authorized termination of our REIT election which became effective on January 1, 2023. Historically, we had filed an election to be taxed as a REIT beginningcommencing with our taxable year ended December 31, 2014. 2014, which remained in effect with respect to each subsequent taxable year ending on or before the year ended December 31, 2022.
On January 11, 2023 we effected a 1-for-8 reverse stock split that was previously approved by our board, resulting in each outstanding share of Class A common stock being converted into 0.125 shares of common stock, with no fractional shares being issued. For additional information, see Note 7 — Stockholders’ Equity to our consolidated financial statements included in this Quarterly Report on Form 10-Q. Also, effective January 19, 2023, we amended our charter to change our name to “American Strategic Investment Co.” from “New York City REIT, Inc.” Trading of our Class A common stock on the New York Stock Exchange under the new name began on January 20, 2023 under the existing trading symbol “NYC.” Shares of our Class A common stock were first listed on the New York Stock Exchange (“NYSE”) on August 18, 2020. Also, on February 22, 2023, we completed a non-transferable rights offering raising gross proceeds of $5.0 million. As a result, we issued 386,100 shares of our Class A common stock subscribed for in the Rights Offering on February 27, 2023.
Substantially all of our business is conducted through the OP.
On April 24, 2014, we commencedOP and its wholly owned subsidiaries. New York City Advisors, LLC (our “Advisor”) manages our initial public offering ("IPO") on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, for total gross proceeds of up to $750.0 million. We closed our IPO on May 31, 2015. As of September 30, 2017, we had 31.2 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO and the DRIP of $771.6 million, inclusive of $60.1 million from the DRIP and net of repurchases.
We first established an estimated net asset value per share of our common stock (“Estimated Per-Share NAV”) in 2016. On October 24, 2016, our board of directors approved an Estimated Per-Share NAV of $21.25 as of June 30, 2016 (the “2016 Estimated Per-Share NAV”), which was published on October 26, 2016 (the “NAV Pricing Date”). Prior to the NAV Pricing Date, we had offered shares pursuant to the DRIP and had repurchased shares pursuant to the Share Repurchase Program (“SRP”) at a price based on $23.75 per share, the offering price in the IPO. Beginningday-to-day business with the NAV Pricing Date, we began to offer shares pursuant to the DRIP and repurchase shares pursuant to its SRP at a price based on Estimated Per-Share NAV.
On October 25, 2017, our boardassistance of directors approved an Estimated Per-Share NAV of $20.26 as of June 30, 2017 (the "2017 Estimated Per-Share NAV"), based on an estimated fair value of our assets less the estimated fair value of our liabilities, divided by 31,029,865 shares of common stock outstanding on a fully diluted basis as of June 30, 2017, which was published on October 26, 2017. We intend to publish subsequent valuations of Estimated Per-Share NAV at least once annually. We offer shares pursuant to the DRIP and repurchase shares pursuant to our SRP at a price based on Estimated Per-Share NAV.
We have no employees. Our Advisor manages our affairs on day-to-day basis. We have retained New York City Properties, LLC (our "Property Manager"“Property Manager”) to serve as our property manager. The. Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“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 parentImpacts of the COVID-19 Pandemic
New York City, where all of our Sponsor,properties are located, has been among the hardest hit locations in the country and fully reopened from relevant restrictions and lockdowns on March 7, 2022. 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 negative impacts of the COVID-19 pandemic during 2020 and 2021 caused certain of our tenants to be unable to make rent payments to us timely, or at all. As a result, we did experience delays in rent collections during 2021, however, with the exception of which they are related partiesone minor lease deferral during the third quarter of the year ended December 31, 2022, this trend did not continue
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into 2022 or the first six months of 2023. During the quarter ended June 30, 2023 we had two lease terminations, unrelated to the impact of COVID-19, and eachfour new leases that commenced and we continue to modify leases as opportunities arise.
Beginning in the third and fourth quarters of these entities has2020, the operating results at 1140 Avenue of the Americas, 9 Times Square, 400 E. 67th Street - Laurel Condominium/200 Riverside Boulevard Garage and 8713 Fifth Avenue properties were negatively impacted by the COVID-19 pandemic causing cash trap events under the non-recourse mortgages 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, to fund operating expenses at our other properties and other capital requirements. As of June 30, 2023 two of our mortgages aggregating $109.0 million in principal amount remained in a cash trap event, all as described in detail further below in the Liquidity and Capital Resources section.
We took several steps to mitigate the impact of the pandemic on our business and in some cases, in 2020 and 2021, we executed different types of lease amendments, including rent deferrals and abatements and, in some cases, extensions to the term of the leases. There were no new deferrals or abatements during the six months ended June 30, 2023.
Our portfolio is primarily comprised of office and retail tenants. We have collected 100% of original cash rent due across our entire portfolio for the three months ended June 30, 2023 (based on annualized straight-line rent as of June 30, 2023). The original cash rent received or will receive compensation, fees and expense reimbursements for services related toacross our IPOentire portfolio was consistent with the first quarter 2023 and the investment and management of2022 quarterly collection percentages. We expect our assets. We are the sole general partner and hold substantially all of the units of limited partner interestscash rent collections will stay at current levels, however there can be no assurance that we will be able to collect cash rent at these levels in the OP, entitled "OP units" (“OP units”).future. The Advisor contributed $2,020cash rent collections for the second quarter of 2023 includes cash receipts through July 31, 2023 and therefore is inclusive of cash received in July for rent due in the second quarter of 2023. Cash received in July 2023 is not included in cash and cash equivalents on our June 30, 2023 consolidated balance sheet and was immaterial in amount for quarter ended June 30, 2023. “Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in their originally executed lease agreement at inception or as amended, prior to any rent deferral agreement. We calculate “original cash rent collections” by comparing the total amount of rent collected during the period to the OP in exchange for 90 OP units, which represents a nominal percentageoriginal cash rent due. Total rent collected during the period includes both original cash rent due and payments made by tenants pursuant to rent deferral agreements.
Our cash rent collections may not be indicative of the aggregate OP ownership. A holder of OP units has the rightany future period. Moreover, there is no assurance that we will be able to convert OP units forcollect the cash valuerent that is due in future months including the remaining amounts deferred from 2021 or the deferred 2022 rent amounts that we expect to receive during the remainder of a corresponding number of shares of2023 under deferral agreements we have entered into with our common stock or, at the option of the OP, a corresponding number of shares of our common stock, in accordance with the limited partnership agreement of the OP, provided, however, that such OP units must have been outstanding for at least one year. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.tenants.
Significant Accounting Estimates and Critical Accounting Policies
Set forth below isFor a summary of thediscussion about our significant accounting estimates and critical accounting policies, that management believes are important tosee the preparation“Significant Accounting Estimates and Critical Accounting Policies” section of our consolidated financial statements. Certain of our2022 Annual Report on Form 10-K. Except for those required by new accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result,pronouncements discussed below, there have been no material changes from these estimates are subject to a degree of uncertainty. These significant accounting estimates and critical accounting policies include:policies.

Recently Issued Accounting Pronouncements
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Offering and Related Costs
All offering costs incurred by us, our Advisor and its affiliates on our behalf are charged to additional paid-in capital on the consolidated balance sheets. Offering and related costs include all expenses incurred in connection with our IPO. Offering costs (other than selling commissions and the dealer manager fees) include costs that may be paid by the Advisor, the Former Dealer Manager or their affiliates on our behalf. These costs include but are not limited to (i) legal, accounting, printing, mailing, and filing fees; (ii) escrow service related fees; (iii) reimbursement of the Former Dealer Manager for amounts it may pay to reimburse itemized and detailed due diligence expenses of broker-dealers; and (iv) reimbursement to the Advisor for a portion of the costs of its employees and other costs in connection with preparing supplemental sales materials and related offering activities. We are obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on our behalf, provided that the Advisor is obligated to reimburse us to the extent organization and offering costs (excluding selling commissions and the dealer manager fee) incurred by us in our IPO exceeded 2.0% of gross offering proceeds in the IPO. As a result, these costs are our liability to the extent aggregate selling commissions, the dealer manager fee and other organization and offering costs are less than 12.0% of the gross proceeds determined at the end of the IPO. As of the end of the IPO, aggregate selling commissions, dealer manager fees and other offering costs did not exceed 12.0% of the gross proceeds received in the IPO.
Revenue Recognition
Our revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Because many of our leases provide for rental increases at specified intervals, accounting principles generally accepted in the United States ("GAAP") require us to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. We defer the revenue related to lease payments received from tenants in advance of their due dates. When we acquire a property, the acquisition date is considered to be the commencement date for the purposes of this calculation.
Rental revenue recognition commences when the tenant takes possession of or controls the physical use of the leased space. For the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, we evaluate whether we own or if the tenant owns the tenant improvements. When we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of the finished space, which is when such improvements are substantially complete. When we conclude that the tenant is the owner of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space.
When we conclude that we are the owner of tenant improvements, we capitalize the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants. When we conclude that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred leasing costs, net on the consolidated balance sheets and amortized as a reduction to rental income on a straight-line basis over the term of the lease.
We continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, we will record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our consolidated statements of operations.
We may own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant's sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. As the lessor to the aforementioned leases, we defer the recognition of contingent rental income until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. If we own certain properties with leases that include these provisions, contingent rental income will be included in rental income on the consolidated statements of operations and comprehensive loss.
Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.
Investments in Real Estate
We evaluate the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statement of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.

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We allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and non-controlling interests based on their respective estimated fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets or liabilities may include the value of in-place leases, above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics.
The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases is recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and our estimate of the comparable fair market lease rate, measured over the remaining term of the lease. The fair value of other intangible assets, such as real estate tax abatements and signage rights, are recorded based on the present value of the expected benefit and amortized over the expected useful life including any below-market fixed rate renewal options for below-market leases.
Fair values of assumed mortgages, if applicable, are recorded as debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates.
Non-controlling interests in property owning entities are recorded based on the fair value of units issued at the date of acquisition, as determined by the terms of the applicable agreement.
We use a number of sources in making our estimates of fair values for purposes of allocating purchase price, including real estate valuations prepared by independent valuation firms. We also consider information and other factors including: market conditions, the industry in which the tenant operates, characteristics of the real estate such as location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business.
Disposals of real estate investments that represent a strategic shift in operations that will have a major effect on our operations and financial results are presented as discontinued operations in the consolidated statements of operations and comprehensive loss for all periods presented; otherwise, we continue to report these properties' operations within continuing operations. Properties that are intended to be sold will be designated as "held for sale" on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs for all periods presented when they meet specific criteria to be presented as held for sale. Properties are no longer depreciated when they are classified as held for sale.
Restricted Cash
Restricted cash consists of mortgage lender required reserves for maintenance, real estate tax, structural, debt service, lease, tenant improvement and leasing commission cost.
Depreciation and Amortization
Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five to seven years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Acquired above-market leases are amortized as a reduction of rental income over the remaining terms of the respective leases. Acquired below-market leases are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.
The value of in-place leases, exclusive of the value of above and below-market in-place leases, is amortized to depreciation and amortization expense over the remaining periods of the respective leases.
Assumed mortgage premiums or discounts, if applicable, are amortized as a reduction or increase to interest expense over the remaining term of the respective mortgages.
Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, we review the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If such estimated cash flows are less than the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is based on the adjustment to estimated fair value less estimated cost to dispose of the asset. Generally, we determine estimated fair value for properties held for sale based on the agreed-upon selling price of an asset. These assessments may result in the immediate recognition of an impairment loss resulting in a reduction to net income (loss).

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RecentSignificant Accounting Pronouncement
In May 2014, the FinancialPolicies - Recently Issued Accounting Standards Board (“FASB”) issued an update (“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a comprehensive model for entities Pronouncements to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. We will adopt this guidance effective January 1, 2018 and currently expect to utilize the modified retrospective approach upon adoption and do not expect that this will result in a significant cumulative-effect adjustment to equity.
We have progressed in our project plan in evaluating our various revenue streams in order to identify any differences in the timing, measurement or presentation of revenue recognition under ASC 606 and ASC Topic 842, Leases (“ASC 842”). Based on our evaluation of our various revenue streams, we believe that gains on sales of real estate could be impacted by adoption of ASC 606. We expect that this standard could have an impact on the timing of gains on certain sales of real estate as a result of more transactions generally qualifying as sales of real estate and revenue being recognized at an earlier date than under current accounting guidance. Specifically, we expect that this would impact partial sales of real estate in situations where we no longer retain a controlling financial interest. If we were to enter into partial sales of real estate, we would derecognize the real estate asset consistent with the principles outlined in ASC 606 and any retained non-controlling ownership interest would be measured at fair value consistent with the guidance on noncash consideration in ASC 606.
We are continuing to evaluate any differences in the timing, measurement, or presentation of revenue recognition and the impact on our consolidated financial statements and internal accounting processes resulting from ASC 606 as well as ASC 842, Leases as discussed below.
In January 2016, the FASB issued an update that amends the recognition and measurement of financial instruments. The new guidance revises an entity’s accounting related to equity investments and the presentation of certain fair value changesin this Quarterly Report on Form 10-Q for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The revised guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is not permitted for most of the amendments in the update. We are currently evaluating the impact of the new guidance.
In February 2016, the FASB issued an update to ASU 2016-02 establishing ASC 842, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASC 842 supersedes previous leasing standards and is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. ASC 842 will impact the lease accounting model for both lessees and lessors. We will adopt this guidance effective January 1, 2019.
We are a lessee for a property in which we have a ground lease as of September 30, 2017. For this lease, we will be required to record a right-of-use asset and lease liability equal to the present value of the remaining lease payments upon adoption of this update. The new standard requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today.
From a lessor perspective we expect that the new standard will impact the presentation of lease and non-lease components of revenue such as rent, and operating expense reimbursements including common area maintenance, taxes, and insurance from leases for which we are a lessor. We do not expect this guidance to impact its existing lessor revenue recognition pattern. We anticipate that it will elect the following practical expedients, which must be elected as a package and applied consistently by an entity to all of its leases, which allow us to not have to reassess the following upon adoption: (i) whether any expired or existing contract contains a lease, (ii) lease classification related to expired or existing leases, or (iii) whether costs incurred on existing leases qualify as initial direct costs. We are continuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of the new lessee accounting model on our consolidated financial position, results of operations and disclosures.

further discussion.
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In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The revised guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of this new guidance.
In November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of this new guidance.
In May 2017, the FASB issued guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award and the classification of the award as either equity or liability, does not change as a result of the modification. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for reporting periods for which financial statements have not yet been issued. We are currently evaluating the impact of this new guidance.
Recently Adopted Accounting Pronouncements
In October 2016, the FASB issued guidance where a reporting entity will need to evaluate if it should consolidate a variable interest entity ("VIE"). The amendments change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. Early adoption is permitted. We adopted the provisions of this guidance beginning January 1, 2017 and determined that there is no impact to our consolidated financial position, results of operations and cash flows.
In January 2017, the FASB issued guidance that revises the definition of a business. This new guidance is applicable when evaluating whether an acquisition should be treated as either a business acquisition or an asset acquisition. Under the revised guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset or group of similar assets, the assets acquired would not be considered a business. The revised guidance is effective for reporting periods beginning after December 15, 2017, and the amendments will be applied prospectively. Early application is permitted only for transactions that have not previously been reported in issued financial statements. We have assessed this revised guidance and expect, based on historical acquisitions, future properties acquired to qualify as an asset acquisition rather than a business acquisition, which would result in the capitalization of related transaction costs. We adopted this guidance for the nine months ended September 30, 2017 and have had no acquisition to apply the new standard.
Properties -
The following table presents certain information about the investment properties we owned as of SeptemberJune 30, 2017:2023:
Portfolio Acquisition Date Rentable Square Feet Occupancy 
Remaining Lease Term (1)
421 W. 54th Street - Hit Factory Jun. 2014 12,327
 100.0% 3.0
400 E. 67th Street - Laurel Condominium Sept. 2014 58,750
 100.0% 6.5
200 Riverside Boulevard - ICON Garage Sept. 2014 61,475
 100.0% 20.0
9 Times Square Nov. 2014 167,390
 57.9% 5.3
123 William Street Mar. 2015 542,676
 92.1% 8.0
1140 Avenue of the Americas Jun. 2016 242,466
 89.1% 4.5
    1,085,084
 87.1% 6.4

PortfolioAcquisition DateNumber of PropertiesRentable Square FeetOccupancy
Remaining Lease Term (1)
421 W. 54th Street - Hit FactoryJun. 2014112,327 — %—
400 E. 67th Street - Laurel CondominiumSept. 2014158,750 100.0 %4.0
200 Riverside Boulevard - ICON GarageSept. 2014161,475 100.0 %14.0
9 Times SquareNov. 20141167,390 68.0 %(2)6.6
123 William StreetMar. 20151542,676 92.0 %(2)5.5
1140 Avenue of the AmericasJun. 20161242,646 74.6 %(3)6.7
8713 Fifth AvenueOct. 2018117,500 88.6 %(4)8.6
196 Orchard StreetJul. 2019160,297 100.0 %11.9
81,163,061 85.1 %6.8
______
(1) Remaining lease term in years as of September 30, 2017, calculatedCalculated on a weighted-average basis as of June 30, 2023, as applicable.

(2)In January 2021, our former tenant, Knotel, filed for bankruptcy and the leases with this tenant were terminated effective January 31, 2021, which impacted two of our properties, 9 Times Square and 123 William Street. The Knotel termination and new leasing activity since that time has resulted in occupancy at the 9 Times Square property of 68.0% as of June 30, 2023, as compared to 61.9% and 59.3% as of December 31, 2022 and 2021, respectively. After taking into account the Knotel termination and new leasing activity since that time at the 123 William Street property, occupancy as of June 30, 2023, was 92.0%, as compared to 91.4% and 90.8% as of December 31, 2022 and 2021, respectively.
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Results of Operations
As of September 30, 2017 and September 30, 2016, we owned six properties, comprising five properties purchased prior to January 1, 2016 (our "Initial Five Properties"), and one property we acquired in June 2016 located(3)Occupancy at 1140 Avenue of the Americas in Manhattan, New York (our "1140 Property"). Due to our 1140 Property, our results of operationsincreased 3.7% for the nine monthsperiod ended SeptemberJune 30, 20172023 as compared to December 31, 2022. The increase was due to two new leases signed in the nine monthsquarter ended September 30, 2016, reflect significant increasesMarch 31, 2023.
(4)The Company signed a lease with a new tenant at this property in most categories.November 2021, and began occupying a portion of the leased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of the space in the fourth quarter of 2023, which will bring the occupancy to 100.0%.

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Results of Operations
As of SeptemberJune 30, 2017,2023 and 2022, our overall portfolio occupancy was 87.1% notwithstanding the fact that occupancy at our property located at 9 Times Square was57.9%85.1% and 56.0% as of September 30, 2017 and December 31, 2016,84.0%, respectively. In August, we entered into a lease with a tenant for three full floors at 9 Times Square totaling approximately 26,000 square feet. Terms for two of the three floors representing approximately 18,000 square feet had not commenced as of September 30, 2017, and, as a result were not included in our occupancy as of that date. However, if the term for the 18,000 square feet comprising these two floors had commenced during the quarter ended September 30, 2017, the occupancy for 9 Times Square as of September 30, 2017 would have been 68.4%.
During the three months ended September 30, 2017, six leases with six different tenants totaling approximately 51,000 square feet expired, although a new lease was executed by one of those tenants with respect to approximately 41,000 square feet in connection with the expiration of the existing lease.
The following table is a summary of our quarterly leasing activity forduring the ninefirst three months of 2023. There were no replacement leases during the year ended December 31, 2022 and the six months ended SeptemberJune 30, 2017:
  Q3 2017Q2 2017 Q1 2017
Leasing activity:     
Lease executed 2
3
 2
Total square feet leased 9,983
23,579
 21,701
Annualized straight-line rent(1)
 $80.95
$49.65
 $44.78
Weighted average lease term (years) 10.74
9.2
 5.8
      
Replacement leases:(2)
    

Replacement leases executed 2
2
 2
Square feet 48,519
19,639
 21,701
      
Tenant improvements on replacement leases per square foot(3)
 $40.00
$60.00
 $14.04
Leasing commissions on replacement leases per square foot(3)
 $36.04
$19.73
 $14.42

2023.
Q1 2023Q2 2023
Leasing activity:
New leases:
New leases commenced5 4 
Total square feet leased19,812 26,778 
Annualized straight-line rent per square foot (1)
$54.18 $55.14 
Weighted-average lease term (years) (2)
12.7 5.4 
Terminated or expired leases:
Number of leases terminated or expired1 2 
Square feet4,548 7,908 
Annualized straight-line rent per square foot (1)
$44.93 $60.35 
______
(1)Represents the GAAP basis weighted averageannualized straight-line rent per square feet that is recognized over the term on the respective leases, which includes free rent, and periodic rent increases, and excludes recoveries.
(2) Replacement leases are for spaces that were leased during the period and also have been leased at some time during the prior twelve months.The weighted-average remaining lease term (years) is based on annualized straight-line rent.
(3) Presented as if tenant improvements and leasing commissions were incurred in the period in which the lease was signed, which may be different than the period in which these amounts were actually paid.
Subsequent to the acquisition of 9 Times Square in November 2014, we allowed leases to expire and terminate as part of the implementation of our repositioning, redeveloping and remarketing plan with respect to the property. This effort has taken longer than anticipated, however, as of September 30, 2017, we have substantially completed our repositioning and redevelopment plan and are working to lease the remaining vacant space at the property. Although this effort has taken longer than originally anticipated and the overall New York City leasing market has not been as strong as expected through September 30, 2017, during the third quarter of 2017, and continuing into the fourth quarter of 2017, we have seen strong interest in the leasing of the vacant space at the property. We are also working with several prospective tenants interested in office space and existing tenants interested in expanding the office space they currently occupy, and we are expecting these positive leasing trends to continue. In addition to the positive leasing trends with respect to the office space, we have seen an increase in interest in leasing the retail space at the property since engaging new leasing brokers as of March 30, 2017 to re-engage and refresh the marketing for this space. Although we continue to experience vacancies at the property, given the trends that we are seeing at the property, we expect revenue generated by the property to increase during the remainder of 2017.

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Comparison of Three Months Ended SeptemberJune 30, 20172023 and 2022
As of June 30, 2023, we owned eight properties, all of which were acquired prior to Three Months Ended SeptemberJanuary 1, 2022. Our results of operations for the three months ended June 30, 20162023 as compared to the three months ended June 30, 2022 primarily reflect changes due to leasing activity and occupancy.
Rental IncomeNet Loss Attributable to Common Stockholders
RentalNet loss attributable to common stockholders was $10.9 million for the quarter ended June 30, 2023, as compared to $13.0 million for the quarter ended June 30, 2022. The change in net loss income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.
Revenue from Tenants
Revenue from tenants decreased $0.1slightly to $15.8 million for the three months ended June 30, 2023 as compared to $13.3$16.2 million for the three months ended SeptemberJune 30, 2017, from $13.4 million for the three months ended September 30, 2016, due to a slight2022. The decrease in occupancy.
Operating Expense Reimbursements
Operating expense reimbursements increased $0.1 million to $1.1 million for the three months ended September 30, 2017, compared to $1.0 million for the three months ended September 30, 2016,was primarily due to an increasepercentage rent agreements naturally expiring during the quarter ended June 30, 2022 that resulted in a decrease in revenue, as well as a decrease in our real estate tax reimbursements.reimbursement billings. The percentage rent deals that we entered into provided us with an opportunity to capture more original cash rent due as New York City began to rebound from the COVID-19 pandemic.
PursuantAsset and Property Management Fees to many of our lease agreements, tenants are required to pay their pro rata share of certain property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are directly responsible for most operating costs of the respective properties. Therefore, operating expense reimbursements are directly affected by changes in property operating expenses, although not all increases in property operating expenses may be reimbursed by our tenants. Operating expense reimbursements primarily relate to costs associated with maintaining our properties including utilities, repairs and maintenance and real estate taxes incurred by us and subsequently reimbursed by the tenant.Related Parties
Property Operating Expenses
Property operating expenses increased $0.4 million to $6.8 million for the three months ended September 30, 2017 from $6.4 million for the three months ended September 30, 2016. The increase is primarily due the increase in property operating expense relates to the increased costs of maintaining our six properties including the costs of real estate taxes, utilities, and repairs and maintenance.
Operating Fees incurred from Related Parties
We incurred $1.5$2.0 million and $1.5$1.8 million in fees for asset and property management services frompaid to our Advisor and Property ManagerManager for the three months ended SeptemberJune 30, 20172023 and 2016, respectively. Please see 2022, respectively. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees incurred from our Advisor.Advisor and Property Manager. The Advisor elected to receive shares in lieu of cash for the January 2023 base management fee, however the remainder of the management fees in the first and second quarters of 2023 were paid in cash. Also, in the quarter ended June 30, 2022, in accordance with the Side Letter entered into with the Advisor (as defined below), the Advisor reinvested base management fees, aggregating $1.5 million (for April, May and June of 2022), in cash and reinvested these fees in shares of the Company’s Class A common stock. For accounting purposes, the shares issued in the quarter ended June 30, 2022 were issued using the closing price on date of issue and the related expense was $1.3 million for the three months ended June 30, 2022.
Acquisition and Transaction RelatedProperty Operating Expenses
We incurred no acquisitionProperty operating expenses increased to $8.4 million for the three months ended June 30, 2023 compared to $8.3 million for the three months ended June 30, 2022. This was primarily due to higher professional fees, repairs and transaction relatedmaintenance and utility expenses for the three months ended SeptemberJune 30, 2017. We incurred $24,000 in acquisition and transaction related expenses for2023
Impairments of Real Estate Investments
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During the three months ended SeptemberJune 30, 2016.2023, we recorded impairment charges of $0.2 million related to our 421 W. 54th Street - Hit Factory property. We have been evaluating our options for this property, including selling the property. We have not, however, entered into an agreement to sell this property which, therefore, does not qualify to be classified as held for sale on the consolidated balance sheet as of June 30, 2023. However, during quarter ended June 30, 2023, we recorded impairment charges for this property because we determined that the carrying value exceeded our estimate of the net sale price of the property as of June 30, 2023.
General and Administrative ExpensesEquity-Based Compensation
General and administrative expensesEquity-based compensation increased $0.8$0.1 million to $2.1$2.3 million for the three months ended SeptemberJune 30, 20172023 compared to $1.3$2.2 million for the three months ended SeptemberJune 30, 2016, primarily related2022. These amounts are comprised of restricted share amortization expense and the amortization of our multi-year outperformance award granted to anthe Advisor in August 2020 (the “2020 OPP”). The expense from the 2020 OPP is generally consistent period over period. The increase relates to higher restricted share amortization expense due to additional restricted shares issued to our board of directors in generalJune 2022. See Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and administrative expense reimbursements incurred from our Advisor, as well as an increase in audit, legalrestricted shares of common stock.
General and proxy fees. Administrative Expenses
General and administrative expense reimbursements incurred from our Advisor increased $0.5 millionexpenses decreased to $1.0$2.4 million for the three months ended SeptemberJune 30, 20172023 from $5.2 million for three months ended June 30, 2022. The decrease was due to lower proxy costs in the quarter ended June 30, 2023 as compared to $0.5 million for the three months ended SeptemberJune 30, 2016. Audit,2022. During the three months ended June 30, 2022 in connection with the annual meeting of stockholders and proxy contest we incurred overall higher legal and proxy fees contributed $0.3other costs of approximately $2.1 million, which were attributable to the increase.portion of our 2022 proxy contest materials.
Total reimbursement expenses for administrative and personnel services provided by the Advisor during the three months ended June 30, 2023 and 2022 were $0.8 million ($0.7 million related to salaries, wages, and benefits and $0.1 million related to administrative and overhead expenses)and $0.9 million ($0.7 million related to salaries, wages, and benefits and $0.1 million related to administrative and overhead expenses), respectively.
Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits of $2.6 million related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.
Depreciation and Amortization
Depreciation and amortization expensesexpense decreased $0.2 million to $7.1$6.7 million for the three months ended SeptemberJune 30, 2017,2023 as compared to $7.3$7.0 million for the three months ended SeptemberJune 30, 2016.2022. The decrease iswas primarily due to the expirationwrite-off of severalin-place leases duringin the period that had been amortizing.quarter ended June 30, 2022 as a result of lease terminations.
Interest Expense
Interest expense increased $0.5expense remained approximately the same at $4.7 million for the three months ended June 30, 2023, compared to $2.9$4.7 million for the three months ended SeptemberJune 30, 2017, from $2.4 million for2022. During the three months ended SeptemberJune 30, 2016, primarily due to the refinancing of 123 William Street. As of September 30, 2017, we had two loans2023 and 2022, our weighted-average outstanding with a combineddebt balance of $239.0was $399.5 million, and had a weighted averageweighted-average effective interest rate of 4.61%. As4.35% in each period. All of September 30, 2016,our mortgage debt is either fixed rate or swapped to fixed rate and, accordingly, we had two loans outstanding with a combined balance of $195.0 million and a weighted average effectivehave not currently been affected by rising interest rate of 3.58%.rates.
Income from Investment Securities and Interest
Income from investment securities and interest increased approximately $12,000 to approximately $68,000 for the three months ended September 30, 2017, compared to approximately $56,000 three months ended September 30, 2016. The income primarily related to interest earned on our cash balance during the period.

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Comparison of NineSix Months Ended SeptemberJune 30, 20172023 and 2022
As of June 30, 2023, we owned eight properties, all of which were acquired prior to Nine Months Ended SeptemberJanuary 1, 2021. Changes in our results of operations for the six months ended June 30, 20162023 as compared to the six months ended June 30, 2022 was primarily due to an increase in occupancy which increased rental revenue for previously vacant spaces.
Rental IncomeRevenue from Tenants
Rental income increased $9.2Revenue from tenants decreased slightly to $31.3 million to $40.0for the six months ended June 30, 2023, from $31.9 million for the ninesix months ended SeptemberJune 30, 2017, from $30.8 million for the nine months ended September 30, 2016,2022. The decrease was primarily due to our 1140 Property, which contributed $8.9 million topercentage rent agreements naturally expiring during the increase andquarter ended June 30, 2022 that resulted in a decrease in revenue, as well as a decrease in our Initial Five Properties provided $0.3 million of the increase in rental income.
Operating Expense Reimbursements
Operating expense reimbursements increased $1.4 million to $3.6 million for the nine months ended September 30, 2017, compared to $2.2 million for the nine months ended September 30, 2016, primarily due to the acquisition of our 1140 Property on June 15, 2016, which contributed to $0.9 million of the increase. Our Initial Five Properties provided $0.4 million of the increase.
Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of certain property operating expenses, in addition to base rent, whereas under certain other lease agreements, the tenants are directly responsible for most operating costs of the respective properties. Therefore, operating expense reimbursements are directly affected by changes in property operating expenses, although not all increases in property operating expenses may be reimbursed by our tenants. Operating expense reimbursements primarily relate to costs associated with maintaining our properties including utilities, repairs and maintenance and real estate taxes incurred bytax reimbursement billings. The percentage rent deals that we entered into provided us with an opportunity to capture more original cash rent due as New York City began to rebound from the COVID-19 pandemic
Asset and subsequently reimbursed by the tenant.
Property Operating Expenses
Property operating expenses increased $6.0 millionManagement Fees to $19.9 million for the nine months ended September 30, 2017 from $13.9 million for the nine months ended September 30, 2016 primarily due to our 1140 Property, which contributed $5.0 million to the increase. Our Initial Five Properties provided $1.0 million of the increase. The increase in property operating expenses primarily related to the increased costs of maintaining our six properties including the costs of real estate taxes, condominium fees, utilities, repairs and maintenance and property insurance.
Operating Fees incurred from Related Parties
We incurred $4.6 million and $3.7 million in feesFees for asset and property management services frompaid to our Advisor and Property Manager for the nine months ended September 30, 2017 and 2016, respectively. Cash asset management fees increased in direct correlation with the increase in cost of assets, as a result of the acquisition of our 1140 Property. We paid $4.1were $3.9 million and $3.3 million in cash for asset management fees for the nine months ended September 30, 2017 and 2016, respectively. Property management fees increased in direct correlation with gross revenue and amounted to $0.5 million and $0.3$3.7 million for the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, respectively. Please see SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on fees
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incurred from our Advisor.Advisor and Property Manager. The Advisor elected to receive shares in lieu of cash for the January 2023 base management fee, however the remainder of the management fees in the six months ended June 30, 2023 were paid in cash. Also, in the six months ended June 30, 2022, in accordance with the Side Letter, the Advisor was paid base management fees, aggregating $2.5 million in cash and reinvested these fees in shares of the Company’s Class A common stock. For accounting purposes these shares are issued using the closing price on date of issuance and the related expense was $0.5 million and $2.3 million for the six months ended June 30, 2023 and 2022, respectively.
Acquisition and Transaction RelatedProperty Operating Expenses
We incurred approximately $6,000 of acquisitionProperty operating expenses decreased$0.2 million to $16.8 million for the six months ended June 30, 2023 from $16.9 million for the six months ended June 30, 2022. This was primarily due to lower professional fees, repairs and transaction relatedmaintenance and utility expenses for the ninesix months ended SeptemberJune 30, 20172023.
Impairments of Real Estate Investments
During the six months ended June 30, 2023, we recorded impairment charges of $0.2 million related to a dead deal cost. Forour 421 W. 54th Street - Hit Factory property. We have been evaluating our options for this property, including selling the nineproperty. We have not, however, entered into an agreement to sell this property which, therefore, does not qualify to be classified as held for sale on the consolidated balance sheet as of June 30, 2023. However, during the six months ended SeptemberJune 30, 2016,2023, we incurred approximatelyrecorded impairment charges for this property because we determined that the carrying value exceeded our estimate of the net sale price of the property as of June 30, 2023.
Equity-Based Compensation
Equity-based compensation increased to $4.5 million for the six months ended June 30, 2023, as compared to $4.3 million for the six months ended June 30, 2022. These amounts are comprised of acquisitionrestricted share amortization expense and transaction related expensesthe amortization of our multi-year outperformance award granted to the Advisor in connection with acquiringAugust 2020 (the “2020 OPP”). The expense from the 2020 OPP is generally consistent period over period. The increase relates to higher restricted share amortization expense due to additional restricted shares issued to employees of the Advisor in April 2022 and additional restricted shares issued to our 1140 Property.board of directors in June 2022. See Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on the 2020 OPP and restricted shares of common stock.
General and Administrative Expenses
General and administrative expenses increased $1.8decreased $2.5 million to $5.6 million for the ninesix months ended SeptemberJune 30, 20172023 compared to $3.8$8.2 million for the ninesix months ended SeptemberJune 30, 2016, primarily2022. The decrease was due to lower proxy costs in the quarter ended June 30, 2023 as compared to the six months ended June 30, 2022. During the sixth months ended June 30, 2022 in connection with the annual meeting of stockholders and proxy contest we incurred overall higher legal and other costs of approximately $2.5 million, which were attributable to the portion of our 2022 proxy contest materials.
Total reimbursement expenses for administrative and personnel services provided by the Advisor during the six months ended June 30, 2023 and June 30, 2022 were $1.9 million ($1.5 million were for salaries, wages, and benefits and $0.4 million related to an increaseadministrative and overhead expenses) and $2.1 million ($1.7 million were for salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses), respectively.
Pursuant to our Advisory Agreement, reimbursement for administrative and overhead expenses and reimbursements for salaries, wages, and benefits are subject to annual limits of $2.6 million related to salaries, wages, and benefits and $0.4 million related to administrative and overhead expenses. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in general and administrative expense reimbursements incurred from our Advisor, as well as an increase in audit, legal fees and proxy services. General and administrative expense reimbursements incurred from our Advisor increased $1.2 million to $2.5 millionthis Quarterly Report on Form 10-Q for the nine months ended September 30, 2017 compared to $1.3 million for the nine months ended September 30, 2016. Audit, legal and proxy fees contributed $0.5 million of the increase.further details.
Depreciation and Amortization
Depreciation and amortization expenses increased $4.5 millionexpense decreased slightly to $21.3$13.7 million for the ninesix months ended SeptemberJune 30, 2017,2023, compared to $16.8$14.0 million for the ninesix months ended SeptemberJune 30, 2016,2022. The decrease was primarily due to our 1140 Property, which contributedthe write-off of in-place leases in second quarter of 2022 in relation to $4.7 million oflease terminations during the increase.quarter ended June 30, 2022.
Interest Expense
Interest expense increased $3.4 million to $8.4remained the same at $9.4 million for the ninesix months ended SeptemberJune 30, 2017, from $5.0 million2023, and for the ninesix months ended SeptemberJune 30, 2016, due to2022. In the closingquarter ended March 31, 2022 there was a partial pay-down of the loan onsecured by 9 Times Square. During the six months ended June 30, 2023 and 2022, our 1140 Property on June 15, 2016 and refinancing of 123 William Street on March 6, 2017. As of September 30, 2017, we had two loansweighted average outstanding with a combineddebt balance of $239.0was $399.5 million and $401.3 million, respectively, and had a weighted averageweighted-average effective interest rate of 4.61%. As4.35% in each period. All of September 30, 2016,our mortgage debt is fixed rate and, accordingly, we had two loans outstanding with a combined balance of $195.0 million and a weighted average effectivehave not currently been affected by rising market interest rate of 3.58%.

rates.
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Income from Investment Securities and Interest
Income from investment securities and interest decreased $0.1 million to $0.2 million for the nine months ended September 30, 2017, compared to approximately $0.3 million nine months ended September 30, 2016. The income is primarily related to interest earned on our cash balance during the period.
Gain on Sale of Investment Securities
Gain on sale of investment securities increased approximately $24,000 for the nine months ended September 30, 2017, which resulted from the sale of investment in equity securities with a cost basis of approximately $467,000 for approximately $491,000. No investment in equity securities was sold during the nine months ended September 30, 2016.
Cash Flows for the Nine Months Ended September 30, 2017
During the nine months ended September 30, 2017, net cash provided by operating activities was approximately $2.4 million, compared to net cash used of $0.6 million during nine months ended September 30, 2016. The increase is primarily due to the acquisition of our 1140 Property, acquired in June 2016.from Operating Activities
The level of cash flows used in or provided by or used in operating activities is affected by the volume of acquisition activity, restricted cash we are required to maintain, the timing of interest payments, the receipt of scheduled rent payments and the level of general, administrative and property operating expenses.
Net cash used in operating activities was $4.2 million during the six months ended June 30, 2023 and was impacted primarily by a net loss of $22.7 million, adjusted for non-cash items of $19.6 million, including depreciation and amortization of tangible and intangible real estate assets, amortization of deferred financing costs, accretion/amortization of below market and above market lease liabilities and assets, equity-based compensation and management fees reinvested by the Advisor. Net cash provided by operating activities was also impacted by an increase in prepaid expenses and other assets of $0.5 million and an increase in accounts payable and accrued expenses associated with operating activities of $0.2 million, an increase in deferred revenue (prepaid rent) of $0.4 million and an increase in straight-line receivable of $0.1 million.
Net cash provided by operating activities was $2.4$1.7 million during the ninesix months ended SeptemberJune 30, 20172022 and consisted ofwas impacted primarily by a net loss of $16.0$24.7 million, adjusted for non-cash items of $21.3 million, including depreciation and amortization forof tangible and intangible real estate assets, amortization of deferred financing costs, accretion/amortization of below market and other non-cash expenses of $20.8 million, which resulted in cash inflows of $4.8 million.above market lease liabilities and assets, equity-based compensation and management fees reinvested by the Advisor. Net cash provided by operating activities also included net cash inflows of $2.5 million for an increase in deferred rent related to payments received from tenants in advance of their due dates and other liabilities, as well as a $3.9 million increase related to accounts payable and accrued expenses associated with operating activities. These operating cash inflows were partially offset by a decrease in prepaid expenses and other assets of $7.2$0.5 million primarily related toand an increase in unbilled rent receivables recordedaccounts payable and accrued expenses associated with operating activities of $9.2 million, a decrease in accordance with accounting for rental income on adeferred revenue (prepaid rent) of $1.4 million and an increase in straight-line basis and restricted cashreceivable of $1.5 million reserved for ground rent and real estate taxes required by the mortgage lender for the property at 1140 Avenue of the Americas.$2.2 million.
Cash Flows from Investing Activities
Net cash used in investing activities of $7.6$2.8 million during the ninesix months ended SeptemberJune 30, 2017 related to payments2023 consisted of the funding of capital expenditures of $8.1 million relating to buildingtenant and tenantbuilding improvements at 9 Times Square, 123 William Street, and 1140 Avenue of the Americas offset by the proceeds received from the sale of investment securities of $0.5 million.
Net cash used in financing activities of $12.0 million during the nine months ended September 30, 2017 related to the proceeds from mortgage note payable of $115.2 million, which include $140.0 million of mortgage note payable, net $24.8 million of restricted cash required by the mortgage lender for leasing, tenant improvement and leasing commission reserves, partially offset by payment of mortgage note payable of $96.0 million, distributions to stockholders of $20.9 million, payments of $2.9 million relating to financing costs and repurchases of common stock of $7.3 million.
Cash Flows for the Nine Months Ended September 30, 2016
During the nine months ended September 30, 2016, net cash used in operating activities was $0.6 million, compared to $8.2 million of net cash used in operating activities during nine months ended September 30, 2015. Net cash used in operating activities contained acquisition and transaction related expenses of approximately $4.3 million and $6.0 million, respectively, for the nine months ended September 30, 2016 and 2015.
The level of cash flows used in operating activities is affected by the volume of acquisition activity, the timing of interest payments, the receipt of scheduled rent payments and the level of property operating expenses. Notwithstanding a net loss of $14.2 million, net cash used in operating activities included adjustments for depreciation and amortization of tangible and intangible assets and other non-cash expenses of $16.8 million, which resulted in cash outflows of $2.6 million. Net cash used in operating activities also included net cash inflows of $1.7 million for an increase in deferred rent related to payments received from tenants in advance of their due dates and other liabilities.
Net operating cash outflows primarily related to an increase in prepaid expenses and other assets of $6.3 million primarily related to an increase in unbilled rent receivables recorded in accordance with accounting for rental income on a straight-line basis as well as a $1.4 million decrease related to accounts payable and accrued expenses associated with operating activities.8713 Fifth Avenue.
Net cash used in investing activities of $1.4 million during the ninesix months ended SeptemberJune 30, 2016 was $91.6 million, primarily related2022 consisted of the funding of capital expenditures relating to the acquisition oftenant and building improvements at 123 William Street and 1140 Avenue of the Americas for $79.2 million, consisting of a purchase price of $178.5 million, net of purchase price adjustments, partially funded with a mortgage note payable of $99.0 million. Americas.
Cash Flows from Financing Activities
Net cash used in investingprovided by financing activities also relatedwas $4.0 million during the six months ended June 30, 2023 due primarily to paymentthe net proceeds of capital expenditures of $12.4$4.1 million relating to building and tenant improvements at 9 Times Square and 123 William Street.

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from the Rights Offering.
Net cash used inby financing activities of $37.4was $8.3 million during the ninesix months ended SeptemberJune 30, 2016 consisted primarily2022 related to payments on mortgage notes payable of distributions to stockholders$5.5 million and the payment of $18.7 million, payments of $3.3 million relating to financing costs, repurchases ofdividends on common stock of $12.5 million and an increase in restricted cash of $2.9$2.7 million.
Liquidity and Capital Resources
As of September 30, 2017, we had cash and cash equivalents of $30.5 million as compared to $43.5 million as of June 30, 2017. Our principal demands for cash are to fund acquisitions, including the purchase price of any properties, loans and securities we acquire, improvement costs, the payment of our operating and administrative expenses, continuingcapital expenditures, tenant improvement and leasing commission costs related to our properties, our debt service obligations distributionsand, subject to capital availability, acquisitions. We did not make any new acquisitions or investments in the quarter ended June 30, 2023.
Cash, Cash Equivalents and Restricted Cash
As of June 30, 2023, we had cash and cash equivalents of $7.1 million as compared to $9.2 million as of December 31, 2022. The decrease is cash was mainly due to the funding of capital expenditures related to building and tenant improvements at our 9 Times Square, 123 William Street, 1140 Avenue of the Americas and 8713 Fifth Avenue properties. Under the guarantee of certain enumerated recourse liabilities of the borrower under one of our mortgage loans, we are required to maintain a minimum net worth in excess of $175.0 million and minimum liquid assets (i.e. cash and cash equivalents) of $10.0 million, which includes cash and cash equivalents and restricted cash, which totaled $13.2 million as of June 30, 2023.
We had restricted cash of $6.1 million as of June 30, 2023 as compared to $6.9 million as of December 31, 2022. The decrease in cash was due to the funding of capital expenditures at our 1140 Avenue of the Americas property. We are able to use a portion of our restricted cash for certain property operating expenses and capital expenditures. For certain property operating expenses and capital expenditures specifically related to our stockholders1140 Avenue of the Americas property, lender approval is required to use any of the cash that is held in restricted cash accounts resulting from the breach of covenants on the loan secured by that property (see below). As a result, some of the property operating expenses and repurchasescapital expenditures that will be paid with restricted cash may reside in accounts payable and accrued expenses on our consolidated balance sheet as of June 30, 2023.
Segregated Cash Accounts - Loan Covenant Breaches
The negative impacts of the COVID-19 pandemic have caused and may continue to 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
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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 these properties to fund operating expenses at our SRP.other properties and other capital requirements during the quarter ended June 30, 2023.
As of June 30, 2023, we are only operating under two cash traps (1140 Avenue of the Americas and 8713 Fifth Avenue), which together, represent 22% of the rentable square feet in our portfolio as of June 30, 2023. Also, as of June 30, 2023 and December 31, 2022, there was $2.3 million and $3.6 million of cash maintained in a segregated and restricted cash account resulting from the breach of covenants on the loan secured by our 1140 Avenue of the Americas property. However, our 8713 Fifth Avenue property has not generated excess cash after debt service and as of June 30, 2023 there is no related cash maintained in a segregated and restricted cash account for that property. We may not access the cash from the 1140 Avenue of the Americas property without lender approval unless and until the various breaches have been cured. Excess cash generated by the 1140 Avenue of the Americas property continues to be deposited in a separate cash management account until the borrower under the loan is able to comply with all of the applicable covenants.
Liquidity
We do not have any significant scheduled debt principal repayments due until 2024 when the loan secured by Nine Times Square matures. We are presently evaluating our options to extend or refinance that loan. We believe that we will have sufficient cash available to us to meet our operating and capital requirements over the next year. We expect to fund our future short-term operating liquidity requirements, including distributions, through a combination of net cash provided by our current property operations and the operations of properties to be acquired in the future, proceeds from secured mortgage financings and proceeds from reinvestments under the DRIP. 
Management expects that, as our portfolio of investments stabilizes, specifically 9 Times Square, cash flow from our properties will be sufficient to fund operating expenses and capital requirements over the next 12 months with cash on hand as of June 30, 2023 and the cash we believe we will generate from operations that are not otherwise subject to cash traps described herein.
In February 2023, we raised gross proceeds of $5.0 million ($4.1 million of net proceeds) from our Rights Offering, which entitled holders of rights to purchase 0.20130805 of a larger portionshare of our Class A common stock for every right held at a subscription price of $12.95 per whole share. As a result, we issued 386,100 shares of our Class A common stock subscribed for in our Rights Offering on February 27, 2023. The net proceeds were used for general corporate purposes.
We may also use cash from dispositions, if we decide to sell an asset (we are evaluating our options for our 421 W. 54th Street - Hit Factory property, which include potentially selling the property to a third party).
To further augment our liquidity, we may potentially be able to generate funds for these needs through the additional offering and sale of Class A common stock through the Common Stock ATM Program (as defined below) or the potential issuance or placement of unsecured debt or an offering of equity securities as well as proceeds from property dispositions, if any. Our ability to sell shares under our existing shelf registration statement including under the Common Stock ATM Program is limited to one third of our market capitalization unless the aggregate value of our Class A common stock held by non-affiliates exceeds $75.0 million. As of June 30, 2023, our public float was $18.2 million. During the year ended December 31, 2022 and the three months ended March 31, 2023, we were also able to preserve cash through an arrangement reached with our Advisor. In each of August, September, October, November and December 2022, the Advisor elected to receive shares of Class A common stock in lieu of cash in respect of its management fee. We issued 15,586, 18,899, 18,285, 19,320 and 24,744 shares (adjusted for the Reverse Stock Split), respectively. Since February of 2023 the advisor has been paid its fees in cash. For the full year ended December 31, 2022 in connection with the monthly base management fee earned by the Advisor, an aggregate of 129,671 shares were issued (including those issued in the three months ended March 31, 2022).
We continue to focus on increasing occupancy of the paymentportfolio 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 monthlyleases upon commencement of executed leases. These incentives may delay or reduce cash flow 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.
Dividend Policy
Through the six months ended June 30, 2022, we paid dividends to our common stockholders at our current annual rate of $3.20 per share of Class A common stock (adjusted for the Reverse Stock Split), or $0.80 per share (adjusted for the Reverse Stock Split) on a quarterly basis. The board subsequently decided not to declare any further distributions. There is no assurance as to when or if the board will declare future dividends or the amount of any future dividends that may be declared.
Mortgage Loans
We have six mortgage loans secured by seven of our eight properties with an aggregate balance of $399.5 million as of June 30, 2023 with a weighted-average effective interest rate of 4.35%. All our mortgage loans bear interest at a fixed rate, except for a mortgage loan agreement secured by Capital One N.A. that has terms now based on SOFR for which we have a related derivative agreement for a “pay-fixed” swap which effectively converts the loan to a fixed rate. We do not have any scheduled principal payments due on our mortgage notes payable during the remainder of the year ending December 31, 2023.
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The loan secured by Nine Times Square in the principal amount of $49.5 million matures in April 2024. We are presently reviewing options including extending or refinancing the loan. This loan bears interest at a rate equal to 3.72% per annum.
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 however, that this stabilization will occur on a timely basis, or at all.
Other potential future sources of capital include proceeds from secured and unsecured financings from banks or other lenders, proceeds from future offerings, proceeds from the sale of properties and cash flows from operations to the extent we have cash flow in excess of the amount needed to fund distributions to our stockholders.
As with prior periods, for the three and nine months ended September 30, 2017, our cash flows from operations was less than the amount we distributed to our stockholders. We do not expect to generate sufficient cash flow from operations in 2017 to fund distributions at our current level. To pay distributions in future periods, as we have in prior periods, we expect to use cash on hand, proceeds from the sale of our shares through DRIP and proceeds from secured mortgages financings. In prior periods, we have also used remaining proceeds from the IPO to fund distributions, but this source will not be available to us in future periods as we used the remaining $2.4 million proceeds we received from the IPO during the nine months ended September 30, 2017. If these sources are insufficient to fund distributions, we may seek to obtain additional liquidity from other sources, such as borrowings other than secured mortgage financings, to fund distributions. Management expects that, as our portfolio of investments stabilizes, specifically 9 Times Square, cash flow from our properties will be sufficient to fund operating expenses and a larger portion of the payment of our monthly distributions. There can be no assurance, however, that this stabilization will occur on a timely basis, or at all. A decrease in the level of stockholder participation in our DRIP or continued cash flow less than the amount distributed or need to use cash flow that we may generate in the future for other purposes could have an adverse impact on our ability to meet these expectations. To the extent we are required to borrow additional amounts to pay distributions, we may notwould be able to do soobtain corporate-level financing on favorable terms, or at all. There canOur only asset that is not serving as collateral for a mortgage is 421 W. 54th Street - Hit Factory, which is unoccupied and therefore unlikely to be no assuranceaccepted as collateral for a new mortgage loan. See “-Acquisitions and Dispositions” section below for further detail on this property. We do not currently anticipate incurring additional indebtedness secured by our existing properties, however, despite a tightening of the credit markets, we willexpect to be able to continue paying cash distributions at our current level or at all.
We have used mortgage financing to acquire two of our properties and expect to continue to use debt financing as a source of capital. Under our charter,capital especially if we acquire additional properties.
1140 Avenue of the maximumAmericas
We breached both a debt service coverage provision and a reserve fund provision under its non-recourse mortgage secured by the 1140 Avenue of the Americas property in each of the last 12 quarters ended June 30, 2023. The principal amount of the loan was $99.0 million as of June 30, 2023. These breaches are not events of default, rather they require excess cash, if any, generated at the property (after paying operating costs, debt service and capital/tenant replacement reserves) to be held in a segregated account as additional collateral under the loan. The covenants for this loan may be cured if we satisfy the required debt service coverage ratio for two consecutive quarters, whereupon the additional collateral will be released. We can remain subject to this reserve requirement through maturity of the loan without further penalty or ramifications. As of June 30, 2023 and December 31, 2022 we had $2.3 million and $3.6 million, respectively, in cash that is retained by the lender and maintained in restricted cash on our total indebtedness mayconsolidated balance sheet as of those dates.
8713 Fifth Avenue
We breached a debt service coverage ratio covenant under the non-recourse mortgage secured by 8713 Fifth Avenue in each of the last 12 quarters ended June 30, 2023. The principal amount for the loan was $10.0 million as of June 30, 2023. The breach of this covenant did not exceed 300%result in an event of our total "net assets" (as defineddefault but rather triggered an excess cash flow sweep period. We have the ability to avoid the excess cash flow sweep period by electing to fund a reserve in our charter)the amount of $125,000 of additional collateral in cash or as a letter of credit. As of the date of any borrowing, which is generally equalfiling this Quarterly Report on Form 10-Q, we had not yet determined whether we will do so. If we do not elect to 75%continue to fund the $125,000 additional collateral in a subsequent quarter, then the excess flow sweep period would commence in such quarter and continue until the covenant breaches are cured in accordance with the terms of the cost of our investments.loan agreement. Additionally, in the event that the debt service coverage ratio covenant remains in breach at or below the current level for two consecutive calendar quarters and the lender reasonably determines that such breach is due to the property not being prudently 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. This property did not generate any excess cash since the breach occurred and thus no cash has ever been trapped related to this property. We may exceed that limit if approved bysigned a majority of our independent directorslease with a new tenant at this property in November 2021, and disclosed to stockholders in our next quarterly report following such borrowing along with justification for exceeding such limit. This charter limitation, however, does not apply to individual real estate assets or investments. In addition, we intend to limit our aggregate borrowings to 40% to 50%began occupying a portion of the aggregate fair market valueleased space in the quarter ended March 31, 2023 and is expected to occupy the remainder of our assets, which would be an aggregate borrowingthe space in the fourth quarter of approximately $322.4 million to $403.1 million, respectively. As of September 30, 2017, our aggregate borrowings were $239.0 million. We may exceed that limit if approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for borrowing such a greater amount. This limitation will be calculated once we have invested substantially all the proceeds of our IPO and will not apply to individual real estate assets or investments. At the date of acquisition of each asset, we anticipate that the cost of investment for such asset will be substantially similar to its fair market value,2023, which will enable usbring the occupancy to satisfy100.0%. We anticipate complying with the debt service coverage ratio under the non-recourse mortgage once the space is occupied.
Other Information
We entered into one new lease at 9 Times Square representing over 8,700 square feet during the three months ended June 30, 2023. We are also working to increase the rental income at our requirements under our charter. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits.
Share Repurchase Program
Our board of directors has adopted the SRPother properties that enables stockholders, subject to certain conditions and limitations, to sell their shares to us. Due to these conditions and limitations, thereare not fully occupied. There can be no assurance, however, that we will be able to lease all or any shares submitted validly for repurchaseportion of the vacant space at any property on acceptable or favorable terms, or at all, or that we will not experience further terminations. Unless we are able to increase the occupancy at 1140 Avenue of the Americas and 8713 Fifth Avenue on terms that allow us to cure the two remaining covenant breaches described above, we will be repurchased underunable to access excess cash flow from those properties and the SRP.lenders may be able to exercise additional remedies.
On June 14, 2017, we announcedAny cash that our board of directors had adopted an amendment and restatementis restricted for the remaining breaches on 1140 Avenue of the SRPAmericas and 8713 Fifth Avenue mortgages (as disclosed above) are not available to be used for other corporate purposes. There is no assurance that supersededwe will be able to cure these breaches. Moreover, 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 replacedwe may also become restricted from accessing excess cash flows from those properties. Except as described herein, we were in compliance with the existing SRP effectiveremaining covenants under our mortgage notes payable as of July 14, 2017. UnderJune 30, 2023.
Leasing Activity/Occupancy
We had an increase in occupancy level of 85.1% across our portfolio as of June 30, 2023, as compared to 82.7% as of December 31, 2022. Even though overall occupancy did not change materially, the amended and restated SRP, subjectchanges in occupancy were as follows:
•Occupancy at 9 Times Square increased to certain conditions, only repurchase requests made following68.0% as of June 30, 2023, compared to 61.9% as of December 31, 2022. The increase was due to two new leases signed during the death or qualifying disability of stockholders that purchased shares of our common stock or received their shares from us (directly or indirectly) through one or more non-cash transactions would be

six months ended June 30, 2023.
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•Occupancy at 123 William Street increased to 92.0% as of June 30, 2023 compared to 91.4% as of December 31, 2022. The increase was due to the signing of two new leases and one termination during the six months ended June 30, 2023.
considered for repurchase. Other terms and provisions•Occupancy at 1140 Avenue of the amended and restated SRP remained consistent with the existing SRP.
Under the SRP in effect priorAmericas increased to this amendment and restatement, repurchases74.6% as of shares of our common stock, when requested, are at the sole discretion of our board of directors and generally will be made semiannually (each six-month period ending June 30, or2023, compared to 70.9% as of December 31, 2022. The increase was due to three new leases signed during the six months ended June 30, 2023.
•Occupancy at 8713 Fifth Avenue increased to 88.6% as of June 30, 2023, compared to 57.1% as of December 31, 2022. The increase was due to two new lease signed during the six months ended June 30, 2023. We signed a "fiscal semester"). Repurchases for any fiscal semester were limited tolease with a maximum of 2.5%new tenant at this property in November 2021, and began occupying a portion of the weighted average number of shares of common stock outstanding duringleased space in the previous fiscal year, with a maximum for any fiscal year of 5.0%quarter ended March 31, 2023 and is expected to occupy the remainder of the weighted average number of shares of common stock outstanding on December 31stspace in the fourth quarter of the previous calendar year. In addition, we are only authorizedyear ending December 31, 2023, which will bring the occupancy to repurchase shares in a given fiscal semester up to the amount of proceeds received from the DRIP in that same fiscal semester, as well as any reservation of funds our board of directors may, in its sole discretion, make available for this purpose. Since we established the 2016 Estimated Per-Share NAV during the second fiscal semester of 2016, any repurchase requests received during the second fiscal semester of 2016 were paid at the Estimated Per-Share NAV. The SRP amendment became effective on February 28, 2016, and we published the 2017 Estimated Per-Share NAV in the second fiscal semester, after the repurchases with respect to the first fiscal semester of 2017 had been completed. Any shares repurchased with respect to the second fiscal semester of 2017 will be at the 2017 Estimated Per-Share NAV.100.0%.
If a stockholder requests a repurchase and the repurchase is approved by our board of directors, we will reclassify such obligation from equity to a liability based on the value of the obligation. Shares purchased under the SRP will have the status of authorized but unissued shares. The following table reflects the number of shares repurchased cumulatively through September 30, 2017:
  Numbers of Shares Repurchased Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2016 645,335
 $23.63
Nine months ended September 30, 2017(1)
 359,458
 20.41
Cumulative repurchases as of September 30, 2017 1,004,793
 $22.48
_____________________
(1)Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13.7 thousand at a weighted average price per share of $23.68 and (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.
Capital Expenditures
For the six months ended June 30, 2023, we funded an aggregate of $2.8 million of capital expenditures primarily related to tenant and building improvements at 123 William Street, 9 Times Square 1140 Avenue of the Americas, and 8713 Fifth Avenue. We may fundinvest in additional capital expenditures if we believe doing so willto further enhance the value of our investments.properties. Additionally, many of our lease agreements with tenants require us to fundinclude provisions for tenant improvement allowances.
As previously noted, subsequent to the acquisition of 9 Times Square in November 2014, The amount we allowed leases to expire and terminate as part of the implementation of our repositioning, redeveloping and remarketing plan with respect to the property. As a result of these initiatives, we funded approximately $7.1 million of capital expenditures in 2016 related to building improvements, tenant improvements and leasing commissions. While we have substantially completed our repositioning and redevelopment plan with respect to 9 Times Square and are currently working to lease the remaining vacant space at the property, there can be no assurance that we will be successful in lease-up of this property or effectively repositioning or remarketing any other property we may acquire for these purposes, including increasing the occupancy rate. We expect capital expenditures in 2017 to be less than 2016 and consist primarily of tenant requested improvements incurred in connection with our leasing efforts. The remainder of $9.7 millioninvest in capital expenditures forduring the full year ending December 31, 2023, including amounts we expect to fund under new or replacement leases, and we expect the amount invested will be similar to the year ended December 31, 2016 related to building and tenant improvements at 123 William Street and 1140 Avenue of2022, or may be higher if management deems necessary. We funded our capital expenditures during the Americas. For the ninethree months ended SeptemberJune 30, 2017, we have funded $8.1 million2023 with cash on hand consisting of proceeds from previous offerings/financings and, cash retained from the Advisor by electing to receive shares of our Class A common stock in lieu of cash for its base management fee for January 2023. The economic uncertainty created by the COVID-19 global pandemic has impacted and could continue to impact our decisions on the amount and timing of future capital expenditures.

Acquisitions and Dispositions
35
We had no acquisitions or dispositions during the three months ended June 30, 2023.
TableWe are evaluating our options for our 421 W. 54th Street — Hit Factory property, which include potentially selling or leasing the property to a third party. We have not, however, entered into an agreement to sell this property which, therefore, does not qualify to be classified as held for sale on our consolidated balance sheet as of Contents
June 30, 2023. The sole tenant terminated its lease early and vacated the space during the quarter ended June 30, 2018.

Non-GAAP Financial Measures
This section reportsdiscusses the non-GAAP financial measures we use to evaluate our performance, including fundsFunds from operations ("FFO"Operations (“FFO”), modified fundsCore Funds from operations ("MFFO"Operations (“Core FFO”) and cash net operating income ("Cash NOI"Net Operating Income (“Cash NOI”). A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income (loss), is provided below.
In December 2022 we announced that that we changed our business strategy and terminated our election to be taxed as a REIT effective January 1, 2023. However, our business and operations have not materially changed in the quarter ended June 30, 2023 since we did not make new investments. Therefore, we did not change any of the non-GAAP metrics that we have historically used to evaluate performance.
Funds from Operations and ModifiedCore Funds from Operations
The historical accounting convention used forFunds from Operations
Due to certain unique operating characteristics of real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies thatcompanies, as discussed below, the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.
The National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has publishedpromulgated a standardizedperformance measure of performance known as FFO, which is used in the REIT industry as a supplemental performance measure. Wewe believe FFO, which excludes certain items such as real estate-related depreciation and amortization, isto be an appropriate supplemental measure to reflect the operating performance of a REIT’s operating performance.company with a business similar to our current business. FFO is not equivalent to our net income or loss as determined under GAAP.
We definecalculate FFO, a non-GAAP measure, consistent with the standards set forthestablished over time by the Board of Governors of NAREIT, as restated in thea White Paper on FFOand approved by the Board of Governors of NAREIT as revisedeffective in February 2004December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, but excluding depreciation and amortization related to real estate, gains orand losses from sales of property andcertain real estate related impairments, plusassets, gain and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated partially-owned entities (including our OP) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes
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predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a company with a business similar to our current business using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
We believe that the use of FFOamong other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
ChangesCore Funds from Operations
Beginning in the accounting and reporting promulgations under GAAPquarter ended September 30, 2020, following the listing of our Class A common stock on the NYSE, we began presenting Core FFO, also a non-GAAP metric. We have presented prior periods on a comparable basis so that were put into effect in 2009 subsequentthe metric is useful to the establishmentusers of NAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.
Because of these factors, the Investment Program Association (the “IPA”), an industry trade group, has published a standardized measure of performance known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP.our financial statements. We believe itthat Core FFO is appropriateutilized by other publicly-traded companies with businesses similar to use MFFO as a supplemental measure of operating performance because we believe that, when compared year over year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisitions fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, whichcurrent business, although Core FFO presented by us may not be immediately apparent from net income. MFFOcomparable to Core FFO reported by other companies that define Core FFO differently. In calculating Core FFO, we start with FFO, then we exclude the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is not equivalent to our net income or loss as determined under GAAP.
We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the “Practice Guideline”) issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted forcore business platform. Specific examples of discrete non-operating items include acquisition and transaction related feescosts for dead deals, debt extinguishment costs, non-cash equity-based compensation and expensescosts incurred for the 2022 contested proxy that were specifically related to the portion of our 2022 proxy contest. We add back non-cash write-offs of deferred financing costs and other items. In calculating MFFO, we followprepayment penalties incurred with the Practice Guideline and exclude acquisition and transaction-related fees and expenses, amounts relating to deferred rent receivables and amortizationearly extinguishment of above-and below-market leases and liabilities (whichdebt which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income gains or losses includedbut are considered financing cash flows when paid in net income from the extinguishment or salestatement of debt, hedges, foreign exchange, derivatives or securities holdings where tradingcash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of such holdingsnormal operating performance. Further, we do not consider the costs associated with the 2022 contested proxy, while paid in cash, to be indicative of normal operating performance. By excluding expensed acquisition and transaction dead deal costs as well as non-operating costs described above, we believe Core FFO provides useful supplemental information that is not a fundamental attributecomparable for each type of real estate investment and is consistent with management’s analysis of the business plan, unrealized gains or losses resultinginvesting and operating performance of our properties. In future periods, we may also exclude other items from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

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We believe that, because MFFO excludes costsCore FFO that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) ofbelieve may help investors compare our operating performance after the period in which we are acquiring properties and once our portfolio is stabilized. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.results.
Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations, as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. FFO and MFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.
None of the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guideline or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.
The table below reflects the items deducted or added to net loss in our calculation of FFO and MFFOCore FFO for the periods presented.
Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2023202220232022
Net loss attributable to common stockholders (in accordance with GAAP)$(10,899)$(13,001)$(22,657)$(24,713)
    Impairment of real estate investments151 — 151 — 
   Depreciation and amortization6,749 7,041 13,701 14,022 
FFO (deficit) (As defined by NAREIT) attributable to common stockholders(3,999)(5,960)(8,805)(10,691)
   Acquisition and transaction related— — — — 
   Equity-based compensation (1)
2,304 2,201 4,504 4,321 
   Expenses attributable to portion of 2022 proxy contest (2)
— 2,084 — 2,477 
Core FFO (deficit) attributable to common stockholders$(1,695)$(1,675)$(4,301)$(3,893)
_________
  Three Months Ended Nine Months Ended
(In thousands) March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
Net loss (in accordance with GAAP) $(4,786) $(5,362) $(5,877) $(16,025)
Depreciation and amortization 6,997
 7,227
 7,125
 21,349
FFO 2,211
 1,865
 1,248
 5,324
Acquisition and transaction related 6
 —
 —
 6
Accretion of below- and amortization of above-market lease liabilities and assets, net (539) (532) (499) (1,570)
Straight-line rent (618) (603) (1,365) (2,586)
Straight-line ground rent 27
 27
 28
 82
Loss on extinguishment of debt 131
 —
 —
 131
Gain on sale of investment securities $—
 $(24) $—
 $(24)
MFFO $1,218
 $733
 $(588) $1,363
(1) Includes expense related to the amortization of our restricted common shares and LTIP Units related to its multi-year outperformance agreement for all periods presented. Management has not added back the cost of the base management fee elected to be received by the Advisor in shares in lieu of cash or the Advisor’s base management fee used by the Advisor under the Side Letter to purchase shares because such amounts are considered a normal operating expense. Such amounts included in net loss were $0.5 million and $2.3 million for the six months ended June 30, 2023 and 2022, respectively.
(2) Amount relates to costs incurred for the 2022 proxy that were specifically related to the portion of the 2022 proxy contest. We do not consider these expenses to be part of our normal operating performance and has, accordingly, increased its Core FFO for this amount.
Cash Net Operating Income
Cash NOI is a non-GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, less income from investment securities and interest, plus general and administrative expenses, acquisition and transaction-related expenses, depreciation and amortization, other non-cash expenses and interest expense. In calculating Cash NOI, we also eliminate the effects of straight-lining of rent and the amortization of aboveabove- and below marketbelow-market leases. Cash NOI should not be considered an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity.

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We use Cash NOI internally as a performance measure and believe Cash NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe Cash NOI is a useful measure for evaluating the operating performance of our real estate assets and to make decisions about resource allocations. Further, we believe Cash NOI is useful to investors as performance measures because, when compared across periods, Cash NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition activity on an unlevered basis. Cash NOI excludes certain components from net income in order to provide results that are more closely related to a property'sproperty’s results of operations. For example, interest expense is not linked to the operating performance of a real estate asset and Cash NOI is not affected by whether the financing is at the property level or corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. Cash NOI presented by us may not be comparable to Cash NOI reported by other REITscompanies that may define Cash NOI differently. We believe that in order to facilitate a clear understanding of our operating results, Cash NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements.
The table below reflects the items deducted or added to net loss in our calculation of Cash NOI for the periods presented.presented:
Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2023202220232022
Net loss (in accordance with GAAP)$(10,899)$(13,001)$(22,657)$(24,713)
Depreciation and amortization6,749 7,041 13,701 14,022 
Interest expense4,707 4,703 9,370 9,418 
Impairment of real estate investments151 — 151 — 
Equity-based compensation2,304 2,201 4,504 4,321 
Other expense(10)(2)(19)35 
Asset and property management fees to related parties1,988 1,785 3,872 3,707 
General and administrative2,439 5,175 5,620 8,161 
Accretion of below- and amortization of above-market lease liabilities and assets, net(45)(50)(9)(101)
Straight-line rent (revenue as a lessor)120 (930)(84)(2,233)
Straight-line ground rent (expense as lessee)27 27 54 54 
Cash NOI$7,531 $6,949 $14,503 $12,671 
Dividends
  Three Months Ended Nine Months Ended
(In thousands) March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
Net loss (in accordance with GAAP) $(4,786) $(5,362) $(5,877) $(16,025)
Income from Investment Securities and Interest (49) (73) (68) (190)
General and administrative 1,576
 1,992
 2,066
 5,634
Operating fees incurred from related parties 1,538
 1,513
 1,515
 4,566
Acquisition and transaction related 6
 —
 —
 6
Depreciation and amortization 6,997
 7,227
 7,125
 21,349
Interest Expense 2,665
 2,834
 2,866
 8,365
Gain on sale of investment securities —
 (24) —
 (24)
Accretion of below- and amortization of above-market lease liabilities and assets, net (539) (532) (499) (1,570)
Straight-line rent
 (618) (603) (1,365) (2,586)
Straight-line ground rent
 27
 27
 28
 82
Cash NOI $6,817
 $6,999
 $5,791
 $19,607
As noted above, we have not paid dividends to stockholders since those that were declared and paid through the six months ended June 30, 2022.
Distributions
In May 2014,Decisions regarding the frequency and amount of any future dividends we pay on our Class A common stock are entirely at the discretion of our board of directors authorized, and we began paying monthly distributions to stockholders of record at a rate equal to $1.5125 per annum, per share of common stock. We continuedirectors. Our ability to pay monthly distributions at this rate, but we do not expectdividends in the future will depend on our ability to operate profitably and to generate sufficient cash flowflows from operationsthe operations. We cannot guarantee that we will be able to pay dividends on a regular basis on our Class A common stock or any other class or series of stock we may issue in 2017 to fund distributions at our current level.the future. There can beis no assurance that additional liquiditywe will be available to us, on favorable terms,reinstitute the payment dividends at the previous rate, or at all, in sufficient amounts to maintain distributions at our current levels. Our board of directors may reduce theall. The amount of distributions paid or suspend distribution payments and therefore the amount and timing of future distribution payments, if any, are not assured.
Both the amount and timing of future distributionsdividends we may pay to our stockholders will beis determined by our board of directors and are dependentbased on a number ofseveral factors, including funds available for distribution,dividends, our financial condition, provisions in our loans and any agreement we are party to that may restrict our ability to pay dividends or repurchase shares, capital expenditure requirements, as applicable, and requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). Distribution payments are dependent on the availability of funds.law.
As with prior periods, for the three and nine months ended September 30, 2017, our cash flows from operations was less than the amount distributed, and we do not expect to generate sufficient cash flow from operations in 2017 to fund distributions at our current level. No assurance as to cash flows from operations can be made with respect to future years. The amount of cash available for distributions is affected by many factors, such as rental income from acquired properties, our operating expense levels, the amount of our cash and many other variables. Actual cash available for distributions may vary substantially from estimates. We cannot give any assurance that rents from the properties we have acquired will increase, or that future acquisitions of real properties will increase our cash available for distributions to stockholders. Management expects that, as our portfolio of investments stabilizes, specifically 9 Times Square, cash flow from our properties will be sufficient to fund operating expenses and a larger portion of the payment of our monthly distributions. There can be no assurance, however, that this stabilization will occur on a timely basis, or at all. Our actual results may differ significantly from the assumptions used by our board of directors in establishing a distribution rate to stockholders.
During the nine months ended September 30, 2017, distributions paid to common stockholders totaled $35.1 million. Of that amount, $14.2 million was reinvested in shares of our common stock pursuant to the DRIP. During the three months ended September 30, 2017, we funded distributions from cash provided by operations, cash proceeds received from common stock issued under the DRIP and cash on hand which represented the remaining $2.4 million in proceeds from the IPO and proceeds from secured financings.

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To pay distributions in future periods, we expect to use cash on hand, proceeds from the sale of our shares through DRIP and proceeds from secured mortgages financings. A decrease in the level of stockholder participation in our DRIP or continued cash flow less than the amount distributed or need to use cash flow that we may generate in the future for other purposes could have an adverse impact on our ability to meet these expectations. To the extent we are required to borrow additional amounts to pay distributions, we may not be able to do so on favorable terms or at all. If these sources are insufficient, we may use other sources, such as from borrowings other than secured mortgage financings, to fund distributions. There can be no assurance we will be able to continue paying cash distributions at our current level or at all.
The following table shows the sources for the payment of distributions to common stockholders for the periods presented:
  Three Months Ended Nine Months Ended
  March 31, 2017 June 30, 2017 September 30, 2017 September 30, 2017
(In thousands)   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions
Distributions:(1)
                
Cash distributions paid to stockholders not reinvested in common stock $6,661
   $7,004
   $7,233
   $20,898
  
Cash distributions reinvested in common stock issued under the DRIP 4,794
   4,771
   4,605
   14,170
  
Total distributions paid $11,455
   $11,775
   $11,838
   $35,068
  
Source of distribution coverage:                
Cash flows provided by operations * —% $3,612
 30.7% * —% $3,612
 10.3%
Cash proceeds received from common stock issued under the DRIP 4,936
 43.1% 4,673
 39.7% 4,655
 39.3% 14,264
 40.7%
Available cash on hand(2) 
 6,519
 56.9% 3,490
 29.6% 7,183
 60.7% 17,192
 49.0%
Total sources of distributions $11,455
 100.0% $11,775
 100.0% $11,838
 100.0% $35,068
 100.0%
Cash flows (used in) provided by operations (GAAP basis) $(98)   $3,612
   $(1,135)   $2,379
  
Net loss (in accordance with GAAP) $(4,786)   $(5,362)   $(5,877)   $(16,025)  

(1) Excludes distributions related to Class B Units, the expense for which is included in general and administrative expenses on the consolidated statements of operations and comprehensive loss.
(2) Includes remaining proceeds from the IPO and proceeds from secured mortgages financing. As of September 30, 2017, there were no remaining proceeds from the IPO. See Note 5 — Mortgage Notes Payable for information on our secured mortgage loans outstanding.
* No cash flows from operations were used to cover distributions during the three months ended March 31, 2017 and September 30, 2017. Net cash used in operating activities was approximately $98,000 and $1.1 million for the three months ended March 31, 2017 and September 30, 2017, respectively.

Contractual Obligations
Debt Obligations
The following is a summary of our contractual debt obligations as of September 30, 2017:
      Years Ended December 31,  
(In thousands) Total October 1, 2017 — December 31, 2017 2018 — 2019 2020 — 2021 Thereafter
Mortgage note payable:          
Principal payments $239,000
 $—
 $—
 $—
 $239,000
Interest payments 99,372
 2,680
 21,496
 21,525
 53,671
Total debt obligations $338,372
 $2,680
 $21,496
 $21,525
 $292,671

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Ground Lease Obligations
The following is a summary of our contractual ground lease obligations as of September 30, 2017:
      Years Ended December 31,  
(In thousands) Total October 1, 2017 — December 31, 2017 2018 — 2019 2020 — 2021 Thereafter
Ground lease payments $241,655
 $1,187
 $9,492
 $9,492
 $221,484
Previous Election as a REIT
We elected and qualified to be taxed as a REIT, under the Code, effective forcommencing with our taxable year ended December 31, 2014. Our board subsequently authorized the termination of our REIT election which became effective on January 1, 2023. We believe that commencing with suchduring the taxable year ended December 31, 2014 through December 31, 2022, we have beenwere organized and operated in a manner so that we qualified as a REIT. To qualify for taxation as a REIT under the Code. We intendduring that period, we were required to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to remain qualified for taxation as a REIT. In order to continue to qualify for taxation as a REIT we must, among other things, distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard for the deduction for dividends paid and excluding net capital gains and must comply with a number ofseveral other organizational and operational requirements. If we continue to qualify for taxation asAs a REIT, we were generally will not be subject to U.S. federal corporate income tax on thatthe portion of our REIT taxable income that we distributedistributed to our stockholders. Even if we qualifyA tax loss for taxationa particular year eliminated the need to distribute REIT taxable income to meet the 90% distribution requirement for that year and minimized or eliminated the need to pay distributions to meet the distribution requirement in one or more subsequent years. We had a loss for tax purposes in the year ending December 31, 2022 and therefore there was no REIT taxable income requiring distribution to maintain our qualification as a REIT wefor the year ended December 31, 2022.
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Inflation
We may be subjectadversely 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, 2023, the increase to certain state and local taxes on our income and propertiesthe 12-month CPI for all items, as well as federal income and excise taxes on our undistributed income.
Inflation
Manypublished by the Bureau of our leases contain provisions designed toLabor Statistics, was 3.0%. To help mitigate the adverse impact of inflation.inflation, approximately 85% 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 2.1% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (basedother measures. As of June 30, 2023, based on the Consumer Price Index or other measures). We may be adversely impacted by inflationstraight-line rent, approximately 85% are fixed rate, scheduled escalation increases recorded on the leases thata straight-line basis, and 15% do not contain indexedany escalation provisions.
In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our netresults 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
See Note 9 — Related Party Transactions and Arrangements to our accompanying consolidated financial statements.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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
TheThere has been no material change in our exposure to market risk associated with financial instruments and derivative financial instruments isduring the risk of loss from adverse changes in market prices or interest rates. Our long-term debt, which consists of secured financings, bears interest at fixed rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. From time to time, we may enter into interest rate hedge contracts such as swaps, caps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.
As of Septembersix months ended June 30, 2017, our debt consisted of fixed-rate secured mortgage notes payable with an aggregate carrying value of $239.0 million and2023. For a fair value of$244.2 million.Changes in market interest rates on our fixed-rate debt impact the fair value of the note, but it has no impact on interest due on the note. For instance, if interest rates rise 100 basis points and our fixed rate debt balance remains constant, we expect the fair valuediscussion of our obligationexposure to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis relatedmarket risk, refer to our fixed–rate debt assumes an immediate 100 basis point move in interest rates from their September 30, 2017 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed-rate debt by $17.4 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt by $19.0 million.

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These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs,Item 7A, “Quantitative and assuming no other changesQualitative Disclosures about Market Risk,” contained in our capital structure. AsAnnual Report on Form 10-K for the information presented above includes only those exposures that existed as of September 30, 2017 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.fiscal year ended December 31, 2022.
Item 4. Controls and Procedures.
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), our management, under the supervision and with the participation of our Chief Executive Officer and Interim 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, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that as of the end of such period, thatJune 30, 2023, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.
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 SeptemberJune 30, 20172023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to any material pending legal proceedings.
Item 1A. Risk Factors.
Not applicable.There have been no material changes to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, and we direct your attention to those risk factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities.Proceeds.
Recent Sales of Unregistered Securities
None.
Use of Proceeds from Sales of Registered Securities
On April 24, 2014, we commenced our IPO on a "reasonable best efforts" basis of up to 30.0 million shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, pursuant to the Registration Statement filed with the SEC under the Securities Act (File No. 333-194135). The Registration Statement also included 10.5 million shares of common stock issuable pursuant to the DRIP under which common stockholders may elect to have their distributions reinvested in additional shares of common stock. On May 29, 2014, we received and accepted subscriptions in excess of the minimum offering amount for the IPO of $2.0 million in shares, broke general escrow and issued shares of common stock to initial investors who were admitted as stockholders. On May 31, 2015, we closed our IPO after having sold substantially all of the shares registered in our IPO, and continued to accept subscriptions in process as of that date. As of September 30, 2017, we had 31.2 million shares of common stock outstanding, including unvested restricted shares and shares issued pursuant to the DRIP, and had received total gross proceeds from the IPO and DRIP of $771.6 million, inclusive of $60.1 million from the DRIP.None.
The following table reflects the offering costs associated with the issuance of common stock:
  Year Ended December 31,
(In thousands) 2015 2014
Selling commissions and dealer manager fees $22,374
 $46,997
Other offering costs 6,050
 8,628
Total offering costs $28,424
 $55,625
The Former Dealer Manager was able to reallow the selling commissions and a portion of the dealer manager fees to participating broker-dealers. The following table details the selling commissions incurred and reallowed related to the sale of shares of common stock:
  Year Ended December 31,
(In thousands) 2015 2014
Total commissions paid to the Former Dealer Manager $22,374
 $46,997
Less:    
  Commissions to participating brokers (15,505) (31,920)
  Reallowance to participating broker dealers (2,625) (5,685)
Net to the Former Dealer Manager $4,244
 $9,392
As of September 30, 2017, we have incurred $84.0 million of cumulative offering costs in connection with the issuance and distribution of our registered securities. Cumulative offering proceeds from the sale of common stock exceeded cumulative offering costs by $680.0 million at September 30, 2017.

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As of September 30, 2017, cumulative offering costs included $69.4 million of selling commissions and dealer manager fees and $11.9 million of offering cost reimbursements incurred from the Advisor and Former Dealer Manager. We are obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on our behalf, provided that the Advisor is obligated to reimburse us to the extent organization and offering costs (excluding selling commissions and the dealer manager fee) incurred by us in our IPO exceed 2.0% of gross offering proceeds in the IPO. As a result, these costs were only our liability to the extent aggregate selling commissions, the dealer manager fee and other organization and offering costs did not exceed 12.0% of the gross proceeds determined at the end of the IPO. As of the end of the IPO, aggregate selling commissions, dealer manager fees and other offering costs did not exceed 12.0% of the gross proceeds received in the IPO.
As of September 30, 2017, we have used $11.2 million of proceeds from secured mortgage financing and all $711.5 million in aggregate net proceeds from our IPO, excluding the DRIP, as follows: (i) $492.5 million to pay all or a portion of the purchase price of six properties; (ii) $69.4 million to pay selling commissions and dealer manager fees to our Former Dealer Manager; (iii) $11.9 million to reimburse our Advisor for Offering expenses; (iv) $17.6 million to pay acquisition fees, acquisition cost reimbursements, financing coordination fees and other fees and reimbursements to our Advisor and its affiliates; (v) $69.5 million to pay distributions to our stockholders; (vi) $39.3 million to fund capital expenditures; and (vii) $22.5 million to repurchase shares of our common stock pursuant to the SRP. As of September 30, 2017, there were no remaining proceeds from the IPO.
Issuer Purchases of Equity Securities by the Issuer and Affiliated Purchasers
As permitted under the SRP, as amended and restated on June 14, 2017 and effective as of July 14, 2017, our board of directors authorized, with respect to redemption requests received during the quarter ended September 30, 2017, the repurchase of all shares validly submitted for repurchase following the death or qualifying disability of a shareholder. When a shareholder requests a repurchase and the repurchase is approved by our board of directors, we will reclassify such obligation from equity to a liability based on the value of the obligation. Shares purchased under the SRP will have the status of authorized but unissued shares. The following table reflects the number of shares repurchased cumulatively through September 30, 2017.
  Numbers of Shares Repurchased Weighted-Average Price per Share
Cumulative repurchases as of December 31, 2016 645,335
 $23.63
Nine months ended September 30, 2017(1)
 359,458
 20.41
Cumulative repurchases as of September 30, 2017 1,004,793
 $22.48
_____________________
(1)Includes (i) 276,624 shares repurchased during the three months ended March 31, 2017 for approximately $5.6 million at a weighted average price per share of $20.15, (ii) 578 shares repurchased during the three months ended June 30, 2017 for approximately $13.7 thousand at a weighted average price per share of $23.68 and (iii) 82,256 shares repurchased during the three months ended September 30, 2017, for approximately $1.7 million at a weighted average price per share of $21.25. Excludes rejected repurchase requests received during 2016 with respect to 902,420 shares for $18.1 million at an average price per share of $20.03. During the three months ended September 30, 2017, following the effectiveness of the amendment and restatement of the SRP, the board of directors approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to June 30, 2017, which were fulfilled during the three months ended September 30, 2017. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.

None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.

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Item5. Other Information.
Indemnification Agreement
OnNovember 13, 2017, in connection withEffective August 8, 2023, the electionCompany’s board of Katie P. Kurtz as our chief financial officerdirectors approved the Second Amended and treasurer, effective upon the resignation of Nicholas Radesca from the same role, we entered into an indemnification agreement (the “Indemnification Agreement”) with Ms. Kurtz in the same form as the indemnification agreements we have entered into with our other directors and officers. Under the Indemnification Agreement, Ms. Kurtz will be indemnified by usRestated Bylaws. The revisions to the maximum extent permitted by Maryland law for certain liabilitiesSecond Amended and will be advanced certain expenses that have been incurred as a result of actions brought, or threatenedRestated Bylaws include changes to be brought, against him as our officer as a result of his service, subjectArticle II, Section 1 to, among other things, make changes to Article II, Section 11 to address procedural issues related to the limitationsuniversal proxy rules as set forth in Rule 14a-19 under the Indemnification Agreement. The Indemnification Agreement will become effective on November 15, 2017,Exchange Act of 1934, including (i) requiring representations and notifications regarding compliance with the date Mr. Radesca’s resignation will become effective.requirements of Rule 14a-19, (ii) prohibiting additional or substitute nominations following the expiration of the nomination period, (iii) designating the white proxy card for exclusive use by the Company, and (iv) updating other requirements for valid nominations and clarifying the treatment of defective nominations.
The foregoingThis description of the Indemnification Agreement does not purport to be completeSecond Amended and Restated Bylaws is qualified in its entirety by reference to the fullcomplete text of the Indemnification Agreement,Second Amended and Restated Bylaws, a copy of which is filed herewith as an exhibitExhibit 3.14 to this Quarterly Report on Form 10-Q.
Item6. Exhibits.
The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.
By:/s/ Edward M. Weil, Jr.
Edward M. Weil, Jr.

Executive Chairman, Chief Executive Officer, President and Secretary
(Principal Executive Officer)

By:/s/ Nicholas Radesca
Nicholas Radesca
Interim Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)

Dated: November 13, 2017

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EXHIBITS INDEX

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarterthree months ended SeptemberJune 30, 20172023 (and are numbered in accordance with Item 601 of Regulation S-K).
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EXHIBITS INDEX
Exhibit No.Description
3.1(1)
Articles Supplementary of American Realty CapitalAmendment and Restatement
3.2 (2)
Articles of Amendment relating to corporate name change
3.3 (1)
Amended and Restated Bylaws of New York City REIT, Inc.
3.4(3)
Amendment to Amended and Restated Bylaws of New York City REIT, Inc.

3.5(7)
Second Amendment to Amended and Restated Bylaws of New York City REIT, Inc.
10.13.6 (2)

(4)
First
Articles of Amendment relating to Employee and Director Incentive Restricted Share Plan of American Realty Capital New York City REIT, Inc.reverse stock split

10.23.7 *(4)
Articles of Amendment relating to par value decrease and common stock name change

3.8(4)
Articles Supplementary classifying and designating Class B common stock

3.9(5)
Articles Supplementary classifying and designating Series A Preferred Stock
3.10(6)
Articles Supplementary reclassifying Class B common stock into Class A common stock
3.11(8)
Articles of Amendment relating to Reverse Stock Split (2023)
3.12(8)
Articles of Amendment relating to par value decrease (2023)
3.13(9)
Articles of Amendment relating to name change (2023)
Second Amended and Restated Employee and Director Incentive Restricted Share PlanBylaws of American Realty Capital New York City REIT, Inc.Strategic Investment Co.
10.34.1 *(9)
Indemnification Agreement between the Company and Katie P. Kurtz,Third Amendment, dated as of November 13, 2017.January 23, 2023, to the Amended and Restated Rights Agreement, as amended by Amendment No. 1, dated August 12, 2021, and Amendment No. 2, dated August 10, 2022, between American Strategic Investment Co. and Computershare Trust Company, N.A. as Rights Agent
4.2(9)
Certificate of Notice of American Strategic Investment Co.
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 *
Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101101.INS *Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *Inline XBRL Taxonomy Extension Schema Document.
101.CAL *Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 * Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL (eXtensible Business Reporting Language). The following materials from American Realty Capital New York City REIT, Inc.'s Quarterly Report on Form 10-Q fortags are embedded within the three months ended September 30, 2017, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.Inline XBRL document.
___________________________
* Filed herewith
(1) Filed as an exhibit to the Company's Current Report on Form 8-K filed with the SEC on October 10, 2017.
(2) Filed as an exhibit to the Company'sour Quarterly Report on Form 10-Q filed with the SEC on August 11, 2017.14, 2018.

(2) Filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on March 15, 2019.

(3) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 19, 2020.

(4) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 5, 2020.

(5) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 18, 2020.

(6) Filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on March 18, 2022.

(7) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 19, 2022.
(8) Filed as an exhibit to our Form 8-K filed with the SEC on January 12, 2023.
(9) Filed as an exhibit to our Form 8-K filed with the SEC on January 24, 2023.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICAN STRATEGIC INVESTMENT CO.
By:/s/ Edward M. Weil, Jr.
Edward M. Weil, Jr.
Executive Chairman, Chief Executive Officer, President and Secretary
(Principal Executive Officer)
By:/s/ Christopher J. Masterson
Christopher J. Masterson
Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)

Dated: August 11, 2023
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