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Operator
Thank you, Operator. Good morning, everyone, and thank you for joining us for ASIC's fourth quarter and year-end earnings call. This event is also being webcast in the investor relations section of our website. Joining me today on the call to discuss the quarter's results are Michael Anderson, American Strategic Investment Company's Chief Executive Officer, and Joe Marnikovic, the Chief Financial Officer. The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. Please review the forward-looking and cautionary statements section at the end of our fourth quarter 2023 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings including the Form 10-K, filed for the year ended December 31, 2023, filed on April 1, 2024, for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this call are only made as of the date of this call. As stated in our SEC filings, ASIC disclaims any intent or obligation to update or revise these forward-looking statements, except it's required to do so by law. Please note that all fourth quarter 2023 financial information is unaudited. Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial and operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release, which is posted on our website. Please also refer to our earnings release for more detailed information about what we consider to be implied investment grade tenants, a term we will use throughout today's call. I will now turn the call over to Michael Anderson, Chief Executive Officer. Please go ahead, Michael. Thanks, Curtis.
Michael
Good morning, and thank you for joining us. Today, we will discuss our results for the fourth quarter and full year 2023. Two of the most important initiatives for ASIC in 2023 were leasing and controlling costs. the end of the fourth quarter we completed 15 new leases which contributed to a 400 basis point growth in occupancy within our real estate portfolio to 86.7 percent from 82.7 percent at the end of 2022. as part of our expense reduction efforts early in the fourth quarter we sold the hip factory a small unoccupied asset for which we had been exploring strategic options the sale generated 4.2 million dollars in cash proceeds and eliminated annual carrying costs of approximately $300,000. Our existing portfolio consists of seven real estate assets throughout New York City, primarily in Manhattan. At year end, our $725.1 million, 1.2 million square foot portfolio and a weighted average remaining lease term of 6.5 years. Our New York City-centric portfolio features a mix of large investment-grade tenants of whom the top 10 tenants are 79% investment grade or implied investment grade, based on straight line rent, with a weighted average remaining lease term of 8.6 years. Investment grade tenants in our portfolio include Weill Cornell Medical, CVS, and government agencies. We continue to focus our leasing efforts on securing tenants in resilient industries, such as well-capitalized financial service companies and medical institutions. our core office properties are located in submarkets with close proximity to major transportation hubs. One such submarket in particular, Midtown South, remains a desirable area for office leasing, which we believe will enable us to build on the positive momentum we have produced at 200 West 41st Street and 1140 Avenue of the Americas. These two properties saw us increase occupancy by 900 basis points and 600 basis points, respectively, since the fourth quarter of 2022. Our strong leasing results are led by our asset management team, who has worked closely with existing tenants and the brokerage community to find new and renewal leases, including tenant expansions. In 2023, we completed 15 new leases totaling over 100,000 square feet and $4.6 million of straight line rent, including five in the fourth quarter that totaled almost 48,000 square feet and $1.6 million of straight line rent. As we look ahead, the commencement of leases currently in our pipeline would further increase portfolio occupancy to 87.9%. We remain committed to strengthening our existing portfolio of real estate assets as we explore additional income-generating investments. In recent years, we have taken advantage of opportunities to invest in the long-term future of our portfolio and will continue to pursue transactions that we believe will be accretive to shareholders. With that, I'll turn it over to Joe Marnikovic to go over the fourth quarter and full year 2023 results. Joe?
Joe Marnikovic
Thanks, Michael. Revenue was $62.7 million for the year ended December 31st, 2023, compared to $64 million in 2022. Revenue for the fourth quarter, 2023, was $15.4 million compared to $16.2 million in the fourth quarter of 2022. The company's full year gap net loss attributable to common stockholders was $105.9 million in compared to a net loss of $45.9 million in 2022. Net loss for the quarter was $73.9 million compared to $10.1 million for the fourth quarter 2022. Net loss for the quarter was primarily impacted by a $66.1 million non-cash impairment on one of the company's office properties in Midtown Manhattan. This non-cash impairment resulted from the ongoing pressures being experienced by the industry as it relates to office leasing and specifically to a reduction in the fair value of this investment due to, among other factors, a reduced anticipated hold period for the property. Excluding the non-cash impairments, the net loss for 2023 would have been approximately $39.4 million or a $6.5 million improvement over 2022. Adjusted EBITDA for 2023 was $11.9 million and was $3.4 million for the fourth quarter. Cash NOI for the full year was $27.3 million and was $6.3 million in the fourth quarter. For the fourth quarter of 2023, our FFO attributable to common stockholders was negative $1.5 million compared to negative $2.4 million last year. Core FFO was negative $1.2 million in the fourth quarter, or negative 52 cents per share, compared to negative $0.2 million, or negative 11 cents per share, in the fourth quarter of 2022. As always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release supplemental in Form 10-K. NYC maintains a relatively conservative balance sheet with 100%, fixed rate debt and prudent net leverage of 47%. We ended the fourth quarter with net debt of $394.2 million and a weighted average effective interest rate of 4.4% and a weighted average remaining debt term of 3.2 years. As we have previously discussed, all of our debt is fixed rate or swapped to fixed rate after we locked in interest rates while they were broadly at historic lows. With that, I'll turn the call back to Michael for some closing remarks.
Michael
Great. Thank you, Joe. Before we conclude, I want to thank you on behalf of the entire team for your many contributions as our CFO. We wish you well in your retirement. At the same time, we welcome Michael LoSanto as our new CFO. Mike joined us in 2020 as Senior Portfolio Controller, then served as the company's Chief Accounting Officer from 2021 through 2024. Mike and I are looking forward to the year ahead and to building on the solid foundation of our portfolio. Let me end by reiterating a few of our accomplishments from last year. We expanded our investment strategy and changed the name of the company at the beginning of the year and followed that with a rights offering to shareholders. Leasing activity throughout the year culminated in occupancy growth of 4% year over year. Our current leasing pipeline is expected to increase occupancy to 87.9% and would add approximately $800,000 of additional straight line rent. We believe we are positioned well to build on our progress in 2024, which we look forward to sharing with you. Thank you for joining us today, and operator, please open the line for questions.
Mike
Thank you. If you have a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, simply press star 1 again. One moment, please, for your first question. Your first question comes from the line of Brian Mayer of B. Reilly Securities. Your line is open.
Brian Mayer
Thank you, and good afternoon, Michael and Joseph. Not too many questions today. I mean, it was helpful getting the 10K 20 hours before the earnings call, so a lot of questions already answered in that. But I do have a question regarding specifically 1140 and the impairment that you took there. And tell me if I was reading this right in the 10K, is the new value on the property something like 69 million and the debt's 99 million? And if that's the case, I mean, how do you solve for X there without ultimately handing back that property or trying to sell it for above the... you know, value. It seems like it's going to be hard to get new debt on that.
Michael
Thanks, Brian, and good to speak with you this afternoon. That is correct as it relates to the new impaired value. You know, the focus on that property is certainly on leasing. We do still have available space in the building. We've seen in the last four or five months an increase in in both leasing activity and foot traffic through the building, as well as leasing rates on deals that we've been executing on, as well as term sheets. So the focus as we think about a refinance about two and a half years out is going to be on continued leasing efforts there at higher market rates that we're seeing now and expect those rates to continue. Certainly, we'll work with tenants to expand their footprint, stay in the building, and also work with both the existing lender as well as the lending community at large to find the right refi opportunity for that property.
Brian Mayer
Okay. And can you give us a little bit more, Kyle, or maybe for Chris, I don't know, on what's going on with Nine Times Square? How's that property continuing to lease up? What's the pipeline there? It's well-situated.
Michael
relative to traffic in the city you know can you just give us a little more color on how we should think about nine times square this year sure i and let chris chime in as well but i think our similar to 1140 both buildings are relatively close to each other um nine times square obviously has become a very attractive uh sub market as it relates to various transportation options. It's kind of equidistant from Grand Central, Penn Station. It's right down the block from Port Authority. And so as we've seen people move out of the city but beginning to return to work with more frequency, we do believe that that market is very desirable. And we're starting to see leasing rates increase there, as we have at 1140. And I saw a 2% increase in occupancy at that building over the third quarter. And I think Similar to 1140, I would say that both 9 times square and 1140 are where we see a lot of increased interest and pricing elasticity from the landlord side of things.
Brian Mayer
Okay, and maybe last for me, I mean, it's a tough stock to cover, right? I mean, you look at the balance sheet and the equity, which is nearly a hundred dollars a share trading at seven. you know, clearly there's some, you know, embedded value in, you know, some of these assets in the portfolio that can really drive, you know, the company and the stock in the future. Can you kind of highlight for us which assets you see having the most embedded value and maybe the ability to, you know, garner some capital from to deploy into acquisitions, you know, over the next couple of years?
Michael
Sure. You know, I think certainly the flagship asset would be 123 William Street, sitting around 91, 92% occupancy. We think that that asset has significant equity value in it. It's one of the larger assets that we own and really strong tenant base with New York City and New York State governmental agencies, as well as some very large, well-capitalized nonprofits. So we do think there are opportunities on that asset. Similarly, we've got the retail condos on Orchard that fully occupy net leases with three strong tenants there. We think that there is also significant equity in those deals and in those assets. And as we've looked to and are working through a refi at nine times square, those appraisals are also confirming for us that Nine times squared does have meaningful equity in it above and beyond the level of debt at $49.5 million. So I think those three are probably the three largest and strongest assets that could prove to provide proceeds to the company for reinvestment opportunities should we decide to take any of them to market in the coming years.
Brian Mayer
Okay, that's helpful. Thank you.
Michael
Thanks, Brian.
Mike
There are no further questions at this time. I will now turn the call over to Michael Anderson for some closing remarks.
Michael
Thank you, operator, and thank you all for joining us. We're excited about the year that we have ahead of us as we continue to focus on leasing efforts in our office portfolio as well as meaningful expense reduction initiatives. And I'd like to once again thank Joe for his service as our CFO and wish him the best in his retirement. Excited to have Michael Santo by my side as the new CFO for the year to come. So thank you all.
Mike
This concludes today's conference call. You may now disconnect.
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