American Strategic Investment (NYC) risk factors, FY2024 10-K

Risks Related to Our Properties and Operations

1. 01All of our real estate assets are located in the New York City area and, therefore, our business is particularly vulnerable to an economic downturn in New York City
2. 02We have no operating history with businesses that are not REIT qualifying assets. We cannot make any assurance that our new business plan will be successfully implemented
3. 03Certain of our unaudited financial statements for the three and six months ended June 30, 2022 were required to be restated and our management and audit committee identified a material weakness in our internal control over financial reporting
4. 04Our ability to fund our capital requirements will depend on, among other things, the amount of cash we are able to generate from our operations and outside sources, which may not be available on acceptable or favorable terms, or at all
5. 05We face competition for tenants and acquisitions from entities that may have more capital than us
6. 06There is no assurance we will restart paying cash dividends
7. 07We may be unable to secure funds for future tenant improvements or capital needs
8. 08Our properties have been and may continue to be subject to impairment charges
9. 09We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the global COVID-19 pandemic, which may have a material adverse effect on our business
10. 10We may change our targeted investments without stockholder consent
11. 11In order to meet our investment objectives, we have acquired and may continue to acquire assets that have less than 80% occupancy at the time of acquisition, but which we believe we can reposition, redevelop or remarket to enhance value
12. 12Two of our individual real estate investments represent a material percentage of our assets
13. 13We rely significantly on the following major tenants and therefore, are subject to tenant credit concentrations that make us more susceptible to adverse events with respect to these tenants
14. 14The ongoing Russia-Ukraine conflict may adversely impact our business operations and financial performance
15. 15We may in the future acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, which could expose us to additional risks
16. 16Any one or a combination of these factors may cause a borrower to default on a loan or to declare bankruptcy. If a default or bankruptcy occurs and the underlying asset value is less than the loan amount, we will suffer a loss

Risks Related to Investments in Real Estate

1. 17We generally obtain only limited warranties when we purchase a property and therefore have only limited recourse if our due diligence did not identify any issues that lower the value of our property
2. 18We may be unable to sell a property at the time or on the terms we desire
3. 19We may be unable to renew leases or re-lease space on favorable terms or at all as leases expire
4. 20We depend on tenants for our revenue, and accordingly lease terminations, tenant default and bankruptcy have adversely affected and could in the future adversely affect the income produced by our properties
5. 21A sale-leaseback transaction may be recharacterized in a tenant’s bankruptcy proceeding
6. 22If we sell a property by providing financing to the purchaser, we will bear the risk of default by the purchaser
7. 23Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers
8. 24Covenants, conditions and restrictions may restrict our ability to operate a property, which may adversely affect our operating costs
9. 25Our real properties are subject to property taxes that may increase in the future, which could adversely affect our cash flow
10. 26We may suffer uninsured losses relating to real property or have to pay expensive premiums for insurance coverage
11. 27Actual or threatened terrorist attacks and other acts of violence, civilian unrest, or war may affect the markets in which we operate our business and our profitability
12. 28Inflation may have an adverse effect on our investments and results of operations
13. 29We face possible risks associated with the natural disasters and the physical effects of climate change
14. 30Failure to succeed in new markets or in new asset classes may have adverse consequences on our performance
15. 31We may be adversely affected by certain trends that reduce demand for office real estate
16. 32We are subject to risks that affect the general and New York City retail environments
17. 33Costs of complying with governmental laws and regulations, including those relating to environmental matters and discovery of previously undetected environmentally hazardous conditions, may adversely affect our operating results
18. 34There are costs associated with complying with the Americans with Disabilities Act

Risks Related to Our Indebtedness

1. 35As of December 31, 2024, we had total outstanding indebtedness of approximately $347.4 million. We do not have any debt maturing in 2025
2. 36We have been in breach of several of our mortgage loan covenants for multiple quarters
3. 37Changes in the debt markets could materially and adversely impact us
4. 38Increasing interest rates could increase the amount of our debt payments
5. 39Our loan agreements contain restrictive covenants that limit operating and financial flexibility

Risks Related to Conflicts of Interest

1. 40Our Advisor faces conflicts of interest relating to the purchase and leasing of properties and these conflicts may not be resolved in our favor, which could adversely affect our investment opportunities
2. 41Our Property Manager is an affiliate of our Advisor and therefore we face conflicts of interest in determining whether to assign certain operating assets to our Property Manager or an unaffiliated property manager
3. 42Our Advisor faces conflicts of interest relating to joint ventures, which could result in a disproportionate benefit to the other venture partners
4. 43Our Advisor, AR Global and their officers and employees and certain of our executive officers and other key personnel face competing demands relating to their time, and this may cause returns on our investments to suffer
5. 44Our officers and directors face conflicts of interest related to the positions they hold with related parties
6. 45Our Advisor faces conflicts of interest relating to the structure of the compensation it may receive

Risks Related to Our Corporate Structure

1. 46The trading price of our Class A common stock may fluctuate significantly
2. 47Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders
3. 48We have a classified board, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders
4. 49The stockholder rights plan adopted by our Board may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders
5. 50We may terminate our advisory agreement in only limited circumstances, which may require payment of a termination fee
6. 51We depend on our Advisor and our Property Manager to provide us with executive officers, key personnel and all services required for us to conduct our operations and our operating performance may be impacted by any adverse changes in the financial health or reputation of our Advisor and our Property Manager
7. 52Our business and operations could suffer if our Advisor or any other party that provides us with services essential to our operations experiences system failures or cyber incidents or a deficiency in cybersecurity
8. 53Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders
9. 54Maryland law limits the ability of a third party to buy a large stake in us and exercise voting power in electing directors, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders
10. 55Certain provisions in our bylaws and agreements may deter, delay or prevent a change in our control
11. 56We depend on our OP and its subsidiaries for cash flow and are structurally subordinated in right of payment to the obligations of our OP and its subsidiaries
12. 57Failure to qualify as a REIT for prior taxable years would subject us to U.S. federal income tax and potentially state and local tax
13. 58We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility, and reduce the market price of shares of our stock