- American Strategic Investment told the SEC that substantial doubt about its going concern status remains.
- Its $140M loan on 123 William St. matures in March, above the tower’s $137.7M Q2 valuation.
- The REIT lost $16M in the first half while its external manager’s affiliates collected about $6M in fees.
American Strategic Investment Co. has warned that substantial doubt surrounds its ability to stay in business. The disclosure came in filings with the Securities and Exchange Commission. The company trades on the New York Stock Exchange under the NYC ticker. It could fall into bankruptcy within 12 months. According to Bisnow, its largest remaining asset carries an underwater mortgage that matures in March.
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From Nine Assets to Four
Nicholas S. Schorsch founded the REIT in 2013. It owned nine properties at its peak. The company dropped the New York City REIT name in 2023. That came as it tried to move into assets outside its home base. Shares have lost more than 90% of their value since 2022. Tenants left and debt payments were missed. In April 2022, with the stock above $100, then-CEO Michael Weil halted dividends. The cash went into renovations and leasing instead. That gambit failed. The REIT sold 9 Times Square in 2024 at a $100M loss. At the end of 2025, it agreed to a consensual foreclosure at 1140 Sixth Ave. The company had defaulted on the $99M loan there.
The Details
ASIC carries a $249M debt pile. The largest piece is a $140M loan on 123 William St. That loan, secured by a 545K SF Class-B tower in the Financial District, matures in March. New York City REIT paid $253M for the 27-story building in 2015. It valued the property at $137.7M at the end of Q2, below the loan balance. Occupancy slipped to 72% in June from 84% a year earlier. That figure comes from the company’s latest quarterly filing. The REIT announced plans to sell the tower in April 2024 and has found no buyer.
Fees Keep Flowing as Losses Mount
ASIC lost $16M in the first six months of the year. Revenue over that period was $14.7M. Affiliates of external manager AR Global collected roughly $6M in advisory and management fees. They took $4M of that in new stock rather than cash. Unrestricted cash fell to $2.4M as of June 30, down from $5.3M a year earlier. The management agreement requires monthly payments of $500K to AR Global affiliates. Those payments continue regardless of performance. Jonathan Morris teaches a class on REITs at Georgetown University and is a former REIT executive. He said most managers are paid on performance. Morris questioned why a company operating in the red owes anyone a fee.
Stalled Foreclosures Slow the Wind Down
The REIT agreed in June to let another foreclosure proceed. It covers office and lab space under the Laurel condominium and a parking lot at 200 Riverside Drive. ASIC bought that 120K SF portfolio for $88M in 2014. It refinanced in 2018 with a $50M loan from Société Générale that was bundled into CMBS. Special servicer Rialto Capital Advisors sued in January to place the units in receivership. The condo board at 200 Riverside then sued the CMBS trustee in February over garage rents. The parking operator asked the court to decide who it should pay. No ruling has come. So 33K SF of vacant space at 400 E. 67th St. remains with ASIC.
Why It Matters
A going concern warning from a listed owner shows how thin the margin has become. Class-B New York office product carries little room for error. Meanwhile, tax disputes are creating additional uncertainty for major Manhattan office projects, including the proposed 350 Park Avenue tower. The gap between a $137.7M valuation and a $140M loan leaves no equity to refinance against.
Occupancy is not the immediate problem. The debt comes due before leasing can close that gap. Bondholders are exposed too. KBRA downgraded three classes of the CMBS loan tied to the condo assets in a May report. It estimated a potential 54.6% loss.
What’s Next
The March maturity at 123 William St. is the date to watch. ASIC has two other holdings, an 18K SF Brooklyn preschool and 60K SF at 196 Orchard St. Both are fully leased. Even so, the preschool building generates no cash flow and is in breach of a debt covenant. Executives gave no indication of an investor call after the latest results. They did not respond to requests for comment. Morris doubts a bankruptcy filing. He argues that distressed REITs can still tap lenders. Insiders will not surrender the cash and equity, he said.
