Trinity Place Holdings Inc. [TPHS] Filings

10-Q 1 tphs-20230331x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____________ to _____________

Commission File Number 001-08546

TRINITY PLACE HOLDINGS INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware	22-2465228
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

340 Madison Avenue, New York, New York	10173
(Address of Principal Executive Offices)	(Zip Code)

(212) 235-2190

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of each exchange on which registered
Common Stock $0.01 Par Value Per Share	TPHS	NYSE American

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 ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ◻

Accelerated Filer ☐

Non-Accelerated Filer ☒

Smaller Reporting Company ☒

Emerging Growth Company ☐

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. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No ⌧

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ⌧ No ◻

As of May 15, 2023, there were 37,246,004 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

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INDEX


		PAGE NO.
PART I.	FINANCIAL INFORMATION	3

Item 1.	Condensed Consolidated Financial Statements (unaudited)	3

	Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	3

	Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2023 and the three months ended March 31, 2022	4

	Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2023 and the three months ended March 31, 2022	5

	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and the three months ended March 31, 2022	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39

Item 4.	Controls and Procedures	39

PART II.	OTHER INFORMATION	41

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 3.	Defaults Upon Senior Securities	41

Item 4.	Mine Safety Disclosures	41

Item 5.	Other Information	41

Item 6.	Exhibits	42

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

TRINITY PLACE HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS (unaudited)

(In thousands, except par value and share amounts)


	March 31,		December 31,
	2023		2022

ASSETS

Real estate, net	$	63,990	$	64,651
Residential condominium units for sale		194,858		202,999
Cash and cash equivalents		2,582		1,548
Restricted cash		16,169		20,507
Prepaid expenses and other assets, net		2,893		3,774
Investments in unconsolidated joint ventures		—		4,386
Receivables		261		262
Deferred rents receivable		183		163
Right-of-use asset		850		945
Intangible assets, net		7,507		7,692
Total assets	$	289,293	$	306,927

LIABILITIES

Loans payable, net	$	198,894	$	208,762
Corporate credit facility, net		34,676		34,429
Secured line of credit, net		11,750		9,750
Note payable		—		5,863
Accounts payable and accrued expenses		21,201		19,018
Pension liability		651		651
Lease liability		931		1,037
Warrant liability		10		76
Total liabilities		268,113		279,586

Commitments and Contingencies

STOCKHOLDERS’ EQUITY

Preferred stock, $0.01 par value; 40,000,000 shares authorized; no shares issued and outstanding		—		—
Preferred stock, $0.01 par value; 2 shares authorized; no shares issued and outstanding at March 31, 2023 and December 31, 2022		—		—
Special stock, $0.01 par value; 1 share authorized, issued and outstanding at March 31, 2023 and December 31, 2022		—		—
Common stock, $0.01 par value; 79,999,997 shares authorized; 43,903,363 and 43,448,384 shares issued at March 31, 2023 and December 31, 2022, respectively; 37,163,137 and 36,907,862 shares outstanding at March 31, 2023 and December 31, 2022, respectively		439		435
Additional paid-in capital		144,980		144,879
Treasury stock (6,740,226 and 6,540,522 shares at March 31, 2023 and December 31, 2022, respectively)		(57,610)		(57,461)
Accumulated other comprehensive loss		(3,507)		(3,626)
Accumulated deficit		(63,122)		(56,886)

Total stockholders’ equity		21,180		27,341

Total liabilities and stockholders’ equity	$	289,293	$	306,927

See Notes to Consolidated Financial Statements

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TRINITY PLACE HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)

(In thousands, except per share amounts)


	Three Months Ended		Three Months Ended
	March 31,		March 31,
	2023		2022

Revenues
Rental revenues	$	1,511	$	1,260
Other income		120		16
Sales of residential condominium units		13,097		6,069

Total revenues		14,728		7,345

Operating Expenses
Property operating expenses		1,267		804
Real estate taxes		463		390
General and administrative		1,444		1,502
Pension related costs		144		158
Cost of sales - residential condominium units		12,309		5,721
Transaction related costs		113		—
Depreciation and amortization		1,000		1,003

Total operating expenses		16,740		9,578

Operating loss		(2,012)		(2,233)

Equity in net (loss) income from unconsolidated joint ventures		(4)		746
Equity in net gain on sale of unconsolidated joint venture property		3,058		—
Unrealized gain (loss) on warrants		66		(369)
Interest expense, net		(6,328)		(2,769)
Interest expense - amortization of deferred finance costs		(892)		(436)

Loss before taxes		(6,112)		(5,061)

Tax expense		(124)		(70)

Net loss attributable to common stockholders	$	(6,236)	$	(5,131)

Other comprehensive (loss) income:

Unrealized gain on pension liability		119		119
Comprehensive loss attributable to common stockholders	$	(6,117)	$	(5,012)

Loss per share - basic and diluted	$	(0.17)	$	(0.14)

Weighted average number of common shares - basic and diluted		37,605		37,104

See Notes to Consolidated Financial Statements

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TRINITY PLACE HOLDINGS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

(In thousands)


FOR THE THREE MONTHS ENDED MARCH 31, 2023

											Accumulated
				Additional							Other
	Common Stock			Paid-In		Treasury Stock			Accumulated		Comprehensive
	Shares	Amount		Capital		Shares	Amount		Deficit		Loss		Total

Balance as of December 31, 2022	43,448	$	435	$	144,879	(6,541)	$	(57,461)	$	(56,886)	$	(3,626)	$	27,341

Net loss attributable to common stockholders	—		—		—	—		—		(6,236)		—		(6,236)
Settlement of stock awards	455		4		—	(199)		(149)		—		—		(145)
Unrealized gain on pension liability	—		—		—	—		—		—		119		119
Stock-based compensation	—		—		101	—		—		—		—		101

Balance as of March 31, 2023	43,903	$	439	$	144,980	(6,740)	$	(57,610)	$	(63,122)	$	(3,507)	$	21,180


FOR THE THREE MONTHS ENDED MARCH 31, 2022

											Accumulated
				Additional							Other
	Common Stock			Paid-In		Treasury Stock			Accumulated		Comprehensive
	Shares	Amount		Capital		Shares	Amount		Deficit		Loss		Total

Balance as of December 31, 2021	43,024	$	430	$	144,282	(6,398)	$	(57,166)	$	(36,196)	$	(1,343)	$	50,007

Net loss attributable to common stockholders	—		—		—	—		—		(5,131)		—		(5,131)
Settlement of stock awards	364		4		—	(153)		(295)		—		—		(291)
Unrealized gain on pension liability	—		—		—	—		—		—		119		119
Stock-based compensation	—		—		169	—		—		—		—		169

Balance as of March 31, 2022	43,388	$	434	$	144,451	(6,551)	$	(57,461)	$	(41,327)	$	(1,224)	$	44,873

See Notes to Consolidated Financial Statements

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TRINITY PLACE HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(In thousands)


	For the		For the
	Three Months Ended		Three Months Ended
	March 31,		March 31,
	2023		2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to common stockholders	$	(6,236)	$	(5,131)
Adjustments to reconcile net loss attributable to common stockholders to net cash provided by operating activities:
Depreciation and amortization and amortization of deferred finance costs		1,892		1,439
Other non-cash adjustment - paid-in-kind interest		(153)		—
Stock-based compensation expense		99		123
Gain on sale of joint venture real estate		(3,058)		—
Deferred rents receivable		(20)		(4)
Other non-cash adjustments - pension expense		119		119
Unrealized gain on warrants		(66)		369
Equity in net loss (income) from unconsolidated joint ventures		4		(746)
Distributions from unconsolidated joint ventures		—		168
Decrease (increase) in operating assets:
Residential condominium units for sale		8,221		3,548
Receivables		1		24
Prepaid expenses and other assets, net		756		(1,008)
Increase in operating liabilities:
Accounts payable and accrued expenses		2,525		1,474
Net cash provided by operating activities		4,084		375

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate		(29)		(64)
Net proceeds from sale of unconsolidated joint venture		7,240		—
Net cash provided by (used in) investing activities		7,211		(64)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans and corporate credit facility		—		2,390
Proceeds from secured line of credit		2,000		—
Repayment of loans		(10,591)		(11,642)
Repayment of note payable		(5,863)		—
Settlement of stock awards		(145)		(291)
Net cash used in financing activities		(14,599)		(9,543)

NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(3,304)		(9,232)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD		22,055		24,845
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	18,751	$	15,613

CASH AND CASH EQUIVALENTS, BEGINNING PERIOD	$	1,548	$	4,310
RESTRICTED CASH, BEGINNING OF PERIOD		20,507		20,535
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	$	22,055	$	24,845

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,582	$	1,381
RESTRICTED CASH, END OF PERIOD		16,169		14,232
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	18,751	$	15,613

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for: Interest	$	5,015	$	3,050
Cash paid during the period for: Taxes	$	115	$	66

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capitalized amortization of deferred financing costs and warrants	$	78	$	583
Capitalized stock-based compensation expense	$	2	$	18

See Notes to Consolidated Financial Statements

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Trinity Place Holdings Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
March 31, 2023

Note 1 – Business

Overview

Trinity Place Holdings Inc., which we refer to in these financial statements as “Trinity,” “we,” “our,” or “us,” is a real estate holding, investment, development and asset management company. Our largest asset is a property located at 77 Greenwich Street in Lower Manhattan (“77 Greenwich”), which is nearing completion as a mixed-use project consisting of a 90-unit residential condominium tower, retail space and a New York City elementary school. We also own a 105-unit, 12-story multi-family property located at 237 11^th Street in Brooklyn, New York (“237 11^th”), as well as a property occupied by a retail tenant in Paramus, New Jersey. In February 2023, we sold our 10% interest in a joint venture that owned a multifamily property at 250 North 10^th Street in Brooklyn, New York (“250 North 10^th”).

We also control a variety of intellectual property assets focused on the consumer sector, a legacy of our predecessor, Syms Corp. (“Syms”), including FilenesBasement.com, our rights to the Stanley Blacker® brand, as well as the intellectual property associated with the Running of the Brides® event and An Educated Consumer is Our Best Customer® slogan. In addition, we also had approximately $282.9 million of federal net operating loss carryforwards (“NOLs”) at March 31, 2023, which can be used to reduce our future taxable income and capital gains.

Liquidity and Going Concern; Management’s Plans; Recent Developments

Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. The COVID-19 pandemic and related matters, including government actions, shifts in residential consumer sentiment and changes to the broader and local economies, had a significant adverse impact on our business. More recently, the economic downturn, increased interest rates and high inflation have also impacted our business. As of March 31, 2023, we had total cash and restricted cash of $18.8 million, of which approximately $2.6 million was cash and cash equivalents and approximately $16.2 million was restricted cash. The Company’s cash and cash equivalents will not be sufficient to fund the Company’s operations, debt service, amortization and maturities and corporate expenses over the next 12 months, unless we are able to extend or refinance our maturing debt and raise additional capital, creating substantial doubt about our ability to continue as a going concern. Management is exploring opportunities to secure additional funding through the sale of assets, refinancings of outstanding indebtedness, and equity or debt financings or other sources. The Company also continues to explore a range of strategic and financing alternatives. Potential strategic alternatives that may be evaluated include securing an equity and/or debt financing of the Company, refinancing of existing debt, and/or a sale or merger or reverse merger of the Company. The Company reached agreement with its CCF lender regarding, among other things, the deferment of cash interest payments and a $7 million prepayment until August 31, 2023, subject to extension in certain circumstances, which also provided that the Company will enter into a strategic transaction that results in the repayment of the CCF or prepay the CCF by $5 million from equity proceeds by such date. The Company’s subsidiary borrower under the secured line of credit also entered into an amendment to that agreement extending the maturity date to March 22, 2024 and reducing the interest rate to 2.5% until such date. See Note 14 – Subsequent events for further information on the amendments. The Company is also exploring a refinancing of the debt in respect of 237 11^th. Given the current financial market challenges and a slowdown in lending and other transactions, there can be no assurance that we will be able to enter into a strategic transaction or prepay the CCF by the agreed-upon date, or that our cash position will extend through that date or that we will be able to enter into any future extensions, amendments or waivers with these or other lenders, raise additional capital, refinance indebtedness or enter into other financing arrangements or engage in asset sales or strategic partnerships sufficient to fund our cash needs, on terms satisfactory to us, if at all. Further, in the event that market conditions preclude our ability to consummate such transactions, we will be required to evaluate additional alternatives in restructuring our business and our capital structure, including but not limited to filing for bankruptcy protection or seeking an out-of-court restructuring of our liabilities.

While construction at 77 Greenwich has taken longer than projected and the impact of the pandemic and broader economic conditions have impeded the sale of residential condominium units at 77 Greenwich, we continue to sign and close contracts for our residential condominium units, including five units since December 31, 2022, for a total of 33 units as of March 31, 2023. Following the failure of Silicon Valley Bank in March 2023 and subsequent additional bank failures and

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related stresses, the pace of signing and closing contracts on residential condominium units has slowed markedly, with one contract being closed since that time period. Although we anticipate the pace will normalize in the near term in light of historical trends, predictions are inherently uncertain and there can be no assurances that it will do so in the near term or at all.

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to our ability to continue as a going concern.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include our financial statements and the financial statements of our wholly-owned subsidiaries.

The accompanying unaudited consolidated interim financial information also conform with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. Management believes that the disclosures presented in these unaudited consolidated financial statements are adequate to make the information presented not misleading. In management’s opinion, all adjustments and eliminations, consisting only of normal recurring adjustments, necessary to present fairly the financial position and results of operations for the reported periods have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. The accompanying unaudited consolidated interim financial information should be read in conjunction with our December 31, 2022 audited consolidated financial statements filed on Form 10-K, (the “2022 Annual Report”).

a. Principles of Consolidation - The consolidated financial statements include our accounts and those of our subsidiaries which are or were wholly-owned or controlled by us. Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method. Accordingly, our share of the earnings or losses of our unconsolidated joint ventures, The Berkley, which was sold in April 2022, and 250 North 10^th, which was sold in February 2023, are included in our consolidated statements of operations and comprehensive (loss) income (see Note 13 – Investments in Unconsolidated Joint Ventures for further information). All significant intercompany balances and transactions have been eliminated.

We are required to consolidate a variable interest entity (the “VIE”) in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. As of March 31, 2023, we had no VIEs.

Investments in Unconsolidated Joint Ventures - We accounted for our investments in unconsolidated joint ventures, namely, The Berkley, which was sold in April 2022, and 250 North 10^th, which was sold in February 2023, under the equity method of accounting (see Note 13 - Investments in Unconsolidated Joint Ventures for further information).

c. 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. Accordingly, actual results could differ from those estimates (see Note 2g. for further discussion).

d. Reportable Segments - We operate in one reportable segment, commercial real estate.

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e. Concentrations of Credit Risk - Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. We hold substantially all of our cash and cash equivalents in banks. Such cash balances at times exceed federally insured limits.

f. Real Estate - Real estate assets are stated at historical cost, less accumulated depreciation and amortization. All costs related to the improvement or replacement of real estate properties are capitalized. Additions, renovations and improvements that enhance and/or extend the useful life of a property are also capitalized. Expenditures for ordinary maintenance, repairs and improvements that do not materially prolong the useful life of an asset are charged to operations as incurred. Depreciation and amortization are determined using the straight-line method over the estimated useful lives as described in the table below:


Category		Terms
Buildings and improvements		10 - 39 years
Tenant improvements		Shorter of remaining term of the lease or useful life
Furniture and fixtures		5 - 8 years

Residential Condominium Units for Sale - We capitalize certain costs related to the development and redevelopment of real estate including initial project acquisition costs, pre-construction costs and construction costs for each specific property. Additionally, we capitalize operating costs, interest, real estate taxes, insurance and compensation and related costs of personnel directly involved with the specific project related to real estate that is under development. Capitalization of these costs begin when the activities and related expenditures commence, and cease as the condominium units receives its temporary certificates of occupancy (“TCOs”).

77 Greenwich is a condominium development project which includes residential condominium units that are ready for sale. Residential condominium units for sale as of March 31, 2023 and December 31, 2022 includes 77 Greenwich, and in all cases, excludes costs of development for the residential condominium units at 77 Greenwich that were sold. The residential condominium units for sale are stated at the lower of cost or net realizable value. Management considers relevant cash flows relating to budgeted project costs and estimated costs to complete, estimated sales velocity, expected proceeds from the sales of completed condominium units, including any potential declines in market values, and other available information in assessing whether the 77 Greenwich development project is impaired. Residential condominium units are evaluated for impairment based on the contracted and projected sales prices compared to the total estimated cost to construct. Any calculated impairments are recorded immediately in cost of sales. No provision for impairment was recorded for our unsold residential condominium units during the three months ended March 31, 2023 or 2022, respectively.

Valuation of Long-Lived Assets - We periodically review long-lived assets for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. We consider relevant cash flow, management’s strategic plans and significant decreases, if any, in the market value of the asset and other available information in assessing whether the carrying value of the assets can be recovered. When such events occur, we compare the carrying amount of the asset to the undiscounted expected future cash flows, excluding interest charges, from the use and eventual disposition of the asset. If this comparison indicates an impairment, the carrying amount would then be compared to the estimated fair value of the long-lived asset. An impairment loss would be measured as the amount by which the carrying value of the long-lived asset exceeds its estimated fair value. We considered all the aforementioned indicators of impairment for our real estate for the three months ended March 31, 2023 and 2022, respectively, and no provision for impairment was recorded during the three months ended March 31, 2023 or 2022, respectively.

Fair Value Measurements - We determine fair value in accordance with Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement,” for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures.

Fair value is defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. Assets and liabilities disclosed at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

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Hierarchical levels, which are defined by ASC 820-10-35, are directly related to the amount of subjectivity associated with the inputs to the fair valuation of these assets and liabilities. Determining which category an asset or liability falls within the hierarchy requires significant judgment and we evaluate our hierarchy disclosures each quarter.

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Valuations based on unobservable inputs reflecting management’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

j. Cash and Cash Equivalents - Cash and cash equivalents include securities with original maturities of three months or less when purchased.

k. Restricted Cash - Restricted cash represents amounts required to be restricted under our loan agreements, letter of credit (see Note 6 - Loans Payable and Secured Line of Credit for further information), deposits on residential condominium sales at 77 Greenwich, condominium sales proceeds that have not yet been transferred to the lender and tenant related security deposits.

Revenue Recognition - Leases with tenants are accounted for as operating leases. Minimum rents are recognized on a straight-line basis over the term of the respective lease, beginning when the tenant takes possession of the space. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rents receivable. In addition, retail leases typically provide for the reimbursement of real estate taxes, insurance and other property operating expenses. As lessor, when reporting revenue, we have elected to combine the lease and non-lease components of our operating lease agreements and account for the components as a single lease component in accordance with ASC Topic 842. Lease revenues and reimbursement of real estate taxes, insurance and other property operating expenses are presented in the consolidated statements of operations and comprehensive loss as “rental revenues.” Also, these reimbursements of expenses are recognized within revenue in the period the expenses are incurred. We assess the collectability of our accounts receivable related to tenant revenues. We applied the guidance under ASC 842 in assessing our lease payments: if collection of rents under specific operating leases is not probable, then we recognize the lesser of that lease’s rental income on a straight-line basis or cash received, plus variable rents as earned. Once this assessment is completed, we apply a general reserve, as provided under ASC 450-20, if applicable.

Revenues on sale of residential condominiums reflects the gross sales price from sales of residential condominium units which are recognized at the time of the closing of a sale, when title to and possession of the units are transferred to the buyer. Our performance obligation, to deliver the agreed-upon condominium, is generally satisfied in less than one year from the original contract date. Cash proceeds from unit closings held in escrow for our benefit are included in restricted cash in the consolidated balance sheets. Customer cash deposits on residential condominiums that are in contract are recorded as restricted cash and the related liability is recorded in accounts payable and accrued expenses in our consolidated balance sheets. Our cost of sales consists of allocated expenses related to the initial acquisition, demolition, construction and development of the condominium complex, including associated building costs, development fees, as well as salaries, benefits, bonuses and share-based compensation expense, including other directly associated overhead costs, in addition to qualifying interest and financing costs. See also Note 2g. Residential Condominium Units for Sale above.

Stock-Based Compensation – We have granted stock-based compensation, which is described below in Note 12 – Stock-Based Compensation. Stock-based compensation cost is measured at the grant date, based on the fair value of the award on that date, and is expensed at the grant date (for the portion that vests immediately) or ratably over the related vesting periods. Shares that are forfeited are added back into the pool of shares available under the Stock Incentive Plan (see Note 12 – Stock-Based Compensation), and any recorded expense related to forfeited shares are reversed in the year of forfeiture.

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Income Taxes - We account for income taxes under the asset and liability method as required by the provisions of ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We provide a valuation allowance for deferred tax assets for which we do not consider realization of such assets to be more likely than not.

ASC 740-10-65 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-65, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740-10-65 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and increased other disclosures. As of both March 31, 2023 and December 31, 2022, we had determined that no liabilities are required in connection with unrecognized tax positions. As of March 31, 2023, our tax returns for the years ended December 31, 2018 through December 31, 2022 are subject to review by the Internal Revenue Service. Our state returns are open to examination for the years December 31, 2017 or 2018 through December 31, 2022, depending on the jurisdiction.

We are subject to certain federal, state and local income and franchise taxes.

o. Earnings (loss) Per Share - We present both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower per share amount. 7,179,000 warrants exercisable at $4.31 per share were excluded from the computation of diluted earnings (loss) per share because the awards would have been antidilutive for the three months ended March 31, 2023 and 2022. Shares issuable at March 31, 2023 comprising 104,030 restricted stock units that have vested but not yet settled were excluded from the computation of diluted loss per share because the awards would have been antidilutive for the three months ended March 31, 2023. Shares issuable at March 31, 2022 comprising 228,060 restricted stock units that had vested but not yet settled were excluded from the computation of diluted loss per share because the awards would have been antidilutive for the three months ended March 31, 2022.

p. Deferred Finance Costs – Capitalized and deferred finance costs represent commitment fees, legal, title and other third party costs associated with obtaining commitments for mortgage financings which result in a closing of such financing. These costs are being offset against loans payable in the consolidated balance sheets for mortgage financings and had an unamortized balance of $1.3 million and $2.1 million at March 31, 2023 and December 31, 2022, respectively. Costs for our corporate credit facility are being offset against corporate credit facility, net, in the consolidated balance sheets and had an unamortized balance of $1.1 million and $1.3 million at March 31, 2023 and December 31, 2022, respectively. Unamortized deferred finance costs are expensed when the associated debt is refinanced with a new lender or repaid before maturity. Costs incurred in seeking financing transactions which do not close are expensed in the period in which it is determined that the financing will not close.

q. Deferred Lease Costs – Deferred lease costs consist of fees and incremental costs incurred to initiate and renew retail operating leases and are amortized to depreciation and amortization on a straight-line basis over the related non-cancelable lease term. Lease costs incurred under our residential leases are expensed as incurred.

r. Underwriting Commissions and Costs – Underwriting commissions and costs incurred in connection with our stock offerings are reflected as a reduction of additional paid-in-capital in stockholders’ equity.

Any references to square footage, property count or occupancy percentages, and any amounts derived from these values in these notes to the condensed consolidated financial statements, are outside the scope of our independent registered public accounting firm’s review.

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Note 3 – Residential Condominium Units for Sale

Residential condominium units for sale as of March 31, 2023 and December 31, 2022 includes 77 Greenwich, and in all cases, excludes costs of development for the residential condominium units at 77 Greenwich that were sold. Closings on residential condominium units started in September 2021 with 33 closings having occurred through March 31, 2023, and we have closed on one additional unit since March 31, 2023.

Note 4 – Real Estate, Net

As of March 31, 2023 and December 31, 2022, real estate, net, includes the following (dollars in thousands):


	March 31,		December 31,
	2023		2022


Building and building improvements	$	51,141	$	51,141
Tenant improvements		221		221
Furniture and fixtures		876		847
Land and land improvements		28,847		28,847
		81,085		81,056
Less: accumulated depreciation		17,095		16,405
	$	63,990	$	64,651

Building and building improvements, tenant improvements, furniture and fixtures, and land and land improvements included the 237 11^th property and the Paramus, New Jersey property as of March 31, 2023 and December 31, 2022. Depreciation expense amounted to approximately $690,000 and $693,000 for the three months ended March 31, 2023 and 2022.

In May 2018, we closed on the acquisition of 237 11^th, a 105-unit, 12-story multi-family apartment building located at 237 11^thStreet, Brooklyn, New York for a purchase price of $81.2 million, excluding transaction costs of approximately $0.7 million. Due to water damage in apartment units and other property at 237 11^th resulting from construction defects, we submitted a notice of claim to our insurance carrier for property damage and business interruption (lost revenue) in September 2018. The insurance carrier subsequently disclaimed coverage for the losses and we filed a complaint against the carrier alleging that it breached the insurance policy by denying coverage. We also filed legal claims against the seller, its parent company, and the general contractor to recover damages arising from the defective construction. In addition, the general contractor impleaded into that litigation several subcontractors who performed work on the property. Management expects to recover some portion of the cost incurred to repair the property through the litigations and/or settlement negotiations with the seller, its parent company, the general contractor, the subcontractors, and the insurance carrier, although the amount of damages that may be recoverable in litigation and/or potential settlement negotiations are uncertain at this time, as is the timing of receipt of any such payments, which has been impacted by the COVID-19 pandemic, including the resulting backlog in the court system and slowdown in judicial proceedings. We have, from time to time, engaged in mediation with the seller, its parent company, the general contractor, and the third-party defendants impleaded by the general contractor to explore the possibility of settling the case involving those parties, but to date, we have not reached an agreement, and we continue to pursue all legal remedies. We incurred significant cash outflows for costs associated with these repairs and remediation, which commenced in September 2019 and was completed as of December 31, 2021. As of March 31, 2023, the property was 99.1% leased.

As of March 31, 2023 and December 31, 2022, intangible assets, net, consisted of the real estate tax abatement at its original valuation of $11.1 million offset by its related accumulated amortization of approximately $3.6 million and $3.4 million at March 31, 2023 and December 31, 2022, respectively. Amortization expense amounted to $185,000 for each of the three months ended March 31, 2023 and 2022, respectively.

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77 Greenwich and the New York City School Construction Authority

We entered into an agreement with the New York City School Construction Authority (the “SCA”), whereby we constructed a school sold to the SCA as part of our condominium development at 77 Greenwich. Pursuant to the agreement, the SCA agreed to pay us $41.5 million for the purchase of their condominium unit and reimburse us for the costs associated with constructing the school, including a construction supervision fee of approximately $5.0 million. Payments for construction are being made by the SCA to the general contractor in installments as construction on their condominium unit progresses. Payments to us for the land and construction supervision fee commenced in January 2018 and continued through October 2019 for the land and will continue through completion of the SCA buildout for the construction supervision fee, with an aggregate of $46.3 million having been paid to us as of March 31, 2023 from the SCA, with approximately $233,000 remaining to be paid. We have also received an aggregate of $54.9 million in reimbursable construction costs from the SCA through March 31, 2023. In April 2020, the SCA closed on the purchase of the school condominium unit from us, at which point title transferred to the SCA, and the SCA has completed the buildout of the interior space, which is a public elementary school with approximately 476 seats. The school received its final TCO and opened to students in September 2022. We have also guaranteed certain obligations with respect to the construction of the school.

Note 5 – Prepaid Expenses and Other Assets, Net

As of March 31, 2023 and December 31, 2022, prepaid expenses and other assets, net, include the following (dollars in thousands):


	March 31,		December 31,
	2023		2022


Prepaid expenses	$	1,746	$	2,494
Deferred finance costs warrants		2,184		2,184
Other		1,058		1,066
		4,988		5,744
Less: accumulated amortization		2,095		1,970
	$	2,893	$	3,774

Note 6 – Loans Payable and Secured Line of Credit

Corporate Credit Facility

In December 2019, we entered into a multiple draw credit agreement aggregating $70.0 million (the “Corporate Credit Facility,” or “CCF”), which may be increased by $25.0 million subject to satisfaction of certain conditions and the consent of the lender (the “CCF Lender”). Draws under the Corporate Credit Facility were allowed during the 32-month period following the closing date of the Corporate Credit Facility (the “Closing Date”). The CCF matures on December 19, 2024, subject to extensions until December 19, 2025 and June 19, 2026, respectively, under certain circumstances. The CCF provided for the proceeds of the CCF to be used for investments in certain multi-family apartment buildings in the greater New York City area and certain non-residential real estate investments approved by the CCF Lender in its reasonable discretion, as well as in connection with certain property recapitalizations and in specified amounts for general corporate purposes and working capital.

In connection with the December 2020 transaction noted below, the Company entered into an amendment to the CCF, pursuant to which, among other things, (i) we were permitted to enter into the Mezzanine Loan Agreement (as defined below) and related documents, (ii) the commitment made by the CCF Lender under the CCF was reduced by the $7.5 million, and (iii) the MOIC amount was amended to combine the CCF and the Mezzanine Loan. In addition, the exercise price of the warrants issued in connection with the CCF was amended from $6.50 per share to $4.31 per share (the “Warrant Agreement Amendment”) (see Note 11 – Stockholders Equity – Warrants to our consolidated financial statements for further discussion regarding the warrants).

In connection with the closing of the 77 Mortgage Loan and amendment to the Mezzanine Loan described below, we entered into amendments, dated as of October 22, 2021 and November 10, 2021, to our CCF pursuant to which, among

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other things, the parties agreed that (a) no additional funds will be drawn under the CCF, (b) the minimum liquidity requirement was made consistent with the 77 Mortgage Loan Agreement until May 1, 2023, (c) the Company will prepay the outstanding principal balance of the CCF in an amount no less than $7.0 million on or prior to May 1, 2023 and (d) the multiple on invested capital (the “MOIC”) provisions were revised to provide that (i) the MOIC amount due upon final repayment of the CCF was amended to be consistent with the Mezzanine Loan such that if no event of default exists and is continuing under the CCF at any time prior to June 22, 2023, the amount due will be combined with the Mezzanine Loan, to the extent not previously paid, if any, and (ii) the amount of the CCF used to calculate the MOIC was reduced to $35.75 million. We entered into an amendment in November 2022, which eliminated the minimum liquidity requirement, and we entered into an amendment in April 2023, which, among other things, deferred upcoming cash interest payments as well as the $7.0 million amortization payment until August 31, 2023, subject to extension in certain circumstances, which also provides that the Company will enter into a strategic transaction that results in the repayment of the CCF or pre-pay the CCF by $5.0 million from equity by such date. See Note 14 – Subsequent Events for additional information.

The CCF bears interest at a rate per annum equal to the sum of (i) 5.25% and (ii) a scheduled interest rate of 4% (the “Cash Pay Interest Rate”) which increases by 0.125% every six-month period from the Closing Date, subject to increase during the extension periods. The effective interest rate at March 31, 2023 and December 31, 2022 was 10.0% and 10.0%, respectively. A $2.45 million commitment fee was payable 50% on the initial draw and 50% as amounts under the CCF are drawn, with any remaining balance due on the last date of the draw period, and a 1.0% exit fee is payable in respect of CCF repayments. As of March 31, 2023, we had paid $1.85 million of the commitment fee. With the reduction in the committed amount under the CCF, no further commitment fee is due. The CCF may be prepaid at any time subject to a prepayment premium on the portion of the CCF being repaid. The CCF is subject to certain mandatory prepayment provisions, including that, subject to the terms of the mortgage loan documents applicable to the Company’s 77 Greenwich property, 90% or 100% of the net cash proceeds of residential condominium sales, depending on the circumstances, and 70% of the net cash proceeds of retail condominium sales at the Company’s 77 Greenwich property shall be used to repay the CCF. Upon final repayment of the CCF, the MOIC amount equal to 30% of the initial CCF amount plus drawn incremental amounts less the sum of all interest payments, commitment fee and exit fee payments and prepayment premiums, if any, shall be due, if such amounts are less than the MOIC amount. The collateral for the CCF consists of (i) 100% of the equity interests in our direct subsidiaries, to the extent such a pledge is permitted by the organizational documents of such subsidiary and any financing agreements to which such subsidiary is a party, (ii) our cash and cash equivalents, excluding restricted cash and cash applied toward certain liquidity requirements under existing financing arrangements, and (iii) other non-real estate assets of ours, including intellectual property. The Company determined that the CCF was considered a troubled debt restructuring due to a decrease in the post restructuring effective interest rate. The Company determined that the CCF will be treated as a modification with no gain or loss recognized during the three month period ended March 31, 2023 as the carrying amount of the loan was not greater than the respective undiscounted cash flows of the modified loan.

The CCF provides that we and our subsidiaries must comply with various affirmative and negative covenants including restrictions on debt, liens, business activities, equity repurchases, distributions and dividends, disposition of assets and transactions with affiliates, as well as financial covenants regarding corporate loan to value and net worth. The CCF also provides for certain events of default, including cross-defaults to our other loans, and for a guaranty of the CCF obligations by our loan party subsidiaries.

Pursuant to the terms of the CCF, so long as the CCF is outstanding and the CCF Lender is owed or holds greater than 50% of the sum of (x) the aggregate principal amount of the balance outstanding and (y) the aggregate unused commitments, the CCF Lender will have the right to appoint one member to our and each of our subsidiary’s board of directors or equivalent governing body (the “Designee”). At the election of the CCF Lender, a board observer may be selected in lieu of a board member. The Designee may also sit on up to three committees of the board of directors or equivalent governing body of ours and each subsidiary of the Designee’s choosing from time to time. The Designee will be entitled to receive customary reimbursement of expenses incurred in connection with his or her service as a member of the board and/or any committee thereof but will not, except in the case of an independent director, receive compensation for such service. On April 21, 2023, the Company entered into an amendment to the CCF, pursuant to which, among other things, the CCF Lender was granted the right to appoint an independent director to the Company’s Board of Directors (the “Independent Director Designee”), in addition to its existing right to appoint the Designee so long as the advances remain outstanding and the CCF Lender is owed or holds greater than 50% of the sum of the aggregate principal amount of advances outstanding and the aggregate unused commitments. At the election of the CCF Lender, a Board observer may be selected in lieu of the Independent Director Designee. The Independent Director Designee may sit on up to three Board

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committees and will be automatically included on any Board committee relating to a Strategic Transaction. See Note 14 – Subsequent Events for further information.

The CCF had an outstanding balance of $35.75 million at both March 31, 2023 and December 31, 2022, excluding deferred finance fees of $1.1 million and $1.3 million, respectively. Accrued interest, which is included in accounts payable and accrued expenses, totaled approximately $6.7 million at March 31, 2023 and $6.1 million at December 31, 2022, of which approximately $419,000 was paid during the first week of January 2023.

As of March 31, 2023, we were in compliance with all covenants of the CCF.

Loans Payable

77 Mortgage Loan

In October 2021, a wholly-owned subsidiary of ours (the “Mortgage Borrower”) entered into a loan agreement with Macquarie PF Inc., a part of Macquarie Capital, the advisory, capital markets and principal investment arm of Macquarie Group, as lender and administrative agent (the “77 Mortgage Lender”), pursuant to which 77 Mortgage Lender agreed to extend credit to Mortgage Borrower in the amount of up to $166.7 million (the “77 Mortgage Loan”), subject to the satisfaction of certain conditions (the “77 Mortgage Loan Agreement”). We borrowed $133.1 million on the closing date of the 77 Mortgage Loan and a portion of the proceeds of the 77 Mortgage Loan, together with the proceeds of an increase in the Mezzanine Loan, the Berkley Partner Loan and funds raised through the Private Placement were used to repay the 77 Greenwich construction facility that the Company entered into in December 2017. At the time of the closing of the 77 Mortgage Loan in October 2021, $33.6 million was available to be used to, among other things, complete construction of 77 Greenwich and fund carry costs while the residential condominium units are being sold.

The 77 Mortgage Loan has a two-year term, maturing on October 1, 2023, with an option to extend for an additional year, if, among other conditions, the loan balance is $70.0 million or less and we purchase a new interest rate cap. The 77 Mortgage Loan is secured by the Mortgage Borrower’s fee interest in 77 Greenwich. The 77 Mortgage Loan bears interest at a rate per annum equal to the greater of (i) 7.00% in excess of LIBOR and (ii) 7.25%; provided that, if, on April 22, 2023, the outstanding principal balance of the 77 Mortgage Loan, together with any accrued and unpaid PIK Interest and unpaid Additional Unused Fee (as those terms are defined below) is equal to or greater than $91.0 million, the rate per annum will be equal to the greater of (i) 9.00% in excess of LIBOR and (ii) 9.25%. The all-in interest rate was 11.5% at March 31, 2023. If cash flow from 77 Greenwich (including proceeds from the sales of residential condominium units) is insufficient to pay interest payments when due, any accrued but unpaid interest will remain unpaid and interest will continue to accrue on such unpaid amounts (“PIK Interest”) until the cumulative PIK Interest and Additional Unused Fee accrues to $4.5 million (the “Threshold Amount”), after which all such amounts in excess of the Threshold Amount shall be paid in cash on a monthly basis until such amounts are less than the Threshold Amount. As advances of the 77 Mortgage Loan are made to Mortgage Borrower and the outstanding principal balance of the 77 Mortgage Loan increases, net proceeds from the sales of condominium units will be paid to 77 Mortgage Lender to reduce the outstanding balance of the 77 Mortgage Loan. A 1% per annum fee (the “Additional Unused Fee”) on a $3.0 million portion (the “Additional Amount”) of the 77 Mortgage Loan, is payable on a monthly basis on the undrawn portion of such Additional Amount. To the extent the 77 Mortgage Loan was not fully funded by October 22, 2022 (April 22, 2023 in the case of amounts with respect to construction work related to the new handicapped accessible subway entrance on Trinity Place), 77 Mortgage Lender had the discretion to force fund the remaining balance other than the Additional Amount into a reserve account held by 77 Mortgage Lender and disbursed in accordance with the terms of the 77 Mortgage Loan Agreement. The 77 Mortgage Lender elected to force fund the 77 Mortgage Loan in October 2022. The 77 Mortgage Loan is prepayable without penalty, subject to 77 Mortgage Lender receiving a minimum total return of $15.26 million, or if an advance has been made of the Additional Amount, the sum of $15.26 million, plus 10% of the Additional Amount that has been disbursed, in each case, inclusive of interest and fees, and must be prepaid in part in certain circumstances such as in the event of the sale of residential and retail condominium units. Mortgage Borrower was required to achieve completion of the construction work and the improvements for the Project on or before July 1, 2022, subject to certain exceptions. The 77 Mortgage Loan Agreement also includes additional customary affirmative and negative covenants for loans of this type, with the first sales pace covenant in April 2023. Based on sales closed through March 31, 2023, we met this sales covenant. In November 2022, we amended the 77 Mortgage Loan to, amongst other things, extend the Final Completion date to September 29, 2023 and eliminate the liquidity requirement. At that time, we drew down $3.0 million under the letter of credit to fund an interest reserve and $1.0 million to pay down the PIK balance. The Company determined that the 77 Mortgage Loan was considered a troubled debt restructuring due to a decrease in the post restructuring effective interest

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rate. The Company determined that the 77 Mortgage Loan will be treated as a modification with no gain or loss recognized during the three month period ended March 31, 2023 as the carrying amount of the loan was not greater than the respective undiscounted cash flows of the modified loan.

In connection with the 77 Mortgage Loan Agreement, we entered into guarantees with the 77 Mortgage Lender pursuant to which we guaranteed the completion and payment of costs and expenses related to the construction; the payment of accrued and unpaid interest and other fees, costs, expenses and payments due and payable with respect to the 77 Mortgage Loan or 77 Greenwich; and the payment when due of all amounts due to 77 Mortgage Lender, as a result of “bad-boy” provisions. Mortgage Borrower and the Company also entered into an environmental compliance and indemnification undertaking for the benefit of 77 Mortgage Lender.

As of March 31, 2023, we had received our TCOs for 100% of the residential condominium units, lobby, Cloud Club (lounge, terrace, game room, dining room, kitchen and kids play room), mechanical rooms, and portions of the cellar (including the bike and storage rooms.) Upon the granting of our first TCO in March 2021 and having 16 units under contract, our offering plan was declared effective.

As of March 31, 2023, the 77 Mortgage Loan had a balance of $110.0 million, which includes $4.5 million in PIK interest. Through March 31, 2023, the 77 Mortgage loan was paid down by approximately $58.2 million through closed sales of residential condominium units.

As of March 31, 2023, we were in compliance with all covenants under the 77 Mortgage Loan.

Mezzanine Loan

In December 2020, we entered into a mezzanine loan agreement with an affiliate of the CCF Lender (the “Mezzanine Loan Agreement”, and the loan thereunder, the “Mezzanine Loan”). The Mezzanine Loan was originally for the amount of $7.5 million and has a term of three years with two one-year extension options, exercisable under certain circumstances. The collateral for the Mezzanine Loan was the borrower’s equity interest in its direct, wholly-owned subsidiary, which owns 100% of the equity interests in the borrower under the 77 Mortgage Loan. As of March 31, 2023, the annual blended interest rate for the 77 Mortgage Loan and the Mezzanine Loan was 10.3%. Interest on the Mezzanine Loan is not payable on a monthly basis but instead is automatically added to the unpaid principal amount on a monthly basis (and therefore accrues interest) and is payable in full on the maturity date of the Mezzanine Loan. Upon final repayment of the Mezzanine Loan, a MOIC will be due on substantially the same terms as provided for in the CCF. The Mezzanine Loan may not be prepaid prior to prepayment in full of the 77 Mortgage Loan, but if the 77 Mortgage Loan is being prepaid in full, the Mezzanine Loan may be prepaid simultaneously therewith. Subject to the prior sentence the Mezzanine Loan may be prepaid in whole or in part, without penalty or premium (other than payment of the MOIC amount, if applicable, as provided above), upon prior written notice to the lender under the Mezzanine Loan. In connection with the Mezzanine Loan, the Company entered into a completion guaranty, carry guaranty, equity funding guaranty, recourse guaranty and environmental indemnification undertaking substantially consistent with the Company’s existing guarantees made to the 77 Mortgage Lender in connection with the 77 Greenwich Mortgage Loan.

In October 2021, the Mezzanine Loan Agreement was amended and restated to, among other things, (i) increase the amount of the loan thereunder by approximately $22.77 million, of which $0.77 million reflects interest previously accrued under the original Mezzanine Loan, (ii) reflected the pledge of the equity interests in the Mortgage Borrower to the Mezzanine Lender as additional collateral for the Mezzanine Loan and (iii) conform certain of the covenants to those included in the 77 Mortgage Loan Agreement, as applicable. Additionally, the existing completion guaranty, carry guaranty, recourse guaranty and environmental indemnification executed in connection with the original Mezzanine Loan Agreement were amended to conform to the mortgage guarantees and mortgage environmental indemnity made in connection with the 77 Mortgage Loan (and the existing equity funding guaranty was terminated). In November 2022, we amended the Mezzanine Loan Agreement to, amongst other things, extend the Final Completion date to September 29, 2023 and eliminate the liquidity requirement.

As of March 31, 2023, the Mezzanine Loan had a balance of $30.3 million and accrued interest totaled approximately $7.0 million.

As of March 31, 2023, we were in compliance with the covenants of the Mezzanine Loan.

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237 11^thLoans

In June 2021, we entered into a $50.0 million senior loan (the “237 11^th Senior Loan”) provided by Natixis and a $10 million mezzanine loan (the “237 11^th Mezz Loan” and together with the 237 11^th Senior Loan, the “237 11^th Loans”), provided by an affiliate of LibreMax Capital, LLC, bearing interest at a blended rate of 3.05% per annum at that time.

In June 2021, we also entered into an interest rate cap agreement as required under the 237 11^th Loans. The interest rate cap agreement provided the right to receive cash if the reference interest rate rose above a contractual rate. We paid a premium of approximately $32,500 for the 2.5% interest rate cap on the 30-day LIBOR rate on a notional amount of $60.0 million. The interest rate cap matures in July 2023. We did not designate this interest rate cap as a hedge and are recognizing the change in estimated fair value in interest expense.

In December 2022, we amended the 237 11^th Loans to allow for the 237 11^th Senior Loan lender to fund the undrawn operating expense shortfall holdback and force fund the undrawn portion of the leasing related costs and the loan benchmark was converted from LIBOR to SOFR. The Company determined that the 237 11th Loans are considered a troubled debt restructuring due to a decrease in the post restructuring effective interest rate. The Company determined that the 237 11^th Loans will be treated as modifications with no gain or loss recognized during the three month period ended March 31, 2023 as the carrying amount of each loan was not greater than the respective undiscounted cash flows of the modified loans.

As of March 31, 2023, the blended interest rate was 5.35% per year. The SOFR-based floating rate 237 11^th Loans have an initial term of two years and three one-year extension options. The first extension option is not subject to satisfaction of any financial tests, but requires a new interest rate cap be purchased by the Company. $1.5 million of the 237 11^th Senior Loan proceeds were initially held back by Natixis to cover debt service and operating expense shortfalls, as well as leasing related costs.

The 237 11^th Loans require us to comply with various customary affirmative and negative covenants and provide for certain events of default, the occurrence of which would permit the lender to declare the 237 11^th Loans due and payable, among other remedies.

As of March 31, 2023 and December 31, 2022, there was an outstanding balance of $50.0 million on the 237 11^th Senior Loan and $10.0 million on the 237 11^th Mezz Loan. As of March 31, 2023, we were in compliance with the covenants of the 237 11^th Loans, except for the minimum liquidity requirement. The lender has agreed in principle to waive this requirement through the initial maturity date of the loan of July 9, 2023 and the parties are working on documentation. We are currently exploring a potential refinancing of the 237 11^th Loans.

Secured Line of Credit

Our $11.75 million secured line of credit is secured by the Paramus, New Jersey property. The Paramus property had been under contract for sale pursuant to a purchase and sale agreement, which was subject to site plan approval. The agreement was terminated by the buyer in January 2023. The secured line of credit was scheduled to mature on May 22, 2023 and bore interest at the prime rate. Effective with an April 2023 amendment, the maturity date was extended to March 22, 2024 and the interest rate was reduced to 2.5% during the period from April 2023 to the new maturity date. See Note 14 – Subsequent Events for additional information. The secured line of credit is pre-payable at any time without penalty. This secured line of credit had an outstanding balance of $11.75 million and $9.75 million at March 31, 2023 and December 31, 2022, respectively, and an effective interest rate of 7.75% and 7.5% as of March 31, 2023 and December 31, 2022, respectively. The Company determined that the secured line of credit was considered a troubled debt restructuring due to a decrease in the post restructuring effective interest rate. The Company determined that the secured line of credit will be treated as a modification with no gain or loss recognized during the three month period ended March 31, 2023 as the carrying amount of the loan was not greater than the respective undiscounted cash flows of the modified loan.

Note Payable (250 North 10^th Partner Loan)

We owned a 10% interest in a joint venture with TF Cornerstone (the “250 North 10^th JV”) formed to acquire and operate 250 North 10^th, a 234-unit apartment building in Williamsburg, Brooklyn, New York. On January 15, 2020, the 250 North 10^th JV closed on the acquisition of the property. Our share of the equity totaling approximately $5.9 million was funded through a loan (the “Partner Loan”) from our joint venture partner. The Partner Loan, which had a balance of $5.9 million,

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which was repaid in full when we sold our interest in the joint venture to our joint venture partner in February 2023, bore interest at 7.0% and was prepayable any time within its four year term. See also Note 13 – Investments in Unconsolidated Joint Ventures.

Principal Maturities

Combined aggregate principal maturities of our loans, secured line of credit and note payable as of March 31, 2023, excluding extension options, were as follows (in thousands):


Year of Maturity	Principal

2023	$	200,225
2024		47,500
2025		—
2026		—
2027		—
		247,725
Less: deferred finance costs, net		(2,405)
Total loans, corporate credit facility and secured line of credit, net	$	245,320

Interest

Consolidated interest expense, net includes the following (in thousands):


	Three Months Ended		Three Months Ended
	March 31,		March 31,
	2023		2022


Interest expense	$	7,017	$	4,287
Interest capitalized		(689)		(1,518)
Interest expense, net	$	6,328	$	2,769

Note 7 – Fair Value Measurements

The fair value of our financial instruments are determined based upon applicable accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).

The fair values of cash and cash equivalents, receivables, accounts payable and accrued expenses, and other liabilities approximated their carrying value because of their short-term nature. The fair value of the consolidated loans payable, Corporate Credit Facility and the secured line of credit approximated their carrying values as they are variable-rate instruments under Level 2. The warrant liability is recorded at fair value under Level 2.

On an annual recurring basis, we are required to use fair value measures when measuring plan assets of our pension plans. As we elected to adopt the measurement date provisions of ASC 715, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” as of March 4, 2007, we were required to determine the fair value of our pension plan assets as of December 31, 2022. The fair value of pension plan assets was $12.6 million at December 31, 2022. These assets are valued in active liquid markets under Level 2.

We recognized the fair values of all derivatives in prepaid expenses and other assets, net on our consolidated balance sheets based on Level 2 information. Derivatives that are not hedges are adjusted to fair value through earnings. The

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changes in the fair value of the derivative is offset against the change in fair value of the hedged asset through interest expense, net for the three months ended March 31, 2023 and 2022, respectively. Reported net loss may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of hedging instruments and hedged items, but will have no effect on cash flows.

The following table summarizes our consolidated hedging instruments, all of which hedge variable rate debt, as of March 31, 2023 and December 31, 2022 (in thousands):


	Fair Value Asset as of March 31,		Fair Value Asset as of December 31,		Change in Fair Value March 31,		Change in Fair Value March 31,		Notional Amount		All-In Capped Rate		Interest Rate Cap Expiration Date
	2023		2022		2023		2022
Interest Rate Caps:
77 Mortgage Loan	$	890	$	1,298	$	(408)	$	429	$	72,500	2.5	%	11/1/2023
237 11^th Loans		394		707		(313)		244		60,000	2.5	%	7/9/2023
Included in prepaid expenses and other assets, net	$	1,284	$	2,005	$	(721)	$	673

Note 8 – Pension Plan

Syms sponsored a defined benefit pension plan for certain eligible employees not covered under a collective bargaining agreement. The pension plan was frozen effective December 31, 2006. At March 31, 2023 and December 31, 2022, we had recorded an underfunded pension balance of approximately $651,000, respectively, which is included in pension liability on the accompanying consolidated balance sheets. If we decided to terminate the plan under a standard termination, we would be required to make additional contributions to the plan so that the assets of the plan are sufficient to satisfy all benefit liabilities.

We currently plan to continue to maintain the Syms pension plan and make all contributions required under applicable minimum funding rules; however, we may terminate it at any time. In the event we terminate the plan, we intend that any such termination would be a standard termination. Although we have accrued the liability associated with a standard termination, we have not taken any steps to commence such a termination and currently have no intention of terminating the pension plan. In accordance with minimum funding requirements and court ordered allowed claims distributions, we paid approximately $6.1 million to the Syms sponsored plan from September 17, 2012 through March 31, 2023. Historically, we have funded this plan in the third quarter of the calendar year. We funded $400,000 to the Syms sponsored plan in September 2022.

Note 9 – Commitments

Leases – The lease for our corporate office located at 340 Madison Avenue, New York, New York expires on March 31, 2025. Rent expense paid for this operating lease was approximately $118,000 for each of the three months ended March 31, 2023 and 2022, respectively. The remaining cash lease obligation, excluding any extension options, for our corporate office is approximately $939,000 through March 31, 2025 and is as follows (in thousands):


	Future
	Minimum
Year Ended	Rentals
2023	$	353
2024		470
2025		116
Total undiscounted lease payments	$	939
Discount		(8)
Lease Liability	$	931

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Legal Proceedings – In the normal course of business, we are party to routine legal proceedings. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals where they have been established, management currently believes that any liabilities ultimately resulting from litigation we are currently involved in will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or liquidity.

Note 10 – Income Taxes

As of March 31, 2023, we had federal NOLs of approximately $282.9 million. NOLs generated prior to tax-year 2018 will expire in years through fiscal 2037 while NOLs generated in 2018 and forward carry-over indefinitely. The gain resulting from the conveyance of the school condominium to the SCA was fully offset by our available NOL carryforward. Since 2009 through March 31, 2023, we have utilized approximately $20.1 million of our federal NOLs. As of March 31, 2023, we also had state NOLs of approximately $203.0 million. These state NOLs have various expiration dates through 2042, if applicable. We also had additional New York State and New York City prior NOL conversion (“PNOLC”) subtraction pools of approximately $27.9 million and $22.9 million, respectively. The conversion to the PNOLC under the New York State and New York City corporate tax reforms does not have any material tax impact.

Based on management’s assessment, we believe it is more likely than not that the entire deferred tax assets will not be realized by future taxable income or tax planning strategy. In recognition of this risk, we have provided a valuation allowance of $80.1 million as of March 31, 2023. If our assumptions change and we determine we will be able to realize these NOLs, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets would be recognized as a reduction of income tax expense and an increase in the deferred tax asset.

Note 11 – Stockholders’ Equity

Capital Stock

Our authorized capital stock consists of 120,000,000 shares consisting of 79,999,997 shares of common stock, $0.01 par value per share, two (2) shares of preferred stock, $0.01 par value per share (which have been redeemed in accordance with their terms and may not be reissued), one (1) share of special stock, $0.01 par value per share, and 40,000,000 shares of a new class of blank-check preferred stock, $0.01 par value per share. As of March 31, 2022 and December 31, 2022, there were 43,903,363 shares and 43,448,384 shares of common stock issued, respectively, and 37,163,137 share

Trinity Place Holdings Inc. [TPHS] Filings
10-Q	[2023-05-15]
10-K	[2023-03-31]
10-Q	[2022-11-14]
10-Q	[2022-09-07]
10-Q	[2022-05-16]
10-K	[2022-03-31]
10-Q	[2021-11-12]
10-Q	[2021-08-11]
10-Q	[2021-05-12]
10-K	[2021-03-31]
10-Q	[2020-11-06]
10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-03-13]
10-Q	[2019-11-08]
10-Q	[2019-08-07]
10-Q	[2019-05-08]
10-K	[2019-03-18]
10-Q	[2018-11-07]
10-Q	[2018-08-08]
10-Q	[2018-05-10]
10-K	[2018-03-15]
10-Q	[2017-11-08]
10-Q	[2017-08-09]
10-Q	[2017-05-09]
10-K	[2017-03-15]
10-Q	[2016-11-07]
10-Q	[2016-08-08]
10-Q	[2016-05-10]
10-Q	[2016-01-07]
10-Q	[2015-10-08]
10-Q	[2015-07-09]
10-K	[2015-05-14]
10-Q	[2015-01-13]
10-Q	[2014-10-14]
10-Q	[2014-07-15]
10-K	[2014-05-30]
S-1	[2014-01-16]
10-Q	[2014-01-14]
10-Q	[2013-10-15]
10-Q	[2013-07-16]
10-K	[2013-05-31]
10-Q	[2013-01-08]
10-Q	[2012-10-09]
10-Q	[2012-07-10]
10-K	[2012-05-25]
10-Q	[2012-01-10]