false00015414010001553079 0001541401 2024-02-20 2024-02-20 0001541401 esrt:EmpireStateRealtyOPLPMember 2024-02-20 2024-02-20 0001541401 us-gaap:CommonClassAMember 2024-02-20 2024-02-20 0001541401 esrt:EmpireStateRealtyOPLPMember esrt:SeriesESOperatingPartnershipUnitsMember 2024-02-20 2024-02-20 0001541401 esrt:EmpireStateRealtyOPLPMember esrt:Series60OperatingPartnershipUnitsMember 2024-02-20 2024-02-20 0001541401 esrt:EmpireStateRealtyOPLPMember esrt:Series250OperatingPartnershipUnitsMember 2024-02-20 2024-02-20
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM
8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 20, 2024
 
 
EMPIRE STATE REALTY TRUST, INC.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
Maryland
  
001-36105
  
37-1645259
(State or other Jurisdiction
of Incorporation)
  
(Commission
File Number)
  
(I.R.S. Employer
Identification No.)
 
 
EMPIRE STATE REALTY OP, L.P.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
Delaware
  
001-36106
  
45-4685158
(State or other Jurisdiction
of Incorporation)
  
(Commission
File Number)
  
(I.R.S. Employer
Identification No.)
 
111 West 33
rd
Street, 12
th
Floor
New York, New York
  
10120
(Address of Principal Executive Offices)
  
(Zip Code)
Registrant’s telephone number, including area code: (212)
687-8700
n/a
(Former name or former address, if changed from last report)
 
 
Check the appropriate box below if the Form
8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
Soliciting material pursuant to Rule
14a-12
under the Exchange Act (17 CFR
240.14a-12)
 
☐
Pre-commencement
communications pursuant to Rule
14d-2(b)
under the Exchange Act (17 CFR
240.14d-2(b))
 
☐
Pre-commencement
communications pursuant to Rule
13e-4(c)
under the Exchange Act (17 CFR
240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
  
Trading
Symbol(s)
  
Name of each exchange
on which registered
Empire State Realty Trust, Inc.
    
Class A Common Stock, par value $0.01 per share   ESRT   The New York Stock Exchange
Empire State Realty OP, L.P.
    
Series ES Operating Partnership Units   ESBA   NYSE Arca, Inc.
Series 60 Operating Partnership Units   OGCP   NYSE Arca, Inc.
Series 250 Operating Partnership Units   FISK   NYSE Arca, Inc.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2
of the Securities Exchange Act of 1934
(§240.12b-2
of this chapter).
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. ☐
 
 
 
Item 2.02.
Results of Operations and Financial Condition.
On February 20, 2024, Empire State Realty Trust, Inc. (the “Company” or “we”) issued a press release announcing its financial results for the fourth quarter 2023. The press release referred to certain supplemental information that is available on the Company’s website. The press release and supplemental report are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.
The information in Item 2.02 of this Current Report, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, unless it is specifically incorporated by reference therein.
 
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Item 7.01.
Regulation FD Disclosure
Fourth Quarter 2023 Earnings
As discussed in Item 2.02 above, the Company issued a press release regarding its financial results for the fourth quarter 2023 and made available on its website certain supplemental information relating thereto.
The information in Item 7.01 of this Current Report is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act or the Exchange Act, unless it is specifically incorporated by reference therein.
 
Item 9.01.
Financial Statements and Exhibits.
(d) Exhibits.
 
Exhibit
No.
   
Description
99.1    Press Release announcing financial results for the fourth quarter 2023
99.2    Supplemental report
104   
CoverPage Interactive File (the cover page tags are embedded within the Inline XBRL document).
Non-GAAP
Supplemental Financial Measures
Funds From Operations (“FFO”)
We compute FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment
 
write-off
 
of investments in depreciable real estate and investments in
in-substance
real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to
non-controlling
interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures. FFO is a widely recognized
non-GAAP
financial measure for REITs that we believe, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs. In addition, we believe FFO is useful to investors as it captures features particular to real estate performance by recognizing that real estate has generally appreciated over time or maintains residual value to a much greater extent than do other depreciable assets. Investors should review FFO, along with GAAP net income, when trying to understand an equity REIT’s operating performance. We present FFO because we consider it an important supplemental measure of our operating performance and believe that
 
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it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of performance is limited. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another.
Modified Funds From Operations (“Modified FFO”)
Modified FFO adds back an adjustment for any above or below-market ground lease amortization to traditionally defined FFO. We believe this a useful supplemental measure in evaluating our operating performance due to the
non-cash
accounting treatment under GAAP, which stems from the third quarter 2014 acquisition of two option properties following our formation transactions as they carry significantly below market ground leases, the amortization of which is material to our overall results. We present Modified FFO because we believe it is an important supplemental measure of our operating performance in that it adds back the
non-cash
amortization of below-market ground leases. There can be no assurance that Modified FFO presented by us is comparable to similarly titled measures of other REITs. Modified FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Modified FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions.
Core Funds From Operations (“Core FFO”)
Core FFO adds back to Modified FFO the following items: acquisition expenses, loss on early extinguishment of debt, severance expenses and IPO litigation expense. The Company believes Core FFO is an important supplemental measure of its operating performance because it excludes
non-recurring
items. There can be no assurance that Core FFO presented by the Company is comparable to similarly titled measures of other REITs. Core FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.
 
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Core Funds Available for Distribution (“Core FAD”)
In addition to Core FFO, we present Core FAD by (i) adding to Core FFO
non-real
estate depreciation and amortization, the amortization of deferred financing costs, amortization of debt discounts and
non-cash
compensation expense and (ii) deducting straight line rent, amortization of debt premiums and above/below market rent revenue, and recurring capital improvements such as second generation leasing commissions, tenant improvements, prebuilts, capital expenditures, furniture, fixtures & equipment. Core FAD is presented solely as a supplemental disclosure that management believes provides useful information regarding our ability to fund our dividends. Core FAD does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FAD is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. There can be no assurance that Core FAD presented by us is comparable to similarly titled measures of other REITs.
Net Operating Income (“NOI”) and Property Cash NOI
NOI is a
non-GAAP
financial measure of performance. NOI is used by our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by: (i) the cost of funds of the property owner, (ii) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (iii) acquisition expenses, loss on early extinguishment of debt, impairment charges and loss from derivative financial instruments, or (iv) general and administrative expenses and other gains and losses that are specific to the property owner. The cost of funds is eliminated from NOI because it is specific to the particular financing capabilities and constraints of the owner. The cost of funds is eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital which may have changed or may change in the future. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our office or retail properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly-timed purchases or sales. We believe that eliminating these costs from net income is useful to investors because the resulting measure captures the actual revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating
 
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costs. In some cases, the Company also presents (1) Property Cash NOI, which excludes observatory NOI and the effects of straight-line rent, fair value lease revenue, and straight-line ground rent expense adjustment, and (2) Property Cash NOI excluding lease termination fees. Property Cash NOI is presented solely as a supplemental disclosure that management believes allows investors to compare NOI performance across periods without taking into account the effect of certain
non-cash
rental revenues and straight-line ground rent expense adjustment. Similar to depreciation and amortization expense, fair value lease revenues, because of historical cost accounting, may distort operating performance measures at the property level. Additionally, presenting NOI excluding the impact of straight-line rent and straight-line ground rent expense adjustment provides investors with an alternative view of operating performance at the property level that more closely reflects net cash generated in the portfolio. Presenting Property Cash NOI excluding lease termination fees provides investors with additional information that allows them to compare operating performance between periods without taking into account termination fees, which can distort the results for any given period because they generally represent multiple months or years of a tenant’s rental obligations that are paid in a lump sum in connection with a negotiated early termination of the tenant’s lease and are not reflective of the core ongoing operating performance of the Company’s portfolio. However, the usefulness of NOI, Property Cash NOI, and Property Cash NOI excluding lease termination fees is limited because it excludes general and administrative costs, interest expense, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI and Property Cash NOI may fail to capture significant trends in these components of net income which further limits its usefulness. NOI and Property Cash NOI are measurements of the operating performance of our properties but do not measure our performance as a whole. These metrics therefore are not substitutes for net income as computed in accordance with GAAP. These measures should be analyzed in conjunction with net income computed in accordance with GAAP. Other companies may use different methods for calculating NOI, Property Cash NOI or similarly titled measures and, accordingly, our measures may not be comparable to similarly titled measures reported by other companies that do not define the measure exactly as we do.
Same Store
In the Company’s analysis of NOI, particularly to make comparisons of NOI between periods meaningful, it is important to provide information for properties that were owned by the Company throughout each period presented. The Company refers to properties acquired prior to the beginning of the earliest period presented and owned by the Company through the end of the latest period presented as “Same Store.” Same Store therefore excludes properties acquired after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented. Accordingly, it takes at least one year and one quarter after a property is acquired for that property to be included in Same Store. The Company’s definition of Same Store also excludes properties
held-for-sale
or those which we otherwise expect to dispose of in the subsequent quarter and our
 
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multifamily properties. For
mixed-use
properties, all same store property NOI is represented in the property category that comprises the majority of that
mixed-use
property’s NOI.
EBITDA and Adjusted EBITDA
We compute EBITDA as net income plus interest expense, income taxes and depreciation and amortization. We present EBITDA because we believe that EBITDA, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of its ability to incur and service debt. EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of its liquidity. For Adjusted EBITDA, we add back impairment charges and gain on disposition of property.
Net Debt to Adjusted EBITDA
We compute Net Debt to Adjusted EBITDA as the Company’s
pro-rata
share of gross debt less cash and cash equivalents divided by the Company’s
pro-rata
share of trailing twelve months Adjusted EBITDA. The Company believes that the presentation of Net Debt to Adjusted EBITDA provides useful information to investors because the Company reviews Net Debt to Adjusted EBITDA as part of the management of its overall financial flexibility, capital structure and leverage based on its percentage ownership interest in all of its assets.
 
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SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
   
EMPIRE STATE REALTY TRUST, INC.
(Registrant)
Date: February 20, 2024     By:  
/s/ Stephen V. Horn
    Name:   Stephen V. Horn
    Title:   Executive Vice President, Chief Financial Officer & Chief
Accounting Officer
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
.
  
EMPIRE STATE REALTY OP, L.P.
(Registrant)
    By:   Empire State Realty Trust, Inc., as general partner
Date: February 20, 2024     By:  
/s/ Stephen V. Horn
    Name:   Stephen V. Horn
    Title:   Executive Vice President, Chief Financial Officer & Chief
Accounting Officer
 
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Exhibit 99.1

 

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EMPIRE STATE REALTY TRUST ANNOUNCES FOURTH QUARTER

AND FULL YEAR 2023 RESULTS

– Net Income Per Fully Diluted Share of $0.06 in Fourth Quarter and $0.30 in 2023 –

– Core FFO Per Fully Diluted Share of $0.25 in Fourth Quarter and $0.93 in 2023 –

– Signed 951,000 Rentable Square Feet of Leases in 2023 –

– $1.2 Billion of Liquidity, No Floating Rate Debt Exposure –

– Provides 2024 Outlook –

New York, New York, February 20, 2024 – Empire State Realty Trust, Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. The Company is a recognized leader in energy efficiency and indoor environmental quality. ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – includes its Observatory, the #1 attraction in the U.S. in Tripadvisor’s Travelers’ Choice Awards: Best of the Best for two consecutive years. Today the Company reported its operational and financial results for the fourth quarter and full year 2023 and provided guidance for the full year 2024. All per share amounts are on a fully diluted basis, where applicable.

Fourth Quarter and Full Year 2023 Recent Highlights

 

  •  

Net Income of $0.06 per share in the fourth quarter of 2023 and $0.30 per share in 2023.

 

  •  

Core Funds From Operations (“Core FFO”) of $0.25 per share in the fourth quarter of 2023 and $0.93 per share in 2023.

 

  •  

Same-Store Property Cash Net Operating Income (“NOI”) increased 11.3% from the fourth quarter of 2022 and increased 2.2% from the full year 2022, excluding lease termination fees, primarily driven by higher revenues from cash rent commencement and other income, which was partially offset by increases in property operating expenses.

 

  •  

Manhattan office portfolio leased rate increased by 20bps sequentially and increased by 250bps year-over-year to 92.1%. Total commercial portfolio is 90.6% leased as of December 31, 2023.

 

  •  

Signed approximately 164,000 rentable square feet of new, renewal, and expansion leases, in the fourth quarter and 951,000 rentable square feet of new, renewal and expansion leases in 2023.

 

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  •  

Empire State Building Observatory generated $26.9 million of NOI in the fourth quarter and $94.1 million of NOI for the full year 2023, which is in-line with full year 2019 NOI.

Property Operations

As of December 31, 2023, the Company’s property portfolio contained 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units, which were occupied and leased as shown below.

 

     December 31,
2023		     September 30,
2023		     December 31,
2022		  

Percent occupied:

       

Total commercial portfolio

      86.3 %      87.0 %      85.2 % 

Total office

      86.0 %      86.7 %      85.1 % 

Manhattan office

      87.3 %      87.8 %      86.0 % 

GNYMA office1

     76.6 %      79.3 %      80.2 % 

Total retail2

     90.4 %      90.4 %      86.5 % 

Percent leased (includes signed leases not commenced):

       

Total commercial portfolio

      90.6 %      90.5 %      88.6 % 

Total office

      90.5 %      90.5 %      88.3 % 

Manhattan office

      92.1 %      91.9 %      89.6 % 

GNYMA office1

     79.3 %      79.9 %      80.9 % 

Total retail2

     92.1 %      91.5 %      92.2 % 

Total multifamily portfolio

      98.1 %      97.1 %      96.3 % 

 

1 

“GNYMA office” for the periods ended December 31, 2023 and September 30, 2023 reflects the removal of 500 Mamaroneck, Harrison, NY.

2 

“Total retail” for the period ended December 31, 2022 includes the Westport, CT retail assets which were sold in February 2023.

 

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Leasing

The tables that follow summarize leasing activity for the three months ended December 31, 2023. During this period, the Company signed 19 leases in the total portfolio totaling 163,896 square feet. Within the Manhattan office portfolio, the Company signed 14 office leases totaling 135,017 square feet.

Total Portfolio

 

Total Portfolio

    Total Leases
Executed		      Total square
footage
executed		      Average cash
rent psf –
leases executed		      Previously
escalated cash
rents psf		      % of new cash
rent over / under
previously
escalated rents		  

Office

      16        156,444      $ 63.40      $ 59.93        5.8 % 

Retail

      3        7,452      $ 189.20      $ 288.16        -34.3 % 

Total Overall

      19        163,896      $ 69.98      $ 71.87        -2.6 % 

Manhattan Office Portfolio

 

                                                                                              

Manhattan Office Portfolio

    Total Leases
Executed		      Total square
footage
executed		      Average cash
rent psf –
leases executed		      Previously
escalated cash
rents psf		      % of new cash
rent over / under
previously
escalated  rents		  

New Office

      9        96,341      $ 62.26      $ 59.54        4.6 % 

Renewal Office

      5        38,676      $ 66.23      $ 60.91        8.7 % 

Total Office

      14        135,017      $ 63.40      $ 59.93        5.8 % 

Leasing Activity Highlights

 

  •  

A 17-year 52,116 square foot new lease with Greater New York Mutual Insurance Company, at the Empire State Building.

 

  •  

After the quarter end, a 16-year 67,865 square foot expansion lease with Burlington Merchandising Corporation, at 1400 Broadway.

Observatory Results

In the fourth quarter, Observatory revenue was $36.2 million and expenses were $9.3 million. Observatory NOI was $26.9 million, a 13% increase year-over-year. For the full year 2023, Observatory revenue was $129.4 million and expenses were $35.3 million. Observatory NOI totaled $94.1 million, a 26% increase year-over-year and was in-line with full year 2019 NOI.

 

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Balance Sheet

The Company had $1.2 billion of total liquidity as of December 31, 2023, which was comprised of $347 million of cash, plus $850 million available under its revolving credit facility. At December 31, 2023, the Company had total debt outstanding of approximately $2.2 billion, no floating rate debt exposure, and a weighted average interest rate of 3.9% per annum. The weighted average term to maturity was 5.4 years. At December 31, 2023, the Company’s ratio of net debt to adjusted EBITDA was 5.4x.

Share Repurchase

The stock repurchase program began in March 2020 and through February 19, 2024, approximately $293.7 million has been repurchased at a weighted average price of $8.18 per share. There were no share repurchases during the fourth quarter.

Dividend

On December 29, 2023, the Company paid a quarterly dividend of $0.035 per share or unit, as applicable, for the fourth quarter of 2023 to holders of the Company’s Class A common stock (NYSE: ESRT) and Class B common stock and to holders of the Series ES, Series 250 and Series 60 partnership units (NYSE Arca: ESBA, FISK and OGCP, respectively) and Series PR partnership units of Empire State Realty OP, L.P., the Company’s operating partnership (the “Operating Partnership”).

On December 29, 2023, the Company paid a quarterly preferred dividend of $0.15 per unit for the fourth quarter of 2023 to holders of the Operating Partnership’s Series 2014 private perpetual preferred units and a preferred dividend of $0.175 per unit for the fourth quarter of 2023 to holders of the Operating Partnership’s Series 2019 private perpetual preferred units.

 

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2024 Earnings Outlook

The Company has provided initial 2024 guidance and key assumptions, as summarized in the table below. The Company’s guidance does not include the impact of any significant future lease termination fee income or any unannounced acquisition, disposition or other capital markets activity.

 

       
Key Assumptions    2024 Guidance     

 

2023 Actual

Results

      Comments

Earnings

                       
       

Core FFO Per Fully Diluted Share

      $0.90 to $0.94       


 $0.93

($0.90 ex non- 
recurring items)

 
 

   

•  2023 FFO included approximately $0.03 of non-recurring items

 

•  2024 includes $0.04 from multifamily assets

       

Commercial Property Drivers

           
       

Commercial Occupancy at year-end

      87% to 89%        86.3%       
       

SS Property Cash NOI

(excluding lease termination fees)

      -1% to +2%        +2.2%     

•  Assumes positive revenue growth

 

•  Assumes a ~6-8% y/y increase in operating expenses and real estate taxes, partially offset by higher tenant expense reimbursements

       

Observatory Drivers

           
       

Observatory NOI

      $94M to $102M        $94.1M     

•  Reflects average quarterly expenses of ~$9M

 

     Low      High  

Net Income (Loss) Attributable to Common Stockholders and the Operating Partnership

    $ 0.24      $ 0.28  

Add:

      

Impairment Charge

      0.00        0.00  

Real Estate Depreciation & Amortization

      0.65        0.65  

Less:

      

Private Perpetual Distributions

      0.02        0.02  

Gain on Disposal of Real Estate, net

      0.00        0.00  
  

 

 

     

 

 

  

FFO Attributable to Common Stockholders and the Operating Partnership

    $ 0.87      $ 0.91  

Add:

      

Amortization of Below Market Ground Lease

      0.03        0.03  
  

 

 

     

 

 

  

Core FFO Attributable to Common Stockholders and the Operating Partnership

    $ 0.90      $ 0.94  

The estimates set forth above may be subject to fluctuations as a result of several factors, including continued impacts of changes in the use of office space and remote work on our business and our market, our ability to complete planned capital improvements in line with budget, costs of integration of completed acquisitions, costs associated with future acquisitions or other transactions, straight-line rent adjustments and the amortization of above and below-market leases. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

 

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Investor Presentation Update

The Company has posted on the “Investors” section of ESRT’s website the latest investor presentation, which contains additional information on its businesses, financial condition and results of operations.

Webcast and Conference Call Details

Empire State Realty Trust, Inc. will host a webcast and conference call, open to the general public, on Wednesday, February 21, 2024 at 12:00 pm Eastern time.

The webcast will be accessible on the “Investors” section of ESRT’s website. To listen to the live webcast, go to the site at least five minutes prior to the scheduled start time in order to register and download and install any necessary audio software. The conference call can also be accessed by dialing 1-877-407-3982 for domestic callers or 1-201-493-6780 for international callers.

Starting shortly after the call until February 28, 2024, a replay of the webcast will be available on the Company’s website, and a dial-in replay will be available by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for this dial-in replay is 13739774.

The Supplemental Report and Investor Presentation are additional components of the quarterly earnings announcement and are now available on the “Investors” section of ESRT’s website.

The Company uses, and intends to continue to use, the “Investors” page of its website, which can be found at www.esrtreit.com, as a means to disclose material nonpublic information and to comply with its disclosure obligations under Regulation FD, including, without limitation, through the posting of investor presentations that may include material nonpublic information. Accordingly, investors should monitor the “Investors” page, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

 

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About Empire State Realty Trust

Empire State Realty Trust, Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. The Company is the recognized leader in energy efficiency and indoor environmental quality. ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – includes its Observatory, the #1 attraction in the U.S. in Tripadvisor’s Travelers’ Choice Awards: Best of the Best for two consecutive years. As of December 31, 2023, ESRT’s portfolio is comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units. More information about Empire State Realty Trust can be found at esrtreit.com and by following ESRT on Facebook, Instagram, TikTok, X, and LinkedIn.

 

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Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. You can identify forward-looking statements by the use of forward-looking terminology such as “aims,” “anticipates,” “approximately,” “believes,” “contemplates,” “continues,” “estimates,” “expects,” “forecasts,” “hope,” “intends,” “may,” “plans,” “seeks,” “should,” “thinks,” “will,” “would” or the negative of these words and phrases or similar words or phrases. For the avoidance of doubt, any projection, guidance, or similar estimation about the future or future results, performance or achievements is a forward-looking statement.

Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).

 

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Many important factors could cause our actual results, performance, achievements, and future events to differ materially from those set forth, implied, anticipated, expected, projected, assumed or contemplated in our forward-looking statements, including, among other things: (i) economic, market, political and social impact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, climate-related risks such as natural disasters and extreme weather events, terrorism and other armed hostilities, as well as cybersecurity threats and technology disruptions; (ii) a failure of conditions or performance regarding any event or transaction described herein; (iii) resolution of legal proceedings involving the Company; (iv) reduced demand for office, multifamily or retail space, including as a result of the changes in the use of office space and remote work; (v) changes in our business strategy; (vi) a decline in Observatory visitors due to changes in domestic or international tourism, including due to health crises, geopolitical events, currency exchange rates, and/or competition from other observatories; (vii) defaults on, early terminations of, or non-renewal of, leases by tenants; (viii) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors; (ix) declining real estate valuations and impairment charges; (x) termination of our ground leases; (xi) limitations on our ability to pay down, refinance, restructure or extend our indebtedness or borrow additional funds; (xii) decreased rental rates or increased vacancy rates; (xiii) difficulties in executing capital projects or development projects successfully or on the anticipated timeline or budget; (xiv) difficulties in identifying and completing acquisitions; (xv) impact of changes in governmental regulations, tax laws and rates and similar matters; (xvi) our failure to qualify as a REIT; (xvii) incurrence of taxable capital gain on disposition of an asset due to failure of compliance with a 1031 exchange program; and (xviii) failure to achieve sustainability metrics and goals, including as a result of tenant collaboration, and impact of governmental regulation on our sustainability efforts. For a further discussion of these and other factors that could impact the company’s future results, performance, or transactions, see the section entitled “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2022 and any additional factors that may be contained in any filing we make with the SEC.

While forward-looking statements reflect the Company’s good faith beliefs, they do not guarantee future performance. Any forward-looking statement contained in this press release speaks only as of the date on which it was made, and we assume no obligation to update or revise publicly any forward-looking

 

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statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this press release, except as required by applicable law. Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company (or to third parties making the forward-looking statements).

Contact: Investors and Media

Empire State Realty Trust Investor Relations

(212) 850-2678

IR@esrtreit.com

 

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Empire State Realty Trust, Inc.

Condensed Consolidated Statements of Operations

(unaudited and amounts in thousands, except per share data)

 

     Three Months Ended
December 31,		  
     2023     2022  

Revenues

     

Rental revenue

    $ 151,167     $ 145,905  

Observatory revenue

      36,217       32,318  

Lease termination fees

      —        —   

Third-party management and other fees

      275       336  

Other revenue and fees

      5,223       2,714  
  

 

 

    

 

 

  

Total revenues

      192,882       181,273  

Operating expenses

     

Property operating expenses

      42,944       39,060  

Ground rent expenses

      2,332       2,332  

General and administrative expenses

      16,144       16,478  

Observatory expenses

      9,282       8,529  

Real estate taxes

      31,809       31,420  

Depreciation and amortization

      49,599       44,500  
  

 

 

    

 

 

  

Total operating expenses

      152,110       142,319  
  

 

 

    

 

 

  

Total operating income

      40,772       38,954  

Other income (expense):

     

Interest income

      4,740       2,804  

Interest expense

      (25,393 )      (25,634 ) 

Gain (loss) on sale of properties

      (2,497 )      6,818  
  

 

 

    

 

 

  

Income before income taxes

      17,622       22,942  

Income tax expense

      (1,792 )      (1,322 ) 
  

 

 

    

 

 

  

Net income

      15,830       21,620  

Net (income) loss attributable to noncontrolling interests:

     

Noncontrolling interest in the Operating Partnership

      (5,670 )      (7,947 ) 

Noncontrolling interests in other partnerships

      1       (28 ) 

Preferred unit distributions

      (1,050 )      (1,050 ) 
  

 

 

    

 

 

  

Net income attributable to common stockholders

    $ 9,111     $ 12,595  
  

 

 

    

 

 

  

Total weighted average shares

     

Basic

      161,974       161,720  
  

 

 

    

 

 

  

Diluted

      267,003       265,370  
  

 

 

    

 

 

  

Earnings per share attributable to common stockholders

     

Basic

    $ 0.06     $ 0.08  
  

 

 

    

 

 

  

Diluted

    $ 0.06     $ 0.08  
  

 

 

    

 

 

  

 

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Empire State Realty Trust, Inc.

Condensed Consolidated Statements of Operations

(unaudited and amounts in thousands, except per share data)

 

     Year Ended December 31,  
     2023     2022  

Revenues

     

Rental revenue

    $ 597,319     $ 591,048  

Observatory revenue

      129,366       105,978  

Lease termination fees

      —        20,032  

Third-party management and other fees

      1,351       1,361  

Other revenue and fees

      11,536       8,622  
  

 

 

    

 

 

  

Total revenues

      739,572       727,041  

Operating expenses

     

Property operating expenses

      167,324       157,935  

Ground rent expenses

      9,326       9,326  

General and administrative expenses

      63,939       61,765  

Observatory expenses

      35,265       31,036  

Real estate taxes

      127,101       123,057  

Depreciation and amortization

      189,911       216,894  
  

 

 

    

 

 

  

Total operating expenses

      592,866       600,013  
  

 

 

    

 

 

  

Total operating income

      146,706       127,028  

Other income (expense):

     

Interest income

      15,136       4,948  

Interest expense

      (101,484 )      (101,206 ) 

Gain on sale/disposition of properties

      26,764       33,988  
  

 

 

    

 

 

  

Income before income taxes

      87,122       64,758  

Income tax benefit

      (2,715 )      (1,546 ) 
  

 

 

    

 

 

  

Net income

      84,407       63,212  

Net (income) loss attributable to noncontrolling interests:

     

Noncontrolling interest in the Operating Partnership

      (31,094 )      (22,812 ) 

Noncontrolling interests in other partnerships

      (68 )      243  

Preferred unit distributions

      (4,201 )      (4,201 ) 
  

 

 

    

 

 

  

Net income attributable to common stockholders

    $ 49,044     $ 36,442  
  

 

 

    

 

 

  

Total weighted average shares

     

Basic

      161,122       165,039  
  

 

 

    

 

 

  

Diluted

      265,633       269,948  
  

 

 

    

 

 

  

Earnings per share attributable to common stockholders

     

Basic

    $ 0.30     $ 0.22  
  

 

 

    

 

 

  

Diluted

    $ 0.30     $ 0.22  
  

 

 

    

 

 

  

 

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Empire State Realty Trust, Inc.

Reconciliation of Net Income to Funds From Operations (“FFO”),

Modified Funds From Operations (“Modified FFO”) and Core Funds From Operations (“Core FFO”)

(unaudited and amounts in thousands, except per share data)

 

     Three Months Ended
December 31,		  
     2023     2022  

Net income

    $ 15,830     $ 21,620  

Noncontrolling interests in other partnerships

      1       (28 ) 

Preferred unit distributions

      (1,050 )      (1,050 ) 

Real estate depreciation and amortization

      48,548       43,076  

(Gain) loss on sale of properties

      2,497       (6,818 ) 
  

 

 

    

 

 

  

FFO attributable to common stockholders and Operating Partnership units

      65,826       56,800  

Amortization of below-market ground leases

      1,958       1,958  
  

 

 

    

 

 

  

Modified FFO attributable to common stockholders and Operating Partnership units

      67,784       58,758  
  

 

 

    

 

 

  

Core FFO attributable to common stockholders and Operating Partnership units

    $ 67,784     $ 58,758  
  

 

 

    

 

 

  

Total weighted average shares and Operating Partnership units

     

Basic

      262,775       263,759  
  

 

 

    

 

 

  

Diluted

      267,003       265,370  
  

 

 

    

 

 

  

FFO per share

     

Basic

    $ 0.25     $ 0.22  
  

 

 

    

 

 

  

Diluted

    $ 0.25     $ 0.21  
  

 

 

    

 

 

  

Modified FFO per share

     

Basic

    $ 0.26     $ 0.22  
  

 

 

    

 

 

  

Diluted

    $ 0.25     $ 0.22  
  

 

 

    

 

 

  

Core FFO per share

     

Basic

    $ 0.26     $ 0.22  
  

 

 

    

 

 

  

Diluted

    $ 0.25     $ 0.22  
  

 

 

    

 

 

  

 

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Empire State Realty Trust, Inc.

Reconciliation of Net Income to Funds From Operations (“FFO”),

Modified Funds From Operations (“Modified FFO”) and Core Funds From Operations (“Core FFO”)

(unaudited and amounts in thousands, except per share data)

 

     Year Ended
December 31,		  
     2023     2022  

Net income

    $ 84,407     $ 63,212  

Noncontrolling interests in other partnerships

      (68 )      243  

Preferred unit distributions

      (4,201 )      (4,201 ) 

Real estate depreciation and amortization

      184,633       210,522  

Gain on sale/disposition of properties

      (26,764 )      (33,988 ) 
  

 

 

    

 

 

  

FFO attributable to common stockholders and Operating Partnership units

      238,007       235,788  

Amortization of below-market ground leases

      7,831       7,831  
  

 

 

    

 

 

  

Modified FFO attributable to common stockholders and Operating Partnership units

      245,838       243,619  
  

 

 

    

 

 

  

Core FFO attributable to common stockholders and Operating Partnership units

    $ 245,838     $ 243,619  
  

 

 

    

 

 

  

Total weighted average shares and Operating Partnership units

     

Basic

      263,226       268,337  
  

 

 

    

 

 

  

Diluted

      265,633       269,948  
  

 

 

    

 

 

  

FFO per share

     

Basic

    $ 0.90     $ 0.88  
  

 

 

    

 

 

  

Diluted

    $ 0.90     $ 0.87  
  

 

 

    

 

 

  

Modified FFO per share

     

Basic

    $ 0.93     $ 0.91  
  

 

 

    

 

 

  

Diluted

    $ 0.93     $ 0.90  
  

 

 

    

 

 

  

Core FFO per share

     

Basic

    $ 0.93     $ 0.91  
  

 

 

    

 

 

  

Diluted

    $ 0.93     $ 0.90  
  

 

 

    

 

 

  

 

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Empire State Realty Trust, Inc.

Condensed Consolidated Balance Sheets

(unaudited and amounts in thousands)

 

     December 31,     December 31,  
     2023     2022  

Assets

     

Commercial real estate properties, at cost

    $ 3,655,192     $ 3,551,449  

Less: accumulated depreciation

      (1,250,062 )      (1,137,267 ) 
  

 

 

    

 

 

  

Commercial real estate properties, net

      2,405,130       2,414,182  
  

 

 

    

 

 

  

Assets held for sale

      —        35,538  

Cash and cash equivalents

      346,620       264,434  

Restricted cash

      60,336       50,244  

Tenant and other receivables

      39,836       24,102  

Deferred rent receivables

      255,628       240,188  

Prepaid expenses and other assets

      98,167       98,114  

Deferred costs, net

      172,457       187,570  

Acquired below market ground leases, net

      321,241       329,073  

Right of use assets

      28,439       28,670  

Goodwill

      491,479       491,479  
  

 

 

    

 

 

  

Total assets

    $ 4,219,333     $ 4,163,594  
  

 

 

    

 

 

  

Liabilities and equity

     

Mortgage notes payable, net

    $ 877,388     $ 883,705  

Senior unsecured notes, net

      973,872       973,659  

Unsecured term loan facility, net

      389,286       388,773  

Accounts payable and accrued expenses

      99,756       80,729  

Acquired below market leases, net

      13,750       17,849  

Ground lease liabilities

      28,439       28,670  

Deferred revenue and other liabilities

      70,298       76,091  

Tenants’ security deposits

      35,499       25,084  

Liabilities related to assets held for sale

      —        5,943  
  

 

 

    

 

 

  

Total liabilities

      2,488,288       2,480,503  

Total equity

      1,731,045       1,683,091  
  

 

 

    

 

 

  

Total liabilities and equity

    $ 4,219,333     $ 4,163,594  
  

 

 

    

 

 

  

 

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Exhibit 99.2

 

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LOGO    Fourth Quarter 2023

 

 

     Page  
Table of Contents   

Summary

   

Supplemental Definitions

      3  

Company Profile

      5  

Condensed Consolidated Balance Sheets

      6  

Condensed Consolidated Statements of Operations

      7  

Highlights

      8  

Selected Property Data

   

Property Summary Net Operating Income

      9  

Same Store Net Operating Income (“NOI”), Initial Cash Rent Contributing to Cash NOI

      10  

Leasing Activity

      11  

Commercial Property Detail

      13  

Portfolio Expirations and Vacates Summary

      14  

Tenant Lease Expirations

      15  

Largest Tenants and Portfolio Tenant Diversification by Industry

      17  

Capital Expenditures and Redevelopment Program

      18  

Observatory Summary

      19  

Financial information

   

FFO, Modified FFO, Core FFO, FAD and EBITDA

      20  

Consolidated Debt Analysis

   

Debt Summary

      21  

Debt Detail

      22  

Debt Maturities

      23  

Ground Leases

      23  

Forward-looking Statements

This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. You can identify forward-looking statements by the use of forward-looking terminology such as “aims,” “anticipates,” “approximately,” “believes,” “contemplates,” “continues,” “estimates,” “expects,” “forecasts,” “hope,” “intends,” “may,” “plans,” “seeks,” “should,” “thinks,” “will,” “would” or the negative of these words and phrases or similar words or phrases. For the avoidance of doubt, any projection, guidance, or similar estimation about the future or future results, performance or achievements is a forward-looking statement.

Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).

Many important factors could cause our actual results, performance, achievements, and future events to differ materially from those set forth, implied, anticipated, expected, projected, assumed or contemplated in our forward-looking statements, including, among other things: (i) economic, market, political and social impact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, climate-related risks such as natural disasters and extreme weather events, terrorism and other armed hostilities, as well as cybersecurity threats and technology disruptions; (ii) a failure of conditions or performance regarding any event or transaction described herein; (iii) resolution of legal proceedings involving the Company; (iv) reduced demand for office, multifamily or retail space, including as a result of the changes in the use of office space and remote work; (v) changes in our business strategy; (vi) a decline in Observatory visitors due to changes in domestic or international tourism, including due to health crises, geopolitical events, currency exchange rates, and/or competition from other observatories; (vii) defaults on, early terminations of, or non-renewal of, leases by tenants; (viii) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors; (ix) declining real estate valuations and impairment charges; (x) termination of our ground leases; (xi) limitations on our ability to pay down, refinance, restructure or extend our indebtedness or borrow additional funds; (xii) decreased rental rates or increased vacancy rates; (xiii) difficulties in executing capital projects or development projects successfully or on the anticipated timeline or budget; (xiv) difficulties in identifying and completing acquisitions; (xv) impact of changes in governmental regulations, tax laws and rates and similar matters; (xvi) our failure to qualify as a REIT; (xvii) incurrence of taxable capital gain on disposition of an asset due to failure of compliance with a 1031 exchange program; and (xviii) failure to achieve sustainability metrics and goals, including as a result of tenant collaboration, and impact of governmental regulation on our sustainability efforts. For a further discussion of these and other factors that could impact the company’s future results, performance, or transactions, see the section entitled “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2022 and any additional factors that may be contained in any filing we make with the U.S. Securities and Exchange Commission.

While forward-looking statements reflect the company’s good faith beliefs, they do not guarantee future performance. Any forward-looking statement contained in this presentation speaks only as of the date on which it was made, and we assume no obligation to update or revise publicly any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this presentation, except as required by applicable law. Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the company (or to third parties making the forward-looking statements).

 

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Fourth Quarter 2023

Supplemental Definitions

 

 

Funds From Operations (“FFO”)

We compute FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment write-off of investments in depreciable real estate and investments in in-substance real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to non-controlling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures. FFO is a widely recognized non-GAAP financial measure for REITs that we believe, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs. In addition, we believe FFO is useful to investors as it captures features particular to real estate performance by recognizing that real estate has generally appreciated over time or maintains residual value to a much greater extent than do other depreciable assets. Investors should review FFO, along with GAAP net income, when trying to understand an equity REIT’s operating performance. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of its performance is limited. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another.

Modified Funds From Operations (“Modified FFO”)

Modified FFO adds back an adjustment for any above or below-market ground lease amortization to traditionally defined FFO. We believe this a useful supplemental measure in evaluating our operating performance due to the non-cash accounting treatment under GAAP, which stems from the third quarter 2014 acquisition of two option properties following our formation transactions as they carry significantly below market ground leases, the amortization of which is material to our overall results. We present Modified FFO because we believe it is an important supplemental measure of our operating performance in that it adds back the non-cash amortization of below-market ground leases. There can be no assurance that Modified FFO presented by us is comparable to similarly titled measures of other REITs. Modified FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Modified FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions.

Core Funds From Operations (“Core FFO”)

Core FFO adds back to Modified FFO the following items: loss on early extinguishment of debt, acquisition expenses, severance expenses and IPO litigation expense. The Company believes Core FFO is an important supplemental measure of its operating performance because it excludes non-recurring items. There can be no assurance that Core FFO presented by the Company is comparable to similarly titled measures of other REITs. Core FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.

Core Funds Available for Distribution (“Core FAD”)

In addition to Core FFO, we present Core FAD by (i) adding to Core FFO non-real estate depreciation and amortization, the amortization of deferred financing costs, amortization of debt discounts and non-cash compensation expenses and (ii) deducting straight line rent, amortization of debt premiums and above/below market rent revenue, and recurring capital improvements such as second generation leasing commissions, tenant improvements, prebuilts, capital expenditures and furniture, fixtures & equipment. Core FAD is presented solely as a supplemental disclosure that we believe provides useful information regarding our ability to fund our dividends. Core FAD does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FAD is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. There can be no assurance that Core FAD presented by us is comparable to similarly titled measures of other REITs.

Net Operating Income (“NOI”) and Property Cash NOI

NOI is a non-GAAP financial measure of performance. NOI is used by our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by: (i) the cost of funds of the property owner, (ii) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (iii) acquisition expenses, loss on early extinguishment of debt, impairment charges and loss from derivative financial instruments, or (iv) general and administrative expenses and other gains and losses that are specific to the property owner. The cost of funds is eliminated from NOI because it is specific to the particular financing capabilities and constraints of the owner. The cost of funds is eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital which may have changed or may change in the future. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our office or retail properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly-timed purchases or sales. We believe that eliminating these costs from net income is useful to investors because the resulting measure captures the actual revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs. In some cases, the Company also presents (1) Property Cash NOI, which excludes Observatory NOI and the effects of straight-line rent, fair value lease revenue, and straight-line ground rent expense adjustment, and (2) Property Cash NOI excluding lease termination fees. Property Cash NOI is presented solely as a supplemental disclosure that management believes allows investors to compare NOI performance across periods without taking into account the effect of certain non-cash rental revenues and straight-line ground rent expense adjustment. Similar to depreciation and amortization expense, fair value lease revenues, because of historical cost accounting, may distort operating performance measures at the property level. Additionally, presenting NOI excluding the impact of straight-line rent and straight-line ground rent expense adjustment provides investors with an alternative view of operating performance at the property level that more closely reflects net cash generated in the portfolio. Presenting Property Cash NOI excluding lease termination fees provides investors with additional information that allows them to compare operating performance between periods without taking into account termination fees, which can distort the results for any given period because they generally represent multiple months or years of a tenant’s rental obligations that are paid in a lump sum in connection with a negotiated early termination of the tenant’s lease and are not reflective of the core ongoing operating performance of the Company’s portfolio. However, the usefulness of NOI, Property Cash NOI, and Property Cash NOI excluding lease termination fees is limited because it excludes general and administrative costs, interest expense, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI and Property Cash NOI may fail to capture significant trends in these components of net income which further limits its usefulness. NOI and Property Cash NOI are measurements of the operating performance of our properties but do not measure our performance as a whole. These metrics therefore are not substitutes for net income as computed in accordance with GAAP. These measures should be analyzed in conjunction with net income computed in accordance with GAAP. Other companies may use different methods for calculating NOI, Property Cash NOI or similarly titled measures and, accordingly, our measures may not be comparable to similarly titled measures reported by other companies that do not define the measure exactly as we do.

Same Store

In the Company’s analysis of NOI, particularly to make comparisons of NOI between periods meaningful, it is important to provide information for properties that were owned by the Company throughout each period presented. The Company refers to properties acquired prior to the beginning of the earliest period presented and owned by the Company through the end of the latest period presented as “Same Store.” Same Store therefore excludes properties acquired after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented. Accordingly, it takes at least one year and one quarter after a property is acquired for that property to be included in Same Store. The Company’s definition of Same Store also excludes properties held-for-sale or those which we otherwise expect to dispose of in the subsequent quarter and our multifamily properties. For mixed-use properties, all same store property NOI is represented in the property category that comprises the majority of that mixed-use property’s NOI.

 

Page 3

LOGO   

Fourth Quarter 2023

Supplemental Definitions

 

 

EBITDA and Adjusted EBITDA

We compute EBITDA as net income plus interest expense, income taxes and depreciation. We present EBITDA because we believe that EBITDA, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of its ability to incur and service debt. EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of its liquidity. For adjusted EBITDA, we add back impairment charges and gain on disposition of property.

Net Debt to Adjusted EBITDA

We compute Net Debt to Adjusted EBITDA as the Company’s pro-rata share of gross debt less cash and cash equivalents divided by the Company’s pro-rata share of trailing twelve months Adjusted EBITDA. The Company believes that the presentation of Net Debt to Adjusted EBITDA provides useful information to investors because the Company reviews Net Debt to Adjusted EBITDA as part of the management of its overall financial flexibility, capital structure and leverage based on its percentage ownership interest in all of its assets.

 

Page 4

LOGO    Fourth Quarter 2023

 

 

COMPANY PROFILE

 

Empire State Realty Trust, Inc., or the Company, is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. The Company is a recognized leader in energy efficiency and indoor environmental quality. ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – includes its Observatory, the #1 attraction in the U.S. in Tripadvisor’s Travelers’ Choice Awards: Best of the Best for two consecutive years.

BOARD OF DIRECTORS

 

 

Anthony E. Malkin    Chairman and Chief Executive Officer
Thomas J. DeRosa    Director, Chair of the Compensation and Human Capital Committee
Steven J. Gilbert    Director, Lead Independent Director
S. Michael Giliberto    Director, Chair of the Audit Committee
Patricia S. Han    Director
Grant H. Hill    Director
R. Paige Hood    Director, Chair of the Finance Committee
James D. Robinson IV    Director, Chair of the Nominating and Corporate Governance Committee
Christina Van Tassell    Director
Hannah Yang    Director

EXECUTIVE MANAGEMENT

 

 

Anthony E. Malkin    Chairman and Chief Executive Officer
Christina Chiu    President
Thomas P. Durels    Executive Vice President, Real Estate

Steve Horn

   

Executive Vice President, Chief Financial Officer & Chief Accounting Officer

COMPANY INFORMATION

 

 

Corporate Headquarters    Investor Relations    New York Stock Exchange
111 West 33rd Street, 12th Floor    IR@esrtreit.com    Trading Symbol: ESRT
New York, NY 10120      
www.esrtreit.com      
(212) 687-8700      

RESEARCH COVERAGE

 

 

Bank of America Merrill Lynch    Camille Bonnel    (416) 369-2140    camille.bonnel@bofa.com
BMO Capital Markets Corp.    John Kim    (212) 885-4115    jp.kim@bmo.com
BTIG    Thomas Catherwood    (212) 738-6140    tcatherwood@btig.com
Citi    Michael Griffin    (212) 816-5871    michael.a.griffin@citi.com
Evercore ISI    Steve Sakwa    (212) 446-9462    steve.sakwa@evercoreisi.com
Green Street Advisors    Dylan Burzinski    (949) 640-8780    dburzinski@greenstreetadvisors.com
KeyBanc Capital Markets    Todd Thomas    (917) 368-2286    tthomas@key.com
Wells Fargo Securities, LLC    Blaine Heck    (443) 263-6529    blaine.heck@wellsfargo.com
Wolfe Research    Andrew Rosivach    (646) 582-9251    arosivach@wolferesearch.com

 

Page 5

LOGO   

Fourth Quarter 2023

Condensed Consolidated Balance Sheets

(unaudited and dollars in thousands)

 

 

     December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Assets

           

Commercial real estate properties, at cost:

           

Land

    $ 366,357     $ 366,364     $ 361,497     $ 361,497     $ 365,540  

Development costs

      8,178       8,178       8,204       8,178       8,166  

Building and improvements

      3,280,657       3,245,555       3,196,181       3,183,615       3,177,743  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     3,655,192       3,620,097       3,565,882       3,553,290       3,551,449  

Less: accumulated depreciation

      (1,250,062 )      (1,217,967 )      (1,180,558 )      (1,162,923 )      (1,137,267 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Commercial real estate properties, net

      2,405,130       2,402,130       2,385,324       2,390,367       2,414,182  

Assets held for sale

      —        —        —        35,980       35,538  

Cash and cash equivalents

      346,620       353,999       315,357       272,648       264,434  

Restricted cash

      60,336       66,954       80,451       108,183       50,244  

Tenant and other receivables

      39,836       37,651       32,901       23,879       24,102  

Deferred rent receivables

      255,628       254,233       249,881       238,842       240,188  

Prepaid expenses and other assets

      98,167       82,918       98,986       57,891       98,114  

Deferred costs, net

      172,457       175,488       176,678       182,367       187,570  

Acquired below-market ground leases, net

      321,241       323,199       325,157       327,115       329,073  

Right of use assets

      28,439       28,496       28,554       28,612       28,670  

Goodwill

      491,479       491,479       491,479       491,479       491,479  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 4,219,333     $ 4,216,547     $ 4,184,768     $ 4,157,363     $ 4,163,594  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Liabilities and Equity

           

Mortgage notes payable, net

    $ 877,388     $ 878,757     $ 880,592     $ 882,142     $ 883,705  

Senior unsecured notes, net

      973,872       973,819       973,768       973,714       973,659  

Unsecured term loan facility, net

      389,286       389,158       389,028       388,901       388,773  

Unsecured revolving credit facility, net

      —        —        —        —        —   

Accounts payable and accrued expenses

      99,756       83,299       71,709       71,605       80,729  

Acquired below-market leases, net

      13,750       14,703       15,280       16,581       17,849  

Ground lease liabilities

      28,439       28,496       28,554       28,612       28,670  

Deferred revenue and other liabilities

      70,298       75,688       73,972       76,769       76,091  

Tenants’ security deposits

      35,499       39,307       40,253       35,111       25,084  

Liabilities related to assets held for sale

      —        —        —        6,862       5,943  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      2,488,288       2,483,227       2,473,156       2,480,297       2,480,503  

Total equity

      1,731,045       1,733,320       1,711,612       1,677,066       1,683,091  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and equity

    $ 4,219,333     $ 4,216,547     $ 4,184,768     $ 4,157,363     $ 4,163,594  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Page 6

LOGO   

Fourth Quarter 2023

Condensed Consolidated Statements of Operations

(unaudited and in thousands, except per share amounts)

 

 

     Three Months Ended  
     December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Revenues

           

Rental revenue (1)

    $  151,167     $  151,458     $  154,603     $  140,091     $  145,905  

Observatory revenue

      36,217       37,562       33,433       22,154       32,318  

Third-party management and other fees

      275       268       381       427       336  

Other revenue and fees

      5,223       2,238       2,125       1,950       2,714  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

      192,882       191,526       190,542       164,622       181,273  

Operating expenses

           

Property operating expenses

      42,944       42,817       39,519       42,044       39,060  

Ground rent expenses

      2,332       2,331       2,332       2,331       2,332  

General and administrative expenses

      16,144       16,012       16,075       15,708       16,478  

Observatory expenses

      9,282       9,471       8,657       7,855       8,529  

Real estate taxes

      31,809       32,014       31,490       31,788       31,420  

Depreciation and amortization

      49,599       46,624       46,280       47,408       44,500  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      152,110       149,269       144,353       147,134       142,319  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total operating income

      40,772       42,257       46,189       17,488       38,954  

Other income (expense)

           

Interest income

      4,740       4,462       3,339       2,595       2,804  

Interest expense

      (25,393 )      (25,382 )      (25,405 )      (25,304 )      (25,634 ) 

Gain (loss) on disposition of property

      (2,497 )      —       13,565       15,696       6,818  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      17,622       21,337       37,688       10,475       22,942  

Income tax (expense) benefit

      (1,792 )      (1,409 )      (733 )      1,219       (1,322 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income

      15,830       19,928       36,955       11,694       21,620  

Net (income) loss attributable to noncontrolling interests:

           

Non-controlling interests in the Operating Partnership

      (5,670 )      (7,207 )      (14,049 )      (4,168 )      (7,947 ) 

Non-controlling interests in other partnerships

      1       (111 )      (1 )      43       (28 ) 

Private perpetual preferred unit distributions

      (1,050 )      (1,050 )      (1,051 )      (1,050 )      (1,050 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income attributable to common stockholders

    $ 9,111     $ 11,560     $ 21,854     $ 6,519     $ 12,595  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average common shares outstanding

           

Basic

      161,974       161,851       160,028       161,339       161,720  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

      267,003       266,073       264,196       265,197       265,370  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per share attributable to common stockholders

           

Basic and diluted

    $ 0.06     $ 0.07     $ 0.14     $ 0.04     $ 0.08  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Dividends per share

    $ 0.035     $ 0.035     $ 0.035     $ 0.035     $ 0.035  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Note:

(1)

The following table reflects the components of rental revenue.

 

     Three Months Ended  
     December 31,
2023		      September 30,
2023		      June 30,
2023		      March 31,
2023		      December 31,
2022		  

Rental Revenue

               

Base rent

    $  134,467      $ 133,228      $  138,808      $  124,782      $ 131,745  

Billed tenant expense reimbursement

      16,700        18,230        15,795        15,309        14,160  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total rental revenue

    $  151,167      $  151,458      $  154,603      $  140,091      $  145,905  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

The preceding table of the components of rental revenue is not, and is not intended to be, a presentation in accordance with GAAP. The Company believes this information is frequently used by management, investors, securities analysts and other interested parties to evaluate the Company’s performance.

 

Page 7

LOGO   

Fourth Quarter 2023

Highlights

(unaudited and dollars and shares in thousands, except per share amounts)

 

 

     Three Months Ended  
     December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Office and Retail Metrics:

           

Total rentable square footage

      9,359,219       9,361,656       9,356,165       9,637,356       9,661,065  

Percent occupied (1)

      86.3 %      87.0 %      86.8 %      86.7 %      85.2 % 

Percent leased (2)

      90.6 %      90.5 %      90.3 %      89.4 %      88.6 % 

Same Store Property Cash Net Operating Income (NOI):

           

Manhattan office portfolio

    $ 66,897     $ 61,985     $ 62,800     $ 58,227     $ 61,913  

Greater New York office portfolio

      5,206       3,982       4,291       3,121       3,731  

Retail portfolio

      1,791       1,752       1,609       512       753  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Same Store Property Cash NOI

    $ 73,894     $ 67,719     $ 68,700     $ 61,860     $ 66,397  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Multifamily Metrics:

           

Multifamily Cash NOI (4)

    $ 4,032     $ 4,837     $ 3,756     $ 3,499     $ 2,848  

Total number of units

      727       727       721       721       721  

Percent occupied

      98.1 %      97.1 %      97.4 %      97.2 %      96.3 % 

Observatory Metrics:

           

Observatory NOI

    $ 26,935     $ 28,091     $ 24,776     $ 14,299     $ 23,789  

Number of visitors (3)

      711,000       743,000       666,000       443,000       660,000  

Change in visitors year-over-year

      7.7 %      8.2 %      16.2 %      64.7 %      83.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ratios at ESRT pro-rata share: (4)

           

Debt to Total Market Capitalization (5)

      45.2 %      49.7 %      51.4 %      54.8 %      54.0 % 

Net Debt to Total Market Capitalization (5)

      41.1 %      45.4 %      47.6 %      51.6 %      50.9 % 

Debt and Perpetual Preferred Units to Total Market Capitalization (5)

      47.0 %      51.7 %      53.5 %      56.9 %      56.1 % 

Net Debt and Perpetual Preferred Units to Total Market Capitalization (5)

      43.0 %      47.6 %      49.8 %      53.9 %      53.1 % 

Debt to Adjusted EBITDA (6)

      6.4x       6.6x       6.7x       6.6x       6.5x  

Net Debt to Adjusted EBITDA (6)

      5.4x       5.5x       5.8x       5.7x       5.7x  

Core FFO Payout Ratio (7)

      14 %      14 %      14 %      20 %      16 % 

Core FAD Payout Ratio (8)

      35 %      23 %      29 %      83 %      23 % 

Core FFO per share - diluted

    $ 0.25     $ 0.25     $ 0.26     $ 0.16     $ 0.22  

Diluted weighted average shares

      267,003       266,073       264,196       265,197       265,370  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Class A common stock price at quarter end

    $ 9.69     $ 8.04     $ 7.49     $ 6.49     $ 6.74  

Dividends declared and paid per share

    $ 0.035     $ 0.035     $ 0.035     $ 0.035     $ 0.035  

Dividends per share - annualized

    $ 0.14     $ 0.14     $ 0.14     $ 0.14     $ 0.14  

Dividend yield (9)

      1.4 %      1.7 %      1.9 %      2.2 %      2.1 % 

Series 2013 Private Perpetual Preferred Units outstanding ($16.62 liquidation value)

      1,560       1,560       1,560       1,560       1,560  

Series 2019 Private Perpetual Preferred Units outstanding ($13.52 liquidation value)

      4,664       4,664       4,664       4,664       4,664  

Class A common stock

      162,062       161,346       159,843       160,340       160,140  

Class B common stock (10)

      984       987       988       989       990  

Operating partnership units

      107,900       108,618       110,087       110,618       109,905  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total common stock and operating partnership units outstanding (11)

      270,946       270,951       270,918       271,947       271,035  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Notes:

(1)

Based on leases signed and commenced as of end of period.

(2)

Represents occupancy and includes signed leases not commenced.

(3)

Reflects the number of visitors who pass through the turnstile, excluding visitors who make a second visit on the same ticket at no additional charge.

(4)

Calculated to include ESRT’s pro-rata 90% share of NOI, debt, interest, EBITDA and FFO at its joint venture properties.

(5)

Market capitalization represents the sum of (i) Company’s common stock per share price as of December 31, 2023 multiplied by the total outstanding number of shares of common stock and operating partnership units as of December 31, 2023; (ii) the number of Series 2014 perpetual preferred units at December 31, 2023 multiplied by $16.62, (iii) the number of Series 2019 perpetual preferred units at December 31, 2023 multiplied by $13.52, and (iv) our outstanding indebtedness as of December 31, 2023.

(6)

Calculated based on trailing 12 months Adjusted EBITDA.

(7)

Represents the amount of Core FFO paid out in distributions.

(8)

Beginning in the three months ended December 31, 2023, we have eliminated a deduction of other non-recurring capital improvements from Core FFO to arrive at Core FAD and the related Core FAD Payout Ratio. We made this modification above to the calculation of Core FAD Payout Ratio for the other periods presented; in our previous supplemental reports prior to this change, the Core FAD Payout Ratios were 27%, 33%, 97%, and 23% for the three months ended September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.

(9)

Based on the closing price per share of Class A common stock on December 31, 2023.

(10)

We have two classes of common stock as a means to give our OP Unit holders voting rights in the public company that correspond to their economic interest in the combined entity. A one-time option was created at our formation transactions for any pre-IPO OP Unit holder to exchange one OP Unit out of every 50 OP Units they owned for one Class B share, and such Class B share carries 50 votes to the extent such holder continues to hold 49 OP units for every Class B share.

(11)

Represents fully diluted common stock and operating partnership units as it includes unvested restricted stock and unvested LTIP units.

 

Page 8

LOGO   

Fourth Quarter 2023

Property Summary - Same Store (1) Net Operating Income (“NOI”) by Quarter

(unaudited and dollars in thousands)

 

 

 

     Twelve Months
Ended		     Three Months Ended  
     December 31,
2023		     December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Same Store Portfolio

             

Revenues

    $ 570,559     $ 146,857     $ 144,331     $ 147,806     $ 131,565     $ 138,097  

Operating expenses

      (284,765 )      (72,397 )      (73,074 )      (68,653 )      (70,641 )      (67,132 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store property NOI

      285,794       74,460       71,257       79,153       60,924       70,965  

Straight-line rent

      (18,960 )      (1,990 )      (4,900 )      (11,742 )      (328 )      (5,896 ) 

Above/below-market rent revenue amortization

      (2,492 )      (534 )      (595 )      (669 )      (694 )      (630 ) 

Below-market ground lease amortization

      7,831       1,958       1,957       1,958       1,958       1,958  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total same store property cash NOI - excluding lease termination fees

    $ 272,173     $ 73,894     $ 67,719     $ 68,700     $ 61,860     $ 66,397  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Percent change over prior year

      2.2 %      11.3 %      8.8 %      1.1 %      (11.4 )%      (3.3 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Property cash NOI

    $ 272,173     $ 73,894     $ 67,719     $ 68,700     $ 61,860     $ 66,397  

Lease termination fees

      —        —        —        —        —        —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total same store property cash NOI

    $ 272,173     $ 73,894     $ 67,719     $ 68,700     $ 61,860     $ 66,397  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same Store Manhattan Office(2)

             

Revenues

    $ 517,516     $ 133,207     $ 130,888     $ 133,986     $ 119,435     $ 125,014  

Operating expenses

      (257,353 )      (65,750 )      (66,294 )      (61,601 )      (63,708 )      (60,332 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store property NOI

      260,163       67,457       64,594       72,385       55,727       64,682  

Straight-line rent

      (15,593 )      (1,984 )      (3,971 )      (10,874 )      1,236       (4,097 ) 

Above/below-market rent revenue amortization

      (2,492 )      (534 )      (595 )      (669 )      (694 )      (630 ) 

Below-market ground lease amortization

      7,831       1,958       1,957       1,958       1,958       1,958  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total same store property cash NOI - excluding lease termination fees

      249,909       66,897       61,985       62,800       58,227       61,913  

Lease termination fees

      —        —        —        —        —        —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total same store property cash NOI

    $ 249,909     $ 66,897     $ 61,985     $ 62,800     $ 58,227     $ 61,913  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same Store Greater New York Metropolitan Area Office

             

Revenues

    $ 40,370     $ 10,064     $ 9,902     $ 10,325     $ 10,079     $ 10,617  

Operating expenses

      (20,917 )      (4,978 )      (5,127 )      (5,384 )      (5,428 )      (5,196 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store property NOI

      19,453       5,086       4,775       4,941       4,651       5,421  

Straight-line rent

      (2,853 )      120       (793 )      (650 )      (1,530 )      (1,690 ) 

Above/below-market rent revenue amortization

      —        —        —        —        —        —   

Below-market ground lease amortization

      —        —        —        —        —        —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total same store property cash NOI - excluding lease termination fees

      16,600       5,206       3,982       4,291       3,121       3,731  

Lease termination fees

      —        —        —        —        —        —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total same store property cash NOI

    $ 16,600     $ 5,206     $ 3,982     $ 4,291     $ 3,121     $ 3,731  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same Store Retail

             

Revenues

    $ 12,673     $ 3,586     $ 3,541     $ 3,495     $ 2,051     $ 2,466  

Operating expenses

      (6,495 )      (1,669 )      (1,653 )      (1,668 )      (1,505 )      (1,604 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Same store property NOI

      6,178       1,917       1,888       1,827       546       862  

Straight-line rent

      (514 )      (126 )      (136 )      (218 )      (34 )      (109 ) 

Above/below-market rent revenue amortization

      —        —        —        —        —        —   

Below-market ground lease amortization

      —        —        —        —        —        —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total same store property cash NOI - excluding lease termination fees

      5,664       1,791       1,752       1,609       512       753  

Lease termination fees

      —        —        —        —        —        —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total same store property cash NOI

    $ 5,664     $ 1,791     $ 1,752     $ 1,609     $ 512     $ 753  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Notes:

(1)

Excludes 10 Bank Street, White Plains, NY, 69-97 and 103-107 Main Street, Westport, CT, and 500 Mamaroneck Ave, Harrison, NY, which were sold in December 2022, February 2023, and April 2023, respectively, Williamsburg retail in New York City, NY which was acquired in September 2023, and multifamily properties.

(2)

Includes 498,682 rentable square feet of retail space in the Company’s nine Manhattan office properties.

 

Page 9

LOGO   

Fourth Quarter 2023

Same Store Net Operating Income (“NOI”), Initial Cash Rent Contributing to Cash NOI

(unaudited and dollars in thousands)

 

 

     Twelve Months
Ended		     Three Months Ended  
     December 31,
2023		     December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Reconciliation of Net Income to Cash NOI and Same Store Cash NOI

             

Net income

    $ 84,407     $ 15,830     $ 19,928     $ 36,955     $ 11,694     $ 21,620  

Add:

             

General and administrative expenses

      63,939       16,144       16,012       16,075       15,708       16,478  

Depreciation and amortization

      189,911       49,599       46,624       46,280       47,408       44,500  

Interest expense

      101,484       25,393       25,382       25,405       25,304       25,634  

Income tax expense (benefit)

      2,715       1,792       1,409       733       (1,219 )      1,322  

Less:

             

(Gain) loss on disposition of property

      (26,764 )      2,497       —        (13,565 )      (15,696 )      (6,818 ) 

Third-party management and other fees

      (1,351 )      (275 )      (268 )      (381 )      (427 )      (336 ) 

Interest income

      (15,136 )      (4,740 )      (4,462 )      (3,339 )      (2,595 )      (2,804 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net operating income

      399,205       106,240       104,625       108,163       80,177       99,596  

Straight-line rent

      (19,563 )      (2,133 )      (5,015 )      (11,859 )      (556 )      (6,029 ) 

Above/below-market rent revenue amortization

      (2,415 )      (483 )      (554 )      (675 )      (703 )      (622 ) 

Below-market ground lease amortization

      7,831       1,958       1,957       1,958       1,958       1,958  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total cash NOI - including Observatory and lease termination fees

      385,058       105,582       101,013       97,587       80,876       94,903  

Less: Observatory NOI

      (94,101 )      (26,935 )      (28,091 )      (24,776 )      (14,299 )      (23,789 ) 

Less: cash NOI from non-Same Store properties

      (18,784 )      (4,753 )      (5,203 )      (4,111 )      (4,717 )      (4,717 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Same Store property cash NOI - including lease termination fees

      272,173       73,894       67,719       68,700       61,860       66,397  

Less: Lease termination fees

      —        —        —        —        —        —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Same Store property cash NOI - excluding Observatory and lease termination fees

    $ 272,173     $ 73,894     $ 67,719     $ 68,700     $ 61,860     $ 66,397  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Multifamily NOI(1)

             

Revenues

    $ 32,669     $ 8,345     $ 8,581     $ 8,119     $ 7,624     $ 6,251  

Operating expenses

      (16,218 )      (4,268 )      (3,683 )      (4,254 )      (4,013 )      (3,345 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

NOI

      16,451       4,077       4,898       3,865       3,611       2,906  

Straight-line rent

      (408 )      (102 )      (103 )      (101 )      (102 )      (64 ) 

Above/below-market rent revenue amortization

      81       57       42       (8 )      (10 )      6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Cash NOI

    $ 16,124     $ 4,032     $ 4,837     $ 3,756     $ 3,499     $ 2,848  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Initial Cash Rent Contributing to Cash NOI in the Following Years From Burn-off of Free Rent and Signed Leases not Commenced

 

     Square
Feet		      Initial
Annual
Cash Rent		      Initial Cash Rent Contributing to Cash NOI in the
Following Years		  

Expected Cash Commencement

    2024      2025      2026      2027      2028  

First quarter 2024

      314,994      $ 17,360      $ 15,533      $ 15,895      $ 15,443      $ 14,733      $ 11,748  

Second quarter 2024

      192,860        14,241        9,432        14,241        14,241        14,241        14,241  

Third quarter 2024

      41,056        2,672        954        2,672        2,672        2,672        2,672  

Fourth quarter 2024

      81,756        3,577        819        3,577        3,577        3,577        3,516  

First quarter 2025

      36,590        2,491        —         2,251        2,491        2,491        2,491  

Second quarter 2025

      154,756        9,321        —         6,128        9,321        9,321        9,321  

Third quarter 2025

      19,671        1,274        —         587        1,274        1,274        1,274  

Fourth quarter 2025

      21,262        1,318        —         330        1,318        1,318        1,318  

First quarter 2027

      52,116        3,231        —         —         —         3,152        3,231  

First quarter 2028

      25,132        1,785        —         —         —         —         1,784  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     940,193      $ 57,270      $ 26,738      $ 45,681      $ 50,337      $ 52,779      $ 51,596  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     Incremental
Annual		      Initial
Annual		      Initial Cash Rent Contributing to Cash NOI in the
Following Years		  

4Q 2023

    Cash Rent (2)      Cash Rent      2024      2025      2026      2027      2028  

Commenced leases in free rent period

    $ 25,418      $ 29,246      $ 21,871      $ 27,738      $ 27,328      $ 26,619      $ 23,572  

Signed leases not commenced

      25,264        28,024        4,867        17,943        23,009        26,160        28,024  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 50,682      $ 57,270      $ 26,738      $ 45,681      $ 50,337      $ 52,779      $ 51,596  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Notes:

(1)

Calculated to include ESRT’s pro-rata 90% share at its joint venture properties.

(2)

Reflects initial annual cash rent less annual cash rent from existing tenant in the space.

 

Page 10

LOGO   

Fourth Quarter 2023

Property Summary - Leasing Activity by Quarter

(unaudited)

 

 

     Three Months Ended  
     December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Total Office and Retail Portfolio

           

Total leases executed

      19       21       31       19       29  

Weighted average lease term

      11.1 years       8.6 years       7.9 years       9.1 years       5 years  

Average free rent period

      13.5 months       10.5 months       7.2 months       8.6 months       4.6 months  

Office

           

Total square footage executed

      156,444       245,292       326,150       201,145       142,828  

Average starting cash rent psf - leases executed

    $ 63.40     $ 66.71     $ 64.27     $ 57.11     $ 55.46  

Previously escalated cash rents psf

    $ 59.93     $ 60.28     $ 56.20     $ 54.89     $ 55.10  

Percentage of new cash rent over previously escalated rents

      5.8 %      10.7 %      14.4 %      4.1 %      0.7 % 

Retail

           

Total square footage executed

      7,452       3,187       10,164       912       1,498  

Average starting cash rent psf - leases executed

    $ 189.20     $ 169.44     $ 122.70     $ 39.47     $ 262.60  

Previously escalated cash rents psf

    $ 288.16     $ 169.31     $ 178.14     $ 65.79     $ 416.07  

Percentage of new cash rent over previously escalated rents

      (34.3 %)      0.1 %      (31.1 %)      (40.0 %)      (36.9 %) 

Total Office and Retail Portfolio

           

Total square footage executed

      163,896       248,479       336,314       202,057       144,326  

Average starting cash rent psf - leases executed

    $ 69.98     $ 68.03     $ 66.10     $ 57.03     $ 57.66  

Previously escalated cash rents psf

    $ 71.87     $ 61.68     $ 60.03     $ 54.94     $ 58.93  

Percentage of new cash rent over previously escalated rents

      (2.6 %)      10.3 %      10.1 %      3.8 %      (2.2 %) 

Leasing commission costs per square foot

    $ 28.52     $ 19.53     $ 17.34     $ 20.90     $ 13.60  

Tenant improvement costs per square foot

    $ 96.54       91.09       64.40       83.02       41.12  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total LC and TI per square foot (1)

    $ 125.06     $ 110.62     $ 81.74     $ 103.92     $ 54.72  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Occupancy

      86.3 %      87.0 %      86.8 %      86.7 %      85.2 % 

Manhattan Office Portfolio

           

Total leases executed

      14       18       25       15       22  

Office - New Leases

           

Total square footage executed

      96,341       78,305       156,949       168,335       75,182  

Average starting cash rent psf - leases executed

    $ 62.26     $ 65.59     $ 66.35     $ 57.42     $ 62.95  

Previously escalated cash rents psf

    $ 59.54     $ 59.89     $ 48.93     $ 54.71     $ 58.78  

Percentage of new cash rent over previously escalated rents

      4.6 %      9.5 %      35.6 %      4.9 %      7.1 % 

Office - Renewal Leases

           

Total square footage executed

      38,676       157,133       151,361       14,929       17,658  

Average starting cash rent psf - leases executed

    $ 66.23     $ 68.79     $ 62.55     $ 62.44     $ 63.87  

Previously escalated cash rents psf

    $ 60.91     $ 61.68     $ 63.79     $ 63.90     $ 65.80  

Percentage of new cash rent over previously escalated rents

      8.7 %      11.5 %      (1.9 %)      (2.3 %)      (2.9 %) 

Total Manhattan Office Portfolio

           

Total square footage executed

      135,017       235,438       308,310       183,264       92,840  

Average starting cash rent psf - leases executed

    $ 63.40     $ 67.73     $ 64.48     $ 57.83     $ 63.12  

Previously escalated cash rents psf

    $ 59.93     $ 61.08     $ 56.23     $ 55.46     $ 60.11  

Percentage of new cash rent over previously escalated rents

      5.8 %      10.9 %      14.7 %      4.3 %      5.0 % 

Leasing commission costs per square foot

    $ 28.27     $ 18.54     $ 17.02     $ 21.88     $ 15.54  

Tenant improvement costs per square foot

      103.30       93.00       64.58       81.92       48.72  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total LC and TI per square foot (1)

    $ 131.57     $ 111.54     $ 81.60     $ 103.80     $ 64.26  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Occupancy

      87.3 %      87.8 %      87.6 %      87.8 %      86.0 % 

 

Page 11

LOGO   

Fourth Quarter 2023

Property Summary - Leasing Activity by Quarter - (Continued)

(unaudited)

 

 

     Three Months Ended  
     December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Greater New York Metropolitan Area Office Portfolio

           

Total leases executed

      2       2       3       3       5  

Total square footage executed

      21,427       9,854       17,840       17,881       49,988  

Average starting cash rent psf - leases executed

      N/A (2)    $ 42.53     $ 50.55     $ 43.98     $ 40.26  

Previously escalated cash rents psf

      N/A (2)    $ 41.00     $ 54.38     $ 44.33     $ 45.15  

Percentage of new cash rent over previously escalated rents

      N/A (2)      3.7 %      (7.1 %)      (0.8 %)      (10.8 %) 

Leasing commission costs per square foot

    $ 16.38     $ 9.35     $ 16.48     $ 11.86     $ 6.31  

Tenant improvement costs per square foot

      80.55       34.49       81.70       98.47       25.53  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total LC and TI per square foot (1)

    $ 96.93     $ 43.84     $ 98.18     $ 110.33     $ 31.84  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Occupancy

      76.6 %      79.3 %      79.2 %      80.6 %      80.2 % 

Retail Portfolio

           

Total leases executed

      3       1       3       1       2  

Total square footage executed

      7,452       3,187       10,164       912       1,498  

Average starting cash rent psf - leases executed

    $ 189.20     $ 169.44     $ 122.70     $ 39.47     $ 262.60  

Previously escalated cash rents psf

    $ 288.16     $ 169.31     $ 178.14     $ 65.79     $ 416.07  

Percentage of new cash rent over previously escalated rents

      (34.3 %)      0.1 %      (31.1 %)      (40.0 %)      (36.9 %) 

Leasing commission costs per square foot

    $ 67.66     $ 123.73     $ 28.28     $ —      $ 136.80  

Tenant improvement costs per square foot

      20.18       125.00       28.40       —        90.32  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total LC and TI per square foot (1)

    $ 87.84     $ 248.73     $ 56.68     $ —      $ 227.12  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Occupancy

      90.4 %      90.4 %      90.7 %      86.7 %      86.5 % 

Multifamily Portfolio

           

Percent occupied

      98.1 %      97.1 %      97.4 %      97.2 %      96.3 % 

Total number of units

      727       727       721       721       721  

Notes:

(1)

Presents all tenant improvement and leasing commission costs as if they were incurred in the period in which the lease was signed, which may be different than the period in which they were actually paid.

(2)

Leases on spaces that have been vacant for more than two years are not included in the calculation of leasing spreads. The average starting cash rent psf for these two leases was $42.06.

 

Page 12

LOGO   

Fourth Quarter 2023

Commercial Property Detail

(unaudited)

 

 

Property Name

   

Location or Sub-Market

    Rentable
Square Feet
(1)		      Percent
Occupied (2)		     Percent
Leased (3)		     Annualized Rent
(4)		      Annualized
Rent per
Occupied
Square Foot (5)		      Number of
Leases (6)		  
Office - Manhattan                

The Empire State Building

    Penn Station -Times Sq. South      2,713,783        84.6 %      91.8 %    $ 149,146,291      $ 64.98        144  

One Grand Central Place

    Grand Central      1,241,235        85.2 %      90.7 %      64,495,396        61.01        148  

1400 Broadway (7)

    Penn Station -Times Sq. South      917,281        100.0 %      100.0 %      51,543,523        56.19        20  

111 West 33rd Street (8)

   Penn Station -Times Sq. South      639,496        94.2 %      95.7 %      40,779,657        67.68        21  

250 West 57th Street

    Columbus Circle - West Side      472,707        80.6 %      84.5 %      23,990,288        62.98        28  

501 Seventh Avenue

    Penn Station -Times Sq. South      461,209        88.4 %      88.4 %      20,432,035        50.09        19  

1359 Broadway

    Penn Station -Times Sq. South      456,004        83.5 %      91.4 %      22,376,656        58.75        32  

1350 Broadway (9)

    Penn Station -Times Sq. South      372,599        85.5 %      86.4 %      19,076,631        59.90        50  

1333 Broadway

    Penn Station -Times Sq. South      296,349        84.4 %      94.4 %      14,545,148        58.12        13  
     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Office - Manhattan

      7,570,663        87.3 %      92.1 %      406,385,625        61.47        475  
Office - Greater New York Metropolitan Area                

First Stamford Place (10)

    Stamford, CT      781,731        78.7 %      82.3 %      26,691,177        43.38        48  

Metro Center

    Stamford, CT      281,510        70.9 %      70.9 %      10,914,848        54.71        20  
     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Office - Greater New York Metropolitan Area

      1,063,241        76.6 %      79.3 %      37,606,025        46.15        68  
     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Total/Weighted Average Office Properties

      8,633,904        86.0 %      90.5 %      443,991,650        59.79        543  
     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
Retail Properties                

112 West 34th Street (8)

    Penn Station -Times Sq. South      93,057        100.0 %      100.0 %      24,825,569        266.78        4  

The Empire State Building

    Penn Station -Times Sq. South      90,670        71.9 %      76.4 %      7,032,389        107.93        10  

One Grand Central Place

    Grand Central      68,733        99.4 %      99.4 %      8,977,805        131.41        12  

1333 Broadway

    Penn Station -Times Sq. South      67,001        100.0 %      100.0 %      10,155,485        151.57        4  

250 West 57th Street

    Columbus Circle - West Side      65,526        91.4 %      91.4 %      9,111,860        152.07        7  

10 Union Square

    Union Square      58,006        91.9 %      91.9 %      8,181,304        153.49        10  

1542 Third Avenue

    Upper East Side      56,135        100.0 %      100.0 %      2,542,042        45.28        4  

1010 Third Avenue

    Upper East Side      38,235        100.0 %      100.0 %      3,460,188        90.50        2  

501 Seventh Avenue

    Penn Station -Times Sq. South      35,859        50.8 %      59.6 %      1,310,333        71.94        5  

1350 Broadway (9)

    Penn Station -Times Sq. South      30,710        77.8 %      77.8 %      5,962,833        249.70        5  

1359 Broadway

    Penn Station -Times Sq. South      29,247        83.0 %      100.0 %      1,668,652        68.73        5  

561 10th Avenue

    Hudson Yards      28,266        100.0 %      100.0 %      2,007,748        71.03        3  

77 West 55th Street

    Midtown      25,388        100.0 %      100.0 %      1,978,407        77.93        3  

1400 Broadway (7)

   Penn Station -Times Sq. South      17,879        78.2 %      78.2 %      1,538,836        110.07        6  

298 Mulberry Street

    NoHo      10,365        100.0 %      100.0 %      1,802,507        173.90        1  

Williamsburg Retail

    Brooklyn      6,538        100.0 %      100.0 %      1,158,422        177.18        3  

345 East 94th Street

    Upper East Side      3,700        100.0 %      100.0 %      263,134        71.12        1  
     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Total/Weighted Average Retail Properties

      725,315        90.4 %      92.1 %      91,977,514        140.27        85  
     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Portfolio Total

         9,359,219        86.3 %      90.6 %    $ 535,969,164      $ 66.32        628  
     

 

 

     

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

Notes:

(1)

Excludes (i) 189,148 square feet of space across the Company’s portfolio attributable to building management use and tenant amenities and (ii) 83,190 square feet of space attributable to the Company’s Observatory.

(2)

Based on leases signed and commenced as of December 31, 2023.

(3)

Includes occupied space plus leases signed but not commenced as of December 31, 2023.

(4)

Represents annualized base rent and current reimbursement for operating expenses and real estate taxes.

(5)

Represents annualized rent under leases commenced as of December 31, 2023 divided by occupied square feet.

(6)

Represents the number of leases at each property or on a portfolio basis. If a tenant has more than one lease, whether or not at the same property, but with different expirations, the number of leases is calculated equal to the number of leases with different expirations.

(7)

Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 40 years (expiring December 31, 2063).

(8)

Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 54 years (expiring May 31, 2077).

(9)

Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 27 years (expiring July 31, 2050).

(10)

First Stamford Place consists of three buildings.

 

Page 13

LOGO   

Fourth Quarter 2023

Total Portfolio Expirations and Vacates Summary

(unaudited and in square feet)

 

 

     Actual      Forecast (1)  
     Three Months Ended      Three Months Ended               
     December 31,
2023		      March 31,
2024		     June 30,
2024		      September 30,
2024		     December 31,
2024		      Full Year
2024		     Full Year
2025		  

Total Office and Retail Portfolio (2)

                  

Total expirations

      205,619        188,726       114,707        125,180       150,609        579,222       594,946  

Less: broadcasting

      —         (906 )      —         (511 )      —         (1,417 )      —   
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Office and retail expirations

      205,619        187,820       114,707        124,669       150,609        577,805       594,946  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Renewals & relocations (3)

      51,704        80,714       34,787        32,024       43,464        190,989       87,685  

New leases (4)

      50,828        25,651       4,115        2,998       6,738        39,502       119,226  

Vacates (5)

      103,087        72,064       72,271        75,649       52,219        272,203       139,521  

Unknown (6)

      —         9,391       3,534        13,998       48,188        75,111       248,514  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total Office and Retail Portfolio expirations and vacates

      205,619        187,820       114,707        124,669       150,609        577,805       594,946  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
Manhattan Office Portfolio                  

Total expirations

      186,007        150,009       114,707        103,587       130,047        498,350       495,292  

Less: broadcasting

      —         (906 )      —         (511 )      —         (1,417 )      —   
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Office expirations

      186,007        149,103       114,707        103,076       130,047        496,933       495,292  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Renewals & relocations (3)

      34,632        65,235       34,787        21,728       43,464        165,214       57,630  

New leases (4)

      50,828        25,651       4,115        2,998       6,738        39,502       119,226  

Vacates (5)

      100,547        52,347       72,271        64,352       41,690        230,660       106,311  

Unknown (6)

      —         5,870       3,534        13,998       38,155        61,557       212,125  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total expirations and vacates

      186,007        149,103       114,707        103,076       130,047        496,933       495,292  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
Greater New York Metropolitan Area Office Portfolio

 

Office expirations

      3,168        14,017       —         20,689       20,562        55,268       76,903  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Renewals & relocations (3)

      628        8,628       —         9,805       —         18,433       23,777  

New leases (4)

      —         —        —         —        —         —        —   

Vacates (5)

      2,540        2,540       —         10,884       10,529        23,953       16,737  

Unknown (6)

      —         2,849       —         —        10,033        12,882       36,389  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total expirations and vacates

      3,168        14,017       —         20,689       20,562        55,268       76,903  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
Retail Portfolio                  

Retail expirations

      16,444        24,700       —         904       —         25,604       22,751  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Renewals & relocations (3)

      16,444        6,851       —         491       —         7,342       6,278  

New leases (4)

      —         —        —         —        —         —        —   

Vacates (5)

      —         17,177       —         413       —         17,590       16,473  

Unknown (6)

      —         672       —         —        —         672       —   
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total expirations and vacates

      16,444        24,700       —         904       —         25,604       22,751  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Notes:

(1)

These forecasts, which are subject to change, are based on management’s current expectations, including, among other things, discussions with and other information provided by tenants as well as management’s analyses of past historical trends.

(2)

Any lease on month to month or short-term will re-appear in “Actual” in each period until tenant has vacated or renewed, and thus it would be double counted if periods were cumulated. “Forecast” avoids double counting.

(3)

For forecasted periods, “Renewals & relocations” includes the following: tenants renew their existing leases in all or a portion of their current spaces; tenants which signed renewal leases for a term of less than six months and reappear in forecast periods in 2024; and tenants who move within a building or within the Company’s portfolio.

(4)

For forecasted periods, “New Leases” represents leases that have been signed with a new tenant, a subtenant who signed a direct lease or a tenant who expanded. There may be downtime between the lease expiration and the new lease commencement.

(5)

For forecasted periods, “Vacates” assumes a tenant elects not to renew at the end of their existing lease or exercises an early termination option; leases that the Company decides not to renew at the end of tenants’ existing lease due to anticipated future redevelopment or for other reasons. This also may include early lease terminations.

(6)

For forecasted periods, “Unknown” represents tenants whose intentions are unknown.

 

Page 14

LOGO   

Fourth Quarter 2023

Tenant Lease Expirations

(unaudited)

 

 

                   Percent of                     
            Rentable      Portfolio                  Annualized  
     Number      Square      Rentable            Percent of     Rent Per  
     of Leases      Feet      Square Feet     Annualized      Annualized     Rentable  
     Expiring (1)      Expiring (2)      Expiring     Rent (3)      Rent     Square Foot  

Total Office and Retail Lease Expirations

                

Available

      —         875,777        9.4 %    $ —         0.0 %    $ —   

Signed leases not commenced

      28        402,268        4.3 %      —         0.0 %      —   

4Q 2023 (4)

      15        143,627        1.5 %      7,522,786        1.4 %      52.38  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total 2023

      15        143,627        1.5 %      7,522,786        1.4 %      52.38  

1Q 2024

      21        119,175        1.3 %      8,359,089        1.6 %      70.14  

2Q 2024

      13        114,707        1.2 %      5,798,621        1.1 %      50.55  

3Q 2024

      17        125,180        1.3 %      7,181,398        1.3 %      57.37  

4Q 2024

      38        150,609        1.6 %      8,736,094        1.6 %      58.01  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total 2024

      89        509,671        5.4 %      30,075,202        5.6 %      59.01  

2025

      85        594,946        6.4 %      40,363,625        7.5 %      67.84  

2026

      72        628,943        6.7 %      37,384,704        7.0 %      59.44  

2027

      87        713,569        7.6 %      47,192,095        8.8 %      66.14  

2028

      63        945,077        10.1 %      52,486,474        9.8 %      55.54  

2029

      50        981,952        10.5 %      73,521,837        13.7 %      74.87  

2030

      38        745,546        8.0 %      50,024,340        9.3 %      67.10  

2031

      23        174,491        1.9 %      20,214,026        3.8 %      115.85  

2032

      29        368,694        3.9 %      26,223,606        4.9 %      71.13  

2033

      29        329,711        3.5 %      21,332,708        4.0 %      64.70  

Thereafter

      48        1,944,947        20.8 %      129,627,761        24.2 %      66.65  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total

      656        9,359,219        100.0 %    $ 535,969,164        100.0 %    $ 66.32  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
Manhattan Office Properties (5)                

Available

      —         597,862        7.9 %    $ —         0.0 %    $ —   

Signed leases not commenced

      20        362,213        4.8 %      —         0.0 %   

4Q 2023 (4)

      12        124,643        1.6 %      7,044,490        1.7 %      56.52  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total 2023

      12        124,643        1.6 %      7,044,490        1.7 %      56.52  

1Q 2024

      14        82,998        1.1 %      5,229,107        1.3 %      63.00  

2Q 2024

      13        114,707        1.5 %      5,798,621        1.4 %      50.55  

3Q 2024

      13        103,587        1.4 %      6,394,857        1.6 %      61.73  

4Q 2024

      36        130,047        1.7 %      7,781,812        1.9 %      59.84  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total 2024

      76        431,339        5.7 %      25,204,397        6.2 %      58.43  

2025

      67        495,292        6.5 %      32,205,906        7.9 %      65.02  

2026

      57        485,929        6.4 %      29,511,170        7.3 %      60.73  

2027

      71        600,450        7.9 %      36,782,006        9.1 %      61.26  

2028

      47        854,943        11.3 %      47,465,773        11.7 %      55.52  

2029

      35        738,291        9.8 %      44,821,337        11.0 %      60.71  

2030

      27        599,150        7.9 %      37,243,747        9.2 %      62.16  

2031

      12        86,541        1.1 %      6,076,449        1.5 %      70.21  

2032

      21        334,698        4.4 %      23,105,190        5.7 %      69.03  

2033

      15        141,599        1.9 %      8,587,282        2.1 %      60.65  

Thereafter

      35        1,717,713        22.8 %      108,337,878        26.6 %      63.07  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total Manhattan office properties

      495        7,570,663        100.0 %    $ 406,385,625        100.0 %    $ 61.47  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

 

Page 15

LOGO   

Fourth Quarter 2023

Tenant Lease Expirations

(unaudited)

 

 

                   Percent of                     
            Rentable      Portfolio                  Annualized  
     Number      Square      Rentable            Percent of     Rent Per  
     of Leases      Feet      Square Feet     Annualized      Annualized     Rentable  
     Expiring (1)      Expiring (2)      Expiring     Rent (3)      Rent     Square Foot  

Greater New York Metropolitan Area Office Properties

                

Available

      —         220,593        20.7 %    $ —         0.0 %    $ —   

Signed leases not commenced

      3        27,802        2.5 %      —         0.0 %      —   

4Q 2023 (4)

      2        2,540        0.2 %      63,701        0.2 %      25.08  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total 2023

      2        2,540        0.2 %      63,701        0.2 %      25.08  

1Q 2024

      3        11,477        1.1 %      547,643        1.5 %      47.72  

2Q 2024

      —         —         0.0 %      —         0.0 %      —   

3Q 2024

      2        20,689        1.9 %      721,050        1.9 %      34.85  

4Q 2024

      2        20,562        1.9 %      954,282        2.5 %      46.41  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total 2024

      7        52,728        5.0 %      2,222,975        5.9 %      42.16  

2025

      13        76,903        7.2 %      3,597,773        9.6 %      46.78  

2026

      8        71,784        6.8 %      3,508,404        9.3 %      48.87  

2027

      10        58,730        5.5 %      2,801,695        7.5 %      47.70  

2028

      11        84,915        8.0 %      3,735,230        9.9 %      43.99  

2029

      5        128,271        12.1 %      5,907,668        15.7 %      46.06  

2030

      4        78,033        7.3 %      3,562,425        9.5 %      45.65  

2031

      2        16,560        1.6 %      843,885        2.2 %      50.96  

2032(6)

      1        —         0.0 %      6,180        0.0 %      —   

2033

      3        151,754        14.3 %      7,494,005        19.9 %      49.38  

Thereafter

      2        92,628        8.8 %      3,862,084        10.3 %      41.69  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total greater New York metropolitan area office properties

      71        1,063,241        100.0 %    $ 37,606,025        100.0 %    $ 46.15  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
               
Retail Properties                

Available

      —         57,322        7.9 %    $ —         0.0 %    $ —   

Signed leases not commenced

      5        12,253        1.7 %      —         0.0 %      —   

4Q 2023 (4)

      1        16,444        2.3 %      414,595        0.5 %      25.21  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total 2023

      1        16,444        2.3 %      414,595        0.5 %      25.21  

1Q 2024

      4        24,700        3.4 %      2,582,339        2.8 %      104.55  

2Q 2024

      —         —         0.0 %      —         0.0 %      —   

3Q 2024

      2        904        0.1 %      65,491        0.1 %      72.45  

4Q 2024

      —         —         0.0 %      —         0.0 %      —   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total 2024

      6        25,604        3.5 %      2,647,830        2.9 %      103.41  

2025

      5        22,751        3.1 %      4,559,946        5.0 %      200.43  

2026

      7        71,230        9.8 %      4,365,130        4.7 %      61.28  

2027

      6        54,389        7.5 %      7,608,394        8.3 %      139.89  

2028

      5        5,219        0.7 %      1,285,471        1.4 %      246.31  

2029

      10        115,390        15.9 %      22,792,832        24.8 %      197.53  

2030

      7        68,363        9.4 %      9,218,168        10.0 %      134.84  

2031

      9        71,390        9.8 %      13,293,692        14.5 %      186.21  

2032

      7        33,996        4.7 %      3,112,236        3.4 %      91.55  

2033

      11        36,358        5.0 %      5,251,421        5.7 %      144.44  

Thereafter

      11        134,606        18.7 %      17,427,798        18.8 %      129.47  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total retail properties

      90        725,315        100.0 %    $ 91,977,514        100.0 %    $ 140.27  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Notes:

(1)

If a tenant has more than one lease, whether or not at the same property, but with different expirations, the number of leases is calculated equal to the number of leases with different expirations.

(2)

Excludes (i) 189,148 square feet of space across the Company’s portfolio attributable to building management use and tenant amenities and (ii) 83,190 square feet of space attributable to the Company’s Observatory.

(3)

Represents annualized base rent and current reimbursement for operating expenses and real estate taxes.

(4)

Represents leases that are included in occupancy as of December 31, 2023 and expire on December 31, 2023.

(5)

Excludes (i) retail space in the Manhattan office and (ii) the Empire State Building broadcasting licenses and Observatory operations.

(6)

Represents a telecom lease with no square footage.

 

Page 16

LOGO   

Fourth Quarter 2023

20 Largest Tenants and Portfolio Tenant Diversification by Industry

(unaudited)

 

 

                Weighted           Percent of              
                Average     Total     Portfolio           Percent of  
                Remaining     Occupied     Rentable           Portfolio  
          Lease     Lease     Square     Square     Annualized     Annualized  

20 Largest Tenants

   

Property

    Expiration (1)     Term(2)     Feet (3)     Feet (4)     Rent (5)     Rent (6)  

1. LinkedIn

    Empire State Building      Aug. 2036       12.7 years       501,409       5.4 %    $ 33,465,435       6.2 % 

2. Flagstar Bank

    1400 Broadway      Aug. 2039       15.7 years       313,109       3.3 %      18,285,046       3.4 % 

3. Centric Brands Inc.

    Empire State Building      Oct. 2028       4.8 years       221,365       2.4 %      11,952,833       2.2 % 

4. PVH Corp.

    501 Seventh Avenue      Oct. 2028       4.8 years       237,281       2.5 %      11,519,383       2.1 % 

5. Sephora

    112 West 34th Street      Jan. 2029       5.1 years       11,334       0.1 %      10,533,585       2.0 % 

6. Target

    112 West 34th St., 10 Union Sq.      Jan. 2038       14.1 years       81,340       0.9 %      9,341,224       1.7 % 

7. Coty Inc.

    Empire State Building      Jan. 2030       6.1 years       156,187       1.7 %      8,497,458       1.6 % 

8. Macy’s

    111 West 33rd Street      May 2030       6.4 years       131,117       1.4 %      8,451,562       1.6 % 

9. Urban Outfitters

    1333 Broadway      Sept. 2029       5.8 years       56,730       0.6 %      8,185,595       1.5 % 

10. Li & Fung

    1359 Broadway, ESB      Oct. 2027 - Oct. 2028       4.5 years       149,061       1.6 %      7,954,806       1.5 % 

11. Footlocker

    112 West 34th Street      Sept. 2031       7.8 years       34,192       0.4 %      7,745,828       1.4 % 

12. Federal Deposit Insurance Corp.

    Empire State Building      Dec. 2025       2.0 years       119,226       1.3 %      7,578,004       1.4 % 

13. HNTB Corporation

    Empire State Building      Feb. 2029       5.2 years       105,143       1.1 %      7,000,733       1.3 % 

14. Institutional Capital Network, Inc.

    One Grand Central Place      Feb. 2024 - Oct. 2035       10.6 years       94,331       1.0 %      6,351,680       1.2 % 

15. The Michael J. Fox Foundation

    111 West 33rd Street      Nov. 2029       5.9 years       86,492       0.9 %      6,267,495       1.2 % 

16. Shutterstock

    Empire State Building      Apr. 2029       5.3 years       104,386       1.1 %      6,096,096       1.1 % 

17. Fragomen

    1400 Broadway      Feb. 2035       11.2 years       107,680       1.2 %      5,959,656       1.1 % 

18. Burlington Merchandising Corp.

    1400 Broadway      Jan. 2038       14.1 years       102,898       1.1 %      5,932,832       1.1 % 

19. ASCAP

    250 West 57th Street      Aug. 2034       10.7 years       87,943       0.9 %      5,384,628       1.0 % 

20. Duane Reade

    ESB, 1350 Broadway      May 2025 - Sept. 2027       2.5 years       39,142       0.4 %      4,941,165       0.9 % 
         

 

 

    

 

 

    

 

 

    

 

 

  

Total

             2,740,366       29.3 %    $ 191,445,044       35.5 % 
         

 

 

    

 

 

    

 

 

    

 

 

  

Notes:

 

(1)

Expiration dates are per lease and do not assume exercise of renewal or extension options. For tenants with more than two leases, the lease expiration is shown as a range.

(2)

Represents the weighted average lease term based on annualized rent.

(3)

Based on leases signed and commenced as of December 31, 2023.

(4)

Represents the percentage of rentable square feet of the Company’s office and retail portfolios in the aggregate.

(5)

Represents annualized base rent and current reimbursement for operating expenses and real estate taxes.

(6)

Represents the percentage of annualized rent of the Company’s office and retail portfolios in the aggregate.

Portfolio Tenant Diversification by Industry (based on annualized rent)

 

LOGO

 

Page 17

LOGO   

Fourth Quarter 2023

Capital Expenditures and Redevelopment Program and Leasing Opportunity

(unaudited and dollars in thousands)

 

 

 

     Three Months Ended  
Capital expenditures    December 31,
2023		      September 30,
2023		      June 30,
2023		      March 31,
2023		      December 31,
2022		  

Tenant improvements - first generation

    $ —       $ —       $ —       $ —       $ 6,024  

Tenant improvements - second generation

      28,817        18,047        19,823        23,919        8,867  

Leasing commissions - first generation

      125        203        98        —         —   

Leasing commissions - second generation

      5,706        2,319        4,370        4,114        4,721  

Building improvements - first generation

      —         —         —         —         2,530  

Building improvements - second generation

      12,102        7,425        8,879        11,050        5,945  

Non-recurring capital improvements

      4,420        5,226        3,935        1,561        892  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 51,170      $ 33,220      $ 37,105      $ 40,644      $ 28,979  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

Leasing Opportunity - Inventory of Current Vacant Space as of December 31, 2023 (in square feet) (1)

   

Total Portfolio vacant space

       1,278,000  
  

 

 

  

Signed leases not commenced (“SLNC”):

   

Manhattan Office Properties SLNC

      362,000  

Greater New York Office Properties SLNC

      28,000  

Retail Properties SLNC

      12,000  

Greater New York Office Properties

      221,000  

Retail Properties

      57,000  

Manhattan Office Properties

      535,000  

Manhattan Office Properties off market

      20,000  

Manhattan Office Properties other

      43,000  
  

 

 

  

Total

      1,278,000  
  

 

 

  

Notes:

 

(1)

These estimates are based on the Company’s current budgets and are subject to change.

 

Page 18

LOGO   

Fourth Quarter 2023

Observatory Summary

(unaudited and dollars in thousands)

 

 

            Three Months Ended  
Observatory NOI    Twelve
Months to
Date		      December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Observatory revenue (1)

    $ 129,366      $ 36,217     $ 37,562     $ 33,433     $ 22,154     $ 32,318  

Observatory expenses

      35,265        9,282       9,471       8,657       7,855       8,529  
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

NOI

      94,101        26,935       28,091       24,776       14,299       23,789  

Intercompany rent expense (2)

      80,514        21,545       22,113       20,942       15,914       18,204  
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

NOI after intercompany rent

    $ 13,587      $ 5,390     $ 5,978     $ 3,834     $ (1,615 )    $ 5,585  
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Observatory Metrics

              

Number of visitors (3)

         711,000       743,000       666,000       443,000       660,000  

Change in visitors year over year

         7.7 %      8.2 %      16.2 %      64.7 %      83.3 % 

Number of bad weather days (“BWD”) (4)

         11       10       12       15       20  

Notes:

 

(1)

Observatory revenues include the fixed license fee received from WDFG North America, the Observatory gift shop operator. For the three months ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, the fixed license fee was $1,807, $1,807, $1,807, $1,807 and $1,200 respectively.

(2)

The Observatory pays a market-based rent payment comprised of fixed and percentage rent to the Empire State Building. Intercompany rent is eliminated upon consolidation.

(3)

Reflects the number of visitors who pass through the turnstile, excluding visitors who make a second visit on the same ticket at no additional charge.

(4)

The Company defines a bad weather day as one in which the top of the Empire State Building is obscured from view for more than 50% of the day.

Annual Observatory NOI 2018 to 2023

 

LOGO

Notes:

(1)

The 102nd floor Observatory was closed for approximately nine months in 2019 for renovations.

(2)

Due to the COVID-19 pandemic, the Observatory was closed on March 16, 2020. The 86th floor Observatory reopened on July 20, 2020 and the 102nd floor Observatory reopened on August 24, 2020.

(3)

The Observatory continued to experience a gradual recovery in visitors due to the COVID-19 pandemic.

 

Page 19

LOGO   

Fourth Quarter 2023

Funds from Operations (“FFO”), Modified Funds From Operations (“Modified FFO”), Core Funds

from Operations (“Core FFO”), Core Funds Available for Distribution (“Core FAD”) and EBITDA

(unaudited and in thousands, except per share amounts)

 

 

 

     Three Months Ended  

Reconciliation of Net Income to FFO, Modified FFO and Core FFO

    December 31,
2023		     September 30,
2023		     June 30,
2023		     March 31,
2023		     December 31,
2022		  

Net Income

    $ 15,830     $ 19,928     $ 36,955     $ 11,694     $ 21,620  

Non-controlling interests in other partnerships

      1       (111 )      (1 )      43       (28 ) 

Preferred unit distributions

      (1,050 )      (1,050 )      (1,051 )      (1,050 )      (1,050 ) 

Real estate depreciation and amortization

      48,548       45,174       44,887       46,024       43,076  

(Gain) loss on sale of properties

      2,497       —        (13,565 )      (15,696 )      (6,818 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

FFO attributable to common stockholders and the Operating Partnership

      65,826       63,941       67,225       41,015       56,800  

Amortization of below-market ground lease

      1,958       1,957       1,958       1,958       1,958  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Modified FFO attributable to common stockholders and the Operating Partnership

      67,784       65,898       69,183       42,973       58,758  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Core FFO attributable to common stockholders and the Operating Partnership

    $ 67,784     $ 65,898     $ 69,183     $ 42,973     $ 58,758  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total weighted average shares and Operating Partnership units

           

Basic

      262,775       262,756       262,903       264,493       263,759  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

      267,003       266,073       264,196       265,197       265,370  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

FFO attributable to common stockholders and the Operating Partnership per share and unit

           

Basic

    $ 0.25     $ 0.24     $ 0.26     $ 0.16     $ 0.22  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

    $ 0.25     $ 0.24     $ 0.25     $ 0.15     $ 0.21  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Modified FFO attributable to common stockholders and the Operating Partnership per share and unit

           

Basic

    $ 0.26     $ 0.25     $ 0.26     $ 0.16     $ 0.22  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

    $ 0.25     $ 0.25     $ 0.26     $ 0.16     $ 0.22  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Core FFO attributable to common stockholders and the Operating Partnership per share and unit

           

Basic

    $ 0.26     $ 0.25     $ 0.26     $ 0.16     $ 0.22  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

    $ 0.25     $ 0.25     $ 0.26     $ 0.16     $ 0.22  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Reconciliation of Core FFO to Core FAD

           

Core FFO

    $ 67,784     $ 65,898     $ 69,183     $ 42,973     $ 58,758  

Add:

           

Amortization of deferred financing costs

      1,075       1,089       1,088       1,089       1,096  

Non-real estate depreciation and amortization

      1,077       1,298       1,248       1,237       1,285  

Amortization of non-cash compensation expense

      5,294       4,989       5,369       4,375       5,412  

Amortization of loss on interest rate derivative

      1,527       1,527       1,527       1,527       1,525  

Deduct:

           

Straight-line rental revenues, above/below market rent, and other non-cash adjustments

      (3,013 )      (5,569 )      (12,534 )      (1,259 )      (6,651 ) 

Corporate capital expenditures

      (71 )      (90 )      (225 )      (270 )      (162 ) 

Tenant improvements - second generation

      (28,817 )      (18,047 )      (19,823 )      (23,919 )      (8,867 ) 

Building improvements - second generation

      (12,102 )      (7,425 )      (8,879 )      (11,050 )      (5,945 ) 

Leasing commissions - second generation

      (5,706 )      (2,319 )      (4,370 )      (4,114 )      (4,721 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Core FAD (1)

    $ 27,047     $ 41,351     $ 32,584     $ 10,589     $ 41,730  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

           

Net income

    $ 15,830     $ 19,928     $ 36,955     $ 11,694     $ 21,620  

Interest expense

      25,393       25,382       25,405       25,304       25,634  

Income tax expense (benefit)

      1,792       1,409       733       (1,219 )      1,322  

Depreciation and amortization

      49,599       46,624       46,280       47,408       44,500  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA

      92,614       93,343       109,373       83,187       93,076  

(Gain) loss on sale of properties

      2,497       —        (13,565 )      (15,696 )      (6,818 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

    $ 95,111     $ 93,343     $ 95,808     $ 67,491     $ 86,258  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1)

Beginning in the three months ended December 31, 2023, we have eliminated a deduction of other non-recurring capital improvements from Core FFO to arrive at Core FAD and the related Core FAD payout ratio. We made this modification to the calculation of Core FAD for the other periods presented; in our previous supplemental reports prior to this change, Core FAD was $35,922, $28,551, $9,028, and $40,838 for the three months ended September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.

 

Page 20

LOGO   

Fourth Quarter 2023

Debt Summary

(unaudited and dollars in thousands)

 

 

     December 31, 2023      September 30, 2023  
           ESRT      Weighted Average            ESRT      Weighted Average  
           Pro-rata      Interest     Maturity            Pro-rata      Interest     Maturity  

Debt Summary

    Balance     Share      Rate     (Years)      Balance     Share      Rate     (Years)  

Mortgage debt

    $ 891,998     $ 873,887        3.77 %      6.0      $ 893,945     $ 875,775        3.77 %      6.3  

Senior unsecured notes

      975,000       975,000        4.05 %      6.2        975,000       975,000        4.05 %      6.4  

Unsecured term loan facilities (1)

      390,000       390,000        3.93 %      2.0        390,000       390,000        3.93 %      2.3  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total fixed rate debt

      2,256,998       2,238,887        3.94 %      5.4        2,258,945       2,240,775        3.94 %      5.7  

Unsecured term loan facilities (2)

      —        —         —        —         —        —         —        —   

Unsecured revolving credit facilities

      —        —         —        1.3        —        —         —        1.5  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total variable rate debt

      —        —         —        1.5        —        —         —        1.5  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total debt

      2,256,998       2,238,887        3.94 %      5.4        2,258,945       2,240,775        3.94 %      5.7  
    

 

 

     

 

 

    

 

 

       

 

 

     

 

 

    

 

 

  

Deferred financing costs, net

      (9,488 )              (10,052 )        

Debt discount

      (6,964 )              (7,159 )        
  

 

 

            

 

 

         

Total

    $ 2,240,546             $ 2,241,734         
  

 

 

            

 

 

         

 

Available Capacity

    Facility      Outstanding at
December 31,
2023		      Letters
of Credit		      Available
Capacity		  

Unsecured revolving credit facility (3)

    $ 850,000      $ —       $ —       $ 850,000  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

Covenant Summary

    Required     Current
Quarter		     In
Compliance		  

Maximum Total Leverage(4)

      < 60 %      31.5 %      Yes  

Maximum Secured Leverage (4)

      < 40 %      12.3 %      Yes  

Minimum Fixed Charge Coverage

      > 1.50x       3.3x       Yes  

Minimum Unencumbered Interest Coverage

      > 1.75x       5.7x       Yes  

Maximum Unsecured Leverage (4)

      < 60 %      23.4 %      Yes  

Notes:

 

(1)

SOFR is fixed at 2.562% for $175 million and 2.626% for $215 million under variable to fixed interest rate swap agreements, through debt maturity.

(2)

As of December 31, 2023, each of our unsecured term loan facilities are fixed under variable to fixed interest rate swap agreements.

(3)

The unsecured revolving credit and term loan facilities have an accordion feature allowing for an increase in maximum aggregate principal balance to $1.5 billion under certain circumstances. This unsecured revolving credit facility matures in March 2025 with two additional six-month extension options.

(4)

Represents the ratio of total indebtedness to total asset value as determined in accordance with the credit facility agreement.

 

Page 21

LOGO   

Fourth Quarter 2023

Debt Detail

(unaudited and dollars in thousands)

 

 

   

Stated

Interest

  

Effective

Interest

     Principal     ESRT Pro-rata
Share		     Maturity        
   

Rate (%)

   Rate (%) (1)     Balance     Percent     Amount     Date     Amortization  

Metro Center

   3.59%     3.67 %    $ 80,070       100 %    $ 80,070       11/5/2024       30 years  

10 Union Square

   3.70%     3.97 %      50,000       100 %      50,000       4/1/2026       Interest only  

1542 Third Avenue

   4.29%     4.53 %      30,000       100 %      30,000       5/1/2027       Interest only  

First Stamford Place (2)

   4.28%     4.73 %      175,860       100 %      175,860       7/1/2027      
 5 years interest only;
30 years thereafter		  
 

1010 Third Avenue & 77 West 55th St.

   4.01%     4.21 %      34,958       100 %      34,958       1/5/2028       30 years  

250 West 57th Street

   2.83%     3.21 %      180,000       100 %      180,000       12/1/2030       Interest only  

1333 Broadway

   4.21%     4.29 %      160,000       100 %      160,000       2/5/2033       Interest only  

345 East 94th Street - Series A

   70% of SOFR plus 0.95%     3.56 %      43,600       90 %      39,240       11/1/2030       Interest only  

345 East 94th Street - Series B

   SOFR plus 2.24%     3.56 %      7,209       90 %      6,488       11/1/2030       30 years  

561 10th Avenue - Series A

   70% of SOFR plus 1.07%     3.85 %      114,500       90 %      103,050       11/1/2033       Interest only  

561 10th Avenue - Series B

   SOFR plus 2.45%     3.85 %      15,801       90 %      14,221       11/1/2033       30 years  
     

 

 

      

 

 

      

Total fixed rate mortgage debt

         891,998         873,887      

Unsecured term loan facility

   SOFR plus 1.20%     4.22 %      215,000       100 %      215,000       3/19/2025       Interest only  

Unsecured revolving credit facility

   SOFR plus 1.30%     —        —        100 %      —        3/31/2025       Interest only  

Unsecured term loan facility

   SOFR plus 1.50%     4.51 %      175,000       100 %      175,000       12/31/2026       Interest only  

Senior unsecured notes:

              

Series A

   3.93%     3.96 %      100,000       100 %      100,000       3/27/2025       Interest only  

Series B

   4.09%     4.12 %      125,000       100 %      125,000       3/27/2027       Interest only  

Series C

   4.18%     4.21 %      125,000       100 %      125,000       3/27/2030       Interest only  

Series D

   4.08%     4.11 %      115,000       100 %      115,000       1/22/2028       Interest only  

Series E

   4.26%     4.27 %      160,000       100 %      160,000       3/22/2030       Interest only  

Series F

   4.44%     4.45 %      175,000       100 %      175,000       3/22/2033       Interest only  

Series G

   3.61%     4.89 %      100,000       100 %      100,000       3/17/2032       Interest only  

Series H

   3.73%     5.00 %      75,000       100 %      75,000       3/17/2035       Interest only  
 

 

  

 

 

    

 

 

      

 

 

      

Total / weighted average debt

   3.94%     4.20 %      2,256,998       $ 2,238,887      
 

 

  

 

 

    

 

 

      

 

 

      

Deferred financing costs, net

         (9,488 )         

Debt discount

         (6,964 )         
     

 

 

          

Total

       $ 2,240,546          
     

 

 

          

Notes:

(1)

The effective interest rate is composed of the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(2)

Represents a $164 million mortgage loan bearing interest at 4.09% and a $11.9 million mortgage loan bearing interest at 6.25%.

 

Page 22

LOGO   

Fourth Quarter 2023

Debt Maturities and Ground Lease Commitments

(unaudited and dollars in thousands)

 

 

Year

    Maturities (1)      Amortization      Total     ESRT
Pro-rata
Share		      Percentage of
Total Debt		     Weighted
Average
Interest
Rate of
Maturing Debt		  

2024

    $ 77,675      $ 8,861      $ 86,536     $ 86,288        3.9 %      3.59 % 

2025

      315,000        6,893        321,893       321,621        14.4 %      3.86 % 

2026

      225,000        7,330        232,330       232,033        10.4 %      3.98 % 

2027

      319,000        6,461        325,461       325,136        14.5 %      4.21 % 

2028

      146,092        3,556        149,648       149,292        6.7 %      4.06 % 

2029

      —         3,988        3,988       3,589        0.2 %      n/a  

2030

      508,600        4,413        513,013       508,212        22.7 %      3.67 % 

2031

      —         3,283        3,283       2,955        0.1 %      n/a  

2032

      100,000        3,591        103,591       103,231        4.6 %      3.61 % 

2033

      439,007        3,248        442,255       431,530        19.3 %      4.20 % 

Thereafter

      75,000        —         75,000       75,000        3.2 %      3.73 % 
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total debt

    $ 2,205,374      $ 51,624        2,256,998     $ 2,238,887        100.0 %      3.94 % 
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Deferred financing costs, net

            (9,488 )        

Debt discount

            (6,964 )        
        

 

 

         

Total

          $ 2,240,546         
        

 

 

         

Debt Maturity Profile (2)

 

LOGO

Ground Lease Commitments (3)

 

Year

    1350
Broadway (4)		      1400
Broadway (5)		      111 West
33rd Street (6)		      Total  

2024

    $ 108      $ 675      $ 735      $ 1,518  

2025

      108        675        735        1,518  

2026

      93        675        735        1,503  

2027

      72        675        735        1,482  

2028

      72        675        735        1,482  

Thereafter

      1,584        23,625        35,586        60,795  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 2,037      $ 27,000      $ 39,261      $ 68,298  
  

 

 

     

 

 

     

 

 

     

 

 

  

Notes:

(1)

Assumes no extension options are exercised.

(2)

The table reflects ESRT’s pro-rata share of debt maturities.

(3)

There are no fair value market resets, no step-ups, and no escalations in the three ground lease commitments.

(4)

Expires July 31, 2050 with a remaining term, including unilateral extension rights available to the Company, of approximately 27 years.

(5)

Expires December 31, 2063 with a remaining term, including unilateral extension rights available to the Company, of approximately 40 years.

(6)

Expires May 31, 2077 with a remaining term, including unilateral extension rights available to the Company, of approximately 54 years.

 

Page 23

v3.24.0.1
Cover
Feb. 20, 2024
Entity Information [Line Items]  
Document Type 8-K
Amendment Flag false
Document Period End Date Feb. 20, 2024
Entity Registrant Name EMPIRE STATE REALTY TRUST, INC.
Entity Incorporation, State or Country Code MD
Entity File Number 001-36105
Entity Tax Identification Number 37-1645259
Entity Address, Address Line One 111 West 33rd Street
Entity Address, Address Line Two 12th Floor
Entity Address, City or Town New York
Entity Address, State or Province NY
Entity Address, Postal Zip Code 10120
City Area Code 212
Local Phone Number 687-8700
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0001541401
Common Class A  
Entity Information [Line Items]  
Title of 12(b) Security Class A Common Stock, par value $0.01 per share
Trading Symbol ESRT
Security Exchange Name NYSE
Empire State Realty OP, LP  
Entity Information [Line Items]  
Entity Registrant Name EMPIRE STATE REALTY OP, L.P.
Entity Incorporation, State or Country Code DE
Entity File Number 001-36106
Entity Tax Identification Number 45-4685158
Entity Central Index Key 0001553079
Empire State Realty OP, LP | Series ES Operating Partnership Units  
Entity Information [Line Items]  
Title of 12(b) Security Series ES Operating Partnership Units
Trading Symbol ESBA
Security Exchange Name NYSEArca
Empire State Realty OP, LP | Series 60 Operating Partnership Units  
Entity Information [Line Items]  
Title of 12(b) Security Series 60 Operating Partnership Units
Trading Symbol OGCP
Security Exchange Name NYSEArca
Empire State Realty OP, LP | Series 250 Operating Partnership Units  
Entity Information [Line Items]  
Title of 12(b) Security Series 250 Operating Partnership Units
Trading Symbol FISK
Security Exchange Name NYSEArca
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