0001193125-20-202628.txt : 20200729 0001193125-20-202628.hdr.sgml : 20200729 20200729170230 ACCESSION NUMBER: 0001193125-20-202628 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 20200727 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20200729 DATE AS OF CHANGE: 20200729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Empire State Realty Trust, Inc. CENTRAL INDEX KEY: 0001541401 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 371645259 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36105 FILM NUMBER: 201057815 BUSINESS ADDRESS: STREET 1: 111 WEST 33RD STREET, 12TH FL CITY: NEW YORK STATE: NY ZIP: 10120 BUSINESS PHONE: 212-953-0888 MAIL ADDRESS: STREET 1: 111 WEST 33RD STREET, 12TH FL CITY: NEW YORK STATE: NY ZIP: 10120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Empire State Realty OP, L.P. CENTRAL INDEX KEY: 0001553079 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 454685158 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36106 FILM NUMBER: 201057814 BUSINESS ADDRESS: STREET 1: 111 WEST 33RD STREET, 12TH FL CITY: NEW YORK STATE: NY ZIP: 10120 BUSINESS PHONE: 212-953-0888 MAIL ADDRESS: STREET 1: 111 WEST 33RD STREET, 12TH FL CITY: NEW YORK STATE: NY ZIP: 10120 8-K 1 d39482d8k.htm 8-K 8-K
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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): July 27, 2020
 
 
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 July 29, 2020, Empire State Realty Trust, Inc. (the “Company” or “we”) issued a press release announcing its financial results for the second quarter 2020. 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.
 
Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In view of the ongoing impact of the
COVID-19
pandemic on the Company and Empire State Realty OP, L.P., the limited partnership through which the Company conducts its operations, each of Anthony E. Malkin, Chairman, President and Chief Executive Officer, and Thomas P. Durels, Executive Vice President, Real Estate, has volunteered to reduce his annual base salary for the remainder of 2020, effective August 1, 2020 through December 31, 2020. Mr. Malkin’s salary will be reduced by
one-third
(1/3
rd
), so that his new base salary rate is $540,000 (instead of $810,000) per annum, and Mr. Durels’ salary will be reduced by
one-fourth
(1/4
th
), so that his new base salary rate is $525,000 (instead of $700,000) per annum. Mr. Malkin’s base salary reduction is in addition to the salary reduction to $1.00 that he voluntarily took for the second quarter of 2020, as announced in the Company’s Current Report on
Form 8-K
dated May 11, 2020.
Additionally, each of Mr. Malkin and Mr. Durels has voluntarily agreed to reduce his long-term equity incentive compensation target for 2021, so that the value of equity awards to be granted to him in 2021 in the discretion of the Compensation Committee under the Company’s 2019 Equity Incentive Plan will be not greater than 66% of the value of comparable equity awards issued to him under such Plan in 2020; and as a result, the 2021 grants to these two executives would be reduced from 2020 levels by at least $3,9
1
2,082, as follows:
 
Grantee
   2020 Time-
based LTI
equity
     New Cap on
2021 Time
based LTI
equity
     2020
Performance-
based LTI equity
max
     New Cap on
2021
Performance-
based LTI equity
max
     Reduction in
LTI equity
from 2020 to
2021 will be at
least
 
Anthony E. Malkin
   $ 2,731,714      $ 1,823,178      $ 5,467,500      $ 3,646,357      $ 2,731,713  
Thomas P, Durels
   $ 1,181,250      $ 787,793      $ 2,632,500      $ 1,575,586      $ 1,180,369  
           
 
TOTAL
REDUCTION
 
 
  
$
3,9
12
,082
 
These compensation reductions will not modify other rights under Mr. Malkin’s Amended and Restated Employment Agreement with the Company, dated as of October 7, 2013, as amended by the First Amendment thereto, or Mr. Durels’ Amended and Restated Change In Control Severance Agreement with the Company, dated April 5, 2016, in each case including those rights that are determined by reference to base salary.
 
2

Item 7.01.
Regulation FD Disclosure
As discussed in Item 2.02 above, the Company issued a press release regarding its financial results for the second quarter 2020 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 second quarter 2020
99.2    Supplemental report
104    Cover Page 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 writedowns 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, 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
 
3

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 consider 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 consider it 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 and severance expenses. The Company presents Core FFO because it considers it an important supplemental measure of its operating performance in that 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.
 
4

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, recurring second generation leasing commissions, tenant improvements, prebuilts, capital expenditures, furniture, fixtures & equipment purchases, amortization of debt premiums and above/below market rent revenue. 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”)
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 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. However, the usefulness of NOI is limited because it excludes general and administrative
 
5

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 may fail to capture significant trends in these components of net income which further limits its usefulness. NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income computed in accordance with. Other companies may use different methods for calculating NOI or similarly titled measures and, accordingly, our NOI may not be comparable to similarly titled measures reported by other companies that do not define the measure exactly as we do.
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.
 
6

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: July 29, 2020     By:  
/s/ Christina Chiu
    Name:   Christina Chiu
    Title:   Executive Vice President and Chief Financial 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: July 29, 2020     By:  
/s/ Christina Chiu
    Name:   Christina Chiu
    Title:   Executive Vice President and Chief Financial Officer
 
7
EX-99.1 2 d39482dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

EMPIRE STATE REALTY TRUST ANNOUNCES SECOND QUARTER 2020 RESULTS

- Net loss of $0.07 Per Fully Diluted Share -

- Core FFO of $0.14 Per Fully Diluted Share -

- $0.9 Billion in Cash On Hand -

- Collections Improved -

- Observatory Reopened -

- Meaningful Cost Reduction Measures -

New York, New York, July 29, 2020—Empire State Realty Trust, Inc. (NYSE: ESRT) (the “Company”), a real estate investment trust with office and retail properties in Manhattan and the greater New York metropolitan area, today reported its operational and financial results for the second quarter of 2020.

“Our team has been effective in our responses to the challenges of the second quarter. Our balance sheet remains strong and flexible, rent collections have improved, the Observatory is reopened, and we have additionally reduced the Company’s costs,” stated Anthony E. Malkin, Empire State Realty Trust’s Chairman, President and Chief Executive Officer. “ESRT colleagues have successfully navigated new protocols for return to work for themselves and for our tenants. Our focus for more than a decade on Indoor Environmental Quality in our office, retail, and public spaces has given us a competitive advantage in our ability to address concerns about tenant and visitor health.”

Second Quarter and Recent Highlights

 

   

Net loss attributable to the Company was $0.07 per fully diluted share.

 

   

After a $0.03 per share reserve against tenant receivables and non-cash reduction in straight line rent balances, Core Funds From Operations (“Core FFO”) was $0.14 per fully diluted share.

 

   

Same Store Property Cash NOI excluding lease termination fees was up 18.0% from the second quarter 2019 primarily driven by lower property operating expenses, partially offset by a reserve against tenant receivables. When COVID-related rent deferrals are excluded, Same Store Property Cash NOI increased 9.9% from the second quarter 2019.

 

   

Strong liquidity position with $1.4 billion of total liquidity as of June 30, 2020, which consists of $873 million of cash plus an additional $550 million available under its revolving credit facility.

 

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LOGO

 

   

The Company repurchased $52 million of its common stock shares at a weighted average price of $7.99 per share in the second quarter, and year-to-date through July 28, 2020, the Company repurchased $119 million of common stock at a weighted average share price of $8.67.

 

   

For the total portfolio in the second quarter, we signed 19 new, renewal, and expansion leases, representing 113,431 rentable square feet at an average starting rental rate of $64.43 per rentable square foot.

 

   

Collected 84% of second quarter 2020 total billings with 86% for office tenants and 75% for retail tenants. Through July 24, 2020, collected 90% of July total billings, with 93% for office tenants and 75% for retail tenants.

 

   

The Empire State Building Observatory remained closed during the entire second quarter and reopened on July 20, 2020.

 

   

Declared a dividend of $0.105 per share.

 

   

Announced the appointment of Christina Chiu to EVP and CFO, Aaron D. Ratner to SVP and CIO, and the departure of John B. Kessler. On July 13, 2020, the Company announced the appointment of R. Paige Hood to its Board of Directors, effective August 1, 2020, and the departure of William H. Berkman, effective July 31, 2020.

 

   

Reduced expected full year G&A by approximately 12% from the previously disclosed 2020 G&A run rate of $68 million to $60 million, excluding one-time severance charges.

 

   

Reduced property operating expenses by $10 million in the second quarter 2020 from the prior year period and expect further to reduce expenses by $12 million in the second half of 2020.

 

   

Reduced required capital expenditures planned for 2020.

 

   

Reduced annual base salary for Anthony E. Malkin, the Company’s Chairman, President and CEO, and Thomas P. Durels, EVP Real Estate, by 33% and 25%, respectively, effective August 1 through the remainder of 2020. This is in addition to Mr. Malkin’s base salary reduction to $1.00 for the second quarter of 2020.

 

   

Reduced 2021 NEO annual equity compensation by $3.9 million, comprised of a $2.7 million reduction for Mr. Malkin and $1.2 million reduction for Mr. Durels.

 

2


LOGO

 

Investor Presentation Update

The Company has posted on the “Investors” section of its website (www.empirestaterealtytrust.com) the latest investor presentation which contains information on the current impact of the COVID-19 pandemic on its businesses, financial condition and results of operations.

Portfolio Operations

As of June 30, 2020, the Company’s total portfolio contained 10.1 million rentable square feet which consisted of 9.4 million rentable square feet of office space and 0.7 million rentable square feet of retail space. As of June 30, 2020, the Company’s portfolio was occupied and leased as shown below. The Company’s occupancy levels fluctuate in certain periods due to the timing lag between the date of tenants’ move out and the date of the Company’s completion of redevelopment work for new leases to commence. Leased percentages include signed leases not commenced.

 

     June 30, 2020     March 31, 2020     June 30, 2019  

Percent occupied:

      

Total portfolio

     85.6     88.7     90.2

Total office

     85.5     88.7     90.1

Manhattan office

     87.0     90.0     90.7

Empire State Building

     86.1     93.7     93.5

Retail

     87.4     88.5     90.5

Percent leased:

      

Total portfolio

     89.6     91.1     92.2

Total office

     89.4     90.9     92.2

Manhattan office

     91.5     92.6     93.0

Empire State Building

     93.5     95.4     95.2

Retail

     93.4     94.0     92.3

 

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LOGO

 

Rent Collections

The Company has experienced steady monthly improvement in the collection of its property billings. The Company has collected the following:

 

Collections as of 7/23/20201

   Overall     Office     Retail  

April

     86     86     84

May

     83     85     73

June

     83     85     69

July

     90     93     75

Collections with Application of Security Deposits2
(as of 7/23/2020)

   Overall     Office     Retail  

April

     96     97     92

May

     94     96     84

June

     93     96     77

July

     96     98     84

The Company took a $9.1 million total reduction in revenue comprised of a $1.9 million reserve against tenant receivables and $7.2 million non-cash reduction of straight line rent balances. This equates to 1.6% of our annualized rental revenue as of June 30, 2020 or a $0.03 per share impact.

 

1 

Collections against total billings, not adjusted for deferral agreements or application of security deposits

2 

Collections against total billings, not adjusted for deferral agreements and reflects applied and potential application of security deposits

 

4


LOGO

 

Leasing

Leasing activity was substantially impacted during the second quarter due to the impact of the COVID-19 pandemic. The below tables summarize leasing activity for the three months ended June 30, 2020:

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
previously
escalated rents
 

Office

     17        99,229      $ 52.82      $ 51.40        2.8

Retail

     2        14,202      $ 145.58      $ 158.58        (8.2 %) 

Total Overall

     19        113,431      $ 64.43      $ 64.82        (0.6 %) 

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
previously
escalated rents
 

New Office

     4        24,859      $ 66.94      $ 61.55        8.7

Renewal Office

     8        27,123      $ 58.35      $ 58.39        (0.1 %) 

Total Office

     12        51982      $ 62.46      $ 59.90        4.3

First Half Observatory Results and Reopening

Observatory revenue for January and February 2020 increased 13.2% year-over-year, after adjusting for the 102nd floor observation deck, which was closed for redevelopment in first quarter 2019 and re-opened in the fourth quarter 2019. In compliance with the requirements of authorities, the Company closed the Empire State Building Observatory on March 16, 2020 due to the COVID-19 pandemic.

The Observatory was closed for the entirety of the second quarter 2020 and reopened on July 20, 2020. Key highlights, as noted in our July 13th reopening press release, are as follows:

 

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LOGO

 

   

For the first few weeks, hours of operation will be reduced to 8:00 a.m. to 11:00 p.m.

 

   

To avoid crowds that will compromise social distancing, tickets for set times must be purchased at www.esbnyc.com, and initial capacity has been limited to 500 guests in the Observatory’s 70,000 square foot space at a time – well below the capacity limits set forth by authorities.

 

   

Indoor Environmental Quality components of the Observatory’s redevelopment include MERV-13 air filters, AtmosAir air purification and constant ventilation through the introduction of fresh air to, and the exhaust interior air from, the Observatory. MERV-13 filters and ventilation are the standard in all ESRT’s new office and retail installations, and AtmosAir can be added to new spaces or retrofitted into existing spaces at the tenant’s request.

 

   

We have posted our complete Observatory reopening protocols on www.esbnyc.com/safety for the public to view, both to give our guests confidence and to help guide other attractions in best practices.

Balance Sheet

The Company continues to maintain a strong liquidity position with $1.4 billion of total liquidity as of June 30, 2020, which is comprised of $873.0 million of cash, plus an additional $550.0 million available under its revolving credit facility.

At June 30, 2020, the Company had total debt outstanding of approximately $2.5 billion, with a weighted average interest rate of 3.41% per annum, and a weighted average term to maturity of 6.9 years. At June 30, 2020, the Company’s net debt to total market capitalization was 43.7% and net debt to EBITDA was 5.2x.

The Company repurchased $52 million of its common stock at a weighted average price of $7.99 per share in the second quarter and year-to-date through July 28, 2020, the Company repurchased a total of $119 million of its common stock at a weighted average share price of $8.67 per share, through a combination of open-market purchases and the execution of a 10b5-1 program.

 

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Personnel Changes

The Company made several personnel changes to position itself for ESRT version 2.0. This builds upon earlier hires and appointments in areas such as technology, energy efficiency and sustainability, and ESG with:

 

   

Appointment of Christina Chiu as Executive Vice President and Chief Financial Officer to lead the Company’s finance function and support our growth initiatives;

 

   

Appointment of Aaron D. Ratner as Senior Vice President and Chief Investment Officer to build our external growth team;

 

   

Departure of John B. Kessler and elimination of the Chief Operating Officer position; and

 

   

Refreshment of the Board of Directors with the arrival of R. Paige Hood and departure of William H. Berkman.

Expense Reductions

The Company has undertaken meaningful cost reduction measures to ensure its ongoing strength and position the business optimally through the current environment, which result in expected full year 2020 G&A of $60 million, excluding one-time severance charges. This is approximately 12% less than the previously disclosed G&A run rate of $68 million, broken down as follows:

 

   

Named Executive Officer compensation:

 

   

($0.4) million from reduction in annual base salary for Anthony E. Malkin and Thomas P. Durels through December 31, 2020;

 

   

($1.2) million from the change in age requirement from 60 to 65 for the accounting vesting period for time-based equity compensation; and

 

   

($2.7) million from the departure of our former Chief Operating Officer.

 

   

Other corporate overhead:

 

   

($1.5) million of net changes from the addition of investment personnel and reductions in executive and corporate staff, and temporary corporate salary reductions through December 31, 2020; and

 

   

Balance from department budget cuts and lower anticipated spending due to COVID-19.

 

   

In addition, the Company announced a $3.9 million reduction in 2021 NEO annual equity compensation, comprised of a $2.7 million reduction for Mr. Malkin and $1.2 million reduction for Mr. Durels. We currently expect 2021 G&A of approximately $58 million and will continue to seek efficiencies and cost reduction opportunities in operating our business.

 

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Property operating expenses

 

   

$12 million in one-time operating expense savings for 2H 2020 from additional cost reduction efforts.

 

   

$4 million on an annualized basis of permanent cost reductions due to staffing and other reductions.

 

   

Capital expenditures

 

   

$24 million in lower planned 2020 capital expenditures for buildings improvements compared to 2019 due to focus only on mandatory spending and work previously commenced.

Other Items

The Company recognized the following one-time expenses during the quarter:

 

   

A $4.1 million non-cash write-off of prior capitalized expenditures on a combined heat and power generation project for the Empire State Building that has been rendered economically unfeasible due to New York City’s new Local Law 97; and

 

   

A $3.0 million one-time charge in general and administrative expenses related to the departure of our former Chief Operating Officer, of which $2.7 million is the non-cash accelerated vesting of equity compensation.

Dividend

On June 30, 2020, the Company paid a dividend of $0.105 per share, or unit as applicable, for the second quarter 2020 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”). The Company paid a dividend of $0.15 per unit for the second quarter 2020 to holders of the Operating Partnership’s Series 2014 private perpetual preferred units and a dividend of $0.175 per unit for the second quarter 2020 to holders of the Operating Partnership’s Series 2019 private perpetual preferred units.

 

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Webcast and Conference Call Details

Empire State Realty Trust, Inc. will host a webcast and conference call, open to the general public, on Thursday, July 30, 2020 at 1:00 pm Eastern time.

The webcast will be accessible on the “Investors” section of the Company’s website at www.empirestaterealtytrust.com. 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. Shortly after the call, a replay of the webcast will be available for 90 days on the Company’s website.

The conference call can also be accessed by dialing 1-877-407-3982 for domestic callers or 1-201-493-6780 for international callers. A dial-in replay will be available starting shortly after the call until August 6, 2020, which can be accessed 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 13706424.

The Supplemental Report and Investor Presentation are integral components of quarterly earnings announcement and are now available on the “Investors” section of the Company’s website at www.empirestaterealtytrust.com.

The Company uses, and intends to continue to use, the Investors page of its website, which can be found at www.empirestaterealtytrust.com, as a means of disclosing material nonpublic information and of complying 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.

About Empire State Realty Trust

Empire State Realty Trust, Inc. (NYSE: ESRT), a leading real estate investment trust (REIT), owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building, the world’s most famous building.

 

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Headquartered in New York, New York, the Company’s office and retail portfolio covers 10.1 million rentable square feet, as of June 30, 2020, consisting of 9.4 million rentable square feet in 14 office properties, including nine in Manhattan, three in Fairfield County, Connecticut, and two in Westchester County, New York; and approximately 700,000 rentable square feet in the retail portfolio.

Forward-Looking Statements

This press release includes “forward looking statements” within the meaning of the federal securities laws. Forward-looking statements may be identified by the use of words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “contemplates,” “aims,” “continues,” “would” or “anticipates” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: (i) economic, political and social impact of, and uncertainty relating to, the COVID-19 pandemic, including (a) the effectiveness or lack of effectiveness of governmental relief in providing assistance to businesses that have suffered significant declines in revenues as a result of mandatory business shut-downs, “shelter-in-place” or “stay-at-home” orders and social distancing practices, as well as individuals adversely impacted by the COVID-19 pandemic, (b) the duration of any such orders or other formal recommendations for social distancing and the speed and extent to which revenues of the Company’s tenants, particularly retail, and the Observatory recover following the lifting of any such orders or recommendations, (c) the potential impact of any such events on the obligations of the Company’s tenants to make rent and other payments or honor other commitments, including such tenants’ ability to pay rent following the termination of temporary governmental assistance and benefits programs, (d) government moratoriums and/or limits (including temporary closure of certain court systems) which directly or indirectly abridge the enforcement of lease obligations and related guarantees, (e) the potential impact on the Company’s human capital management, including restrained productivity associated with work-from-home and risks associated with employees returning to the office, (f) international and national disruption of travel and tourism with a resulting decline in Observatory visitors, and (g) macroeconomic conditions, such as a disruption of, or lack of access to, the capital markets, and general volatility adversely impacting the market price of the Company’s Class A common stock and publicly-traded partnership units of the Operating Partnership; (ii) resolution of legal proceedings involving the Company; (iii) reduced demand for office or retail space, including as a result of the COVID-19 pandemic; (iv) changes in our business strategy; (v) changes in technology and market competition that

 

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affect utilization of our office, retail, broadcast or other facilities; (vi) changes in domestic or international tourism, including due to health crises such as the COVID-19 pandemic, geopolitical events and/or currency exchange rates, which may cause a decline in Observatory visitors; (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, including the potential phasing out of LIBOR after 2021; (ix) declining real estate valuations and impairment charges; (x) termination or expiration of our ground leases; (xi) changes in our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due and potential limitations on our ability to borrow additional funds in compliance with drawdown conditions and financial covenants; (xii) decreased rental rates or increased vacancy rates; (xiii) our failure to redevelop and reposition properties, or to execute any newly planned capital project successfully or on the anticipated timeline or at the anticipated costs; (xiv) difficulties in identifying properties to acquire and completing acquisitions; (xv) risks related to our development projects (including our Metro Tower development site) and capital projects, including the cost of construction delays and cost overruns; (xvi) impact of changes in governmental regulations, tax laws and rates and similar matters; (xvii) our failure to qualify as a REIT; and (xviii) environmental uncertainties and risks related to adverse weather conditions, rising sea levels and natural disasters. 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” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.

While forward-looking statements reflect the Company’s good faith beliefs, they are not guarantees of future performance. The Company disclaims any 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 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).

 

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Contact:

Investors

Empire State Realty Trust Investor Relations

(212) 850-2678

IR@empirestaterealtytrust.com

Media

Sard Verbinnen & Co.

(212) 687-8080

 

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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 June 30,  
     2020      2019  

Revenues

     

Rental revenue

   $ 137,999      $ 141,071  

Observatory revenue

     86        32,895  

Lease termination fees

     1,033        363  

Third-party management and other fees

     301        331  

Other revenue and fees

     1,611        1,584  
  

 

 

    

 

 

 

Total revenues

     141,030        176,244  

Operating expenses

     

Property operating expenses

     29,750        40,227  

Ground rent expenses

     2,332        2,332  

General and administrative expenses

     18,149        15,998  

Observatory expenses

     4,002        8,360  

Real estate taxes

     29,579        28,267  

Impairment charge

     4,101        —    

Depreciation and amortization

     52,783        44,821  
  

 

 

    

 

 

 

Total operating expenses

     140,696        140,005  
  

 

 

    

 

 

 

Total operating income

     334        36,239  

Other income (expense):

     

Interest income

     1,526        3,899  

Interest expense

     (23,928)        (20,597)  

Loss on early extinguishment of debt

     —          —    
  

 

 

    

 

 

 

Income (loss) before income taxes

     (22,068)        19,541  

Income tax benefit (expense)

     2,450        (611)  
  

 

 

    

 

 

 

Net income (loss)

     (19,618)        18,930  

Preferred unit distributions

     (1,047)        (234)  

Net (income) loss attributable to non-controlling interests

     7,872        (7,609)  
  

 

 

    

 

 

 

Net income (loss) attributable to common stockholders

   $ (12,793)      $ 11,087  
  

 

 

    

 

 

 

Total weighted average shares

     

Basic

     175,433        176,796  
  

 

 

    

 

 

 

Diluted

     283,384        298,131  
  

 

 

    

 

 

 

Net income (loss) per share attributable to common stockholders

 

Basic

   $ (0.07)      $ 0.06  
  

 

 

    

 

 

 

Diluted

   $ (0.07)      $ 0.06  
  

 

 

    

 

 

 

 

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Empire State Realty Trust, Inc.  
Condensed Consolidated Statements of Operations  
(unaudited and amounts in thousands, except per share data)  
     Six Months Ended June 30,  
     2020      2019  

Revenues

     

Rental revenue

   $ 286,112      $ 284,488  

Observatory revenue

     19,630        53,464  

Lease termination fees

     1,244        751  

Third-party management and other fees

     647        651  

Other revenue and fees

     3,621        4,183  
  

 

 

    

 

 

 

Total revenues

     311,254        343,537  

Operating expenses

     

Property operating expenses

     71,218        83,182  

Ground rent expenses

     4,663        4,663  

General and administrative expenses

     34,100        30,024  

Observatory expenses

     12,156        15,935  

Real estate taxes

     58,833        56,499  

Impairment charge

     4,101        —    

Depreciation and amortization

     98,876        90,919  
  

 

 

    

 

 

 

Total operating expenses

     283,947        281,222  
  

 

 

    

 

 

 

Total operating income

     27,307        62,315  

Other income (expense):

     

Interest income

     2,163        7,638  

Interest expense

     (43,546)        (41,286)  

Loss on early extinguishment of debt

     (86)        —    
  

 

 

    

 

 

 

Income (loss) before income taxes

     (14,162)        28,667  

Income tax benefit

     2,832        119  
  

 

 

    

 

 

 

Net income (loss)

     (11,330)        28,786  

Preferred unit distributions

     (2,097)        (468)  

Net (income) loss attributable to non-controlling interests

     5,129        (11,554)  
  

 

 

    

 

 

 

Net income (loss) attributable to common stockholders

   $ (8,298)      $ 16,764  
  

 

 

    

 

 

 

Total weighted average shares

     

Basic

     178,029        176,495  
  

 

 

    

 

 

 

Diluted

     288,015        298,100  
  

 

 

    

 

 

 

Net income (loss) per share attributable to common stockholders

 

Basic

   $ (0.05)      $ 0.09  
  

 

 

    

 

 

 

Diluted

   $ (0.05)      $ 0.09  
  

 

 

    

 

 

 

 

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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 June 30,  
     2020     2019  

Net income (loss)

   $ (19,618   $ 18,930  

Preferred unit distributions

     (1,047     (234

Real estate depreciation and amortization

     51,096       43,822  

Impairment charge

     4,101       —    
  

 

 

   

 

 

 

FFO attributable to common stockholders and non-controlling interests

     34.532       62,518  

Amortization of below-market ground leases

     1,958       1,958  
  

 

 

   

 

 

 

Modified FFO attributable to common stockholders and non-controlling interests

     36.490       64,476  

Loss on early extinguishment of debt

     —         —    

Severance expenses

     3,008       —    
  

 

 

   

 

 

 

Core FFO attributable to common stockholders and non-controlling interests

   $ 39,498     $ 64,476  
  

 

 

   

 

 

 

Total weighted average shares

    

Basic

     283,384       298,131  
  

 

 

   

 

 

 

Diluted

     283,384       298,131  
  

 

 

   

 

 

 

FFO per share

    

Basic

   $ 0.12     $ 0.21  
  

 

 

   

 

 

 

Diluted

   $ 0.12     $ 0.21  
  

 

 

   

 

 

 

Modified FFO per share

    

Basic

   $ 0.13     $ 0.22  
  

 

 

   

 

 

 

Diluted

   $ 0.13     $ 0.22  
  

 

 

   

 

 

 

Core FFO per share

    

Basic

   $ 0.14     $ 0.22  
  

 

 

   

 

 

 

Diluted

   $ 0.14     $ 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)

 

     Six Months Ended June 30,  
     2020     2019  

Net income (loss)

   $ (11,330   $ 28,786  

Preferred unit distributions

     (2,097     (468

Real estate depreciation and amortization

     95,526       88,914  

Impairment charge

     4,101       —    
  

 

 

   

 

 

 

FFO attributable to common stockholders and non-controlling interests

     86,200       117,232  

Amortization of below-market ground leases

     3,916       3,916  
  

 

 

   

 

 

 

Modified FFO attributable to common stockholders and non-controlling interests

     90,116       121,148  

Loss on early extinguishment of debt

     86       —    

Severance expenses

     3,008       —    
  

 

 

   

 

 

 

Core FFO attributable to common stockholders and non-controlling interests

   $ 93,210     $ 121,148  
  

 

 

   

 

 

 

Total weighted average shares

    

Basic

     288,015       298,100  
  

 

 

   

 

 

 

Diluted

     288,015       298,100  
  

 

 

   

 

 

 

FFO per share

    

Basic

   $ 0.30     $ 0.39  
  

 

 

   

 

 

 

Diluted

   $ 0.30     $ 0.39  
  

 

 

   

 

 

 

Modified FFO per share

    

Basic

   $ 0.31     $ 0.41  
  

 

 

   

 

 

 

Diluted

   $ 0.31     $ 0.41  
  

 

 

   

 

 

 

Core FFO per share

    

Basic

   $ 0.32     $ 0.41  
  

 

 

   

 

 

 

Diluted

   $ 0.32     $ 0.41  
  

 

 

   

 

 

 

 

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Empire State Realty Trust, Inc.

Condensed Consolidated Balance Sheets

(unaudited and amounts in thousands)

 

     June 30, 2020     December 31, 2019  

Assets

    

Commercial real estate properties, at cost

   $ 3,125,049     $ 3,109,433  

Less: accumulated depreciation

     (911,546     (862,534
  

 

 

   

 

 

 

Commercial real estate properties, net

     2,213,503       2,246,899  

Cash and cash equivalents

     872,970       233,946  

Restricted cash

     58,878       37,651  

Tenant and other receivables

     29,800       25,423  

Deferred rent receivables

     226,444       220,960  

Prepaid expenses and other assets

     68,109       65,453  

Deferred costs, net

     211,356       228,150  

Acquired below market ground leases, net

     348,651       352,566  

Right of use assets

     29,205       29,307  

Goodwill

     491,479       491,479  
  

 

 

   

 

 

 

Total assets

   $ 4,550,395     $ 3,931,834  
  

 

 

   

 

 

 

Liabilities and equity

    

Mortgage notes payable, net

   $ 603,974     $ 605,542  

Senior unsecured notes, net

     973,053       798,392  

Unsecured term loan facility, net

     387,059       264,640  

Unsecured revolving credit facility, net

     546,778       —    

Accounts payable and accrued expenses

     104,992       143,786  

Acquired below market leases, net

     35,170       39,679  

Ground lease liabilities

     29,205       29,307  

Deferred revenue and other liabilities

     62,996       72,015  

Tenants’ security deposits

     51,130       30,560  
  

 

 

   

 

 

 

Total liabilities

     2,794,357       1,983,921  

Total equity

     1,756,038       1,947,913  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 4,550,395     $ 3,931,834  
  

 

 

   

 

 

 

 

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EX-99.2 3 d39482dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

 

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   Second Quarter 2020

 

Table of Contents

   Page  

Summary

  

Company Profile

     3  

Financial Highlights

     4  

Selected Property Data

  

Property Summary Net Operating Income

     5  

Net Operating Income and Initial Free Rent Burn-Off

     6  

Leasing Activity

     7  

Portfolio Expirations and Vacates Summary

     9  

Property Detail

     10  

Tenant Lease Expirations

     11  

Largest Tenants and Portfolio Tenant Diversification by Industry

     14  

Capital Expenditures and Redevelopment Program

     15  

Observatory Summary

     16  

Financial information

  

Condensed Consolidated Balance Sheets

     17  

Condensed Consolidated Statements of Operations

     18  

Core FFO, Modified FFO, FFO, FAD and EBITDA

     19  

Consolidated Debt Analysis

  

Debt Summary

     20  

Debt Detail

     21  

Debt Maturities

     22  

Ground Leases

     22  

Supplemental Definitions

     23  

Forward-looking Statements

This presentation includes “forward looking statements” within the meaning of the federal securities laws. Forward-looking statements may be identified by the use of words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “contemplates,” “aims,” “continues,” “would” or “anticipates” or the negative of these words and phrases or similar words or phrases.

The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: (i) economic, political and social impact of, and uncertainty relating to, the COVID-19 pandemic, including (a) the effectiveness or lack of effectiveness of governmental relief in providing assistance to businesses that have suffered significant declines in revenues as a result of mandatory business shut-downs, “shelter-in-place” or “stay-at-home” orders and social distancing practices, as well as individuals adversely impacted by the COVID-19 pandemic, (b) the duration of any such orders or other formal recommendations for social distancing and the speed and extent to which revenues of the Company’s tenants, particularly retail, and the Observatory recover following the lifting of any such orders or recommendations, (c) the potential impact of any such events on the obligations of the Company’s tenants to make rent and other payments or honor other commitments, including such tenants’ ability to pay rent following the termination of temporary governmental assistance and benefits programs, (d) government moratoriums and/or limits (including temporary closure of certain court systems) which directly or indirectly abridge the enforcement of lease obligations and related guarantees, (e) the potential impact on the Company’s human capital management, including restrained productivity associated with work-from-home and risks associated with employees returning to the office, (f) international and national disruption of travel and tourism with a resulting decline in Observatory visitors, and (g) macroeconomic conditions, such as a disruption of, or lack of access to, the capital markets, and general volatility adversely impacting the market price of the Company’s Class A common stock and publicly-traded partnership units of the Operating Partnership; (ii) resolution of legal proceedings involving the Company; (iii) reduced demand for office or retail space, including as a result of the COVID-19 pandemic; (iv) changes in our business strategy; (v) changes in technology and market competition that affect utilization of our office, retail, broadcast or other facilities; (vi) changes in domestic or international tourism, including due to health crises such as the COVID-19 pandemic, geopolitical events and/or currency exchange rates, which may cause a decline in Observatory visitors; (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, including the potential phasing out of LIBOR after 2021; (ix) declining real estate valuations and impairment charges; (x) termination or expiration of our ground leases; (xi) changes in our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due and potential limitations on our ability to borrow additional funds in compliance with drawdown conditions and financial covenants; (xii) decreased rental rates or increased vacancy rates; (xiii) our failure to redevelop and reposition properties, or to execute any newly planned capital project successfully or on the anticipated timeline or at the anticipated costs; (xiv) difficulties in identifying properties to acquire and completing acquisitions; (xv) risks related to our development projects (including our Metro Tower development site) and capital projects, including the cost of construction delays and cost overruns; (xvi) impact of changes in governmental regulations, tax laws and rates and similar matters; (xvii) our failure to qualify as a REIT; and (xviii) environmental uncertainties and risks related to adverse weather conditions, rising sea levels and natural disasters. 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” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.

While forward-looking statements reflect the Company’s good faith beliefs, they are not guarantees of future performance. The Company disclaims any 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 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).

 

Page 2


LOGO

 

   Second Quarter 2020

 

COMPANY PROFILE

Empire State Realty Trust, Inc., or the Company, is a leading real estate investment trust (REIT) that owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building, the world’s most famous building.

BOARD OF DIRECTORS

 

Anthony E. Malkin    Chairman and Chief Executive Officer
William H. Berkman    Director, Chair of Finance Committee (will leave the Board of Directors on July 31, 2020)
Leslie D. Biddle    Director
Thomas J. DeRosa    Director
Steven J. Gilbert    Director, Lead Director
S. Michael Giliberto    Director, Chair of Audit Committee
Patricia S. Han    Director
R. Paige Hood    Director (will join the Board of Directors on August 1, 2020)
James D. Robinson IV    Director, Chair of Compensation and Nominating/Corporate Governance Committees

EXECUTIVE MANAGEMENT

 

Anthony E. Malkin    Chairman, President and Chief Executive Officer
Christina Chiu    Executive Vice President and Chief Financial Officer
Thomas P. Durels    Executive Vice President, Real Estate
Thomas N. Keltner, Jr.    Executive Vice President, General Counsel and Secretary

COMPANY INFORMATION

 

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

RESEARCH COVERAGE

 

Bank of America Merrill Lynch      James Feldman      (646) 855-5808    james.feldman@baml.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 Bilerman      (212) 816-1383    michael.bilerman@citi.com
     Emmanuel Korchman      (212) 816-1382    emmanuel.korchman@citi.com
Evercore ISI      Steve Sakwa      (212) 446-9462    steve.sakwa@evercoreisi.com
Green Street Advisors      Daniel Ismail      (949) 640-8780    dismail@greenstreetadvisors.com
Goldman Sachs      Richard Skidmore      (801) 741-5459    richard.skidmore@gs.com
KeyBanc Capital Markets      Jordan Sadler      (917) 368-2280    jsadler@key.com
     Craig Mailman      (917) 368-2316    cmailman@key.com
Wells Fargo Securities, LLC      Blaine Heck      (443) 263-6529    blaine.heck@wellsfargo.com

 

Page 3


LOGO   

Second Quarter 2020

Financial Highlights

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

 

     Three Months Ended  

Selected Items:

   June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 

Revenue

   $ 141,030     $ 170,224     $ 194,933     $ 192,873     $ 176,244  

Net income (loss)

   $ (19,618   $ 8,288     $ 28,720     $ 26,784     $ 18,930  

Cash net operating income (1)

   $ 78,368     $ 81,528     $ 103,992     $ 98,757     $ 93,737  

Core funds from operations (“Core FFO”) (1)

   $ 39,498     $ 53,712     $ 74,935     $ 71,810     $ 64,476  

Core funds available for distribution (“Core FAD”) (1)

   $ 37,786     $ 37,738     $ 41,903     $ 54,650     $ 48,235  

Core FFO per share—diluted

   $ 0.14     $ 0.18     $ 0.25     $ 0.24     $ 0.22  

Diluted weighted average shares

     283,384,000       292,645,000       296,852,000       298,151,000       298,131,000  

Dividends declared and paid per share

   $ 0.105     $ 0.105     $ 0.105     $ 0.105     $ 0.105  

Portfolio Statistics:

          

Number of properties

     20       20       20       20       20  

Total rentable square footage

     10,132,492       10,135,413       10,138,057       10,134,495       10,134,435  

Percent occupied (2)

     85.6     88.7     88.6     89.4     90.2

Percent leased (3)

     89.6     91.1     91.2     91.7     92.2

Observatory Metrics:

          

Number of visitors (4)

     —         422,000       894,000       1,042,000       968,000  

Change in visitors year over year

     N/A       (29.8 %)      (5.5 %)      (10.7 %)      (7.7 %) 

Observatory revenues (5)

   $ 86     $ 19,544     $ 37,730     $ 37,575     $ 32,895  

Change in revenues year over year

     N/A       (5.0 %)      9.2     (6.6 %)      (6.6 %) 

Ratios:

          

Consolidated Debt to Total Market Capitalization (6)

     54.3     47.8     28.2     27.7     29.8

Consolidated Net Debt to Total Market Capitalization (6)

     43.7     35.5     25.2     24.1     23.6

Consolidated Debt and Perpetual Preferred Units to Total Market Capitalization (6)

     56.2     49.5     29.7     28.2     30.2

Consolidated Net Debt and Perpetual Preferred Units to Total Market Capitalization (6)

     46.1     37.6     26.8     24.5     24.0

Consolidated Debt to EBITDA (7)

     8.0x       7.3x       4.8x       4.6x       5.3x  

Consolidated Net Debt to EBITDA (7)

     5.2x       4.4x       4.1x       3.8x       3.9x  

Interest Coverage Ratio

     2.6x       4.3x       5.0x       4.8x       4.4x  

Core FFO Payout Ratio (8)

     83     61     43     45     50

Core FAD Payout Ratio (9)

     86     87     76     59     66

Class A common stock price at quarter end

   $ 7.00     $ 8.96     $ 13.96     $ 14.27     $ 14.81  

Average closing price

   $ 7.72     $ 12.24     $ 14.04     $ 14.12     $ 15.48  

Dividends per share—annualized

   $ 0.42     $ 0.42     $ 0.42     $ 0.42     $ 0.42  

Dividend yield (10)

     6.0     4.7     3.0     2.9     2.8

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

     1,560,360       1,560,360       1,560,360       1,560,360       1,560,360  

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

     4,664,038       4,664,038       4,610,383       —         —    

Class A common stock

     172,332,358       176,112,860       180,877,597       179,131,090       176,991,123  

Class B common stock

     1,014,221       1,015,149       1,016,799       1,018,463       1,029,782  

Operating partnership units

     117,475,995       120,548,216       117,757,653       124,107,019       126,870,876  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total common stock and operating partnership units outstanding (11)

     290,822,574       297,676,225       299,652,049       304,256,572       304,891,781  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Notes:

 

(1)

Represents non-GAAP financial measures. For a discussion on what these metrics represent and why the Company presents them, see page 23 and for a reconciliation of these metrics to net income, see pages 5 and 19.

(2)

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

(3)

Represents occupancy and includes signed leases not commenced.

(4)

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.

(5)

Observatory revenues include the fixed license fee received from WDFG North America, the Observatory gift shop operator. See page 16.

(6)

Market capitalization represents the sum of (i) Company’s common stock per share price as of June 30, 2020 multiplied by the total outstanding number of shares of common stock and operating partnership units as of June 30, 2020; (ii) the number of Series 2014 perpetual preferred units at June 30, 2020 multiplied by $16.62, (iii) the number of Series 2019 perpetual preferred units at June 30, 2020 multiplied by $13.52, and (iv) our outstanding indebetedness as of June 30, 2020.

(7)

Calculated based on trailing 12 months EBITDA.

(8)

Represents the amount of Core FFO paid out in distributions.

(9)

Represents the amount of Core FAD paid out in distributions.

(10)

Based on the closing price per share of Class A common stock on June 30, 2020.

(11)

As of June 30, 2020, the Company has had conversions from operating partnership units and Class B common shares to Class A common shares totaling 58.2 million shares or approximately $407 million at a closing share price of $7.00. This represents a 71% increase in the number of Class A shares since the IPO.

 

 

Page 4


LOGO   

Second Quarter 2020

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

(unaudited and dollars in thousands)

 

     Three Months Ended  
     June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 

Same Store Total Portfolio

          

Revenues

   $ 139,610     $ 150,123     $ 155,664     $ 152,633     $ 142,655  

Operating expenses

     (61,661     (73,053     (76,051     (79,824     (70,826
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Same store property NOI

     77,949       77,070       79,613       72,809       71,829  

Straight-line rent

     2,710       (8,193     (6,276     (5,174     (3,203

Above/below-market rent revenue amortization

     (1,366     (908     (1,530     (1,682     (1,745

Below-market ground lease amortization

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total same store property cash NOI—excluding lease termination fees

   $ 81,251     $ 69,927     $ 73,765     $ 67,910     $ 68,839  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Percent increase over prior year

     18.0     4.8     6.9     2.0     0.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Property cash NOI

   $ 81,251     $ 69,927     $ 73,765     $ 67,910     $ 68,839  

Observatory cash NOI

     (3,916     11,390       28,987       28,486       24,535  

Lease termination fees

     1,033       211       1,240       2,361       363  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total portfolio same store cash NOI

   $ 78,368     $ 81,528     $ 103,992     $ 98,757     $ 93,737  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Same Store Manhattan Office Portfolio (1)

          

Revenues

   $ 119,445     $ 128,909     $ 132,672     $ 130,214     $ 120,249  

Operating expenses

     (52,619     (62,670     (65,509     (68,516     (60,152
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Same store property NOI

     66,826       66,239       67,163       61,698       60,097  

Straight-line rent

     1,774       (8,338     (6,705     (5,319     (4,163

Above/below-market rent revenue amortization

     (1,366     (908     (1,530     (1,682     (1,745

Below-market ground lease amortization

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total same store property cash NOI—excluding lease termination fees

     69,192       58,951       60,886       56,654       56,147  

Lease termination fees

     863       159       995       835       301  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total same store property cash NOI

   $ 70,055     $ 59,110     $ 61,881     $ 57,489     $ 56,448  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Same Store Greater New York Metropolitan Area Office Portfolio

          

Revenues

   $ 16,529     $ 16,915     $ 18,771     $ 18,137     $ 17,798  

Operating expenses

     (7,230     (8,479     (8,663     (9,373     (8,784
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Same store property NOI

     9,299       8,436       10,108       8,764       9,014  

Straight-line rent

     331       12       285       (42     655  

Above/below-market rent revenue amortization

     —         —         —         —         —    

Below-market ground lease amortization

     —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total same store property cash NOI—excluding lease termination fees

     9,630       8,448       10,393       8,722       9,669  

Lease termination fees

     170       52       245       710       62  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total same store property cash NOI

   $ 9,800     $ 8,500     $ 10,638     $ 9,432     $ 9,731  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Same Store Standalone Retail Portfolio

          

Revenues

   $ 3,636     $ 4,299     $ 4,221     $ 4,282     $ 4,608  

Operating expenses

     (1,812     (1,904     (1,879     (1,935     (1,890
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Same store property NOI

     1,824       2,395       2,342       2,347       2,718  

Straight-line rent

     605       133       144       187       305  

Above/below-market rent revenue amortization

     —         —         —         —         —    

Below-market ground lease amortization

     —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total same store property cash NOI—excluding lease termination fees

     2,429       2,528       2,486       2,534       3,023  

Lease termination fees

     —         —         —         816       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total same store property cash NOI

   $ 2,429     $ 2,528     $ 2,486     $ 3,350     $ 3,023  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note:

Includes 506,452 rentable square feet of retail space in the Company’s nine Manhattan office properties.

 

Page 5


LOGO   

Second Quarter 2020

Net Operating Income (“NOI”), Initial Free Rent Burn-Off and Signed Leases Not Commenced

(unaudited and dollars in thousands)

 

     Three Months Ended  
Reconciliation of Net Income to NOI and Cash NOI    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 

Net income (loss)

   $ (19,618   $ 8,288     $ 28,720     $ 26,784     $ 18,930  

Add:

          

General and administrative expenses

     18,149       15,951       16,618       14,421       15,998  

Depreciation and amortization

     52,783       46,093       46,409       44,260       44,821  

Interest expense

     23,928       19,704       18,534       19,426       20,597  

Income tax expense (benefit)

     (2,450     (382     1,210       1,338       611  

Impairment charges

     4,101       —         —         —         —    

Less:

          

Third-party management and other fees

     (301     (346     (299     (304     (331

Interest income

     (1,526     (637     (1,352     (2,269     (3,899
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income

     75,066       88,671       109,840       103,656       96,727  

Straight-line rent

     2,710       (8,193     (6,276     (5,174     (3,203

Above/below-market rent revenue amortization

     (1,366     (908     (1,530     (1,682     (1,745

Below-market ground lease amortization

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cash NOI—including Observatory and lease termination income

     78,368       81,528       103,992       98,757       93,737  

Less: Observatory NOI

     3,916       (11,390     (28,987     (28,486     (24,535

Less: Lease termination income

     (1,033     (211     (1,240     (2,361     (363
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total property cash NOI—excluding Observatory and lease termination income

   $ 81,251     $ 69,927     $ 73,765     $ 67,910     $ 68,839  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Burn-off of Free Rent and Signed Leases Not Commenced

 

     Incremental
Annual

Revenue
     Base Cash Rent Contributing to Cash NOI in the Following Years  

Total Portfolio

   2020      2021      2022      2023  

Commenced leases in free rent period

   $ 10,991      $ 4,485      $ 10,991      $ 10,991      $ 10,991  

Signed leases not commenced

     31,450        138        10,027        26,613        28,965  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 42,441      $ 4,623      $ 21,018      $ 37,604      $ 39,956  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commenced leases in free rent period

 

     Square
Feet
     Cash
Rent Date
     Incremental
Annual

Revenue
     Base Cash Rent Contributing to Cash NOI in the Following Years  
     2020     2021      2022      2023  

Third quarter 2020 - 14 leases

     156,180        Jul. 2020 - Sept. 2020      $ 9,218      $ 3,685  (1)    $ 9,218      $ 9,218      $ 9,218  

Fourth quarter 2020 - 3 leases

     20,841        Oct. 2020 - Dec. 2020        1,030        158       1,030        1,030        1,030  

First quarter 2021 - 1 lease

     2,652        Jan. 2021 - Mar. 2021        681        611       681        681        681  

Second quarter 2021 - 1 lease

     2,578        Apr. 2021 - Jun. 2021        62        31       62        62        62  
        

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
         $ 10,991      $ 4,485     $ 10,991      $ 10,991      $ 10,991  
        

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Signed leases not commenced (“SLNC”)

 

    

Square

     Expected Base Rent
Commencement
  

Incremental

Annual

     Base Cash Rent Contributing to Cash NOI in the Following Years  

Tenant

   Feet      GAAP    Cash    Revenue (2)      2020      2021      2022      2023  

Winged Keel Group, Inc.

     12,724      Jan. 2021    Mar. 2022    $ 920      $ —        $ —        $ 761      $ 920  

Uber Technologies, Inc.

     32,927      Jan. 2021    May 2021      2,300        —          1,530        2,300        2,300  

Concord Music Group, Inc.

     46,329      Jan. 2021    Nov. 2021      2,870        —          396        2,870        2,870  

Kaplan Hecker & Fink LLP

     26,997      Feb. 2021    Mar. 2021      2,000        —          1,576        2,000        2,000  

First Republic Bank

     14,430      Jul. 2021    Jul. 2021      2,040        —          1,016        2,040        2,040  

Starbucks Corporation

     22,916      Feb. 2022    Feb. 2022      900        —          —          820        900  

LinkedIn Corporation:

                       

LinkedIn Corporation

     52,939      May 2021    Jan. 2022      3,870        —          —          3,854        3,870  

LinkedIn Corporation

     52,666      Nov. 2021    Nov. 2021      3,840        —          630        3,840        3,840  

LinkedIn Corporation

     52,574      Jul. 2022    Jul. 2022      3,840        —          —          1,908        3,840  

LinkedIn Corporation

     30,283      Dec. 2022    Oct. 2023      670        —          —          —          165  

Target

     32,579      June 2024    Oct. 2024      1,980        —          —          —          —    

Other SLNC

     98,037      Jul. 2020 - Apr. 2021    Aug. 2020 - Sept. 2021      6,220        138        4,879        6,220        6,220  
  

 

 

          

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     475,401            $ 31,450      $ 138      $ 10,027      $ 26,613      $ 28,965  
  

 

 

          

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Notes:

 

(1)

As an example, the 2020 amount represents cash revenue contributing from the cash rent commencement date of July 2020 through December 2020. The full annual amount is realized in 2021.

(2)

Reflects new annual rent less annual rent from existing tenant in the space.

 

Page 6


LOGO   

Second Quarter 2020

Property Summary - Leasing Activity by Quarter

(unaudited)

 

     Three Months Ended  
     June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 

Total Portfolio

          

Total leases executed

     19       35       47       25       55  

Weighted average lease term

     6.1 years       6.8 years       8.6 years       10.7 years       6.4 years  

Average free rent period

     4.4 months       4.1 months       5.3 months       6.9 months       2.8 months  

Office

          

Total square footage executed

     99,229       117,481       313,027       374,256       228,346  

Average cash rent psf—leases executed

   $ 52.82     $ 57.29     $ 59.74     $ 62.83     $ 59.13  

Previously escalated cash rents psf

   $ 51.40     $ 52.43     $ 54.02     $ 51.10     $ 51.72  

Percentage of new cash rent over previously escalated rents

     2.8     9.3     10.6     23.0     14.3

Retail

          

Total square footage executed

     14,202       31,662       32,579       14,430       32,706  

Average cash rent psf—leases executed

   $ 145.58     $ 101.03     $ 122.78     $ 141.68     $ 71.52  

Previously escalated cash rents psf

   $ 158.58     $ 108.81     $ 60.79     $ 104.66     $ 72.08  

Percentage of new cash rent over previously escalated rents

     (8.2 %)      (7.1 %)      102.0     35.4     (0.8 %) 

Total Portfolio

          

Total square footage executed

     113,431       149,143       345,606       388,686       261,052  

Average cash rent psf—leases executed

   $ 64.43     $ 66.58     $ 65.68     $ 65.76     $ 61.25  

Previously escalated cash rents psf

   $ 64.82     $ 64.40     $ 54.66     $ 53.09     $ 54.58  

Percentage of new cash rent over previously escalated rents

     -0.6     3.4     20.2     23.9     12.2

Leasing commission costs per square foot

   $ 13.52     $ 20.19     $ 19.84     $ 23.75     $ 15.61  

Tenant improvement costs per square foot

     21.68       100.79       55.65       65.59       47.06  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total LC and TI per square foot (2)

   $ 35.20     $ 120.98     $ 75.49     $ 89.34     $ 62.67  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Occupancy

     85.6     88.7     88.6     89.4     90.2

Manhattan Office Portfolio (1)

          

Total leases executed

     13       26       36       18       40  

Office—New Leases

          

Total square footage executed

     24,859       63,153       170,247       266,769       119,235  

Average cash rent psf—leases executed

   $ 66.94     $ 62.78     $ 64.82     $ 71.36     $ 65.08  

Previously escalated cash rents psf

   $ 61.55     $ 52.56     $ 52.12     $ 53.83     $ 53.26  

Percentage of new cash rent over previously escalated rents

     8.7     19.4     24.4     32.6     22.2

Office—Renewal Leases

          

Total square footage executed

     27,123       30,712       54,345       18,826       56,211  

Average cash rent psf—leases executed

   $ 58.35     $ 60.20     $ 66.62     $ 53.83     $ 62.37  

Previously escalated cash rents psf

   $ 58.39     $ 60.02     $ 66.27     $ 53.64     $ 55.88  

Percentage of new cash rent over previously escalated rents

     -0.1     0.3     0.5     0.4     11.6

Retail—New and Renewal Leases

          

Total square footage executed

     10,702       26,432       —         14,430       3,711  

Average cash rent psf—leases executed

   $ 149.50     $ 76.73     $ —       $ 141.68     $ 405.41  

Previously escalated cash rents psf

   $ 150.16     $ 103.75     $ —       $ 104.66     $ 317.25  

Percentage of new cash rent over previously escalated rents

     (0.4 %)      (0     0.0     35.4     27.8

Total Manhattan Office Portfolio

          

Total square footage executed

     62,684       120,297       224,592       300,025       179,157  

Average cash rent psf—leases executed

   $ 77.32     $ 65.19     $ 65.26     $ 73.64     $ 71.28  

Previously escalated cash rents psf

   $ 75.31     $ 65.71     $ 55.54     $ 56.26     $ 59.55  

Percentage of new cash rent over previously escalated rents

     2.7     -0.8     17.5     30.9     19.7

Leasing commission costs per square foot

   $ 19.84     $ 20.57     $ 19.81     $ 28.93     $ 20.53  

Tenant improvement costs per square foot

     39.23       107.77       70.39       78.31       56.60  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total LC and TI per square foot (2)

   $ 59.07     $ 128.34     $ 90.20     $ 107.24     $ 77.13  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Occupancy

     86.8     89.8     89.7     89.6     90.6

 

Page 7


LOGO   

Second Quarter 2020

Property Summary - Leasing Activity by Quarter - (Continued)

(unaudited

 

     Three Months Ended  
     June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 

Greater New York Metropolitan Area Office Portfolio

          

Total leases executed

     5       7       10       7       12  

Total square footage executed

     47,247       23,616       88,435       88,661       52,900  

Average cash rent psf—leases executed

   $ 42.21     $ 38.85     $ 45.73     $ 39.08     $ 42.30  

Previously escalated cash rents psf

   $ 42.04     $ 42.23     $ 50.15     $ 42.36     $ 43.82  

Percentage of new cash rent over previously escalated rents

     0.4     (8.0 %)      (8.8 %)      (7.7 %)      (3.5 %) 

Leasing commission costs per square foot

   $ 5.78     $ 7.34     $ 8.00     $ 6.22     $ 6.05  

Tenant improvement costs per square foot

     —         51.56       26.02       22.53       37.37  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total LC and TI per square foot (2)

   $ 5.78     $ 58.90     $ 34.02     $ 28.75     $ 43.42  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Occupancy

     79.1     83.0     83.0     88.0     87.8

Standalone Retail Portfolio

          

Total leases executed

     1       2       1       —         3  

Total square footage executed

     3,500       5,230       32,579       —         28,995  

Average cash rent psf—leases executed

   $ 133.59     $ 223.86     $ 122.78     $ —       $ 28.78  

Previously escalated cash rents psf

   $ 184.31     $ 134.41     $ 60.79     $ —       $ 40.70  

Percentage of new cash rent over previously escalated rents

     (27.5 %)      66.5     102.0     0.0     (29.3 %) 

Leasing commission costs per square foot

   $ 4.71     $ 69.53     $ 52.21     $ —       $ 2.68  

Tenant improvement costs per square foot

     —         162.60       34.47       —         5.79  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total LC and TI per square foot (2)

   $ 4.71     $ 232.13     $ 86.68     $ —       $ 8.47  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Occupancy

     95.2     95.2     93.7     93.7     93.7

Notes:

 

(1)

Includes 506,452 rentable square feet of retail space in the Company’s nine Manhattan office properties.

(2)

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.

 

Page 8


LOGO   

Second Quarter 2020

Total Portfolio Expirations and Vacates Summary

(unaudited and in square feet)

 

     Three Months Ended              
     Actual     Actual     Forecast (1)     Forecast (1)     Forecast (1)     Full Year  
     March 31,
2020
    June 30,
2020
    September 30,
2020
    December 31,
2020
    Jul. to Dec.
2020
    2021  

Total Portfolio (2)

            

Total expirations

     92,373       393,584       151,647       157,192       308,839       664,552  

Less: broadcasting

     (906     (906     (906     (753     (1,659     (1,049
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Office and retail expirations

     91,467       392,678       150,741       156,439       307,180       663,503  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Renewal & relocations (3)

     35,005       76,411       30,059       75,012       105,071       210,354  

Short-term renewals (4)

     —         3,024       —         —         —         —    

New leases (5)

     2,286       171,834       9,367       12,850       22,217       23,247  

Tenant vacates (6)

     30,445       97,727       101,043       39,228       140,271       289,929  

Intentional vacates (7)

     23,731       43,682       3,024       3,625       6,649       9,265  

Holdover (8)

     —         —         —         —         —         —    

Unknown (9)

     —         —         7,248       25,724       32,972       130,708  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Portfolio expirations and vacates

     91,467       392,678       150,741       156,439       307,180       663,503  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Manhattan Office Portfolio

            

Total expirations

     53,312       256,551       136,248       115,390       251,638       406,943  

Less: broadcasting

     (906     (906     (906     (753     (1,659     (1,049
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Office expirations

     52,406       255,645       135,342       114,637       249,979       405,894  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Renewal & relocations (3)

     16,958       15,141       19,802       55,816       75,618       88,596  

Short-term renewals (4)

     —         3,024       —         —         —         —    

New leases (5)

     2,286       164,520       9,367       12,850       22,217       23,247  

Tenant vacates (6)

     27,106       36,715       95,901       31,334       127,235       222,006  

Intentional vacates (7)

     6,056       36,245       3,024       3,625       6,649       9,265  

Holdover (8)

     —         —         —         —         —         —    

Unknown (9)

     —         —         7,248       11,012       18,260       62,780  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expirations and vacates

     52,406       255,645       135,342       114,637       249,979       405,894  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Greater New York Metropolitan Area Office Portfolio

 

         

Office expirations

     17,148       126,162       15,399       32,237       47,636       234,433  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Renewal & relocations (3)

     13,809       57,836       10,257       17,525       27,782       110,215  

Short-term renewals (4)

     —         —         —         —         —         —    

New leases (5)

     —         7,314       —         —         —         —    

Tenant vacates (6)

     3,339       61,012       5,142       —         5,142       56,455  

Intentional vacates (7)

     —         —         —         —         —         —    

Holdover (8)

     —         —         —         —         —         —    

Unknown (9)

     —         —         —         14,712       14,712       67,763  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expirations and vacates

     17,148       126,162       15,399       32,237       47,636       234,433  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Retail Portfolio

            

Retail expirations

     21,913       10,871       —         9,565       9,565       23,176  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Renewal & relocations (3)

     4,238       3,434       —         1,671       1,671       11,543  

Short-term renewals (4)

     —         —         —         —         —         —    

New leases (5)

     —         —         —         —         —         —    

Tenant vacates (6)

     —         —         —         7,894       7,894       11,468  

Intentional vacates (7)

     17,675       7,437       —         —         —         —    

Holdover (8)

     —         —         —         —         —         —    

Unknown (9)

     —         —         —         —         —         165  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expirations and vacates

     21,913       10,871       —         9,565       9,565       23,176  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Notes:

 

(1)

These forecasts, which are subject to change, are based on management’s 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” assume tenants renew their existing leases in all or a portion of their current spaces, and “Relocations” assume tenants move within a building or within the Company’s portfolio.

(4)

Represents tenants which signed renewal leases for a term of less than six months and reappear in forecast periods in 2020.

(5)

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. The lease commencement dates are provided on page 6. There may be downtime between the lease expiration and the new lease commencement.

(6)

For forecasted periods, “Tenant Vacates” assumes a tenant elects not to renew at the end of their existing lease or exercises an early termination option.

(7)

For forecasted periods, “Intentional Vacates” assumes the Company decides not to renew tenant at the end of their existing lease due to anticipated future redevelopment or for other reasons. This also may include early lease terminations.

(8)

Holdover represents a tenant that remains in its space, paying rent after the expiration of its lease, but is not anticipated to continue doing so on a monthly basis. These tenants may reappear in forecast periods in 2020.

(9)

For forecasted periods, “Unknown” represents tenants’ existing leases which do not fall into any of the above categories: Renewals & Relocations, New Leases, Tenant Vacates or Intentional Vacates and tenants’ whose intention is unknown.

 

Page 9


LOGO   

Second Quarter 2020

Property Detail

(unaudited)

 

                           Annualized
Rent
       

Property Name

  

Location or Sub-Market

  Rentable
Square Feet (1)
    Percent
Occupied (2)
    Annualized
Rent (3)
    per Occupied
Square Foot (4)
    Number of
Leases (5)
 

Manhattan Office Properties—Office

         

The Empire State Building (6)

   Penn Station -Times Sq. South     2,710,823       87.6   $  144,394,079     $ 60.84       162  

One Grand Central Place

  

Grand Central

    1,247,764       86.6     64,361,553       59.55       180  

1400 Broadway (8)

  

Penn Station -Times Sq. South

    916,834       89.7     44,415,793       54.04       25  

111 West 33rd Street (9)

  

Penn Station -Times Sq. South

    641,133       97.5     38,209,981       61.15       23  

250 West 57th Street

  

Columbus Circle -West Side

    474,119       71.2     20,956,696       62.08       37  

501 Seventh Avenue

  

Penn Station -Times Sq. South

    461,652       82.8     18,897,823       49.46       29  

1359 Broadway

  

Penn Station -Times Sq. South

    455,873       95.1     23,884,943       55.07       32  

1350 Broadway (10)

  

Penn Station -Times Sq. South

    372,955       83.2     18,442,460       59.46       54  

1333 Broadway

  

Penn Station -Times Sq. South

    292,835       77.1     12,261,924       54.28       8  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Manhattan Office Properties—Office

       7,573,988       87.0     385,825,252       58.54       550  

Manhattan Office Properties—Retail

            

The Empire State Building (7)

   Penn Station -Times Sq. South     99,572       46.7     11,214,102       240.94       11  

One Grand Central Place

  

Grand Central

    68,732       79.0     6,594,878       121.45       13  

1400 Broadway (8)

  

Penn Station -Times Sq. South

    20,176       77.2     2,050,919       131.71       7  

112 West 34th Street (9)

  

Penn Station -Times Sq. South

    90,132       100.0     23,273,069       258.21       4  

250 West 57th Street

  

Columbus Circle -West Side

    67,927       100.0     10,316,195       151.87       8  

501 Seventh Avenue

  

Penn Station -Times Sq. South

    33,632       87.3     2,028,797       69.11       8  

1359 Broadway

  

Penn Station -Times Sq. South

    27,506       92.9     1,912,176       74.79       5  

1350 Broadway (10)

  

Penn Station -Times Sq. South

    31,774       95.6     7,238,797       238.20       5  

1333 Broadway

  

Penn Station -Times Sq. South

    67,001       100.0     9,330,744       139.26       4  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Manhattan Office Properties—Retail

       506,452       84.3     73,959,677       173.29       65  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sub-Total/Weighted Average Manhattan Office Properties—Office and Retail

       8,080,440       86.8     459,784,929       65.52       615  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Greater New York Metropolitan Area Office Properties

            

First Stamford Place (11)

  

Stamford, CT

    778,848       84.9     28,785,770       43.54       45  

Metro Center

  

Stamford, CT

    287,929       71.6     11,856,164       57.52       23  

383 Main Avenue

  

Norwalk, CT

    260,546       54.1     4,173,619       29.59       21  

500 Mamaroneck Avenue

  

Harrison, NY

    287,157       81.1     7,031,746       30.19       29  

10 Bank Street

  

White Plains, NY

    232,084       94.5     8,011,993       36.53       35  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sub-Total/Weighted Average Greater New York Metropolitan Area Office Properties

    1,846,564       79.1     59,859,292       40.98       153  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Standalone Retail Properties

            

10 Union Square

  

Union Square

    57,984       94.7     6,696,820       121.98       11  

1542 Third Avenue

  

Upper East Side

    56,250       100.0     4,160,189       73.96       4  

1010 Third Avenue

  

Upper East Side

    44,662       100.0     3,612,691       80.89       2  

77 West 55th Street

  

Midtown

    25,388       100.0     2,824,593       111.26       3  

69-97 Main Street

  

Westport, CT

    16,874       59.7     1,143,384       113.49       3  

103-107 Main Street

  

Westport, CT

    4,330       100.0     776,442       179.32       1  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sub-Total/Weighted Average Standalone Retail Properties

       205,488       95.2     19,214,118       98.23       24  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio Total

       10,132,492       85.6   $ 538,858,339     $ 62.13       792  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total/Weighted Average Office Properties

       9,420,552       85.5   $ 445,684,544     $ 55.36       703  

Total/Weighted Average Retail Properties

       711,940       87.4     93,173,795       149.70       89  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio Total

       10,132,492       85.6   $ 538,858,339     $ 62.13       792  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Notes:

(1)

Excludes (i) 193,895 square feet of space across the Company’s portfolio attributable to building management use and tenant amenities and (ii) 79,613 square feet of space attributable to the Company’s observatory.

(2)

Based on leases signed and commenced as of June 30, 2020.

(3)

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

(4)

Represents annualized rent under leases commenced as of June 30, 2020 divided by occupied square feet.

(5)

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.

(6)

Includes 38,912 rentable square feet of space leased by the Company’s broadcasting tenants.

(7)

Includes 5,300 rentable square feet of space leased by WDFG North America, a licensee of the Company’s observatory.

(8)

Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 43 years (expiring December 31, 2063).

(9)

Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 57 years (expiring May 31, 2077).

(10)

Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 30 years (expiring July 31, 2050).

(11)

First Stamford Place consists of three buildings.

 

Page 10


LOGO   

Second Quarter 2020

Tenant Lease Expirations

(unaudited)

 

Total Lease Expirations

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

Available

     —          1,049,673        10.4   $ —          0.0   $ —    

Signed leases not commenced

     20        409,505        4.0     —          0.0     —    

2Q 2020 (4)

     18        44,240        0.4     2,333,535        0.4     52.75  

3Q 2020

     25        138,777        1.4     7,746,282        1.4     55.82  

4Q 2020

     26        157,192        1.6     8,860,222        1.6     56.37  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2020

     69        340,209        3.4     18,940,039        3.5     55.67  

1Q 2021

     29        101,390        1.0     7,360,756        1.4     72.60  

2Q 2021

     26        190,934        1.9     10,407,336        1.9     54.51  

3Q 2021

     29        175,016        1.7     10,513,171        2.0     60.07  

4Q 2021

     23        197,212        1.9     9,719,605        1.8     49.29  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2021

     107        664,552        6.6     38,000,868        7.1     57.18  

2022

     113        585,348        5.8     37,573,202        7.0     64.19  

2023

     98        745,946        7.4     45,377,311        8.4     60.83  

2024

     83        802,770        7.9     49,111,946        9.1     61.18  

2025

     79        495,458        4.9     36,608,261        6.8     73.89  

2026

     56        711,228        7.0     38,367,583        7.1     53.95  

2027

     51        561,392        5.5     33,552,189        6.2     59.77  

2028

     29        1,027,220        10.1     56,308,691        10.4     54.82  

2029

     35        872,679        8.6     61,482,785        11.4     70.45  

2030

     30        684,251        6.8     42,839,350        8.0     62.61  

Thereafter

     42        1,182,261        11.6     80,696,114        15.0     68.26  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     812        10,132,492        100.0   $ 538,858,339        100.0   $ 62.13  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Manhattan Office Properties (5)

                                       

Available

     —          642,118        8.5   $ —          0.0   $ —    

Signed leases not commenced

     12        341,554        4.5     —          0.0     —    

2Q 2020 (4)

     11        19,047        0.3     1,042,311        0.3     54.72  

3Q 2020

     21        130,386        1.7     7,346,551        1.9     56.34  

4Q 2020

     19        115,390        1.5     5,678,215        1.5     49.21  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2020

     51        264,823        3.5     14,067,077        3.6     53.12  

1Q 2021

     15        45,272        0.6     2,631,836        0.7     58.13  

2Q 2021

     20        132,908        1.8     7,174,891        1.9     53.98  

3Q 2021

     16        105,093        1.4     6,647,359        1.7     63.25  

4Q 2021

     16        123,670        1.6     6,819,779        1.8     55.14  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2021

     67        406,943        5.4     23,273,865        6.0     57.19  

2022

     82        392,965        5.2     23,410,732        6.1     59.57  

2023

     74        542,101        7.2     32,107,846        8.3     59.23  

2024

     61        572,265        7.6     34,054,763        8.8     59.51  

2025

     48        315,198        4.2     19,963,407        5.2     63.34  

2026

     38        529,346        7.0     30,335,692        7.9     57.31  

2027

     38        431,669        5.7     24,619,080        6.4     57.03  

2028

     19        944,700        12.5     52,381,828        13.6     55.45  

2029

     23        629,599        8.3     36,800,046        9.5     58.45  

2030

     19        583,922        7.7     33,866,762        8.8     58.00  

Thereafter

     30        976,785        12.7     60,944,154        15.8     62.39  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Manhattan office properties

     562        7,573,988        100.0   $  385,825,252        100.0   $  58.54  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Notes:

(1)

If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage).

(2)

Excludes (i) 193,895 rentable square feet of space across the Company portfolio attributable to building management use and tenant amenities and (ii) 79,613 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 June 30, 2020 and expire on June 30, 2020.

(5)

Excludes (i) retail space in the Company’s Manhattan office properties and (ii) the Empire State Building broadcasting licenses and observatory operations.

 

Page 11


LOGO   

Second Quarter 2020

Tenant Lease Expirations

(unaudited)

 

Greater New York Metropolitan
Area Office Properties

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

Available

     —          360,539        19.5   $ —          0.0   $ —    

Signed leases not commenced

     4        25,420        1.4     —          0.0     —    

2Q 2020 (4)

     4        14,322        0.8     703,269        1.2     49.10  

3Q 2020

     4        8,391        0.5     399,731        0.7     47.64  

4Q 2020

     5        32,237        1.7     1,331,790        2.2     41.31  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2020

     13        54,950        3.0     2,434,790        4.1     41.31  

1Q 2021

     10        42,800        2.3     2,129,575        3.6     49.76  

2Q 2021

     4        55,035        3.0     2,896,037        4.8     52.62  

3Q 2021

     11        63,354        3.4     2,676,591        4.5     42.25  

4Q 2021

     7        73,542        4.0     2,899,826        4.8     39.43  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2021

     32        234,731        12.7     10,602,029        17.7     45.17  

2022

     22        133,636        7.2     5,003,416        8.4     37.44  

2023

     15        157,542        8.5     7,190,914        12.0     45.64  

2024

     12        205,193        11.1     9,244,116        15.4     45.05  

2025

     23        142,935        7.7     4,964,266        8.3     34.73  

2026

     11        113,471        6.1     3,876,004        6.5     34.16  

2027

     8        73,457        4.0     2,507,401        4.2     34.13  

2028

     6        74,533        4.0     2,696,619        4.5     36.18  

2029

     6        144,998        7.9     5,796,456        9.7     39.98  

2030

     4        36,578        2.0     1,795,169        3.0     49.08  

Thereafter

     1        88,581        4.9     3,748,112        6.2     42.31  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total greater New York metropolitan area office properties

     157        1,846,564        100.0   $ 59,859,292        100.0   $ 40.98  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Retail Properties

                                       

Available

     —          47,016        6.6   $ —          0.0   $ —    

Signed leases not commenced

     4        42,531        6.0     —          0.0     —    

2Q 2020 (4)

     3        10,871        1.5     587,955        0.6     54.08  

3Q 2020

     —          —          0.0     —          0.0     —    

4Q 2020

     2        9,565        1.3     1,850,217        2.0     193.44  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2020

     5        20,436        2.9     2,438,172        2.6     119.43  

1Q 2021

     4        13,318        1.9     2,599,345        2.8     195.18  

2Q 2021

     2        2,991        0.4     336,408        0.4     112.47  

3Q 2021

     2        6,569        0.9     1,189,221        1.3     181.04  

4Q 2021

     —          —          0.0     —          0.0     —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2021

     8        22,878        3.2     4,124,974        4.4     180.30  

2022

     9        58,747        8.3     9,159,054        9.8     155.91  

2023

     9        46,303        6.5     6,078,551        6.5     131.28  

2024

     10        25,312        3.6     5,813,067        6.2     229.66  

2025

     8        37,325        5.2     11,680,588        12.5     312.94  

2026

     7        68,411        9.6     4,155,887        4.5     60.75  

2027

     5        56,266        7.9     6,425,708        6.9     114.20  

2028

     4        7,987        1.1     1,230,244        1.3     154.03  

2029

     6        98,082        13.8     18,886,283        20.3     192.56  

2030

     7        63,751        9.0     7,177,419        7.7     112.59  

Thereafter

     11        116,895        16.3     16,003,848        17.3     136.91  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total retail properties

     93        711,940        100.0   $ 93,173,795        100.0   $
 
 
149.70
 
 
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Notes:

(1)

If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage).

(2)

Excludes (i) 193,895 rentable square feet of space across the Company portfolio attributable to building management use and tenant amenities and (ii) 79,613 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 June 30, 2020 and expire on June 30, 2020.

 

Page 12


LOGO   

Second Quarter 2020

Tenant Lease Expirations

(unaudited)

 

Empire State Building Office (1)

   Number of
Leases
Expiring (2)
     Rentable
Square
Feet
Expiring (3)
     Percent of
Portfolio
Rentable
Square
Feet
Expiring
    Annualized
Rent (4) (5)
     Percent of
Annualized
Rent
    Annualized
Rent Per
Rentable
Square Foot
 

Available

     —          153,048        5.6   $ —          0.0   $ —    

Signed leases not commenced

     2        184,393        6.8     —          0.0     —    

2Q 2020 (6)

     2        1,853        0.1     41,203        0.0     22.24  

3Q 2020

     5        24,519        0.9     1,553,026        1.1     63.66  

4Q 2020

     6        37,592        1.4     1,994,228        1.4     53.05  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2020

     13        63,964        2.4     3,588,457        2.5     56.10  

1Q 2021

     1        2,488        0.1     210,704        0.1     84.69  

2Q 2021

     13        81,328        3.0     4,247,655        2.9     52.23  

3Q 2021

     3        16,066        0.6     1,167,452        0.8     72.67  

4Q 2021

     2        7,903        0.3     502,354        0.3     63.56  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total 2021

     19        107,785        4.0     6,128,165        4.2     56.86  

2022

     21        114,522        4.2     7,259,805        5.0     63.39  

2023

     25        112,852        4.2     7,600,136        5.3     67.35  

2024

     18        227,351        8.4     14,867,651        10.3     65.40  

2025

     14        106,823        3.9     7,113,073        4.9     66.59  

2026

     9        122,685        4.5     7,604,968        5.3     61.99  

2027

     9        35,511        1.3     2,082,393        1.4     58.64  

2028

     5        545,722        20.1     30,642,139        21.2     56.15  

2029

     7        282,020        10.4     17,247,180        11.9     61.16  

2030

     5        206,489        7.6     11,085,358        7.7     53.68  

Thereafter

     17        447,658        16.6     29,174,754        20.3     65.17  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total Empire State Building office

     164        2,710,823        100.0   $ 144,394,079        100.0   $ 60.84  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

Empire State Building Broadcasting Licenses and Leases

   Annualized
Base Rent (7)
     Annualized
Expense
Reimbursements
     Annualized
Rent (4)
     Percent of
Annualized
Rent
 

2Q 2020 (6)

   $ 31,710      $ 12,618      $ 44,328        0.3

3Q 2020

     —          —          —          0.0

4Q 2020

     99,320        31,621        130,941        0.9
  

 

 

    

 

 

    

 

 

    

 

 

 

Total 2020

     131,030        44,239        175,269        1.2

1Q 2021

     —          —          —          0.0

2Q 2021

     —          44,482        44,482        0.3

3Q 2021

     —          —          —          0.0

4Q 2021

     —          —          —          0.0
  

 

 

    

 

 

    

 

 

    

 

 

 

Total 2021

     —          44,482        44,482        0.3

2022

     1,719,156        429,802        2,148,958        15.0

2023

     283,668        42,987        326,655        2.3

2024

     65,000        21,360        86,360        0.6

2025

     1,571,830        186,453        1,758,283        12.3

2026

     807,668        74,589        882,257        6.2

2027

     787,969        75,972        863,941        6.0

2028

     248,614        17,946        266,560        1.9

2029

     —          —          —          0.0

2030

     463,507        96,589        560,096        3.9

Thereafter

     6,394,911        786,033        7,180,944        50.3
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Empire State Building broadcasting licenses and leases

   $ 12,473,353      $ 1,820,452      $ 14,293,805        100.0
  

 

 

    

 

 

    

 

 

 

Notes:

(1)

Excludes retail space, broadcasting licenses and observatory operations.

(2)

If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage).

(3)

Excludes 52,508 rentable square feet of space attributable to building management use.

(4)

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

(5)

Includes approximately $6.1 million of annualized rent related to physical space occupied by broadcasting tenants for their broadcasting operations. Does not include license fees charged to broadcasting tenants.

(6)

Represents leases that are included in occupancy as of June 30, 2020 and expire on June 30, 2020.

(7)

Represents license fees for the use of the Empire State Building mast and base rent for physical space occupied by broadcasting tenants.

 

Page 13


LOGO   

Second Quarter 2020

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. Global Brands Group

   ESB, 1333 B’Way    Oct. 2023 - Oct. 2028    7.6 years      668,942        6.4   $ 36,558,903        6.8

2. LinkedIn

   ESB    Aug. 2036    16.2 years      312,947        3.0     18,330,896        3.4

3. PVH Corp.

   501 Seventh Avenue    Oct. 2028    8.4 years      237,281        2.3     11,716,228        2.2

4. Sephora

   112 West 34th Street    Jan. 2029    8.6 years      11,334        0.1     10,468,996        1.9

5. Coty

   ESB    Jan. 2030    9.6 years      156,970        1.5     8,022,839        1.5

6. Macy’s

   111 West 33rd Street    May 2030    9.9 years      131,117        1.3     7,813,096        1.4

7. Li & Fung

   1359 Broadway    Oct. 2021 - Oct. 2027    3.8 years      149,436        1.4     7,701,934        1.4

8. Signature Bank

   1333 & 1400 Broadway    Jul. 2030 - Apr. 2035    14.3 years      124,884        1.2     7,540,459        1.4

9. Federal Deposit Insurance Corp.

   ESB    Dec. 2024    4.5 years      119,226        1.1     7,511,238        1.4

10. Urban Outfitters

   1333 Broadway    Sept. 2029    9.3 years      56,730        0.5     7,367,374        1.4

11. The Interpublic Group of Co’s, Inc.

   111 West 33rd St & 1400 B’way    Jul. 2024 - Feb. 2025    4.3 years      128,296        1.2     7,232,743        1.3

12. Footlocker

   112 West 34th Street    Sept. 2031    11.3 years      34,192        0.3     6,898,262        1.3

13. Duane Reade/Walgreen’s

   ESB, 1350 B’Way, 250 West 57th    Feb. 2021 - Sept. 2027    4.4 years      47,541