Exhibit 99.1
EMPIRE STATE REALTY TRUST ANNOUNCES FIRST QUARTER2024 RESULTS
– Net Income Per Fully Diluted Share of$0.03 –
– Core FFO Per Fully Diluted Share of$0.21 –
– Signed248,000 Rentable Square Feet of Leases –
– Closed New Credit Facility, over $800Mof Liquidity, No Floating Rate Debt Exposure –
– Reaffirms2024 Outlook –
New York, NewYork, April24, 2024 – Empire State Realty Trust,Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operatesa portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets, and the Observatory deck attraction inESRT’s flagship Empire State Building – the “World’s Most Famous Building”. The Company is a recognizedleader in energy efficiency and indoor environmental quality. Today the Company reported its operational and financial results for thefirst quarter 2024. All per share amounts are on a fully diluted basis, where applicable.
First Quarter and Recent Highlights
| · | Net Income of $0.03 per share. |
| · | Core Funds From Operations (“Core FFO”) of $0.21 per share. |
| · | Same-Store Property Cash Net Operating Income (“NOI”) increased 12.3% year-over-year, excludinglease termination fees, primarily driven by higher revenues from cash rent commencement, which was partially offset by increases in operatingexpenses. Adjusted for certain nonrecurring items, first quarter Same-Store NOI increased by approximately 8% year-over-year. |
| · | Manhattan office portfolio leased rate increased by 60bps sequentially and 200bps year-over-year to 92.7%.The total commercial portfolio is 91.1% leased as March31, 2024. This is the 9th consecutive quarter of positive commercialleased rate absorption. |
| · | Signed approximately 248,000 rentable square feet of new, renewal, and expansion leases. In our Manhattanoffice portfolio, blended leasing spreads were +5.4% and this is the 11th consecutive quarter of positive leasing spreads. |
| · | Empire State Building Observatory generated $16.2 million of NOI, a 13% increase year-over-year. |
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| · | In March, closed on a new $715 million credit facility comprised of a revolver and term loan that maturein 2029, inclusive of extensions, which replaces the existing facility that was due to mature in 2025. |
| · | In April, entered into a notepurchase agreement to issue $225 million of green senior unsecured notes in a private placement transaction. |
| · | Achieved the Energy Star Partner of the Year Sustained Excellence award for the second year, the WELL Equity Award and WELL Health-Safety Leadership Award. Published ESRT’s fourth annual Sustainability Report on April23, 2024 (linked here). |
Property Operations
As of March31, 2024, the Company’sproperty portfolio contained 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727residential units, which were occupied and leased as shown below.
| March31, 2024 | December31, 2023 | March31, 2023 | ||||||||||
| Percent occupied: | ||||||||||||
| Total commercial portfolio | 87.6 | % | 86.3 | % | 86.7 | % | ||||||
| Total office | 87.4 | % | 86.0 | % | 86.7 | % | ||||||
| Manhattan office | 88.9 | % | 87.3 | % | 87.8 | % | ||||||
| GNYMA office1 | 76.8 | % | 76.6 | % | 80.6 | % | ||||||
| Total retail2 | 89.8 | % | 90.4 | % | 86.7 | % | ||||||
| Percent leased (includes signed leases not commenced): | ||||||||||||
| Total commercial portfolio | 91.1 | % | 90.6 | % | 89.4 | % | ||||||
| Total office | 91.1 | % | 90.5 | % | 89.3 | % | ||||||
| Manhattan office | 92.7 | % | 92.1 | % | 90.7 | % | ||||||
| GNYMA office1 | 79.5 | % | 79.3 | % | 81.6 | % | ||||||
| Total retail2 | 91.0 | % | 92.1 | % | 90.6 | % | ||||||
| Total multifamily portfolio | 97.1 | % | 98.1 | % | 97.2 | % | ||||||
1 “GNYMA office” for theperiods ended March31, 2024 and December31, 2023 reflects the removal of 500 Mamaroneck.
2 “Total retail” for theperiods ended March31, 2024 and December31, 2023 includes the Williamsburg Retail, Brooklyn assets which were acquired inSeptember2023.
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Leasing
The tables thatfollow summarize leasing activity for the three months ended March31, 2024. During this period, the Company signed 23 leasesthat totaled 248,108 square feet. Within the Manhattan office portfolio, the Company signed 20 office leases that totaled 235,664 squarefeet.
Total Portfolio
| Total Portfolio | Total Leases Executed | Total square footage executed | Average cash rent psf – leases executed | Previously escalated cash rents psf | % of new cash rent over/ under previously escalated rents | |||||||||||||||
| Office | 22 | 245,650 | $ | 59.21 | $ | 56.51 | 4.8 | % | ||||||||||||
| Retail | 1 | 2,458 | $ | 400.00 | $ | 378.97 | 5.5 | % | ||||||||||||
| Total Overall | 23 | 248,108 | $ | 62.59 | $ | 59.71 | 4.8 | % | ||||||||||||
Manhattan Office Portfolio
| Manhattan Office Portfolio | Total Leases Executed | Total square footage executed | Average cash rent psf – leases executed | Previously escalated cash rents psf | % of new cash rent over / under previously escalated rents | |||||||||||||||
| New Office | 12 | 201,580 | $ | 59.70 | $ | 55.66 | 7.3 | % | ||||||||||||
| Renewal Office | 8 | 34,084 | $ | 57.92 | $ | 60.62 | -4.4 | % | ||||||||||||
| Total Office | 20 | 235,664 | $ | 59.44 | $ | 56.38 | 5.4 | % | ||||||||||||
Leasing Activity Highlights
| · | 16-year 67,865 square foot expansion lease withBurlington Merchandising Corporation at 1400 Broadway. |
| · | 11-year 57,203 square foot new lease with Solde Janeiro USA,Inc. at One Grand Central Place. |
Observatory Results
In the first quarter, Observatory revenue was $24.6 million and expenseswere $8.4 million. Observatory NOI was $16.2 million, a 13% increase year-over-year.
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Balance Sheet
The Company had $834 million of total liquidityas of March31, 2024, which was comprised of $334 million of cash, plus $500 million available under its revolving credit facility.At March31, 2024, the Company had total debt outstanding of approximately $2.2 billion, no floating rate debt exposure, and a weightedaverage interest rate of 3.97% per annum. The weighted average term to maturity was 5.4 years. At March31, 2024, the Company’sratio of net debt to adjusted EBITDA was 5.3x.
In March, the Companyclosed on a new $715 million credit facility, which consists of a $620 million revolving credit facility and a $95 million term loan facility.The new credit facility matures in March2029, inclusive of extensions, and replacesthe existing credit facility that was due to mature in March2025. The facility has a sustainability-linked pricing mechanism thatreduces the borrowing spread if certain benchmarks are achieved each year.
In April, the Companyentered into a note purchase agreement to issue $225 million of green senior unsecured notesin a private placement transaction with three tranches including $155 million that matures in 2029, $45 million that matures in 2031,and $25 million that matures in 2034, at a weighted average rate of 7.25%. The private placement is scheduled to fund on June17,2024.
Portfolio Transaction Activity
In March, the Company executed a buyout of its partner’s 10%interest in two multifamily assets located at 561 10th Avenue and 345 East 94th Street for approximately $14 million in cash and the assumptionof $18 million of the in-place debt. ESRT now owns 100% of all assets in the Company’s portfolio with no JV ownership structures.
In April, the Company worked with the First Stamford Place mortgagelender to structure a cooperative consensual foreclosure, which is anticipated to be completed by the end of the second quarter. Uponcompletion, this transaction is expected to eliminate a $176 million liability that matures in July2027 from the balance sheet.
Share Repurchase
The stock repurchase program began in March2020 and through April23,2024, approximately $293.7 million has been repurchased at a weighted average price of $8.18 per share. There were no share repurchasesduring the first quarter.
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Dividend
On March28, 2024, the Company paid a quarterlydividend of $0.035 per share or unit, as applicable, for the first quarter of 2024 to holders of the Company’s ClassA commonstock (NYSE: ESRT) and ClassB common stock and to holders of the SeriesES, Series250 and Series60 partnershipunits (NYSE Arca: ESBA, FISK and OGCP, respectively) and SeriesPR partnership units of Empire State Realty OP, L.P., the Company’soperating partnership (the “Operating Partnership”).
On March28, 2024, the Company paid a quarterlypreferred dividend of $0.15 per unit for the first quarter of 2024 to holders of the Operating Partnership’s Series2014 privateperpetual preferred units and a preferred dividend of $0.175 per unit for the first quarter of 2024 to holders of the Operating Partnership’sSeries2019 private perpetual preferred units.
2024 Earnings Outlook
The Company reaffirms2024 guidance and key assumptions, as summarized in the table below. The Company’s guidance does not include the impact ofany significant future lease termination fee income or any unannounced acquisition, disposition or other capital markets activity.
| Key Assumptions | 2024 Guidance | 2023 Actual Results | Comments |
| Earnings | |||
| Core FFO Per Fully Diluted Share | $0.90 to $0.94 | $0.93 ($0.90 ex non-recurring items) | · 2023 FFO included approximately $0.03 of non-recurring items · 2024 includes $0.04 from multifamily assets |
| Commercial Property Drivers | |||
| Commercial Occupancy at year-end | 87% to 89% | 86.3% | |
| SS Property Cash NOI (excluding lease termination fees) | -1% to +2% | +2.2% | · Assumes positive revenue growth · Assumes a ~6-8% y/y increase in operating expenses and real estate taxes, partially offset by higher tenant expense reimbursem*nts |
| Observatory Drivers | |||
| Observatory NOI | $94M to $102M | $94.1M | · Reflects average quarterly expenses of ~$9M |
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| Low | High | |||||||
| Net Income (Loss) Attributable to Common Stockholders and the Operating Partnership | $ | 0.24 | $ | 0.28 | ||||
| Add: | ||||||||
| Impairment Charge | 0.00 | 0.00 | ||||||
| Real Estate Depreciation& Amortization | 0.65 | 0.65 | ||||||
| Less: | ||||||||
| Private Perpetual Distributions | 0.02 | 0.02 | ||||||
| Gain on Disposal of Real Estate, net | 0.00 | 0.00 | ||||||
| FFO Attributable to Common Stockholders and the Operating Partnership | $ | 0.87 | $ | 0.91 | ||||
| Add: | ||||||||
| Amortization of Below Market Ground Lease | 0.03 | 0.03 | ||||||
| Core FFO Attributable to Common Stockholders and the Operating Partnership | $ | 0.90 | $ | 0.94 | ||||
The estimates set forth above may be subjectto fluctuations as a result of several factors, including continued impacts of changes in the use of office space and remote work onour business and our market, our ability to complete planned capital improvements in line with budget, costs of integration of completedacquisitions, costs associated with future acquisitions or other transactions, straight-line rent adjustments and the amortization ofabove and below-market leases. There can be no assurance that the Company’s actual results will not differ materially from theestimates set forth above.
Investor Presentation Update
The Company hasposted on the “Investors” section of ESRT’s website the latest investor presentation, which containsadditional information on its businesses, financial condition and results of operations.
Webcast and Conference Call Details
Empire State Realty Trust,Inc. will hosta webcast and conference call, open to the general public, on Thursday, April25, 2024 at 12:00 pm Eastern time.
The webcast willbe accessible on the “Investors” section of ESRT’s website. To listen to the live webcast, go to thesite at least five minutes prior to the scheduled start time in order to register and download and install any necessary audio software.The conference call can also be accessed by dialing 1-877-407-3982 for domestic callers or 1-201-493-6780 for international callers.
Starting shortly after the call until May2,2024, a replay of the webcast will be available on the Company’s website, and a dial-in replay will be available by dialing 1-844-512-2921for domestic callers or 1-412-317-6671 for international callers. The passcode for this dial-in replay is 13741461.
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The SupplementalReport and Investor Presentation are additional components of the quarterly earnings announcement and are now available on the “Investors”section of ESRT’s website.
The Company uses, and intends to continue to use,the “Investors” pageof its website, which can be found at www.esrtreit.com, as a means to disclose material nonpublicinformation and to comply with its disclosure obligations under Regulation FD, including, without limitation, through the posting of investorpresentations 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 containedon, 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 RealtyTrust,Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office,retail, and multifamily assets and the Observatory deck attraction in ESRT’s flagship Empire State Building – the “World’sMost Famous Building”. The Company is the recognized leader in energy efficiency and indoor environmental quality. As of March31,2024, ESRT's portfolio is comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feetof retail space and 727 residential units. More information about Empire State Realty Trust can be found at esrtreit.comandby following ESRT onFacebook,Instagram, TikTok,X,andLinkedIn.
Forward-Looking Statements
This press release includes “forward-lookingstatements” within the meaning of Section27A of the Securities Act of 1933, as amended (the “Securities Act"),and Section21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend these forward-lookingstatements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation ReformAct of 1995 and are including this statement for purposes of complying with those safe harbor provisions. You can identify forward-lookingstatements by the use of forward-looking terminology such as “aims," "anticipates," "approximately," "believes," "contemplates," "continues," "estimates," "expects," "forecasts," "hope," "intends," "may," "plans," "seeks," "should," "thinks," "will," "would" or the negative of these words and phrases or similar words or phrases. For the avoidance of doubt, any projection,guidance, or similar estimation about the future or future results, performance or achievements is a forward-looking statement.
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Forward-looking statements are subject to substantialrisks and uncertainties, many of which are difficult to predict and are generally beyond our control, and you should not rely on themas predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise,and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or thatthey will happen at all).
Many important factors could cause our actualresults, performance, achievements, and future events to differ materially from those set forth, implied, anticipated, expected, projected,assumed or contemplated in our forward-looking statements, including, among other things: (i)economic, market, political and socialimpact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, climate-relatedrisks such as natural disasters and extreme weather events, terrorism and other armed hostilities, as well as cybersecurity threats andtechnology disruptions; (ii)a failure of conditions or performance regarding any event or transaction described herein; (iii)resolutionof legal proceedings involving the Company; (iv)reduced demand for office, multifamily or retail space, including as a result ofthe changes in the use of office space and remote work; (v)changes in our business strategy; (vi)a decline in Observatoryvisitors due to changes in domestic or international tourism, including due to health crises, geopolitical events, currency exchange rates,and/or competition from other observatories; (vii)defaults on, early terminations of, or non-renewal of, leases by tenants; (viii)increasesin the Company’s borrowing costs as a result of changes in interest rates and other factors; (ix)declining real estate valuationsand impairment charges; (x)termination of our ground leases; (xi)limitations on our ability to pay down, refinance, restructureor extend our indebtedness or borrow additional funds; (xii)decreased rental rates or increased vacancy rates; (xiii)difficultiesin executing capital projects or development projects successfully or on the anticipated timeline or budget; (xiv)difficulties inidentifying and completing acquisitions; (xv)impact of changes in governmental regulations, tax laws and rates and similar matters;(xvi)our failure to qualify as a REIT; (xvii)incurrence of taxable capital gain on disposition of an asset due to failureof compliance with a 1031 exchange program; and (xviii)failure to achieve sustainability metrics and goals, including as a resultof tenant collaboration, and impact of governmental regulation on our sustainability efforts. For a further discussion of these and otherfactors that could impact the company's future results, performance, or transactions, see the section entitled “Risk Factors”of our annual report on Form10-K for the year ended December31, 2023 and any additional factors that may be contained in anyfiling we make with the SEC.
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While forward-looking statements reflect the Company'sgood faith beliefs, they do not guarantee future performance. Any forward-looking statement contained in this press release speaks onlyas of the date on which it was made, and we assume no obligation to update or revise publicly any forward-looking statement to reflectchanges in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of thispress release, except as required by applicable law. Prospective investors should not place undue reliance on any forward-looking statements,which are based only on information currently available to the Company (or to third parties making the forward-looking statements).
Contact: Investors and Media
Empire State Realty Trust Investor Relations
(212) 850-2678
IR@esrtreit.com
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Empire State Realty Trust,Inc.
Condensed Consolidated Statements of Operations
(unaudited and amounts in thousands, except per share data)
| Three Months Ended March31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues | ||||||||
| Rental revenue | $ | 153,882 | $ | 140,091 | ||||
| Observatory revenue | 24,596 | 22,154 | ||||||
| Lease termination fees | - | - | ||||||
| Third-party management and other fees | 265 | 427 | ||||||
| Other revenue and fees | 2,436 | 1,950 | ||||||
| Total revenues | 181,179 | 164,622 | ||||||
| Operating expenses | ||||||||
| Property operating expenses | 45,060 | 42,044 | ||||||
| Ground rent expenses | 2,331 | 2,331 | ||||||
| General and administrative expenses | 15,972 | 15,708 | ||||||
| Observatory expenses | 8,431 | 7,855 | ||||||
| Real estate taxes | 32,241 | 31,788 | ||||||
| Depreciation and amortization | 46,081 | 47,408 | ||||||
| Total operating expenses | 150,116 | 147,134 | ||||||
| Total operating income | 31,063 | 17,488 | ||||||
| Other income (expense): | ||||||||
| Interest income | 4,178 | 2,595 | ||||||
| Interest expense | (25,128 | ) | (25,304 | ) | ||||
| Loss on early extinguishment of debt | (553 | ) | - | |||||
| Gain (loss) on sale of properties | - | 15,696 | ||||||
| Income before income taxes | 9,560 | 10,475 | ||||||
| Income tax benefit (expense) | 655 | 1,219 | ||||||
| Net income | 10,215 | 11,694 | ||||||
| Net (income) loss attributable to non-controlling interests: | ||||||||
| Non-controlling interest in the Operating Partnership | (3,500 | ) | (4,168 | ) | ||||
| Non-controlling interests in other partnerships | (4 | ) | 43 | |||||
| Preferred unit distributions | (1,050 | ) | (1,050 | ) | ||||
| Net income attributable to common stockholders | $ | 5,661 | $ | 6,519 | ||||
| Total weighted average shares | ||||||||
| Basic | 163,491 | 161,339 | ||||||
| Diluted | 267,494 | 265,197 | ||||||
| Earnings per share attributable to common stockholders | ||||||||
| Basic | $ | 0.03 | $ | 0.04 | ||||
| Diluted | $ | 0.03 | $ | 0.04 | ||||
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Empire State RealtyTrust,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 March31, | ||||||||
| 2024 | 2023 | |||||||
| Net income | $ | 10,215 | $ | 11,694 | ||||
| Non-controlling interests in other partnerships | (4 | ) | 43 | |||||
| Preferred unit distributions | (1,050 | ) | (1,050 | ) | ||||
| Real estate depreciation and amortization | 44,857 | 46,024 | ||||||
| (Gain) loss on sale of properties | - | (15,696 | ) | |||||
| FFO attributable to common stockholders and Operating Partnership units | 54,018 | 41,015 | ||||||
| Amortization of below-market ground leases | 1,958 | 1,958 | ||||||
| Modified FFO attributable to common stockholders and Operating Partnership units | 55,976 | 42,973 | ||||||
| Loss on early extinguishment of debt | 553 | - | ||||||
| Core FFO attributable to common stockholders and Operating Partnership units | $ | 56,529 | $ | 42,973 | ||||
| Total weighted average shares and Operating Partnership units | ||||||||
| Basic | 264,562 | 264,493 | ||||||
| Diluted | 267,494 | 265,197 | ||||||
| FFO per share | ||||||||
| Basic | $ | 0.20 | $ | 0.16 | ||||
| Diluted | $ | 0.20 | $ | 0.15 | ||||
| Modified FFO per share | ||||||||
| Basic | $ | 0.21 | $ | 0.16 | ||||
| Diluted | $ | 0.21 | $ | 0.16 | ||||
| Core FFO per share | ||||||||
| Basic | $ | 0.21 | $ | 0.16 | ||||
| Diluted | $ | 0.21 | $ | 0.16 | ||||
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Empire State RealtyTrust,Inc.
Condensed Consolidated Balance Sheets
(unaudited and amounts in thousands)
March31, | December31, 2023 | |||||||
| Assets | ||||||||
| Commercial real estate properties, at cost | $ | 3,702,317 | $ | 3,655,192 | ||||
| Less: accumulated depreciation | (1,288,519 | ) | (1,250,062 | ) | ||||
| Commercial real estate properties, net | 2,413,798 | 2,405,130 | ||||||
| Cash and cash equivalents | 333,573 | 346,620 | ||||||
| Restricted cash | 51,738 | 60,336 | ||||||
| Tenant and other receivables | 40,137 | 39,836 | ||||||
| Deferred rent receivables | 257,266 | 255,628 | ||||||
| Prepaid expenses and other assets | 74,472 | 98,167 | ||||||
| Deferred costs, net | 180,462 | 172,547 | ||||||
| Acquired below market ground leases, net | 319,284 | 321,241 | ||||||
| Right of use assets | 28,378 | 28,439 | ||||||
| Goodwill | 491,479 | 491,479 | ||||||
| Total assets | $ | 4,190,587 | $ | 4,219,333 | ||||
| Liabilities and equity | ||||||||
| Mortgage notes payable, net | $ | 876,497 | $ | 877,388 | ||||
| Senior unsecured notes, net | 973,926 | 973,872 | ||||||
| Unsecured term loan facility, net | 268,503 | 389,286 | ||||||
| Unsecured revolving credit facility | 120,000 | - | ||||||
| Accounts payable and accrued expenses | 91,005 | 99,756 | ||||||
| Acquired below market leases, net | 12,798 | 13,750 | ||||||
| Ground lease liabilities | 28,378 | 28,439 | ||||||
| Deferred revenue and other liabilities | 69,289 | 70,298 | ||||||
| Tenants’ security deposits | 25,457 | 35,499 | ||||||
| Total liabilities | 2,465,853 | 2,488,288 | ||||||
| Total equity | 1,724,734 | 1,731,045 | ||||||
| Total liabilities and equity | $ | 4,190,587 | $ | 4,219,333 | ||||
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