8-K
Empire State Realty Trust, Inc. (ESRT)
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<br> of Incorporation) | (Commission<br> <br>File Number) | (I.R.S. Employer<br> 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<br> of Incorporation) | (Commission<br> <br>File Number) | (I.R.S. Employer<br> Identification No.) |
| 111 West 33<br>rd<br> Street, 12<br>th<br> Floor<br> <br>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) |
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| ☐ | Soliciting material pursuant to Rule <br>14a-12<br> under the Exchange Act (17 CFR <br>240.14a-12) |
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| ☐ | Pre-commencement<br> communications pursuant to Rule <br>14d-2(b)<br> under the Exchange Act (17 CFR <br>240.14d-2(b)) |
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| ☐ | Pre-commencement<br> communications pursuant to Rule <br>13e-4(c)<br> under the Exchange Act (17 CFR <br>240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>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. |
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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. |
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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-<br> based LTI<br> equity | New Cap on<br> 2021 Time<br> based LTI<br> equity | 2020<br> Performance-<br> based LTI equity<br> max | New Cap on<br> 2021<br> Performance-<br> based LTI equity<br> max | Reduction in<br> LTI equity<br> from 2020 to<br> 2021 will be at<br> 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<br> REDUCTION | $ | 3,9<br>12<br>,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.
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| Item 7.01. | Regulation FD Disclosure |
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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. |
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(d) Exhibits.
| Exhibit<br> 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
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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.
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Core Funds Available for Distribution (“Core FAD”)
In addition to Core FFO, we present Core FAD by (i) adding to Core FFO non-real estate depreciation and amortization, the amortization of deferred financing costs, amortization of debt discounts and non-cash compensation expense and (ii) deducting straight line rent, 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
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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.
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SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EMPIRE STATE REALTY TRUST, INC.<br> <br>(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.<br> <br>(Registrant)<br> <br><br> <br>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 |
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EX-99.1
Exhibit 99.1
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,<br>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<br>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<br>second quarter 2019. |
| --- | --- |
| • | Strong liquidity position with $1.4 billion of total liquidity as of June 30, 2020, which consists of<br>$873 million of cash plus an additional $550 million available under its revolving credit facility. |
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| • | The Company repurchased $52 million of its common stock shares at a weighted average price of $7.99 per<br>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<br>$8.67. |
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| • | For the total portfolio in the second quarter, we signed 19 new, renewal, and expansion leases, representing<br>113,431 rentable square feet at an average starting rental rate of $64.43 per rentable square foot. |
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| • | Collected 84% of second quarter 2020 total billings with 86% for office tenants and 75% for retail tenants.<br>Through July 24, 2020, collected 90% of July total billings, with 93% for office tenants and 75% for retail tenants. |
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| • | The Empire State Building Observatory remained closed during the entire second quarter and reopened on<br>July 20, 2020. |
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| • | Declared a dividend of $0.105 per share. |
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| • | Announced the appointment of Christina Chiu to EVP and CFO, Aaron D. Ratner to SVP and CIO, and the departure of<br>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. |
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| • | Reduced expected full year G&A by approximately 12% from the previously disclosed 2020 G&A run rate of<br>$68 million to $60 million, excluding one-time severance charges. |
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| • | Reduced property operating expenses by $10 million in the second quarter 2020 from the prior year period and<br>expect further to reduce expenses by $12 million in the second half of 2020. |
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| • | Reduced required capital expenditures planned for 2020. |
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| • | Reduced annual base salary for Anthony E. Malkin, the Company’s Chairman, President and CEO, and Thomas P.<br>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<br>and $1.2 million reduction for Mr. Durels. |
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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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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 7/23/2020^1^ | Overall | Office | Retail | ||||||
|---|---|---|---|---|---|---|---|---|---|
| April | 86 | % | 86 | % | 84 | % | |||
| May | 83 | % | 85 | % | 73 | % | |||
| June | 83 | % | 85 | % | 69 | % | |||
| July | 90 | % | 93 | % | 75 | % | |||
| Collections with Application of Security Deposits^2^(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<br> |
|---|---|
| ^2^ | Collections against total billings, not adjusted for deferral agreements and reflects applied and potential<br>application of security deposits |
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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 LeasesExecuted | Total squarefootageexecuted | Average cashrent psf - leasesexecuted | Previouslyescalated cashrents psf | % of new cashrent overpreviouslyescalated 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 LeasesExecuted | Total squarefootageexecuted | Average cashrent psf - leasesexecuted | Previouslyescalated cashrents psf | % of new cashrent overpreviouslyescalated 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 102^nd^ 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 13^th^ reopening press release, are as follows:
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| • | For the first few weeks, hours of operation will be reduced to 8:00 a.m. to 11:00 p.m. |
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| • | To avoid crowds that will compromise social distancing, tickets for set times must be purchased at<br>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. |
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| • | 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<br>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<br>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<br>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<br>team; |
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| • | Departure of John B. Kessler and elimination of the Chief Operating Officer position; and |
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| • | Refreshment of the Board of Directors with the arrival of R. Paige Hood and departure of William H. Berkman.<br> |
| --- | --- |
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<br>December 31, 2020; |
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| • | ($1.2) million from the change in age requirement from 60 to 65 for the accounting vesting period for time-based<br>equity compensation; and |
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| • | ($2.7) million from the departure of our former Chief Operating Officer. |
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| • | Other corporate overhead: |
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| • | ($1.5) million of net changes from the addition of investment personnel and reductions in executive and corporate<br>staff, and temporary corporate salary reductions through December 31, 2020; and |
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| • | Balance from department budget cuts and lower anticipated spending due to<br>COVID-19. |
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| • | In addition, the Company announced a $3.9 million reduction in 2021 NEO annual equity compensation,<br>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<br>opportunities in operating our business. |
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| • | Property operating expenses |
|---|---|
| • | $12 million in one-time operating expense savings for 2H 2020 from<br>additional cost reduction efforts. |
| --- | --- |
| • | $4 million on an annualized basis of permanent cost reductions due to staffing and other reductions.<br> |
| --- | --- |
| • | Capital expenditures |
| --- | --- |
| • | $24 million in lower planned 2020 capital expenditures for buildings improvements compared to 2019 due to<br>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<br>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<br>Law 97; and |
|---|---|
| • | A $3.0 million one-time charge in general and administrative<br>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.
8
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.
9
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
10
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).
11
Contact:
Investors
Empire State Realty Trust InvestorRelations
(212) 850-2678
IR@empirestaterealtytrust.com
Media
Sard Verbinnen & Co.
(212) 687-8080
12
| 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<br>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 |
13
| 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<br>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 |
14
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 andnon-controlling interests | 34.532 | 62,518 | ||||
| Amortization of below-market ground leases | 1,958 | 1,958 | ||||
| Modified FFO attributable to common stockholders andnon-controlling interests | 36.490 | 64,476 | ||||
| Loss on early extinguishment of debt | — | — | ||||
| Severance expenses | 3,008 | — | ||||
| Core FFO attributable to common stockholders andnon-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 |
15
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 andnon-controlling interests | 86,200 | 117,232 | ||||
| Amortization of below-market ground leases | 3,916 | 3,916 | ||||
| Modified FFO attributable to common stockholders andnon-controlling interests | 90,116 | 121,148 | ||||
| Loss on early extinguishment of debt | 86 | — | ||||
| Severance expenses | 3,008 | — | ||||
| Core FFO attributable to common stockholders andnon-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 |
16
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 |
17
EX-99.2
Exhibit 99.2
| 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 RentBurn-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
| 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
| Second Quarter 2020<br><br><br>Financial Highlights<br><br><br>(unaudited and dollars in thousands, except per share amounts) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Selected Items: | 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<br>(6) | 54.3 | % | 47.8 | % | 28.2 | % | 27.7 | % | 29.8 | % | ||||
| Consolidated Net Debt to Total Market Capitalization<br>(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 |
All values are in US Dollars.
Notes:
| (1) | Represents non-GAAP financial measures. For a discussion on what these<br>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<br>the same ticket at no additional charge. |
| --- | --- |
| (5) | Observatory revenues include the fixed license fee received from WDFG North America, the Observatory gift shop<br>operator. See page 16. |
| --- | --- |
| (6) | Market capitalization represents the sum of (i) Company’s common stock per share price as of<br>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,<br>(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<br>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.<br> |
| --- | --- |
Page 4
| Second Quarter 2020<br><br><br>Property Summary - Same Store Net Operating Income (“NOI”) by Quarter<br><br><br>(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
| Second Quarter 2020<br><br><br>Net Operating Income (“NOI”), Initial Free Rent Burn-Off and Signed Leases Not Commenced<br><br><br>(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
| IncrementalAnnual<br>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<br>Feet | Cash<br>Rent Date | IncrementalAnnual<br>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<br>Commencement | Incremental<br><br><br>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<br>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
| Second Quarter 2020<br><br><br>Property Summary - Leasing Activity by Quarter<br><br><br>(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
| Second Quarter 2020<br><br><br>Property Summary - Leasing Activity by Quarter - (Continued)<br><br><br>(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.<br> |
|---|---|
| (2) | Presents all tenant improvement and leasing commission costs as if they were incurred in the period in which<br>the lease was signed, which may be different than the period in which they were actually paid. |
| --- | --- |
Page 8
| Second Quarter 2020<br><br><br>Total Portfolio Expirations and Vacates Summary<br><br><br>(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<br>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<br>“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<br>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<br>periods in 2020. |
| --- | --- |
| (5) | For forecasted periods, “New Leases” represents leases that have been signed with a new tenant, a<br>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<br>existing lease or exercises an early termination option. |
| --- | --- |
| (7) | For forecasted periods, “Intentional Vacates” assumes the Company decides not to renew tenant at the<br>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<br>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<br>of the above categories: Renewals & Relocations, New Leases, Tenant Vacates or Intentional Vacates and tenants’ whose intention is unknown. |
| --- | --- |
Page 9
| Second Quarter 2020<br><br><br>Property Detail<br><br><br>(unaudited) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AnnualizedRent | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Property Name | Location orSub-Market | RentableSquare Feet ^(1)^ | PercentOccupied ^(2)^ | AnnualizedRent ^(3)^ | per OccupiedSquare Foot ^(4)^ | Number ofLeases ^(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 ManhattanOffice 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 NewYork 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 RetailProperties | **** | 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<br>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.<br> |
| --- | --- |
| (4) | Represents annualized rent under leases commenced as of June 30, 2020 divided by occupied square feet.<br> |
| --- | --- |
| (5) | Represents the number of leases at each property or on a portfolio basis. If a tenant has more than one lease,<br>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.<br> |
| --- | --- |
| (7) | Includes 5,300 rentable square feet of space leased by WDFG North America, a licensee of the Company’s<br>observatory. |
| --- | --- |
| (8) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension<br>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<br>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<br>rights available to the Company, of approximately 30 years (expiring July 31, 2050). |
| --- | --- |
| (11) | First Stamford Place consists of three buildings. |
| --- | --- |
Page 10
| Second Quarter 2020<br><br><br>Tenant Lease Expirations<br><br><br>(unaudited) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Lease Expirations | Number ofLeasesExpiring ^(1)^ | RentableSquare FeetExpiring ^(2)^ | Percent ofPortfolioRentableSquareFeetExpiring | AnnualizedRent ^(3)^ | Percent ofAnnualizedRent | AnnualizedRent PerRentableSquareFoot | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 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<br>count and square footage). |
|---|---|
| (2) | Excludes (i) 193,895 rentable square feet of space across the Company portfolio attributable to building<br>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.<br> |
| --- | --- |
| (4) | Represents leases that are included in occupancy as of June 30, 2020 and expire on June 30, 2020.<br> |
| --- | --- |
| (5) | Excludes (i) retail space in the Company’s Manhattan office properties and (ii) the Empire State<br>Building broadcasting licenses and observatory operations. |
| --- | --- |
Page 11
| Second Quarter 2020<br><br><br>Tenant Lease Expirations<br><br><br>(unaudited) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Greater New York MetropolitanArea OfficeProperties | Number ofLeasesExpiring ^(1)^ | RentableSquareFeetExpiring ^(2)^ | Percent ofPortfolioRentableSquareFeetExpiring | AnnualizedRent ^(3)^ | Percent ofAnnualizedRent | AnnualizedRent PerRentableSquareFoot | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 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<br>count and square footage). |
|---|---|
| (2) | Excludes (i) 193,895 rentable square feet of space across the Company portfolio attributable to building<br>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.<br> |
| --- | --- |
| (4) | Represents leases that are included in occupancy as of June 30, 2020 and expire on June 30, 2020.<br> |
| --- | --- |
Page 12
| Second Quarter 2020<br><br><br>Tenant Lease Expirations<br><br><br>(unaudited) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Empire State Building Office ^(1)^ | Number ofLeasesExpiring ^(2)^ | RentableSquareFeetExpiring ^(3)^ | Percent ofPortfolioRentableSquareFeetExpiring | AnnualizedRent ^(4) (5)^ | Percent ofAnnualizedRent | AnnualizedRent PerRentableSquare 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 andLeases | AnnualizedBase Rent ^(7)^ | AnnualizedExpenseReimbursements | AnnualizedRent ^(4)^ | Percent ofAnnualizedRent | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| 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<br>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.<br> |
| --- | --- |
| (5) | Includes approximately $6.1 million of annualized rent related to physical space occupied by broadcasting<br>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.<br> |
| --- | --- |
| (7) | Represents license fees for the use of the Empire State Building mast and base rent for physical space occupied<br>by broadcasting tenants. |
| --- | --- |
Page 13
| Second Quarter 2020<br><br><br>20 Largest Tenants and Portfolio Tenant Diversification by Industry<br><br><br>(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 | 0.5 | % | 6,704,508 | 1.2 | % | ||||
| 14. HNTB Corporation | ESB | Feb. 2029 | 8.7 years | 105,143 | 1.0 | % | 6,629,258 | 1.2 | % | ||||
| 15. Legg Mason | First Stamford Place | Sept. 2024 | 4.3 years | 137,583 | 1.3 | % | 6,409,614 | 1.1 | % | ||||
| 16. WDFG North America | ESB | Dec. 2025 | 5.5 years | 5,300 | 0.1 | % | 6,037,484 | 1.1 | % | ||||
| 17. Shutterstock | ESB | Apr. 2029 | 8.8 years | 104,386 | 1.0 | % | 5,938,370 | 1.1 | % | ||||
| 18. Fragomen | 1400 Broadway | Feb. 2035 | 14.7 years | 107,680 | 1.0 | % | 5,922,400 | 1.1 | % | ||||
| 19. The Michael J. Fox Foundation | 111 West 33rd Street | Nov. 2029 | 9.4 years | 86,492 | 0.8 | % | 5,390,818 | 1.0 | % | ||||
| 20. ASCAP | 250 West 57th Street | Aug. 2034 | 14.2 years | 87,943 | 0.8 | % | 5,345,814 | 1.0 | % | ||||
| Total | 2,813,423 | 26.8 | % | $ | 185,541,234 | 34.2 | % |
Notes:
| (1) | Expiration dates are per lease and do not assume exercise of renewal or extension options. For tenants with<br>more than two leases, the lease expiration is shown as a range. |
|---|---|
| (2) | Represents the weighted average lease term, based on annualized rent. |
| --- | --- |
| (3) | Based on leases signed and commenced as of June 30, 2020. |
| --- | --- |
| (4) | Represents the percentage of rentable square feet of the Company’s office and retail portfolios in the<br>aggregate. |
| --- | --- |
| (5) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes.<br> |
| --- | --- |
| (6) | Represents the percentage of annualized rent of the Company’s office and retail portfolios in the<br>aggregate. |
| --- | --- |
Portfolio Tenant Diversification by Industry (based on annualized rent)
Page 14
| Second Quarter 2020<br><br><br>Capital Expenditures and Redevelopment Program and Leasing Opportunity<br><br><br>(unaudited and dollars in thousands) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Capital expenditures | June 30,2020 | March 31,2020 | December 31,2019 | September 30,2019 | June 30,2019 | |||||
| Tenant improvements—first generation | $ | 4,562 | $ | 4,913 | $ | 22,479 | $ | 17,639 | $ | 17,255 |
| Tenant improvements—second generation | 5,243 | 8,151 | 12,581 | 8,734 | 10,513 | |||||
| Leasing commissions—first generation | 1,272 | 4,001 | 578 | 574 | 4,742 | |||||
| Leasing commissions—second generation | 2,048 | 3,347 | 13,244 | 2,651 | 3,016 | |||||
| Building improvements—first generation | 358 | 8,379 | 14,457 | 10,988 | 12,910 | |||||
| Building improvements—second generation | 8,075 | 3,846 | 6,556 | 4,931 | 6,296 | |||||
| Observatory capital project ^(1)^ | 829 | 1,175 | 17,574 | 18,185 | 14,539 | |||||
| Development ^(2)^ | 525 | 811 | — | — | — | |||||
| Total | $ | 22,912 | $ | 34,623 | $ | 87,469 | $ | 63,702 | $ | 69,271 |
Note:
| (1) | Total Observatory capital project<br>spent-to-date was $157.4 million as of June 30, 2020. |
|---|---|
| (2) | Primarily represents design and engineering costs. |
| --- | --- |
Tenant space redevelopment by square feet ^(3) (4)^
Future redevelopment (Empire State Building) – 140,000 square feet
Future redevelopment (other Manhattan properties) – 330,000 square feet
Redevelopment completed – 7,500,000 square feet
Inventory of vacant space^(3)^
Developed – 560,000 square feet, 90%
Undeveloped – 60,000 square feet, 10%
Inventory of undeveloped space^(3)^
Vacant – 60,000 square feet, 13%
Expires in 2020 – 80,000 square feet, 17%
Expires in 2021 and thereafter – 330,000 square feet, 70%
Developed no square feet in the second quarter 2020 and 80,000 square feet as of June 30, 2020 YTD.
| Leasing Opportunity – Inventory of Current Vacant Space as of June 30, 2020 (insquare feet) | |
|---|---|
| Total Portfolio vacant space | 1,460,000 |
| Signed leases not commenced (“SLNC”): | |
| Manhattan Office Properties SLNC | 342,000 |
| Greater New York Office Properties SLNC | 25,000 |
| Retail Properties SLNC | 43,000 |
| Redeveloped Manhattan Office space | 513,000 |
| Greater New York Office Properties space | 361,000 |
| Retail Properties space | 47,000 |
| Undeveloped Manhattan Office space | 42,000 |
| Space held off market | 41,000 |
| Other | 46,000 |
| Total | 1,460,000 |
Notes:
| (3) | These estimates are based on the Company’s current budgets and are subject to change.<br> |
|---|---|
| (4) | Redevelopment program is for the Manhattan office assets only. Square footage based on market measurement.<br>Developed space includes space that has been demolished and completed asbestos abatement and available for lease up or ready to be prebuilt. |
| --- | --- |
Permanent building use spaces, amenity spaces and broadcasting spaces are excluded.
Page 15
| Second Quarter 2020<br><br><br>Observatory Summary<br><br><br>(unaudited and dollars in thousands) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Observatory NOI | Twelve Monthsto Date | June 30,2020 | March 31,2020 ^(1)^ | December 31,2019 | September 30,2019 | June 30,2019 | ||||||
| Observatory revenue ^(2)^ | $ | 94,935 | $ | 86 | $ | 19,544 | $ | 37,730 | $ | 37,575 | $ | 32,895 |
| Observatory expenses | 29,988 | 4,002 | 8,154 | 8,743 | 9,089 | 8,360 | ||||||
| NOI | **** | 64,947 | **** | (3,916) | **** | 11,390 | **** | 28,987 | **** | 28,486 | **** | 24,535 |
| Intercompany rent expense ^(3)^ | 62,546 | 4,053 | 11,536 | 23,715 | 23,242 | 21,491 | ||||||
| NOI after intercompany rent | $ | 2,401 | $ | (7,969) | $ | (146) | $ | 5,272 | $ | 5,244 | $ | 3,044 |
| 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%) | |||||||
| Number of bad weather days during open days (“BWD”) ^(5)^ | N/A | 15 | 22 | 12 | 24 | |||||||
| Days closed due to COVID-19 | 91 | 15 | — | — | — | |||||||
| 102nd floor revenue ^(6)^ | $ | — | $ | 1,808 | $ | 3,375 | $ | — | $ | — |
Notes:
| (1) | Due to the COVID-19 pandemic, the Observatory was closed on<br>March 16, 2020. The Observatory reopened on July 20, 2020. |
|---|---|
| (2) | Observatory revenues include the fixed license fee received from WDFG North America, the Observatory gift shop<br>operator. For the three months ended June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019 and June 30, 2019, the fixed license fee was $0, $1,314, $1,453, $1,453, and $1,453, respectively.<br> |
| --- | --- |
| (3) | The observatory pays a market-based rent payment comprised of fixed and percentage rent to the Empire State<br>Building. Intercompany rent is eliminated upon consolidation. |
| --- | --- |
| (4) | Reflects the number of visitors who pass through the turnstile, excluding visitors who make a second visit on<br>the same ticket at no additional charge. |
| --- | --- |
| (5) | The Company defines a bad weather day as one in which the top of the Empire State Building is obscured from<br>view for more than 50% of the day. |
| --- | --- |
| (6) | Reflects revenues derived from the 102nd floor observatory which are included in total observatory revenues<br>above. |
| --- | --- |
Annual Observatory Revenues 2015 to 2019
Note:
| (1) | The 102nd floor observatory was closed for approximately nine months in 2019 for renovations.<br> |
|---|
Page 16
| Second Quarter 2020<br><br><br>Condensed Consolidated Balance Sheets<br><br><br>(unaudited and dollars in thousands) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,2020 | March 31,2020 | December 31,2019 | September 30,2019 | June 30,2019 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Assets | |||||||||||||||
| Commercial real estate properties, at cost: | |||||||||||||||
| Land | $ | 201,196 | $ | 201,196 | $ | 201,196 | $ | 201,196 | $ | 201,196 | |||||
| Development costs | 9,325 | 8,800 | 7,989 | 7,989 | 7,987 | ||||||||||
| Building and improvements | 2,914,528 | 2,913,312 | 2,900,248 | 2,830,353 | 2,784,472 | ||||||||||
| 3,125,049 | 3,123,308 | 3,109,433 | 3,039,538 | 2,993,655 | |||||||||||
| Less: accumulated depreciation | (911,546 | ) | (886,822 | ) | (862,534 | ) | (829,495 | ) | (809,197 | ) | |||||
| Commercial real estate properties, net | 2,213,503 | 2,236,486 | 2,246,899 | 2,210,043 | 2,184,458 | ||||||||||
| Cash and cash equivalents | 872,970 | 1,008,983 | 233,946 | 293,710 | 375,335 | ||||||||||
| Restricted cash | 58,878 | 36,881 | 37,651 | 36,609 | 38,043 | ||||||||||
| Short term investments | — | — | — | — | 150,000 | ||||||||||
| Tenant and other receivables, net | 29,800 | 22,549 | 25,423 | 29,287 | 31,264 | ||||||||||
| Deferred rent receivables, net | 226,444 | 229,154 | 220,960 | 214,685 | 209,510 | ||||||||||
| Prepaid expenses and other assets | 68,109 | 40,583 | 65,453 | 41,927 | 60,818 | ||||||||||
| Deferred costs, net | 211,356 | 218,578 | 228,150 | 223,698 | 228,782 | ||||||||||
| Acquired below-market ground leases, net | 348,651 | 350,609 | 352,566 | 354,524 | 356,482 | ||||||||||
| Right of use assets | 29,205 | 29,256 | 29,307 | 29,355 | 29,404 | ||||||||||
| Goodwill | 491,479 | 491,479 | 491,479 | 491,479 | 491,479 | ||||||||||
| Total assets | $ | 4,550,395 | $ | 4,664,558 | $ | 3,931,834 | $ | 3,925,317 | $ | 4,155,575 | |||||
| Liabilities and Equity | |||||||||||||||
| Mortgage notes payable, net | $ | 603,974 | $ | 604,763 | $ | 605,542 | $ | 606,313 | $ | 607,072 | |||||
| Senior unsecured notes, net | 973,053 | 973,002 | 798,392 | 798,347 | 1,047,939 | ||||||||||
| Unsecured term loan facility, net | 387,059 | 386,568 | 264,640 | 264,517 | 264,394 | ||||||||||
| Unsecured revolving credit facility, net | 546,778 | 546,436 | — | — | — | ||||||||||
| Accounts payable and accrued expenses | 104,992 | 142,315 | 143,786 | 143,201 | 131,842 | ||||||||||
| Acquired below-market leases, net | 35,170 | 37,623 | 39,679 | 42,655 | 45,651 | ||||||||||
| Ground lease liabilties | 29,205 | 29,256 | 29,307 | 29,355 | 29,404 | ||||||||||
| Deferred revenue and other liabilities | 62,996 | 64,176 | 72,015 | 68,742 | 48,858 | ||||||||||
| Tenants’ security deposits | 51,130 | 30,543 | 30,560 | 31,841 | 32,383 | ||||||||||
| Total liabilities | 2,794,357 | 2,814,682 | 1,983,921 | 1,984,971 | 2,207,543 | ||||||||||
| Total equity | 1,756,038 | 1,849,876 | 1,947,913 | 1,940,346 | 1,948,032 | ||||||||||
| Total liabilities and equity | $ | 4,550,395 | $ | 4,664,558 | $ | 3,931,834 | $ | 3,925,317 | $ | 4,155,575 |
Page 17
| Second Quarter 2020<br><br><br>Condensed Consolidated Statements of Operations<br><br><br>(unaudited and in thousands, except per share amounts) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30,2020 | March 31,2020 | December 31,2019 | September 30,2019 | June 30,2019 | |||||||||||
| Revenues | |||||||||||||||
| Rental revenue ^(1)^ | $ | 137,999 | $ | 148,113 | $ | 151,701 | $ | 150,225 | $ | 141,071 | |||||
| Observatory revenue | 86 | 19,544 | 37,730 | 37,575 | 32,895 | ||||||||||
| Lease termination fees | 1,033 | 211 | 1,240 | 2,361 | 363 | ||||||||||
| Third party management and other fees | 301 | 346 | 299 | 304 | 331 | ||||||||||
| Other revenue and fees | 1,611 | 2,010 | 3,963 | 2,408 | 1,584 | ||||||||||
| Total revenues | 141,030 | 170,224 | 194,933 | 192,873 | 176,244 | ||||||||||
| Operating expenses | |||||||||||||||
| Property operating expenses | 29,750 | 41,468 | 43,901 | 47,894 | 40,227 | ||||||||||
| Ground rent expenses | 2,332 | 2,331 | 2,332 | 2,331 | 2,332 | ||||||||||
| General and administrative expenses | 18,149 | 15,951 | 16,618 | 14,421 | 15,998 | ||||||||||
| Observatory expenses | 4,002 | 8,154 | 8,743 | 9,089 | 8,360 | ||||||||||
| Real estate taxes | 29,579 | 29,254 | 29,818 | 29,599 | 28,267 | ||||||||||
| Impairment charge | 4,101 | ^(2)^ | — | — | — | — | |||||||||
| Depreciation and amortization | 52,783 | 46,093 | 46,409 | 44,260 | 44,821 | ||||||||||
| Total operating expenses | 140,696 | 143,251 | 147,821 | 147,594 | 140,005 | ||||||||||
| Total operating income | 334 | 26,973 | 47,112 | 45,279 | 36,239 | ||||||||||
| Other income (expense) | |||||||||||||||
| Interest income | 1,526 | 637 | 1,352 | 2,269 | 3,899 | ||||||||||
| Interest expense | (23,928 | ) | (19,618 | ) | (18,534 | ) | (19,426 | ) | (20,597 | ) | |||||
| Loss on early extinguishment of debt | — | (86 | ) | — | — | — | |||||||||
| Income (loss) before income taxes | (22,068 | ) | 7,906 | 29,930 | 28,122 | 19,541 | |||||||||
| Income tax (expense) benefit | 2,450 | 382 | (1,210 | ) | (1,338 | ) | (611 | ) | |||||||
| Net income (loss) | (19,618 | ) | 8,288 | 28,720 | 26,784 | 18,930 | |||||||||
| Perpetual preferred unit distributions | (1,047 | ) | (1,050 | ) | (1,041 | ) | (234 | ) | (234 | ) | |||||
| Net (income) loss attributable to non-controlling<br>interests | 7,872 | (2,743 | ) | (10,880 | ) | (10,668 | ) | (7,609 | ) | ||||||
| Net income (loss) attributable to common stockholders | $ | (12,793 | ) | $ | 4,495 | $ | 16,799 | $ | 15,882 | $ | 11,087 | ||||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 175,433 | 181,741 | 180,166 | 178,352 | 176,796 | ||||||||||
| Diluted | 283,384 | 292,645 | 296,852 | 298,151 | 298,131 | ||||||||||
| Net income (loss) per share attributable to common stockholders | **** | ||||||||||||||
| Basic and diluted | $ | (0.07 | ) | $ | 0.02 | $ | 0.09 | $ | 0.09 | $ | 0.06 | ||||
| Dividends per share | $ | 0.105 | $ | 0.105 | $ | 0.105 | $ | 0.105 | $ | 0.105 |
Notes:
| (1) | The following table reflects the components of rental revenue. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Rental Revenue | June 30,2020 | March 31,2020 | December 31,2019 | September 30,2019 | June 30,2019 | |||||
| Base rent | $ | 122,374 | $ | 130,577 | $ | 130,234 | $ | 129,098 | $ | 125,170 |
| Billed tenant expense reimbursement | 15,625 | 17,536 | 21,467 | 21,127 | 15,901 | |||||
| Total rental revenue | $ | 137,999 | $ | 148,113 | $ | 151,701 | $ | 150,225 | $ | 141,071 |
The Company believes the preceding table of the components of rental revenue is not, and is not intended to be, a presentation in accordance with GAAP. The Company believes this information is frequently used by management, investors, securities analysts and other interested parties to evaluate the Company’s performance.
| (2) | Reflects a $4.1 million non-cash write-off of prior capitalized expenditures on a combined heat and power<br>generation project for the Empire State Building that has been rendered economically unfeasible due to New York City’s new Local Law 97. |
|---|
Page 18
| Second Quarter 2020<br><br><br>Funds from Operations (“FFO”), Modified Funds From Operations (“Modified FFO”), Core Funds<br><br><br>from Operations (“Core FFO”), Core Funds Available for Distribution (“Core FAD”) and EBITDA<br><br><br>(unaudited and in thousands, except per share amounts) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30,2020 | March 31,2020 | December 31,2019 | September 30,2019 | June 30,2019 | |||||||||||
| Reconciliation of Net Income to FFO, Modified FFO and Core FFO | |||||||||||||||
| Net Income (loss) | $ | (19,618 | ) | $ | 8,288 | $ | 28,720 | $ | 26,784 | $ | 18,930 | ||||
| Preferred unit distributions | (1,047 | ) | (1,050 | ) | (1,041 | ) | (234 | ) | (234 | ) | |||||
| Real estate depreciation and amortization | 51,096 | 44,430 | 45,298 | 43,303 | 43,822 | ||||||||||
| Impairment charge | 4,101 | — | — | — | — | ||||||||||
| FFO attributable to common stockholders andnon-controlled interests | 34,532 | 51,668 | 72,977 | 69,853 | 62,518 | ||||||||||
| Amortization of below-market ground lease | 1,958 | 1,958 | 1,958 | 1,957 | 1,958 | ||||||||||
| Modified FFO attributable to common stockholders andnon-controlled interests | 36,490 | 53,626 | 74,935 | 71,810 | 64,476 | ||||||||||
| Loss on early extinguishment of debt | — | 86 | — | — | — | ||||||||||
| Severance expenses | 3,008 | — | — | — | — | ||||||||||
| Core FFO attributable to common stockholders andnon-controlled interests | $ | 39,498 | $ | 53,712 | $ | 74,935 | $ | 71,810 | $ | 64,476 | |||||
| Total weighted average shares and Operating Partnership Units | |||||||||||||||
| Basic | 283,384 | 292,645 | 296,852 | 298,151 | 298,131 | ||||||||||
| Diluted | 283,384 | 292,645 | 296,852 | 298,151 | 298,131 | ||||||||||
| FFO attributable to common stockholders andnon-controlled interests per share | |||||||||||||||
| Basic | $ | 0.12 | $ | 0.18 | $ | 0.25 | $ | 0.23 | $ | 0.21 | |||||
| Diluted | $ | 0.12 | $ | 0.18 | $ | 0.25 | $ | 0.23 | $ | 0.21 | |||||
| Modified FFO attributable to common stockholders andnon-controlled interests per share | |||||||||||||||
| Basic | $ | 0.13 | $ | 0.18 | $ | 0.25 | $ | 0.24 | $ | 0.22 | |||||
| Diluted | $ | 0.13 | $ | 0.18 | $ | 0.25 | $ | 0.24 | $ | 0.22 | |||||
| Core FFO attributable to common stockholders andnon-controlled interests per share | |||||||||||||||
| Basic | $ | 0.14 | $ | 0.18 | $ | 0.25 | $ | 0.24 | $ | 0.22 | |||||
| Diluted | $ | 0.14 | $ | 0.18 | $ | 0.25 | $ | 0.24 | $ | 0.22 | |||||
| Reconciliation of Core FFO to Core FAD | |||||||||||||||
| Core FFO | $ | 39,498 | $ | 53,712 | $ | 74,935 | $ | 71,810 | $ | 64,476 | |||||
| Add: | |||||||||||||||
| Amortization of deferred financing costs | 1,049 | 894 | 873 | 923 | 1,020 | ||||||||||
| Non-real estate depreciation and amortization | 1,686 | 1,664 | 1,110 | 958 | 998 | ||||||||||
| Amortization of non-cash compensation expense | 8,778 | 5,892 | 5,465 | 4,049 | 5,924 | ||||||||||
| Amortization of debt discount | — | — | — | 311 | 668 | ||||||||||
| Amortization of loss on interest rate derivative | 938 | 447 | 385 | 385 | 385 | ||||||||||
| Deduct: | |||||||||||||||
| Straight-line rental revenues | 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 | ) | |||||
| Corporate capital expenditures | (141 | ) | (426 | ) | (678 | ) | (614 | ) | (463 | ) | |||||
| Tenant improvements—second generation | (5,243 | ) | (8,151 | ) | (12,581 | ) | (8,734 | ) | (10,513 | ) | |||||
| Building improvements—second generation | (8,075 | ) | (3,846 | ) | (6,556 | ) | (4,931 | ) | (6,296 | ) | |||||
| Leasing commissions—second generation | (2,048 | ) | (3,347 | ) | (13,244 | ) | (2,651 | ) | (3,016 | ) | |||||
| Core FAD | $ | 37,786 | $ | 37,738 | $ | 41,903 | $ | 54,650 | $ | 48,235 | |||||
| Reconciliation of Net Income to EBITDA | |||||||||||||||
| Net income (loss) | $ | (19,618 | ) | $ | 8,288 | $ | 28,720 | $ | 26,784 | $ | 18,930 | ||||
| Interest expense | 23,928 | 19,618 | 18,534 | 19,426 | 20,597 | ||||||||||
| Income tax expense (benefit) | (2,450 | ) | (382 | ) | 1,210 | 1,338 | 611 | ||||||||
| Depreciation and amortization | 52,783 | 46,093 | 46,409 | 44,260 | 44,821 | ||||||||||
| EBITDA | 54,643 | 73,617 | 94,873 | 91,808 | 84,959 | ||||||||||
| Impairment charges | 4,101 | — | — | — | — | ||||||||||
| Adjusted EBITDA | $ | 58,744 | $ | 73,617 | $ | 94,873 | $ | 91,808 | $ | 84,959 |
Page 19
| Second Quarter 2020<br><br><br>Debt Summary<br> <br>(unaudited anddollars in thousands) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2020 | March 31, 2020 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Weighted Average | Weighted Average | |||||||||||||||
| Debt Summary | Balance | InterestRate | Maturity(Years) | Balance | InterestRate | Maturity(Years) | ||||||||||
| Fixed rate mortgage debt | $ | 608,871 | 4.10 | % | 8.5 | $ | 609,851 | 4.10 | % | 8.8 | ||||||
| Senior unsecured notes | 975,000 | 4.10 | % | 9.7 | 975,000 | 4.10 | % | 9.9 | ||||||||
| Unsecured term loan facilities ^(1)^ | 265,000 | 3.40 | % | 5.1 | 390,000 | 3.70 | % | 5.8 | ||||||||
| Total fixed rate debt | 1,848,871 | 4.02 | % | 8.6 | 1,974,851 | 4.02 | % | 8.8 | ||||||||
| Unsecured term loan facilities | 125,000 | 1.66 | % | 6.5 | — | — | — | |||||||||
| Unsecured revolving credit facilities | 550,000 | 1.26 | % | 1.2 | 550,000 | 2.09 | % | 1.4 | ||||||||
| Total variable rate debt ^(2)^ | 675,000 | 1.34 | % | 2.2 | 550,000 | 2.09 | % | 1.4 | ||||||||
| Total debt | 2,523,871 | 3.41 | % | 6.9 | 2,524,851 | 3.60 | % | 7.2 | ||||||||
| Deferred financing costs, net | (13,007 | ) | (14,082 | ) | ||||||||||||
| Total | $ | 2,510,864 | $ | 2,510,769 |
Note:
| (1) | LIBOR is fixed at 2.1485% for $265 million under variable to fixed interest rate swap agreements.<br> | |||||||
|---|---|---|---|---|---|---|---|---|
| Available Capacity | Facility | Outstanding atJune 30,2020 | Lettersof Credit | AvailableCapacity | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Unsecured revolving credit facility ^(1)^ | $ | 1,100,000 | $ | 550,000 | $ | — | $ | 550,000 |
| Covenant Summary | Required | CurrentQuarter | InCompliance | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Maximum Total Leverage^(2)^ | < 60 | % | 34.2 | % | Yes | |||
| Maximum Secured Debt | < 40 | % | 8.2 | % | Yes | |||
| Minimum Fixed Charge Coverage | > 1.50x | 3.3x | Yes | |||||
| Minimum Unencumbered Interest Coverage | > 1.75x | 5.7x | Yes | |||||
| Maximum Unsecured Leverage | < 60 | % | 30.6 | % | Yes |
Notes:
| (1) | The unsecured revolving credit and term loan facilities have an accordion feature allowing for an increase in<br>maximum aggregate principal balance to $2.0 billion under certain circumstances. This unsecured revolving credit facility matures in August 2021 with two additional six-month extension options.<br> |
|---|---|
| (2) | Represents the ratio of total indebtedness to total asset value as defined and determined in accordance with<br>the credit facility agreement. |
| --- | --- |
Page 20
| Second Quarter 2020<br><br><br>Debt Detail<br> <br>(unaudited anddollars in thousands) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| StatedInterestRate (%) | EffectiveInterestRate (%) ^(1)^ | PrincipalBalance | MaturityDate | Amortization | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Fixed rate mortgage debt: | |||||||||||||
| Metro Center | 3.59 | % | 3.66 | % | $ | 88,526 | 11/5/2024 | 30 years | |||||
| 10 Union Square | 3.70 | % | 3.97 | % | 50,000 | 4/1/2026 | Interest only | ||||||
| 1542 Third Avenue | 4.29 | % | 4.53 | % | 30,000 | 5/1/2027 | Interest only | ||||||
| First Stamford Place ^(2)^ | 4.28 | % | 4.75 | % | 180,000 | 7/1/2027 | 5 years interest only;<br> <br>30 years thereafter | ||||||
| 1010 Third Avenue and 77 West 55th Street | 4.01 | % | 4.20 | % | 37,868 | 1/5/2028 | 30 years | ||||||
| 10 Bank Street | 4.23 | % | 4.36 | % | 32,477 | 6/1/2032 | 25 years | ||||||
| 383 Main Avenue | 4.44 | % | 4.55 | % | 30,000 | 6/30/2032 | 5 years interest only;<br>30 years thereafter | ||||||
| 1333 Broadway | 4.21 | % | 4.29 | % | 160,000 | 2/5/2033 | Interest only | ||||||
| Total mortgage debt | 608,871 | ||||||||||||
| Unsecured revolving credit facility | LIBOR plus 1.10 | % | 2.17 | % | 550,000 | 8/29/2021 | Interest only | ||||||
| Unsecured term loan facility | LIBOR plus 1.20 | % | 3.61 | % | 215,000 | 3/19/2025 | Interest only | ||||||
| Unsecured term loan facility | LIBOR plus 1.50 | % | 2.98 | % | 175,000 | 12/31/2026 | Interest only | ||||||
| Senior unsecured notes: | |||||||||||||
| Series A | 3.93 | % | 3.96 | % | 100,000 | 3/27/2025 | Interest only | ||||||
| Series B | 4.09 | % | 4.12 | % | 125,000 | 3/27/2027 | Interest only | ||||||
| Series C | 4.18 | % | 4.21 | % | 125,000 | 3/27/2030 | Interest only | ||||||
| Series D | 4.08 | % | 4.11 | % | 115,000 | 1/22/2028 | Interest only | ||||||
| Series E | 4.26 | % | 4.27 | % | 160,000 | 3/22/2030 | Interest only | ||||||
| Series F | 4.44 | % | 4.45 | % | 175,000 | 3/22/2033 | Interest only | ||||||
| Series G | 3.61 | % | 4.89 | % | 100,000 | 3/17/2032 | Interest only | ||||||
| Series H | 3.73 | % | 5.00 | % | 75,000 | 3/17/2035 | Interest only | ||||||
| Total / weighted average debt | 3.41 | % | 3.71 | % | 2,523,871 | ||||||||
| Deferred financing costs, net | (13,007 | ) | |||||||||||
| Total | $ | 2,510,864 |
Notes:
| (1) | The effective interest rate is composed of the stated interest rate, deferred financing cost amortization and<br>interest associated with variable to fixed interest rate swap agreements. |
|---|---|
| (2) | Represents a $164 million mortgage loan bearing interest at 4.09% and a $16 million loan bearing<br>interest at 6.25%. |
| --- | --- |
Page 21
| Second Quarter 2020<br><br><br>Debt Maturities and Ground Lease Commitments<br><br><br>(unaudited and dollars in thousands) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year | Maturities ^(1)^ | Amortization | Total | Percentage ofTotal Debt | WeightedAverageInterest<br>Rate ofMaturing Debt | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | $ | — | $ | 1,987 | $ | 1,987 | 0.1 | % | n/a | ||||
| 2021 | 550,000 | 4,090 | 554,090 | 22.0 | % | 1.26 | % | ||||||
| 2022 | — | 5,628 | 5,628 | 0.2 | % | n/a | |||||||
| 2023 | — | 7,876 | 7,876 | 0.3 | % | n/a | |||||||
| 2024 | 77,675 | 7,958 | 85,633 | 3.4 | % | 3.59 | % | ||||||
| 2025 | 315,000 | 5,826 | 320,826 | 12.7 | % | 3.57 | % | ||||||
| 2026 | 225,000 | 6,080 | 231,080 | 9.2 | % | 3.83 | % | ||||||
| 2027 | 319,000 | 5,008 | 324,008 | 12.8 | % | 4.21 | % | ||||||
| 2028 | 146,092 | 1,877 | 147,969 | 5.9 | % | 4.06 | % | ||||||
| 2029 | — | 1,959 | 1,959 | 0.1 | % | n/a | |||||||
| Thereafter | 837,656 | 5,159 | 842,815 | 33.4 | % | 4.16 | % | ||||||
| Total debt | $ | 2,470,423 | $ | 53,448 | 2,523,871 | 100.0 | % | 3.41 | % | ||||
| Deferred financing costs, net | (13,007 | ) | |||||||||||
| Total | $ | 2,510,864 |
Note:
| (1) | Assumes no extension options are exercised. |
|---|
Debt Maturity and Amortization Profile
Ground Lease Commitments ^(1)^
| Year | 1350Broadway ^(2)^ | 1400Broadway^(3)^ | 111 West33rd Street ^(4)^ | Total | ||||
|---|---|---|---|---|---|---|---|---|
| 2020 | $ | 54 | $ | 338 | $ | 368 | $ | 759 |
| 2021 | 108 | 675 | 735 | 1,518 | ||||
| 2022 | 108 | 675 | 735 | 1,518 | ||||
| 2023 | 108 | 675 | 735 | 1,518 | ||||
| 2024 | 108 | 675 | 735 | 1,518 | ||||
| Thereafter | 1,929 | 26,325 | 38,526 | 66,780 | ||||
| $ | 2,415 | $ | 29,363 | $ | 41,834 | $ | 73,611 |
Notes:
| (1) | There are no fair value market resets, no step-ups, and no escalations<br>in the three ground lease commitments. |
|---|---|
| (2) | Expires July 31, 2050 with a remaining term, including unilateral extension rights available to the<br>Company, of approximately 30 years. |
| --- | --- |
| (3) | Expires December 31, 2063 with a remaining term, including unilateral extension rights available to the<br>Company, of approximately 43 years. |
| --- | --- |
| (4) | Expires May 31, 2077 with a remaining term, including unilateral extension rights available to the<br>Company, of approximately 57 years. |
| --- | --- |
Page 22
| Second Quarter 2020<br><br><br>Supplemental Definitions |
|---|
Funds From Operations (“FFO”)
We compute FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment 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 frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of its performance is limited. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another.
Modified Funds From Operations (“Modified FFO”)
Modified FFO adds back an adjustment for any above or below-market ground lease amortization to traditionally defined FFO. We 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 FundsFrom Operations (“Core FFO”)
Core FFO adds back to Modified FFO the following items: loss on early extinguishment of debt, acquisition expenses 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.
Core Funds Available forDistribution (“Core FAD”)
In addition to Core FFO, we present Core FAD by (i) adding to Core FFO non-real estate depreciation and amortization, the amortization of deferred financing costs, amortization of debt discounts and non-cash compensation expenses and (ii) deducting straight line rent, recurring second generation leasing commissions, tenant improvements, prebuilts, capital expenditures, furniture, fixtures & equipment, amortization of debt premiums and above/below market rent revenue. Core FAD is presented solely as a supplemental disclosure that we believe provides useful information regarding our ability to fund our dividends. Core FAD does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FAD is not indicative of cash available to fund ongoing cash needs., including the ability to make cash distributions. There can be no assurance that Core FAD presented by us is comparable to similarly titled measures of other REITs.
Net Operating Income (NOI)
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, impairment charges, loss on early extinguishment of debt 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 net operating income because it is specific to the particular financing capabilities and constraints of the owner. The cost of funds is also 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 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 GAAP. 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. 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.
Page 23