(State or other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
(State or other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
rd Streetth Floor |
||||
(Address of Principal Executive Offices) |
(Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Empire State Realty Trust, Inc. |
||||
Empire State Realty OP, L.P. |
||||
Item 2.02. |
Results of Operations and Financial Condition. |
Item 7.01. |
Regulation FD Disclosure |
Item 9.01. |
Financial Statements and Exhibits. |
Exhibit No. |
Description | |||
99.1 |
||||
99.2 |
||||
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
EMPIRE STATE REALTY TRUST, INC. (Registrant) | ||||||
Date: October 23, 2019 |
By: |
/s/ Thomas N. Keltner, Jr. | ||||
Name: |
Thomas N. Keltner, Jr. | |||||
Title: |
Executive Vice President, General Counsel and Secretary |
EMPIRE STATE REALTY OP, L.P. (Registrant) By: Empire State Realty Trust, Inc., as general partner | ||||||
Date: October 23, 2019 |
By: |
/s/ Thomas N. Keltner, Jr. | ||||
Name: |
Thomas N. Keltner, Jr. | |||||
Title: |
Executive Vice President, General Counsel and Secretary |
Exhibit 99.1
EMPIRE STATE REALTY TRUST ANNOUNCES THIRD QUARTER 2019 RESULTS
- Earnings of $0.09 Per Fully Diluted Share -
- Core FFO of $0.24 Per Fully Diluted Share -
- Leased 388,686 Square Feet of Office and Retail Space
New York, New York, October 23, 2019 - 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 third quarter of 2019.
Tenants continue to be attracted to our well-located, amenity-rich office buildings, and during the third quarter, we leased approximately 389,000 square feet of office and retail space. In aggregate for the quarter, we delivered cash rent spreads of 32.6% on new Manhattan office leases and 23.9% on all leases portfolio-wide over previous fully escalated cash rents, stated John B. Kessler, Empire State Realty Trusts President and Chief Operating Officer.
Year-to-date, Observatory revenue adjusted for the closure of the 102nd floor observation deck was roughly flat due to improved pricing, offset by lower visitation, added Kessler. On October 12th we continued the rolling unveil of the new Observatory and opened the 102nd floor to fantastic worldwide media coverage and excellent visitor feedback. Our new 2nd floor museum and reimagined 102nd floor observation deck together now show very well. We remain well positioned with a fortress balance sheet as we continue to execute on our long-term strategy to consolidate, redevelop and re-lease space to larger, higher credit quality tenants at higher rents and create long-term value for shareholders.
Third Quarter Highlights
| Net income attributable to the Company was $0.09 per fully diluted share. |
| Core Funds From Operations (Core FFO) was $0.24 per fully diluted share. |
| Occupancy and leased percentages at September 30, 2019: |
| Total portfolio was 89.4% occupied; including Signed Leases Not Commenced (SLNC), the total portfolio was 91.7% leased. |
1
| Manhattan office portfolio (excluding the retail component of these properties) was 89.6% occupied; including SLNC, the Manhattan office portfolio was 92.1% leased. |
| Retail portfolio was 90.7% occupied; including SLNC, the retail portfolio was 94.3% leased. |
| Empire State Building was 93.4% occupied; including SLNC, was 95.3% leased. |
| Signed 25 leases, representing 388,686 rentable square feet across the total portfolio, and achieved a 23.9% increase in mark-to-market cash rent over previous fully escalated cash rents portfolio-wide on new, renewal, and expansion leases. |
| Signed 13 new leases, representing 266,769 rentable square feet for the Manhattan office portfolio (excluding the retail component of these properties), and achieved an increase of 32.6% in mark-to-market cash rent over previous fully escalated cash rents. |
| Empire State Building Observatory revenue for the third quarter 2019 decreased by 6.6% to $37.6 million from $40.2 million in the third quarter 2018. Net operating income for the third quarter 2019 decreased by 9.2% to $28.5 million from $31.4 million in the third quarter 2018. As a reminder, the 102nd floor observation deck was closed through the third quarter 2019 and opened on October 12, 2019. |
| Declared a dividend of $0.105 per share. |
Financial Results for the Third Quarter 2019
Net income attributable to common stockholders was $15.9 million, or $0.09 per fully diluted share, compared to $16.3 million, or $0.10 per fully diluted share, in the third quarter of 2018.
Both Core and Modified FFO were $71.8 million, or $0.24 per fully diluted share, compared to $73.0 million, or $0.25 per fully diluted share, in the third quarter of 2018.
FFO was $69.9 million, or $0.23 per fully diluted share, compared to $71.0 million, or $0.24 per fully diluted share, in the third quarter of 2018.
A reconciliation of net income to FFO, Modified FFO and Core FFO is provided in the tables accompanying this press release.
2
Financial Results for the Nine Months Ended September 30, 2019
Net income attributable to common stockholders was $32.6 million, or $0.18 per fully diluted share, compared to $42.8 million, or $0.26 per fully diluted share, in the nine months ended September 30, 2018.
Both Core and Modified FFO were $193.0 million, or $0.65 per fully diluted share, compared to $203.2 million, or $0.68 per fully diluted share, in the nine months ended September 30, 2018.
FFO was $187.1 million, or $0.63 per fully diluted share, compared to $197.3 million, or $0.66 per fully diluted share, in the nine months ended September 30, 2018.
Portfolio Operations
As of September 30, 2019, the Companys total portfolio contained 10.1 million rentable square feet of office and retail space. The Companys occupancy levels fluctuate in certain periods due to the timing lag between the date of tenants move out and the date of Companys completion of redevelopment work for new leases to commence. As of September 30, 2019, the Companys portfolio was occupied and leased as shown below. Leased percentages include signed leases not commenced.
3
September 30, 2019 | June 30, 2019 | September 30, 2018 | ||||||||||
Percent occupied: |
||||||||||||
Total portfolio |
89.4 | % | 90.2 | % | 88.4 | % | ||||||
Total office |
89.3 | % | 90.1 | % | 88.3 | % | ||||||
Manhattan office |
89.6 | % | 90.7 | % | 88.3 | % | ||||||
Empire State Building |
93.4 | % | 93.5 | % | 94.0 | % | ||||||
Retail |
90.7 | % | 90.5 | % | 90.8 | % | ||||||
Percent leased: |
||||||||||||
Total portfolio |
91.7 | % | 92.2 | % | 92.1 | % | ||||||
Total office |
91.5 | % | 92.2 | % | 92.2 | % | ||||||
Manhattan office |
92.1 | % | 93.0 | % | 93.0 | % | ||||||
Empire State Building |
95.3 | % | 95.2 | % | 94.3 | % | ||||||
Retail |
94.3 | % | 92.3 | % | 90.8 | % |
Leasing
For the three months ended September 30, 2019, the Company signed 25 new, renewal, and expansion leases within the total portfolio, comprising 388,686 rentable square feet with an average starting rental rate of $65.76 per rentable square foot, representing an increase of 23.9% over the previous fully escalated cash rent.
On a blended basis, the 17 new, renewal, and expansion office leases, comprising 285,595 rentable square feet signed within the Manhattan office portfolio during the third quarter, had an average starting rental rate of $70.21 per rentable square foot, representing an increase of 30.4% over the previous fully escalated cash rent.
Leases Signed in the Third Quarter 2019 for the Manhattan Office Portfolio
| 13 new leases, comprising 266,769 rentable square feet, with an average starting rental rate of $71.36 per rentable square foot, representing an increase of 32.6% over the previous fully escalated cash rent, and |
4
| 4 renewal leases, comprising 18,826 rentable square feet, with an average starting rental rate of $53.83 per rentable square foot, representing an increase of 0.4% over the previous fully escalated cash rent. |
Significant Leases Executed During the Third Quarter 2019
| At the Empire State Building, the Company signed the seventh and eight expansions with LinkedIn for approximately 189,000 square feet which added three floors from an early recapture of space from an existing tenant and a half floor expansion. |
| At One Grand Central Place, the Company signed a new retail lease totaling approximately 14,400 rentable square feet with First Republic Bank for a term of 11.0 years. |
Observatory
Observatory revenue for the third quarter 2019 declined 6.6% compared to the third quarter 2018 driven by the closure of the 102nd floor observation deck as part of the Observatory upgrade program and a visitation decline, partially offset by improved pricing. As set forth in the chart below, excluding third quarter 2018 102nd floor revenue, year-over-year revenue would have increased 1.1%.
Third Quarter Observatory Results
(dollars in thousands) | 2019 | 2018 | Percent Change |
|||||||||
Observatory revenue |
$ | 37,575 | $ | 40,241 | (6.6 | %) | ||||||
Less: 102nd floor revenue |
| (3,066 | ) | | ||||||||
|
|
|
|
|
|
|||||||
Observatory revenue excluding 102nd floor |
$ | 37,575 | $ | 37,175 | 1.1 | % | ||||||
|
|
|
|
|
|
|||||||
Number of visitors |
1,042,000 | 1,167,000 | (10.7 | %) | ||||||||
Bad weather days |
12 | 11 |
5
Year-to-Date Observatory Results
Observatory revenue for the nine months ended September 30, 2019 declined 5.8% compared to the nine months ended September 30, 2018 driven by the closure of the 102nd floor observation deck as part of the Observatory upgrade program and a visitation decline, partially offset by improved pricing. As set forth in the chart below, excluding the 102nd floor revenue in each period, year-over-year revenue growth for the nine months ended September 30, 2019 would have been approximately flat.
(dollars in thousands) | 2019 | 2018 | Percent Change |
|||||||||
Observatory revenue |
$ | 91,039 | $ | 96,691 | (5.8 | %) | ||||||
Less: 102nd floor revenue |
(180 | ) | (6,190 | ) | | |||||||
|
|
|
|
|
|
|||||||
Observatory revenue excluding 102nd floor |
$ | 90,859 | $ | 90,501 | 0.4 | % | ||||||
|
|
|
|
|
|
|||||||
Number of visitors |
2,611,000 | 2,860,000 | (8.7 | %) | ||||||||
Bad weather days |
51 | 37 |
The 102nd floor Observatory was closed for approximately nine months in 2019 and opened on October 12, 2019. The Company continues its work on the 80th floor component of its Observatory upgrade program and anticipates opening this floor in November 2019 and completing the overall project.
6
Balance Sheet
At September 30, 2019, there was no outstanding balance under the Companys $1.1 billion unsecured revolving credit facility, and the Companys $265 million term loan facility was fully drawn. The facilities have an accordion feature allowing for an increase in the maximum aggregate principal balance to $1.75 billion under certain circumstances. During the third quarter, the Company repaid a $250 million exchangeable senior unsecured note which matured on August 15, 2019 with available cash on hand. The Company held cash and cash equivalents of $293.7 million at September 30, 2019.
As of September 30, 2019, the Company had total debt outstanding of approximately $1.7 billion, with a weighted average interest rate of 4.03% per annum, and a weighted average term to maturity of 8.5 years. None of the Companys outstanding debt is subject to variable interest rates. At September 30, 2019, the Companys consolidated net debt to total market capitalization was approximately 24.1% and consolidated net debt to EBITDA was 3.8x.
Dividend
On September 30, 2019, the Company paid a dividend of $0.105 per share, or unit as applicable, for the third quarter 2019 to holders of the Companys 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 Companys operating partnership (the Operating Partnership). The Company paid a dividend of $0.15 per unit for the third quarter 2019 to holders of the Operating Partnerships private perpetual preferred units.
Webcast and Conference Call Details
Empire State Realty Trust, Inc. will host a webcast and conference call, open to the general public, on Thursday, October 24, 2019 at 8:30 am Eastern time.
The webcast will be accessible on the Investors section of the Companys 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, download and install any necessary audio software. Shortly after the call, a replay of the webcast will be available for 90 days on the Companys website.
7
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 October 31, 2019, 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 13695202.
The Supplemental Report will be available prior to the conference call on the Investors section of the Companys website at www.empirestaterealtytrust.com.
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 worlds most famous building. Headquartered in New York, New York, the Companys office and retail portfolio covers 10.1 million rentable square feet, as of September 30, 2019, 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: changes in our industry, the real estate markets, either nationally or in Manhattan or the greater New York metropolitan area; resolution of legal proceedings involving the Company; reduced demand for office or retail space; general volatility of the capital and credit markets and the market price of the Companys Class A common stock and the publicly-traded
8
partnership units of the Operating Partnership; changes in our business strategy; changes in technology and market competition that affect utilization of our broadcast or other facilities; changes in domestic or international tourism, including geopolitical events and currency exchange rates; defaults on, early terminations of, or non-renewal of, leases by tenants; fluctuations in interest rates; declining real estate valuations and impairment charges; termination or expiration of our ground leases; our failure to obtain or maintain necessary outside financing, including our unsecured revolving credit facility and term loan facility; our leverage; decreased rental rates or increased vacancy rates; 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; difficulties in identifying properties to acquire and completing acquisitions; risks of real estate development (including our Metro Tower development site) and capital projects, including the cost of construction delays and cost overruns; impact of changes in governmental regulations, tax laws and rates and similar matters; our failure to qualify as a REIT; and 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 Companys future results, performance or transactions, see the section entitled Risk Factors in the Companys Annual Report on Form 10-K for the year ended December 31, 2018, 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 Companys 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).
Contact:
Investors
Empire State Realty Trust Investor Relations
(212) 850-2678
IR@empirestaterealtytrust.com
Media
Sard Verbinnen & Co.
(212) 687-8080
9
Empire State Realty Trust, Inc.
Condensed Consolidated Statements of Income
(unaudited and amounts in thousands, except per share data)
Three Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Revenues |
||||||||
Rental revenue (1) |
$ | 150,225 | $ | 123,621 | ||||
Tenant expense reimbursement (1) |
| 18,627 | ||||||
Observatory revenue |
37,575 | 40,241 | ||||||
Lease termination fees |
2,361 | 1,185 | ||||||
Third-party management and other fees |
304 | 312 | ||||||
Other revenue and fees |
2,408 | 2,416 | ||||||
|
|
|
|
|||||
Total revenues |
192,873 | 186,402 | ||||||
Operating expenses |
||||||||
Property operating expenses |
47,894 | 42,772 | ||||||
Ground rent expenses |
2,331 | 2,331 | ||||||
General and administrative expenses |
14,421 | 13,148 | ||||||
Observatory expenses |
9,089 | 8,854 | ||||||
Real estate taxes |
29,599 | 28,284 | ||||||
Depreciation and amortization |
44,260 | 42,475 | ||||||
|
|
|
|
|||||
Total operating expenses |
147,594 | 137,864 | ||||||
Total operating income |
45,279 | 48,538 | ||||||
Other income (expense): |
||||||||
Interest income |
2,269 | 3,485 | ||||||
Interest expense |
(19,426 | ) | (20,658 | ) | ||||
|
|
|
|
|||||
Income before income taxes |
28,122 | 31,365 | ||||||
Income tax expense |
(1,338 | ) | (2,135 | ) | ||||
|
|
|
|
|||||
Net income |
26,784 | 29,230 | ||||||
Preferred unit distributions |
(234 | ) | (234 | ) | ||||
Net income attributable to non-controlling interests |
(10,668 | ) | (12,654 | ) | ||||
|
|
|
|
|||||
Net income attributable to common stockholders |
$ | 15,882 | $ | 16,342 | ||||
|
|
|
|
|||||
Total weighted average shares |
||||||||
Basic |
178,352 | 167,657 | ||||||
|
|
|
|
|||||
Diluted |
298,151 | 297,478 | ||||||
|
|
|
|
|||||
Net income per share attributable to common stockholders |
| |||||||
Basic |
$ | 0.09 | $ | 0.10 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.09 | $ | 0.10 | ||||
|
|
|
|
Note:
(1) | The Company adopted Financial Accounting Standards Board Topic 842 using the modified retrospective approach as of January 1, 2019 and elected to apply the transition provisions of the standard at adoption. As such, the prior period amounts presented under ASC 840 were not restated to conform with the 2019 presentation. The Company adopted the practical expedient in Topic 842, which allowed the Company to avoid separating lease and non-lease rental income. Consequently, all rental income earned pursuant to tenant leases in 2019 is reflected as one category, Rental Revenue, in the 2019 consolidated statements of income. The billed tenant expense reimbursement was $21.1 million for the three months ended September 30, 2019. |
In connection with the adoption of Topic 842, beginning in 2019, the Company expensed certain leasing costs that were previously capitalized. Had the Company adopted Topic 842 in 2018, it would have expensed in general and administrative expenses an additional $1.1 million of such costs in the third quarter 2018.
10
Empire State Realty Trust, Inc.
Condensed Consolidated Statements of Income
(unaudited and amounts in thousands, except per share data)
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Revenues |
||||||||
Rental revenue (1) |
$ | 434,713 | $ | 369,970 | ||||
Tenant expense reimbursement (1) |
| 52,626 | ||||||
Observatory revenue |
91,039 | 96,691 | ||||||
Lease termination fees |
3,112 | 2,164 | ||||||
Third-party management and other fees |
955 | 1,151 | ||||||
Other revenue and fees |
6,591 | 9,600 | ||||||
|
|
|
|
|||||
Total revenues |
536,410 | 532,202 | ||||||
Operating expenses |
||||||||
Property operating expenses |
131,076 | 126,375 | ||||||
Ground rent expenses |
6,994 | 6,994 | ||||||
General and administrative expenses |
44,445 | 39,001 | ||||||
Observatory expenses |
25,024 | 23,868 | ||||||
Real estate taxes |
86,098 | 81,771 | ||||||
Depreciation and amortization |
135,179 | 121,826 | ||||||
|
|
|
|
|||||
Total operating expenses |
428,816 | 399,835 | ||||||
Total operating income |
107,594 | 132,367 | ||||||
Other income (expense): |
||||||||
Interest income |
9,907 | 7,209 | ||||||
Interest expense |
(60,712 | ) | (58,774 | ) | ||||
|
|
|
|
|||||
Income before income taxes |
56,789 | 80,802 | ||||||
Income tax benefit (expense) |
(1,219 | ) | (3,330 | ) | ||||
|
|
|
|
|||||
Net income |
55,570 | 77,472 | ||||||
Preferred unit distributions |
(702 | ) | (702 | ) | ||||
Net income attributable to non-controlling interests |
(22,222 | ) | (34,009 | ) | ||||
|
|
|
|
|||||
Net income attributable to common stockholders |
$ | 32,646 | $ | 42,761 | ||||
|
|
|
|
|||||
Total weighted average shares |
||||||||
Basic |
177,428 | 165,613 | ||||||
|
|
|
|
|||||
Diluted |
298,117 | 297,181 | ||||||
|
|
|
|
|||||
Net income per share attributable to common stockholders |
| |||||||
Basic |
$ | 0.18 | $ | 0.26 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.18 | $ | 0.26 | ||||
|
|
|
|
Note:
(1) | The Company adopted Financial Accounting Standards Board Topic 842 using the modified retrospective approach as of January 1, 2019 and elected to apply the transition provisions of the standard at adoption. As such, the prior period amounts presented under ASC 840 were not restated to conform with the 2019 presentation. The Company adopted the practical expedient in Topic 842, which allowed the Company to avoid separating lease and non-lease rental income. Consequently, all rental income earned pursuant to tenant leases in 2019 is reflected as one category, Rental Revenue, in the 2019 consolidated statements of income. The billed tenant expense reimbursement was $53.8 million for the nine months ended September 30, 2019. |
In connection with the adoption of Topic 842, beginning in 2019, the Company expensed certain leasing costs that were previously capitalized. Had the Company adopted Topic 842 in 2018, wit would have expensed in general and administrative expenses an additional $3.3 million of such costs in the nine months ended September 30, 2018.
11
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 September 30, |
||||||||
2019 | 2018 | |||||||
Net income |
$ | 26,784 | $ | 29,230 | ||||
Preferred unit distributions |
(234 | ) | (234 | ) | ||||
Real estate depreciation and amortization |
43,303 | 42,004 | ||||||
|
|
|
|
|||||
FFO attributable to common stockholders and non-controlling interests |
69,853 | 71,000 | ||||||
Amortization of below-market ground leases |
1,957 | 1,957 | ||||||
|
|
|
|
|||||
Modified FFO attributable to common stockholders and non-controlling interests |
71,810 | 72,957 | ||||||
|
|
|
|
|||||
Core FFO attributable to common stockholders and non-controlling interests |
$ | 71,810 | $ | 72,957 | ||||
|
|
|
|
|||||
Total weighted average shares |
||||||||
Basic |
298,151 | 297,478 | ||||||
|
|
|
|
|||||
Diluted |
298,151 | 297,478 | ||||||
|
|
|
|
|||||
FFO per share |
||||||||
Basic |
$ | 0.23 | $ | 0.24 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.23 | $ | 0.24 | ||||
|
|
|
|
|||||
Modified FFO per share |
||||||||
Basic |
$ | 0.24 | $ | 0.25 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.24 | $ | 0.25 | ||||
|
|
|
|
|||||
Core FFO per share |
||||||||
Basic |
$ | 0.24 | $ | 0.25 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.24 | $ | 0.25 | ||||
|
|
|
|
12
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)
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Net income |
$ | 55,570 | $ | 77,472 | ||||
Preferred unit distributions |
(702 | ) | (702 | ) | ||||
Real estate depreciation and amortization |
132,217 | 120,521 | ||||||
|
|
|
|
|||||
FFO attributable to common stockholders and non-controlling interests |
187,085 | 197,291 | ||||||
Amortization of below-market ground leases |
5,873 | 5,873 | ||||||
|
|
|
|
|||||
Modified FFO attributable to common stockholders and non-controlling interests |
192,958 | 203,164 | ||||||
|
|
|
|
|||||
Core FFO attributable to common stockholders and non-controlling interests |
$ | 192,958 | $ | 203,164 | ||||
|
|
|
|
|||||
Total weighted average shares |
||||||||
Basic |
298,117 | 297,180 | ||||||
|
|
|
|
|||||
Diluted |
298,117 | 297,181 | ||||||
|
|
|
|
|||||
FFO per share |
| |||||||
Basic |
$ | 0.63 | $ | 0.66 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.63 | $ | 0.66 | ||||
|
|
|
|
|||||
Modified FFO per share |
||||||||
Basic |
$ | 0.65 | $ | 0.68 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.65 | $ | 0.68 | ||||
|
|
|
|
|||||
Core FFO per share |
||||||||
Basic |
$ | 0.65 | $ | 0.68 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.65 | $ | 0.68 | ||||
|
|
|
|
13
Empire State Realty Trust, Inc.
Condensed Consolidated Balance Sheets
(unaudited and amounts in thousands)
September 30, 2019 |
December 31, 2018 |
|||||||
Assets |
||||||||
Commercial real estate properties, at cost |
$ | 3,039,538 | $ | 2,884,486 | ||||
Less: accumulated depreciation |
(829,495 | ) | (747,304 | ) | ||||
|
|
|
|
|||||
Commercial real estate properties, net |
2,210,043 | 2,137,182 | ||||||
Cash and cash equivalents |
293,710 | 204,981 | ||||||
Restricted cash |
36,609 | 65,832 | ||||||
Short-term investments |
| 400,000 | ||||||
Tenant and other receivables |
29,287 | 29,437 | ||||||
Deferred rent receivables |
214,685 | 200,903 | ||||||
Prepaid expenses and other assets |
41,927 | 64,345 | ||||||
Deferred costs, net |
223,698 | 241,223 | ||||||
Acquired below market ground leases, net |
354,524 | 360,398 | ||||||
Right of use assets |
29,355 | | ||||||
Goodwill |
491,479 | 491,479 | ||||||
|
|
|
|
|||||
Total assets |
$ | 3,925,317 | $ | 4,195,780 | ||||
|
|
|
|
|||||
Liabilities and equity |
||||||||
Mortgage notes payable, net |
$ | 606,313 | $ | 608,567 | ||||
Senior unsecured notes, net |
798,347 | 1,046,219 | ||||||
Unsecured term loan facility, net |
264,517 | 264,147 | ||||||
Unsecured revolving credit facility |
| | ||||||
Accounts payable and accrued expenses |
143,201 | 130,676 | ||||||
Acquired below market leases, net |
42,655 | 52,450 | ||||||
Ground lease liabilities |
29,355 | | ||||||
Deferred revenue and other liabilities |
68,742 | 44,810 | ||||||
Tenants security deposits |
31,841 | 57,802 | ||||||
|
|
|
|
|||||
Total liabilities |
1,984,971 | 2,204,671 | ||||||
Total equity |
1,940,346 | 1,991,109 | ||||||
|
|
|
|
|||||
Total liabilities and equity |
$ | 3,925,317 | $ | 4,195,780 | ||||
|
|
|
|
14
Exhibit 99.2
|
Third Quarter 2019 |
Table of Contents |
Page | |||
Summary |
||||
Company Profile |
3 | |||
Financial Highlights |
4 | |||
Selected Property Data |
||||
Property Summary Net Operating Income |
5 | |||
Net Operating Income and Initial Free Rent Burn-Off |
6 | |||
Leasing Activity |
7 | |||
Portfolio Expirations and Vacates Summary |
9 | |||
Property Detail |
10 | |||
Tenant Lease Expirations |
11 | |||
Largest Tenants and Portfolio Tenant Diversification by Industry |
14 | |||
Capital Expenditures and Redevelopment Program |
15 | |||
Observatory Summary |
16 | |||
Financial information |
||||
Condensed Consolidated Balance Sheets |
17 | |||
Condensed Consolidated Statements of Income |
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
We make forward-looking statements in this supplemental package within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You should not rely on them as predictions of future events. For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections.
You can identify forward-looking statements by the use of forward-looking terminology such as believes, expects, may, will, should, seeks, approximately, intends, plans, estimates, contemplates, aims, continues, would or anticipates or similar words or phrases in the positive or negative. In particular, forward looking statements include those pertaining to our capital resources, portfolio performance, dividend policy, results of operations, anticipated growth in our portfolio from operations, acquisitions, and market conditions and demographics.
Forward-looking statements involve numerous risks and uncertainties, many of which are difficult to predict and generally beyond our control. They depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).
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: changes in our industry and markets, either nationally or in Manhattan or the greater New York metropolitan area; resolution of legal proceedings involving our company; reduced demand for office or retail space; new office or observatory development in our market; general volatility of the capital and credit markets and the market price of our Class A common stock and listed operating partnership units; changes in our business strategy; defaults on, early terminations of, or non-renewal of, leases by tenants; insolvency of a major tenant or a significant number of smaller tenants; litigation; fluctuations in interest rates; increased operating costs; declining real estate valuations and impairment charges; availability, terms and deployment of capital; our failure to obtain necessary outside financing; our expected leverage; decreased rental rates or increased vacancy rates; breach of or the expiration of our ground lease; our failure to generate sufficient cash flows to service our outstanding indebtedness; our failure to redevelop, renovate and reposition properties or to execute any planned capital project, successfully or on the anticipated timeline or at the anticipated costs; difficulties in identifying properties to acquire and completing acquisitions; risks of real estate acquisitions, dispositions and development (including our Metro Tower development site), including construction delays and cost overruns; our failure to operate acquired properties and operations successfully; our ability to manage our growth effectively; changes in governmental regulations, tax laws and rates and similar matters; estimates relating to our ability to make distributions to our securityholders in the future; our failure to qualify as a REIT; a future terrorist event in the U.S.; environmental uncertainties and risks related to adverse weather conditions and natural disasters; lack or insufficient amounts of insurance; financial market fluctuations; availability of, and our ability to attract and retain, qualified personnel; conflicts of interest affecting our senior management team; competition; changes in real estate and zoning laws and increases in real property tax rates; inability to comply with applicable rules and regulations and, in particular, public companies and damages resulting from security breaches through cyberattacks, cyber intrusions or otherwise, as well as other significant disruptions of our technology (IT) networks related systems. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, or new information, data or methods, future events or other changes after the date of this presentation, except as required by applicable law. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018 and other risks described in documents we subsequently file from time to time with the Securities and Exchange Commission.
Page 2
|
Third Quarter 2019 |
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 worlds most famous building.
BOARD OF DIRECTORS | ||
Anthony E. Malkin | Chairman and Chief Executive Officer | |
William H. Berkman | Director, Chair of Finance Committee | |
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 | |
James D. Robinson IV | Director, Chair of Compensation and Nominating/Corporate Governance Committees | |
EXECUTIVE MANAGEMENT | ||
Anthony E. Malkin | Chairman and Chief Executive Officer | |
John B. Kessler | President and Chief Operating 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 | |||
Jason Green | (212) 446-9449 | jason.green@evercoreisi.com | ||||
Green Street Advisors | Daniel Ismail | (949) 640-8780 | dismail@greenstreetadvisors.com | |||
KeyBanc Capital Markets | Jordan Sadler | (917) 368-2280 | jsadler@key.com | |||
Craig Mailman | (917) 368-2316 | cmailman@key.com | ||||
Stifel Nicolaus & Company, Inc. | John Guinee | (443) 224-1307 | jwguinee@stifel.com | |||
Wells Fargo Securities, LLC | Blaine Heck | (443) 263-6529 | blaine.heck@wellsfargo.com |
Page 3
![]() |
Third Quarter 2019 Financial Highlights (unaudited and dollars in thousands, except per share amounts) |
Three Months Ended | ||||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||
Selected Items: |
||||||||||||||||||||
Revenue |
$ | 192,873 | $ | 176,244 | $ | 167,293 | $ | 199,309 | $ | 186,402 | ||||||||||
Net income |
$ | 26,784 | $ | 18,930 | $ | 9,856 | $ | 39,781 | $ | 29,230 | ||||||||||
Cash net operating income (1) |
$ | 98,757 | $ | 93,737 | $ | 80,080 | $ | 113,336 | $ | 99,138 | ||||||||||
Core funds from operations (Core FFO) (1) |
$ | 71,810 | $ | 64,476 | $ | 56,672 | $ | 87,276 | $ | 72,957 | ||||||||||
Core funds available for distribution (Core FAD) (1) |
$ | 54,650 | $ | 48,235 | $ | 41,179 | $ | 68,142 | $ | 59,205 | ||||||||||
Core FFO per share - diluted |
$ | 0.24 | $ | 0.22 | $ | 0.19 | $ | 0.29 | $ | 0.25 | ||||||||||
Diluted weighted average shares |
298,151,000 | 298,131,000 | 298,049,000 | 297,492,000 | 297,478,000 | |||||||||||||||
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 |
10,134,495 | 10,134,435 | 10,130,875 | 10,128,839 | 10,126,547 | |||||||||||||||
Percent occupied (2) |
89.4 | % | 90.2 | % | 88.8 | % | 88.8 | % | 88.4 | % | ||||||||||
Percent leased (3) |
91.7 | % | 92.2 | % | 91.5 | % | 91.8 | % | 92.1 | % | ||||||||||
Observatory Metrics: |
||||||||||||||||||||
Number of visitors (4) |
1,042,000 | 968,000 | 601,000 | 945,000 | 1,167,000 | |||||||||||||||
Change in visitors year over year |
(10.7 | %) | (7.7 | %) | (6.7 | %) | (4.6 | %) | (5.6 | %) | ||||||||||
Observatory revenues (5) |
$ | 37,575 | $ | 32,895 | $ | 20,569 | $ | 34,536 | $ | 40,241 | ||||||||||
Change in revenues year over year |
(6.6 | %) | (6.6 | %) | (3.2 | %) | 4.9 | % | 2.4 | % | ||||||||||
Ratios: |
||||||||||||||||||||
Consolidated Debt to Total Market Capitalization (6) |
27.7 | % | 29.8 | % | 28.5 | % | 30.8 | % | 27.6 | % | ||||||||||
Consolidated Net Debt to Total Market Capitalization (6) |
24.1 | % | 23.6 | % | 21.6 | % | 23.4 | % | 20.4 | % | ||||||||||
Consolidated Debt and Perpetual Preferred Units to Total Market Capitalization (6) |
28.2 | % | 30.2 | % | 28.9 | % | 31.2 | % | 28.0 | % | ||||||||||
Consolidated Net Debt and Perpetual Preferred Units to Total Market Capitalization (6) |
24.5 | % | 24.0 | % | 22.0 | % | 23.8 | % | 20.8 | % | ||||||||||
Consolidated Debt to EBITDA (7) |
4.6 | x | 5.3 | x | 5.2 | x | 5.2 | x | 5.5 | x | ||||||||||
Consolidated Net Debt to EBITDA (7) |
3.8 | x | 3.9 | x | 3.6 | x | 3.6 | x | 3.7 | x | ||||||||||
Interest Coverage Ratio |
4.8 | x | 4.4 | x | 4.0 | x | 5.7 | x | 5.0 | x | ||||||||||
Core FFO Payout Ratio (8) |
45 | % | 50 | % | 56 | % | 35 | % | 44 | % | ||||||||||
Core FAD Payout Ratio (9 |
59 | % | 66 | % | 77 | % | 45 | % | 54 | % | ||||||||||
Class A common stock price at quarter end |
$ | 14.27 | $ | 14.81 | $ | 15.80 | $ | 14.23 | $ | 16.61 | ||||||||||
Average closing price |
$ | 14.12 | $ | 15.48 | $ | 15.36 | $ | 15.65 | $ | 17.07 | ||||||||||
Dividends per share - annualized |
$ | 0.42 | $ | 0.42 | $ | 0.42 | $ | 0.42 | $ | 0.42 | ||||||||||
Dividend yield (10) |
2.9 | % | 2.8 | % | 2.7 | % | 3.0 | % | 2.5 | % | ||||||||||
Private Perpetual Preferred Units outstanding ($16.62 liquidation value) |
1,560,360 | 1,560,360 | 1,560,360 | 1,560,360 | 1,560,360 | |||||||||||||||
Class A common stock |
179,131,090 | 176,991,123 | 175,557,910 | 173,872,536 | 168,176,734 | |||||||||||||||
Class B common stock |
1,018,463 | 1,029,782 | 1,035,327 | 1,038,090 | 1,044,169 | |||||||||||||||
Operating partnership units |
124,107,019 | 126,870,876 | 128,232,650 | 128,415,440 | 134,112,696 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total common stock and operating partnership units outstanding (11) |
304,256,572 | 304,891,781 | 304,825,887 | 303,326,066 | 303,333,599 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Notes:
(1) | Represents non-GAAP financial measures. For a discussion on what these metrics represent and why the Company presents them, see page 23 and for a reconciliation of these metrics to net income, see pages 5 and 19. |
(2) | Based on leases signed and commenced as of end of period. |
(3) | Represents occupancy and includes signed leases not commenced. |
(4) | Reflects the number of visitors who pass through the turnstile, excluding visitors who make a second visit on the same ticket at no additional charge. |
(5) | Observatory revenues include the fixed license fee received from WDFG North America, the Observatory gift shop operator. See page 16. |
(6) | Market capitalization represents the sum of (i) Companys common stock per share price as of September 30, 2019 multiplied by the total outstanding number of shares of common stock and operating partnership units as of September 30, 2019; (ii) the number of perpetual preferred units at September 30, 2019 multiplied by $16.62 and (iii) our outstanding indebtedness or net indebtedness as of September 30, 2019. |
(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 September 30, 2019. |
(11) | As of September 30, 2019, the Company has had conversions from operating partnership units and Class B common shares to Class A common shares totaling 52.0 million shares or approximately $743 million at a closing share price of $14.27. This represents a 63% increase in the number of Class A shares since the IPO. |
Page 4
|
Third Quarter 2019 Property Summary - Same Store Net Operating Income (NOI) by Quarter (unaudited and dollars in thousands) |
Three Months Ended | ||||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||
Same Store Total Portfolio |
||||||||||||||||||||
Revenues |
$ | 152,633 | $ | 142,655 | $ | 146,016 | $ | 145,801 | $ | 144,664 | ||||||||||
Operating expenses |
(79,824 | ) | (70,826 | ) | (73,518 | ) | (71,565 | ) | (73,387 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Same store property NOI |
72,809 | 71,829 | 72,498 | 74,236 | 71,277 | |||||||||||||||
Straight-line rent |
(5,174 | ) | (3,203 | ) | (5,404 | ) | (5,445 | ) | (5,000 | ) | ||||||||||
Above/below-market rent revenue amortization |
(1,682 | ) | (1,745 | ) | (2,354 | ) | (1,733 | ) | (1,668 | ) | ||||||||||
Below-market ground lease amortization |
1,957 | 1,958 | 1,958 | 1,958 | 1,957 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total same store property cash NOI - excluding lease termination fees |
$ | 67,910 | $ | 68,839 | $ | 66,698 | $ | 69,016 | $ | 66,566 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percent increase/decrease over prior year |
2.0 | % | 0.2 | % | 0.1 | % | -1.4 | % | -3.1 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Property cash NOI |
$ | 67,910 | $ | 68,839 | $ | 66,698 | $ | 69,016 | $ | 66,566 | ||||||||||
Observatory cash NOI |
28,486 | 24,535 | 12,994 | 25,637 | 31,387 | |||||||||||||||
Lease termination fees |
2,361 | 363 | 388 | 18,683 | 1,185 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total portfolio same store cash NOI |
$ | 98,757 | $ | 93,737 | $ | 80,080 | $ | 113,336 | $ | 99,138 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Same Store Manhattan Office Portfolio (1) |
||||||||||||||||||||
Revenues |
$ | 130,214 | $ | 120,249 | $ | 123,290 | $ | 122,481 | $ | 121,657 | ||||||||||
Operating expenses |
(68,516 | ) | (60,152 | ) | (62,665 | ) | (60,919 | ) | (62,464 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Same store property NOI |
61,698 | 60,097 | 60,625 | 61,562 | 59,193 | |||||||||||||||
Straight-line rent |
(5,319 | ) | (4,163 | ) | (5,408 | ) | (5,037 | ) | (4,068 | ) | ||||||||||
Above/below-market rent revenue amortization |
(1,682 | ) | (1,745 | ) | (2,354 | ) | (1,733 | ) | (1,668 | ) | ||||||||||
Below-market ground lease amortization |
1,957 | 1,958 | 1,958 | 1,958 | 1,957 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total same store property cash NOI - excluding lease termination fees |
56,654 | 56,147 | 54,821 | 56,750 | 55,414 | |||||||||||||||
Lease termination fees |
835 | 301 | 326 | 17,962 | 1,030 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total same store property cash NOI |
$ | 57,489 | $ | 56,448 | $ | 55,147 | $ | 74,712 | $ | 56,444 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Same Store Greater New York Metropolitan Area Office Portfolio |
||||||||||||||||||||
Revenues |
$ | 18,137 | $ | 17,798 | $ | 18,045 | $ | 18,566 | $ | 18,397 | ||||||||||
Operating expenses |
(9,373 | ) | (8,784 | ) | (8,927 | ) | (8,839 | ) | (9,069 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Same store property NOI |
8,764 | 9,014 | 9,118 | 9,727 | 9,328 | |||||||||||||||
Straight-line rent |
(42 | ) | 655 | (124 | ) | (516 | ) | (1,014 | ) | |||||||||||
Above/below-market rent revenue amortization |
| | | | | |||||||||||||||
Below-market ground lease amortization |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total same store property cash NOI - excluding lease termination fees |
8,722 | 9,669 | 8,994 | 9,211 | 8,314 | |||||||||||||||
Lease termination fees |
710 | 62 | 62 | 721 | 139 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total same store property cash NOI |
$ | 9,432 | $ | 9,731 | $ | 9,056 | $ | 9,932 | $ | 8,453 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Same Store Standalone Retail Portfolio |
||||||||||||||||||||
Revenues |
$ | 4,282 | $ | 4,608 | $ | 4,681 | $ | 4,754 | $ | 4,610 | ||||||||||
Operating expenses |
(1,935 | ) | (1,890 | ) | (1,926 | ) | (1,807 | ) | (1,854 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Same store property NOI |
2,347 | 2,718 | 2,755 | 2,947 | 2,756 | |||||||||||||||
Straight-line rent |
187 | 305 | 128 | 108 | 82 | |||||||||||||||
Above/below-market rent revenue amortization |
| | | | | |||||||||||||||
Below-market ground lease amortization |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total same store property cash NOI - excluding lease termination fees |
2,534 | 3,023 | 2,883 | 3,055 | 2,838 | |||||||||||||||
Lease termination fees |
816 | | | | 16 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total same store property cash NOI |
$ | 3,350 | $ | 3,023 | $ | 2,883 | $ | 3,055 | $ | 2,854 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Note:
Includes 511,755 rentable square feet of retail space in the Companys nine Manhattan office properties.
Page 5
![]() |
Third Quarter 2019 Net Operating Income (NOI), Initial Free Rent Burn-Off and Signed Leases Not Commenced (unaudited and dollars in thousands) |
Three Months Ended | ||||||||||||||||||||
Reconciliation of Net Income to NOI and Cash NOI |
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
|||||||||||||||
Net income |
$ | 26,784 | $ | 18,930 | $ | 9,856 | $ | 39,781 | $ | 29,230 | ||||||||||
Add: |
||||||||||||||||||||
General and administrative expenses |
14,421 | 15,998 | 14,026 | 13,673 | 13,148 | |||||||||||||||
Depreciation and amortization |
44,260 | 44,821 | 46,098 | 46,682 | 42,475 | |||||||||||||||
Interest expense |
19,426 | 20,597 | 20,689 | 20,849 | 20,658 | |||||||||||||||
Income tax expense (benefit) |
1,338 | 611 | (730 | ) | 1,312 | 2,135 | ||||||||||||||
Less: |
||||||||||||||||||||
Third-party management and other fees |
(304 | ) | (331 | ) | (320 | ) | (289 | ) | (312 | ) | ||||||||||
Interest income |
(2,269 | ) | (3,899 | ) | (3,739 | ) | (3,452 | ) | (3,485 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net operating income |
103,656 | 96,727 | 85,880 | 118,556 | 103,849 | |||||||||||||||
Straight-line rent |
(5,174 | ) | (3,203 | ) | (5,404 | ) | (5,445 | ) | (5,000 | ) | ||||||||||
Above/below-market rent revenue amortization |
(1,682 | ) | (1,745 | ) | (2,354 | ) | (1,733 | ) | (1,668 | ) | ||||||||||
Below-market ground lease amortization |
1,957 | 1,958 | 1,958 | 1,958 | 1,957 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total cash NOI - including Observatory and lease termination income |
98,757 | 93,737 | 80,080 | 113,336 | 99,138 | |||||||||||||||
Less: Observatory NOI |
(28,486 | ) | (24,535 | ) | (12,994 | ) | (25,637 | ) | (31,387 | ) | ||||||||||
Less: lease termination income |
(2,361 | ) | (363 | ) | (388 | ) | (18,683 | ) | (1,185 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total property cash NOI - excluding Observatory and lease termination income |
$ | 67,910 | $ | 68,839 | $ | 66,698 | $ | 69,016 | $ | 66,566 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Burn-off of Free Rent and Signed Leases Not Commenced
Incremental Annual |
Base Cash Rent Contributing to Cash NOI in the Following Years | |||||||||||||||||||
Total Portfolio |
Revenue | 2019 | 2020 | 2021 | 2022 | |||||||||||||||
Commenced leases in free rent period |
$ | 24,785 | $ | 1,342 | $ | 20,448 | $ | 24,785 | $ | 24,785 | ||||||||||
Signed leases not commenced |
20,830 | 46 | 7,330 | 16,606 | 19,605 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 45,615 | $ | 1,388 | $ | 27,778 | $ | 41,391 | $ | 44,390 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Commenced leases in free rent period
Square | Cash | Incremental Annual |
Base Cash Rent Contributing to Cash NOI in the Following Years | |||||||||||||||||||||||||
Feet | Rent Date | Revenue | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||||||||
Fourth quarter 2019 - 22 leases |
181,145 | Oct. 2019 - Dec. 2019 | $ | 8,292 | $ | 1,342 | (1) | $ | 8,292 | $ | 8,292 | $ | 8,292 | |||||||||||||||
First quarter 2020 - 4 leases |
156,977 | Jan. 2020 - Mar. 2020 | 7,280 | | 6,359 | 7,280 | 7,280 | |||||||||||||||||||||
Second quarter 2020 - 3 leases |
133,264 | Apr. 2020 - Jun. 2020 | 8,066 | | 5,343 | 8,066 | 8,066 | |||||||||||||||||||||
Third quarter 2020 - 2 leases |
34,304 | Jul. 2020 - Sept. 2020 | 1,147 | | 454 | 1,147 | 1,147 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
$ | 24,785 | $ | 1,342 | $ | 20,448 | $ | 24,785 | $ | 24,785 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Signed leases not commenced (SLNC)
Square | Expected Base Rent Commencement |
Incremental Annual |
Base Cash Rent Contributing to Cash NOI in the Following Years | |||||||||||||||||||||||||||||
Tenant |
Feet | GAAP | Cash | Revenue (2) | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||||||||||
Distinguished Concerts International LLC |
17,644 | Oct. 2019 | Jan. 2020 | $ | 1,180 | $ | | $ | 1,170 | $ | 1,180 | $ | 1,180 | |||||||||||||||||||
Institutional Capital Network, Inc. |
17,613 | Oct. 2019 | Jun. 2020 | 1,130 | | 598 | 1,130 | 1,130 | ||||||||||||||||||||||||
LOccitane, Inc. |
20,962 | Dec. 2019 | Jun. 2020 | 1,380 | | 804 | 1,380 | 1,380 | ||||||||||||||||||||||||
Kaplan Hecker & Fink LLP |
26,997 | Jun. 2020 | Jul. 2020 | 1,140 | | 498 | 1,140 | 1,140 | ||||||||||||||||||||||||
Abrams Artists Agency LLC |
25,294 | Jan. 2020 | Oct. 2020 | 1,850 | | 404 | 1,850 | 1,850 | ||||||||||||||||||||||||
Interdigital, Inc. |
19,403 | May 2020 | Dec. 2020 | 1,340 | | 108 | 1,340 | 1,340 | ||||||||||||||||||||||||
First Republic Bank |
14,430 | Jan. 2021 | Jul. 2021 | 2,040 | | | 1,017 | 2,040 | ||||||||||||||||||||||||
LinkedIn Corporation: |
||||||||||||||||||||||||||||||||
LinkedIn Corporation |
52,939 | Apr. 2021 | Sept. 2021 | 1,000 | | | 329 | 1,000 | ||||||||||||||||||||||||
LinkedIn Corporation |
52,666 | Nov. 2021 | Nov. 2021 | 900 | | | 150 | 900 | ||||||||||||||||||||||||
LinkedIn Corporation |
52,574 | Jul. 2022 | Jul. 2022 | 1,110 | | | | 555 | ||||||||||||||||||||||||
LinkedIn Corporation |
30,283 | Apr. 2023 | Sept. 2023 | 670 | | | | | ||||||||||||||||||||||||
Other SLNC |
104,236 | |
Oct. 2019 - Jun. 2020 |
|
|
Oct. 2019 - Dec. 2020 |
|
7,090 | 46 | 3,748 | 7,090 | 7,090 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total |
435,041 | $ | 20,830 | $ | 46 | $ | 7,330 | $ | 16,606 | $ | 19,605 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1) | As an example, the 2019 amount represents cash revenue contributing from the cash rent commencement date of October 2019 through December 2019. The full annual amount is realized in 2020. |
(2) | Reflects new annual rent less annual rent from existing tenant in the space. |
Page 6
![]() |
Third Quarter 2019 Property Summary - Leasing Activity by Quarter (unaudited) |
Three Months Ended | ||||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||
Total Portfolio |
||||||||||||||||||||
Total leases executed |
25 | 55 | 34 | 35 | 43 | |||||||||||||||
Weighted average lease term |
10.7 years | 6.4 years | 8.3 years | 10.5 years | 9.8 years | |||||||||||||||
Average free rent period |
6.9 months | 2.8 months | 4.7 months | 5.4 months | 6.8 months | |||||||||||||||
Office |
||||||||||||||||||||
Total square footage executed |
374,256 | 228,346 | 300,408 | 241,978 | 353,686 | |||||||||||||||
Average cash rent psf - leases executed |
$ | 62.83 | $ | 59.13 | $ | 61.79 | $ | 62.44 | $ | 58.47 | ||||||||||
Previously escalated cash rents psf |
$ | 51.10 | $ | 51.72 | $ | 54.36 | $ | 49.69 | $ | 47.10 | ||||||||||
Percentage of new cash rent over previously escalated rents |
23.0 | % | 14.3 | % | 13.7 | % | 25.7 | % | 24.1 | % | ||||||||||
Retail |
||||||||||||||||||||
Total square footage executed |
14,430 | 32,706 | 7,643 | 4,782 | 413 | |||||||||||||||
Average cash rent psf - leases executed |
$ | 141.68 | $ | 71.52 | $ | 109.54 | $ | 104.57 | $ | 65.03 | ||||||||||
Previously escalated cash rents psf |
$ | 104.66 | $ | 72.08 | $ | 106.84 | $ | 128.16 | $ | 63.22 | ||||||||||
Percentage of new cash rent over previously escalated rents |
35.4 | % | (0.8 | %) | 2.5 | % | (18.4 | %) | 2.9 | % | ||||||||||
Total Portfolio |
||||||||||||||||||||
Total square footage executed |
388,686 | 261,052 | 308,051 | 246,760 | 354,099 | |||||||||||||||
Average cash rent psf - leases executed |
$ | 65.76 | $ | 61.25 | $ | 63.90 | $ | 63.57 | $ | 58.48 | ||||||||||
Previously escalated cash rents psf |
$ | 53.09 | $ | 54.58 | $ | 56.35 | $ | 51.32 | $ | 47.12 | ||||||||||
Percentage of new cash rent over previously escalated rents |
23.9 | % | 12.2 | % | 13.4 | % | 23.9 | % | 24.1 | % | ||||||||||
Leasing commission costs per square foot |
$ | 23.75 | $ | 15.61 | $ | 15.00 | $ | 26.07 | $ | 22.33 | ||||||||||
Tenant improvement costs per square foot |
65.59 | 47.06 | 55.09 | 86.99 | 75.17 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total LC and TI per square foot (2) |
$ | 89.34 | $ | 62.67 | $ | 70.09 | $ | 113.06 | $ | 97.50 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Occupancy |
89.4 | % | 90.2 | % | 88.8 | % | 88.8 | % | 88.4 | % | ||||||||||
Manhattan Office Portfolio (1) |
||||||||||||||||||||
Total leases executed |
18 | 40 | 30 | 28 | 37 | |||||||||||||||
Office - New Leases |
||||||||||||||||||||
Total square footage executed |
266,769 | 119,235 | 153,506 | 204,999 | 281,844 | |||||||||||||||
Average cash rent psf - leases executed |
$ | 71.36 | $ | 65.08 | $ | 63.74 | $ | 64.82 | $ | 61.84 | ||||||||||
Previously escalated cash rents psf |
$ | 53.83 | $ | 53.26 | $ | 52.65 | $ | 49.85 | $ | 48.56 | ||||||||||
Percentage of new cash rent over previously escalated rents |
32.6 | % | 22.2 | % | 21.1 | % | 30.0 | % | 27.3 | % | ||||||||||
Office - Renewal Leases |
||||||||||||||||||||
Total square footage executed |
18,826 | 56,211 | 131,304 | 13,547 | 33,212 | |||||||||||||||
Average cash rent psf - leases executed |
$ | 53.83 | $ | 62.37 | $ | 62.51 | $ | 60.75 | $ | 53.77 | ||||||||||
Previously escalated cash rents psf |
$ | 53.64 | $ | 55.88 | $ | 58.55 | $ | 56.55 | $ | 46.90 | ||||||||||
Percentage of new cash rent over previously escalated rents |
0.4 | % | 11.6 | % | 6.8 | % | 7.4 | % | 14.7 | % | ||||||||||
Retail - New and Renewal Leases |
||||||||||||||||||||
Total square footage executed |
14,430 | 3,711 | 1,998 | 862 | 413 | |||||||||||||||
Average cash rent psf - leases executed |
$ | 141.68 | $ | 405.41 | $ | 80.00 | $ | 78.30 | $ | 65.03 | ||||||||||
Previously escalated cash rents psf |
$ | 104.66 | $ | 317.25 | $ | 73.73 | $ | 78.30 | $ | 63.22 | ||||||||||
Percentage of new cash rent over previously escalated rents |
35.4 | % | 27.8 | % | 8.5 | % | 0.0 | % | 2.9 | % | ||||||||||
Total Manhattan Office Portfolio |
||||||||||||||||||||
Total square footage executed |
300,025 | 179,157 | 286,808 | 219,408 | 315,469 | |||||||||||||||
Average cash rent psf - leases executed |
$ | 73.64 | $ | 71.28 | $ | 63.29 | $ | 64.62 | $ | 61.00 | ||||||||||
Previously escalated cash rents psf |
$ | 56.26 | $ | 59.55 | $ | 55.50 | $ | 50.38 | $ | 48.40 | ||||||||||
Percentage of new cash rent over previously escalated rents |
30.9 | % | 19.7 | % | 14.0 | % | 28.3 | % | 26.0 | % | ||||||||||
Leasing commission costs per square foot |
$ | 28.93 | $ | 20.53 | $ | 14.50 | $ | 27.50 | $ | 24.23 | ||||||||||
Tenant improvement costs per square foot |
78.31 | 56.60 | 54.18 | 90.85 | 79.42 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total LC and TI per square foot (2) |
$ | 107.24 | $ | 77.13 | $ | 68.68 | $ | 118.35 | $ | 103.65 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Occupancy |
89.6 | % | 90.6 | % | 88.9 | % | 88.9 | % | 88.3 | % |
Page 7
![]() |
Third Quarter 2019 Property Summary - Leasing Activity by Quarter - (Continued) (unaudited) |
Three Months Ended | ||||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||
Greater New York Metropolitan Area Office Portfolio |
||||||||||||||||||||
Total leases executed |
7 | 12 | 3 | 6 | 6 | |||||||||||||||
Total square footage executed |
88,661 | 52,900 | 15,598 | 23,432 | 38,630 | |||||||||||||||
Average cash rent psf - leases executed |
$ | 39.08 | $ | 42.30 | $ | 36.60 | $ | 42.59 | $ | 37.92 | ||||||||||
Previously escalated cash rents psf |
$ | 42.36 | $ | 43.82 | $ | 35.78 | $ | 44.30 | $ | 36.63 | ||||||||||
Percentage of new cash rent over previously escalated rents |
(7.7 | %) | (3.5 | %) | 2.3 | % | (3.9 | %) | 3.5 | % | ||||||||||
Leasing commission costs per square foot |
$ | 6.22 | $ | 6.05 | $ | 15.32 | $ | 11.32 | $ | 6.81 | ||||||||||
Tenant improvement costs per square foot |
22.53 | 37.37 | 77.21 | 50.30 | 40.47 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total LC and TI per square foot (2) |
$ | 28.75 | $ | 43.42 | $ | 92.53 | $ | 61.62 | $ | 47.28 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Occupancy |
88.0 | % | 87.8 | % | 87.8 | % | 87.6 | % | 88.3 | % | ||||||||||
Standalone Retail Portfolio |
||||||||||||||||||||
Total leases executed |
| 3 | 1 | 1 | | |||||||||||||||
Total square footage executed |
| 28,995 | 5,645 | 3,920 | | |||||||||||||||
Average cash rent psf - leases executed |
$ | | $ | 28.78 | $ | 120.00 | $ | 110.34 | $ | | ||||||||||
Previously escalated cash rents psf |
$ | | $ | 40.70 | $ | 118.56 | $ | 139.12 | $ | | ||||||||||
Percentage of new cash rent over previously escalated rents |
0.0 | % | (29.3 | %) (3) | 1.2 | % | (20.7 | %) | 0.0 | % | ||||||||||
Leasing commission costs per square foot |
$ | | $ | 2.68 | $ | 39.08 | $ | 34.10 | $ | | ||||||||||
Tenant improvement costs per square foot |
| 5.79 | 40.00 | 90.00 | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total LC and TI per square foot (2) |
$ | | $ | 8.47 | $ | 79.08 | $ | 124.10 | $ | | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Occupancy |
93.7 | % | 93.7 | % | 94.4 | % | 94.4 | % | 94.4 | % |
Notes:
(1) | Includes 511,755 rentable square feet of retail space in the Companys nine Manhattan office properties. |
(2) | Presents all tenant improvement and leasing commission costs as if they were incurred in the period in which the lease was signed, which may be different than the period in which they were actually paid. |
(3) | Includes the renewal of two parking garages comprising 27,143 of rentable square feet. These below grade spaces have market rents considerably lower than the Companys typical street grade retail and drove the negative spread for the quarter. |
Page 8
![]() |
Third Quarter 2019 Total Portfolio Expirations and Vacates Summary (unaudited and in square feet) |
Actual | Forecast (1) | Forecast (1) | ||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
Total Portfolio (2) |
September 30, 2019 |
December 31, 2019 |
March 31, 2020 |
June 30, 2020 |
September 30, 2020 |
December 31, 2020 |
Full Year 2020 |
Full Year 2021 |
||||||||||||||||||||||||
Total expirations |
205,966 | 311,050 | 80,955 | 369,209 | 162,676 | 169,867 | 782,707 | 694,112 | ||||||||||||||||||||||||
Less: broadcasting |
(2,528 | ) | (2,528 | ) | (611 | ) | (309 | ) | | (753 | ) | (1,673 | ) | (1,049 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Office and retail expirations |
203,438 | 308,522 | 80,344 | 368,900 | 162,676 | 169,114 | 781,034 | 693,063 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Renewal & relocations (3) |
56,613 | 69,323 | 7,090 | 59,843 | 18,766 | 42,718 | 128,417 | 164,149 | ||||||||||||||||||||||||
Short-term renewals (4) |
5,384 | | | | | | | | ||||||||||||||||||||||||
New leases (5) |
11,718 | 55,414 | 12,123 | 171,863 | 7,823 | 3,162 | 194,971 | 19,882 | ||||||||||||||||||||||||
Tenant vacates (6) |
78,236 | 145,320 | 33,127 | 91,167 | 36,589 | 40,892 | 201,775 | 178,944 | ||||||||||||||||||||||||
Intentional vacates (7) |
51,487 | 38,465 | 21,417 | 31,037 | 14,083 | | 66,537 | 10,590 | ||||||||||||||||||||||||
Holdover (8) |
| | | | | | | | ||||||||||||||||||||||||
Unknown (9) |
| | 6,587 | 14,990 | 85,415 | 82,342 | 189,334 | 319,498 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total Portfolio expirations and vacates |
203,438 | 308,522 | 80,344 | 368,900 | 162,676 | 169,114 | 781,034 | 693,063 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Manhattan Office Portfolio |
|
|||||||||||||||||||||||||||||||
Total expirations |
162,769 | 144,036 | 56,863 | 251,369 | 153,634 | 132,998 | 594,864 | 425,962 | ||||||||||||||||||||||||
Less: broadcasting |
(2,528 | ) | (2,528 | ) | (611 | ) | (309 | ) | | (753 | ) | (1,673 | ) | (1,049 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Office expirations |
160,241 | 141,508 | 56,252 | 251,060 | 153,634 | 132,245 | 593,191 | 424,913 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Renewal & relocations (3) |
18,145 | 31,517 | 4,908 | 33,768 | 14,866 | 9,058 | 62,600 | 20,995 | ||||||||||||||||||||||||
Short-term renewals (4) |
5,384 | | | | | | | | ||||||||||||||||||||||||
New leases (5) |
11,718 | 55,414 | 12,123 | 164,549 | 7,823 | 3,162 | 187,657 | 19,882 | ||||||||||||||||||||||||
Tenant vacates (6) |
76,189 | 16,354 | 31,127 | 17,214 | 31,447 | 40,892 | 120,680 | 128,198 | ||||||||||||||||||||||||
Intentional vacates (7) |
48,805 | 38,223 | 3,984 | 20,668 | 14,083 | | 38,735 | 10,590 | ||||||||||||||||||||||||
Holdover (8) |
| | | | | | | | ||||||||||||||||||||||||
Unknown (9) |
| | 4,110 | 14,861 | 85,415 | 79,133 | 183,519 | 245,248 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total expirations and vacates |
160,241 | 141,508 | 56,252 | 251,060 | 153,634 | 132,245 | 593,191 | 424,913 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Greater New York Metropolitan Area Office Portfolio |
|
|||||||||||||||||||||||||||||||
Office expirations |
36,035 | 163,999 | 6,659 | 104,037 | 5,542 | 27,304 | 143,542 | 237,772 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Renewal & relocations (3) |
33,988 | 35,033 | 2,182 | 22,770 | 400 | 25,766 | 51,118 | 139,218 | ||||||||||||||||||||||||
Short-term renewals (4) |
| | | | | | | | ||||||||||||||||||||||||
New leases (5) |
| | | 7,314 | | | 7,314 | | ||||||||||||||||||||||||
Tenant vacates (6) |
2,047 | 128,966 | 2,000 | 73,953 | 5,142 | | 81,095 | 42,347 | ||||||||||||||||||||||||
Intentional vacates (7) |
| | | | | | | | ||||||||||||||||||||||||
Holdover (8) |
| | | | | | | | ||||||||||||||||||||||||
Unknown (9) |
| | 2,477 | | | 1,538 | 4,015 | 56,207 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total expirations and vacates |
36,035 | 163,999 | 6,659 | 104,037 | 5,542 | 27,304 | 143,542 | 237,772 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Retail Portfolio |
||||||||||||||||||||||||||||||||
Retail expirations |
7,162 | 3,015 | 17,433 | 13,803 | 3,500 | 9,565 | 44,301 | 30,378 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Renewal & relocations (3) |
4,480 | 2,773 | | 3,305 | 3,500 | 7,894 | 14,699 | 3,936 | ||||||||||||||||||||||||
Short-term renewals (4) |
| | | | | | | | ||||||||||||||||||||||||
New leases (5) |
| | | | | | | | ||||||||||||||||||||||||
Tenant vacates (6) |
| | | | | | | 8,399 | ||||||||||||||||||||||||
Intentional vacates (7) |
2,682 | 242 | 17,433 | 10,369 | | | 27,802 | | ||||||||||||||||||||||||
Holdover (8) |
| | | | | | | | ||||||||||||||||||||||||
Unknown (9) |
| | | 129 | | 1,671 | 1,800 | 18,043 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total expirations and vacates |
7,162 | 3,015 | 17,433 | 13,803 | 3,500 | 9,565 | 44,301 | 30,378 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1) | These forecasts, which are subject to change, are based on managements expectations, including, among other things, discussions with and other information provided by tenants as well as managements analyses of past historical trends. |
(2) | Any lease on month to month or short-term will re-appear in Actual in each period until tenant has vacated or renewed, and thus it would be double counted if periods were cumulated. Forecast avoids double counting. |
(3) | For forecasted periods, Renewals assume tenants renew their existing leases in all or a portion of their current spaces, and Relocations assume tenants move within a building or within the Companys portfolio. |
(4) | Represents tenants which signed renewal leases for a term of less than six months and reappear in forecast periods in 2019. |
(5) | For forecasted periods, New Leases represents leases that have been signed with a new tenant, a subtenant who signed a direct lease or a tenant who expanded. The lease commencement dates are provided on page 6. There may be downtime between the lease expiration and the new lease commencement. |
(6) | For forecasted periods, Tenant Vacates assumes a tenant elects not to renew at the end of their existing lease or exercises an early termination option. |
(7) | For forecasted periods, Intentional Vacates assumes the Company decides not to renew tenant at the end of their existing lease due to anticipated future redevelopment or for other reasons. This also may include early lease terminations. |
(8) | Holdover represents a tenant that remains in its space, paying rent after the expiration of its lease, but is not anticipated to continue doing so on a monthly basis. These tenants may reappear in forecast periods in 2019. |
(9) | For forecasted periods, Unknown represents tenants existing leases which do not fall into any of the above categories: Renewals & Relocations, New Leases, Tenant Vacates or Intentional Vacates and tenants whose intention is unknown. |
Page 9
![]() |
Third Quarter 2019 Property Detail (unaudited) |
Property Name |
Location or Sub-Market |
Rentable Square Feet (1) |
Percent Occupied (2) |
Annualized Rent (3) |
Annualized Rent per Occupied Square Foot (4) |
Number of Leases (5) |
||||||||||||||||
Manhattan Office Properties - Office |
||||||||||||||||||||||
The Empire State Building (6) |
Penn Station -Times Sq. South | 2,711,163 | 94.4 | % | $ | 152,085,148 | $ | 59.45 | 169 | |||||||||||||
One Grand Central Place |
Grand Central | 1,249,360 | 87.5 | % | 63,847,625 | 58.43 | 197 | |||||||||||||||
1400 Broadway (8) |
Penn Station -Times Sq. South | 914,311 | 90.3 | % | 43,927,959 | 53.20 | 25 | |||||||||||||||
111 West 33rd Street (9) |
Penn Station -Times Sq. South | 641,067 | 89.1 | % | 33,998,809 | 59.51 | 21 | |||||||||||||||
250 West 57th Street |
Columbus Circle - West Side | 471,414 | 74.9 | % | 21,558,659 | 61.06 | 46 | |||||||||||||||
501 Seventh Avenue |
Penn Station -Times Sq. South | 461,653 | 82.2 | % | 18,642,556 | 49.12 | 29 | |||||||||||||||
1359 Broadway |
Penn Station -Times Sq. South | 455,849 | 97.5 | % | 24,427,201 | 54.99 | 33 | |||||||||||||||
1350 Broadway (10) |
Penn Station -Times Sq. South | 371,876 | 87.6 | % | 19,107,249 | 58.69 | 56 | |||||||||||||||
1333 Broadway |
Penn Station -Times Sq. South | 292,835 | 80.3 | % | 12,164,098 | 51.75 | 9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Manhattan Office Properties - Office |
7,569,528 | 89.6 | % | 389,759,304 | 57.44 | 585 | ||||||||||||||||
Manhattan Office Properties - Retail |
||||||||||||||||||||||
The Empire State Building (7) |
Penn Station -Times Sq. South | 104,862 | 69.5 | % | 13,523,529 | 185.68 | 13 | |||||||||||||||
One Grand Central Place |
Grand Central | 68,732 | 79.0 | % | 6,427,789 | 118.37 | 13 | |||||||||||||||
1400 Broadway (8) |
Penn Station -Times Sq. South | 20,418 | 77.4 | % | 2,049,950 | 129.64 | 8 | |||||||||||||||
112 West 34th Street (9) |
Penn Station -Times Sq. South | 90,132 | 100.0 | % | 22,651,620 | 251.32 | 4 | |||||||||||||||
250 West 57th Street |
Columbus Circle - West Side | 67,927 | 100.0 | % | 10,315,884 | 151.87 | 8 | |||||||||||||||
501 Seventh Avenue |
Penn Station -Times Sq. South | 33,403 | 96.7 | % | 2,130,844 | 65.99 | 9 | |||||||||||||||
1359 Broadway |
Penn Station -Times Sq. South | 27,506 | 100.0 | % | 2,336,796 | 84.96 | 6 | |||||||||||||||
1350 Broadway (10) |
Penn Station -Times Sq. South | 31,774 | 95.6 | % | 7,126,817 | 234.52 | 5 | |||||||||||||||
1333 Broadway |
Penn Station -Times Sq. South | 67,001 | 100.0 | % | 9,147,032 | 136.52 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Manhattan Office Properties - Retail |
511,755 | 89.5 | % | 75,710,261 | 165.24 | 70 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Sub-Total/Weighted Average |
||||||||||||||||||||||
Manhattan Office Properties - Office and Retail |
8,081,283 | 89.6 | % | 465,469,565 | 64.26 | 655 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Greater New York Metropolitan Area Office Properties |
||||||||||||||||||||||
First Stamford Place (11) |
Stamford, CT | 779,067 | 88.7 | % | 30,220,642 | 43.74 | 45 | |||||||||||||||
Metro Center |
Stamford, CT | 287,833 | 82.9 | % | 14,751,826 | 61.83 | 22 | |||||||||||||||
383 Main Avenue |
Norwalk, CT | 260,600 | 90.5 | % | 7,510,750 | 31.85 | 22 | |||||||||||||||
500 Mamaroneck Avenue |
Harrison, NY | 287,600 | 81.4 | % | 7,123,529 | 30.42 | 28 | |||||||||||||||
10 Bank Street |
White Plains, NY | 232,517 | 97.3 | % | 8,094,542 | 35.78 | 35 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Sub-Total/Weighted Average Greater New York Metropolitan Area Office Properties |
1,847,617 | 88.0 | % | 67,701,289 | 41.65 | 152 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Standalone Retail Properties |
||||||||||||||||||||||
10 Union Square |
Union Square | 58,007 | 97.2 | % | 6,493,465 | 115.14 | 12 | |||||||||||||||
1542 Third Avenue |
Upper East Side | 56,250 | 100.0 | % | 4,151,047 | 73.80 | 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 | % | 2,634,486 | 103.77 | 3 | |||||||||||||||
69-97 Main Street |
Westport, CT | 16,958 | 32.7 | % | 728,857 | 131.54 | 2 | |||||||||||||||
103-107 Main Street |
Westport, CT | 4,330 | 100.0 | % | 727,876 | 168.10 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Sub-Total/Weighted Average Standalone Retail Properties |
205,595 | 93.7 | % | 18,348,421 | 95.28 | 24 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Portfolio Total |
10,134,495 | 89.4 | % | $ | 551,519,275 | $ | 60.86 | 831 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total/Weighted Average Office Properties |
9,417,145 | 89.3 | % | $ | 457,460,593 | $ | 54.39 | 737 | ||||||||||||||
Total/Weighted Average Retail Properties |
717,350 | 90.7 | % | 94,058,682 | 144.54 | 94 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Portfolio Total |
10,134,495 | 89.4 | % | $ | 551,519,275 | $ | 60.86 | 831 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
Notes:
(1) | Excludes (i) 175,532 square feet of space across the Companys portfolio attributable to building management use and tenant amenities and (ii) 69,789 square feet of space attributable to the Companys observatory. |
(2) | Based on leases signed and commenced as of September 30, 2019. |
(3) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
(4) | Represents annualized rent under leases commenced as of September 30, 2019 divided by occupied square feet. |
(5) | Represents the number of leases at each property or on a portfolio basis. If a tenant has more than one lease, whether or not at the same property, but with different expirations, the number of leases is calculated equal to the number of leases with different expirations. |
(6) | Includes 37,192 rentable square feet of space leased by the Companys broadcasting tenants. |
(7) | Includes 5,300 rentable square feet of space leased by WDFG North America, a licensee of the Companys observatory. |
(8) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 44 years (expiring December 31, 2063). |
(9) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 58 years (expiring May 31, 2077). |
(10) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 31 years (expiring July 31, 2050). |
(11) | First Stamford Place consists of three buildings. |
Page 10
|
Third Quarter 2019 Tenant Lease Expirations (unaudited) |
Total Lease Expirations |
Number of Leases Expiring (1) |
Rentable Square Feet Expiring (2) |
Percent of Portfolio Rentable Square Feet Expiring |
Annualized Rent (3) |
Percent of Annualized Rent |
Annualized Rent Per Rentable Square Foot |
||||||||||||||||||
Available |
| 845,044 | 8.3 | % | $ | | 0.0 | % | $ | | ||||||||||||||
Signed leases not commenced |
27 | 227,660 | 2.2 | % | | 0.0 | % | | ||||||||||||||||
3Q 2019 (4) |
11 | 27,840 | 0.3 | % | 1,871,935 | 0.3 | % | 67.24 | ||||||||||||||||
4Q 2019 |
47 | 311,050 | 3.1 | % | 14,992,398 | 2.7 | % | 48.20 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2019 |
58 | 338,890 | 3.3 | % | 16,864,333 | 3.1 | % | 49.76 | ||||||||||||||||
1Q 2020 |
24 | 80,955 | 0.8 | % | 5,085,192 | 0.9 | % | 62.82 | ||||||||||||||||
2Q 2020 |
43 | 369,209 | 3.6 | % | 20,520,952 | 3.7 | % | 55.58 | ||||||||||||||||
3Q 2020 |
31 | 162,676 | 1.6 | % | 9,507,473 | 1.7 | % | 58.44 | ||||||||||||||||
4Q 2020 |
25 | 169,867 | 1.7 | % | 10,116,763 | 1.8 | % | 59.56 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2020 |
123 | 782,707 | 7.7 | % | 45,230,380 | 8.2 | % | 57.79 | ||||||||||||||||
2021 |
104 | 694,112 | 6.8 | % | 40,061,236 | 7.3 | % | 57.72 | ||||||||||||||||
2022 |
109 | 582,158 | 5.7 | % | 36,994,979 | 6.7 | % | 63.55 | ||||||||||||||||
2023 |
82 | 679,551 | 6.7 | % | 41,818,259 | 7.6 | % | 61.54 | ||||||||||||||||
2024 |
82 | 790,284 | 7.8 | % | 47,380,941 | 8.6 | % | 59.95 | ||||||||||||||||
2025 |
62 | 423,287 | 4.2 | % | 30,591,814 | 5.5 | % | 72.27 | ||||||||||||||||
2026 |
54 | 744,686 | 7.3 | % | 40,941,973 | 7.4 | % | 54.98 | ||||||||||||||||
2027 |
45 | 534,008 | 5.3 | % | 31,898,054 | 5.8 | % | 59.73 | ||||||||||||||||
2028 |
25 | 996,134 | 9.8 | % | 54,597,325 | 9.9 | % | 54.81 | ||||||||||||||||
Thereafter |
87 | 2,495,974 | 24.9 | % | 165,139,981 | 29.9 | % | 66.16 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
858 | 10,134,495 | 100.0 | % | $ | 551,519,275 | 100.0 | % | $ | 60.86 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Manhattan Office Properties (5) |
||||||||||||||||||||||||
Available |
| 600,202 | 7.9 | % | $ | | 0.0 | % | $ | | ||||||||||||||
Signed leases not commenced |
19 | 183,932 | 2.4 | % | | 0.0 | % | | ||||||||||||||||
3Q 2019 (4) |
8 | 10,241 | 0.1 | % | 584,696 | 0.2 | % | 57.09 | ||||||||||||||||
4Q 2019 |
34 | 144,036 | 1.9 | % | 7,567,980 | 1.9 | % | 52.54 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2019 |
42 | 154,277 | 2.0 | % | 8,152,676 | 2.1 | % | 52.54 | ||||||||||||||||
1Q 2020 |
18 | 56,863 | 0.8 | % | 3,436,176 | 0.9 | % | 60.43 | ||||||||||||||||
2Q 2020 |
31 | 251,369 | 3.3 | % | 13,948,718 | 3.6 | % | 55.49 | ||||||||||||||||
3Q 2020 |
27 | 153,634 | 2.0 | % | 8,632,560 | 2.2 | % | 56.19 | ||||||||||||||||
4Q 2020 |
19 | 132,998 | 1.8 | % | 7,076,705 | 1.8 | % | 53.21 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2020 |
95 | 594,864 | 7.9 | % | 33,094,159 | 8.5 | % | 55.63 | ||||||||||||||||
2021 |
64 | 425,962 | 5.6 | % | 23,973,823 | 6.2 | % | 56.28 | ||||||||||||||||
2022 |
80 | 392,252 | 5.2 | % | 23,026,502 | 5.9 | % | 58.70 | ||||||||||||||||
2023 |
59 | 504,660 | 6.7 | % | 29,244,170 | 7.5 | % | 57.95 | ||||||||||||||||
2024 |
60 | 557,066 | 7.4 | % | 32,196,698 | 8.3 | % | 57.80 | ||||||||||||||||
2025 |
40 | 267,557 | 3.5 | % | 15,999,586 | 4.1 | % | 59.80 | ||||||||||||||||
2026 |
36 | 560,061 | 7.4 | % | 31,786,253 | 8.2 | % | 56.75 | ||||||||||||||||
2027 |
33 | 403,909 | 5.3 | % | 22,726,179 | 5.8 | % | 56.27 | ||||||||||||||||
2028 |
16 | 923,632 | 12.2 | % | 51,068,330 | 13.1 | % | 55.29 | ||||||||||||||||
Thereafter |
60 | 2,001,154 | 26.5 | % | 118,490,927 | 30.3 | % | 59.21 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Manhattan office properties |
604 | 7,569,528 | 100.0 | % | $ | 389,759,304 | 100.0 | % | $ | 57.44 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1) | If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage). |
(2) | Excludes (i) 175,532 rentable square feet of space across the Company portfolio attributable to building management use and tenant amenities and (ii) 69,789 square feet of space attributable to the Companys observatory. |
(3) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
(4) | Represents leases that are included in occupancy as of September 30, 2019 and expire on September 30, 2019. |
(5) | Excludes (i) retail space in the Companys Manhattan office properties and (ii) the Empire State Building broadcasting licenses and observatory operations. |
Page 11
![]() |
Third Quarter 2019 Tenant Lease Expirations (unaudited) |
Greater New York Metropolitan Area Office Properties |
Number of Leases Expiring (1) |
Rentable Square Feet Expiring (2) |
Percent of Portfolio Rentable Square Feet Expiring |
Annualized Rent (3) |
Percent of Annualized Rent |
Annualized Rent Per Rentable Square Foot |
||||||||||||||||||
Available |
| 204,097 | 11.0 | % | $ | | 0.0 | % | $ | | ||||||||||||||
Signed leases not commenced |
4 | 17,881 | 1.0 | % | | 0.0 | % | | ||||||||||||||||
3Q 2019 (4) |
1 | 13,452 | 0.7 | % | 535,487 | 0.8 | % | 39.81 | ||||||||||||||||
4Q 2019 |
11 | 163,999 | 8.9 | % | 6,068,819 | 9.0 | % | 37.01 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2019 |
12 | 177,451 | 9.6 | % | 6,604,306 | 9.8 | % | 37.22 | ||||||||||||||||
1Q 2020 |
5 | 6,659 | 0.4 | % | 310,348 | 0.5 | % | 46.61 | ||||||||||||||||
2Q 2020 |
8 | 104,037 | 5.6 | % | 5,809,624 | 8.6 | % | 55.84 | ||||||||||||||||
3Q 2020 |
3 | 5,542 | 0.3 | % | 229,834 | 0.3 | % | 41.47 | ||||||||||||||||
4Q 2020 |
4 | 27,304 | 1.5 | % | 1,199,972 | 1.8 | % | 43.95 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2020 |
20 | 143,542 | 7.8 | % | 7,549,778 | 11.2 | % | 52.60 | ||||||||||||||||
2021 |
32 | 238,070 | 12.9 | % | 11,011,903 | 16.3 | % | 46.25 | ||||||||||||||||
2022 |
20 | 131,159 | 7.1 | % | 5,007,752 | 7.4 | % | 38.18 | ||||||||||||||||
2023 |
13 | 120,187 | 6.5 | % | 5,596,372 | 8.3 | % | 46.56 | ||||||||||||||||
2024 |
11 | 204,943 | 11.1 | % | 9,049,100 | 13.4 | % | 44.15 | ||||||||||||||||
2025 |
15 | 122,735 | 6.6 | % | 3,943,026 | 5.8 | % | 32.13 | ||||||||||||||||
2026 |
9 | 109,944 | 6.0 | % | 3,824,674 | 5.6 | % | 34.79 | ||||||||||||||||
2027 |
7 | 73,833 | 4.0 | % | 2,789,669 | 4.1 | % | 37.78 | ||||||||||||||||
2028 |
5 | 64,515 | 3.5 | % | 2,311,764 | 3.4 | % | 35.83 | ||||||||||||||||
Thereafter |
8 | 239,260 | 12.9 | % | 10,012,946 | 14.8 | % | 41.85 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total greater New York metropolitan area office properties |
156 | 1,847,617 | 100.0 | % | $ | 67,701,289 | 100.0 | % | $ | 41.65 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Retail Properties |
||||||||||||||||||||||||
Available |
| 40,745 | 5.7 | % | $ | | 0.0 | % | $ | | ||||||||||||||
Signed leases not commenced |
4 | 25,847 | 3.6 | % | | 0.0 | % | | ||||||||||||||||
3Q 2019 (4) |
2 | 4,147 | 0.6 | % | 751,752 | 0.8 | % | 181.28 | ||||||||||||||||
4Q 2019 |
2 | 3,015 | 0.4 | % | 1,355,599 | 1.4 | % | 449.62 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2019 |
4 | 7,162 | 1.0 | % | 2,107,351 | 2.2 | % | 294.24 | ||||||||||||||||
1Q 2020 |
1 | 17,433 | 2.4 | % | 1,338,668 | 1.4 | % | 76.79 | ||||||||||||||||
2Q 2020 |
4 | 13,803 | 1.9 | % | 762,610 | 0.8 | % | 55.25 | ||||||||||||||||
3Q 2020 |
1 | 3,500 | 0.5 | % | 645,079 | 0.7 | % | 184.31 | ||||||||||||||||
4Q 2020 |
2 | 9,565 | 1.3 | % | 1,840,086 | 2.0 | % | 192.38 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2020 |
8 | 44,301 | 6.2 | % | 4,586,443 | 4.9 | % | 103.53 | ||||||||||||||||
2021 |
8 | 30,080 | 4.2 | % | 5,075,510 | 5.4 | % | 168.73 | ||||||||||||||||
2022 |
9 | 58,747 | 8.2 | % | 8,960,725 | 9.5 | % | 152.53 | ||||||||||||||||
2023 |
10 | 54,704 | 7.6 | % | 6,977,717 | 7.4 | % | 127.55 | ||||||||||||||||
2024 |
11 | 28,275 | 3.9 | % | 6,135,143 | 6.5 | % | 216.98 | ||||||||||||||||
2025 |
7 | 32,995 | 4.6 | % | 10,649,202 | 11.3 | % | 322.75 | ||||||||||||||||
2026 |
9 | 74,681 | 10.4 | % | 5,331,046 | 5.7 | % | 71.38 | ||||||||||||||||
2027 |
5 | 56,266 | 7.8 | % | 6,382,206 | 6.8 | % | 113.43 | ||||||||||||||||
2028 |
4 | 7,987 | 1.1 | % | 1,217,231 | 1.3 | % | 152.40 | ||||||||||||||||
Thereafter |
19 | 255,560 | 35.7 | % | 36,636,108 | 39.0 | % | 143.36 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total retail properties |
98 | 717,350 | 100.0 | % | $ | 94,058,682 | 100.0 | % | $ | 144.54 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1) | If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage). |
(2) | Excludes (i) 175,532 rentable square feet of space across the Company portfolio attributable to building management use and tenant amenities and (ii) 69,789 square feet of space attributable to the Companys observatory. |
(3) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
(4) | Represents leases that are included in occupancy as of September 30, 2019 and expire on September 30, 2019. |
(5) | Represents two license agreements. |
Page 12
|
Third Quarter 2019 Tenant Lease Expirations (unaudited) |
Empire State Building Office (1) |
Number of Leases Expiring (2) |
Rentable Square Feet Expiring (3) |
Percent of Portfolio Rentable Square Feet Expiring |
Annualized Rent (4) (5) |
Percent of Annualized Rent |
Annualized Rent Per Rentable Square Foot |
||||||||||||||||||
Available |
| 101,159 | 3.7 | % | $ | | 0.0 | % | $ | | ||||||||||||||
Signed leases not commenced |
6 | 51,872 | 1.9 | % | | 0.0 | % | | ||||||||||||||||
3Q 2019 (6) |
| | 0.0 | % | | 0.0 | % | | ||||||||||||||||
4Q 2019 |
8 | 33,255 | 1.2 | % | 1,705,774 | 1.1 | % | 51.29 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2019 |
8 | 33,255 | 1.2 | % | 1,705,774 | 1.1 | % | 51.29 | ||||||||||||||||
1Q 2020 |
4 | 11,792 | 0.4 | % | 732,862 | 0.5 | % | 62.15 | ||||||||||||||||
2Q 2020 |
9 | 197,973 | 7.3 | % | 10,709,393 | 7.0 | % | 54.10 | ||||||||||||||||
3Q 2020 |
8 | 38,636 | 1.4 | % | 2,316,700 | 1.5 | % | 59.96 | ||||||||||||||||
4Q 2020 |
7 | 58,837 | 2.2 | % | 3,550,691 | 2.3 | % | 60.35 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total 2020 |
28 | 307,238 | 11.3 | % | 17,309,646 | 11.4 | % | 56.34 | ||||||||||||||||
2021 |
17 | 97,780 | 3.6 | % | 5,752,469 | 3.8 | % | 58.83 | ||||||||||||||||
2022 |
22 | 114,179 | 4.2 | % | 7,142,129 | 4.7 | % | 62.55 | ||||||||||||||||
2023 |
19 | 100,390 | 3.7 | % | 6,624,358 | 4.4 | % | 65.99 | ||||||||||||||||
2024 |
17 | 220,522 | 8.1 | % | 13,672,410 | 9.0 | % | 62.00 | ||||||||||||||||
2025 |
11 | 78,396 | 2.9 | % | 4,545,388 | 3.0 | % | 57.98 | ||||||||||||||||
2026 |
10 | 132,344 | 4.9 | % | 8,221,791 | 5.4 | % | 62.12 | ||||||||||||||||
2027 |
8 | 29,184 | 1.1 | % | 1,734,254 | 1.1 | % | 59.42 | ||||||||||||||||
2028 |
4 | 545,713 | 20.1 | % | 30,765,395 | 20.2 | % | 56.38 | ||||||||||||||||
Thereafter |
25 | 899,131 | 33.3 | % | 54,611,534 | 35.9 | % | 60.74 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Empire State Building office |
175 | 2,711,163 | 100.0 | % | $ | 152,085,148 | 100.0 | % | $ | 59.45 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Empire State Building Broadcasting Licenses and Leases |
Annualized Base Rent (7) |
Annualized Expense Reimbursements |
Annualized Rent (4) |
Percent of Annualized Rent |
||||||||||||
3Q 2019 (6) |
31,710 | 12,476 | 44,186 | 0.3 | % | |||||||||||
4Q 2019 |
| | | 0.0 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total 2019 |
31,710 | 12,476 | 44,186 | 0.3 | % | |||||||||||
1Q 2020 |
629,656 | 70,970 | 700,626 | 4.8 | % | |||||||||||
2Q 2020 |
137,188 | 27,182 | 164,370 | 1.1 | % | |||||||||||
3Q 2020 |
| | | 0.0 | % | |||||||||||
4Q 2020 |
99,320 | 31,248 | 130,568 | 0.9 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total 2020 |
866,164 | 129,400 | 995,564 | 6.8 | % | |||||||||||
2021 |
55,685 | 98,355 | 154,040 | 1.1 | % | |||||||||||
2022 |
1,617,907 | 414,558 | 2,032,465 | 14.0 | % | |||||||||||
2023 |
82,480 | 24,933 | 107,413 | 0.7 | % | |||||||||||
2024 |
65,000 | 36,667 | 101,667 | 0.7 | % | |||||||||||
2025 |
1,533,492 | 183,939 | 1,717,431 | 11.8 | % | |||||||||||
2026 |
807,668 | 83,571 | 891,239 | 6.1 | % | |||||||||||
2027 |
787,969 | 76,989 | 864,958 | 5.9 | % | |||||||||||
2028 |
248,614 | 15,362 | 263,976 | 1.8 | % | |||||||||||
Thereafter |
6,501,770 | 886,475 | 7,388,245 | 50.7 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Empire State Building broadcasting licenses and leases |
$ | 12,598,459 | $ | 1,962,725 | $ | 14,561,184 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
Notes:
(1) | Excludes retail space, broadcasting licenses and observatory operations |
(2) | If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage). |
(3) | Excludes 25,937 rentable square feet of space attributable to building management use. |
(4) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
(5) | Includes approximately $4.6 million of annualized rent related to physical space occupied by broadcasting tenants for their broadcasting operations. Does not include license fees charged to broadcasting tenants. |
(6) | Represents leases that are included in occupancy as of September 30, 2019 and expire on September 30, 2019. |
(7) | Represents license fees for the use of the Empire State Building mast and base rent for physical space occupied by broadcasting tenants. |
Page 13
|
Third Quarter 2019 20 Largest Tenants and Portfolio Tenant Diversification by Industry (unaudited) |
20 Largest Tenants |
Property |
Lease Expiration (1) |
Weighted Average Remaining Lease Term(2) |
Total Occupied Square Feet (3) |
Percent of Portfolio Rentable Square Feet (4) |
Annualized Rent (5) |
Percent of Portfolio Annualized Rent (6) |
|||||||||||||||||
1. Global Brands Group |
ESB, 1333 BWay | Oct. 2023 - Oct. 2028 | 8.4 years | 668,942 | 6.4 | % | $ | 36,313,742 | 6.6 | % | ||||||||||||||
2. LinkedIn |
ESB | Aug. 2036 | 16.9 years | 312,947 | 3.0 | % | 18,434,225 | 3.3 | % | |||||||||||||||
3. Coty |
ESB | Apr. 2020 - Jan. 2030 | 5.6 years | 312,471 | 3.0 | % | 17,501,397 | 3.2 | % | |||||||||||||||
4. PVH Corp. |
501 Seventh Avenue | Oct. 2028 | 9.0 years | 237,281 | 2.3 | % | 11,716,228 | 2.1 | % | |||||||||||||||
5. Sephora |
112 West 34th Street | Jan. 2029 | 9.3 years | 11,334 | 0.1 | % | 10,468,996 | 1.9 | % | |||||||||||||||
6. Li & Fung |
1359 Broadway | Oct. 2021 - Oct. 2027 | 4.5 years | 149,436 | 1.4 | % | 7,605,086 | 1.4 | % | |||||||||||||||
7. Signature Bank |
1333 & 1400 Broadway | Apr. 2035 | 15.1 years | 124,884 | 1.2 | % | 7,540,459 | 1.4 | % | |||||||||||||||
8. Urban Outfitters |
1333 Broadway | Sept. 2029 | 10.0 years | 56,730 | 0.5 | % | 7,196,283 | 1.3 | % | |||||||||||||||
9. Macys |
111 West 33rd Street | May 2030 | 10.6 years | 131,117 | 1.3 | % | 7,157,511 | 1.3 | % | |||||||||||||||
10. Federal Deposit Insurance Corp. |
ESB | Dec. 2024 | 5.3 years | 119,226 | 1.1 | % | 6,837,182 | 1.2 | % | |||||||||||||||
11. HNTB Corporation |
ESB | Feb. 2029 | 9.4 years | 105,143 | 1.0 | % | 6,666,632 | 1.2 | % | |||||||||||||||
12. Duane Reade |
ESB, 1350 BWay, 250 West 57th | Feb. 2021 - Sept. 2027 | 4.8 years | 47,541 | 0.5 | % | 6,663,966 | 1.2 | % | |||||||||||||||
13. The Interpublic Group of Cos, Inc. |
111 West 33rd St & 1400 Bway | Jul. 2024 - Feb. 2025 | 5.0 years | 124,884 | 1.2 | % | 6,443,584 | 1.2 | % | |||||||||||||||
14. Footlocker |
112 West 34th Street | Sept. 2031 | 12.0 years | 34,192 | 0.3 | % | 6,276,836 | 1.1 | % | |||||||||||||||
15. Legg Mason |
First Stamford Place | Sept. 2024 | 5.0 years | 137,583 | 1.3 | % | 6,270,544 | 1.1 | % | |||||||||||||||
16. Fragomen |
1400 Broadway | Feb. 2035 | 15.4 years | 107,680 | 1.0 | % | 5,922,400 | 1.1 | % | |||||||||||||||
17. WDFG North America |
ESB | Dec. 2025 | 6.3 years | 5,300 | 0.1 | % | 5,833,702 | 1.1 | % | |||||||||||||||
18. Shutterstock |
ESB | Apr. 2029 | 9.6 years | 104,386 | 1.0 | % | 5,560,875 | 1.0 | % | |||||||||||||||
19. The Michael J. Fox Foundation |
111 West 33rd Street | Nov. 2029 | 10.1 years | 86,492 | 0.8 | % | 5,390,818 | 1.0 | % | |||||||||||||||
20. ASCAP |
250 West 57th Street | Aug. 2034 | 14.9 years | 87,943 | 0.8 | % | 5,345,814 | 1.0 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
2,965,512 | 28.3 | % | $ | 191,146,280 | 34.7 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
Notes:
(1) | Expiration dates are per lease and do not assume exercise of renewal or extension options. For tenants with more than two leases, the lease expiration is shown as a range. |
(2) | Represents the weighted average lease term, based on annualized rent. |
(3) | Based on leases signed and commenced as of September 30, 2019. |
(4) | Represents the percentage of rentable square feet of the Companys office and retail portfolios in the aggregate. |
(5) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
(6) | Represents the percentage of annualized rent of the Companys office and retail portfolios in the aggregate. |
Portfolio Tenant Diversification by Industry (based on annualized rent)
Page 14
|
Third Quarter 2019 Capital Expenditures and Redevelopment Program and Leasing Opportunity (unaudited and dollars in thousands) |
Three Months Ended | ||||||||||||||||||||
Capital expenditures | September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
|||||||||||||||
Tenant improvements - first generation |
$ | 17,639 | $ | 17,255 | $ | 19,142 | $ | 26,079 | $ | 21,229 | ||||||||||
Tenant improvements - second generation |
8,734 | 10,513 | 9,028 | 7,963 | 10,069 | |||||||||||||||
Leasing commissions - first generation |
574 | 4,742 | 1,276 | 4,533 | 4,813 | |||||||||||||||
Leasing commissions - second generation |
2,651 | 3,016 | 1,869 | 2,845 | 2,576 | |||||||||||||||
Building improvements - first generation |
10,988 | 12,910 | 11,022 | 10,085 | 18,418 | |||||||||||||||
Building improvements - second generation |
4,931 | 6,296 | 4,840 | 8,624 | 2,279 | |||||||||||||||
Observatory capital project (1) |
18,185 | 14,539 | 13,789 | 12,750 | 14,507 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 63,702 | $ | 69,271 | $ | 60,966 | $ | 72,879 | $ | 73,891 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Note:
(1) | Total Observatory capital project spent-to-date was $137.8 million as of September 30, 2019. |
Tenant space redevelopment by square feet (2) (3)
| Future redevelopment (Empire State Building) - 170,000 square feet |
| Future redevelopment (other Manhattan properties) - 400,000 square feet |
| Redevelopment completed - 7,400,000 square feet |
Inventory of vacant space (2)
| Developed - 540,000 square feet, 90% |
| Undeveloped - 60,000 square feet, 10% |
Inventory of undeveloped space (2)
| Vacant - 60,000 square feet, 10% |
| Expires in 2019 - 50,000 square feet, 9% |
| Expires in 2020 and thereafter - 460,000 square feet, 81% |
Developed 20,000 square feet in the third quarter 2019 and 90,000 square feet through September 30, 2019.
Leasing Opportunity - Inventory of Current Vacant Space as of September 30, 2019 (in square feet)
Total Portfolio vacant space |
1,073,000 | |||
|
|
|||
Signed leases not commenced (SLNC): |
||||
Manhattan Office Properties SLNC |
184,000 | |||
Greater New York Office Properties SLNC |
18,000 | |||
Retail Properties SLNC |
26,000 | |||
Redeveloped Manhattan Office space |
472,000 | |||
Greater New York Office Properties space |
204,000 | |||
Retail Properties space |
41,000 | |||
Undeveloped Manhattan Office space |
33,000 | |||
Space held off market |
48,000 | |||
Other |
47,000 | |||
|
|
|||
Total |
1,073,000 | |||
|
|
Development of Space Expected to Vacate from September 30, 2019 through December 31, 2019 (in square feet)
Expected Vacates |
2019 | 2020 | 2021 | Thereafter | ||||||||||||||||
Tenant Vacates |
||||||||||||||||||||
Developed |
16,354 | |||||||||||||||||||
Undeveloped space to be developed |
| | | | | |||||||||||||||
|
|
|||||||||||||||||||
16,354 | ||||||||||||||||||||
|
|
|||||||||||||||||||
Intentional Vacates |
||||||||||||||||||||
Developed |
17,253 | |||||||||||||||||||
Undeveloped space to be developed |
21,212 | | 21,212 | | | |||||||||||||||
|
|
|||||||||||||||||||
38,465 | ||||||||||||||||||||
|
|
Notes:
(2) | These estimates are based on the Companys current budgets and are subject to change. |
(3) | Redevelopment program is for the Manhattan office assets only. Square footage based on market measurement. 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
![]() |
Third Quarter 2019 Observatory Summary (unaudited and dollars in thousands) |
Three Months Ended | ||||||||||||||||||||||||
Observatory NOI |
Twelve Months to Date |
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||||
Observatory revenue (1) |
$ | 125,575 | $ | 37,575 | $ | 32,895 | $ | 20,569 | $ | 34,536 | $ | 40,241 | ||||||||||||
Observatory expenses |
33,923 | 9,089 | 8,360 | 7,575 | 8,899 | 8,854 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
NOI |
91,652 | 28,486 | 24,535 | 12,994 | 25,637 | 31,387 | ||||||||||||||||||
Intercompany rent expense (2) |
79,352 | 23,242 | 21,491 | 14,021 | 20,598 | 23,805 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
NOI after intercompany rent |
$ | 12,300 | $ | 5,244 | $ | 3,044 | $ | (1,027 | ) | $ | 5,039 | $ | 7,582 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Observatory Metrics |
||||||||||||||||||||||||
Number of visitors (3) |
1,042,000 | 968,000 | 601,000 | 945,000 | 1,167,000 | |||||||||||||||||||
Change in visitors year over year |
(10.7 | %) | (7.7 | %) | (6.7 | %) | (4.6 | %) | (5.6 | %) | ||||||||||||||
Number of bad weather days (BWD) (4) |
12 | 24 | 15 | 19 | 11 | |||||||||||||||||||
102nd floor revenue (5) |
$ | | $ | | $ | 180 | $ | 2,388 | $ | 3,066 |
Notes:
(1) | Observatory revenues include the fixed license fee received from WDFG North America, the Observatory gift shop operator. For the three months ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, the fixed license fee was $1,453, $1,453, $1,453, $1,411, and $1,411, respectively. |
(2) | The observatory pays a market-based rent payment comprised of fixed and percentage rent to the Empire State Building. Intercompany rent is eliminated upon consolidation. |
(3) | Reflects the number of visitors who pass through the turnstile, excluding visitors who make a second visit on the same ticket at no additional charge. |
(4) | The Company defines a bad weather day as one in which the top of the Empire State Building is obscured from view for more than 50% of the day. |
(5) | Reflects revenues derived from the 102nd floor observatory. This revenue is included in total observatory revenues above and will be disclosed separately throughout the duration of the observatory capital improvement program. |
Annual Observatory Revenues 2014 to 2018
Page 16
![]() |
Third Quarter 2019 Condensed Consolidated Balance Sheets (unaudited and dollars in thousands) |
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||
Assets |
||||||||||||||||||||
Commercial real estate properties, at cost: |
||||||||||||||||||||
Land |
$ | 201,196 | $ | 201,196 | $ | 201,196 | $ | 201,196 | $ | 201,196 | ||||||||||
Development costs |
7,989 | 7,987 | 7,987 | 7,987 | 7,987 | |||||||||||||||
Building and improvements |
2,830,353 | 2,784,472 | 2,727,497 | 2,675,303 | 2,616,772 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
3,039,538 | 2,993,655 | 2,936,680 | 2,884,486 | 2,825,955 | ||||||||||||||||
Less: accumulated depreciation |
(829,495 | ) | (809,197 | ) | (777,794 | ) | (747,304 | ) | (718,959 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial real estate properties, net |
2,210,043 | 2,184,458 | 2,158,886 | 2,137,182 | 2,106,996 | |||||||||||||||
Cash and cash equivalents |
293,710 | 375,335 | 242,910 | 204,981 | 229,745 | |||||||||||||||
Restricted cash |
36,609 | 38,043 | 61,766 | 65,832 | 54,356 | |||||||||||||||
Short term investments |
| 150,000 | 350,000 | 400,000 | 400,000 | |||||||||||||||
Tenant and other receivables, net |
29,287 | 31,264 | 22,052 | 29,437 | 31,342 | |||||||||||||||
Deferred rent receivables, net |
214,685 | 209,510 | 206,307 | 200,903 | 195,455 | |||||||||||||||
Prepaid expenses and other assets |
41,927 | 60,818 | 37,766 | 64,345 | 50,663 | |||||||||||||||
Deferred costs, net |
223,698 | 228,782 | 233,382 | 241,223 | 244,441 | |||||||||||||||
Acquired below-market ground leases, net |
354,524 | 356,482 | 358,440 | 360,398 | 362,355 | |||||||||||||||
Right of use assets |
29,355 | 29,404 | 29,452 | | | |||||||||||||||
Goodwill |
491,479 | 491,479 | 491,479 | 491,479 | 491,479 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
$ | 3,925,317 | $ | 4,155,575 | $ | 4,192,440 | $ | 4,195,780 | $ | 4,166,832 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities and Equity |
||||||||||||||||||||
Mortgage notes payable, net |
$ | 606,313 | $ | 607,072 | $ | 607,823 | $ | 608,567 | $ | 609,299 | ||||||||||
Senior unsecured notes, net |
798,347 | 1,047,939 | 1,047,078 | 1,046,219 | 1,045,362 | |||||||||||||||
Unsecured term loan facility, net |
264,517 | 264,394 | 264,271 | 264,147 | 264,023 | |||||||||||||||
Unsecured revolving credit facility |
| | | | | |||||||||||||||
Accounts payable and accrued expenses |
143,201 | 131,842 | 127,986 | 130,676 | 128,340 | |||||||||||||||
Acquired below-market leases, net |
42,655 | 45,651 | 48,731 | 52,450 | 55,662 | |||||||||||||||
Ground lease liabilties |
29,355 | 29,404 | 29,452 | | | |||||||||||||||
Deferred revenue and other liabilities |
68,742 | 48,858 | 43,339 | 44,810 | 32,175 | |||||||||||||||
Tenants security deposits |
31,841 | 32,383 | 56,559 | 57,802 | 42,520 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities |
1,984,971 | 2,207,543 | 2,225,239 | 2,204,671 | 2,177,381 | |||||||||||||||
Total equity |
1,940,346 | 1,948,032 | 1,967,201 | 1,991,109 | 1,989,451 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities and equity |
$ | 3,925,317 | $ | 4,155,575 | $ | 4,192,440 | $ | 4,195,780 | $ | 4,166,832 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Page 17
![]() |
Third Quarter 2019 Condensed Consolidated Statements of Income (unaudited and in thousands, except per share amounts) |
Three Months Ended | ||||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||
Revenues |
||||||||||||||||||||
Rental revenue (1) |
$ | 150,225 | $ | 141,071 | $ | 143,417 | $ | 123,261 | $ | 123,621 | ||||||||||
Tenant expense reimbursement |
| | | 19,746 | 18,627 | |||||||||||||||
Observatory revenue |
37,575 | 32,895 | 20,569 | 34,536 | 40,241 | |||||||||||||||
Lease termination fees |
2,361 | 363 | 388 | 18,683 | 1,185 | |||||||||||||||
Third party management and other fees |
304 | 331 | 320 | 289 | 312 | |||||||||||||||
Other revenue and fees |
2,408 | 1,584 | 2,599 | 2,794 | 2,416 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total revenues |
192,873 | 176,244 | 167,293 | 199,309 | 186,402 | |||||||||||||||
Operating expenses |
||||||||||||||||||||
Property operating expenses |
47,894 | 40,227 | 42,955 | 41,004 | 42,772 | |||||||||||||||
Ground rent expenses |
2,331 | 2,332 | 2,331 | 2,332 | 2,331 | |||||||||||||||
General and administrative expenses |
14,421 | 15,998 | 14,026 | 13,673 | 13,148 | |||||||||||||||
Observatory expenses |
9,089 | 8,360 | 7,575 | 8,899 | 8,854 | |||||||||||||||
Real estate taxes |
29,599 | 28,267 | 28,232 | 28,229 | 28,284 | |||||||||||||||
Depreciation and amortization |
44,260 | 44,821 | 46,098 | 46,682 | 42,475 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total operating expenses |
147,594 | 140,005 | 141,217 | 140,819 | 137,864 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total operating income |
45,279 | 36,239 | 26,076 | 58,490 | 48,538 | |||||||||||||||
Other income (expense) |
||||||||||||||||||||
Interest income |
2,269 | 3,899 | 3,739 | 3,452 | 3,485 | |||||||||||||||
Interest expense |
(19,426 | ) | (20,597 | ) | (20,689 | ) | (20,849 | ) | (20,658 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income before income taxes |
28,122 | 19,541 | 9,126 | 41,093 | 31,365 | |||||||||||||||
Income tax (expense) benefit |
(1,338 | ) | (611 | ) | 730 | (1,312 | ) | (2,135 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
26,784 | 18,930 | 9,856 | 39,781 | 29,230 | |||||||||||||||
Perpetual preferred unit distributions |
(234 | ) | (234 | ) | (234 | ) | (234 | ) | (234 | ) | ||||||||||
Net income attributable to non-controlling interests |
(10,668 | ) | (7,609 | ) | (3,945 | ) | (16,705 | ) | (12,654 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income attributable to common stockholders |
$ | 15,882 | $ | 11,087 | $ | 5,677 | $ | 22,842 | $ | 16,342 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Weighted average common shares outstanding |
||||||||||||||||||||
Basic |
178,352 | 176,796 | 175,850 | 171,829 | 167,657 | |||||||||||||||
|
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|
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|
|||||||||||
Diluted |
298,151 | 298,131 | 298,049 | 297,492 | 297,478 | |||||||||||||||
|
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|
|
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|
|
|
|
|
|||||||||||
Net income per share attributable to common stockholders |
||||||||||||||||||||
Basic and diluted |
$ | 0.09 | $ | 0.06 | $ | 0.03 | $ | 0.13 | $ | 0.10 | ||||||||||
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|
|||||||||||
Dividends per share |
$ | 0.105 | $ | 0.105 | $ | 0.105 | $ | 0.105 | $ | 0.105 | ||||||||||
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|
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Notes:
(1) | The Company adopted Financial Accounting Standards Board Topic 842, Lease Accounting, using the modified retrospective approach on January 1, 2019 and elected to apply the transition provisions of the standard at adoption. As such, the prior period amounts presented under ASC 840 were not restated to conform with the 2019 presentation. The Company adopted the practical expedient in Topic 842, which allows the Company to avoid separating lease and non-lease rental income. Consequently, all rental income earned pursuant to tenant leases in 2019 is reflected as one category, Rental Revenue, in the 2019 consolidated statements of income. |
The following table reflects the components of 2019 rental revenue.
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
||||||||||
Rental Revenue |
||||||||||||
Base rent |
$ | 129,098 | $ | 125,170 | $ | 126,634 | ||||||
Billed tenant expense reimbursement |
21,127 | 15,901 | 16,783 | |||||||||
|
|
|
|
|
|
|||||||
Total rental revenue |
$ | 150,225 | $ | 141,071 | $ | 143,417 | ||||||
|
|
|
|
|
|
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 Companys performance.
Page 18
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Third Quarter 2019 Funds from Operations (FFO), Modified Funds From Operations (Modified FFO), Core Funds from Operations (Core FFO), Core Funds Available for Distribution (Core FAD) and EBITDA (unaudited and in thousands, except per share amounts) |
Three Months Ended | ||||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||
Reconciliation of Net Income to FFO, Modified FFO and Core FFO |
||||||||||||||||||||
Net Income |
$ | 26,784 | $ | 18,930 | $ | 9,856 | $ | 39,781 | $ | 29,230 | ||||||||||
Preferred unit distributions |
(234 | ) | (234 | ) | (234 | ) | (234 | ) | (234 | ) | ||||||||||
Real estate depreciation and amortization |
43,303 | 43,822 | 45,092 | 45,771 | 42,004 | |||||||||||||||
|
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|
|
|
|
|
|
|
|
|||||||||||
FFO attributable to common stockholders and non-controlled interests |
69,853 | 62,518 | 54,714 | 85,318 | 71,000 | |||||||||||||||
Amortization of below-market ground lease |
1,957 | 1,958 | 1,958 | 1,958 | 1,957 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Modified FFO attributable to common stockholders and non-controlled interests |
71,810 | 64,476 | 56,672 | 87,276 | 72,957 | |||||||||||||||
|
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|
|
|
|
|
|
|
|||||||||||
Core FFO attributable to common stockholders and non-controlled interests |
$ | 71,810 | $ | 64,476 | $ | 56,672 | $ | 87,276 | $ | 72,957 | ||||||||||
|
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|
|||||||||||
Total weighted average shares and Operating Partnership Units |
||||||||||||||||||||
Basic |
298,151 | 298,131 | 298,049 | 297,492 | 297,478 | |||||||||||||||
|
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|
|
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|
|||||||||||
Diluted |
298,151 | 298,131 | 298,049 | 297,492 | 297,478 | |||||||||||||||
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|
|||||||||||
FFO attributable to common stockholders and non-controlled interests per share |
||||||||||||||||||||
Basic |
$ | 0.23 | $ | 0.21 | $ | 0.18 | $ | 0.29 | $ | 0.24 | ||||||||||
|
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|||||||||||
Diluted |
$ | 0.23 | $ | 0.21 | $ | 0.18 | $ | 0.29 | $ | 0.24 | ||||||||||
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|
|||||||||||
Modified FFO attributable to common stockholders and non-controlled interests per share |
||||||||||||||||||||
Basic |
$ | 0.24 | $ | 0.22 | $ | 0.19 | $ | 0.29 | $ | 0.25 | ||||||||||
|
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|
|
|
|
|
|
|
|||||||||||
Diluted |
$ | 0.24 | $ | 0.22 | $ | 0.19 | $ | 0.29 | $ | 0.25 | ||||||||||
|
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|
|
|
|
|
|
|
|
|||||||||||
Core FFO attributable to common stockholders and non-controlled interests per share |
||||||||||||||||||||
Basic |
$ | 0.24 | $ | 0.22 | $ | 0.19 | $ | 0.29 | $ | 0.25 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Diluted |
$ | 0.24 | $ | 0.22 | $ | 0.19 | $ | 0.29 | $ | 0.25 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reconciliation of Core FFO to Core FAD |
||||||||||||||||||||
Core FFO |
$ | 71,810 | $ | 64,476 | $ | 56,672 | $ | 87,276 | $ | 72,957 | ||||||||||
Add: |
||||||||||||||||||||
Amortization of deferred financing costs |
923 | 1,020 | 1,021 | 1,021 | 1,020 | |||||||||||||||
Non-real estate depreciation and amortization |
958 | 998 | 1,007 | 912 | 826 | |||||||||||||||
Amortization of non-cash compensation expense |
4,049 | 5,924 | 5,419 | 4,722 | 4,852 | |||||||||||||||
Amortization of debt discount |
311 | 668 | 668 | 667 | 668 | |||||||||||||||
Amortization of loss on interest rate derivative |
385 | 385 | 385 | 385 | 474 | |||||||||||||||
Deduct: |
||||||||||||||||||||
Straight-line rental revenues |
(5,174 | ) | (3,203 | ) | (5,404 | ) | (5,445 | ) | (5,000 | ) | ||||||||||
Above/below-market rent revenue amortization |
(1,682 | ) | (1,745 | ) | (2,354 | ) | (1,733 | ) | (1,668 | ) | ||||||||||
Corporate capital expenditures |
(614 | ) | (463 | ) | (498 | ) | (231 | ) | | |||||||||||
Tenant improvements - second generation |
(8,734 | ) | (10,513 | ) | (9,028 | ) | (7,963 | ) | (10,069 | ) | ||||||||||
Building improvements - second generation |
(4,931 | ) | (6,296 | ) | (4,840 | ) | (8,624 | ) | (2,279 | ) | ||||||||||
Leasing commissions - second generation |
(2,651 | ) | (3,016 | ) | (1,869 | ) | (2,845 | ) | (2,576 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Core FAD |
$ | 54,650 | $ | 48,235 | $ | 41,179 | $ | 68,142 | $ | 59,205 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reconciliation of Net Income to EBITDA |
||||||||||||||||||||
Net income |
$ | 26,784 | $ | 18,930 | $ | 9,856 | $ | 39,781 | $ | 29,230 | ||||||||||
Interest expense |
19,426 | 20,597 | 20,689 | 20,849 | 20,658 | |||||||||||||||
Income tax expense (benefit) |
1,338 | 611 | (730 | ) | 1,312 | 2,135 | ||||||||||||||
Depreciation and amortization |
44,260 | 44,821 | 46,098 | 46,682 | 42,475 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
EBITDA |
$ | 91,808 | $ | 84,959 | $ | 75,913 | $ | 108,624 | $ | 94,498 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Page 19
|
Third Quarter 2019 Debt Summary (unaudited and dollars in thousands) |
September 30, 2019 | June 30, 2019 | |||||||||||||||||||||||
Weighted Average | Weighted Average | |||||||||||||||||||||||
Interest | Maturity | Interest | Maturity | |||||||||||||||||||||
Debt Summary |
Balance | Rate | (Years) | Balance | Rate | (Years) | ||||||||||||||||||
Fixed rate mortgage debt |
$ | 611,783 | 4.10 | % | 9.3 | $ | 612,735 | 4.10 | % | 9.5 | ||||||||||||||
Senior unsecured notes |
800,000 | 4.19 | % | 9.8 | 1,050,000 | 3.82 | % | 7.7 | ||||||||||||||||
Unsecured term loan facility (1) |
265,000 | 3.35 | % | 2.9 | 265,000 | 3.35 | % | 3.2 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total fixed rate debt |
1,676,783 | 4.03 | % | 8.5 | 1,927,735 | 3.84 | % | 7.6 | ||||||||||||||||
Unsecured revolving credit facility |
| | 1.9 | | | 2.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total variable rate debt (2) |
| | 1.9 | | | 2.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total debt |
1,676,783 | 4.03 | % | 8.5 | 1,927,735 | 3.84 | % | 7.6 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Discount |
| (312 | ) | |||||||||||||||||||||
Deferred financing costs, net |
(7,606 | ) | (8,018 | ) | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total |
$ | 1,669,177 | $ | 1,919,405 | ||||||||||||||||||||
|
|
|
|
Note:
(1) | LIBOR is fixed at 2.1485% under a variable to fixed interest rate swap agreement. |
(2) | In July 2018 the Company entered into a $250 million forward starting interest rate swap agreement, which fixed three month LIBOR at 2.958% for the first $250 million of its next financing. |
Outstanding at | ||||||||||||||||
September 30, | Letters | Available | ||||||||||||||
Available Capacity |
Facility | 2019 | of Credit | Capacity | ||||||||||||
Unsecured revolving credit facility (1) |
$ | 1,100,000 | $ | | $ | | $ | 1,100,000 | ||||||||
|
|
|
|
|
|
|
|
Current | In | |||||||||
Covenant Summary |
Required | Quarter | Compliance | |||||||
Maximum Total Leverage(2) |
< 60 | % | 26.7 | % | Yes | |||||
Maximum Secured Debt |
< 40 | % | 9.6 | % | Yes | |||||
Minimum Fixed Charge Coverage |
> 1.50 | x | 4.1 | x | Yes | |||||
Minimum Unencumbered Interest Coverage |
> 1.75 | x | 6.3 | x | Yes | |||||
Maximum Unsecured Leverage |
< 60 | % | 20.1 | % | Yes | |||||
Minimum Tangible Net Worth |
$ | 1,252,954 | $ | 1,833,218 | Yes |
Notes:
(1) | The unsecured revolving credit and term loan facility has an accordion feature allowing for an increase in maximum aggregate principal balance to $1.75 billion under certain circumstances. This unsecured revolving credit facility matures in August 2021 with two additional six-month extension options. |
(2) | Represents the ratio of total indebtedness to total asset value as defined and determined in accordance with the credit facility agreement. |
Page 20
|
Third Quarter 2019 Debt Detail (unaudited and dollars in thousands) |
Stated Interest Rate (%) |
Current Interest Rate (%) |
Principal Balance |
Maturity Date |
Amortization | ||||||||||||||
Fixed rate mortgage debt: |
||||||||||||||||||
Metro Center |
3.59 | % | 3.59 | % | $ | 90,205 | 11/5/2024 | 30 years | ||||||||||
10 Union Square |
3.70 | % | 3.70 | % | 50,000 | 4/1/2026 | Interest only | |||||||||||
1542 Third Avenue |
4.29 | % | 4.29 | % | 30,000 | 5/1/2027 | Interest only | |||||||||||
First Stamford Place (1) |
4.28 | % | 4.28 | % | 180,000 | 7/1/2027 | 5 years interest only; 30 years thereafter | |||||||||||
1010 Third Avenue and 77 West 55th Street |
4.01 | % | 4.01 | % | 38,440 | 1/5/2028 | 30 years | |||||||||||
10 Bank Street |
4.23 | % | 4.23 | % | 33,138 | 6/1/2032 | 25 years | |||||||||||
383 Main Avenue |
4.44 | % | 4.44 | % | 30,000 | 6/30/2032 | 5 years interest only; 30 years thereafter | |||||||||||
1333 Broadway |
4.21 | % | 4.21 | % | 160,000 | 2/5/2033 | Interest only | |||||||||||
|
|
|||||||||||||||||
Total mortgage debt |
611,783 | |||||||||||||||||
Unsecured revolving credit facility |
LIBOR plus 1.10 | % | 3.12 | % | | 8/29/2021 | Interest only | |||||||||||
Unsecured term loan facility (2) |
LIBOR plus 1.20 | % | 3.35 | % | 265,000 | 8/29/2022 | Interest only | |||||||||||
Senior unsecured notes: |
||||||||||||||||||
Series A |
3.93 | % | 3.93 | % | 100,000 | 3/27/2025 | Interest only | |||||||||||
Series B |
4.09 | % | 4.09 | % | 125,000 | 3/27/2027 | Interest only | |||||||||||
Series C |
4.18 | % | 4.18 | % | 125,000 | 3/27/2030 | Interest only | |||||||||||
Series D |
4.08 | % | 4.08 | % | 115,000 | 1/22/2028 | Interest only | |||||||||||
Series E |
4.26 | % | 4.26 | % | 160,000 | 3/22/2030 | Interest only | |||||||||||
Series F |
4.44 | % | 4.44 | % | 175,000 | 3/22/2033 | Interest only | |||||||||||
|
|
|
|
|||||||||||||||
Total / weighted average debt |
4.03 | % | 1,676,783 | |||||||||||||||
|
|
|||||||||||||||||
Deferred financing costs, net |
(7,606 | ) | ||||||||||||||||
|
|
|||||||||||||||||
Total (3) |
$ | 1,669,177 | ||||||||||||||||
|
|
Notes:
(1) | Represents a $164 million mortgage loan bearing interest at 4.09% and a $16 million loan bearing interest at 6.25%. |
(2) | LIBOR is fixed at 2.1485% under a variable to fixed interest rate swap agreement. |
(3) | Capitalized interest was $0.4 million for the three months ended September 30, 2019. |
Page 21
|
Third Quarter 2019 Debt Maturities and Ground Lease Commitments (unaudited and dollars in thousands) |
Year |
Amortization | Maturities (1) | Total | Percentage of Total Debt |
Weighted Average Interest Rate of Maturing Debt |
|||||||||||||||
2019 |
$ | 961 | $ | | $ | 961 | 0.1 | % | n/a | |||||||||||
2020 |
3,938 | | 3,938 | 0.2 | % | n/a | ||||||||||||||
2021 |
4,090 | | 4,090 | 0.2 | % | n/a | ||||||||||||||
2022 |
5,628 | 265,000 | 270,628 | 16.1 | % | 3.35 | % | |||||||||||||
2023 |
7,876 | | 7,876 | 0.5 | % | n/a | ||||||||||||||
Thereafter |
33,868 | 1,355,422 | 1,389,290 | 82.9 | % | 4.15 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total debt |
$ | 56,361 | $ | 1,620,422 | 1,676,783 | 100.0 | % | 4.03 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Deferred financing costs, net |
(7,606 | ) | ||||||||||||||||||
|
|
|||||||||||||||||||
Total |
$ | 1,669,177 | ||||||||||||||||||
|
|
Note:
(1) | Assumes no extension options are exercised. |
Debt Maturity Profile
Ground Lease Commitments (1)
Year |
1350 Broadway (2) |
1400 Broadway (3) |
111 West 33rd Street (4) |
Total | ||||||||||||
2019 |
$ | 27 | $ | 169 | $ | 184 | $ | 380 | ||||||||
2020 |
108 | 675 | 735 | 1,518 | ||||||||||||
2021 |
108 | 675 | 735 | 1,518 | ||||||||||||
2022 |
108 | 675 | 735 | 1,518 | ||||||||||||
2023 |
108 | 675 | 735 | 1,518 | ||||||||||||
Thereafter |
2,037 | 27,000 | 39,261 | 68,298 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 2,496 | $ | 29,869 | $ | 42,385 | $ | 74,750 | |||||||||
|
|
|
|
|
|
|
|
Notes:
(1) | There are no fair value market resets, no step-ups, and no escalations in the three ground lease commitments. |
(2) | Expires July 31, 2050 with a remaining term, including unilateral extension rights available to the Company, of approximately 31 years. |
(3) | Expires December 31, 2063 with a remaining term, including unilateral extension rights available to the Company, of approximately 44 years. |
(4) | Expires May 31, 2077 with a remaining term, including unilateral extension rights available to the Company, of approximately 58 years. |
Page 22
![]() |
Third Quarter 2019 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 REITs 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 Funds From Operations (Core FFO)
Core FFO adds back to Modified FFO the following items: deferred tax asset write-off, loss on early extinguishment of debt and acquisition 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 for Distribution (Core FAD)
In addition to Core FFO, we present Core FAD by (i) adding to Core FFO non-real estate depreciation and amortization, the amortization of deferred financing costs, amortization of debt discounts and non-cash compensation expenses and (ii) deducting straight line rent, 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, 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.
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